Drawback

Drawback, in law in commerce, paying back a duty previously paid on exporting excisable articles or on re-exporting foreign goods. The object of a drawback is to let commodities which are subject to taxation be exported and sold in a foreign country on the same terms as goods from countries where they are untaxed. It differs from a bounty in that a bounty lets commodities be sold abroad at less than their cost price; it may occur, however, under certain conditions that giving a drawback has an effect equivalent to that of a bounty, as in the case of the so-called sugar bounties in Germany (see sugar). The earlier tariffs contained elaborate tables of the drawbacks allowed on exporting or re-exporting commodities, but so far as the United Kingdom was concerned (as of the early twentieth century) the system of bonded warehouses practically abolished drawbacks, as commodities could be warehoused (placed in bond) until needed for exportation.

Duty Drawback is the rebate of duty chargeable on imported material or excisable material used in the manufacturing of goods in and is exported. The exporter may claim drawback or refund of excise and customs duties being paid by his suppliers. The final exporter can claim the drawback on material used for the manufacture of export products. In case of re-import of goods the drawback can be claimed.

The following are Drawbacks:

Drawback is not allowed on inputs obtained without payment of customs or excise duty. In part payment of customs and excise duty, rebate or refund can be claimed only on the paid part.

In case of re-export of goods, it should be done within 2 years from the date of payment of duty when they were imported. 99% of the duty is allowable as drawback, only after inspection. If the goods imported are used before its re-export, the drawback will be allowed as at reduced percent.

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