The segments of export, which will be hit due to slash in duty draw back rate include job-oriented sectors like textiles and leather. The new duty draw back rates will become effective from September 20, the Central Board of Excise and Customs (CBEC) said in a notification. issued here. Under the duty drawback scheme exporters get refund of raw materials used in exports.
However explaining rationale behind reduction in rates the CBEC said “the drawback rates have been determined on the basis of certain broad parameters, like the prevailing prices of inputs...and the incidence of service tax.”
Most of the cut in duty drawback has been made in various segments of textile sector. As per the notification duty drawback for cotton garments has been slashed to 7.5 per cent as against the present rate of 8.8 per cent.
For blended garments using cotton and manmade fibre, the duty drawback rate has been slashed to 8.6 per cent from the current level of 9.8 per cent.
In case of leather and leather articles, the duty draw back rate has been reduced by 5 to 15 per cent. In case of sports goods the duty draw back rate has been reduced by 9 to 20 per cent.
The government drastically reduced the duty drawback rate in case of article of iron and steel. In this segment the rate has been brought down by 25 to 30 per cent. In case of stainless steel utensils and cutlery, the refund rate has been reduced by 12.5 per cent to 8.8 per cent.
Reacting sharply to reduction in duty drawback rates for textile and garment sector the Apparel Export Promotion Council (AEPC) said the industry fails to understand the rationale of reduction of duty drawback by 15 per cent when duties were increased by over 25 per cent and fresh additional duties were also levied on inputs.
In letter addressed to the Finance Minister Pranab Mukherjee the AEPC Chairman Premal Udani said “the recession for readymade garment sector is far from over. For the first four months of current financial year, exports declined by eight per cent over last year. The industry is reeling under unprecedented price rise of its basic materials like raw cotton, cotton yarns and fabrics.”