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Nhava Sheva customs dept in Mumbai starts issuing notices to drug exporters to recover duty drawback
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Laxmi Yadav, Mumbai
April 25 , 2022
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The office of the commissioner of customs at Jawaharlal Nehru Customs House (JNCH), Nhava Sheva, Mumbai has started issuing notices to exporters of various sectors including pharma in order to recover duty drawback from them.
The notices have been issued to exporters who have not yet received export proceeds on their shipping bills as well as those exporters who realized export proceeds but their exports realization is not being shown on the Export Data Processing and Monitoring System (EDPMS) by banks.
The exporters have availed duty drawback to fulfill export orders from 2014-2018.
As per the Foreign Exchange Management Act, 1999, realization of export proceeds should happen within a period of nine months from the date of export, unless this period is extended by the Reserve Bank of India (RBI). The details of export proceeds realization pertaining to shipping bills, where Let Export Order (LEO) was granted on or after April 1, 2014, need to be updated by authorized dealer banks in their respective EDPMS so that the data is transmitted to Customs for reconciliation, according to a circular issued by Central Board of Excise & Customs Drawback Division on June 30, 2016.
The EDPMS system which integrates customs, SEZs, STPI and all authorised (AD) banks was introduced by Reserve Bank of India in 2014 to monitor payments against export bills. It requires all banks to report in this system details of the export proceeds realization pertaining to the shipping bills filed after February 28, 2014.
According to the office of commissioner of customs at JNCH, there are a large number of exporter/shipping bills wherein export proceeds have not been realized even after completion of mandated period. As a consequence, in all such cases, the drawback amount relatable to such exports is liable to be recovered along with applicable interest in terms of the afore-cites provisions.
In cases where export proceeds have been realized, details of such realization may be updated in the EDPMS through their authorized dealer bank for reconciliation failing which appropriate action for recovery of ineligible drawback disbursed along with interest shall be initiated by office of commissioner of customs, said NV Kulkarni, commissioner of customs, JNCH.
Further, as prescribed in CBIC circular dated September 19, 2019, in cases where the short realization of export sale proceeds is due to bank charges deducted by foreign bank or agency commission paid to agents abroad for securing export contract, exporters are required to produce documentary evidence such as export invoice, bank’s confirmation regarding foreign bank charges etc. to justify such deductions, said Kulkarni.
Says Nipun Jain, chairman of Small and Medium Pharma Manufacturers Association (SMPMA), “Scores of drug exporters are in a soup due to the slow pace of clearing entries in EDPMS by banks. There are exporters who received payment on shipping bills but authorized dealer banks are yet to knock off entries in EDPMS. Notices have been served on them to recover the duty drawback amount. Banks especially PSU banks are facing serious capacity and system constraints due to which they are unable to knock off entries in EDPMS in a timely manner. Hence, we are facing the risk of losing duty drawback. It is the responsibility of AD banks to knock off entries in EDPMS where payment has been realized so that customers do not face risk of losing duty drawback.”
“On the other hand, banks refuse to issue electronic bank realisation certificates (e-BRCs) to the drug manufacturers exporting products to OFAC-embargoed nations despite receiving payment within a mandatory nine months from date of export. There should be an alternative mechanism for these exporters to ensure that they continue to avail duty drawback. There needs to be deliberation between the government and industry in this regard,” said Jain.
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