CBIC clarifies drawback and refund mechanism under customs where import duty is paid through duty credit scrips

 This Tax Alert summarizes a recent Circular issued by the Central Board of Indirect Taxes and Customs (CBIC) clarifying the manner of grant of drawback or refund in cases where import duty was paid through duty credit scrips.

The key clarifications are:

• In cases where duty has been paid through duty credit scrips at the time of import, any admissible drawback under Section 74 or refund under Section 27 of the Customs Act, 1962 shall be granted through re-credit into the scrips and not in cash.
• Accordingly, where duty at the time of import was paid through Remission of Duties and Taxes on Exported Products (RoDTEP) or Rebate of State and Central Taxes and Levies (RoSCTL) scrips, the admissible drawback or refund shall be granted by way of re-credit into the electronic credit ledger of the Importer Exporter Code (IEC) holder.
• The re-credited amount will be available for generation of e-scrips, which may be utilized by the respective IEC holder in the prescribed manner.^[2]
• Where import duty was paid through scrips issued under legacy schemes such as Merchandise Exports from India Scheme (MEIS), Service Exports from India Scheme (SEIS), etc., the customs authority shall issue a re-credit certificate for revalidation of duty credit scrips from the Directorate General of Foreign Trade (DGFT) containing details of the scrip utilized, date of import of the goods subsequently re-exported, and the amount debited at the time of import.