Duty Drawback Scheme

What is the Duty Drawback Scheme?

The Duty Drawback Scheme is a customs refund mechanism run by the Central Board of Indirect Taxes and Customs (CBIC) under the Department of Revenue, Ministry of Finance. Duty Drawback returns to an exporter the customs duty that was paid on imported materials which end up in an exported product, or on duty-paid imported goods that are simply sent back out of the country.

The scheme rests on two sections of the Customs Act, 1962:

• Section 74; drawback on re-export of duty-paid imported goods. Up to 98% of the import duty is refunded if the goods can be identified as the same goods that were imported and are re-exported within two years of payment of duty. The two-year period can be extended by the Board for sufficient cause.
• Section 75; drawback on exported goods manufactured using imported inputs. Here the refund is not a direct trace of the actual duty; it is a rate notified by the government for each tariff item.

The operating framework is the Customs and Central Excise Duties Drawback Rules, 2017, notified in September 2017. The current All Industry Rate schedule runs from Notification No. 77/2023-Customs (N.T.) dated 20 October 2023, which CBIC amends periodically, for example through Notification No. 21/2026-Customs (N.T.) dated 16 February 2026, Notification No. 41/2026-Customs (N.T.) dated 24 April 2026 revising rates for gold and silver jewellery, and Notification No. 64/2026-Customs (N.T.) dated 16 July 2026.

How is Duty Drawback different from RoDTEP?

This is the single most common confusion among Indian exporters, because both schemes put money back in the exporter's hands against the same shipping bill.

Duty Drawback is a refund of a duty you paid. RoDTEP is a remission of taxes buried in your cost chain that no refund route reaches, the principle that taxes should not be exported. Because they cover different duty categories, an exporter can normally claim both on the same consignment: the customs portion of the All Industry Rate drawback plus the RoDTEP entitlement for that tariff line.

RoDTEP's continuation is renewed periodically. DGFT Notification No. 74/2025-26 dated 31 March 2026 extended the scheme from 1 April 2026 to 30 September 2026 with rates and value caps as they stood on 31 March 2026. Exporters should check dgft.gov.in for the position beyond that date. Duty Drawback, by contrast, is a permanent statutory scheme with no expiry.

Who is eligible for Duty Drawback?

You can claim if:

• You are an exporter of goods holding a valid IEC — manufacturer exporter, merchant exporter or a firm re-exporting imported goods.
• Your export goods appear in the All Industry Rate schedule with a drawback serial number, or you obtain a brand rate for them.
• The goods have physically left India and the Export General Manifest has been filed.
• Your bank account is registered and validated on ICEGATE, since drawback is paid by direct credit.
• For Section 74, the re-exported goods are identifiable as the imported goods and the re-export is within two years of duty payment.

You are not eligible and cannot apply if:

• The drawback amount is less than Rs 50 on the consignment, which Section 76 of the Customs Act bars outright.
• The drawback would exceed one-third of the market price of the exported goods.
• The goods were not imported on payment of duty and no duty incidence exists to refund, for a Section 74 claim.
• The imported goods have been used in India for more than 18 months before re-export.
• Export proceeds are not realised within the period allowed under FEMA, in which case drawback already paid is recovered with interest under Rule 18.
• You are claiming both a brand rate and an overlapping remission on the same duty incidence, which amounts to double benefit.

How to claim Duty Drawback

1. Register your firm and your IEC on ICEGATE, and validate the bank account that should receive the drawback credit through the PFMS integration.
2. Identify the correct drawback serial number for your product in the CBIC All Industry Rate schedule, and note the rate and the value cap per unit.
3. File the shipping bill on ICEGATE with the drawback declaration and serial number. Under the Drawback Rules, 2017, the shipping bill itself is the claim: there is no separate application form for All Industry Rate drawback.
4. Present the goods for customs examination and Let Export Order, and ensure the Export General Manifest is filed by the carrier.
5. Wait for the system to process the claim. Once the EGM is matched, the drawback is credited directly to the registered bank account.
6. If the notified rate is inadequate, file a brand rate application with your jurisdictional Customs Commissionerate within three months.
7. If any element was missed in the original claim, file a supplementary claim within three months of the relevant date.

How do you get a brand rate of drawback?

1. Establish that either no All Industry Rate exists for your product (Rule 6), or the notified rate refunds less than 80% of the duties actually paid on your inputs (Rule 7).
2. Prepare the DBK-I, DBK-II and DBK-III statements showing consumption of imported and indigenous inputs, wastage and duty paid, supported by bills of entry and a Chartered Accountant's certification.
3. File the application with the Principal Commissioner or Commissioner of Customs having jurisdiction, within three months of the relevant date.
4. Seek an extension if you miss the window, a further three months can be granted by the Assistant or Deputy Commissioner on payment of a fee of 1% of FOB value or Rs 1,000, whichever is less, and a further six months by the Principal Commissioner or Commissioner on payment of 2% of FOB value or Rs 2,000, whichever is less.
5. Respond to any verification query from the Commissionerate, after which the brand rate letter is issued and applied to your shipping bills.

How much drawback is paid under Section 74?

Section 74 pays 98% of the customs duty paid at import, provided the goods are re-exported without being used in India and within two years. Where the goods have been used after import, the refund is scaled down by a depreciation schedule linked to the length of use, and it falls to nil once the goods have been used for more than 18 months. Machinery sent abroad for repair, unsold exhibition goods and rejected consignments are the typical Section 74 cases.

For Section 75, the All Industry Rate is expressed as a percentage of FOB value with a cap in rupees per unit, so the lower of the two governs. This is why two exporters shipping the same tariff line at very different unit prices can receive different effective percentages.

How do you check your drawback status?

1. Log in to icegate.gov.in with your IEC-linked credentials.
2. Open the Drawback Enquiry service and enter the shipping bill number, location code and date.
3. Check the EGM status first, an unfiled or mismatched Export General Manifest is the most common reason a claim sits pending.
4. Verify the bank account status in your ICEGATE profile; an account not validated with PFMS stops the credit even when the claim is sanctioned.
5. For claims stuck beyond the normal cycle, raise a ticket with the ICEGATE helpdesk or the drawback section of the port of export.

Why do drawback claims get rejected or held up?

• EGM not filed or EGM error by the shipping line or airline, so the export is not confirmed in the system.
• Bank account not validated on ICEGATE or a mismatch with PFMS records.
• Wrong drawback serial number entered on the shipping bill, or the value cap applied incorrectly.
• Claim below Rs 50, which is inadmissible under Section 76.
• Brand rate application filed late, beyond three months and without an extension.
• Non-realisation of export proceeds, which triggers recovery under Rule 18 even after payment.
• Section 74 identity failure, customs cannot establish that the goods being re-exported are the same goods that were imported.

Recent changes exporters should know

• Courier exports were brought within drawback from 12 September 2024, and postal exports from 15 January 2026, opening the scheme to small e-commerce consignments.
• CBIC confirmed in April 2026 that goods bought from an SEZ unit can qualify for Section 74 drawback where customs duty was paid on clearance into the Domestic Tariff Area and the goods were later re-exported.
• The AIR schedule for gold jewellery and silver jewellery or articles was revised by Notification No. 41/2026-Customs (N.T.) dated 24 April 2026, reflecting bullion price movement.

Where to raise a drawback grievance

• ICEGATE 24x7 helpdesk: 1800-3010-1000, for filing, EGM and credit issues.
• The drawback section at your port of export, for claim-specific queries and brand rate follow-up.
• The jurisdictional Principal Commissioner or Commissioner of Customs, for brand rate fixation and condonation of delay.
• CBIC's public grievance route on cbic.gov.in, where a port-level escalation has not worked.

Filing a drawback claim costs nothing beyond the statutory fee for a delayed brand rate application. No agent can accelerate a sanctioned credit, since payment is system-driven once the EGM is matched and the bank account is validated.

How to apply

Duty Drawback is not applied for through a standalone application form; the claim rides on your shipping bill. What actually takes effort is getting your ICEGATE account, AD Code and bank details set up correctly before you file, since any gap there is what stalls the credit later. Here is the practical sequence, separated by where each step happens.

Step 1: Get your IEC and register on ICEGATE (online, one-time). Obtain your Importer-Exporter Code from DGFT if you do not already have one. Then create your login on icegate.gov.in using the IEC, and complete the ICEGATE registration form, which asks for your digital signature certificate (Class 3 DSC) for a company or LLP, or Aadhaar-based e-sign for a proprietorship.

Step 2: Register your AD Code with customs at each port (partly offline). An Authorised Dealer Code from your bank must be registered against every customs location (port, airport or ICD) you intend to export from. Your bank issues the AD Code letter on its letterhead; you then upload it on ICEGATE or submit it to the customs house at that location. Without a port-wise AD Code registration, the shipping bill cannot generate, so this has to be done before your first export, not at the time of filing.

Step 3: Validate your bank account through the PFMS link on ICEGATE (online). Add your bank account under the ICEGATE profile and let it validate against the Public Financial Management System. This is the account the drawback amount is credited to, so a mismatch in account name or IFSC here is a common reason payments never land even after a claim is sanctioned.

Step 4: Decide which drawback route applies to your product (research step, no filing). Check the current CBIC All Industry Rate schedule for a drawback serial number matching your export item. If your product has no listed serial number, or the notified rate clearly falls short of the duty actually paid on your inputs, you will need to pursue a brand rate afterward rather than rely on the AIR at filing time.

Step 5: File the shipping bill with the drawback declaration (online, per shipment). This is usually done through a customs broker or CHA using ICEGATE's shipping bill filing module, quoting the applicable drawback serial number, the FOB value, and a declaration that no other duty remission is being claimed on the same duty incidence. Self-filing exporters can do this directly if they hold the necessary ICEGATE filing access.

Step 6: Present goods for examination and obtain the Let Export Order (offline, at the port). Customs officers examine the consignment as required and issue the Let Export Order, after which the carrier is expected to file the Export General Manifest confirming the goods have left India.

Step 7: For a brand rate, file a separate written application (offline, with the Commissionerate). If Step 4 pointed you toward a brand rate, submit the DBK-I, DBK-II and DBK-III statements along with your CA-certified duty and consumption data to the jurisdictional Principal Commissioner or Commissioner of Customs, within three months of the relevant date.

No fee is charged for a standard All Industry Rate claim filed through the shipping bill. The only fee in this process is the condonation fee payable if a brand rate application is filed after the three-month window has lapsed.