OFFICE OF THE COMMISSIONER OF CUSTOMS, NS-II; SPECIAL INVESTIGATION AND INTELLIGENCE BRANCH (EXPORT)
JAWAHARLAL NEHRU CUSTOM HOUSE, NHAVA SHEVA,
NAVI MUMBAI, DIST. RAIGAD, MAHARASHTRA-400 707.
Tel: 27244700 Extn. 983; Telefax: 27241825; Fax: 27241828

F.No. SG/Misc.94/2014 SIIB (X), JNCH                                                     Date:21.09.2016

SIIB(X) ALERT CIRCULAR No. 04/2016

Sub: In-eligible Drawback claims and mis-declaration of goods entered for export – reg.

During the course of investigation, instances of misuse of export incentives by  fraudulent exporters have been noticed. The following examples/ instances should be kept in mind while examination/ assessment conducted by export officers,  to prevent any fraud :-

1. Man-made Fabrics: Manmade fabrics are of two varieties, i.e., synthetic fabrics and artificial fabrics.
(a) Synthetic Fabrics:The basic material for these fibre is generally derived from coal/ oil distillation process or natural gas. The substances produced by polymerization are either melted or dissolved in suitable solvent and extruded by spinners. The resultant filaments obtained through drawing process from the molecules are called synthetic fibers. Examples of synthetic fibres obtained through chemical synthetic process are polyester, nylon, polyurethane, acrylic, modacrylic etc.
(b) Artificial Fabrics: These are made from organic polymers, extracted from natural raw material by processing (which may include chemical modification). Some examples of artificial fibers are viscose, rayon, cuprammodium rayon, cellulose acetate, protein fibers of ground nut, soya beans, maize etc.

A tendency to mis-classify fabrics as “other woven fabrics of synthetic staple fibres consisting of more than 85% of synthetic staple fibers” under DBK Head 551502 (dyed), has been observed. In case of mixed manmade fabrics i.e. where predominant percentage of fabric is polyester, the tendency is to classify the fabric under DBK Head 551502, which is for synthetic staple fiber, containing 85% or more by weight with a drawback rate of 8.40% with the cap of Rs. 56/- per Kg. However, in most of the cases where the synthetic staple fiber is less than 85% and the balance is artificial fiber like viscose etc., it should be classified under DBK Head 551506 (dyed), with drawback rate of 7.80% with the cap of Rs.56/- per Kg.

2 . Items like hair pins, curling pins, curling grips and the like, are often wrongly classified as ‘Imitation Jewellery’, under DBK head 7117, claiming higher rate of drawback i.e. 4.60% or 7%, as the case may be. However, the same are correctly classifiable under DBK head 961599 @1.90%, without any cap restriction.

3 . Wash basins of stainless steel are mis-classified by exporters under DBK head 732399 (other items of steel) @ 9%, with a cap of Rs.18/- per kg. as kitchen utensils. However, there is a specific entry for sanitary ware (wash basins) of steel under DBK head 7324 @ 7% with a cap of Rs.25/- kg.

4 . Sarees with embroidery with dominating of stone work by weight are sought to be classified under DBK head 5810 01/5810 02/ 5810 03 @8%/ 8.4 / 7.8 % with a cap of Rs. 690, Rs.100/- and Rs.85/- per kg. respectively, whereas the same should be classified under 581099 (other) @ 5% with a cap of Rs.50/- per kg.

5 . It is often noticed that the exporters are declaring two piece night dresses under DBK head 610401, as ladies suits with very higher cap values, varying between Rs.170 to Rs.330, whereas these items are correctly classifiable under drawback head 6108, where the cap values are very much lower (varying from Rs.15/- to Rs.43/- depending on the materials used for the articles.

6 . Further, ladies dresses/ ensembles composed of the same fabric material are classifiable under DBK head 620403/ 620404, with very higher cap values, varying between Rs.44 to Rs.110, when the upper and lower pieces of a set are made of different materials, they should not be classified as ensembles and such ladies dresses i.e. kurta and salwar made of different fabrics, should be classified under DBK head 621105 (others) where the cap values are much lower varying from Rs.33/- to Rs.43/-per piece.

7 . Babies garments are correctly classified under DBK head 6111 with very modest cap values varying from Rs.33/- to Rs.40/-. However, the exporters try to misclassify these goods as boys/ girls dresses or suits etc. which have higher cap values.

8 . Pillows and quilts filled with polypropylene / polyfill are correctly classifiable under DBK head 940401 @ 9.3% with cap of Rs.105/- per Kg. However, pillows and quilts etc filled with cotton are misclassified by exporters under the same classification. These items should be correctly classified under DBK head 940499 (others) @ 5% with a cap of Rs.20/- per Kg.

9 . It is often noticed that the exporters of carpet are declaring the size of carpets in square feet and the same numerical figure is also shown as DBK quantity resulting in disbursement of high amount of DBK by 900%. This happens because of the fact that the eligible unit for drawback is sq. meter. Care should be taken in case of export of carpets, the drawback quantities should be entered in square meter to eliminate the possibility of higher drawback disbursement.

10 .In case of fabric, the UQC is often wrongly mentioned as ‘Meter’, whereas the correct UQC for fabric is ‘Sq. Meter’

11.1 . The officers who are entrusted with responsibility of examination/ assessment of shipping bill, should ensure that the first four digit of the RITC no. has been aligned with the first four digit of the drawback serial no.

11.2 . They should also ensure that the goods are classified properly before deciding upon applicable drawback serial no.

11.3 . They should also ensure that the UQC is correctly furnished, so that there is no chance of claim of undue drawback due to wrong UQC.

11.4 . During examination/ assessment, the goods are to be classified first into various headings accordingly to Section Notes and Chapter Notes of the Customs Tariff/ ITC (HS) and thereafter drawback serial is accordingly to be determined.

11.5 . The concerned AC/DC while releasing drawback shipping bill should ensure that the goods are correctly declared as per ITC(HS).

11.6 .The AC/DC in charge of examination of export goods in various CFS sheds should ensure that such consignments are correctly declared for drawback purposes under appropriate drawback serial no.

Please acknowledge the receipt of this circular. Problem, if any, should be brought to the notice of the undersigned or the DC, SIIB(X), immediately.

This issues with the approval of Commissioner of Customs, NS-II, JNCH.

  —-sd—-
                     (AKHILESH PANDEY)
                   Asstt. Commissioner of Customs
                   NS-I,III&V, JNCH.

Copy to:
1. The Chief Commissioner of Customs, Zone- II , JNCH
2.  All the Commissioner of Customs, JNCH
3. All Addl./Joint Commissioners of Customs, JNCH
4. Notice Board.
5. EDI for uploading on website.
6.  Office Copy.