Calculation Of New Duty Drawback Rates: FBR Yet To Revise Exchange Rate Of Dollar Against Rupee

Friday, September 19, 2008 at 9:41 am

The Federal Board of Revenue (FBR) has yet not revised the exchange rate of dollar against the Pak rupee for calculation of new duty drawback rates on the import of raw materials/inputs used in the manufacture of export goods under standard duty drawback notifications.

Experts told Business Recorder on Thursday that the Ministry of Commerce had asked the FBR to revise the duty drawback rates in view of the prevailing exchange rate of dollar against the rupee and tariff reductions made in budget (2008-2009). So far, the annual revision of duty drawback rates has not been done incorporating the new exchange rates.

The existing standard duty drawback notifications are based on the exchange rate of Rs 58-59, which was taken at the time of revision of rates in budget 2007-2008. The duty drawback rates were being revised on annual basis taking into account the new exchange rates.

For the calculation of duty drawback rates, important factors like exchange rate; revised customs tariff; Cost and Freight (C&F) value ie import value of inputs goods and Freight on Board (FOB) value of exported goods have to be taken into account.

The impact of exchange rate in calculation of revised duty drawback rates has not been worked out despite announcement of federal budget in June 2008. Experts said that the payment of duty drawback has been done on the basis of FOB value of the export goods or weight calculated in kilograms, depending on the type of product specified in the standard duty drawback notifications.

The exchange rate of dollar against the rupee has not very much impact for payment of duty drawback on the basis of FOB value. Contrary to this, exporters have to suffer losses for claiming rebate and duty drawback on the basis of export goods quantity calculated in kilograms. The working of duty drawback in kgs on the old exchange rate has negative implications for the export sectors.

In view of current devaluation of Pak rupee against the dollar during the last one year, the impact of revised exchange rate has to be taken for finalisation of new duty drawback rates. They added that there is an immediate need for annual revision of duty drawback rates, as the first quarter (July-September) of current fiscal is going to be ended in two weeks.

However, it is worth mentioning that the Central Board of Excise and Customs India had issued a notification under section 14 of the Indian Customs Act 1962 with effect from September 1 2008. The notification has been issued to implement new exchange rates of foreign currencies for imports and exports in India.

Calculation Of New Duty Drawback Rates: FBR Yet To Revise Exchange Rate Of Dollar Against Rupee

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