Amount of drawback where imported goods are used before re-exportation [Section 74(2)] :

Under sub-section (2) of section 74, where the imported goods are used after importation, the amount of drawback will be at the reduced rates as fixed by the Central Government having regard to the duration of use, depreciation in value and other relevant circumstances prescribed by a Notification.

In this regard, Notification No.19/65 Cus dated 6-2-1965 as amended provides as follows:

1. List of goods which are not entitled to drawback at all under this notification: As per this notification, no draw back of import duty will be allowed in respect of the following goods, if they have been used after their importation in India:

(i) Wearing Apparel;

(ii) Tea Chests;

(iii) Exposed cinematograph films passed by Board of Film Censors in India.

(iv) Unexposed photographic films, paper and plates, and X-ray films.

It implies that if these goods are not used after their importation into India and subsequently re-exported in the condition they were imported, then they would be entitled to 98% drawback.

2. Reduced drawback rates having regard to duration of use: Following percentages have been fixed as the rates at which drawback of import duty shall be allowed in respect of goods which were used after their importation and which have been out of Customs control.

S. No.	Length of period between the date of clearance for home consumption and the date when the goods are placed under Customs control for export	Percentage of import duty to be paid as Drawback
1	Not more than three months	95%
2	More than three months but not more than six months	85%
3	More than six months but not more than nine months	75%
4	More than nine months but not more than twelve months	70%
5	More than twelve months but not more than fifteen months	65%
6	More than fifteen months but not more than eighteen months	60%
7	More than eighteen months	Nil

Even if imported goods are merely tested though not used, it will be treated as used after importation [Seljegat Printers in Re 2002 (143) ELT 719 (GOI)] .

3. Special rate of drawback in respect of motor vehicles: Having regard to the international practice, a different percentage of import duty to be paid as drawback has been prescribed in the case of motor vehicles and goods imported by the person for his personal and private use.

(i) If the car or specified goods are re-exported immediately: 98% of the duty paid is refundable.

(ii) If the car or specified goods are re-exported after being used: Percentage of reduction of the drawback is related to use of the motor vehicle per quarter as under: –

S.No.	Year	Drawback of duty shall be calculated by reducing the import duty by
1	1st	4% per quarter or part thereof
2	2nd	3% per quarter or part thereof
3	3rd	2 ½ % per quarter or part thereof
4	4th	2% per quarter or part thereof

It has been specifically provided that where such cars are exported after the expiry of the period of two years, the drawback would be allowed only if the Central Board of Excise and Customs, on sufficient cause being shown, extends the period for expiry beyond two years. It is further provided that no drawback shall be allowed if such motor car or goods have been used for more than four years.