Indirect Tax Laws and Practice · Duty Drawback

Procedure, Claim and Conditions for Drawback on Re-export

Updated 11 October 2026 · Fact-checked

Drawback on re-export under Section 74 returns 98% of import duty paid on goods that are easily identified and entered for export within two years of payment of duty. The proper officer must permit export, and identity must satisfy the Assistant or Deputy Commissioner. Used goods get a notified lower rate.

Understand Procedure, Claim and Conditions for Drawback

Drawback is a refund of customs duty. Under Section 74 it is given when you import goods, pay duty, and then send the same goods out of India. The law does not want you to bear import duty on goods that never stay in the country.

The law lets you claim only if certain things happen. The goods must be capable of being easily identified. They must have been imported with duty paid. They must then be entered for export, and the proper officer must make an order permitting clearance and loading under Section 51.

The Act covers three routes of export. First, ordinary export through a shipping bill or entry, with the officer's order under Section 51. Second, export as baggage, where the owner declares the contents to the proper officer under Section 77. That declaration is deemed to be an entry for export, and the officer must then permit clearance. Third, export by post under clause (a) of Section 84, where the proper officer again orders clearance. Section 84 also covers courier.

Once these triggers are met, 98% of the duty paid is repaid as drawback, but only if two conditions are met. (a) The goods are identified to the satisfaction of the Assistant or Deputy Commissioner of Customs as the goods that were imported. (b) The goods are entered for export within two years from the date of payment of duty. The Board may extend the two years on sufficient cause shown.

If the goods were used after import, the 98% rule does not apply. Under Section 74(2), the Central Government fixes the rate by notification, having regard to the duration of use, depreciation in value and other relevant circumstances. The Central Government may also make rules on how identity of bulk-stored consignments is established, which goods are deemed not easily identifiable, and the manner and time for filing the claim.

Key rules to remember

Drawback on unused re-exported goods: Drawback = 98% × import duty paid; Section 74(1). Applies only if the goods are identified and entered for export within two years of payment of duty.
Time limit: Entry for export ≤ 2 years from date of payment of duty; Board may extend on sufficient cause shown (proviso to Section 74(1)).
Used goods: Drawback = rate notified by Central Government under Section 74(2); Rate depends on duration of use, depreciation in value and other relevant circumstances. No fixed percentage in the Act.
Deemed date of entry for export: Date used for rate of duty under Section 16; Section 74(4)(a).
Provisional assessment: Date of payment of provisional duty = date of payment of duty; Section 74(4)(b), for goods assessed provisionally under Section 18. The two-year period runs from this date.
Confiscation link: Export under drawback claim without import duty paid = liable to confiscation; Section 113(j).

How to solve Procedure, Claim and Conditions for Drawback questions

Use this order for any question on drawback on re-export. It makes you test each legal condition before you compute anything.

1Check that the goods were imported into India and that import duty was actually paid. No duty paid means no drawback under Section 74.
2Check that the goods are capable of being easily identified. Bulk goods or goods deemed not easily identifiable under the rules need special identity proof.
3Identify the route: ordinary export, baggage (declaration under Section 77) or post (Section 84(a)). Confirm the officer's order permitting clearance.
4Count the period from the date of payment of duty to the date of entry for export. If it is within two years, you pass. If beyond, ask whether the Board has extended it.
5Decide whether the goods were used. If unused, take 98% of the duty paid. If used, the rate is the one notified under Section 74(2). Use the rate given in the question.
6Compute the amount and state whether identity was satisfied to the Assistant or Deputy Commissioner.
7Write a clear conclusion: eligible or not, amount, and the section relied on.

Quickest way: Four-gate check for Section 74

When to use it: Use it for case-based MCQs and short numerical questions where you must decide quickly whether drawback is allowed.

Gate 1: Was duty paid on import? If not, stop.
Gate 2: Can the goods be identified and have they been identified to the officer's satisfaction? If not, stop.
Gate 3: Was export entered within two years of duty payment (or extended by the Board)? If not, stop.
Gate 4: Is the export permitted by the officer (shipping bill, baggage declaration or post)? If yes, apply 98% for unused goods or the notified rate for used goods.

Common mistakes in Procedure, Claim and Conditions for Drawback

Giving 100% of duty as drawback on unused re-exported goods.
Students think drawback means a full refund.
Fix: Remember that Section 74(1) repays ninety-eight per cent of the duty.
Counting the two years from the date of import or arrival.
Import date and duty payment date feel the same.
Fix: The Act counts from the date of payment of duty. For provisional assessment, it is the date of payment of the provisional duty.
Applying the 98% rate to used goods.
Students overlook sub-section (2).
Fix: For used goods, use the rate fixed by notification, which considers duration of use and depreciation.
Treating baggage or post exports as outside Section 74.
Students think only shipping-bill exports qualify.
Fix: Section 74(1)(ii) and (iii) cover baggage (with a Section 77 declaration) and export by post under Section 84(a).
Ignoring the identification condition.
Students focus only on duty and time limit.
Fix: Always state that the goods must be identified to the satisfaction of the Assistant or Deputy Commissioner as the goods imported.
Confusing Section 74 with Section 75.
Both are called drawback.
Fix: Section 74 is re-export of the same duty-paid goods. Section 75 is drawback on imported materials used in manufacture of exported goods, based on notification and rules.

Worked examples

Example 1

Sharma Traders of Mumbai imported a machine on 10 March 2025 and paid customs duty of ₹5,00,000 on that day. The machine was never used. It is easily identifiable by serial number. The company entered it for export on 20 January 2027 and the proper officer permitted clearance and loading. Is drawback allowed? Compute the amount.

Show the solution

Duty was paid on import and the machine is easily identifiable by its serial number.
The duty was paid on 10 March 2025. Two years end on 10 March 2027.
Entry for export on 20 January 2027 is within two years, so condition (b) is met.
Identity must be established to the satisfaction of the Assistant or Deputy Commissioner. The serial number supports this.
The goods are unused, so 98% of duty is repaid: 98% × ₹5,00,000 = ₹4,90,000.

Answer: Drawback is allowed: ₹4,90,000, subject to the officer being satisfied on identity.

Example 2

Mr Iyer imported goods on which he paid duty of ₹80,000 on 5 June 2024. He failed to export them and entered them for export as baggage on 15 August 2026, by declaring the contents to the proper officer under Section 77. The officer permitted clearance. The goods are unused and identifiable. No extension was obtained. Can he claim drawback?

Show the solution

Baggage export is covered by Section 74(1)(ii). The declaration under Section 77 is deemed an entry for export.
Duty was paid on 5 June 2024. Two years end on 5 June 2026.
Entry for export (the declaration) was on 15 August 2026, which is after the two-year period.
The Board may extend the period on sufficient cause shown, but no extension was obtained.
Condition (b) is not satisfied, so the 98% drawback is not payable.

Answer: Drawback is not allowed, because entry for export was after two years from the date of payment of duty and no Board extension exists.

Exam tips

In case MCQs, check dates first. The two-year test from payment of duty is the most common trap.
Write section references for each route: Section 74(1)(i) ordinary export, (ii) baggage with Section 77 declaration, (iii) post under Section 84(a).
For used goods, say the rate is notified under Section 74(2). Do not invent a percentage unless the question gives one.
Mention identification to the satisfaction of the Assistant or Deputy Commissioner in every descriptive answer.
Remember Section 113(j): goods entered for export under a drawback claim without import duty paid are liable to confiscation.

Practice questions from Duty Drawback

Procedure, Claim and Conditions for Drawback: frequently asked questions

How much drawback is allowed on re-export of duty-paid goods?

For goods that qualify under Section 74(1), ninety-eight per cent of the duty paid is repaid. If the goods were used after importation, the Central Government fixes the rate by notification under Section 74(2).

What is the time limit for entering goods for export to claim drawback?

The goods must be entered for export within two years from the date of payment of duty on importation. The Board may extend this period on sufficient cause being shown.

Can drawback be claimed on goods exported by post or baggage?

Yes. For baggage, the owner makes a declaration under Section 77, which is deemed an entry for export. For post, goods are entered under clause (a) of Section 84. In both cases the proper officer must permit clearance.

Who decides whether goods are the same goods that were imported?

The Assistant Commissioner or Deputy Commissioner of Customs must be satisfied that the goods are those which were imported. Without that identification, drawback under Section 74 is not available.