Important Keywords: Instruction No. 01/2025-Customs, AIR duty drawback eligibility, CBIC drawback clarification, non-duty paid input export refund, drawback circular 2025, Finodha customs experts,
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Table of Contents
Instruction No. 01/2025-Customs
F. No. 609/13/2004-DBK(PI-I)
सरकार / Government of India
वित्त मंत्रालय/ Ministry of Finance,
राजस्व विभाग / Department of Revenue,
केंद्रीय अप्रत्यक्ष कर एवं सीमाशुल्क बोर्ड / Central Board of Indirect Taxes & Customs,
प्रतिअदायगी प्रभाग /Drawback Division
******
चौथी मंजिल, जीवन दीप बिल्डिंग, संसद मार्ग, नई दिल्ली 1100
दिनांक: 28 फ़रवरी, 2025
Instruction No. 01/2025 -Customs dt. 28.02.2025 regarding Admissibility of AIR of duty drawback on export goods manufactured from inputs, some of which are non-duty paid.
To
All Principal Chief Commissioners/Chief Commissioners of Customs/Customs (Preventive)/Customs & Central Taxes.
All Principal Commissioners/Commissioners of Customs/Customs(Preventive).
All Directors General/Director Generals under CBIC.
वि–Admissibility of AIR of duty drawback on export goods manufactured from Inputs, some of which are non-duty paid – reg.
Madam Sir,
It has been brought to the notice of the board that All Industry Rate of duty drawback is being denied or reduced on export goods using inputssome of which are not duty paid or are paid at concessional rate of duty.
- In this regard, attention is invited to Board Circular No. 19/2005- Customs dated 21.03.2005 issued vide F. No. 609/13/2004-Dbk on the above subject matter wherein it was clarified that the concept of AIR of duty drawback is that the rates are determined taking into account the average duties paid on the inputs and in determining the rates, the average (weighted average) Cori Sumption of imported / indigenous inputs of a representative cross- section of exporters is taken into account and it is not open to the field formations to probe whether certain exempted inputs have been used in the manufacture of the export goods.
- Suitable standing order may be issued to instruct the staff to follow the clarification issued under Board Circular No. 19/2005- Customs dated 21.03.2005 scrupulously.
- The difficulties, if any, may be brought to the notice of the Board.
Hindi version follows.
Encl: as above.
Yours faithfully,
Mahendra Singh Gurjar)
OSD (Drawback Division
CBIC, New Delhi
📘 FAQs on Instruction No. 01/2025-Customs (Duty Drawback on Exports Using Non-Duty Paid Inputs)
Q1: What is Instruction No. 01/2025-Customs about?
Answer:
Instruction No. 01/2025-Customs, issued on 28 February 2025, provides clarity on the admissibility of All Industry Rate (AIR) of duty drawback when export goods are manufactured using a mix of duty-paid and non-duty paid inputs. It outlines conditions under which exporters can still claim AIR benefits.
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Q2: What does AIR of duty drawback mean in simple terms?
Answer:
AIR (All Industry Rate) is a standardized refund rate offered by the government to exporters to compensate for duties suffered on inputs used in manufacturing export goods. It simplifies the process by not requiring exporters to maintain detailed input-wise duty records.
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Q3: Can an exporter claim AIR drawback if some inputs were not duty-paid?
Answer:
Yes, but with caveats. Instruction No. 01/2025-Customs clarifies that if only some inputs are non-duty paid and others are fully duty-paid, exporters may still be eligible for AIR drawback. However, a declaration of the nature and source of inputs may be required.
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Q4: What types of non-duty paid inputs are referred to here?
Answer:
These could include:
✅ Exempted inputs under customs notifications
✅ Duty-free imports under Advance Authorization or EOU schemes
✅ Domestic inputs cleared without tax due to exemptions
⚠ Note: Inputs under specific schemes may need additional disclosure to ensure eligibility.
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Q5: Is there any restriction on claiming AIR when duty-free imports are used?
Answer:
If the major proportion of inputs is duty-free (e.g., under Advance Authorization), AIR of drawback may not be permitted. Exporters may need to claim drawback under Brand Rate or Special Brand Rate mechanisms instead.
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Q6: What must an exporter submit to avail AIR in such mixed input cases?
Answer:
📋 Exporters must typically submit:
A declaration stating the proportion of duty-paid and non-duty paid inputs
Supporting documentation such as invoices, shipping bills
Confirmation that drawback claimed does not exceed the customs portion of taxes paid
Need guidance preparing customs documents? Finodha can help:
https://finodha.in/gst-return-filing/
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Q7: Can I claim drawback and IGST refund together?
Answer:
As per general policy, exporters must choose between:
✅ IGST Refund on exports (with ITC claim)
OR
✅ Duty drawback under AIR or Brand Rate
In cases involving non-duty paid inputs, this becomes stricter, and dual benefits are restricted.
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Q8: What happens if AIR is wrongly claimed for exempted input goods?
Answer:
⛔ Misclaiming AIR when the export goods are wholly made from non-duty paid or exempted inputs may result in:
Rejection of drawback
Recovery of wrongly claimed amount
Penalties or interest from Customs
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Q9: How can Finodha help with drawback claims or compliance?
Answer:
Finodha provides end-to-end support including:
🔹 Customs documentation review
🔹 DGFT & ICEGATE filing assistance
🔹 ITC reconciliation for exporters
🔹 Audit defense for drawback claims
🔹 Business setup with export incentive planning → https://finodha.in/setup-business/
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Q10: Where can I track such updates regularly?
Answer:
✔ Bookmark Finodha’s GST & Customs Hub: https://finodha.in/gst-compliance/
✔ Subscribe to CBIC circulars at www.cbic.gov.in
✔ Follow Finodha on LinkedIn and Twitter for real-time notifications
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✅ Conclusion
Instruction No. 01/2025-Customs ensures fair treatment of exporters using mixed inputs—some duty-paid, some exempt. Exporters must declare clearly and follow process discipline to continue availing AIR drawbacks legitimately.
📢 For customs compliance, refunds, and export-related advisory—consult with Finodha’s expert team.
Download PDF: Instruction No. 01/2025-Customs
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