The Pharmaceutical Exports Promotion Council will soon submit a comprehensive report with information from the pharmaceutical industry, to the Ministry of Finance to enable it to calculate and revise the duty drawback rates for eligible export items incorporating duty changes in the new Union Budget.
The Central Board of Excise and Customs, under the finance ministry, has already initiated exercise to re-work the rates of duty drawback as impacted by the changes made in the excise and customs duties or service tax in the Budget 2007-08, according to an official source. Pharmexcil is planning to submit its report on the issue within 10 days, it is learnt.
Pharmexcil has sought relevant information from its members, especially from the big pharma companies for submitting inputs to the Ministry of Finance. In a letter issued in March, the Finance Ministry has requested Pharmexcil to provide them information relevant to pharma sector for review of the rates for the year 2007-08.
"The request to submit information prior to calculation of the rates is to avoid serious complaints from the industry in a later stage. The changes may have a major impact on big pharma companies having substantial exports and we would submit information and views from these companies to the ministry," Dr P V Appaji told Pharmabiz.
Under the duty drawback scheme administered by the Central Board of Excise and Customs, Ministry of Finance, the customs and central excise duties paid on inputs and service tax paid on input services used in the manufacture of export goods are refunded to the exporters in the for of draw back. The drawback rates are worked out and notified every year after taking into account the budgetary changes in the duty structure.
The duty drawback rates for pharma sector will be subjected to slight changes in the current fiscal, according to the adjustments in the service tax and the reduction of import duties from 5 per cent to 2.5 per cent. The changes will be evident in some sections of the pharma industry, considering the nature of the product, said sources.
The companies have to submit details of various inputs, which are used in the manufacture of exported products, on a Performa in three parts. The consumption of input materials and incidence of tax, which is shown against the export of products, should be relatable to the actual business activity of exports. A part of the Performa seeks information on the actual cost incurred for making the export and the sales realisation on such exports and the third part relates to the incidence of service tax on exports, according to official version.