Deemed Export Benefits – Guide to TED Refund & Deemed Export Drawback

Cost Savings for Local Manufacturers

Both of these incentives enable domestic producers/exporters to compete more effectively against international competitors in global tenders or government sponsored projects, thereby increasing their pricing flexibility and decreasing their costs.

Cash Flow Improvement

Exporters can maintain good cash flow by recovering the duties and taxes paid during production, thus improving the operational efficiency and ability to expand their business.

In short, deemed export benefits act as a financial cushion, helping Indian suppliers remain competitive both domestically and internationally.

Deemed Export Refund Types

There are two main types of financial incentives that are available to companies engaged in deemed exports:

TED Refund

• Repayment of the excise duty paid by suppliers/exporters on the goods supplied under deemed export transactions.
• Applicable to manufacturers/suppliers who incurred the expense of the said duty.
• Claims filed through the DGFT jurisdiction or Development Commissioner’s office.

Deemed Export Drawback

• Repayment of customs/excise duties paid on raw materials/products utilized to manufacture the goods sold to customers.
• Normally claimed by the Customs Department under the Drawback Rules.

Step-by-Step Process to Claim TED Refund/Deemed Export Drawback

The refund application process includes document preparation, document review, and submission via various channels. Below is a simple, step-by-step guide to the application process:

1. Eligibility Verification

Verify that your supply meets the criteria for a deemed export in the DGFT’s FTP (Para 7.02, etc.).

2. Required Documentation Preparation

• Prepare the required documents for the refund application:
• Invoice(s)
• Delivery Challan(s)
• Buyer Contract(s)
• Proof of payment of excise duty

3. Preparation of the Refund Application

• Use the prescribed format (ARE-1 form) for excisable goods.
• State the list of supplies, payment evidence, and tax challans.

4. Submission of the Application

Submit the refund application to the Regional Authority of DGFT or the Jurisdictional Excise/Customs Department, based on the nature of the claim.

5. Tracking for Approval

Check for the acknowledgement letter and respond to any questions raised by the authority and confirm that the compliance checks are completed successfully.

6. Credit/Refund Receipt

After successful approval of the claim, the refund/duty drawback amount is credited to the applicant’s bank account.

Documentation Needed To File A Deemed Export Refund

A prepared application facilitates faster approval. Below is the typical checklist of documents needed for the application:

• Tax Paid Invoices (TED paid)
• Delivery Challan and proof of goods supplied
• Copy of IEC Certificate
• GST Registration Certificate
• Letter of Undertaking (LUT) or Supply Contract under the Deemed Export Category
• DGFT/Customs Approvals (as necessary)
• Certificate from the Bank confirming receipt of payment

Afleo advises maintaining digitized versions of all documents for quick access and submission.

Important Considerations for Compliance & Timelines

For applicants seeking Deemed Export Benefits, timely compliance is critical. Below are some important considerations:

• Deadline: Refund applications must be submitted no later than 12 months after the date of supply or as specified by DGFT.
• Record Keeping: Maintain documentation of each transaction for possible audits and reviews by the relevant authorities.
• Accurate Data Entry: Errors in invoice numbers, IEC information, or the appropriate category of the customer/project may result in rejection of the claim or delayed processing.
• Regulatory Compliance: Both IEC and GST registrations must be current and up-to-date prior to filing a claim.

Afleo advises internal audits prior to submitting a claim to minimize errors.