Duty Drawback for Indian Exporters: AIR, Brand Rate and RoDTEP Compared

Short answer. Duty Drawback refunds the customs duty you paid on imported inputs that went into goods you then exported. There are two routes. All Industry Rate, AIR, is a pre-notified standard percentage CBIC publishes for each tariff item, no proof of your actual duty paid required, claimed simply by ticking the DBK option on your shipping bill. Brand Rate is an individually fixed rate for exporters whose actual duty incidence is higher than the AIR, or whose product has no AIR at all, granted only after you submit detailed consumption and duty payment records to your jurisdictional Customs Commissionerate. The current AIR schedule runs under Notification No. 77/2023-Customs (N.T.) dated 20 October 2023, amended most recently for gold and silver jewellery under Notification No. 41/2026-Customs (N.T.) dated 24 April 2026. Credit reaches your bank account through PFMS, typically seven to fifteen working days after the Let Export Order, and it depends on the same registered incentive bank account that governs your RoDTEP credit.

Two things routinely go wrong, and neither shows up as an obvious error on your screen. Exporters using inputs that are partly duty paid and partly not sometimes have their AIR wrongly denied or reduced, when the rule has always allowed the full AIR regardless. And exporters whose actual duty incidence comfortably exceeds the AIR keep claiming AIR anyway, for years, because nobody told them Brand Rate exists and pays more. Both of those cost real money and neither is fixed by reading the notification once.

What Duty Drawback actually is

Duty Drawback exists under Section 75 of the Customs Act, 1962 and Section 37 of the Central Excise Act, 1944, read with the Customs and Central Excise Duties Drawback Rules, 2017. The principle is straightforward: India does not want to export its own tax burden. If you imported a raw material, paid customs duty on it and then used that material to manufacture goods you exported, the duty embedded in your export price should come back to you. Otherwise your export is quietly less competitive than a foreign manufacturer’s who never paid that duty at all.

The mechanism is deliberately light on paperwork for the common case. You do not need to prove exactly how much duty you paid on every kilogram of input that went into a specific consignment. CBIC calculates an average duty incidence for each tariff item across the industry and publishes that as the All Industry Rate. You tick a box on your shipping bill, Customs pays out against the published rate and the system does the rest.

All Industry Rate versus Brand Rate

Most exporters never move past AIR because it is easy. That is exactly the problem for anyone whose actual duty incidence runs meaningfully above the published rate. The AIR is an industry average. If your specific process uses a higher proportion of duty paid imported input than the average exporter in your tariff line, AIR under-compensates you every single shipment, and it does so silently, because there is no rejection or error, just a smaller number than you were entitled to.

Rasp International’s working rule: if your imported input cost, as a share of your export FOB value, is running noticeably above what is typical for your tariff heading, it is worth running the Brand Rate math at least once. Even if you end up staying on AIR, you will know whether you are leaving money on the table.

How to read the AIR schedule and the suffix system

Opening the actual drawback schedule for the first time is confusing, mainly because of the letter suffixed to every tariff item. Here is what it means and why it still matters even after GST removed most of what it originally tracked.

Before GST, the schedule commonly carried two columns per tariff item, one rate for exporters who had availed CENVAT credit and a different, usually higher, rate for those who had not, distinguished by suffix A or B. Composite rates covering the Central Excise and Service Tax component were discontinued with effect from 1 October 2017 as GST subsumed most of what those rates were compensating for. In the current schedule under Notification No. 77/2023-Customs (N.T.), the standard suffix for a general AIR claim is B, covering the customs duty component alone in the great majority of cases. For example, a tariff item 610901 claim is declared on the shipping bill as 610901B.

There is one live exception worth knowing if you export apparel. Goods under Chapters 61 and 62, articles of apparel and clothing accessories, exported under the Special Advance Authorization Scheme per para 4.04A of the Foreign Trade Policy, carry an alternative AIR set out separately in the notification’s own table, referencing Notification No. 45/2016-Customs and Notification No. 27/2023-Customs. For these, the tariff item is suffixed with D instead of the usual B. If you are a garment exporter using Special Advance Authorization and your CHA declares the standard B suffix instead of D, you are very likely claiming the wrong rate.

The rate revision timeline, and what changed most recently

AIRs are not static. CBIC revises them periodically, most often through amendments to the principal notification rather than a wholesale replacement.

Two things stand out. First, gold and silver jewellery exporters have had their rates revised twice in three months, which tells you precious metal categories move fast enough that a rate checked even a few months ago may already be stale. If you export jewellery, verify the current AIR before every filing rather than working from memory of last quarter’s rate.

Second, and this is the one competing guides consistently miss: CBIC Instruction No. 01/2025-Customs exists because the Board was receiving complaints that field officers were denying or reducing AIR whenever an exporter’s inputs were partly non duty paid, for instance where some raw material was sourced domestically or under an exemption. The Instruction is explicit that this is wrong. AIR is calculated on average industry duty incidence and average input consumption, not on a shipment by shipment audit of exactly which rupee of duty was paid on which input. If a field officer has reduced or denied your AIR on this basis, you have a specific instruction number to cite back.

How to claim Duty Drawback, step by step

Step 1. Confirm your tariff item has a published AIR

Check your export product’s eight digit tariff item against the current schedule under Notification No. 77/2023-Customs (N.T.) and its amendments. Most manufactured goods with import content have one. If yours does not, you go straight to the Brand Rate route below rather than waiting for a rejection first.

Step 2. Tick DBK on the shipping bill

At the time of filing your shipping bill through ICEGATE, select the DBK scheme option and declare the correct tariff item with its suffix, B in almost every case, D for the apparel exception described above. This has to be done at filing. Like the RoDTEP declaration, it is not something you can add after the Let Export Order is issued.

Step 3. Let Export Order and automatic processing

Once your consignment clears and the LEO is granted, the AIR claim processes automatically through the Indian Customs EDI system against the declared tariff item and rate. No separate application is needed for AIR, which is the entire point of the mechanism.

Step 4. Credit lands through PFMS

The sanctioned amount is credited directly to the bank account registered against your IEC, the same incentive bank account and AD Code registration that governs your RoDTEP credit, validated through PFMS. In practice this typically takes seven to fifteen working days from the LEO date where the registration is clean. If it does not arrive in that window, the fault almost always sits in the same place RoDTEP credit fails silently, an incentive bank account that has not properly validated at PFMS for that customs location. See our AD Code and incentive bank account guide if credit has stalled.

Step 5. If AIR under-compensates, apply for Brand Rate

Where your product has no published AIR, or the AIR available comfortably under-recovers your actual duty incidence, apply to your jurisdictional Customs Commissionerate under Rule 6 or Rule 7 of the Drawback Rules, 2017. You will need to submit a detailed statement of the imported inputs consumed per unit of export product, proof of the customs duty actually paid on those inputs and typically a certificate from a chartered engineer or cost accountant establishing the consumption ratio. Processing generally takes two to three months depending on how complete the documentation is on first submission. Once fixed, the Brand Rate holds for one financial year or until your manufacturing process materially changes, and can be renewed.

Duty Drawback versus RoDTEP: they are not the same thing and you can claim both

This is the single most common point of confusion we see, so it is worth being precise. Duty Drawback and RoDTEP compensate for entirely different things, they are not alternatives to each other and a shipment can carry both.

The confusion usually comes from the fact that both are declared at shipping bill filing, both depend on the same underlying IEC and bank account registration and both fail in the same silent way when that registration is not clean. But conceptually keep them separate: Drawback answers the question “what customs duty did I pay to import the inputs in this product,” and RoDTEP answers a different question, “what other embedded taxes did this export carry that nothing else refunds.” For the full RoDTEP mechanism see our RoDTEP scheme guide and the current 2026 rates.

A worked illustration: when does Brand Rate actually pay more

The numbers below are illustrative only, built to show the mechanics, not a real client’s figures and not a promise of what any specific exporter will recover. Use the same structure with your own numbers to decide whether the exercise is worth running.

Say your FOB value per shipment is Rs 10 lakh, and the published AIR for your tariff item is 2 percent, giving an AIR claim of Rs 20,000 per shipment. Now suppose your actual imported input cost runs to Rs 4 lakh of that Rs 10 lakh FOB value, well above what is typical for your tariff heading, and the customs duty actually paid on those imports works out to Rs 48,000. Under AIR you are recovering Rs 20,000 against a real duty cost of Rs 48,000, a gap of Rs 28,000 per shipment. Across fifty shipments a year that gap is Rs 14 lakh sitting unclaimed, not because anything was denied, but because AIR was never designed to match your specific, above average import intensity.

That gap is what Brand Rate exists to close. It is also exactly why we say do not assume AIR is fine simply because nothing has been rejected. AIR is never rejected for being too low. It just pays what it pays.

Documentation checklist for a Brand Rate application

Under Rule 6 or Rule 7 of the Drawback Rules, 2017, your jurisdictional Customs Commissionerate will expect a specific documentation set before fixing an individual rate. Incomplete filings are the main reason the two to three month timeline stretches longer.

The chartered engineer’s certificate is the step exporters most often underestimate. It is not a formality. Customs uses it to sanity check that the consumption ratio you are claiming is technically plausible for your process, and a certificate that reads as generic or copy pasted from another applicant’s file is a common reason for a query that adds weeks to the timeline.

How GST changed the drawback landscape, and why it still matters

Duty Drawback predates GST by decades, and the scheme’s shape today still carries the marks of that transition. Before July 2017, drawback compensated for a mix of customs duty, Central Excise duty and Service Tax embedded in an export, which is why the schedule used to carry the composite rate structure and the A and B suffix distinction tied to whether CENVAT credit had been availed.

GST replaced Central Excise and Service Tax with a single tax that is itself zero rated on exports, refunded through a completely different mechanism. That is why composite rates were formally discontinued with effect from 1 October 2017. What survived, and what Duty Drawback continues to do today, is narrower and cleaner: it refunds customs duty on imported inputs, plus a small residual category of Central Excise duty on specified petroleum products used to generate captive power for manufacturing or processing export goods, since those fall outside GST.

The practical upshot is that your GST position and your Drawback position are handled through entirely separate mechanisms even though both concern the same export. GST is zero rated at the point of export, and you either export under a Letter of Undertaking without paying IGST, or you pay IGST and claim it back as a refund. Neither route interacts with your customs Drawback claim. If you are trying to reconcile your total incentive recovery on a shipment, treat GST refund or LUT position, Duty Drawback and RoDTEP as three separate ledgers that happen to share the same shipping bill, not three parts of one number. For the GST side specifically, see our GST compliance for exporters guide.

A note for leather and handicraft exporters in the Agra and Kanpur belt

Finished leather goods and leather footwear are among the tariff headings where the gap between AIR and actual duty incidence is worth checking more often than most categories, because imported tanning chemicals, hardware and component inputs form a meaningfully variable share of the finished cost depending on the specific product line. A shoe with imported buckles, zips and a synthetic sole unit carries a very different import intensity than one built almost entirely from domestically tanned leather and local hardware, even though both might sit under the same or adjacent tariff heading with the same published AIR.

Metal handicraft exporters out of Moradabad face a related version of the same question, since brass, aluminium and other metal inputs are frequently imported and the finishing and plating processes vary widely in imported chemical and component content from one workshop to the next. In both cases, the AIR published for the tariff heading is an average across every exporter filing under that heading nationally, which by definition means some exporters in that heading are being under compensated and some are being over compensated relative to their own actual cost. There is no way to know which side of that average you sit on without doing the comparison once.

Four situations we see repeatedly

The exporter whose AIR was wrongly reduced over mixed inputs

An engineering goods exporter used a mix of imported and domestically sourced steel in the same finished product. A field officer reduced the AIR claim on the basis that not all inputs were duty paid. This is exactly the situation CBIC Instruction No. 01/2025-Customs addresses directly: AIR is an average industry rate, not a shipment specific audit, and using some non duty paid or concessionally duty paid inputs alongside duty paid ones does not itself justify reducing or denying the AIR. Citing the instruction number resolved the matter.

The garment exporter declaring the wrong suffix

An apparel exporter operating under Special Advance Authorization was filing shipping bills with the standard B suffix rather than the D suffix that applies specifically to Chapter 61 and 62 goods under that scheme. The claim still processed, because B is a valid suffix in general, it simply was not the correct alternative rate for that specific authorisation route. The fix was in the CHA’s filing template, not in any government process.

The leather exporter who never checked Brand Rate

A finished leather goods exporter had claimed AIR for years without ever comparing it against actual duty incidence. A one time exercise mapping the actual imported input cost against the published AIR showed the AIR was recovering a meaningfully smaller share of actual duty paid than Brand Rate would. The gap on its own was not dramatic per shipment. Across a year of shipments it was significant enough to justify the two to three month Brand Rate fixation process.

The jewellery exporter working from an outdated rate

A gold jewellery exporter continued to compute expected drawback using a rate that predated Notification No. 41/2026-Customs (N.T.). With two revisions to Chapter 71 AIR inside three months, gold and silver jewellery is one of the few categories where checking the schedule every quarter is not excessive caution, it is necessary.

Record keeping, because Drawback claims do get audited

AIR claims are paid automatically without upfront proof, which makes it tempting to treat the underlying paperwork as optional. It is not. Customs retains the right to audit drawback claims after payment, and where a post audit finds the claim was not supportable, the recovery process is considerably more painful than a routine query at filing would have been, often carrying interest and, in serious cases, penalty.

Keep, for a minimum of five years from the date of export, the bill of entry and duty payment proof for every imported input genuinely used in the exported product, your manufacturing and consumption records showing how those inputs became the finished export, and the shipping bill and export documentation for the claim itself. This matters even for straightforward AIR claims. The rate being pre-notified does not mean Customs assumes you actually used imported, duty paid inputs at all. It means they are not asking you to prove it before paying, which is a different thing from never asking.

Rasp International’s practice: we set up a simple shipment level file for every client claiming Drawback, whether on AIR or Brand Rate, precisely so that if a post audit query does arrive two or three years later, the answer is a matter of minutes rather than a reconstruction project.

Frequently asked questions

How Rasp International handles this

We check whether your tariff item is on AIR or needs Brand Rate, verify your CHA is declaring the correct suffix, run the comparison between your actual duty incidence and the published AIR when the numbers suggest it is worth checking, and prepare Brand Rate applications with the consumption and duty documentation Customs actually asks for. Where credit has stopped arriving, we trace it back through the AD Code and PFMS chain rather than treating it as a mystery. Talk to our team if your drawback has not been reviewed in a while.

References and official sources

Every notification number, date and rule reference on this page is traceable to a primary Government of India source. Where we have relied on a secondary reproduction of a notification’s text, it is marked below. AIR schedules revise periodically. Verify the live rate for your specific tariff item on the CBIC portal before filing.

Last verified 12 August 2026 by Rasp International. AIR schedules are subject to periodic amendment, verify the live rate for your tariff item before filing.

Related reading

• RoDTEP scheme explained
• Current RoDTEP rates for 2026
• AD Code and incentive bank account registration
• Importer Exporter Code
• DGFT and CBIC document library
• TRACE certification cost reimbursement