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Sri Lanka Government implements number of incentive schemes aimed at promoting exports through enhanced competitiveness of export production. These schemes have been designed to provide bonded warehouse facilities for imported raw materials, refund duties and other fiscal levies on import of raw materials and intermediate inputs used in the manufacture of products for exports. At the present there are three main incentive schemes in operation and these schemes are mainly handled by Sri Lanka Customs Bonds Division.
What The Duty Rebate Scheme Attempts to Accomplish
Manufactures who incur fiscal levies on inputs imported directly or purchase locally and utilized such items to manufacture products
and export are eligible to operate under this scheme. Since the levies are imposed for the raw materials and packing materials at the
time of the imports, it will effect to the price of the articles which are to be exported.
The duty rebate scheme is designed to refund duties and other fiscal levies on import of raw materials and intermediate inputs
used in the manufacture of products for export. Duty Rebate Scheme does not function as an incentive scheme. Under the present
revised scheme, only the duty could be refunded.
Legal and Administrative Back Ground of the Scheme
Prior to 1998 Duty Rebate Scheme was implemented and monitored by the committee on Exemption of Fiscal Levies. Later to overcome
the administrative delays experienced by the exporters this scheme was revised and brought under direct control of the Department
of Customs and the Ministry of Finance.
The payments of duty rebate is governed by a set of operative instructions effective from February, 1999 which was prepared by
the Customs Department in collaboration with the other line agencies such as Export Development Board, Ministry of Industrial
Development, Sri Lanka Tea Board, the Department of Fiscal Policy and Economic Affairs and the Chamber Of Commerce.
The revised set of rules and regulations have been gazetted in the Gazette Notification (extra ordinary) No. 1053/12 of 11th
November, 1998 with effect from 01st February, 1999. These rules and regulations are issued in accordance with the Section
22(A) of the Customs Ordinance.
Registration under the Duty Rebate Scheme
Exporters who intend to utilize the scheme should register at Duty Rebate Unit of Sri Lanka Customs Export Division. Registration
should be done for each export shipment. For this purpose it is required to produce export invoice, mate receipt/airway bill, and
parties copy of the export shipment.
How The Duty Rebate Scheme Function
Sri Lanka Customs Department is implementing and monitoring the scheme.
There shall be a rate of rebate determined by the D.G.C. in respect of the goods exported or supplied to exporters.
The D.G.C. will inform the approved rates of rebate to the relevant exporters, the commercial Banks and the Treasury.
The rates will be gazetted by the D.G.C. periodically.
Exporters may submit their claims to the commercial Banks along with the necessary documents.
Paid documents will be sent to the Export Facilitation Unit of the Sri Lanka Customs by the Commercial Banks.
Non-submission of relevant duty rebate claims within the stipulated period will become time barred.
The D.G.C. could approve the time barred claims if the reasons are accepted by him.
If any exporter dissatisfied with a decision of the D.G.C. the exporter may appeal to appellate body within 30 days from the date of such decision.
Any manufacturer who is engaged in manufacturing for export may apply to the Customs Department for the approval
of establishment of a manufacturing-in-Bond warehouse. Manufacturers can avoid paying of duty and taxes by the time of importation
and goods imported and stored in this warehouse can be used for any kind of manufacturing such as mixing and assembling.
Imported goods can be stored for up to 6 months without payment of duties and taxes and for valid reasons this period can be extended
up to 2 years. Further extension will be considered only under exceptional circumstances. Manufacturers are privileged to move the
goods in and out of the warehouse without Customs supervision.
As a security for fiscal levies manufacturer should furnish a Bank Guarantee equals to the full (i.e. 100%) of the value of the duty
and taxes payable. Also manufacturer is required to license the bonded warehouse annually.