Rules 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Once a drawback rate exists, four rules shape how long it lasts and how high it can go. Rule 4 lets the Government revise it, rule 5 sets the date and period, rule 8 stops a rate being fixed where the export value is lower than the imported materials, and rule 9 caps drawback at one third of the market price. Our compliance advisory team can check these limits against your claim.
This article is written as amended up to Notification No. 03/2026-Customs (N.T.) (in force 15 January 2026), on the CBIC text of Notification No. 88/2017-Customs (N.T.) dated 21 September 2017; no official consolidated text exists. Later notifications should be checked. Rates are notified separately and none is stated here.
The Central Government may revise a drawback amount or rate (rule 4) and may specify how long it stays in force; a retrospective rate cannot start earlier than the date of change in duty on inputs (rule 5). No rate is determined under rules 6 or 7 where the export value is less than the value of imported materials used (rule 8, now also covering a section 84 entry for postal exports). The drawback determined under rule 3 shall not exceed one third of the market price (rule 9).
Rule 4: revision of rates
"The Central Government may revise amount or rates determined under rule 3." Rule 3 is explained in our article on rule 3. An exporter should check which rate applies to the date of export.
Rule 5: period and date
| Sub-rule | Content |
|---|---|
| 5(1) | The Central Government may specify the period up to which any amount or rate determined under rule 3 or revised under rule 4 shall be in force |
| 5(2) | Where an amount or rate is allowed with retrospective effect, it is allowed from the date specified by Government notification in the Official Gazette, which shall not be earlier than the date of changes in the rates of duty on inputs used in the export goods |
| 5(3) | Section 16, or section 83(2), of the Customs Act, 1962 shall determine the amount or rate of drawback applicable to any goods exported under these Rules |
Sub-rule (3) ties the applicable rate to the rule of the Act on the relevant date for rate of duty. For section 83, see our guide to sections 83 and 84 on post and courier.
Rule 5(3) also gives rules 6 and 7 their starting point: the time to apply for a brand rate or a higher rate runs from "the date relevant for the applicability of the amount or rate of drawback in terms of sub-rule (3) of rule 5". See our articles on rule 6 and rules 7, 10 and 11.
For example, input duty on a metal component rises on a given date and the Government announces a revised drawback rate with retrospective effect. Under rule 5(2) the retrospective start cannot be earlier than the date on which the input duty changed.
Rule 8: cases where no amount or rate is determined
The rule as amended
"No amount or rate of drawback shall be determined in respect of any goods or class of goods under rule 6 or rule 7, as the case may be, if the export value of each of such goods or class of goods in the bill of export or shipping bill or entry made under section 84 of the Customs Act, 1962, for exports by post is less than the value of the imported materials used in the manufacture of such goods or class of goods, or is not more than such percentage of the value of the imported materials used in the manufacture of such goods or class of goods as the Central Government may, by notification in the Official Gazette, specify in this behalf."
What changed in 2026
Notification No. 03/2026-Customs (N.T.), in force 15 January 2026, inserted the words in bold, so that the export value is also read from an entry made under section 84 for exports by post. The percentage in the second limb is whatever the Government notifies; the Rules print none.
How it works
The test applies to a brand rate application under rule 6 or a higher rate application under rule 7. If the declared export value of each good or class is lower than the value of the imported materials used, or not more than a notified percentage of that value, no rate is determined.
Rule 9: upper limit
"The drawback amount or rate determined under rule 3 shall not exceed one third of the market price of the export product."
The cap applies to the amount or rate determined under rule 3. The rule does not say how the market price is found.
Example: if a rate determined under rule 3 for an export product would give drawback worth more than one third of that product's market price, the rate cannot stand above that cap.
| Rule | Subject | Key content |
|---|---|---|
| 4 | Revision | Government may revise amounts or rates determined under rule 3 |
| 5 | Period and date | Period specified by Government; retrospective rate not earlier than input duty change; section 16 or 83(2) decides the applicable rate |
| 8 | No rate determined | Where export value is below the imported materials value or a notified percentage; section 84 entries now included |
| 9 | Upper limit | One third of the market price of the export product |
Practical checklist
- Check each notified rate for the period it is in force.
- For retrospective rates, check the notified start date against the date of the input duty change.
- Compare the export value with the value of imported materials before applying for a brand rate.
- Keep market price evidence, since the one-third cap rests on it.
- For exports by post, note that the shipping bill test is read for the section 84 entry.
The wider rules are mapped in our article on rules 1, 2, 19 and 20, and the parent power in our guide to section 75.
Need help with rate dates and caps?
If a revised rate or the one-third cap affects your claim, we can review the notification and your shipping bill. Contact our compliance advisory desk.
Key takeaways
- The Central Government may revise rates and specify how long they stay in force.
- A retrospective rate cannot start earlier than the date of change in duty on inputs.
- No rate is determined under rules 6 or 7 where export value is below imported materials value or a notified percentage.
- Rule 8 now also reads a section 84 entry for exports by post.
- Drawback determined under rule 3 cannot exceed one third of the market price.
Read next
- Rule 3: when drawback is allowed and when it is not
- Rule 6: brand rate where no rate is determined
- Rules 12 to 14: claiming drawback on postal and other exports
- Sections 83 and 84: goods imported or exported by post or courier
Disclaimer: Based on the customs rules named above as published on the CBIC Tax Information Portal and, for sets amended since 2023, the amending notifications (read through a TaxClue consolidated reading text; no official consolidated text exists), as consulted on 3 October 2026. Later notifications, rates and the Customs Act, 1962 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.