DRAWBACK, a term in commerce, employed in connection with the remitting or paying back of excise duties on certain classes of articles exported. Excise duties, as a matter of course, enhance by so much the natural price of the commodity on which they are imposed. Were these duties not remitted, the commodity so taxed would not be ordered from those foreign countries where articles of the same kind could be pur• chased free of such duties. To afford facility for the exportation of these articles, tie state resorts to the expedient of returning to the exporter a sum equal in amount to what he or the manufacturer had paid to the excise. Such is drawback. Among other matters of fiscal policy, Adam Smith, in his Wealth of Nations, discusses the propriety of giving drawbacks, and sees in them nothing that is adverse to a sound political econ omy. To allow," lie says, " the merchant to draw back upon exportation, either the whole or a part of whatever excise or inland duty is imposed upon domestic industry, can never occasion the exportation of a greater quantity of goods than what would have been exported had no duty been imposed. Such encouragements do not tend to turn towards any particular employment a greater share of the capital of the country than what would go to that employment of its own accord, but only to hinder the duty from driving away any part of that share to other employments. They tend not to overturn that balance which naturally establishes itself among all the various employ ments of the society, but to hinder it being overturned by the duty: they tend not to destroy, but to preserve, what it is in most eases advantageous to preserve, the natural division and distribution of labor in the society." Correct as is this view in general
principle, it could perhaps be shown, by the closer experience of the present day, that the practice of giving drawbacks is liable to abuse; as, for example, when an excisable article falls in value, and it is exported in order to get the D., with little or no refer ence to sales abroad, or in the hope that the D. will at least bring the amount of the freight. So far, therefore, the state is made to foster an improper species of com merce. To prevent deceptions as far as is practicable, certain rules and formalities have to be attended to by exporters, to which we shall briefly refer.
In preparing goods for D., they must be packed in presence of an excise-officer, who sees them weighed, if the D. depends on weight. When the package is completed, he ineloses it with a tape. which is properly fixed with a seal, this seal it is transferred to the port of shipment, and cleared for export by a person authorized by license from the officers of customs. In the case of press-packed goods, the quanti ties and qualities must be verified by the oath of the master-packer or his foreman. D. is given only on goods which have been charged with duties within three years, and no D. is given on damaged or decayed goods. It is payable only to the real owners of the articles shipped. It is not payable for a certain period after shipment and departure; but cannot be demanded-later than. two years after shipment, As a verification of the principal particulars mentioned, the excise-officer concerned executes a certificate or debenture (q.v.), and under its operation the D. is paid by the inland revenue department. , .