Circular No. 10/97-Cus.
dated 17/4/97
F.No. 605/51/97-DBK
Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject : DEPB Scheme introduced in the new Export and Import Policy for the period 1997-2002 – Clarification

A new Duty Entitlement Pass-book Scheme has been introduced in Chapter 7 of the new Export and Import policy for the period 1997-2002. The scheme substitutes Value Based Advance Licensing Scheme as well as Pass-book Scheme of the earlier EXIM policy. A new Notification No. 34/ 97- Cusdated 7.4.97 has been issued to give effect to this Scheme. Copy of the notification is enclosed for ready reference.

2. It may be noted that earlier Pass-book Scheme covered by para 54 of the EXIM Policy for the period 1992-97 and governed by Notification No. 104-95-Cus. continues to operate for grant of credits on exports made on or before 31.3.97 and for import against such credits in terms of Notfn. No. 104/ 95-Cus.

3. The Value Based Advance Licensing Scheme shall also continue to operation relation to licences issued on or before 31.3.97. Export under this scheme shall continue to be allowed only towards discharge of export obligation against licences issued on or before 31.3.97. No export under the scheme is, therefore, permissible where only an application for Value Based Advance Licence has been made but the license has not been issued on or before 31.3.97. Imports against Value Based Advance Licences issued on or before 31.3.97 shall also continue to be allowed in terms of relevant Customs notifications.

4. Under the new Scheme, a Duty Entitlement Pass-book (DEPB) shall be issued to the eligible exporters by the licensing authorities. Entitlement shall also be allowed in the DEPB at pre-determined and pre-notified rates. by the licensing authorities in respect of exports made under this Scheme. Such Duty Free entitlement can be utilised for import of any goods (other than goods specified in the Negative list in the EXIM Policy) free of basic duty of Customs or addl. duty of Customs subject to duty leviable on goods being debited against credit permitted in the D.E.P.B.

5. In case of pre-export DEPB, licensing authorities may endorse provisional entitlement based on past export performance as specified in the EXIM policy which shall be required to be set off by the exporters by making exports to earn entitlement equal to the provisional entitlement permitted in the D.E.P.B. The importer shall, in such cases, be required to execute a bond with the Asstt. on the goods in case of his failure to earn requisite entitlement. The quantum of bank guarantee shall be determined keeping in view the instructions issued by the Board on the subject in relation to import against advance licences.

6. As specified in the notification, imports and exports under the scheme against a particular DEPB can be made from anyone of the specified ports/ airports / ICDs etc. In other words DEPB issued for a particular Port of Registration is not valid for import or export through any other port, airport or ICD. Although a proviso to the relevant condition in the Customs notification permits Commissioners of Customs to allow import or export from other Port/ Airport /ICD and LCS, this power should be exercised only in consultation with the Chief Commissioner.

7. The Handbook of Procedure provides for exports under the Scheme to be made on blue colour shipping bill. A separate shipping bill for the scheme is being devised. In the meantime, exports may be permitted in the Proforma of Duty free shipping bills, blue in colour or with a blue strip at the top. All shipping bills filed under the scheme should indicate in bold letters on top. right hand corner that export is being made under DEPB Scheme. In addition to all other relevant particulars required to be declared in the shipping bills,  the Sl. No. of the Export Product in the Public Notice issued by Directorate General of Foreign Trade specifying the rate of entitlement and the rate claimed should also be clearly declared by the exporter on the shipping bill. The correctness of this declaration should be verified while processing the shipping bill and also at the time of examination of the goods to ensure that the rate of entitlement claimed on the export goods is correct and admissible. Since the rates to be notified by the Ministry of Commerce will be ad valorem rates, it will be essential to check the correctness of the FOB value declared with a view to ensure that FOB value is not inflated to claim higher entitlement: Wherever FOB value is found to be not correctly declared, export may be permitted provisionally with the condition that entitlement shall be determined with reference to correct FOB value as determined by the Customs. Triplicate copy of the shipping bill bearing the Examination Report and Customs “Let Export” order should be made available to the exporter or his agent for production before e the licensing authority for claiming the entitlement in the DEPB.

8. All shipping bills filed under the scheme should be processed in Group VII of the Customs House should maintain a separate register for exports under this Scheme which should have the following minimum information i.e. Shipping Bill No. and date, Name and Address of the exporter, description of the Export Product, FOB value, Sl.No. of export product in the DGFT’s Public Notice under which rates were notified, the rare claimed and Remarks etc.

9. All Bills of Entries filed for clearance of goods under the Scheme should be processed in Group VII of the Custom House. The Custom House should maintain DEPB-wise Ledgers. The Ledgers should contain information with regard to DEPB No. and date, Importer’s Name and Address, the authority issuing DEPB and the period of validity of the DEPB. All clearances made against a particular DEPB should be entered in this ledger indicating Bill of Entry No. and Date, Description of goods imported, CIF value, amount of duty debited in the DEPB and amount of additional duty paid in cash, if any. It may be-noted that Scheme permits additional duty to be claimed as exempt subject to debit being made in the DEPB or the importer can even pay additional Customs duty in cash if he so desires. Wherever addl. Custom Duty is proposed to be paid in cash, the said additional duty has to be calculated on the value of goods plus basic Customs duty which would have been leviable but for exemption under the Scheme.

10. In case of import against provisional entitlement under Pre-export DEPB, the DEPB holder should be asked to produce evidence of having set-off provisional credits by the credits actually earned on exports made within 30 days of expiry of the validity period of the DEPB. In case of failure to produce evidence, the Custom House should proceed to enforce bond/B.G. to recover duty with interest. It may be noted that there is no provision for extension of validity period of the DEPB.

11.The amount of CIF value of the goods imported, duty debited in the DEPB and the addl. duty paid under the Scheme should be separately indicated in the monthly statement of duty forgone being furnished to Board for all imports under Duty Exemption Scheme, EOU/ EPZ Scheme etc.

12. Suitable Public Notices, Standing orders for guidance of trade/staff may be issued immediately.

(Sunil Kumar)
Director (Drawback)

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Category : Custom Duty (7065)
Type : Circulars (7826) Notifications/Circulars (32348)

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