Circular No. 45/2003-Cus.
4th  June, 2003. 

Government of India
Ministry of Finance
Department of Revenue

Sub : Investigation against exports of processed, preserved and Frozen fish and fish products under DEPB Scheme (S.No.2 of Product Group 66 of DEPB Schedule) by DGRI/Customs authorities – reg.

DGRI/Customs had started investigations against exporters of processed, preserved and frozen fish and fish products in 2001 on the basis of an intelligence that such exporters, who were availing 4% DEPB benefit under Entry S.No.2 of Product Group 66 of DEPB Schedule were resorting to manipulation of export documents so as to avail higher DEPB benefit.  In this regard DGRI had issued modus operandi Circular No. 91/2001 dated 24.11.2001.  It was alleged that such exporters were raising two sets of invoices, one set for customs with the endorsement that chemicals and preservatives specified in relevant SION D.2 are used in the export product and the other set for the foreign buyer and bank which did not contain such a declaration.  It was also reported by DRI that many such exporters did not have any evidence showing procurement of preservatives/chemicals claimed to have been used in the export product.

2. As a result of the aforesaid investigation by DRI and Customs,  Customs at Mumbai and Ahmedabad stopped verifying/debiting of DEPB scrips issued in respect of processed, preserved and frozen fish and fish products and started resorting to provisional assessment in respect of fresh export consignments.

3. Marine Products Export Development Authority (MPEDA) and Seafood Exporters Association of India ( SEAI) represented to Board that as a result of investigation by DGRI/Customs, export of fish and fish products had suffered and many genuine exporters were facing difficulties in meeting their export schedule.  Further, the delay in registration of DEPB scrips was causing delay in clearance of import consignments.

4. The issue was discussed in the full Board meeting and vide this Office letter of even number dated 6.9.2002 it was conveyed that verification/registration of DEPB scrips may be withheld only in respect of those cases where investigations are going on or are contemplated; all other cases should be finalized and DEPB scrips verified/registered.  Later on, MPEDA, SEAI and DGFT requested for early final decision in the matter. This issue was, therefore, discussed with DGRI, DGFT and Associations in details.  In this regard, investigations conducted so far by DGRI/Customs has revealed two types of situations.  Whereas in some cases DRI/Customs has completed investigations and issued show cause notices on the basis of their findings, in other cases the investigations are nearing completion.  The two types of situations are –

i)  where no preservatives/chemicals were actually used by the preserving unit or anybody else in the export product; and

ii)  where only a meager percentage of chemicals/ preservatives were used.

5. The issue has been examined afresh in the Board and it has been decided that in cases where the investigations carried out by DRI/Customs clearly prove that no chemicals/preservatives were at all used in the export product at any stage, in all such cases proceedings against the exporters shall continue and the matter would be adjudicated as usual on merits.  In cases where there is evidence that the sea-food exporter had used only a meager percentage of chemicals/preservatives in the export product, keeping in mind the general practice being followed by sea-food industry and the fact that requirement for giving declaration about usage of chemicals/preservatives in the shipping bill has been withdrawn with effect from 1.4.2002 under DEPB Scheme, it has been decided that in such cases the exporter shall be allowed to avail 4% DEPB benefit if he is otherwise eligible of such benefit.  All DEPB scrips pending registration/verification against exporters covered under(ii) above should be completed immediately including finalization of exports allowed on provisional basis earlier.

6. Suitable Standing Order for the guidance of Departmental Officers and Trade Notice for the information of trade may be issued.

7. Receipt of the Circular may kindly be acknowledged.

R.K. Talajia
Officer on Special Duty (DBK)

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