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Circular No. 15/97- Cus.
dated 3/6/97

F. No. 605/51/97 -DBK
Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject: Duty Entitlement Pass Book Scheme introduced in the new Export and Import Policy for the period 1997-2002

Attention is invited to Circular No. 10/97-Cus dated 17th April, 1997 whereby detailed guidelines for operation of Duty Entitlement Pass-Book Scheme were issued. The said Circular provides for the exporters to declare in the Shipping Bill, the Serial No. of the export products in the Public Notice issued by the DGFT and the rate claimed. It was further provided that correctness of this declaration should be verified while processing the Shipping Bill, and also at the time of examination of the goods.

2. This matter has been re-examined. It has been decided that the role of Customs authorities should be confined to verification of correctness of exporter’s declaration regarding description, quantity and f.o.b. value of the export product. It will be for the Licensing authorities granting credit to ensure the credit is permitted by them at the correct rate as notified by the DGFT.

3. Ministry of Commerce has also incorporated para 7.36 A in the Hand-Book of Procedure, Vol. I by their Public Notice No. 10/97(PN)/97-2002 dated 21st May, 1997. The said para provides that in case products attracting credit at the rate of 15% or more, the amount of credit shall not exceed 50% of the present market value (PMV) of the export product. In order to ensure that this condition is properly implemented, exporters shall also be required to declare in the Shipping Bill filed under DEPB scheme the ‘Present Market Value’ of goods, which being inclusive of Excise duty, Sales Tax and other local Taxes is higher than the FOB price. The PMV should also therefore be higher than AR-4 price. At the stage of processing of Shipping Bills the Correctness of PMV may be examined having regard to the description and specification of export product declared with reference to AR-4, or Excise Invoice (in case of factory cleared goods), in the case of export goods procured from the market, with reference to the sale-invoice of the authorised dealers, or any other evidence based on enquiries. In case of well known brands the market price of goods. which is generally known, itself can form the basis of ascertaining the correctness of PMV without production of any evidence by the exporter.

4. The declared PMV may also be verified by the proper officer of the Customs at the time of examination of goods as is done in the case of drawback shipping bills. Where upon examination of goods the examining officer finds that in view of the quality or condition of the goods prima-facie the PMV declared, or the f.o.b. price, is unduly high, the matter may be refered to the Asst. Commissioner (Export) along with sample of goods wherever possible. In such cases the PMV may be verified/determined through market enquiries, or by such process as the Asst. Commissioner (Customs) may direct.

5. Before making such enquires, the Asst. Commissioner (Export) must satisfy himself as to the necessity for causing such enquiries. The purpose of such enquiry is to ensure that the credit entitlement shall not exceed 50% of the actual PMV as ascertained through market enquiry. Samples may be drawn where necessary, but clearance of the consignment should not be held-up normally for this purpose. Such shipping bills should be endorsed as ‘provisionally cleared for export’ so that the designated authority of the DGFT does not accept the provisionally accepted PMV for fixing the upper- limit of the credit. The market enquiry, or any other process of determining the PMV, should be completed within one month of “let export order” & Shipping Bills should be finally assessed and only then released to the exporter to enable him to get his DEPB entitlement from the licensing authority.

6. Suitable Public Notice and Standing Order, bringing out aforesaid changes to the notice of exporting community and field formations may please be issued.

 Sd /-
(Sunil Kumar)
Director (Drawback)

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