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About DEPB

Brijesh (Deputy Manager Accounts and Finance) (63 Points)

08 December 2009

I am very confuse on DEPB, Plz tell me about all thing about DEPB licence

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Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14487 Points)
Replied 08 December 2009

Duty Entitlement Pass Book Scheme (DEPB Scheme)- The scheme is easy to administer and more transparent. The scheme is similar to Cenvat credit scheme. The exporter gets credit when he exports the goods. The credit is on basis of rates prescribed. This credit can be utilised for payment of customs duty on imported goods.

Provisions are contained in notification No. 45/2002-Cus dated 22-4-2002.

The objective of the scheme is to neutralise incidence of customs duty on the import content of export product. The neutralisation shall be provided by way of grant of duty credit against the export product.

Exports under DEPB scheme are allowed only when DEPB rate for the concerned export product is finalised.

Under this scheme, exporters will be granted duty credit on the basis of notified entitlement rates. The entitlement rates will be notified by DGFT. The entitlement rates will be a % of FOB. The entitlement rate will be fixed on basis of SION (Standard Input Output Norms) and deemed import content. Value addition achieved in export product will also be taken into account.

Supplies made to unit in SEZ are also entitled to DEPB. – MF(DR) Circular No. 25/2003-Cus dated 1-4-2003.

DEPB is issued only on post-exportation basis. Excise duty paid in cash on inputs will be eligible for brand rate of duty drawback. – CBE&C circular No. 24/2002-Cus dated 6-5-2002.

Non-transferable DEPB can be issued before realisation of export proceeds, but if export proceeds are not realised within 6 months, full customs duty along with SAD should be paid with 15% interest.

CIF Value of Imports affected under DEPB shall not exceed FOB Value against which DEPB has been issued.

Value of exports (i.e. export earnings) should be in freely convertible currency like dollars, Euro, British Pounds, Yen etc. Thus, the DEPB scheme is not available in case of exports to Nepal or Bhutan where we have Rupee trade or to Russia etc., if the export is not in hard currency. The credit will be granted on basis of actual amount of FOB value of export realised, as per Bank certificate.

The credit of duty in pass book will entitle the exporter to import raw materials, components, packaging materials etc. duty free. Goods which are otherwise eligible for imports can be imported under the credit. However, capital goods cannot be imported under DEPB.

The scheme is available to both manufacturer exporters as well as merchant exporters. DEPB has to be registered with customs house.

The DEPB rates fixed are inclusive of SAD (Special Additional Duty) w.e.f. 1-4-2002. Hence, goods imported under DEPB scheme are not free from special additional customs duty. [SAD].

If DEPB credit is insufficient, excess amount of duty can be paid in cash. Two separate entries in Bill of Entry should be made.

The CVD (additional duty) paid in cash on inputs can be utilised for availing Cenvat credit.

Export under this scheme will be under a blue coloured shipping bill so that customs authorities can maintain separate record. Declaration in prescribed form should be made on the shipping bill. The shipping bill should give details Serial number of export product in public notice issued by DGFT specifying the rate of entitlement and rate claimed. Exports under the scheme can be made from specified CFS (Container Freight Station) also.

Samples will be drawn for test as per guidelines issued by department.

Limit on credit based on PMV - Where DEPB rate is 10% or more, amount of credit shall not exceed 50% of PMV (Present Market Value) of the product. Customs can check PMV (Present Market Value) of export goods, if over invoicing is suspected. It is clarified that PMV will be verified only if there is specific intelligence. There will be no verification of PMV where value cap exists.

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