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DEPB AUDIT

Sameer (Chartered Accountant) (202 Points)

13 January 2011

Dear All,

Kindly let me know the aspects that we should check while auditing the DEPB licencing scheme.

Regards,

Sameer.

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5 Replies

Shweta Bansal (CA) (175 Points)
Replied 15 January 2011

To understand the aspect of audit; it is required to understand what actually is DEPB :-

DEPB (Duty Entitlement Pass Book) Scheme is an export incentive scheme provided in Import and Export policy.

Objective: The objective of the scheme is to neutralize the incidence of basic custom duty on the import content of the exported products.

Working: Under the scheme, an exporter is eligible to claim credit as a specified percentage of value of exported product and is available at a rate of exported product as may be determined by Director General of Foreign Trade (DGFT). (Generally based on FOB)

Benefit: The credit amount in DEPB only entitles you to adjust that amount for payment of customs duty and is not permitted to be withdrawn or adjusted in some other manner.

Transferable: There is no bar for transfer of this credit to another person and from him to another person ie this credit amount is freely tradable.

So, keeping in view the above points,you are required to:

1) Custom Duty on imported content of the finished goods to be exported.

2) Correct rate of % have been charged as claim.

3) FOB calculations and currency conversions.

Hope this helps..........................:)

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CA Yogesh (Sr. Executive (F&A)) (213 Points)
Replied 15 January 2011

@ shweta...

Hi.. is it necessary to be an exporter so as to claim benefit of DEPB License... coz in one of my assignments, i come across an issue where the auditee was only an importer still utilized DEPB Credit against Customs duty....???

Shweta Bansal (CA) (175 Points)
Replied 17 January 2011

@ yogesh:

I missed on that......Thnx for reminding.

Karthik (student) (147 Points)
Replied 20 January 2011

I think only exporters are eligible for DEPB claim. (Exports include deemed exports also)

Parthenia (gtfghtfhtyuhy) (23 Points)
Replied 21 January 2011

The DEPB scrip is a basic requirement of exemption notification meant for DEPB scheme. Paying CVD or ACD through a DEPB scrip and paying these duties by cash makes a hell of a difference logically.

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