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DEPB Scheme was first introduced on 1st of April 1997 under EXIM Policy 1997-
2002. It is an export promotion scheme and envisages grant of DEPB Credit Entitlement
to an exporter at the time of export at an ad-valorem rate notified by DGFT, in relation to
FOB value of the export product. The DGFT have so far notified DEPB rates for nearly
2000 export products. These rates are based on the computation of Basic Customs Duty
suffered by the exporters on the inputs listed in the Standard Input-Output Norms (SION)
applicable to the export product. The crucial feature of the DEPB Scheme is that all the
inputs listed in the Standard Input-Output Norms are deemed to have been imported and
to have suffered Customs duties. DEPB rates are finalised by the DEPB Committee,
chaired by Additional DGFT and consists of representative from Ministry of Finance
also. Value caps have been imposed on export products having DEPB rates of 15% or
more to curb the tendency of unscrupulous exporters to avail most of the runaway
benefits by over-invoicing export.

 The normal validity period of a DEPB Scrip is 12 months and DGFT authority
(who issues the scrip) is empowered to grant revalidation. These scrips are for a certain
amount of DEPB credit and can be utilised for adjusting Customs Duties (Basic or CVD)
against import of any products into India, without the necessity of any co-relation
between the export product and the import goods, i.e. it is not necessary to import only
the relevant inputs corresponding to the export product.

 Since DEPB Scheme also involves technicalities like DFRC Scheme, its operation
has also been restricted to limited ports, airports, ICDs, etc. which are notified for the
purpose. Commissioners of Customs have, however, been empowered to permit
import/export under the scheme from any other place which has not been notified, on
case to case basis. The DEPB and/or the items imported against it are freely transferable.
Import against DEPB scrips is allowed at the port specified in the DEPB which is the port
from where exports have been made. Imports from a port other than the port of export are
also allowed under TRA (Telegraphic Release Advice) facility as per the terms and
conditions of the notification issued by Department of Revenue.
Ö No duty drawback is allowed on exports made under DEPB Scheme. However, in
cases where CVD is paid in cash on imported inputs, or where indigenous duty paid
inputs, not specified in SION, are used in the manufacture of export product, in such
cases brand rate of duty drawback is admissible as per circular issued by the Ministry of
Finance, provided CENVAT Credit in respect of such duty incidence is not availed.

(Reference: Customs notification No.34/97-cus., dated 7.4.97)


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1. The rates of DEPB specified in book shall not be applicable to export of a
commodity of product if such commodity or product is:-

a. Manufactured partly or wholly in a warehouse under Section 65 of the Customs

Act, 1962 (52 of 1962);
b. Manufacture and/or exported in discharge of export obligation against an
Advance Autorisation including Advance Authorisation for Annual
Requirement or exported under DFIA Scheme of the relevant Foreign Trade
Policy;
c. Manufacture and/or exported by a unit licenced as 100% Export Oriented Unit
in terms of the provisions of the relevant Foreign Trade Policy;
d. Manufactured and /or exported by any of the units situated in Free Trade
Zones/Export Processing Zone/Special Economic Zones/EHTP Scheme;
e. Exports of goods of foreign origin, unless the goods have been manufactured or
processed or on which similar operations have been carried out in India;
f. Exports made under paragraph 2.35 and 2.36 of the Foreign Trade Policy.

2. The DEPB rate and the value cap shall be applicable as existing on the date of order
of ³let export´ by the Customs.

3. The value cap, wherever existing, shall be with reference to the FOB value of
exports. The DEPB rates shall be applied on the FOB value or value cap whichever
is lower. For example, if the FOB value is Rs.500/- per piece, and the value cap is
Rs.300/- per piece, the DEPB rate shall be applied on Rs.300/-.

4. Wherever any specific rate exists for a particular item under DEPB rate list as given
in this book, the items shall not be covered under any generic description of the
DEPB rate list.
5. The DEPB rate aims to neutralize the incidence of duty on the inputs used in the
export product. Therefore, the DEPB rates, as given in this book refer to normally
tradable/exportable product. Items such as Gold Nibs, Gold Pen, Gold watches etc.
though covered under the generic description of writing instructions, components of
writing instruments and watches are thus not eligible for benefit under the DEPB
scheme.

6. The DEPB rates given for various galvanized Engineering product shall cover non
galvanised products and vice-a-versa.

7. The DEPB rate given for various types of garments do not cover Silk as well as
Woolen garments unless specifically mentioned in the DEPB description.

8. Portable product at S.No.239, 240,241,242,243 and 286 of Product Group:

Engineering (Product Code 61) exported in the form of incomplete CKD/SKD Kit,
but consisting of (i) Engine (ii) Chassis (iii) Gear Box (iv) Transmission Assembly
system (v) Axle (Front & Rear) and (vi) Suspension System or Body/Cab or both,
shall be treated at par with complete CKD/SKD Kit for the purpose of relevant
DEPB benefits.

9. The DEPB rate for formulation consisting of more than one bulk drug would be
calculated as per provisions of Policy Circular No.20 dated 31st July, 2000.

10. Wherever the export of resultant product in completely built form is allowed under
DEPB, the CKD/SKD export of such product shall also be allowed under DEPB.

11. DEPB benefit would also be admissible on the export of composite product
including assembled product having more than one constituent items for which
DEPB rates are individually fixed. In such cases, the DEPB entitlement would be
restricted to the lowest of the rate applicable to the constituent items, ignoring the
rate of the constituent item(s) having weight less than 5% of the total net weight of
such product. However, no DEPB benefit would be admissible on the exportof such
product, if constituent item(s) is weighing more than 5% of the total net weight (of
the product) and does not have any DEPB rate fixed.

The exporters shall declare in the shipping bill the following details also for claiming
DEPB benefit on the export of such product:

i. Description of the composite product including the assembled product,

alongwith its total net weight.
ii. Description of all the constitute item(s) of such products which attract a
DEPB rate with their respective DEPB Nos. and their credit rate alongwith
total weight of such constituent (s).
iii. Description and combined total weight of those constituent item(s) which
have no DEPB rate in the schedule.
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In case (iii) above is more than 5% of total weight given in (i), no DEPB on the
composite product would be admissible.

12. DEPB benefit would be available on the export of products having extraneous
material up to 5% by weight. In such cases, extraneous material upto 5% shall be
ignored and the DEPB rate as notified for that export product shall be allowed.
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You can apply for this only when you received the payment. Application for the grant of
credit under Duty Entitlement Pass Book (DEPB) on post export basis may be made to
the licensing authority concerned in ANF-4G along with the documents. The application
for obtaining credit should be field within a period of 6 months from the date of
realization of export proceeds. You can file one or more application subject to the
condition that each application shall contain not more than 10 shipping bills. All the
shipping bills in any of the application must related to export made from same port
(custom house) only. The Duty Entitlement Pass Book (DEPB) shall be issued with
single port of registration, which will be port from where the exports have been affected.

&&
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You have to pay the fee of Duty Entitlement Pass Book (DEPB) at the rate of Rs 5/- per
thousand subject to minimum of Rs 200/-, in cash or by demand draft drawn in favor of
regional licensing authority/DGFT as applicable.

Duty Entitlement Pass Book Scheme in short c

is an export incentive scheme.
Notified on 1/4/1997, thec
  consisted of (a) Post-export DEPB and (b) Pre-
export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the
post-export DEPB, which is issued after exports, the exporter is given a
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   at a pre-determined credit on the FOB value. The
DEPB rates is allows import of any items except the items which are
otherwise restricted for imports. Items such as ,-, Gold Pen, Gold watches etc.
though covered under the generic description of +'
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, components of
writing instruments and watches are thus not eligible for benefit under the DEPB scheme.
The c

 are applied on the basis of FOB value or value cap whichever is lower.
For example, if the FOB value is Rs.700/- per piece, and the value cap is Rs.500/- per
piece, the DEPB rate shall be applied on Rs.500/-. The DEPB rate and the value cap shall
be applicable as existing on the date of exports as defined in paragraph 15.15
of *,-..
DEPB Scheme is issued only on post-export basis and pre/export DEPB Scheme has been
discontinued. The provisions of DEPB Scheme are mentioned in
'Öand 4.3.1 to
4.3.5 of the $'( ',
or % 
. One significant change in the new
DEPB Scheme is that in terms of
'Ö/ of the % 
 even%,
 paid in
cash on inputs used in the manufacture of export product shall be eligible for brand rate
of ,
,'+- as per rules framed by Department of Revenue which was not
mentioned in the earlier DEPB Scheme.
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The benefit of DEPB schemes is available on the %&'
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 having extraneous
material up to 5% by weight. In such cases, extraneous material up to 5% shall be ignored
and the c
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 as notified for that export product is be allowed.
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The Government of India review the DEPB rates after getting the appropriate a%&'

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on FOB value of exports and CIF value of inputs used in the %&'

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1 as per #. Such data and information is usually obtained from the
concerned %&'

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Some additional facilities as listed below have been provided for better implementation
of the DEPB Rates
DEPB rates rationalized to account for the changes in " 
 ,
.
Caps fixed on certain items but there would be no verification of Present Market Value
(PMV) on such items.
A number of &'
 have been added for availing facilities under the c
% &

 , includingDEPB.
The threshold limit of Rs. 200 million for fixing new DEPB rates removed.

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The main objective behind the provisional DEPB rates is to encourage diversification and
to promote export of new products. However, provisional DEPB rates would be valid for
a limited period of time during which exporter would furnish data on export and import
for regular fixation of rates.

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It is necessary for Custom House at &'
 to maintain a separate record of details of
exports made underc
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The exports/imports made from the specified ports given shall be entitled for DEPB.


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 Mumbai, Kolkata, Cochin, Dahej, Kakinada, Kandla, Mangalore, Marmagoa,
Mundra, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam,
Surat (Magdalla), Nagapattinam, Okha , Dharamtar and Jamnagar.

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Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air

Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi,
Nagpur and Chennai.

"c Agra, Ahmedabad, Bangalore, Bhiwadi, Coimbatore, Daulatabad, (Wanjarwadi

and Maliwada), Delhi, Dighi (Pune), Faridabad, Guntur, Hyderabad, Jaipur, Jallandhar,
Jodhpur, Kanpur, Kota, Ludhiana, Madurai and the land Customs station at Ranaghat
Mallanpur, Moradabad, Meerut Nagpur, Nasik, Gauhati (Amingaon), Pimpri (Pune),
Pitampur (Indore), Rudrapur (Nainital), Salem Singanalur, Surat, Tirupur, Udaipur,
Vadodara, Varanasi, Waluj, Bhilwara, Pondicherry ,Garhi-Harsaru, Bhatinda, Dappar,
Chheharata (Amritsar), Karur, Miraj and Rewari.

"Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and

Mahadipur.
The exports made to the following Special Economic Zones (SEZ) are also entitled to
DEPB.
0+ 


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 31 Mar 2001


New Delhi

The Duty Entitlement Pass Book (DEPB) Scheme has been continued in the
Export-Import (Exim) Policy for the year 2001-2002 which was announced by
Shri Murasoli Maran, Union Minister of Commerce & Industry, at a press
conference here today. Under the scheme the following important
changes/improvements have been made:

Ê Provision made for claiming DEPB against advance payment.

Ê Validity of DEPB extended upto the last day of the month in which the
same is expiring.
Ê Rationalisation of DEPB rates in line with changes in Customs duty on
account of union budget.
Ê Coverage of additional ports under DEPB.
Ê TRA facility extended to all notified ports under DEPB scheme.

DEPB means Duty Entitlement Pass Book to neutralise the incidence of basic
and special customs duty on the import content of export product. This is
provided by way of grant of duty credit against the export product at specified
rates. The DEPB Scheme which was notified on 1/4/1997 consisted of (a) Post-
export DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was
abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after
exports, the exporter is given a duty entitlement Pass Book at a pre-determined
credit on the FOB value. The DEPB allows import of any items except the items
which are otherwise restricted for imports.

*********
The combination of new faces at the top in the finance and commerce ministry has worked. We
understand that the department of revenue has agreed to the restoration of the 4% Special
Additional Duty (SAdd) exemption on DEPB scheme exports.
What is more, the measure will be enforced with retrospective effect, that is, from 22 April µ02
when the exemption was withdrawn by the 45/2002 notification. The Customs must now return
the Rs 1,000 crore or so Special Additional Duty collected on the DEPB account in the current
year to the exporter. This will just about make up for the crash in DEPB premium from 110% to
95%. The formal notification on the subject is under issue from the DGFT. The finance ministry
has given the nod on the subject. The government has kept its promise to insulate exports from
the effect of Customs and Excise.
DGFT officers are burning midnight oil to revise the DEPB rate schedule covering nearly 2,000
product groups. The SAdd incidence varies from 6.032% on a 30% basic duty item to 5.1 % on a
10% item, after considering the 16% countervailing additional duty. Our calculations show a
DEPB rate hike of 3% on a 30% basic duty item whose final product is eligible to 15% DEPB after
one-third value addition over raw material cost.
Exporters must now file supplementary claims, they hope that the DGFT and customs officers will
rise to the task and develop special software packages to retrieve the closed files. Over one lakh
DEPB licences must be opened again for the supplementary claim. The question is, who took the
ill-advised step to withdraw the exemption without revising the DEPB rate?
Garlic Politics: The DGFT moved swifly on 17 January to open the import of fresh garlic and shift
the item from the restricted list to free list. According to the DGCIS, Kolkata, 34,200 tonnes of
garlic valued at Rs 73.62 crore entered the country last year. Almost all the shipments were from
China. The land of the dragon accounts for 65% of world trade and 45% of world production. This
year, import is well over Rs 100 crore.
The licensing restriction served little purpose, the domestic price of Rs 36 per kg is far ahead of
the landed import price of Rs 26 per kg., after accounting for the maximum 30% duty. The
farmers were not able to deliver garlic in sufficient quantity to the market. The State Government
Cooperative Marketing Societies too entered the fray and started selling import rights to traders.
In the name of protecting the garlic farmer, even advance licence imports were subjected to the
³prior import before export´ condition.
However, the garlic story is not over. Restrictions have returned in the form of 100% tariff. The
department of revenue raised the customs duty to the maximum WTO bound rate of 100% on 15
January, just two days before the DGFT notification. The stiff tariff brings the landed value to Rs
40 per kg which is above the domestic price of Rs 36 per kg. Official import will come to a
grinding halt for the moment. Goods in transit will suffer sever losses.
The US anti-dumping duty of 385% on Chinese fresh garlic on 1 January 1995 resulted in a shift
in import composition to dehydrated garlic even though the day variety is difficult to sell to the
final consumer due to poor cosmetic appearance. In India too one can expect pressure on the
customs appraiser to accept bills of entry for dried garlic which is subject to only 30% duty on a
low price base.
The sorry state of the garlic trade may yield another crisis on the lines of the onion problem in
1998. The final impact on consumer prices will depend on the size of the winter garlic crop due in
the market soon. Drought and the cold wave may reduce the market surplus resulting in another
round in the sorry affairs of the garlic trade.
SEZs and EOUs: The Export Promotion Council for EOUs and SEZ Units has been notified in the
Handbook of Procedures with its office at 20/34 East Patel Nagar, New Delhi 110 008. EOUs and
SEZ units must now register with the new body to work under the government policies. DGFT has
tightened the screws on the EOUs saying that an email id and website are necessary conditions
for duty-free import and sale into DTA facilities.
The commerce ministry has streamlined the interface between the SEZ and the DTA (Domestic
Tariff Area) for sensitive products. The access of polyester yarn based units to the DTA for job
work or sale through the third party exports route has been severely limited. Power generating
units must cater to the SEZ and not build capacities for DTA market. Surplus power sale into the
DTA will require approval from the SEB and also attract a duty of customs on clearances based
on a future Department of Revenue notification.
The processed granite segment of the EOUs is holding a granite monument Stone Fair in 25
acres of land at the Chennai Trade Fair from 23 to 26 January. Over 100 buyers are expected.
This event will be followed up by a marble stone fair at Jaipur on 31 January. Both granite and
marble provide a lasting smooth surface to monuments, mausoleums and building fronts. World
markets prefer granite but the Indian consumer loves the white marble of the Taj Mahal. Granite
industry of the South is young and bubbling with energy from exports, on the other hand, the
marble of Rajasthan is fighting hard to stop the barrage of imports through licensing restrictions.
The latest is that marble is among the 101 items named by the European Communities in a
dispute with India on remaining QRs in a 23 December 2002 request for consultations at WTO.
O