Duty Entitlement Passbook Scheme (DEPB)

 Post Exports scheme to neutralize the Basic customs duty on inputs.

 Post export Freely transferable Duty Credit Scrips issued at notified percentage of FOB value of
Exports.
 DEPB rates notified for 2137 items
 Most popular scheme
 DEPB on pre realisation and post realisation
 2008-09 – 1,12,764 DEPB scrips issued for duty credit worth Rs.7,713 crores.

Eligibility of DEPB benefit on exports in cases where the inputs have been procured under DEPB
Scheme –

1.Under the DEPB Scheme, the incidence of customs duty (basic) on the deemed import content of the
export product is refunded to the exporters. The refund is provided by way of grant of duty credit against
the export product. The credit is given at notified rates for import of raw materials, components, etc. The
DEPB and/or the items imported against it are freely transferable.

2. In this connection, a doubt has been raised as to whether the benefit of DEPB would be available to the
exports where the inputs used in the manufacture of the export product were imported on payment of duty
through DEPB. The point raised is that since no customs duty has been paid on the inputs by way of cash,
the exporter will not be entitled to DEPB on export goods utilizing such inputs.

3. The matter has been examined by the Ministry. It is noted that the DEPB Scheme is a post export duty
remission scheme, which allows neutralization of deemed import duty charges on inputs used in the export
product. Under the Scheme, the exporter first uses duty paid inputs in the manufacture of the export
product and after exports he gets the duty credit at the notified rates. Thus, instead of refund of duty in cash
after exports, a scrip in the form of DEPB is issued against the export product as duty remission. The
exporter is at liberty to utilize the scrip for import of raw materials, components etc. within the credit allowed
in the DEPB or he may sell it to any other exporter.
4. In a case where the exporter sells the DEPB to another exporter, he gets cash of equivalent amount to
pay customs duty on the import of raw materials and components. In this situation, he would be entitled to
DEPB on his subsequent exports. Further, the exporter can sell the inputs imported against DEPB to
another exporter for being used in export production. In this situation also, the latter exporter will be entitled
to DEPB on his exports. Therefore, to deny the DEPB benefit to an exporter who has utilised the DEPB
scrip for sourcing his own inputs is not appropriate. As such, the point raised that the benefit of DEPB
should not be allowed in a situation where the customs duty has been paid on the inputs by way of debit in
DEPB is devoid of merits.

5. It is, therefore, clarified that the benefit of DEPB Scheme should be allowed on exports even though the
inputs used in the manufacture of the export product were cleared through DEPB route. The letter
F.No.605/11/2004-DBK dated 12.4.2004 of OSD(Drawback) addressed to CC&CE, Indore stands
withdrawn.

6. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and customs
field formations.

Receipt of this Circular may please be acknowledged.

ABOUT

There was some delay in announcing the new DEPB rates this time in view of the fact that exporters
were clamouring for increase in rates with the hardening of the rupee in the forex market. Accordingly, the
Government has announced enhanced DEPB rates across many commodities. For many sectors, the rates
have been increased by 2%. For textiles including handloom, ready made garments, leather products,
handicrafts, engi¬neering products, processed agricultural products, marine products, sports goods, toys,
the DEPB rates have been increased by 3%.

In the current edition, the new DEPB rates have been reproduced along with the existing ones. Opportunity
has also been taken to incorporate relevant amendments at appropriate places which have taken place in
the last one year since the publication of the last edition.

We are extremely grateful to Mr.RA Garg of Commercial Law Publishers (P) Ltd. who has shown immense
interest and enthusiasm in bringing out this updated edition. We are also thankful to Mr. E.G.K. Menon and
Mr. R. Sampath of our office for their assistance.

We sincerely believe the present edition would be useful to manufacturers, exporters, importers,
consultants and practitioners as well as to the departmental officers. As always, we would with all humility
bow to valuable suggestions from our readers as we believe that in the dissemination of knowledge, there
must be confluence of thoughts and views.

Duty Entitlement Pass Book DEPB Secheme.

Duty Entitlement Pass Book Scheme in short DEPB is an export incentive scheme. Notified on 1/4/1997,
the DEPB Scheme 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 Scheme 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
Nibs, Gold Pen, Gold watches etc. though covered under the generic description of writing instruments,
components of writing instruments and watches are thus not eligible for benefit under the DEPB scheme.

The DEPB Rates 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 Handbook (Vol.1).

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 Para 4.3 and 4.3.1 to 4.3.5 of the Foreign Trade Policy
or Exim Policy. One significant change in the new DEPB Scheme is that in terms of Para 4.3.5 of the Exim
Policy even excise duty paid in cash on inputs used in the manufacture of export product shall be eligible
for brand rate of duty drawback as per rules framed by Department of Revenue which was not mentioned in
the earlier DEPB Scheme.

Benefits of DEPB Rates

The benefit of DEPB schemes is available on the export products having extraneous material up to 5% by
weight. In such cases, extraneous material up to 5% shall be ignored and the DEPB rate as notified for that
export product is be allowed.

Review of DEPB Rates

The Government of India review the DEPB rates after getting the appropriate a export import data on FOB
value of exports and CIF value of inputs used in the export product, as per SION. Such data and
information is usually obtained from the concerned Export Promotion Councils.

Implementation of the DEPB Rates

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 Customs duties.

• Caps fixed on certain items but there would be no verification of Present Market Value (PMV) on
such items.

• A number of ports have been added for availing facilities under the Duty Exemption Scheme,
including DEPB.

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

Provisional DEPB Rate

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.

Maintenance of Record

It is necessary for Custom House at ports to maintain a separate record of details of exports made under
DEPB Schemes.

Port of Registration

The exports/imports made from the specified ports given shall be entitled for DEPB.

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

Airports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex,
Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.
ICDs : 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.

LCS: Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and Mahadipur.

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

SEZ : Santacruz , Kandla, Kochi, Vishakhapatnam, Chennai, FALTA, Surat, NOIDA

Credit under DEPB and Present Market Value

In respect of products where rate of credit entitlement under DEPB Scheme comes to 10% or more,
amount of credit against each such export product shall not exceed 50% of Present Market Value (PMV) of
export product. During export, exporter shall declare on shipping bill that benefit under DEPB Scheme
would not exceed 50% of PMV of export product.

However PMV declaration shall not be applicable for products for which value cap exists irrespective of
DEPB rate of product.

Utilization of DEPB credit

Credit given under DEPB Schemes is utilized for payment of indian customs duty including capital goods,
which are free to import.

Re-export of goods imported under DEPB Scheme

In case of return of any exported goods, which has been found defective or unfit for use may be again
exported according to the exim guidelines as mentioned by the Department of Revenue.

In such cases 98% of the credit amount debited against DEPB for the export of such goods is generated by
the concerned Commissioner of Customs in the form of a Certificate, containing the amount generated and
the details of the original DEPB. On the basis of certificate, a fresh DEPB is issued by the concerned DGFT
Regional Authority. It is important to note that the issued DEPB have the same port of registration and shall
be valid for a period equivalent to the balance period available on the date of import of such defective/unfit
goods.
Duty Entitlement Pass Book DEPB Secheme.

Duty Entitlement Pass Book Scheme in short DEPB is an export incentive scheme. Notified on 1/4/1997,
the DEPB Scheme 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 Scheme 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
Nibs, Gold Pen, Gold watches etc. though covered under the generic description of writing instruments,
components of writing instruments and watches are thus not eligible for benefit under the DEPB scheme.

The DEPB Rates 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 Handbook (Vol.1).

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 Para 4.3 and 4.3.1 to 4.3.5 of the Foreign Trade Policy
or Exim Policy. One significant change in the new DEPB Scheme is that in terms of Para 4.3.5 of the Exim
Policy even excise duty paid in cash on inputs used in the manufacture of export product shall be eligible
for brand rate of duty drawback as per rules framed by Department of Revenue which was not mentioned in
the earlier DEPB Scheme.

Benefits of DEPB Rates

The benefit of DEPB schemes is available on the export products having extraneous material up to 5% by
weight. In such cases, extraneous material up to 5% shall be ignored and the DEPB rate as notified for that
export product is be allowed.

Review of DEPB Rates

The Government of India review the DEPB rates after getting the appropriate a export import data on FOB
value of exports and CIF value of inputs used in the export product, as per SION. Such data and
information is usually obtained from the concerned Export Promotion Councils.

Implementation of the DEPB Rates

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 Customs duties.

• Caps fixed on certain items but there would be no verification of Present Market Value (PMV) on
such items.

• A number of ports have been added for availing facilities under the Duty Exemption Scheme,
including DEPB.

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

Provisional DEPB Rate

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.

Maintenance of Record

It is necessary for Custom House at ports to maintain a separate record of details of exports made under
DEPB Schemes.

Port of Registration

The exports/imports made from the specified ports given shall be entitled for DEPB.

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

Airports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex,
Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.
ICDs : 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.

LCS: Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and Mahadipur.

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

SEZ : Santacruz , Kandla, Kochi, Vishakhapatnam, Chennai, FALTA, Surat, NOIDA

Credit under DEPB and Present Market Value

In respect of products where rate of credit entitlement under DEPB Scheme comes to 10% or more,
amount of credit against each such export product shall not exceed 50% of Present Market Value (PMV) of
export product. During export, exporter shall declare on shipping bill that benefit under DEPB Scheme
would not exceed 50% of PMV of export product.

However PMV declaration shall not be applicable for products for which value cap exists irrespective of
DEPB rate of product.

Utilization of DEPB credit

Credit given under DEPB Schemes is utilized for payment of indian customs duty including capital goods,
which are free to import.

Re-export of goods imported under DEPB Scheme

In case of return of any exported goods, which has been found defective or unfit for use may be again
exported according to the exim guidelines as mentioned by the Department of Revenue.

In such cases 98% of the credit amount debited against DEPB for the export of such goods is generated by
the concerned Commissioner of Customs in the form of a Certificate, containing the amount generated and
the details of the original DEPB. On the basis of certificate, a fresh DEPB is issued by the concerned DGFT
Regional Authority. It is important to note that the issued DEPB have the same port of registration and shall
be valid for a period equivalent to the balance period available on the date of import of such defective/unfit
goods.
Introduction

The Government of India offers many incentives to Indian importer under special schemes.
These schemes are mostly available on those imported product, which will be latter on used for
manufacturing of goods meant for export. This not only stimulates the industrial growth and
development but also brings the foreign currency after the final export process. The following
are some of the important import incentives offered by the Government of India, which
significantly reduce the effective tax rates for the import companies:

DEPB
Duty Entitlement Pass Book in short DEPB is basically an export incentive scheme. The objective of DEPB
scheme is to neutralize the incidence of basic custom duty on the import content of the exported
products. Notified on 1/4/1997, the DEPB Scheme 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.

General Instructions:

1. The DEPB rate and the value cap shall be applicable as existing on the date of exports as
defined in paragraph 15.15 of Handbook (Vol.1).
2. The value cap, wherever existing shall be with reference to the FOB value of exports.
The DEPB rate 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/-.
3. Wherever any specific rate exists for a particular item under DEPB rate list as given in
appendix 28A, the items shall not be covered under any generic description of the DEPB
rate list.
4. The DEPB rate aims to neutralise the incidence of duty on the inputs used in the export
product. Therefore, the DEPB rates as given in appendix 28A refer to normally
tradable/exportable product. Items such as gold Nibs, Gold Pen, Gold watches etc. though
covered under the generic description of writing instruments, components of writing
instruments and watches are thus not eligible for benefit under the DEPB scheme.
5. The DEPB rates given for various galvanised Engineering product shall cover non
galvanised products and vice-a-versa.
 6. The DEPB rate given for various types of garments do not cover Silk as well as woollen
garments unless specifically mentioned in the DEPB description.
7. Portable Products at S.No.266, 267, 268, 269, 270 & 316 of Product Group: Engineering
(Product Code 61) exported in the form of incomplete CKD/SKD Kit, but consisting of
(I) Engine (ii) Chasis (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.
8. The DEPB rate for formulations consisting of more than one bulk drug would be
calculated as per provisions of Policy Circular No.20 dated 31st July, 2000.

9. DEPB Scheme benifite

1. Facility for pro visional Duty Entitlement Pass Book(DEPB) rates introduced to
encourage diversification and promote export of new products.
2. DEPB rates rationalize in line with general reduction in Customs duty.