DEPB is an export incentive scheme of Indian Government provided to Exporters in India.
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 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.
When U export any goods out of India; you have 2 options
1. To avail Drawback
2. To avail DEPB benefit.
Thus at the time of export you are required to file either Drawback or DEPB shipping bill.
The credit earned by you by exporting the goods under DEPB is given by DGFT in the Form of DEPB scrip against which U can import any goods and in place of payment of customs duty U can get DEPB scrip debited.
DEPB is also transferable.
The main features of the DEPB scheme are as follows:
i) An exporter can import raw materials, intermediates, components, parts, packaging material etc. except those items mentioned as restricted item for imports in ITC (HS) classifications of export and imports items.
ii) DEPB benefit is available on post export basis only. The rates of import duty credit under DEPB scheme are given in the Hand Book of Procedures Vol.1. The DEPB on post export basis is granted only after the proceeds have been realized by the exporter.
iii) Merchant exporter and manufacture exporter are eligible for DEPB on the post export basis.
iv) The import of inputs is allowed without payment of basic customs duty and surcharge thereof as well as additional duty of customs, against the import duty credit granted under this scheme. The holder of DEPB has the option to pay additional customs duty, if any, in cash as well.
v) Third party exports are also admissible for grant of credit under DEPB.
vi) The DEPB shall be valid for a period of 24 months from the date of its issuance.
vii) The goods already imported/shipped/arrived in advance but not cleared from customs may also be cleared against the DEPB issued subsequently.
viii The DEPB on the post export basis and / or the items imported against it are freely transferable. The transfer of DEPB shall however, be for import at the port specified in the DEPB which shall be the port from where exports have been made.
ix) An exporter can file application for the grant of import duty credit under DEPB scheme within a period of 180 days from the date of exports or within 90 days from the date of realization of export proceeds, whichever is later. The numbers of days are calculated from the last date of realization/export, in respect of shipments for which the claim is filed.
Duty Free Replenishment Certificate is issued to a merchant-exporter or manufacturer-exporter for the import of inputs used in the manufacture of goods without payment of Basic Customs Duty, Surcharge and Special Additional Duty.
However, such inputs shall be subject to the payment of Additional Customs Duty equal to the Excise Duty at the time of import.
Duty Free Replenishment Certificate shall be issued only in respect of export products covered under the SIONs as notified by DGFT.
Duty Free Replenishment Certificate shall be issued for import of inputs, as per SION, having same quality, technical characteristics and specifications as those used in the end product and as indicated in the shipping bills. The validity of such licenses shall be 24 months. DFRC and or the material imported against it shall be freely transferable.
The Duty Free Replenishment Certificate shall be subject to a minimum value addition of 33%
The export products, which are eligible for modified VAT, shall be eligible for CENVAT credit however, non excisable, non dutiable or non centrally vatable products, shall be eligible for drawback at the time of exports in lieu of additional customs duty to be paid at the time of imports under the scheme.
The exporter shall be entitled for drawback benefits in respect of any of the duty paid materials, whether imported or indigenous, used in the export product as per the drawback rate fixed by Directorate of Drawback (Ministry of Finance). The drawback shall however be restricted to the duty paid materials not covered under SION.
The export under deffered payment scheme to Russia is also allowed for issuance of DFRC.
The difference between DFRC & Advance Licence together with DEPB is as under DFRC is transferable script available on post export basis. In this case basic custom duty surcharge and special additional duty is exempted but payment of additional customs duty (CBD) is applicable Advance License is issued with actual user condition and non transferable. In this case all duties of customs and excise are exempted DEPB is transferable script available on post export basis for the duty incident on the custom duty incident on the import content of the export product. The importer has the option to pay additional customs duty if any in cash as well .
The April ’06 version of the Foreign Trade Policy introduced a new scheme known as Duty Free Import Authorisation scheme (DFIA). It came in to force from 1st May ,2006. It replaced the erstwhile Duty Free Replenishment Scheme Certificate (DFRC). The DFIA scheme offers more flexibility than the DFRC.
Why DFIA is issued ? : A Duty Free Import Authorisation is issued to allow duty free import of inputs which are used in the manufacture of the export product (making normal allowance for wastage), and fuel, energy, catalyst etc. which are consumed or utilised in the course of their use to obtain the export product. DFIA is a kind of licence which allows duty free imports for export production.
Why DFIA is Needed ? : Export production requires use of many inputs in small quantities. Even though such inputs are allowed for import without payment of customs duty under Advance Licensing Scheme, exporters generally do not import them because of lack of economies of scale and are forced to source them locally at a higher price. The existing Duty Exemption Schemes have been of little help in such cases because of design limitations.
To Whom DFIA is issued ? : The DFIA can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturers For Physical exports(including exports to SEZ). For intermediate supplies. To the main contractor for the supply of goods.
DFIA for Free of Cost and Paid Material: An exporter may apply for a DFIA for import of items as per SION, some or all of which may also include items that are supplied free of cost. In such cases, a specific endorsement shall be made on the exchange control copy of the DFIA disallowing remittances for the material being supplied free of cost. All inputs imported shall be utilised in the manufacturing of the product except the wastage.
Transferability of DFIA : Once export obligation has been fulfilled, request for transferability of the Authorisation or the inputs imported against it may be made before the Regional Authority. Once, transferability is endorsed, the Authorisation holder will be at liberty to transfer the duty free inputs, other than fuel and any other item(s) notified by DGFT for this purpose.
Duty Drawback Availability : The drawback shall be available in respect of any of the duty paid material, whether imported or indigenous, used in the goods exported, as per the drawback rate fixed by Ministry of Finance. The drawback shall, however be restricted to the duty paid materials mentioned in the application.
Application : An application in ‘Aayaat Niryaat Form’ with the import entitlement as per SION, along with documents prescribed in the application form, shall be submitted to the Regional Authority concerned. Applications, where Acetic Anhydride, Ephedrine and Pseudo-ephedrine is required as an input for import and prescribed in SION, shall be filed with the Regional Authorities concerned.
The Regional Authority while issuing DFIA shall mention the technical characteristics, quality and specification in respect of such inputs: : The Regional Authority while issuing DFIA shall mention the technical characteristics, quality and specification in respect of such inputs: Alloy steel including Stainless Steel Copper Alloy Synthetic Rubber Bearings Solvent Perfumes/ Essential Oil Aromatic Chemicals, Surfactants, Relevant Fabrics Marble Articles made of polypropylene Insecticides Lead Ingots Zinc Ingots Citric Acid Relevant Glass fibre reinforcement Relevant Synthetic Resin Lining Material Articles made of Paper and Paper Board.
DFIA for Applicants with Multi Units : Transfer of any duty free material imported or procured against non-transferable DFIA from one unit of the company to another unit of the same company for manufacturing purpose shall be done with the prior intimation to the jurisdictional Excise Authorities with a clear understanding that no benefit of CENVAT shall be claimed on such transferred inputs.
Monitoring of Export Obligation : The Regional Authority, with whom the undertaking is executed by the DFIA holder, shall maintain a proper record in a master register indicating the starting and closing dates of obligation period and other particulars to monitor the export obligation. Within two months from the date of expiry of the period of obligation, the certificate holder shall submit requisite evidence in discharge of the export obligation.
The objective of the Focus Market Scheme is to offset the high freight cost and other disabilities to select international markets with a view to enhance our export competitiveness to these countries.
Exports of all products to the notified countries shall be entitled forduty credit scrip equivalent to 2.5% of the FOB value of exports for each licensing year commencing from 1st April, 2006. The scrip and the items imported against it would be freely transferable.
Under the Scheme, export to all countries as specified in the Handbook of Procedures (Vol. I) shall qualify for export benefits with certain exceptions as outlined.
The Duty Credit may be used for import of inputs or goods including capital goods, provided the same is freely importable under ITC (HS).
Exporters shall have the option to apply for benefit either under the Focus Market Scheme or under the Focus Product Scheme or under Vishesh Krishi and Gram Udyog Yojana in respect of the same exported product/s.
Objective is to incentivise export of such products, which have high employment intensity in rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products.
Exports of notified products (as in Appendix 37D of HBP v1) to all countries (including SEZ units) shall be entitled for Duty Credit scrip equivalent to 1.25% of FOB value of exports for each licensing year commencing from 1st April, 2006. However, for exports made w.e.f. 1.4.2008, Toys and Sports Goods as detailed in Table 2 of Appendix 37D shall be entitled to duty credit scrip equivalent to 6.25% of FOB value of exports. Further, for exports made w.e.f. 1.4.2008, High Value Added Manufactured goods, as notified in Table 9 of Appendix 37D, shall be entitled to duty credit scrip equivalent to 2.5% of FOB value of exports.
However, New additional products notified / clarified in Appendix 37D of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2008. Exports made by EOUs / EHTPs / BTPs who do not avail direct tax benefits / exemption shall be eligible, provided the same is not covered under the following Paragraph
Following exports shall not be taken into account for computation of entitlement.
(a) (i) Export of imported goods covered under Para 2.35 of FTP;
(ii) Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India;
b. Export turnover of SEZ units or SEZ products exported through DTA units; and Market Linked Focus Product
For exports w.e.f 1.4.2008, Products of high export intensity (which are not covered under present FPS List) but which have a low penetration in countries (which are also not covered under present FMS list) would be incentivised and entitled to a duty credit scrip equivalent to 1.25% of FOB value of exports, provided that the product / sector are destined to specified linked markets for that particular product / sector.
Objective is to offset high freight cost and other externalities to select international markets with a view to enhance our export competitiveness in these countries.
Exporters of all products to notified countries shall be entitled for Duty Credit scrip equivalent to 2.5% of FOB value of exports for each licensing year commencing from 1st April, 2006.However New additional Markets notified in Appendix 37C of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2008.Exports made by EOUs / EHTPs / BTPs who do not avail direct tax benefits / exemption shall be eligible. Following exports shall not be taken into account for computation of entitlement:
a. (i) Export of imported goods covered under Para 2.35 of FTP;
(ii) Exports through transshipment, meaning thereby that exports originating in third country but transshipped through India;
b. Export turnover of SEZ units or supplies made to such units or SEZ products exported through DTA units;
c. Deemed Exports;
d. Service Exports;
e. Diamonds and other precious, semi precious stones;
f. Gold, silver, platinum and other precious metals in any form, including plain and studded Jewellery;
g. Ores and Concentrates, of all types and in all forms;
h. Cereals, of all types;
i. Sugar, of all types and in all forms;
j. Crude / Petroleum Oil & Crude / Petroleum based Products covered under ITC HS codes 2709 to 2715, of all types and in all forms;
k. Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS);
l. Cement, all types and in all forms
Entitlement Exporters of all products through EDI enabled ports to notified countries (as in Appendix 37C of HBP v1) shall be entitled for Duty Credit scrip equivalent to 2.5% of FOB value of exports for each licensing year commencing from 1st April, 2006. However additional Markets notified in Appendix 37C of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2007.
Objective of VKGUY is to promote exports of :
(i) Agricultural Produce and their value added products;
(ii) Minor Forest Produce and their value added variants;
(iii) Gram Udyog Products;
(iv) Forest Based Products; and
(v) Other Products, as notified from time to time.
Duty Credit Scrip benefits are granted with an aim to compensate high transport costs, and to offset other disadvantages. Exporters, of products notified in Appendix 37A of HBPv1, shall be entitled for Duty Credit Scrip equivalent to 5% of FOB value of exports (in free foreign exchange) for exports made from 27.8.2009 onwards. Flowers, Fruits, Vegetables and other products, as listed in Table 2 of appendix 37A shall be entitled to an additional duty credit scrip equivalent to 2% of FOB value of exports;