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Dear Members,
As you are aware, under the DEPB Scheme in the previous Policy, only Basic Customs duty (BCD), Countervailing duty (CVD) was taken into account for the purpose of debiting the DEPB scrip in terms of Customs Notification No.34/97 dt 7.4.1997. Special Additional Duty of Customs (SADC) as an element of duty has been separately exempted in terms of Customs Notification No.23/2002 dated 1.3.2002 (Sl.No.60). However, Customs Notification No.45/2002 dated April 22, 2002 – which was issued to operationalize the DEPB scheme in accordance with the new Exim Policy - stipulates that BCD, CVD and SADC would be debited to the DEPB scrip. This was also categorically mentioned in the Customs circular No.24/2002 dated May 6, 2002 that the element of SADC shall henceforth be debited in the DEPB Scrip.
As a result of additionally debiting the SADC in the DEPB Scrip, several exporters informed the Council that the benefit of duty credit gets exhausted very quickly, and they are put to additional financial burden in customs clearance of the imported inputs. Therefore, the Council immediately took up the matter with the Revenue Secretary, Director General of Foreign Trade, Chairman-Central Board of Excise & Customs, Joint Secretary (Drawback), & Joint Secretary (Dept of Commerce) and requested to exempt SADC element in the DEPB Scheme as was existing in the previous policy. The matter is under the consideration of the Government.
Meanwhile, several member-exporters informed the Council that the customs authorities continue to debit SADC element also, along with BCD and CVD, even in respect of DEPB scrip issued in accordance with the previous Exim Policy 1997-2002.
In other words, the DEPB scrip issued from April 1, 2002 against exports effected prior to 31 March 2002 are now debited with SADC component also.
In view of the seriousness of the matter, the Chairman of the Council and the Executive Director met the Joint Secretary (Drawback) and it was explained that the exports made on or before 31 March 2002 are eligible for DEPB rates as per the then policy and the credit accordingly given. Based on the then prevailing rates and exemption available for SADC, the exporters have made the price commitments and exported the goods accordingly. But while utilizing the DEPB scrip in respect of such shipments, the exporters are now required to bear the additional burden of SADC, due to the application of current stipulation in the Customs Notification No.45/2002 dated 22.4.2002 by the customs authorities. This interpretation problem and the consequential delay in clearing the import consignments had caused severe financial hardships to the exporters, making the export transactions unviable.
Accordingly, the Council requested the JS(DBK) to issue clarification to all the customs authorities, stating that the DEPB scrip issued on or after April 1, 2002 against export effected prior to March 31, 2002 will not be covered under the Customs Notification No.45/2002 dt April 22, 2002 read with Customs Circular No.24/2002 dated May 6, 2002.
It was assured in the said meeting that necessary clarification would be issued to all the customs authorities to allow clearance under the DEPB scrip issued against export effected prior to March 31, 2002 without debiting the SADC element. It is expected that the Revenue Department will issue the clarification shortly.
This is for information of the member-exporters.
With best wishes,
Yours sincerely,
S Audiseshiah
Executive Director
May 27, 2002
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