Wrong availment of DEPB benefit in respect of exports where imports were made without payment of customs duty under Notification No. 32/97, dated 1-4-1997 - Customs - 026/02

Circular No. 26/2002-Cus., dated 16-5-2002 F. No. 605/55/2002-DBK Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject: Wrong availment of DEPB benefit in respect of exports where imports were made without payment of customs duty under Notification No. 32/97, dated 1-4-1997. A complaint has been received in the Board that many custom houses are allowing DEPB benefits in respect of exports where import of materials had taken place without payment of duty in terms of Customs Notification No. 32/97. Customs Notification No. 32/97 permits import of materials/components etc. without payment of customs duty against Bond/BG for jobbing re-export within a specified time limit. In other words, materials imported under 32/97 do not pay any customs duty and on re-export the Bond/BG filed by the party gets redeemed. It is reported that many parties are wrongly availing DEPB benefits in addition to the facility of duty free import available under 32/97 and in order to avoid detection, at the time of export, they do not declare having imported the inputs without payment of duty. 2. DEPB benefit is available only when the inputs gone into the manufacture of export product have suffered duty. Hence, once the party has availed benefit of Customs Notification No. 32/97, then he becomes disentitled to DEPB benefit; the facility available under 32/97 and 34/97 (DEPB Scheme) are exclusive and independent of each other. 3. Due care should be taken by Customs at the time of processing export consignments under DEPB Scheme so as to ensure that in cases where imports had taken place on availing the facility of Customs Notification No. 32/97, no DEPB benefit is extended. For the purpose of ease of identification of export consignments where benefit of Customs Notification No. 32/97 was taken at the time of import, it should be made mandatory for the party to declare this fact on the body of the shipping bill along with details of materials as imported free of duty under 32/97. 4. Suitable trade notice and standing orders for the guidance of trade and staff may respectively be issued. 5. Receipt of the Circular may please be acknowledged.