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Sub : Exemption under Notification No.45/2002 dated 22.4.2002 (related to DEPB scheme)

Vide notification No.45/2002 dated 22.4.2002 at Sr.no.3 it has been provided that whole of SAD will be exempted under DEPB issued in terms of Para 4.3 of Exim Policy. This notification has not been added to notification No.23 dated 1.3.2002 related to exemption of Special Additional Duty (please note that the notification No.34/97 related to DEPB Scheme under Exim Policy 97-02 was covered at Sr.No.60 of notification No.23/2002). This confirms that the import under DEPBs, issued in terms of Para 4.3 of Exim Policy (2002-2007) are not exempted from SAD. However, the importer has an option of debiting SAD under DEPB

Vide Para 4.45.1 of Hand Book of Procedures, it has been provided that in case of export proceeds are not realized within 6 months or such extended period, as may be allowed by RBI, the DEPB holder shall pay in such case the amount equivalent to the duty free credit utilized on imports including SAD against such exports with 15% interest from the date of import till the date of deposit. 

Also, Appendix 10 A Handbook of Procedure Vol.1 (Data sheet for DEPB rates), require the information about basic customs duty only for fixation of DEPB rates.

On the basis of above it can be concluded that DEPB rates have been fixed on the basis of basic customs duty only and impact of SAD has not been taken into account.

Hence, Sr.No.3 of Custom Notification No.45/2002 needs to be deleted and Notification No.45/2002 should be included in Custom Notification No.23/2002.

Exporters are extremely concerned on above, hence it is essential to do the needful at the earliest.


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