Circular No. 6 dated 5^th February 2001

During deliberations in the DEPB Committee, it was noticed that certain field formations are assessing DEPB shipping bills for certain products which are not squarely covered under the relevant DEPB rate entries, and are assessing such shipping bills by splitting the FOB value into two or more elements by costing method or otherwise, and granting DEPB credit in regard to the value of that element which gets covered by the DEPB rate entry.

2.      The issue has been discussed in the DEPB Committee Meeting, wherein it has been decided that it is incorrect to split the value of an export product into two separate elements for two different parts/ constituents and grant DEPB credit in relation to value of one of them treating it as FOB value for the purposes of calculation of DEPB credit entitlement, and where the export product is not squarely covered within the description of the export product given under the relevant DEPB entry, such products would fall outside that entry and DEPB credit cannot be granted by artificially splitting the FOB value declared in the shipping bill into two constituents pertaining to two physical constituents of the export product of which one is deemed to fall within the relevant DEPB rate entry and the other is deemed to fall outside the said rate entry. No DEPB entitlement shall be admissible in such cases.

3.      The issue has been examined in the Board, and it has been decided that the above decision of the DEPB Committee may be noted for uniform application by all Custom Houses.

4.      The contents of this Circular may be brought to the notice of staff for uniform application & to avoid undue revenue outgo.

Method of Calculation of Duty Leviable in Terms of Central Excise Notification No.2/ 95-CE, dated 4-1-95 on Goods Cleared into.