9th September, 2002
Government of India
Ministry of Finance
Department of Revenue
Market verification for ascertaining the present market value under DEPB Scheme and admissibility of DEPB credit-reg.
Attention is invited to Board’s Circulars No.15/97-Cus dated 3.6.1997, 69/97-Cus dated 8.12.1997, 79/98-Cus dated 22.10.1998, 23/99-Cus dated 11.5.1999 and 26/2001-Cus dated 24.4.2001.
2. As per the existing instructions contained in these Circulars, the DEPB credit is to be normally given on the FOB value of the exports. However, where on the basis of market inquiry it is found that the declared value of the export goods is more than their present market value then the present market value shall be considered for the purposes of allowing DEPB Credit.
3. Field formations have sought clarification whether these instructions are also applicable to those goods where the declared f.o.b. value is more than the declared present market value. Also, whether these instructions shall also be applicable to those goods whose DEPB Credit rates are less than 10%.
4. It is clarified that wherever, the declared f.o.b. value is more than the present market value as declared by the exporter or as ascertained by the Customs authorities, the present market value shall be the basis for granting DEPB credit. Further, this principle will be applied to all export products whether their rates are less than 10% or are 10% or above 10%.
5. As per the existing instructions the verification of the present market value through market enquiries should be specifically assigned to the Special Intelligence & Investigation Branch of the Custom House and not to the Assessing Officer and the enquiry must be completed and the final view taken in 30 days except where the Commissioner of Customs has specified that it is necessary to extend the period beyond 30 days to collect further information/evidence, the enquiry period may be extended upto 90 days from the date of the Shipping Bill. The show cause notice should be issued within the extended period of 90 days. However, if the Commissioner of Customs is satisfied that the enquiry for determining the present market value of the goods has to be extended for reasons involving fraud/collusion/wilful mis-statement or suppression of facts, he may extend the period of 3 months till such further period as is deemed necessary after recording the reasons thereof in writing.
6. It has been brought to the notice of the Board that in many cases the intelligence regarding over-valuation of the exports is received much after the exports. Therefore, the existing instructions pose a legal hurdle in investigation of DEPB frauds where the DEPB credit has already been availed and in many cases even utilised.
7. This issue has been examined in the Board. It is clarified that in respect of the cases involving fraud/collusion/wilful mis-statement or suppression of facts, etc., the enquiry can be opened at any stage within a period of 5 years and notice may be issued for recovery of import duty involved.
8. Suitable public notices for information of the trade and standing orders for guidance of the staff may kindly be issued accordingly.
9. The receipt of this Circular may kindly be acknowledged.