Duty Entitlement Pass Book (DEPB. Scheme This is another scheme aimed at ‘neutralising the incidence of customs duty on the import content of the exported product'. Its earliest version, the Pass Book Scheme, introduced in 1995, lapsed in 1997. For the policy period 1997– 2002, the DEPB scheme was introduced in two forms, pre and post export. In 2000, the pre-export DEPB scheme was discontinued and consequently we consider only the post-export variant as currently in force. Under the DEPB scheme, the exporter may apply for duty credit as a specified percentage of the FOB value of exports. The value of such duty credit is determined and notified by the Director General of Foreign Trade on the basis of the ‘deemed import content of the said export product as per SION and the basic custom duty payable on such deemed imports'.25 Where the value of such credits is not notified or where there is a case for change in the rates, the exporter may apply for fixation of rates by furnishing data on import and export. The DEPB credits or the items imported against them are freely transferable, but the import against them can be made only at the port from where exports have been made. Importantly, the credit under DEPB may be utilised for payment of customs duty on any item which is freely importable except capital goods. The period of validity is 12 months. DEPB benefits have been countervailed by the US in ‘Cut-to-length Carbon-Quality Steel Plate From India' (1999) and ‘Certain Hot-Rolled Carbon Steel Flat Products' (2001). In the former case, the US Department of Commerce determined that the GOI did not meet the criteria laid down in US CVD Regulations regarding the remission, exemption, or drawback of import duties. It did not have in place a system or procedure to confirm which imports were consumed in the production of the exported product and in what amounts. Neither had it carried out an examination of actual imports involved to confirm which imports are consumed in the production of the exported product. In the latter case, the exporters had argued that the GOI system met the substitution drawback provisions through the establishment and review of the SIONs, by compiling extensive information on the imported inputs and exported products from evidence such as the bills of entry and shipping bills, and through annual reviews and even revisions of DEPB credit rates. They had also argued that the use of standard norms to facilitate fixed rate drawback programmes was reasonable. Among the arguments...
