14 year old Duty Entitlement Pass Book ( DEPB ) is abolsihed from 1st October 2011 and those items on which DEPB was allowed are shifted to Duty Drawback Scheme . Thus, Centre has now enhanced numbers of items under Duty Drawback to 4000 items .
The move to scrap the DEPB is considered non-compatibility with India’s obligations at the World Trade Organisation (WTO). DEPB scheme was on ventilation since 2005, finally scrapped it from October 1. Presently, there are 2,130 items under DEPB that are allowed refunds on import duty paid on those items manufacture for export purposes.
Under duty drawback scheme an equal amount is spent as tax refunds, Central Board of Excise and Customs chairman Sumit Dutt Majumder said, adding the revenue foregone with the withdrawal of DEPB would be less. The notification of the new rates will be issued in the next few days.
Of the 1,100 items being shifted to DDS, there would be a ceiling of 5.5 per cent tax refund rate on 660 items. However, the ceiling would not apply to 340 items including worsted woolen yarn, blanket, nylon twine, cut polished chat stones, polyester metallised film.
Though exports have shown a remarkable performance, growing by 54.2 per cent between April-August 2011 to $134.5 billion, there are concerns that the momentum may not be sustained in the wake of economic crisis in US and Europe .
A top Finance Ministry Official said “while there would be a minor reduction in duty drawback rates for most items, due care has been taken to ensure that the reduction is capped at 10 per cent of the existing duty drawback rates.”
He also said government has decided to provide a smooth transition for the 1100 DEPB items while incorporating these in the drawback schedule. “As a transitory arrangement, these items will suffer a modest reduction in the existing DEPB rates to the extent of 1-3 per cent.