Q.1 WHAT IS DEPB? 
Ans: Duty Entitlement Passbook Scheme is a duty remission scheme covered in Chapter 7 of the Export And Import Policy. For the exporters not desirous of going through the licensing route, an optional facility is given under DEPB. The objective of Duty Entitlement Passbook Scheme is to neutralise the incidence of Customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product. 

Q.2 HOW MUCH DEPB AMOUNT AN EXPORTER CAN GET? 
Ans: Under the Duty Entitlement Passbook Scheme [DEPB], an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency. The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by way of public notice issued in this behalf. For example if you are an exporter of Kraft Paper you will be entitled to the credit of Rs. 5/- for every FOB of Rs. 100/-. These rates are given in Appendix 28 A of Handbook of Procedures Volume l. 

The above rate in the example refers to 490 of Product group Chemicals having Product Code 62. 

Q.3 HOW THE DEPB CAN BE USED? 
Ans: The DEPB will be used as Duty Payment for import of raw materials, intermediates,  components, parts, packaging material, etc.

Q.4 WHAT ABOUT CVD PAYMENT? 
Ans: The holder of Duty Entitlement Passbook Scheme [DEPB] shall have the option to pay additional customs duty, if any, in cash as well.

Q.5 WHAT IS THE VALIDITY OF DEPB? 
Ans: The DEPB shall be valid for a period of 12 months from the date of issue. 

Q.6 CAN DEPB BE REVALIDATED?  FOR WHAT PERIOD? 
Ans: There is no provision in the policy for revalidation of DEPB. It is therefore advisable to utilise the DEPB within original period of its validity.

Q.7 CAN WE TRANSFER THE DEPB? 
Ans: The DEPB and/or the items imported against it are freely transferable. There is no prior approval required from licensing authority. The DEPB holder can transfer the DEPB by issuing a transfer letter in favour of the person to whom it is being transferred. The transfer letter is signed by the authorised person of the company. 
His signature is verified by his banker so as to establish the genuineness of the signature. 

Q.8 HOW MUCH PREMIUM OR PRICE DO PRICE WE GET FOR SALE OF DEPB?
Ans: There is no fixed rate for the sale and purchase of DEPB. Like any other commodities the premium for DEPB also largely depend on demand and supply condition prevailing in the market at any given point of time. If the demand is more than the supply, then the premium will be high, and vice - versa. Just to give an indication, presently the prevailing premium is about 113% of the DEPB amount. It means you get Rs. 113/- for every hundred rupees value of DEPB. The rate also depends on other factors like Name of the Port, Value of the DEPB, the Exporter's Status, the Date of Issue and the Broker in-between. 

Q.9 CAN DEPB BE UTILISED AS PER CHOICE OF IMPORTER AT ANY PORT? 
Ans: The DEPB shall be utilised for import at the port specified in the DEPB, which shall be the port from where exports have been made. However, imports from a port other than the port of export shall be allowed under Transfer Release Advice (TRA) facility as per the terms and conditions of the notification issued by Department of Revenue.

Q.10 CAN WE ALSO GET THE DUTY DRAWBACK AGAINST THE SAME EXPORTS? 
Ans: The Drawback refers to the refund of customs duty and excise duties paid on inputs. The exports made under the DEPB scheme shall not be entitled for drawback on the customs duty portion. The additional customs duty (CVD)/Central Excise duty paid in cash on inputs under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per Rules framed by the Deptt. of Revenue. However, where the Additional Customs Duty is adjusted from DEPB, no benefit of CENVAT/Drawback shall be admissible. 

Q.11 TO WHOM THE APPLICATION FOR DEPB IS TO BE MADE? 
Ans: An application for grant of credit under DEPB may be made to the licensing authority concerned in theform given in Appendix-11C alongwith the documents prescribed therein. The provisions of paragraph 7.2 of the handbook shall be applicable for DEPB also. An application for DEPB can be made by the Registered Office or by Head office or a Branch office or Manufacturing Unit of the eligible exporter. 

Q.12 HOW THE FOB VALUE WILL BE TAKEN?
Ans: The FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer's T/T buying/on demand buying rate as the case may be, prevalent on the date of negotiation/ purchase/ collection of document. The DEPB rate of credit shall be applied on the FOB value so arrived. The DEPB shall be initially issued with non-transferable endorsement in such cases where realisation has not taken place to enable the exporter to effect import for his own use. However, upon receipt of realisation, the DEPB shall be endorsed transferable. In such cases, where the applicant applies for DEPB after realisation, the DEPB shall be issued with transferable endorsement. 


Q.13 WHAT HAPPENS IF THE AMOUNT IS NOT REALISED FOR THE EXPORTS MADE AND DEPB RECEIVED?
Ans: If the export proceeds is not realised within six months or such extended period as may be allowed by RBI, the DEPB holder shall pay in cash an amount equivalent to the duty free credit utilised on imports, including SAD, against such exports with 24% interest from the date of import till the date of deposit. In such cases, where the amount realised in foreign exchange is less than the amount on which DEPB credit has been obtained, the holder of DEPB shall pay, in cash an amount proportionate to the duty free credit utilised on imports, including SAD with 24% interest from the date of import till the date of deposit. 
However, the facility of transferability may be allowed against DEPB without insisting on realisation of export proceeds if the shipments are made against irrevocable letter of credit and the same is certified by the bank in column 14/15 of Appendix 25.