The Customs department has given a substantial relief to exporters by agreeing to give duty exemption passbook credit to export consignments on free-on-board (f.o.b) rates, instead of their present market value.
In a notification issued by the Customs department last week, it said this would replace the current practice of valuing export consignments at their present market value when those were lower than f.o.b rates as a general rule.
The notification said this had been done since f.o.b value was recognised as the basis of export transactions both in exim ploicy as well as in the Customs Act. The move will benefit exporters as they will earn larger duty exemption passbook credit in such cases.
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The department has accepted the logic of the exporters that high-value products are bound to have a higher f.o.b value than their present market value.
Besides, due to the current valuation rules, whenever the f.o.b value is used as the basis of export invoice, they are subjected to market verification with adverse impact on exports.
However, the department has warned that while reversing the rules, wherever it is conclusively proved through investigations that the f.o.b value has been artificially inflated or manipulated to earn extra duty exemption passbook credit, such credit will be lowered to present market value.
The notification added market verifications to detect such tampering should not be done in a routine manner, but on the basis of intelligence reports and concrete evidence. Additionally, such data collection should not hold up exports.