| Senior government officials told Business Standard that Commerce and Industry Minister Kamal Nath had referred the issue back to the PMO. |
| The finance ministry's proposal to adjust the DEPB rates on the basis of Free-on-Board (FOB) prices prevailing on February 2004, when the DEPB benefits to the steel items were withdrawn, was unacceptable to the ministry. |
| "The Commerce and Industry Ministry is of the view that the adjustment of the DEPB rates should be done on the basis of the prevailing FOB rates," an official said. With the Prime Minister, Manmohan Singh having returned to the country, a decision on the issue is expected to be taken this week. |
| The DEPB is a reimbursement of basic and special customs duty paid by an exporter on an imported input used in the export product. |
| The benefit is given by way of a grant of duty credit against the export product at specified rates. |
| The government had frozen the DEPB benefits to steel in February. |
| These were later restored in July. |
| The finance ministry is keen to reduce the benefits on steel on the grounds that the customs duties on steel had been reduced in the Budget. According to the revenue department estimates the outgo on account of DEPB benefit to the steel sector in 2003-04 was Rs 1,359 crore. |
| The Commerce and Industry Ministry has already reduced the DEPB benefits on 83 textile products by 45 per cent across the board on the suggestions of the finance ministry. |
| The ministry had proposed that the cut should not be more than 30 per cent since the textile sector will be facing a quota free regime from January 1, 2005. The textiles ministry had sought the continuation of the benefits without any cuts. |
| Following the steep cut in DEPB rates, Textiles Minister Shankersinh Vaghela wrote a letter to Commerce and Industry Minister Kamal Nath seeking a review of the new rates which were notified last week. |
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