Double benefit is not allowed

CHATROOM

Exports from EOUs/EPZ units do not enjoy DEPB benefits.

We are merchant exporters. We have executed a bond with the maritime commissioner and issued CT1 favouring an Export Oriented Unit (EOU). We have exported the goods cleared by the EOU under CT1 and claimed the DEPB (Duty Entitlement Passbook) benefit. The EOU requested for giving proof of exports and so we sent copy of the shipping bill. Now, the supplier says that their Central Excise officials are raising some objections. Is there anything wrong in what we are doing?

It is easy to see that against the same exports, you are obtaining DEPB and the EOU is availing duty free raw material import benefit. That amounts double benefit. It is also a violation of the existing instructions. You may refer to the DGFT Policy Circular no. 6/(RE-98)/1998-1999 dated 20th May 1998, which clarifies in no uncertain terms that exports effected by EOUs/EPZ units, whether directly or through third party are not entitled for DEPB benefits/discharge of export obligation under advance licence. The Circular further says that the shipping bills must indicate the names of both the manufacturers and the third party and goes on to clarify that while indicating the name of the manufacturer in such cases, the status of the unit i.e. 100 per cent Export Oriented Unit or Unit in the Export Processing Zone also must be clearly indicated.

We have made some exports under EPCG (Export Promotion Capital Goods) Scheme but, by mistake, we have not mentioned the EPCG license numbers in the shipping bills. Now, our Chartered Accountant (CA) is not ready to certify the statement of redemption. Please suggest a way out.

You may please refer to DGFT Policy Circular no. 7(RE-2002)/2002-07 dated 11th July 2002 which prescribes the procedure for regularising such cases. Essentially, you have to furnish an affidavit/undertaking, duly certified by an independent CA, declaring that the exports accounted for fulfilment of export obligation against a particular EPCG licence have not been/shall not be taken into account for fulfilment of export obligation against any other EPCG license.

We are located in Himachal Pradesh and so our final products are not dutiable. So, we are not entitled for Cenvat Credit. We are exporting under EPCG scheme because the benefits are better than under advance licence. We are mostly procuring local raw materials on excise duty payment and some imported duty-paid raw materials are also available with us. Can we get drawback of the duties paid or any rebate of the duties paid on the raw materials?

You can use excise notification no. 21/2004-CE(NT) dated 26.06.2001 through which you can rebate the excise duty paid as well as the additional duty of customs i.e. CVD paid on the raw materials used in the manufacture of the export product. You can simultaneously avail of the DEPB benefit and thereby, disburden the basic customs duty incidence on the imported inputs used in the manufacture of the export product.

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