PLANS are afoot to supplant the duty entitlement passbook (DEPB)
scheme, the popular tax remission scheme for exporters, with a new
one, where rates would be brand specific, government sources informed
recently.
In place of the industry-average norm being used under DEPB, benefits
would be quantified on the basis of actual consumption of imported
inputs by the manufacturer-exporter under the new scheme.
The government has made it clear that the DEPB scheme would cease to
exist after June 30, considering that it was perceived as being
WTO-incompatible due to its alleged subsidy component.
Large manufacturing firms, including automobile and metal majors, are
expected to welcome the move to supplant DEPB with a brand rate
scheme, but smaller firms may find the new scheme unappealing.
According to sources, all products (defined by the harmonised code
system) now falling under DEPB would also be incorporated into the
duty drawback scheme for the benefit of smaller companies.
Nonetheless, these firms, in particular from labour-intensive
industries such as textiles and leather, are unlikely to be pleased as
the drawback scheme is known for being more rigorous on rate fixation.
A Finance Ministry official affirmed that the government was keen to
shift from notional claims by exporters to actual ones, and hence
brand rate fixation scheme was one of its options. He said the Finance
Ministry and Commerce Ministry were still working out the details.
The official revealed that for fixing the brand rate, applicants have
to file with the Commissioner of Drawback, who will fix the rates
after getting the verified data from exporters. Importantly, the brand
rate scheme would be fully compliant with WTO's agreement on subsidies
and countervailing duties, the official assured, while admitting that
many things still needed to be resolved before shifting to the new
scheme.
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