CIRCULAR No.26/2001-CUS. Dated 24th April, 2001 F.No. 605/36/2001-DBK

Market verification for duty drawback disbursement/ DEPB verification-regarding.

Board is concerned about the exporters resorting to over-invoicing of export goods, and also possibly exporting sub-standard goods by declaring FOB values which are not in consonance with the market value of the commodities being exported. Many instances of frauds attempted by the exporters to avail higher benefits through such means, have also been detected by the Directorate of Revenue Intelligence and even by the Custom Houses.

2. Board desires that the intelligence system should be beefed up in the Custom Houses in respect of such exporters who may be over-valuing the goods grossly and may be trying to export even sub-standard goods procured at very low prices and declaring high F.O.B/ market prices so as to get away with high export benefits. It is, therefore, mandatory for the exporters to declare the present market value of the goods and the veracity of the same should be checked by the field officers. In case, on examination of the goods, the f.o.b. value as well as the declared market value of the goods are suspected to be on the higher side or the goods appear to be sub-standard, then the samples shall be drawn with the approval of the Assistant Commissioner of Customs and careful market verification carried out on most speedy basis.
   
   
3. The provisions contained in section 76(I) (c) of the Customs Act, 1962, stipulate that no drawback shall be allowed in respect of any goods the market price of which is less than the amount of drawback thereon. Similarly, in the case of DEPB, it has been provided that wherever the value of the goods appear on the higher side, the DEPB credit shall be restricted to the extent of 50% of the present market value (PMV) of the goods.
   
   
4. Hence, if on the basis of market inquiry, it is found that the declared value of the export goods is more than their present market value then such present market value shall be the determining value for the purposes of allowing drawback /DEPB credit.
   
   
5. This may be brought to the notice of the staff concerned and the trade through issuance of suitable standing order and public notice. It should also be ensured that such verifications are conducted only in suspected cases and not in a routine manner in case of all exports and no harassment is caused to the genuine exporting community.

Sd/-
(S.S.Renjhen)
Joint Secretary to the Govt. of India

(Please refer CUS CIR NO.07/2003 DATE 5/02/2003)

(Please refer Cus Cir No.77/2002 Date 27/11/2002)

(Please refer Cir. No. 56/2002-Cus, Dt. 09/09/2002 for Market verification for ascertaining the present market value under DEPB Scheme and admissibility of DEPB credit)

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