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DGFT Hand Book of Procedures HB Vol.1 ( upto 31/03/2002) Para 7.38

7.38

An application for grant of credit under DEPB may be made to the licensing authority concerned in the form given in Appendix-11C alongwith the documents prescribed therein. The provisions of paragraph 7.2 shall be applicable for DEPB also. The FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer’s T/T buying rate, prevalent on the date of negotiation/purchase/ collection of document. The DEPB rate of credit shall be applied on the FOB value so arrived. In case of advance payment, the FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer’s T/T buying rate, prevalent on the date of receipt of advance payment.
The DEPB shall be initially issued with non transferable endorsement in such cases where realisation has not taken place to enable the exporter to effect import for his own use. However, upon receipt of realisation, the DEPB shall be endorsed transferable. In such cases where the applicant applies for DEPB after realisation, the DEPB shall be issued with transferable endorsement.
If the export proceeds is not realised within six months or such extended period as may be allowed by RBI, the DEPB holder shall pay in cash an amount equivalent to the duty free credit utilised on imports, including SAD, against such exports with 24% interest from the date of import till the date of deposit. In such cases, where the amount realised in foreign exchange is less than the amount on which DEPB credit has been obtained, the holder of DEPB shall pay, in cash, an amount proportionate to the duty free credit utilised on imports, including SAD with 24% interest from the date of imports till the date of deposit.
However, the facility of transferability may be allowed against DEPB without insisting on realisation of export proceeds if the shipments are made against irrevocable letter of credit and the same is certified by the bank in column 14/15 of Appendix 25.
The Regional Licensing Authorities shall monitor the cases where the DEPB has been granted prior to realisation of export proceeds so as to ensure that realisation takes place within the prescribed time failing which they shall initiate action for recovery of an amount equivalent to DEPB credit with 24% interest. The recovered amount in such cases shall be deposited in the Head of Account of Customs as stated in paragraph 7.29. However there would be no need for monitoring of exports/ shipment made under an irrevocable letter of credit.”

(Last sentence of above para has been added vide P.N. No. 11(RE-01)/97-02, Dt. 1/5/2001)
In such cases where the application for grant of DEPB credit is filed after realisation of export proceeds, the FOB value in free foreign exchange shall be converted into Indian rupees as per authorised dealers T/T buying rate, prevalent on the date of negotiation/ purchase/ collection of documents. The DEPB rate of credit shall be applied on the FOB value so arrived.
The CIF value of imports affected under the DEPB shall not exceed the FOB value against which the DEPB has been issued. The licensing authorities shall incorporate an endorsement to this effect on the DEPB and shall also mention the FOB value in (Indian rupees) on the DEPB.

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