Ministry questions move to remove DEPB benefits to silk exporters

S Venkitachalam

New Delhi, Jan 3: The commerce ministry has questioned the revenue department’s unusual move to take away the DEPB (duty entitlement passbook) scheme benefits already granted to exports of unembroidered silk items effected prior to January 1, 01.

Interpreting its November 6, 2000, notification, the revenue department recently decided against giving the DEPB benefits to unembroidered silk items against the shipments made prior to Jan 1, 01. The ministry, however, contends that it “is judiciously untenable to apply an interpretation with retrospective effect on a widely understood and accepted practice” of giving DEPB benefits to exporters. The ministry further said exporters also insisted that they had contracted export prices after factoring in the benefits available to them under the DEPB scheme.

Further, exporters had also brought to the notice of the textile ministry that the drawback claims due to them had been held up by the customs department against the amount recoverable from them under the DEPB scheme, holding up drawback payments.

The matter was discussed at the DEPB committee, functioning in the office of the director-general of foreign trade in the commerce ministry. The committee decided that no recoveries would be made against the DEPB licences granted to exporters prior to January 1, 01, and accordingly those exports which might have been shipped before this date should also be entitled to the benefit. The decision is, however, pending before the revenue department.

The country’s silk exports have been rising steadily over the years, from Rs 1,133 crore during 1998-99 to Rs 1,755 crore during 1999-00 and to Rs 2,432 crore during 2000-01. This rising trend has also been maintained during December 00-May 01. However, during April-May 01, exports marginally declined to Rs 307 crore as against Rs 357 crore reported during the same period previous year.

One of the reasons cited by the commerce ministry for the decline is the general slowdown in the country’s overall textile and garment exports during April-May 01. It however does not share the view that countries like China, Vietnam and Indonesia have stolen the march over India in silk exports and that it has not been supported by responses received from the country’s missions abroad. The objective of the DEPB scheme is to neutralise the incidence of customs duty on the import content of the exports. The neutralisation shall be given by way of grant of duty credit against exports. During 1999-00, China topped the list of silk producing countries with an output of 57,500 tonne, and India came second with 15,214 tonne, followed by Japan with 1,080 tonne and Brazil with 1,821 tonne.