Govt planning value caps on DEPB credit

new delhi: in a bid to check overinvoicing of exports and revenue leakage, the government is planning to impose value caps on depb (duty entitlement pass book) credit for all type of products. this cap will apply to products which have a depb credit higher than a particular percentage of the export value. having agreed to retain the depb scheme, the government is now discussing the value caps with exporters. the decision on capping of depb rates follows inputs from the direc-torate of revenue intelligence (dri) that overinvoicing of exports to gain undue benefits has not been checked yet. the value cap will be similar to the ceiling prescribed in the case of duty drawback to pre-vent misuse. after several cases of overinvoicing to obtain higher drawback was detected by the dri, value caps were imposed on duty drawback. the customs department also started the exercise of examining market value in the case of shipments destined for sensitive markets. the initiative is expected in the forthcoming five-year exim policy which is to be unveiled at the end of this month. it is understood that exporters are resisting the move to impose value caps on depb rates. their argument is that this would discourage high value addition. however, the revenue department is stern on having a system of value caps which will check overinvoicing. by artificially boosting value of shipments, it is possible for exporters to earn higher depb credit which can then be used to pay customs duty on imports. by specifying an ad valorem ceiling (a specific amount which will be the maximum value permitted) for a particular product, the government can ensure that no exporter claims a higher export value. the normal pattern is to specify a percentage as the applicable depb rate for a particular product.