Attention is invited to Ministry's telex dated 16th August, 1996 issued from F.No. 605/261/96-DBK whereby it was clarified that credit under the Pass Book Scheme in terms of Notification No. 104/95- Customs as amended by notification No. 155/95-Customs shall be admissible only in respect of inputs specified with a quantity restrictions in the Standard Input Output norms and shall not be admissible in respect of inputs permitted even on 'net to net' basis.

2.    The matter has been reconsidered in consultation with the director General of Foreign Trade. Notification permits credit to be allowed in respect of inputs specified with quantity restrictions in the norms. Accordingly even in cases where such quantity is not expressly specified but can be determined with reference to the quantum of inputs used in the export product i.e. either on 'net to net' basis or by applying the formula specified in the norms, in the norms, it can be held that quantity of inputs is specified in the norms. In all such cases standard input output norms are quantity based and Quantity Based Advance Licences are issued based on such norms. There should therefore be no objection in permitting credit under the Pass Book Scheme in respect of such inputs. However, credit shall not be admissible in respect of inputs for which quantity of inputs is to be worked out based on a percentage of F.O.B. value. In such cases quantity of inputs would depend upon the value determined as a percentage of F.O.B. value and therefore not qualify based norms.

3.    Attention is invited to Ministry's Circular No. 17/96 dated 15.3.96 whereby procedure for declaration of the inputs used in the export product and their specifications etc. was prescribed so as to make verification at the time of export. The exporters should be asked to declare the quantity of inputs used in the export product also as per norms in Col. 6 of Annexure 'A' to the said circular. Where such quantum is not expressly prescribed in the norms but is required to be determined either on 'net to net' basis or on the basis of method prescribed in the norms, the verification of such quantity should be done at the time of examination of goods for export under Pass Book Scheme. Due care should be taken by the officer processing the Shipping Bill to order examination of goods taking into account all such aspects.