SUPREME COURT OF INDIA while deciding on 31/08/09 the Civil Appeal No.5891 of 2009 in re: LIBERTY INDIA vs C.I.T. observed as follows:-

QUOTE: DEPB is an incentive. It is given under Duty Exemption Remission Scheme. Essentially, it is an export incentive. No doubt, the object behind DEPB is to neutralise ther incidence of customs duty payment on the import content of export product. This neutraliszation is provided for by credit to customs duty against export product. Under DEPB, an exporter may apply for credit as percentage of FOB value of exports made in freely convertible currency. Credit is available only against the export product and at rates specified by DGFT for import of raw materials, components etc. DEPB credit under the Scheme has to be calculated by taking into account the deemed import content of the export product as per basic customs duty and special additional duty payable on such deemed imports. Therefore, in our view, DEPB / Duty Drawback are incentives which flow from the Schemes framed by the Central Government or from Section 75 of the Customs Act, 1962, hence, incentives profits are not profits derived from the eleigible business under Section 809-IB. They belong to the category of ancillary profits of such undertakings. UNQUOTE

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SUPREME COURT JUDGEMENTS DEPB, export, import, incentive, neutralization