Sub : Revised Norms for Execution of Bond and Bank Guarantee under Advance License and EPCG Schemes – reg.
The Foreign Trade Policy for the period 2004-09 has come into force w.e.f. 1.9.2004. It has been provided in paragraph 2.27.1. of the said Policy that all exporters having an export turnover of at least Rs 5 crores in the current or preceding financial year and having a good track record of three years of exports will be exempted from furnishing a Bank Guarantee (BG) for any of the Schemes under the Policy and may furnish a LUT in lieu of BG. Further, paragraph 2.20 of the Hand Book of Procedures (Vol. I) prescribes that in cases of direct import, before clearance of goods through Customs, the licence holder shall execute a legal undertaking (LUT)/Bank Guarantee (BG) with the Customs authorities in the manner as may be prescribed by them.
2. In the light of these Policy provisions, the issue regarding execution of Bond/BG under DEEC and EPCG Schemes has been reviewed by the Board and in supersession of earlier DOR Circular Nos. 45/96-Cus., dated 28.8.96, 71/98-Cus., dated 15.9.98, 48/2003-Cus., dated 6.6.2003, 74/2003-Cus., dated 21.8.2003 and 79/2003-Cus., dated 4.9.2003, the following revised norms are prescribed for the purpose of furnishing Bond and BG under the said Schemes.
3 The bond under Advance License and EPCG Schemes shall be furnished in the format annexed to this Circular. The bond shall cover the duty ordinarily leviable on the goods but for the exemption. The bond shall be backed by a Bank Guarantee or cash security as per the norms prescribed in the following paragraph. Guarantee from a financial institution like IDBI, ICICI, UTI etc. may also be accepted in lieu of Bank Guarantee.
3.1 The Bank Guarantee/cash security shall be taken as per the following norms for the purpose of permitting clearance of imported goods under Advance License/EPCG Schemes.
3.2. BG exemption as specified in
4. The facility of filing “Corporate Guarantee” as provided in DOR Circular No. 38/97-Cus dated 19.9.97 shall also continue to be available subject to fulfillment of conditions specified in the said Circular.
5. In individual cases where the jurisdictional Commissioner of Customs/ DGFT authority /EPCG Committee/ALC/ is satisfied that a higher quantum of Bank Guarantee is justified on account of risk to revenue, 100% BG may be taken by the Customs after recording the reasons therefor in file.
6. Where an importer so requests, a BG may be taken consignment-wise subject to the condition that such consignment-wise BG shall only be acceptable by the Customs at the port of registration of the license.
7. The Bond/BG shall be filed for a minimum period of 3 years with an undertaking to keep the BG alive for the entire period of export obligation viz. 8+2 = 10 years or 12+2 = 14 years etc. under EPCG Scheme as the case may be.
8. The Custom House shall properly maintain Bond/BG registers and ensure that wherever the bank guarantees are not renewed in time, recovery action is initiated by enforcement of the Bank Guarantee within time. The Customs shall also ensure that, wherever required, Bank Guarantees are renewed well in time. This aspect needs to be monitored closely by the Commissioners.
9. In the case of subsidiary company of a parent company of a recognized status, the facility of filing joint bond (both by the parent company as well as the subsidiary company holding the license) along with BG/cash security/ any other guarantee from financial institutions like IDBI, ICICI, UTI etc, shall also be available. The facility, however, shall be subject to the following conditions:-
10. BG exemption specified in para 3.1 above shall also be available in respect of past licenses where license holder had earlier filed BG but as on date he is entitled for BG exemption.
11. It shall be the responsibility of the jurisdictional Superintendent of Central Excise or other agencies that while issuing the Certificate about export performance or about the fact of payment of central excise duty for the purpose of para 3.1, he satisfies himself about the genuineness of the declaration given by the license holder.
12. In order to thwart attempts to misuse Advance License Scheme, the DGFT authorities shall endorse a copy of the Advance License to the concerned Central Excise authorities by fax or e-mail with request to intimate the concerned DGFT authority in case the party appears to be bogus/ non-existent. Immediately on receipt of copy of the Advance License by Central Excise, the Superintendent of Central Excise having jurisdiction over the manufacturing premises of the license holder shall undertake physical verification within one month of the receipt of copy of Advance License from the relevant DGFT authority to ascertain that the party to whom Advance License has been issued is not bogus/non-existent. In all cases where on physical verification by Central Excise, the party is found to be bogus/non-existent, the jurisdictional Commissioner of Central Excise shall immediately inform the concerned Licensing Authority (who had issued the Advance License) so as to enable the DGFT authorities to suspend the Advance License and intimate the concerned Customs authorities about it where the Advance License is registered.
13. A suitable Trade Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.
14. Receipt of the Circular may kindly be acknowledged.
P. K. Mohanty
Joint Secretary (Drawback)
(For availing duty exemption under Advance Licence / EPCG Scheme)
I / we, _____________________________________ having our registered office at _____________________ hereinafter referred to as the Obligor (s) and __________________ called the surety (ies) (which expression shall, unless repugnant of the context or meaning thereof include our heirs, successors, executors, administrators, liquidators, legal representatives and assignees) hereby hold and firmly bind ourselves jointly and severally unto the President of India, acting through the (jurisdictional Deputy/Assistant Commissioner of Customs) Department of Revenue, Ministry of Finance, Government of India, hereinafter referred to as 'the Government' in the sum of Rupees ____________________ only for which payment to be well and truly made, I/ we, the obligor (s) bind myself/ ourselves by these presents.
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