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Guidelines for execution of Bank Guarantee under Duty Exemption Scheme
and E.P.C.G. Scheme
Circular No. 52 dated 25th
May 1995
With the changes
effected in the Duty Exemption Scheme and the Export Promotion Capital Goods
(EPCG) Scheme in the revised edition of the Exim Policy published on 31st March,
1995 and the revised Handbook of Procedure, Vol. I published on 1st
May 1995 the Bond cum surety/ security under these Schemes is required to be
executed by the importers with the Customs authorities. Accordingly, provisions
for the same have been incorporated in the Notification No. 79/95-Customs,
80-95-Customs and 81/95-Customs all dated 31st March 1995 regarding
import under Duty Exemption Scheme. Similarly notifications under E.P.C.G.
Scheme are also proposed to be revised shortly incorporating similar provisions
for execution of bond with surety or security.
2. In
order to ensure that there is uniformity in the quantum of Bank Guarantee to be
given as surely to bond, the Board has decided to prescribe following
guidelines.
I. Bond under
duty exemption scheme
3.1 It has been decided that
surety to be given with the bond shall always be in the form of Bank Guarantee,
Bond to be executed should cover the duty leviable on the goods but for the
exemption (i.e.basis duty and additional duty leviable on the goods on merits
minus additional duty actually paid). For example if basic duty on the goods
imported is 50% and additional duty is 20%, the effective duty recoverable on
imports shall be 50% plus 20% on 150% i.e. 80% of assessable value. Since
additional duty will actually be recoverable only at the rate of 20% on
assessable value (basic Customs duty being exempt), the bond to be executed
shall be for the difference between 80% and 20% i.e. 60% of the assessable
value. However, the quantum of Bank Guarantee to be executed should be as under:
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Category of Importers
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Quantum to Bank Guarantee
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a) Super Star Trading
House, Star Trading House Trading House and Public Sector Undertaking.
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NIL
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b) Export House, Manufacturer - Exporter other than at (a) above.
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25% (of duty saved)
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c) Others.
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100% (of duty saved)
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3.2 Quantum of bank guarantee
prescribed above should normally be followed. Where however the Collector feels
that considering past track record of the licence a higher bank guarantee is
justified on account of the risks to revenue, he may take such higher bank
guarantee amounts. The grounds may be suitably recorded on file. Normally, such
higher quantum of bank guarantee would be justified in cases where the party
have huge amounts outstanding against them or have repeated cases of evasion of
duty against them, etc.
II. Bond under
E.P.C.G. scheme
4.1 Under E.P.C.G. Scheme also
bond should be insisted upon for the difference between the duty leviable on
goods on merits and the duty actually paid on importation. However, the Bank
Guarantee to the extent of 50% of the duty saved should, normally be sufficient.
Star Trading House, Super Star Trading House, Trading Houses & Public Sector
Undertaking may be exempted from Bank Guarantee. The bond and Bank Guarantee
should be kept alive for the full period of the export obligation plus one year
i.e. for a total six years for import at 15% under E.P.C.G. Scheme and for a
period of 9 years for import at zero duty.
4.2 The
provision with regard to higher Bank Guarantee in the situations referred to in
Para 3.2 shall also be applicable under E. P.C.G. Scheme.
4.3 Where
however the D.G.F.T. has indicated a higher amount of bank guarantee to be taken
on the Licence then the bank guarantee should be taken for such higher amount.
5. Custom
Houses may issue suitable standing order for information of the staff and Public
Notice for information of the Trade. Copies of the standing order/ Public Notice
may please by forwarded to Commissioner (Drawback) and Director General of
Inspection (Customs and Central Excise).
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