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Amendment in Circular No. 52/95 allowing the relaxation of execution of
bond/ bank guarantee by the parent company on behalf the subsidiary company
Circular No. 123 dated 4th
December 1995
A representation
has been received by the Ministry to extend the facility of execution of BG/
Bond to the subsidiary of export house/ trading house/ star trading house/ super
star trading house as has been made available to them under Circular No. 52/
Customs & 97/ 95 Customs issued from F.No. 605/75/95- DBK. It has been
represented by the representations that such facility will be in conformity with
the provisions of para 103(i)(d) of the Handbook of Procedures Volume- I.
The matter has
been considered by the Ministry and it has been decided to exit the benefit of
joint bond/ bank guarantee, which shall be signed both to the parent company as
well as the subsidiary company holding the licence. The facility, however, will
be subject to the following conditions:
(1) The parent company
should necessarily have more than 50% share holding in the subsidiary company.
(2)
The facility will be subject to the fact that both the parent company and
the subsidiary company should have common Board of
Directors. This fact can be verified from the Article of Association/ memorandum of
Association of the parent company and the subsidiary company.
(3)
The bond/ bank guarantee shall be jointly signed by the parent company as
well as the subsidiary company and shall be executed in
terms of criteria laid down under Circular No. 52/95-Cus. as further amended by
Circular No. 97/95-Cus. issued from F.No. 605/ 75/95 -DBK.
(4)
The parent company shall stand surety for the subsidiary company that in
the event subsidiary company failing to fulfill the export
obligation and thereupon defaulting payment of Customs
Duty and interest,
the parent company shall make good to Govt. revenue and the interest. In other
words the parent company will be severally are jointly liable for the action in
terms of the bond/ bank guarantee jointly executed by
them.
The above instructions
will apply mutatis mutandis both to Duty Exemption Scheme and EPCG Scheme. A
Standing order for the guidance of the departmental officers and a Public Notice
for the benefit of the trade may kindly be issued. A copy of SO/ PN issued on
this behalf may be sent to the Commissioner (DBK) and DGI ACC & E. In case
of any difficulty, the same may please be brought to the notice of the Ministry.
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