Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
New Delhi dated 12 August, 2011.
Circular No. 36/2011-Customs
To
All Chief Commissioners of Customs / Customs (Prev)
All Chief Commissioners of Customs & Central Excise
All Commissioners of Customs / Customs (Prev)
All Commissioners of Customs (Appeals)
All Commissioners of Customs & Central Excise
All Commissioners of Customs & Central Excise (Appeals)
Sub:- Waiver from the requirement of Bank
Guarantee in respect of EOUs – Amendment to Circular No. 54/2004-Customs dated
13.10.2004 - reg.
Attention is invited to para 19 of the Board’s
Circular No. 54/2004-Customs
dated 13.10.2004 which extends the facility of exemption from furnishing bank
guarantee by 100% Export Oriented Units (EOUs) at the time of import or for
sending goods on job work in Domestic Tariff Area (DTA).
2. In terms of the provisions of para 6.12 (f) of FTP announced on 31.8.2004,
exemption was granted for 100% EOUs from furnishing bank guarantee at the time
of import or going for job work in DTA subject to certain prescribed conditions
to be followed by the unit. These conditions are that (i) the unit has a
turnover of Rupees 5 crores or above; (ii) unit is in existence for at least
three years; and (iii) unit is having an unblemished track record. Accordingly,
this was implemented by issue of instructions vide para 19 of the aforesaid
Board’s Circular No. 54/2004-Customs.
3. It has been brought to the notice of the Board that one of the conditions
relating to ‘unblemished track record’ for grant of such exemption from
furnishing bank guarantee to 100% EOUs has been changed in the annual FTP
amendments and the same is not being properly implemented. It has been
represented by the exporters that Customs/ Central Excise field formations are
insisting for Bank Guarantee even for Status Holder EOUs on the ground that show
cause notices have been issued to them, thereby such units are unable to fulfill
the condition of ‘unblemished track record’.
4.1 The issue has been examined in the Board. The provisions of para 6.12
providing other entitlements to 100% EOUs was amended in the FTP changes
introduced w.e.f. 1.4.2008, and the said para 6.12 state the following:
*6.12. (f): Unit will not be required to furnish bank guarantee at the
time of import or going for job work in DTA, where unit has
(i) a turnover of Rs. 5 crores or above;
(ii) unit is in existence for at least three years; and
(iii) The unit:
(a) has achieved positive NFE / export obligation wherever applicable;
(b) has not been issued a show cause notice or a confirmed demand, during
the preceding 3 years, on grounds other than procedural violations, under the
penal provision of the Customs Act, the Central Excise Act, the Foreign Trade
(Development & Regulation) Act, the Foreign Exchange Management Act, the Finance
Act, 1994 covering Service Tax or any allied Acts or the rules made thereunder,
on account of fraud / collusion / willful mis-statement/ suppression of facts or
contravention of any of the provisions thereof;
[*Note: The said para has been re-numbered as 6.12(e) in the current FTP
introduced w.e.f. 23.8.2010]
From the above it could be seen that there are four conditions prescribed as
(i), (ii), (iii)(a) and (iii)(b). The condition (iii) has been revised in the
FTP changes introduced w.e.f. 1.4.2008. While there appears to be no difficulty
for the trade and industry in complying with first three conditions, in respect
of condition at (iii)(b) it is represented that mere issue of show cause notice
on procedural non-compliance would not debar them from the entitlements of bank
guarantee waiver granted under para 6.12(f).
4.2 It could be seen from the provisions of para 6.12(f) sub-para (iii)(b) of
FTP, that the prescribed condition clearly excludes show cause notices or cases
booked for procedural violations. Hence, the entitlement of bank guarantee
exemption to 100% EOUs / EHTP / STP / BTP units shall be denied only in cases
involving fraud/ collusion/ willful mis-statement/ suppression of facts, whether
or not extended period for issue of SCN has been invoked. Further, any violation
or contravention of any of the provisions of the Customs Act, 1962 or Central
Excise Act, 1944 or Finance Act, 1994 or other Acts specified in para 6.12(f) of
FTP or any Allied Acts or Rules made thereunder, would also attract denial or
exemption from furnishing bank guarantee. However, in simple cases of issue of
show cause notices for procedural violation against such units, the entitlement
of exemption from furnishing bank guarantee to EOU/EHTP/STP/BTP units need not
be denied. These units shall continue to be eligible for availing the bank
guarantee waiver mentioned in para 6.12(f) of the FTP, in view of the exclusion
provided therein.
5. Board’s Circular No. 54/2004-Customs dated 13.10.2004 stands modified to
the above extent.
6. These instructions may be given wide publicity and should be brought to
the notice of all the concerned by way of issuance of instructions/ trade
notice.
7. Difficulty faced, if any, in implementation of the above instructions may
be brought to the notice of the Board at an early date.
8. This issues with the approval of competent authority.
Yours faithfully,
(H.S. Chimni)
Deputy Director
F. No. DGEP/EOU/18/2011