Government of India
Ministry of Finance
Department of Revenue
New Delhi, the 28th January, 2009.
Circular No.4/2009-Cus.
Sub: Clarifications in respect of quantum of Bond and Bank Guarantee (BG) under
Advance Authorization and Export Promotion Capital Goods schemes– reg.
I am directed to invite your attention to the above mentioned subject and to say
that, doubts have been raised, whether the amount of Bond and Bank Guarantee(BG)
to be executed under Advance Authorization and Export Promotion Capital Goods
schemes, include the interest amount also.
- The matter has been examined by the Board. Para 3 of Board’s
Circular
No.58/2004-Cus. dated 21.10.2004 states that, for clearances under Advance Authorisation and EPCG licence the bond shall be taken for an amount equivalent
to the duty ordinarily leviable on the goods but for the exemption. The said
circular has not envisaged the concept of adding interest amount to the duty
foregone for quantifying the amount for bond/BG purposes. This is because the
interest element is penal in nature and will arise only if the authorization
holder defaults in discharging his obligations under the above schemes. Hence,
it is not the intention of the Board to add the interest component either simple
or compound for the purpose of calculation of bond amount under the said Para in
respect of clearances of EPCG/Advance Authorisations. The assessee, however,
binds himself to pay the interest in case of default as specified in condition 4
of the Bond format enclosed to the circular No.58/2004-Cus.
- ;Accordingly, it is clarified that the Bond under Para 3 of Circular
No.58/2004-Cus. shall cover only the duty ordinarily leviable on the goods but
for the exemption. Similar analogy will apply for quantification of the BG
amount.
- ;However, the bond executed under both the schemes should include a condition
that the interest and other charges as applicable will be paid by the
authorization holder in case of non compliance of the conditions of the
notifications under the above mentioned schemes.
- ;These instructions may be brought to the notice of the trade / exporters by
issuing suitable Trade / Public Notices. Suitable Standing orders/instructions
may be issued for the guidance of the assessing officers. Difficulties faced, if
any, in implementation of the Circular may please be brought to the notice of
the Board at an early date.
Receipt of this Circular may kindly be acknowledged.
Yours faithfully,
-Sd-
(P.V.K. Rajasekhar)
OSD(Drawback)
F.NO.605/61/2007-DBK