Revised norms for execution of Bond and Bank Guarantee under Advance License and EPCG Schemes

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Customs Circular No. 74/2003 dated 21.8.2003
(Amendment to Circular No.48/03-Cus. dated 6.6.2003)
Revised norms for execution of Bond and Bank Guarantee under Advance License and EPCG Schemes – reg.

Kind attention is invited to DOR Circular No.48/2003-Cus. dated 6.6.2003 in terms of which revised norms for execution of Bond/BG under Advance License and EPCG Schemes have been notified. In terms of Para 3.1 (c) and (d) of the said Circular, manufacturer exporters registered with Central Excise who have achieved exports of Rs.1 crore or more during the preceding financial year have been allowed BG exemption. MOC/DGFT and Trade have represented that as a result of the revised norms notified in Circular No.48/2003, manufacturer exporters in the small scale sector and other similar manufacturers having export performance of less than Rs.1 crore or who are paying central excise duty of less than Rs.1 crore will not be able to avail BG exemption and such manufacturers will have to file 100% BG to avail benefit of Advance License/EPCG Schemes which would substantially increase their transaction cost.

2. The issue has been re-examined in consultation with MOC/DGFT and it has been decided that other manufacturer exporters who are not covered under Para 3.1(c) and (d) or who are not status holders { Para 3.1(a)} shall also be eligible for 25% BG concession. For this purpose it is clarified that the category of importer and quantum of bank guarantee specified in Para 3.1 of Circular No.48/2003-Cus. dated 6.6.2003 shall be read as under:-

Category of Importer	Quantum of Bank Guarantee

(a) Super Star Trading House, Star Trading House, Trading House, Export House and Public Sector Undertakings.	Nil
(b) Service Providers who are recognized as status holders by the appropriate authority.	Nil
(c) Manufacturer exporters registered with Central Excise who have been exporting during the previous two financial years and have minimum export of Rs.1 crore or more during the preceding financial year.	Nil
(d) Manufacturer exporters registered with Central Excise, who have paid central excise duty of Rs.1 crore or more during the preceding financial year.	Nil
(e) Manufacturer exporters who are not covered under (a), (c) & (d) above.	25%
(f) Others	100%

2.1 It is also clarified that the sentence “Surety for the bond shall be in the form of bank guarantee or cash security” appearing in Para 3.1 of DOR Circular No.48/2003 dated 6.6.2003 shall be corrected to read as “Bond shall be backed by a bank guarantee or cash security or surety”. It is further clarified that para 3.2(d) of DOR Circular No.48/2003-Cus. dated 6.6.2003 shall be corrected to read as “In case of the person standing as surety to the bond, bank or a chartered accountant shall certify that he is solvent.” In respect of Public Sector Undertakings {vide para 2(a above)}, no surety will be required. The facility of filing “Corporate Guarantee” as provided in earlier 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.

3. It has also been decided in consultation with MOC/DGFT that in order to thwart attempts to misuse Advance License Scheme, 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 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 Advance License) so as to enable the DGFT authorities to suspend the Advance License and intimate the concerned custom authorities about it where the Advance License is registered.

4. As regards para 4 of DOR Circular No.48/2003-Cus. it is clarified that the jurisdictional Superintendent of Central Excise shall also issue certificate about export performance in terms of para 3.1(c) in respect of units which are not in Central Excise control. This is to ensure that no frauds are further perpetrated by obtaining bogus claims of exports.

5. Suitable Standing Order and Public Notice for the guidance of staff and trade may kindly be issued.

6. Receipt of the Circular may kindly be acknowledged.

R.K. Talajia
Officer on Special Duty (DBK)

F.NO.605/41/2003-DBK
Government of India
Ministry of Finance
Department of Revenue