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

With the issue of Customs Circular No. 48/2003 dated 06/06/03 (by which norms for execution of Bond and Bank Guarantee were revised), certain category of exporters were facing problem to operate under Advance License and EPCG Scheme. FIEO, therefore, had taken up the matter with the Department of Revenue (CBEC) for amending the norms. We have pleasure to inform you that the Department of Revenue considered our plea in the matter and has issued Circular No. 74/2003-Cus dated 21.08.2003 specifying the norms 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 CentralExcise 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%

The Circular has also clarified that the surety for the bond will be backed by a Bank Guarantee or cash security or surety. In the case of a person standing as surety to the Bond, the Bank or a Chartered Accountant have to certify that he is solvent. In other words, surety given by a person will also be accepted and Chartered Accountant can also certify solvency of such a person.

Considering the difficulty status holders and other established manufacturer exporters may face to comply with the requirement of furnishing ‘surety’ against Bond, FIEO took up the matter with the Government. Department of Revenue has now issued Circular No. 79/2003-Cus. Dt. 4th Sept., 2003, (Click here for the text of the circular) clarifying that status holders and manufacturer exporters mentioned at (c) and (d) above, shall not be required to furnish any ‘Surety’ for import under Advance Licence/EPCG Scheme.