Circular No.ES/162/2018-19 August 16, 2018
To: Members of the Council
Sub.: Clarification regarding bank guarantee requirement for bond executed by Export Oriented Units (EOUs)
We would like to inform you that the Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 27/2018- Customs dated 14th August, 2018 clarifying the requirement of bank guarantee for bond executed by Export Oriented Units (EOUs).
The Board had received representations from Members of Trade regarding difficulties faced by EOUs with respect to requirements of bank guarantees in view of CBIC Circular no. 48/2017Customs dated 08.12.2017. The matter has been examined by CBIC.
Clarification was issued vide Circular no. 48/2017-Customs dated 08.12.2017 which was related to Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. Also, norms were prescribed with respect to requirement of bank guarantee/ cash security/ surety for various categories of importers which is required to be furnished for the bond to be executed as per sub-rule (2) of Rule 5 Customs (import of goods at concessional rate of duty) Rules, 2017. There was no specific reference to EOUs in these norms.
Further, it has been observed by CBIC that there was confusion due to the requirement of EOUs to follow Rule 5 of Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 to be eligible for claiming exemption of duties/ taxes on the import of goods under Notification No. 52/2003 dated 31.03.2003.
As the EOUs have already been executing B-17 bond, hence it was clarified vide Circular No. 29/2017-Customs dated 17.07.2017 that the said B-17 bond will serve the requirement of continuity bond as required under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 and there is no requirement to submit a separate continuity bond by EOUs since B- 17 Bond was serving the purpose of continuity bond for EOUs.
In this regard, the Board had extended the facility of exemption from furnishing bank guarantee/ surety by EOUs vide Circular No. 54/2004-Customs dated 13.10.2004 and Circular No. 36/2011Customs dated 12.08.2011.
In view of above, it is reiterated that waiver of bank guarantee/ surety to EOUs would continue to be governed by various circulars issued from time to time by CBIC with regard to B-17 bonds executed by EOUs and will not be guided by the Circular No. 48/2017-Customs dated 08.12.2017 which governs the general importers and not the EOUs.
Members may kindly make a note of the above.