Export obligation compliance bars customs from withholding a bank guarantee after advance licence imports are regularised.

Under the Value Based Advance Licence scheme, once the export obligation is shown to have been fulfilled, customs authorities cannot continue to withhold a bank guarantee merely because they are corresponding with licensing authorities. The record indicated that the import was not found objectionable and that the licensing clarification showed no adverse action was pending. Any alleged contravention of licence conditions is for the licensing authorities to examine under the policy framework, not for customs to secure retention of the guarantee after compliance is established. The bank guarantee was therefore ordered to be released.

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Issues: Whether the customs authorities could withhold the bank guarantee furnished for imports made under the Value Based Advance Licence scheme after the export obligation had been met and the licensing authorities had not taken any adverse action.

Analysis: The imports were made under a special export-import scheme, and the record showed that the export obligation had been discharged. The clarification from the Joint Director General of Foreign Trade also indicated that there was nothing amiss in the import. Once the export obligation is fulfilled, the customs authorities cannot insist on maintaining the bank guarantee merely because they are in correspondence with the licensing authorities. If there is any contravention of the licence conditions, action lies with the licensing authorities under the policy framework, not by withholding the bank guarantee at the customs level.

Conclusion: The customs authorities were not justified in retaining the bank guarantee, and its release was directed.

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