Waiver of Bank Guarantee for Procurement without payment of duty

[SNEHAL SHAH]

Dear sir,

We are Mfg of Chemical and pharma product and wants to procure materials under Customs (Import of goods at concessional rate of duty for manufacturing of excisable goods) rules,1996.

We are also three start status holder export house, can we require bank guarantee for above facility ??

If we have not require bank guarantee, please provide related notification with condition .

Advance thanks for provide valuable feedback .

regards,

SNE

[Guest]

Dear Snehal,

Since you are Status Holder, you need not to execute Bank Guarantee (BG) at the time of duty free imports against Advance Authorisation (Chapter 4 of FTP). Instead, you need to furnish Legal Undertaking ( LUT ) to the customs authority (i.e. customs at the sea/ air port from where you will be importing the material) and Bond, duly franking of ₹ 500/- each done on it.

In this regard, you may refer to Para 3.24 (C) of Foreign Trade Policy (Privileges of Status Holders) and Para 2.29 & 2.30 of Handbook of Procedures. There also exist a provision of Corporate Guarantee (Para 2.30 of HBP) in lieu of normal Bang Guarantee. Please refer to the same, if needed.

Regards,

Atul

[Guest]

Dear Snehal,

Please also refer to Customs Circular No. 58/2004 Dtd. 21.10.2004 and Circular No. 15/2014 Dtd. 18.12.2014 to evidence NIL applicability of BG to Status Holder.

Regds,

Atul

AI Summary

Pharmaceutical company exempt from bank guarantee for duty-free imports; Legal Undertaking and bond required under Customs rules. A chemical and pharmaceutical manufacturing company inquired about the necessity of a bank guarantee for duty-free material procurement under the Customs rules of 1996. As a three-star status holder export house, they sought clarification on whether a bank guarantee was required. A respondent clarified that as a status holder, the company does not need to execute a bank guarantee for duty-free imports under an Advance Authorisation. Instead, they should provide a Legal Undertaking and a bond to customs authorities. Relevant references include the Foreign Trade Policy and Customs Circulars, which confirm the exemption for status holders.