Bank Guarantee with auto renewal clause

[Srivatsan Krishnamachari]

Dear Experts,

We need to execute Bank Guarantee on one particular issue to the AC, Central Excise dept. with auto renewal clause, Where as our bankers not accepting with Auto renewal clause.

If any body has come across this type of issue, please provide me the details (BG format with Bank details).

Thanking you,

Srinivas

[KASTURI SETHI]

Sh.Srivatsan Krishnamachari Ji,

I suggest you two options:-

1. Go through Chapter 14 (Para No.9) of CBEC's Excise Manual of Supplementary Instructions, 2005 wherein there is provision for supplementary deed of bank guarantee on a stamp paper.

2. In this context, judgement Delhi High Court is appended below:-

ZEST AVIATION PVT. LTD. Versus UNION OF INDIA 2013 (289) E.L.T. 243 (Del.) = 2013 (6) TMI 9 - DELHI HIGH COURT

[Mahir S]

Sir,

Most of the banks nowadays do execute B.G. with auto renewal clause. If they are not doing so, then take the matter with Head Branch.

Else, simply just change the Bank.

AI Summary

Bank guarantee auto renewal clause: use a supplementary deed or escalate to head branch or change banks. Banks are reluctant to execute a bank guarantee with an auto renewal clause required by the Central Excise department. Advised responses are to execute a supplementary deed of bank guarantee on stamp paper per the Excise Manual guidance, to rely on relevant case law addressing similar instruments, or to escalate the matter to the bank's head branch or change banks if a banker refuses to provide the clause.