LUT under exports

[VENKATESH KARKERA]

Dear Sir,

I am new to this TMI. I need a clarification regarding LUT for exports. We used to renew the LUT every year on Rs,100/- stamp paper. This year when we submitted the documents the excise officers refused to accept it. They asked us to prepare the LUT on ₹ 500/- stamp paper and asked us to get notary whereas earlier we used to get it signed by the range superintendent in lieu of notary. Can i get exactly what is the current status of LUT. Are the excise officers correct, if yes, can i get any notification or circulars regarding the same.

[KASTURI SETHI]

Sh.Karkera Ji,

Execution of LUT is still required. As per CBEC's Circular No.224/37/2oo5/CX.6 dated 24.2.2008, it is official duty of Range Officer and Inspector to safeguard duty.Both the officers are required to verify validity of LUT each year and make proper entry in the office records. LUT is to be renewed every year. Board's circular is still in force. Regarding the stamp fee of ₹ 500/- instead of ₹ 100/- it depends upon the value of goods exported in a year and how much CE duty is involved in the exported goods in a year.

In my view, your Range Officer is absolutely right. Pl. do not take it otherwise. Legal formalities are to be completed by you. Actually LUT is a relief for exporters as they are not to execute Bond with security or surety.

Regarding the attestation by Notary Public, every agreement/contract/bond/LUT should be attested by Notary Public.

[CSSANJAY MALHOTRA]

Dear Sh. Kasturi ji,

Am in agreement with your views. Have also experienced the demand of LUT on ₹ 500/- stamp paper, reason being cited is that the stamp paper less than ₹ 500/- has no legal backing and can't be challenged in court of law.

[KASTURI SETHI]

Sh.CS Sanjay Malhotra Ji,

Sir, I agree with you. But I think if any agreement/contract/LUT etc. is attested by the Notary Public, that document is registered with the Court. I want to say attestation by Notary Public is more important than the amount of stamp paper. After all we submit affidavit on stamp paper of ₹ 5/- or ₹ 3/-. This has legal backing also. This area is to be searched. Will you please throw more light ? It may be something slab wise.

Looking forward to your advice.

[MUKUND THAKKAR]

Dear Sanjay Malhotra sir,

LUT is given to first citizen of India ( The President of India) in such scinreo less than ₹ 500/- has no legal backing and can't be challenged in court of law ? if possible explain, your explanation will enhance our knowldge.

Have a nice day.

[KASTURI SETHI]

Sh.Mukund Thakkar Ji,

Thank you, Sir. With your reply I am one step ahead now but I have not reached destination. I also want complete knowledge on this issue. Why different value of stamp paper for different purposes ?

[Rajagopalan Ranganathan]

Sir,

A perusal of the form UT-1 appended to Notification No. 42/2001-CE (NT) dated 26.6.2001 indicates that no where in the body of the format quantity of goods are likely to be exported and the duty involved on the same are required to be indicated. Therefore since the amount of duty involved on the quantum of excisable goods to be exported is not required to be indicated in UT-1 the letter of undertaking need not be be executed in a stamp paper. It can be executed in a plain paper. To determine the value of stamp paper amount of duty involved on the excisable goods to be exported is required to be declared. Therefore in my view LUT can be executed in plain paper.

[ASHOK AMIN]

Thanks. I think I should follow your good advice. There is no escape from this. But, to enhance my knowledge, I came across a notification of Maharashtra state govt regarding the amendment in stamp duty act dated 24.04.15. In that they had mentioned as follows in point no - (17) for Article 28, the following Article shall be substituted, namely:- “28. CUSTOMS BOND OR EXCISE BOND, Five hundred that is to say, any bond given pursuant to the rupees.”; provisions of any law for the time being in force or to the directions of any officer of Custom or Excise for, or in respect of, any of the duties of Customs or Excise or for preventing frauds or evasions thereof or for any other matter or thing relating thereto". Further, in the minutes of RAC meeting for quarter ending June 2015 held on 30.07.2015 held in the Office of the Chief Commissioner of Central Excise & Customs, Pune Zone, 41-A, ICE House, Sassoon Road, Pune - 411001 - in the issue no 3 it was discussed regarding this amendment and, the RAC members were of the opinion that "Stamp Act is applicable only to bonds and not to LUT. In view of the divergent opinions, it has been decided to refer the matter to the legal Section of CBEC, New Delhi for issuing necessary clarifications".

I hope experts will rethink in this issue and throw some light.

[VENKATESH KARKERA]

I am still confused from the replies I am getting. Kindly advice me whether to execute the UT-1 under plain paper/100/- stamp paper or 500/- stamp paper ?

[CSSANJAY MALHOTRA]

Dear Friends,

Attached herewith is the Trade Notice from Central Excise Hyderabad which mentions of ₹ 100/- stamp paper for LUT.

Agreed with Mr. Kasturi ji that amount of stamp paper should not prevail different and same should be considered by Excise officials too across Commissionerates and Ranges, but to safeguard the interest of revenue, department is looking forward for execution on Stamp Paper for ₹ 500/- as the same has legal backing in all court of law.

Further another good point brought on platform is why need for stamp-paper in case of undertaking.....as if assessee fails then he has to make loss good....

http://www.centralexcisehyderabad4.gov.in/documents/tradenotice/2014/Trade%20facility%20no.%2002.2014.pdf

[KASTURI SETHI]

Sh.CS Sanjay Malhotra Ji,

Thank you, Sir for your immediate efforts and up-dation with authority.

AI Summary

Debate Over Stamp Duty for Letter of Undertaking: Is 500 Stamp Paper with Notary Necessary for Exports? An individual sought clarification on the use of a Letter of Undertaking (LUT) for exports, traditionally renewed annually on a 100 stamp paper. Recently, excise officers demanded it be prepared on a 500 stamp paper with notary attestation, differing from past practices. Responses indicated that the requirement for a higher stamp fee might depend on the value of exported goods and excise duty involved. Some argued that LUT could be executed on plain paper, while others cited legal backing for using a 500 stamp paper. The discussion highlighted discrepancies in practices and sought further clarification.