Waiver of Bank Guarantee

[RAMESH ANANTHAKRISHNAN]

Dear Sir,

 

We are an 100% EOU. Till last year our unit was under Customs control and now it is changed into Central Excise control. Initially we have executed a B17 bond with Bank Guarantee. Since the imports are increased we would like to execute a further bond. Now the issue is Excise Authorities are insisting us to arrange a BG with 2 years validity and also further 2 years claim period whereas the banker is not accepting this further 2 years clause as the standard condition is only 6 months after validity of the BG.

We are also a member in Export Promotion Council. Our turnover crossed Rs.5 Crores only from the current year (2010-11) . In this situation is there any notification to waive BG. If so kindly advise.

AI Summary

Export Unit Faces Bond Execution Issues; Seeks Waiver for Bank Guarantee with Extended Claim Period A 100% Export Oriented Unit (EOU) transitioned from Customs to Central Excise control and faced issues with executing a new bond. The Excise Authorities required a Bank Guarantee (BG) with a 2-year validity and an additional 2-year claim period. However, the bank only accepted a 6-month claim period post-validity. The unit, with a turnover exceeding Rs. 5 Crores, sought advice on any potential waiver for the BG. A Chartered Accountant advised convincing the bank to issue a BG for 2 years and to obtain bank approval for opening such a BG.