Procedure to avail exemption of central excise during export by a merchant exporter that is trading export

[Vinamra Jain]

I am a trader. I want to export goods. I am not registered in central excise. How can I avail exemption of excise duty. Is there any procedure that the manufacturer who is supplying me the goods doesn't charge me the excise duty on his invoice as is the case with the tax which is not charged in case we provide a Form 'H'.

[YAGAY andSUN]

The Merchant exporter is required to execute a bond in Form B-1,so that goods can be cleared by th supplier manufacturer to Mertchant exporter without payment of duty. Merchant Exporter registered with recognised EPC and Star Export House do not have to furnish any security/surity while executing bond, unless they have come to the adverse notice of department - CBE&C circular No. 613/4/2001-CX dated 31-01-2002, confirmed in CBE&C circular No 711/27/2003-CX dated 30-04-2003. If bond is executed by Merchant Exporter, he will obtain certificates in form CT-1 from Superintendent of Central Excise on the basis of proforma Invoice provided by the supplier manufacturer to merchant exporter.

The exporter shall ensure taht debit in bond does not exceed the credit available in the bond any time. Forms of bond, letter of undertaking and CT-1 certificate have been given in Notification No 42/2001-CE(NT). If export is through merchant exporter ARE-1 form should be signed both by Merchant Exporter and as well as manufacturer exporter.

If goods are exported under bond of merchant exporter only he will be liable for action. Duty cannot be demanded from the supplier manufacturer.

Control over bond is exercise by the authority before whom the bond is executed and all proof of export have to be submitted to that authority

The bond can be executed with any one of the following:-

1. Maritime Commissioners
2. Asstt./Dy. Commissioner under whose jurisdiction the factory is situated
3. Asstt./Dy. Commissioner (Export) as officer authorised by Board.

The ARE-1 should clearly indicate the full postal address of authority before whom the bond is executed, so that documents are submitted/transmitted to him for proof of export.

Procedure of CT-1 certificate:- After execution of bond, merchant exporter has to obtain CT-1 certificate from excise office. The merchant exporter can obtain CT-1 form in lot of 25. Part I of the form is certified by the Range Superintendent of Central Excise regarding bond executed. The merchant exporter shall send CT-1 form to the manufacturer from whom goods are to be produced for export without payment of excise duty. Before sending CT-1, the Merchant Exporter should debit estimate amount of duty liability against the Bond. This amount is required to be specified in part II of the CT-1 form. On the basis of this CT-1, the manufacturer can clear goods for export without payment of duty by making suitable entries in part II of CT-1. This provisional debit will be covered into actual debit after the goods are cleared from the place of manufacturer. Chapter 7 part II para 6.2 and 6.2.1 of CBE&C Manual, 2005.

AI Summary

Merchant exporter bond permits suppliers to clear goods duty-free on CT certificate while exporter retains liability for proof of export. Merchant exporters may enable supplier-manufacturers to clear goods without payment of central excise by executing a bond in Form B-1 and obtaining CT-1 certificates from the Superintendent of Central Excise. Registered merchant exporters with recognised export bodies may be exempt from additional security. The exporter debits estimated duty against the bond in CT-1 Part II, sends CT-1 to the manufacturer for duty-free clearance, and remains primarily liable for proof of export and any bond debits. The authority before whom the bond is executed controls submission of export proof.