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Inputs free of duty - Exporting units need raw materials without payment of customs/excise duty, to enable them to compete with world market. Government has devised following schemes for this purpose: (a) Special Economic Zones at various places where inputs are allowed to be imported without payment of duty and finished goods are exported. (b) Export Oriented Undertakings (c) Permission to avail Cenvat on inputs for other similar products (d) Refund of duty on inputs if Cenvat credit cannot be used (e) Duty Drawback Scheme. Elaborate procedures have been prescribed for the above, to ensure that the benefits are not misused.
Exports free of duty on finished product - Exports of almost all excise goods except hides, skin and leather and salt and exports to all countries except to Nepal and Bhutan are exempt from Central Excise Duties. Exports toNepal Bhutan Nepal
EVEN INPUTS RECEIVED BY THE FACTORY CAN BE EXPORTED AS SUCH WITHOUT PAYMENT OF EXCISE DUTY. IF MANUFACTURER HAD AVAILED CENVAT CREDIT OF DUTY ON SUCH INPUTS, IT NEED NOT BE REVERSED [THE CENVAT CREDIT CAN BE UTILISED FOR PAYMENT OF DUTY ON PRODUCTS CLEARED FOR HOME CONSUMPTION].
EXPORT CAN BE MADE WITHOUT PAYMENT OF ALL TYPES OF DUTIES LIKE BASIC, SPECIAL, ADE(GSI) AND ADE (TTA) – - CHAPTER 7 PART IPARA 1.1 OF
CBE&C’S CE MANUAL, 2001.
Export Procedures for Excise - There are basically two procedures for dispatching the goods out ofIndia
Attention of the Exporters, CHAs and all concerned is invited to this Custom House Notices Nos. 112/89 dated 8.9.89, 168/95 dated 11.10.95 and 138/99 dated 23.12.99 prescribing norms for granting permission for factory/warehouse stuffing of export goods and procedure therefore.
2. Representations have since been received from various exporters and trade to review the procedure for obtaining permission for factory/warehouse stuffing and examination of the export goods under the DBK, Free, DEPB, DEEC and DFRC schemes. It has been represented that currently exporter/CHA apply for factory stuffing permission separately for various export promotion schemes to different sections of Export deptt., which causes inconvenience to them. Therefore, in order to streamline the procedure and with a view to further facilitate exports it has been decided that the exporters/CHAs may apply to AC/DC (Gr.7 Exports) for a single permission for factory stuffing under DEEC, DEPB, DFRC schemes. Similarly for factory stuffing permission for DBK and Free exports, single application may be made to DC (Export).
3. AC/DC of Customs (Export/Gr.7)/ (Export) will grant such permission for a period of three (3) months at a time for examination and stuffing of export consignments under supervision of Central Excise Officers or Customs Officers, as the case may be, on M.O.T. basis. In each such case a model examination order would be issued to the jurisdictional AC/DC of Central Excise in case of stuffing under C. Ex supervision or to the AC/DC (Docks) for stuffing under Customs supervision, as the case may be. The permission letter will be sent in a sealed cover to the concerned officers to examine the cargo to be stuffed.
4. The category of goods which will be so allowed to be stuffed at such places are as follows:-
(a) All goods in the factory of production whether or not such goods are excisable;
(b) Perishable frozen sea food/fish/meat/similar item and agricultural horticulture and similar goods;
(c) Articles of foods and pharmaceutical goods which require specialized packing in order to be protected from contamination, deterioration etc;
(d) Glassware and similar articles of fragile nature and
(e) Goods to be exported under duty free shipping bills.
5. In case of exporters having their factories in Mumbai, either they can obtain such permission for 3 months or obtain permission for individual shipments, as the case may be, for stuffing/examination. These exporters will have the option to stuff and examine their export cargo either under Central Excise/Customs supervision. Customs staff for the supervision/examination of export cargo will be available on overtime only on holidays or after normal office hours.
6. In cases of export other than under claim for drawback, DEFC, DEPB or DFRC Schemes and where the manufacturer exporter is a Central Excise Licencee, such export cargo may not be subjected or re-examination in the Docks if it has been examined and sealed under Central Excise supervision. In respect of such free shipping bills, (wherein no claim for Drawback or DEPB or part of export obligation of DEEC or DFRC scheme is envisaged) exporters can avail of the Central Excise supervision facility for examination/stuffing of the containers subject to the condition that such examination is supervised by an officer not less than the rank of Supdt. of Central Excise. This facility would be applicable to all export products which are manufactured in factories under Central Excise Control and which follow the procedure for clearance of goods under Central Excise invoice and the exports are required to be done under AR4 procedure. Small scale units registered with Central Excise can also avail of the above procedure.
7. In respect of goods which are manufactured in factories which are not under Central Excise control, the facility of factory stuffing under Central Excise supervision can be availed by such factories which are situated outside the jurisdiction of Greater Mumbai on M.O.T. basis. In respect of units situated in Greater Mumbai, the examination/stuffing of export cargo have to be normally done only under the supervision of the Customs officers. For this purpose, the services of Customs officers will be available only after office hours and on holidays. However, if such exporters have to execute export orders on urgent basis and during working hours from Monday to Friday (excluding public holidays) they can avail the service of Central Excise Officers for examination/stuffing of the goods at such factory premises on MOT basis.
8. Documents, information to be submitted at the time of making application for the grant of requisite permission by the manufacturer exporter/merchant exporter are as follows:-
(A) IN CASE OF FACTORY STUFFING BY MANUFACTURER EXPORTER:
(i) A request letter for factory stuffing in original mentioning the details reasons for such factory stuffing.
(ii) A copy of Central Excise registration certificate, duly attested by the concerned Central Excise authority in case of units registered with Central Excise, or an attested copy of Small Scale industries Certificate, duly attested, in case of SSI units not registered with Central Excise;
(iii) In case of not-excisable goods or SSI units not registered with Central Excise, original copy of NOC from AC/DC Central Excise mentioning therein their willingness for deputing the Central Excise officers to supervise the examination and stuffing operations in such factory.
(iv) Items to be stuffed with address of factory for every such request or renewal of permission along with their respective DEPB heading No/SION entry Nos. etc.
(v) Export performance in format Annexure ‘A’, duly signed by the exporter.
(B) IN CASE OF FACTORY STUFFING BY MERCHAND EXPORTERS:
(i) Request letter for factory stuffing mentioned therein the detailed reasons for such factory stuffing;
(ii) NOC from supporting manufacturer with every such application;
(iii) A copy of Central excise registration certificate, duly attested by the concerned Central Excise authority in case of units registered with Central Excise or attested copy of SSI registration certificate in case of S.S.I. units, not registered with Central Excise;
(iv) Original copy of NOC duly signed by the AC/DC of Central Excise, in case of non-excisable goods or S.S.I. units not registered with Central Excise, mentioning their willingness for deputing Central Excise Officers to supervise the examination and stuffing operations, in such factory;
(v) Items to be stuffed with address of factory for every such request or renewal of permission along with their respective DEPB heading No./SION entry Nos. etc.
(vi) Export performance in format Annexure ‘A’ duly signed by the Exporter.
(C) IN CASE OF WAREHOUSE STUFFING OF GOODS UNDER FREE, DUTIABLE OR EX-BOND S/BILL:
(i) Request letter for warehouse stuffing permission mentioning therein detailed reasons for such warehouse stuffing;
(ii) Original copy of the NOC from the or warehouse owner with every such request or renewal of permission;
(iii) Original copy of NOC duly signed by AC/DC, Central Excise mentioning therein willingness of deputing the Central Excise officers to supervise the operation;
(iv) Items to be stuffed alongwith address of the warehouse and the exporter for every such request or renewal of permission;
(v) Export performance of the exporter in the format Annexure ‘A’ duly signed by the exporter;
D. IN CASE OF WAREHOUSE STUFFING FOR OTHERS :-
(i) Request letter mentioning therein the detailed reason for factory/warehousing stuffing;
(ii) NOC from Warehouse owner;
(iii) Original letter from jurisdictional AC/DC of Central Excise mentioning therein their No Objection and willingness for deputing Central Excise officers to supervise the stuffing operation at the place of such stuffing.
(iv) Items to be stuffed along with address of the warehouse and the exporter for every such request or renewal of permission along with their respective DEPB heading No/SION entry No., etc.
(v) Export performance of the exporter in the format at Annexure ‘A’ duly signed by the exporter.
9. While applying for such permission the exporter should specify the description of the product to be exported and the details of the inputs claimed under the respective scheme. This one time permission shall be valid for a period of three months and for a particular exporter and the place of stuffing provided that:-
(a) There is no change in the description of the commodity and its particulars/specification;
(b) There is no change in the DEPB/DBK rates and the conditions laid down therein;
(c) There is no change in the EXIM policy or other relevant and allied Acts.
10. Exporters shall present the goods along with relevant invoices (in quadruplicate for export under DBK claims and triplicate for other exports.) packing list, GR form etc. with a written request for prior examination to the jurisdictional Supdt. of Central Excise. The goods will be examined and sealed by the inspector of Central Excise under supervision of Supdt. Central Excise. In case of containers, after examination, the Supdt. Central Excise will supervise stuffing and sealing of the container (after verifying it to be empty) with Customs Bottle Seal only. In case of consignments of value exceeding Rs.25 lacs and all consignments of sensitive commodities established to be prone to malpractices, examination, stuffing and sealing of the containers will be carried out under supervision of AC/DC, Central Excise and necessary orders to this effect will be given on the Model Examination Order. The details of examination carried out (including verification of particulars for duty drawback) and sealing of packages/containers, the container No, and seal No., will be recorded on the invoice/packing list and countersigned by the supervising officer. The Supdt. of Central Excise as well as the inspector of Central Excise will examine the Export cargo as per the model examination orders given by the Custom House. In all cases, unless specifically waived, sealed samples are required to be forwarded to the Custom House. The representative samples should be drawn by the Supdt. of Central Excise and should be sealed with Central Excise seals and should bear indication of shipping bill No., wherever filed in advance or the invoice No., and accompanying documents.
(11) In case the goods under export are subject to compulsory pre-shipment quality inspection, the same can be carried out simultaneously with the Central excise examination and this fact of inspection and sealing of goods by export inspection agency/Agmark official may also be incorporated in the report of Central Excise Inspector.
(12) Whenever export cargo is moved from places under AR4, an extra copy of AR4 should invariably be attached to the S/Bills. The examination report by Central Excise Officers should also be endorsed on the reverse of S/Bills (duplicate and DBK/DEFC etc. copies) where S/Bill is presented to Excise officer after obtaining examination order from Custom House and in other cases on reverse of Invoice.
(13) Thereafter, the exporters are required to file the shipping bill in the Export Deptt of the Custom House along with Central Excise certified copies of invoices, packing lists, G.R. forms etc. Ordinarily there will be no further examination at the docks provided the Central Excise seals and export inspection agency/Agmark seals, if any, are found intact.
14. Exporters are advised to correctly follow the procedure prescribed to avoid re-examination of cargo at the Port. In cases where it comes to notice that the examination by Central Excise Officer has not been carried out in accordance with the prescribed procedures as required under the scheme or where Customs officer has doubts, such cargo shall be subjected to re-examination by Customs in the Docks.
15. In the case of export cargo examined outside the Port by the Customs officers, the Customs seal will be verified by the P. Os in charge of the Division under whose supervision the shipment is to be effected.
16. In other cases not covered by the above, Commissioner (EP) may grant special sanction in individual cases depending on the merits of such cases.
17. This Public Notice supercedes all other Public Notices issued earlier on this subject.
Sd/- 11.07.2001
(M. DWIVEDI)
COMMISSIONER OF CUSTOMS (EP)
Copy to: All concerned
ATTESTED
(P.L. Suraj)
CJ. COMMISSIONER OF CUSTOMS
GROUP VII
FORMAT TO BE ENCLOSED WITH APPLICATION FOR FACTORY/WAREHOUSE STUFFING PERMISSION
1. NAME OF EXPORTER
2. FULL ADDRESS
3. NAME AND ADDRESS OF SUPPORTING MANUFACTURER
4. DESCRIPTION OF EXPORT GOODS
5. DEPB HEADING
6. SION ENTRY NO.
7. DEEC LICENSE NO./ APPLICATION NO.
8. PLACE OF STUFFING
9. PERIOD FOR WHICH PERMSSION IS SOUGHT
10. WAS ANY PERMISSION FOR W/H OR FACTORY STUFFING GRANTED EARLIER
11. EXPORT HOUSE STATUS
12. EXPORT PERFORMANCE DURING LAST THREE YEARS
13. FREQUENCY OF EXPORT
14. DESTINATION OF EXPORT
15. CENTRAL EXCISE REGISTRAION; CERTIFICATE NO.
16. REASONS FOR FACTORY STUFFING
(SIGNATURE OF EXPORTER)
F.NO. S/16-MISC-536/01-GR.VII
Download Export Guide
EXPORT PROCEDURES IN
CENTRAL EXCISE
In
relation to Central Excise and customs, following are the
concessions/incentives for exports:
(1)
Exemption from duty on final products (or refund of duty paid).
(2) Exemption/Refund of excise and customs
duties paid on inputs.
Inputs free of duty - Exporting units need raw materials without payment of customs/excise duty, to enable them to compete with world market. Government has devised following schemes for this purpose: (a) Special Economic Zones at various places where inputs are allowed to be imported without payment of duty and finished goods are exported. (b) Export Oriented Undertakings (c) Permission to avail Cenvat on inputs for other similar products (d) Refund of duty on inputs if Cenvat credit cannot be used (e) Duty Drawback Scheme. Elaborate procedures have been prescribed for the above, to ensure that the benefits are not misused.
Exports free of duty on finished product - Exports of almost all excise goods except hides, skin and leather and salt and exports to all countries except to Nepal and Bhutan are exempt from Central Excise Duties. Exports to
EVEN INPUTS RECEIVED BY THE FACTORY CAN BE EXPORTED AS SUCH WITHOUT PAYMENT OF EXCISE DUTY. IF MANUFACTURER HAD AVAILED CENVAT CREDIT OF DUTY ON SUCH INPUTS, IT NEED NOT BE REVERSED [THE CENVAT CREDIT CAN BE UTILISED FOR PAYMENT OF DUTY ON PRODUCTS CLEARED FOR HOME CONSUMPTION].
EXPORT CAN BE MADE WITHOUT PAYMENT OF ALL TYPES OF DUTIES LIKE BASIC, SPECIAL, ADE(GSI) AND ADE (TTA) – - CHAPTER 7 PART I
Export Procedures for Excise - There are basically two procedures for dispatching the goods out of
CBE&C
has clarified that exports under 'claim of rebate' and 'export under bond' are
at parity, since intention of both the procedures is to make duty incidence
'Nil'. - CBE&C circular No. 283/117/96-CX dated 31-12-1996 .
General
procedures for exports – Export can be under bond without payment
of duty or after payment of duty and then claiming rebate. Some procedures are
common. These are discussed first.
DOCUMENTS
FOR EXPORT - THE GOODS HAVE TO BE CLEARED FROM FACTORY
UNDER INVOICE. IN ADDITION TO THE INVOICE, A PRESCRIBED FORM ARE-1 HAS TO BE
FILLED IN BY EXPORTER. [EARLIER AR-4].
Invoice for export – Invoice for export can be from same series
from which goods for home consumption are cleared or a separate series of
invoice can be maintained for export. General permission has been given to
maintain separate series of Invoice for export purposes. The Invoice should be
prominently marked as ‘FOR EXPORT WITHOUT PAYMENT OF DUTY’.
Copies and colour of ARE-1 form - The copies of ARE-1
form should have following colour : (i) Original : White. (ii) Duplicate:
Buff (iii) Triplicate: Pink (IV) Quadruplicate: Green. Assessee
can optionally have quintuplicate form which can be used for claiming other
export incentives. - - It is sufficient if copies of ARE-1 (that time AR-4)
contain a colour band on the top or right hand corner as per the aforesaid
colour scheme. Thus, it is possible to take out copies on plain/computer
stationery and affix colour band.
The
'Assessable Value' as per section 4 of CEA should be mentioned on ARE-1 and the
Invoice. In view of new section 4, 'Transaction Value' is Assessable Value.
Hence, strictly legally, the ‘value’ can be equal to, less or more than FOB
Value. [Practically, FOB Value is usually accepted as ‘value’]. The running
bond account should be debited by ‘value’ as shown in the Invoice and ARE-1.
Handling of ARE-1 forms - If export consignment is cleared
under supervision of Excise Superintendent or Inspector, the excise officer
will make endorsement on all copies of ARE-1. He will return original and
duplicate copies to the exporter-assessee. He will send triplicate copy of
ARE-1 directly to officer to whom bond was executed or letter of undertaking
was given. This copy can also be handed over to the exporter in a tamper proof
sealed cover to be submitted to the authority. Quadruplicate copy will be
retained by excise officer. Exporter can have optionally quintuplicate copy
which will be dealt with in same manner as the original copy.
At the
time of export, original, duplicate and quintuplicate (optional) will be
submitted to customs officer, along with the goods. These will be examined and
then export will be allowed. He will make endorsement of export on all copies
of ARE-1. He will cite shipping bill number and date and other particulars of
export on ARE-1. Original and quintuplicate (optional) will be returned to
exporter. The duplicate copy will be sent directly by customs officer to the
officer with whom bond was executed or to whom letter of undertaking was given.
The duplicate copy can be sent either by post or by handing over to the
exporter in tamper proof sealed cover.
Thus, the officer where bond is executed will
get two copies – one from Superintendent of Central Excise when goods are
cleared from factory and other from customs officer after export. This will
enable him to keep track to ensure that all goods cleared from factory or
warehouse without payment of duty are actually exported.
If the
goods are sent under self sealing and self certification, the export goods
along with original, duplicate and quintuplicate (optional) copies of ARE-1
will be sent after self sealing and self certification to the port for export.
[There will be no endorsement of excise officer on these copies]. Triplicate
and quadruplicate copies will be submitted to Superintendent or Inspector of
Central Excise within 24 hours after clearance from the factory. The excise
officer will make endorsement on both the copies and then hand over triplicate
copy to exporter in sealed envelope for submitting the same to authority to
whom bond or letter of undertaking was given. Further procedure at the port
will be same as above.
In case of
export after payment of duty, under claim of rebate, the basic procedure is
same as above, except that the triplicate copy (by excise officer) and
duplicate copy (by customs officer) will be sent to the officer to whom rebate
claim is filed. If claim of rebate is by electronic submission, these copies
will be sent to excise rebate audit section at the place of export.
Signing of ARE-1 form – The ARE-1 form is
required to be signed by manufacturer. If the export is under bond executed by
Merchant Exporter, the form should be signed by both manufacturer as well as
Merchant Exporter.
Sealing of
goods for export - Goods can be cleared from factory duly
sealed. Goods can be cleared for export without sealing also. Self sealing and
self certification is also permissible.
Clearance with seal
of Central Excise - In this
method, export goods are examined before despatch by Central Excise Officers.
In such case, the goods are not examined by Customs Officers at the port or
airport of shipment, unless seals are found to be tampered or if there is
specific information.
The CE
officer will verify the goods, DSA and documents. If these are in order, he
will seal the consignment. Sealing can be done of each package or container.
Individual packages may be sealed by using wire and lead seals. An all side
container may be sealed by using one time lock / bottled seals. The officer
will then make necessary endorsement on ARE-1.
Factory stuffing of
containers - Now most of the exports are through
containers. Goods can be stuffed in containers at inland container depots
(ICDs) situated in various places. Stuffing of containers inside the factory,
under supervision of central excise officers is also permissible. Pre-shipment
quality inspection, where required, should be carried out before stuffing.
After the inspection by Central Excise Inspector and Superintendent, samples
will be taken out as per guidelines. Then, the container is sealed.
The
Superintendent of Central Excise shall send an examination report of factory
sealed packages/containers in form Annexure C1 as given in CBE&C circular
No. 6/2002-Cus dated 23-1-2002 .
It has been reiterated that the examination report must accompany the export
goods to port/airport of export. – CBE&C circular No. 630/21/2002-CX dated 27-3-2002 .
After such
sealing, the containers are not normally opened at the port, unless the seal is
found to be tampered with or there is specific intelligence, in which case,
permission of AC/DC is required
before checking.
Consolidation of cargo of different exporters – Often
export goods of more than one manufacturers is required to be consolidated. For
this, export goods of one factory have to be taken to another factory. This is
permissible if done under supervision of excise authorities. - Chapter 7
Part V Para 4.1 and chapter 8 part IV para 3
of CBE&C’s CE Manual, 2001.
Clearance with self-sealing -. Any
exporter who is a manufacturer or owner of warehouse can clear export
consignment with self sealing and self certification. Such sealing should be
done under supervision of owner, working partner, managing director or Company
Secretary or a person duly authorised by such owner, working partner or Board
of Directors of the company.
He should
certify on all copies of ARE-1 that goods have been sealed in his presence. If
such certification is not done, the packages may be opened at port for detailed
customs examination. – CCE, Rajkot TN
At the
gateway port, examination will be carried out as per norms. It is
clarified that self-certification and self-sealing is permissible, but these
will be examined at the port of export on the basis of examination norms prescribed
under circular No. 6/2002-cus dated
23-1-2002. – MF(DR) circular No.
31/2002-Cus dated 7-6-2002 . - - The permission for
factory stuffing will be given on permanent basis and need not be renewed every 6 months. – CBE&C
circular No. 60/2001-Cus dated 1.11.2001.
Self sealing even if export through merchant exporter – Self
sealing is permitted even when goods are exported through merchant exporter.
The sealing will be done by manufacturer following the same procedure as above.
Removal
under bond without payment of duty – The basic procedures
for removal of goods without payment of duty under rule 19 are – (a) Execute a
bond (in case of merchant exporter) or issue letter of undertaking (in case of
manufacturer exporter) (b) Clear goods from factory under bond without payment
of duty (c) Export the goods and obtain certificate of export on ARE-1 from
customs authorities. Submit the proof of export and get self-credit in Running
Bond Account. - - The procedures are prescribed in Notification No. 42/2001-CE(NT)
dated 26.6.2001.
All duties exempt including NCCD – CBE&C has
clarified that National Calamity Contingent Duty (NCCD) is also exempt when
goods are exported under bond. It is policy of Government to grant relief from
domestic taxes on goods which are exported. – CBEC circular No. 641/32/2002-CX dated 26-6-2002 .
bond by merchant exporter – Merchant exporter is
required to execute a bond. The
bond can be executed by merchant-exporter in form B-1. Merchant exporter
registered with recognised Export Promotion Council and Status Holders (Export
House, Trading Hose etc.) do not have to furnish any security/surety while
executing bond, unless they have come to adverse notice of department. –
CBE&C circular No. 613/4/2001-CX dated 31-1-2002 , confirmed in CBE&C circular No.
711/27/2003-CX dated 30-4-2003 .
- - - If bond is executed by merchant exporter, he will obtain
certificates in form CT-1 from Superintendent of Central Excise.
The
exporter shall ensure that debit in bond does not exceed the credit available
in the bond any time. Goods can be cleared by manufacturer on the strength of
this certificate, without payment of duty. 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
manufacturer as well as merchant exporter.
Types of bond for export - The exporter has to
execute B-1 bond. The bond can be with surety or security or only guarantee.
The bond should be at least equal to the duty chargeable on the goods, with
such surety or security as the excise officer may approve. [For instructions
about security / surety etc. see under ‘Bonds’]
Where bond can be executed – The bond can be
executed with any one of the following –
(a) Maritime Commissioners (b) Asstt. / Dy Commissioner under whose
jurisdiction the factory is situated. (c) Assistant / Deputy 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 – The merchant
exporter can obtain CT-1 forms in lot of 25. Part I of the form is certified by
Superintendent of CE regarding bond executed. It is not necessary to obtain
CT-1 for each consignment separately. CT-1 forms in lot of 25 should be issued
to merchant exporter covering period of one to three months, depending on his
track record. The merchant exporter shall send CT-1 form to the manufacturer
from whom goods are to be procured for export. Before sending CT-1, the
merchant exporter should debit estimated amount of duty liability. This amount
is required to be specified in part II form CT-1. 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 converted
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’s CE Manual, 2001.
Letter of undertaking - The manufacturer exporter can furnish a
letter of undertaking (LUT) in form UT-1 as given in Annexure II of
Notification No. 42/2001-CE(NT). The manufacturer exporter need not execute a
bond. The LUT once given is valid for 12 calendar months. It is not necessary
to submit LUT for each consignment. Though manufacturer exporter is not
executing bond, submission of proof of export is required. If the manufacturer
exporter repeatedly fails to comply with conditions of LUT, he can be asked to
furnish B-1 bond with security / surety. The LUT will not be discharged unless
proof of export is submitted or duty is paid upon deficiency with interest. -
Chapter 7 Part II Paras 3.3 and 3.5 of CBE&C’s CE Manual, 2001.
PROCEDURE AT THE TIME OF EXPORT - THE EXPORTER OR HIS AGENT WILL
SUBMIT COPIES OF ARE-1 FORM TO CUSTOMS OFFICER AT THE TIME OF EXPORT. THESE
WILL BE ENDORSED BY HIM CERTIFYING EXPORT OF GOODS. THIS WILL SERVICE AS ‘PROOF
OF EXPORT’.
Running Bond Account – The merchant exporter will maintain a
‘Running Bond Account’ (RBA). Once bond is executed, the RBA will be credited
by the bond amount i.e. the amount for which bond is executed.
A
manufacturer exporter does not execute a bond and hence need not maintain
Running Bond Account. However, he should maintain similar record and submit
proof of export following same procedure.
Export within 6 months - Goods must be exported within 6 months
from date of removal from the factory, unless extension is granted. Extension
can be granted by AC / DC / Maritime commissioner. - Chapter 7 Part II Para
2.2(i) of CBE&C’s CE Manual, 2001.
Proof of export – The exporter will get copy of ARE-1 with
certificate from customs authorities certifying export of goods. The duplicate
copy of ARE-1 will be obtained in sealed envelope to be submitted to the
authority with whom the bond is executed. The exporter is required to submit a
statement at least once a month to the authority with whom bond is executed. If
bond was executed with jurisdictional AC / DC, the statement should be
submitted to him through range office. The statement will be in form as given
in Annexure 19 of CBE&C’s CE Manual, 2001. Assessee should submit duly
certified copy of ARE-1, self attested copy of Bill of Lading and self attested
copy of Shipping Bill (export promotion copy). This statement will be
immediately acknowledged by office of bond accepting authority. On submission
of the statement, the assessee can take credit in his running bond account. It
is not necessary to wait for their approval or permission. The excise office
will verify the correctness of statement and match ARE-1 sullied by range
office with triplicate copy which is already with them. If goods are not
exported within 6 months or extended period permitted, action for recovery
should be initiated. - Chapter 7 Part II Paras 13.1 to 13.6 of CBE&C’s
CE Manual, 2001.
Control of Bond - Control over bond is exercised by the
authority before whom the bond is executed and all proofs of export have to be
submitted to that authority. Any demand for duty in case goods are not exported
will have to be raised by authority before whom the bond is executed. – Bombay
Dyeing and Mfg Co In re 2001(134) ELT 591 = 45 RLT 860 (GOI) – quoted and
followed in Supreme Industries Ltd. In re 2002(144) ELT 729 (GOI).
Change of destination or buyer – If exporter
intends to change destination or buyer or port / place of export after goods
were cleared for export, he can do so. He should submit details to authority
with whom bond was executed and make necessary changes in ARE-1 and Invoices.
Alternatively, he can cancel previous invoice and ARE-1 and prepare fresh
invoice and ARE-1 with permission and authentication by bond / LUT accepting
authorities. The serial number and date of initial documents are endorsed on
the fresh documents. - Chapter 7 Part V Para
1.2 of CBE&C’s CE Manual, 2001.
EXPORT
UNDER CLAIM OF REBATE - THE REBATE OF EXCISE DUTY PAID ON EXPORTED
GOODS IS GRANTED UNDER RULE 18. THE PROCEDURE HAS BEEN PRESCRIBED IN
NOTIFICATION NO 40/2001-CE(NT) DATED 26.6.2001, SUPPLEMENTED IN CHAPTER 8 PART
I OF CBE&C’S CE MANUAL, 2001.
The rebate
is available on all exports except exports to Nepal Bhutan Nepal Nepal
Clearance without bond, but under form ARE-1 - Export
under claim for rebate should be made under ARE-1 form. Since the goods are
being cleared after full payment of duty, execution of any bond is not
necessary. Copies of ARE-1 form and its distribution is same as that for export
under bond. Export can be under seal of Central Excise or without seal.
Procedure for export and distribution of copies of ARE-1 after export is also
identical.
Rebate claim - The rebate claim can be filed with Maritime
Commissioner (if there is one for the port/airport/post). As per section 11B of
CEA, claim must be filed within one year from date of export. Rebate claim can
also be lodged with jurisdictional Assistant / Deputy Commissioner of Central
Excise. Authorities are expected to point out deficiencies in application
within 15 days. Rebate claim below Rs 500 is not acceptable. No form has been prescribed
for submitting application for rebate. Application on letter head is
sufficient. - - Supplementary Rebate Claim can also be filed, but that claim
also must be within time limit. - Chapter 8 Part IV of CBE&C’s CE
Manual, 2001.
Duty can be paid by cash or Cenvat credit - It is not necessary
that rebate can be obtained only if duty is paid by cash. Duty on final
products can be paid either through cash or PLA or Cenvat credit ( that time
RG23A part II or RG23C part II) - CBE&C Circular No 262/96/96-CX 6 dated
6.11.1996.
Restrictions on grant of rebate - The rebate will not
be granted if (i) The market price of goods exported is less than the
amount of rebate. (ii) The amount of rebate of duty is less than Rs.
500.
When rebate procedure may be useful - It is naturally
advisable not to pay duty, than to pay it and then wait for refund from
Government. However, in following situations, it may be beneficial to pay duty
and claim rebate -
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If assessee has balance of duty in Capital Goods Cenvat
Credit Account, it will be advisable to pay duty and claim refund, as balance
in Capital goods Cenvat Credit Account is never refundable. This may happen
when duty paid on capital goods is heavy and assessee may not be able to
utilise the credit.
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An SSI unit may pay 60% duty and claim rebate, as getting
refund of Cenvat credit of inputs is not an easy procedure. Moreover, he is
not entitled to get refund of duty paid on capital goods.
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When duty paid goods are proposed to be exported.
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Duties eligible for rebate – Following duties are eligible for rebate –(a) Basic Duty
paid under Central Excise Act (b) Special excise duty (c) ADE (GSI) and (d) ADE
(TTA). – Explanation I to Notification No. 40/2001-CE(NT).
Rebate of
duty on inputs used in manufacture of export goods - Some
times, final goods may be exempt from duty. In such case, the exporter can
claim rebate of duty paid on excisable materials used in manufacture of export
goods, except in case of export to Nepal Bhutan
Input
output ratio has to be informed to AC/DC. Goods can be procured at concessional
rate of duty by following procedure prescribed under Central Excise (Removal of
Goods at concessional rate of duty for manufacture of excisable goods), Rules.
Inputs can be sent outside for job work and return. Export is required to be
made under form ARE-2. After export, rebate claim should be filed. Procedure
and form has been specified in Notification No. 41/2001-CE(NT) dated 26.6.2001.
Inputs
free of Central Excise duty - A manufacturer of export goods can get
his inputs without payment of Central Excise Duty. Input output ratio should be
informed to Assistant / Deputy Commissioner. Goods can be procured without
payment of duty by following procedure prescribed under Central Excise (Removal
of Goods at concessional rate of duty for manufacture of excisable goods),
Rules. Inputs received can be sent outside for job work and return. Final
product has to be exported. Clearance for export is required to be made under
form ARE-2. See Notification No. 43/2001-CE(NT) and Chapter 7 Part VI of
CBE&C’s CE Manual, 2001 for detailed procedure.
Exports to
Nepal/Bhutan - India Nepal Bhutan Nepal Bhutan
Detailed
procedure has been prescribed in para 4 of Notification No. 40/2001-CE-NT dated
26.6.2001 supplemented in Chapter 8 Part II of CBE&C’s CE Manual, 2001.
Invoice in
prescribed form has to be prepared in quadruplicate. This will be endorsed by
excise officer. Its copies should be submitted at land customs station at Nepal India New Delhi
Exports to
Nepal Bhutan Nepal
EXPORT
INCENTIVES THROUGH CENVAT - CENVAT CREDIT AVAILED ON INPUTS USED
FOR EXPORTED GOODS CAN BE USED FOR PAYMENT OF DUTY ON OTHER SIMILAR PRODUCTS
CLEARED FOR HOME CONSUMPTION (I.E. WITHIN INDIA
CERTIFICATE
REGARDING NON-AVAILMENT OF CENVAT ON INPUTS IF DUTY DRAWBACK TO BE CLAIMED – (A) IF
THE MANUFACTURER-EXPORTER OR SUPPORTING MANUFACTURER OF MERCHANT EXPORTER IS
REGISTERED WITH CENTRAL EXCISE, FACT OF NON-AVAILMENT OF CENVAT CREDIT CAN BE
VERIFIED FROM ARE-1 FORM FURNISHED (B) IF THE MANUFACTURER-EXPORTER OR
SUPPORTING MANUFACTURER OF MERCHANT EXPORTER IS NOT REGISTERED WITH CENTRAL
EXCISE, THEY HAVE TO SUBMIT SELF-DECLARATION ABOUT NON-AVAILMENT OF CENVAT. –
MF(DR) CIRCULAR NO. 8/2003-CUS DATED 17-2-2003 .
The
drawback rate consists of two components - customs portion (consisting of basic
customs duty, surcharge and SAD) and excise portion (consisting of basic excise
duty, special excise duty and CVD). The Cenvat credit is only in respect of
central excise. Hence, it has been clarified that even if Cenvat credit has
been availed, duty drawback in respect of customs portion will be available.
Export
procedures by exempt SSI units and manufacturers of readymade garments - Small
Scale Industries and manufacturers of readymade garments which are exempted
from Central Excise Duty on account of their turnover below prescribe limit, do
not have to follow ARE-1 and bond procedure. However, they have to follow
‘simplified procedure’ as specified in Chapter 7 Part III Paras 1 to 4 of
CBE&C’s CE Manual, 2001. [The ‘simplified procedure’ is really quite
complicated].
The
simplified procedure is applicable to exporters of readymade garments, i.e.
they can clear under their own documents and ARE-1 procedure is not required. –
CBE&C circular No. 705/21/2003-CX dated 8-4-2003 .
(a)
Clearance should be under own invoice of the SSI unit. The SSI unit need not
have separate series of Invoice for export (b) The Invoice should be machine
serial numbered (or by franking machine) starting from 1 from 1st April every
year (c) Invoice should be pre-authenticated by the SSI unit himself (d)
Invoice should indicate name and address of buyer, destination, description,
value, progressive total of total value of excisable goods cleared for home
consumption since beginning of financial year, transport vehicle number, date
and time of removal of goods from his factory. (e) If the export is direct, the
SSI unit should mention "FOR EXPORT" on top and his own Export-Import
Code Number, if any. If export is through merchant exporter, manufacturer
should mention at top of Invoice - 'EXPORT THROUGH MERCHANT EXPORTER'. Export
Import code No. of such merchant exporter should be mentioned in such case.
The SSI
unit should maintain a simple record of production and clearance. Entries in
production record should be made at close of the day or beginning of next day.
No entry is necessary on the days when there is no production. The SSI unit
should file a quarterly statement to jurisdictional Range Superintendent in
prescribed form given in Annexure 20 of CE Manual, 2001.
Bringing
goods for repairs, re-making etc.
It is
often necessary to bring the final products for various purposes like refining,
repairs, re-making, reconditioning, testing etc. Rule 16 of Central Excise
Rules make provisions in this regard.
Procedure
for receipt and clearance - As per the provisions, if the goods are
brought for being re-made, refined, re-conditioned or for any other reason,
assessee should take Cenvat credit of duty paid as if such goods are received
as inputs under Cenvat Credit Rules.
Goods can
be brought ‘for any other reason’. Thus, if goods are returned to assessee by
buyer as they were in excess or if buyer refuses to accept the goods, the goods
can be brought back. There is no time limit for bringing goods for repairs and
goods can be brought any time.
Goods manufactured by others can also be brought for repairs
etc. -
Rule 16 uses the words, ‘brought to the factory’. Thus, the goods brought for
repairs/reconditioning /refining need not have been manufactured by assessee.
Goods manufactured by any other person can be brought in the factory for
repairs etc. However, if such goods brought are not accompanied by duty paying
document, permission from Commissioner under rule 16(3) will be required.
Document for availing Cenvat credit - If the person
sending the goods sends goods under his invoice after payment of duty, Cenvat
credit can be taken on the basis of that invoice. However, such credit can be
taken even on the basis of own Invoice which was raised when the goods were
originally cleared. In Gujarat Containers Ltd.
v. CCE 2000(125) ELT 495 (CEGAT), it has been held that assessee can
take Cenvat credit on basis of his own invoice on returned goods.
In the
opinion of author, Cenvat credit can be availed even on the basis of triplicate
copy of invoice which is in record of assessee. The reason for the view is that
‘triplicate’ copy is also an ‘invoice issued under Central Excise Rules’.
[However, a Xerox copy is not an ‘invoice issued under Central Excise Rules’].
Removal after repairs / re-making etc. - At the time of
clearance, duty should be paid under Invoice as follows - (a) If the process
carried out on the goods brought amounts to manufacture, assessee should pay
duty at the rate applicable on date of removal. Value shall be determined under
section 3(2), 4 or 4A as applicable. (b) If the process does not amount to
manufacture, an ‘amount’ equal to Cenvat credit taken at the time of receipt of
final product is payable. The buyer can avail Cenvat credit of this ‘amount’.
[rule 16(2)]. - - The Cenvat credit available with assessee can be utilised for
payment of ‘duty’ payable under rule 16(1) or ‘amount’ payable under rule
16(2). [Cenvat Credit Rule 3(3)(d)].
Goods can be sent to anyone after repairs - Note that after
repairs, reconditioning etc., goods can be sent to any one. There is no
requirement that goods must be sent only to the person from whom these were
received.
goods brought themselves must be reprocessed – Note
that the goods brought must themselves be reprocessed and then sent. If the
goods brought are scrapped and fresh goods are sent, it is new manufacture.
Fresh duty is payable and Cenvat credit of goods returned cannot be availed.
Cenvat credit of ‘amount’ – The buyer can avail Cenvat credit
of ‘amount’ paid under rule 16(2) – Explanation to Rule 16(2).
If above
procedure cannot be followed - At times, it may not be possible to
follow aforesaid procedure. e.g. (a) the Invoice on which original goods were
cleared may not be available, or (b) the invoice may be for full machine, out
of which only some components might have been brought back for repairs /
reconditioning.
There
might be any other reason too. If there is any difficulty in following
the procedure, permission has to be obtained from Commissioner for bringing the
goods for repairs, reconditioning etc.
Procedure prescribed – The assessee should obtain prior
permission in obtaining such goods. If obtaining prior permission is not
possible, intimation about receipt of goods should be given to Range
Superintendent within 24 hours and then apply for permission through Range
Superintendent in triplicate, indicating reasons for not applying in advance.
Proper records should be maintained. The goods should be re-cleared within six
months or the extended period as may be permitted by Commissioner. - CCE
Pune-I TN 66/2001 dated 5.10.2001 * CCE, Ahmedabad II TN 20/2003 dated 6-2-2003 [152 ELT T46]
Bonds under Central Excise
The word
‘bond’ is used quite often in excise and customs e.g. manufacture under bond,
clearance under bond, export under bond etc. ‘Bond’ means an undertaking given
by the assessee to Government for due fulfilment of certain obligation e.g.
export under bond means a ‘bond’ that goods cleared without payment of duty
from factory for export will be exported and if not, appropriate duty will be
paid.
Bond is an
instrument by which the obligation to pay money is created expressly. It is
also a legal agreement whereby a person undertakes to do or not to do anything
subject to conditions stipulated in the agreement. Primary purpose of the bond
is to secure due compliance with the rules and procedures laid down under CE
Law. A bond is a collateral security, which the department is securing to
ensure payment of appropriate duty, in addition to the statutory provisions
available. - Chapter 14 Para 1.1 of CBE&C’s CE Manual, 2001.
Nature of Bond - Bond is an agreement where a person executing
a bond undertakes to fulfil certain conditions as per agreement. Bond does not
need registration unless it relates to immovable property. Primary purpose of bond
under excise is to secure due compliance with rules and procedures as per Act
and Rules and to provide for payments to be made if the conditions are not
complied with. Bond is a supplementary security which the Central Excise
department can take in addition to provisions of duty payment. Thus,
duty can be recovered under law even if bond is not executed or bond amount is
not adequate.
Execution
of Bonds - Assessee has to execute bond under various provisions of
Act. Form of bond has been standardised by excise department and numbers have
been given for identification. Bonds should be executed on a non-judicial stamp
paper. If adhesive stamps are affixed to any instrument chargeable to duty, the
stamps shall be cancelled so that it cannot be used again. Such cancellation
may be done by drawing two lines across or by signing on the stamp or in any
other effectual manner [If not cancelled, the instrument is treated as
‘unstamped’].- - Amount of stamp depends on the State in which it is executed.
Indian Stamp Act authorises each State to prescribe stamp duty chargeable on
various documents and hence it varies from State to State.
Bond
should be executed in favour of and in name of President of India.
Signing of Bond - If the assessee is a Company, bond can be
signed by a person authorised by the Board of Directors by a resolution. In
case of registered partnership firm, any partner can sign on behalf of the
firm.
Acceptance of Bond – As per earlier instructions, bond should
be executed before Superintendent of Central Excise or officer above that rank
or Notary public or Magistrate. Bond should be accepted by Assistant/Deputy
Commissioner of CE. [Presumably, the instructions are still valid].
Release of Bond – Bond will be preserved by excise officers
till all the obligations are not discharged. After discharge of obligation, the bond can be got released if the
terms of bond are fulfilled. Securities offered can be released and then
encashed by guarantor. He can also get interest accrued on such securities.
Forms of
Bonds - Bonds are of different nature and for various purposes.
Forms of bond etc. have been standardised. The main bonds are as follows :
B-1 general bond - The bond is for due dispatch of excisable
goods removed for export without payment of duty. The bond can be with surety
or security. New form of B-1 bond has been given in Annexure-I of Notification
No. 42/2001-CE(NT) dated 26.6.2001.
An
exporter-manufacturer can execute simple ‘Letter of Undertaking’ (LOU) in form
UT-1 without executing any bond. The UT-1 form is given in Annexure-II of
Notification No. 42/2001-CE(NT) dated 26.6.2001. It is clarified that if export
is through merchant exporter, execution of bond is necessary. Export on basis
of LUT of the manufacturer is not permissible in such case. - Chapter 7 Part
II Para 5.4 of CBE&C’s CE Manual, 2001.
B-2 Bond - This is a General Bond for provisional
assessment. It can be with security or surety.
B-4 Bond - The bond is for provisional release of seized
goods. It can be only security bond. Bond should be for whole value of seized
goods. Amount of security will be as determined by adjudicating authority
taking into consideration of gravity of offence (normally 25% ). [Earlier B-11
bond]. [The name B-4 has been mentioned in Chapter 14 para 2.2 of CE Manual,
2001, but actually, no form has been prescribed. Chapter 17 para 3.2 states
that old form under previous rules may be used. This para mentioned B-8 bond.
Later it is clarified that it should be read as ‘B-11’ – CBE&C circular No.
686/2/2003-CX dated 2-1-2003 .].
B-8 Bond - This bond is for obtaining goods at Nil or
concessional rate of duty under Central Excise (Removal of Goods at
Concessional Rate of Duty for Manufacture of Excisable Goods) Rules. A bond is
required to be executed under these rules. Since no form of bond has been
prescribed, earlier form B-8, which was prescribed under earlier Chapter
X procedure may be used after making necessary changes.
B-11 Bond – This is not
prescribed under new rules. However, it has been clarified that the old B-11
form should be used to clear seized goods on provisional basis. – CBE&C
circular No. 686/2/2003-CX dated 2-1-2003 .
[Then what is ‘B-4’ bond which is mentioned but not printed anywhere ?] – or
departmental instructions, read under B-4.
B-17 Bond - This is a general surety / security bond to be
executed by EOU, EHTP/ STP units. It is for provisional assessment of
goods for export of goods to foreign countries without payment of duty and for
accountal / disposal of excisable goods procured without payment of duty.
Types of
Bond - Bonds are either surety or security type. Surety bonds
are covered under provisions of Contract Act. Under Surety Bond, another person
stands as surety to guarantee the performance on the part of obligor. Surety
should be for full value of bond and the person standing as surety should be
solvent to the extent of bond amount. Under the Contract Act, the liability of
surety is co-extensive with that of the principal debtor and hence the
department is at liberty to enforce the recovery of dues either from the
obligor or from the surety. – - Chapter 14 Paras 2.1 of CBE&C’s CE
Manual, 2001.
Security
Bond - Security
Bonds are executed where security is offered instead of guarantee. Security can
be in nature of Post Office saving deposit, National Saving Certificate or
similar realisable Government papers of Central or State Government. Bank
deposit receipt of large scheduled banks is also acceptable. Interest on such
securities will accrue to person making such deposit. Security can also be
furnished by cash deposit, but no interest will be receivable on such cash
deposit (and hence it is advisable to provide security by way of NSC, Bank FD
etc.). Cash should be deposited by way of TR-6 challan mentioning proper
account head and other details. - Chapter 14 Para 7.1 of CBE&C’s CE Manual,
2001.
Bank
Guarantee as surety/security - Form of bank
guarantee has been prescribed, both for scheduled and un-scheduled banks. Bank
guarantee form when Court orders release of goods against bank guarantee has
also been prescribed.
Legal position of bank guarantee - The bank guarantee
is given is respect of some contract. Such contract is called 'underlying
contract', e.g. in case of excise bond, the bond executed by assessee is the
'underlying contract'. Supreme Court has consistently held that bank guarantee
is independent of the underlying contract. The bank must honour the bank
guarantee except in case of fraud or irretrievable injustice. The fraud should
be of beneficiary and not of some one else. If Banks do not honour their
guarantees, trust in commerce would be irreparably damaged.
Further,
even if bank guarantee specifies a limited period for enforcement of bank
guarantee (e.g. one year etc.). The bank guarantee can be enforced any time
during the period of limitation, which is usually three years in most of the
cases.
One sided
conditions in Bond - Many of the conditions in the standard form
of bond are totally one sided, i.e. favouring revenue. Some times, the
conditions are even against the provisions of law. The assessee has to sign the
bond as per standard format as he has no option. These are dotted line
contracts or contracts of adhesion. Normally, standard forms of contract are
binding on the person even if the person has not read them. However, if the
contracting parties do not have equal bargaining power, these are often one
sided. Such contracts are ‘Adhesion Contracts’. These are standardised form of
contract form offered on essentially ‘take it or leave it’ basis without affording
consumer realistic opportunity to bargain. Court can grant relief if clauses in
such contract are unreasonable and unconscionable. The aggrieved person can
approach Courts for relief in case of such one sided contracts [see
discussions and case law under ‘General Principles of Law’].
Receipt of Goods at
concessional rate of duty
Some users
of excisable goods can obtain goods at nil or lower rate of duty, subject to
certain conditions. If they are entitled to obtain excisable goods at nil or
concessional rate of duty, they are required to follow prescribed procedure.
The provisions are contained in Central Excise (Removal of Goods at
Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.
procedure prescribed in some exemption notifications - Some
exemption notifications prescribe that procedure as contained in Central Excise
(Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable
Goods) Rules shall be followed. In such cases, the exemption will be available
only if the required procedure is followed.
PROCEDURE
FOR AVAILING THE BENEFIT - THE MANUFACTURER INTENDING TO AVAIL
THE BENEFIT OF EXEMPTION NOTIFICATION ISSUED U/S 5A SHALL APPLY TO ASSISTANT /
DEPUTY COMMISSIONER IN QUADRUPLICATE IN FORM SPECIFIED AT ANNEXURE I TO CENTRAL
EXCISE (REMOVAL OF GOODS AT CONCESSIONAL RATE OF DUTY FOR MANUFACTURE OF
EXCISABLE GOODS) RULES. SEPARATE APPLICATION SHALL BE FILED FOR EACH SUPPLIER.
Bond to be executed - A bond in prescribed form should be executed
with surety or security. Bond amount will be prescribed by Assistant / Deputy
Commissioner, considering duty liability estimated to be involved at any given
time. Form of new bond has not been prescribed. Hence, earlier B-8 bond form
may be used with suitable modifications. [See under ‘Bonds’ for instructions
about B-8 bond].
Certificate by AC/DC - The AC / DC will countersign the
application submitted, certifying that necessary bond has been executed.
Subsequent procedure - Copy of this application duly signed by
AC/DC will be sent to supplier-manufacturer. [The earlier procedure of CT-2
certificate has been discontinued]. The supplier can clear goods on
receipt of the certificate duly countersigned by AC / DC. The removal details
will be recorded on the application by the supplier-manufacturer.
Accounts after receipt of goods - Goods obtained by
the manufacture at concessional rate of duty should be properly accounted for
and should be used only for the purpose for which they are brought. Simple
account indicating quantity and value of subject goods, quantity consumed for
intended purpose and quantity remaining in stock shall be maintained invoice
wise.
Clearance to another unit – Goods received without payment of
duty can be sent to another eligible unit/manufacturer under the same
procedure. However, the another unit/manufacturer should be registered under
rule 3 of Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001. [CBE&C circular No.
617/8/2002-CX dated 6-2-2002 ].
Return of goods to supplier – It may happen that goods received
under the rules without payment of duty, may be found to be defective, damaged,
unsuitable or surplus to the needs of manufacturer. In such case, the
manufacturer can return the goods to supplier, i.e. original manufacturer. The
original manufacturer will add this to his non-duty paid stock (in Daily Stock
Account) and then deal with it. [Proviso to rule 6 of Removal of Goods
at Concessional Rate of Duty Rules].
Monthly return - A monthly return in prescribed form should be
submitted by 10th of following month. Form of monthly return has been
prescribed in Annexure II to Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules.
Goods
received at concessional rate not used for intended purpose - If the
material received at concessional rate of duty is not used for intended
purpose, manufacturer is liable to pay differential duty along with interest.
Duty payable if goods lost or destroyed during transport - It has
been clarified that if the goods are lost or destroyed by natural causes or by
unavoidable accident during transport from place of procurement to the
manufacturer’s premises or from place of manufacturer to the place of procurer
(if goods are returned), during handling or storage in the manufacturer’s
premises, it will not be treated as ‘used for intended purpose’. In other
words, in such case, differential duty and interest will become payable. - Explanation
to rule 6.
Intention to use is not enough - actual use necessary - Goods
should be used for intended purpose. Mere intention to use is not sufficient.
If the goods are not used for intended purpose, duty is payable by the
consignee along with interest. Provisions of sections 11A and 11AB shall apply.
Thus, demand has to be raised within period prescribed u/s 11A.
Liability is of consignee - The bond
is executed by consignee. He has to give undertaking to pay differential duty.
Thus, the duty liability is of the consignee.
No Cenvat
to buyer in respect of goods received under the procedure - Since
goods are cleared by supplier-manufacturer without payment of duty, the buyer
will not be entitled to any Cenvat credit. - [Board Circular No.
33/33/94-CX-8 dated 4-5-1994
in respect of earlier Chapter X].
Moreover,
supplier will have to pay 8% ‘amount’ of goods are removed at ‘Nil’ rate of
duty. This ‘amount’ cannot be utilised for Cenvat purposes.
Thus, the
procedure of sending material at concessional rate of duty is not of use if
buyer wants to avail Cenvat on inputs.
Reversal
of Cenvat on inputs or payment of 8% amount - If the
final product is cleared under Chapter X procedure, Cenvat credit taken on
inputs will have to be reversed or ‘amount’ of 8% of price will have to be paid
as per Cenvat provisions. The buyer cannot avail Cenvat credit of this ‘amount’
as Cenvat credit can be taken only of ‘duty’. Hence, in the opinion of
author, if buyer is in a position to avail Cenvat credit, it is advisable to
pay full duty instead of availing the concession.
Rewarehousing
certificate not required - In some cases, range superintendent
having jurisdiction over manufacturer's factory insist on rewarehousing
certificate from the user (to whom goods were despatched at concessional rate
of duty). Rules do not provide for any such requirement.
WAREHOUSING
Normally,
goods are removed from factory on payment of duty. However, in respect of
certain goods, provision has been made to store the goods in warehouses without
payment of duty. - - The provisions are also available for goods cleared for
export on payment of duty under claim for rebate of duty under rule 18 of CE
Rules.
As per
Rule 20 of Central Excise Rules, facility of warehousing can be extended for
removal of excisable goods from factory of production to a warehouse or from
one warehouse to another warehouse without payment of duty. CBE&C can
prescribe conditions, limitations and safeguards. The rule clarifies that
responsibility for payment of duty on the goods removed from factory or
warehouse to another warehouse is that of consignee. However, if goods do not
reach the destination warehouse, the duty liability is that of consignee.
At
present, these provisions are applicable to following -
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(i) Petroleum
products (ii) benzene, toluene and xylene (iii) Goods transferred to customs
bonded warehouse as ‘Stores’. [These goods are cigarettes, aerated waters,
prepared and preserved foods, Aluminium foil covers, stainless steel cutlery,
butter and cheese]. These ‘stores’ are issued to foreign going vessels
without payment of duty - Notification No. 47/2001-CE(NT) dated 26-6-2001.
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Goods removed by
export houses or star trading houses for subsequent exports under rule 18 or
rule 19 of Central Excise Rules - Notification No. 46/2001-CE(NT) dated
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The
warehouses can be public or private. Permission for such warehouses has to be
obtained from Commissioner. The goods are in custody of officer-in-charge of
the warehouse. Goods can be removed from warehouse on payment of duty plus
penalty, godown rent etc. Transfer from one warehouse to another without
payment of duty is also permissible. Goods can be stored for maximum period of
3 years. [It may be noted that provisions of customs bonded warehouse also
exist in respect of imported goods. That facility is available for all imported
goods.]
Procedures to be followed - Procedure, as prescribed in CBE&C circular No.
579/16/2001-CX dated 26-6-2001 supplemented in Chapter 10 Part I of CBE&C’s
CE Manual, 2001, is briefly as follows -
- Warehouse should be registered by Excise
Commissioner.
- Consignor is required to prepare
application in quadruplicate in form attached to aforesaid
notification. [Earlier AR-3]. He is also required to prepare invoice as
required. Three copies of application and duplicate of invoice should be
sent along with goods to consignee.
- On arrival at destination, rewarehousing
certificate will be sent duly countersigned by Range superintendent to his
counterpart at the end of consignee.
- If rewarehousing certificate is not
received within 90 days, consignor shall pay the duty.
- Proper accounts shall be maintained at
the warehouse. He will be responsible for payment of duty, penalty etc.
- Registered person can keep only goods
belonging to him and not to someone else. He can keep other’s goods only
with permission of Commissioner.
- Owner of warehouse can sort, pack or repack the goods in warehouse and make such alterations as may be necessary for preservation, sale or disposal thereof
PLEASE READ ALSO PUBLIC NOTIFICATION NO.85
/2001 DTD.13.07.2001
PUBLIC NOTICE
NO.85/2001 Date: 13.07.2001
Norms for granting permission for factory/warehouse stuffing of export goods and procedure- reg.
Norms for granting permission for factory/warehouse stuffing of export goods and procedure- reg.
Attention of the Exporters, CHAs and all concerned is invited to this Custom House Notices Nos. 112/89 dated 8.9.89, 168/95 dated 11.10.95 and 138/99 dated 23.12.99 prescribing norms for granting permission for factory/warehouse stuffing of export goods and procedure therefore.
2. Representations have since been received from various exporters and trade to review the procedure for obtaining permission for factory/warehouse stuffing and examination of the export goods under the DBK, Free, DEPB, DEEC and DFRC schemes. It has been represented that currently exporter/CHA apply for factory stuffing permission separately for various export promotion schemes to different sections of Export deptt., which causes inconvenience to them. Therefore, in order to streamline the procedure and with a view to further facilitate exports it has been decided that the exporters/CHAs may apply to AC/DC (Gr.7 Exports) for a single permission for factory stuffing under DEEC, DEPB, DFRC schemes. Similarly for factory stuffing permission for DBK and Free exports, single application may be made to DC (Export).
3. AC/DC of Customs (Export/Gr.7)/ (Export) will grant such permission for a period of three (3) months at a time for examination and stuffing of export consignments under supervision of Central Excise Officers or Customs Officers, as the case may be, on M.O.T. basis. In each such case a model examination order would be issued to the jurisdictional AC/DC of Central Excise in case of stuffing under C. Ex supervision or to the AC/DC (Docks) for stuffing under Customs supervision, as the case may be. The permission letter will be sent in a sealed cover to the concerned officers to examine the cargo to be stuffed.
4. The category of goods which will be so allowed to be stuffed at such places are as follows:-
(a) All goods in the factory of production whether or not such goods are excisable;
(b) Perishable frozen sea food/fish/meat/similar item and agricultural horticulture and similar goods;
(c) Articles of foods and pharmaceutical goods which require specialized packing in order to be protected from contamination, deterioration etc;
(d) Glassware and similar articles of fragile nature and
(e) Goods to be exported under duty free shipping bills.
5. In case of exporters having their factories in Mumbai, either they can obtain such permission for 3 months or obtain permission for individual shipments, as the case may be, for stuffing/examination. These exporters will have the option to stuff and examine their export cargo either under Central Excise/Customs supervision. Customs staff for the supervision/examination of export cargo will be available on overtime only on holidays or after normal office hours.
6. In cases of export other than under claim for drawback, DEFC, DEPB or DFRC Schemes and where the manufacturer exporter is a Central Excise Licencee, such export cargo may not be subjected or re-examination in the Docks if it has been examined and sealed under Central Excise supervision. In respect of such free shipping bills, (wherein no claim for Drawback or DEPB or part of export obligation of DEEC or DFRC scheme is envisaged) exporters can avail of the Central Excise supervision facility for examination/stuffing of the containers subject to the condition that such examination is supervised by an officer not less than the rank of Supdt. of Central Excise. This facility would be applicable to all export products which are manufactured in factories under Central Excise Control and which follow the procedure for clearance of goods under Central Excise invoice and the exports are required to be done under AR4 procedure. Small scale units registered with Central Excise can also avail of the above procedure.
7. In respect of goods which are manufactured in factories which are not under Central Excise control, the facility of factory stuffing under Central Excise supervision can be availed by such factories which are situated outside the jurisdiction of Greater Mumbai on M.O.T. basis. In respect of units situated in Greater Mumbai, the examination/stuffing of export cargo have to be normally done only under the supervision of the Customs officers. For this purpose, the services of Customs officers will be available only after office hours and on holidays. However, if such exporters have to execute export orders on urgent basis and during working hours from Monday to Friday (excluding public holidays) they can avail the service of Central Excise Officers for examination/stuffing of the goods at such factory premises on MOT basis.
8. Documents, information to be submitted at the time of making application for the grant of requisite permission by the manufacturer exporter/merchant exporter are as follows:-
(A) IN CASE OF FACTORY STUFFING BY MANUFACTURER EXPORTER:
(i) A request letter for factory stuffing in original mentioning the details reasons for such factory stuffing.
(ii) A copy of Central Excise registration certificate, duly attested by the concerned Central Excise authority in case of units registered with Central Excise, or an attested copy of Small Scale industries Certificate, duly attested, in case of SSI units not registered with Central Excise;
(iii) In case of not-excisable goods or SSI units not registered with Central Excise, original copy of NOC from AC/DC Central Excise mentioning therein their willingness for deputing the Central Excise officers to supervise the examination and stuffing operations in such factory.
(iv) Items to be stuffed with address of factory for every such request or renewal of permission along with their respective DEPB heading No/SION entry Nos. etc.
(v) Export performance in format Annexure ‘A’, duly signed by the exporter.
(B) IN CASE OF FACTORY STUFFING BY MERCHAND EXPORTERS:
(i) Request letter for factory stuffing mentioned therein the detailed reasons for such factory stuffing;
(ii) NOC from supporting manufacturer with every such application;
(iii) A copy of Central excise registration certificate, duly attested by the concerned Central Excise authority in case of units registered with Central Excise or attested copy of SSI registration certificate in case of S.S.I. units, not registered with Central Excise;
(iv) Original copy of NOC duly signed by the AC/DC of Central Excise, in case of non-excisable goods or S.S.I. units not registered with Central Excise, mentioning their willingness for deputing Central Excise Officers to supervise the examination and stuffing operations, in such factory;
(v) Items to be stuffed with address of factory for every such request or renewal of permission along with their respective DEPB heading No./SION entry Nos. etc.
(vi) Export performance in format Annexure ‘A’ duly signed by the Exporter.
(C) IN CASE OF WAREHOUSE STUFFING OF GOODS UNDER FREE, DUTIABLE OR EX-BOND S/BILL:
(i) Request letter for warehouse stuffing permission mentioning therein detailed reasons for such warehouse stuffing;
(ii) Original copy of the NOC from the or warehouse owner with every such request or renewal of permission;
(iii) Original copy of NOC duly signed by AC/DC, Central Excise mentioning therein willingness of deputing the Central Excise officers to supervise the operation;
(iv) Items to be stuffed alongwith address of the warehouse and the exporter for every such request or renewal of permission;
(v) Export performance of the exporter in the format Annexure ‘A’ duly signed by the exporter;
D. IN CASE OF WAREHOUSE STUFFING FOR OTHERS :-
(i) Request letter mentioning therein the detailed reason for factory/warehousing stuffing;
(ii) NOC from Warehouse owner;
(iii) Original letter from jurisdictional AC/DC of Central Excise mentioning therein their No Objection and willingness for deputing Central Excise officers to supervise the stuffing operation at the place of such stuffing.
(iv) Items to be stuffed along with address of the warehouse and the exporter for every such request or renewal of permission along with their respective DEPB heading No/SION entry No., etc.
(v) Export performance of the exporter in the format at Annexure ‘A’ duly signed by the exporter.
9. While applying for such permission the exporter should specify the description of the product to be exported and the details of the inputs claimed under the respective scheme. This one time permission shall be valid for a period of three months and for a particular exporter and the place of stuffing provided that:-
(a) There is no change in the description of the commodity and its particulars/specification;
(b) There is no change in the DEPB/DBK rates and the conditions laid down therein;
(c) There is no change in the EXIM policy or other relevant and allied Acts.
10. Exporters shall present the goods along with relevant invoices (in quadruplicate for export under DBK claims and triplicate for other exports.) packing list, GR form etc. with a written request for prior examination to the jurisdictional Supdt. of Central Excise. The goods will be examined and sealed by the inspector of Central Excise under supervision of Supdt. Central Excise. In case of containers, after examination, the Supdt. Central Excise will supervise stuffing and sealing of the container (after verifying it to be empty) with Customs Bottle Seal only. In case of consignments of value exceeding Rs.25 lacs and all consignments of sensitive commodities established to be prone to malpractices, examination, stuffing and sealing of the containers will be carried out under supervision of AC/DC, Central Excise and necessary orders to this effect will be given on the Model Examination Order. The details of examination carried out (including verification of particulars for duty drawback) and sealing of packages/containers, the container No, and seal No., will be recorded on the invoice/packing list and countersigned by the supervising officer. The Supdt. of Central Excise as well as the inspector of Central Excise will examine the Export cargo as per the model examination orders given by the Custom House. In all cases, unless specifically waived, sealed samples are required to be forwarded to the Custom House. The representative samples should be drawn by the Supdt. of Central Excise and should be sealed with Central Excise seals and should bear indication of shipping bill No., wherever filed in advance or the invoice No., and accompanying documents.
(11) In case the goods under export are subject to compulsory pre-shipment quality inspection, the same can be carried out simultaneously with the Central excise examination and this fact of inspection and sealing of goods by export inspection agency/Agmark official may also be incorporated in the report of Central Excise Inspector.
(12) Whenever export cargo is moved from places under AR4, an extra copy of AR4 should invariably be attached to the S/Bills. The examination report by Central Excise Officers should also be endorsed on the reverse of S/Bills (duplicate and DBK/DEFC etc. copies) where S/Bill is presented to Excise officer after obtaining examination order from Custom House and in other cases on reverse of Invoice.
(13) Thereafter, the exporters are required to file the shipping bill in the Export Deptt of the Custom House along with Central Excise certified copies of invoices, packing lists, G.R. forms etc. Ordinarily there will be no further examination at the docks provided the Central Excise seals and export inspection agency/Agmark seals, if any, are found intact.
14. Exporters are advised to correctly follow the procedure prescribed to avoid re-examination of cargo at the Port. In cases where it comes to notice that the examination by Central Excise Officer has not been carried out in accordance with the prescribed procedures as required under the scheme or where Customs officer has doubts, such cargo shall be subjected to re-examination by Customs in the Docks.
15. In the case of export cargo examined outside the Port by the Customs officers, the Customs seal will be verified by the P. Os in charge of the Division under whose supervision the shipment is to be effected.
16. In other cases not covered by the above, Commissioner (EP) may grant special sanction in individual cases depending on the merits of such cases.
17. This Public Notice supercedes all other Public Notices issued earlier on this subject.
Sd/- 11.07.2001
(M. DWIVEDI)
COMMISSIONER OF CUSTOMS (EP)
Copy to: All concerned
ATTESTED
(P.L. Suraj)
CJ. COMMISSIONER OF CUSTOMS
GROUP VII
A N N E X U R E ‘A’
FORMAT TO BE ENCLOSED WITH APPLICATION FOR FACTORY/WAREHOUSE STUFFING PERMISSION
1. NAME OF EXPORTER
2. FULL ADDRESS
3. NAME AND ADDRESS OF SUPPORTING MANUFACTURER
4. DESCRIPTION OF EXPORT GOODS
5. DEPB HEADING
6. SION ENTRY NO.
7. DEEC LICENSE NO./ APPLICATION NO.
8. PLACE OF STUFFING
9. PERIOD FOR WHICH PERMSSION IS SOUGHT
10. WAS ANY PERMISSION FOR W/H OR FACTORY STUFFING GRANTED EARLIER
11. EXPORT HOUSE STATUS
12. EXPORT PERFORMANCE DURING LAST THREE YEARS
1. 2008-09
2. 2009-10
3. 2010-11
4. 2012-TILL DATE
2. 2009-10
3. 2010-11
4. 2012-TILL DATE
13. FREQUENCY OF EXPORT
14. DESTINATION OF EXPORT
15. CENTRAL EXCISE REGISTRAION; CERTIFICATE NO.
16. REASONS FOR FACTORY STUFFING
(SIGNATURE OF EXPORTER)
F.NO. S/16-MISC-536/01-GR.VII
Role & liability of customs house
agent:-
Section 146 of the
Customs Act 1962 is the enabling provision, which
allows agents of importers and exporters to act on behalf of importers and
exporters. This is necessitated by the highly involved and technical nature of
the work to be done in connection with clearance of imports into and exports
out of country. The importers and exporters themselves may have neither time
nor the requisite knowledge on their own. Therefore, agents are allowed to act
on their behalf. The work of the agents is governed by the Customs House Agents Licensing Regulations, 1984 framed
under this section read with Section 157.
There
are certain liabilities fastened on the agent of the importer or exporter under
Section 147. Some of these liabilities are in the nature of extension of and
exceptions to the liability of an agent under the Indian Contracts Act, 1872.
Sub-section (1) empowers the agent to do everything that an importer or an
exporter can do. Filing a bill of entry, shipping bill, submitting supporting
documents therewith, helping in examination of goods, payment of duty on behalf
of the principal, warehousing of goods, removal from warehouse and the like.
The common law principle that an agent’s actions bind the principal is given
the status of a legal presumption. The consequences of all actions of a CHA
will bind the importers and exporters on whose behalf they act. An agent who is
authorized to act on behalf of the importer or exporter is treated as the owner
of imported or exports goods. In respect of that particular transaction, a
notice could be given to that agent. This does not normally extend to recovery
of duty not paid or short paid by the owner, importer or exporter of goods. As
an exception, this is permissible when the Deputy/Assistant Commissioner is of
the opinion that such recovery from the owner, importer or exporter of goods is
not possible.
Clearances only against authorization
A CHA is
required to clear goods for import or export only against specific
authorization from the principal and must produce it whenever required by the
Deputy/Assistant Commissioner.
Method of
transacting business
The CHA
has to either personally clear the goods or clear it through an employee who is
approved by the Deputy/Assistant Commissioner who is designated for this
purpose by the Commissioner. All the documents prepared by him should
prominently bear the CHAs name at the top of the document. The CHA should not
attempt to influence the conduct of Customs officers in matters pending before
him or his subordinates. There should be no threats, false accusations or
duress against such officers. No promise of advantage or benefit or gift should
be made or bestowed on such officers. Duty of CHA should be discharged with
utmost speed and avoid delays. He cannot charge for his services in excess of
rates approved by the Commissioner.
Personal interests of CHA
If the CHA
is a former officer of the department, he cannot represent any matter before a
Customs officer, which he had personally considered as such officer. He cannot
also use facts which came to his knowledge when he was an officer.
Duty to tender correct advice
The CHA is
duty-bound to advise the client to comply with the provisions of the Act and
the regulations. If there is non-compliance of provisions by any client, he is
required to bring it to the knowledge of the Deputy/Assistant Commissioner.
This regulation requires the CHAs to act as source of information to the
department.
The
CHA has to exercise diligence and ensure that he passes on correct information
to the client, ensure that all information relevant for clearance or cargo or
baggage is passed on to the client if it is relevant for clearance of cargo or
baggage.
Accounting for money received
The
CHA has a duty to promptly pay to Government all money received from client for
payment of duties and taxes. Similarly, any money received by him from the
client or from the Government should be promptly and fully accounted to the
client.
Liability as to information
CHA
should not attempt to gather information from Government records if it is not
granted by the proper officer. Access to record maintained by him should not be
denied, nor removed or concealed when sought by the Commissioner. There is a
duty to maintain records and accounts as directed by the Deputy/Assistant Commissioner
and produce them before that officer for inspection. All documents have to be
prepared strictly in accordance with the rules and orders.
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