Customs Circular No. 11(A)/2011 dated 25/02/2011
Execution of a Common Bond for specified Export Promotion (EP) schemes-reg.
The authorization holders operating under the Advance Authorization/Duty Free
Import Authorization (DFIA) / Export Promotion Capital Goods (EPCG) schemes are
presently, required to execute a bond and a bank guarantee, as applicable, with
the Customs authorities at the time of each import. Further, this bond is
required to be executed separately for each authorization at different ports in
case the goods are being imported from different ports.
2. In this regard I am directed to refer to the report of the Task Force on
Transaction Cost in Exports set up by the Government. The report submitted in
January, 2011, recommended that the authorization holders may be permitted to
execute a single running bond with Customs authorities for all their imports
under any Export Promotion (EP) scheme, from any port in India. The
recommendation of the Task Force has since been accepted by the Government.
3. Since the authorization holders have to execute bonds against each
authorization under specified EP schemes i.e. Advance Authorization / Duty Free
Import Authorization (DFIA) and Export Promotion Capital Goods (EPCG) scheme, it
has been decided that henceforth the authorization holders may execute only one
common bond for all their exports/imports under the above mentioned EP schemes.
This bond shall be called the "Common Bond for EP schemes". The bond shall be
executed on the stamp paper of requisite denomination. The salient features of
the facility of the Common Bond for EP Schemes are as under:-
(i) The facility shall be available to all fresh authorizations issued under the
above mentioned EP schemes on or after 1st March, 2011.
(ii) This facility shall be available financial year wise. In other words, the
authorization holder shall be required to execute one common bond in each
financial year. The authorization holders who avail the facility of common bond
by executing a common bond during March, 2011 shall be required to execute a
fresh common bond for authorizations issued after 1st April 2011 during the
financial year 2011-12.
(iii) The facility of common bond shall be available if the authorization holder
imports/ exports all his goods only from Customs ports / airports / ICDs etc.
where the ICES 1.5 is fully implemented and the Customs location is duly
notified by the DGFT as an EDI port (hereinafter referred to as specified port
(iv) The common bond should be executed at the port of registration of the first
Authorization issued/to be issued in that Financial Year for import of goods
from a specified port. The common bond shall be applicable for all
authorizations issued in that financial year for imports from specified ports.
(v) The common bonds are required to be executed IEC wise.
(vi) An authorization holder shall have a choice of executing either a common
bond for all import clearances from different ports or of continuing with the
existing system of executing different bonds at different ports. However, in
case the authorization holder opts for the common bond facility then all imports
against all authorizations( under the above mentioned EP schemes) issued in that
financial year shall be permitted only under the common bond. In other words,
the authorization holder can opt for the common bond at any point of time during
the financial year; but once the common bond facility has been opted for, the
authorization holder cannot execute separate bonds for authorizations registered
subsequently in that financial year.
(vii) In order to use the common bond facility, the authorization holder shall
execute the bond at the time of registration of the first authorization for
imports through specified ports. The authorization holder shall indicate to the
Customs authorities, at the time of registration of authorization, whether a
common bond has already been registered with the Customs authorities. If so,
then the unique number and the location where such common bond was registered
shall be indicated to the assessing officer. This unique bond number shall be
entered in the system and shall link the authorization with the common bond. If
the common bond has not been executed, then the authorization holder may choose
to do so; or else continue with the present practice of executing different
bonds for different authorizations. The authorization holder shall give an
undertaking to the Customs authorities, at the time of registration, that the
authorization is not registered elsewhere.
(viii) The bond value shall be decided by the authorization holder keeping in
mind the likely imports against authorizations issued in that financial year.
Once a common bond has been executed and the authorization registered against
it, the imports against such authorization shall be permitted as per the time
limits prescribed in the concerned EP scheme. If the bond value is exhausted, it
shall be topped up by the authorization holder at the port where the common bond
was executed. At the time of topping up, the authorization holder shall ensure
that the stamp duty applicable to new bond is paid. For this purpose, the
authorization holder shall furnish a crossed stamp paper of requisite
denomination to the Customs authorities.
(ix) In case any Bank Guarantee is required, the authorization holder need not
furnish the entire Bank Guarantee at the time of executing the bond. The Bank
Guarantee may be furnished as and when the goods are imported and the benefits
of concessional duties availed. While executing the bond, the authorization
holder shall indicate whether the benefits of reduced Bank Guarantee is being
claimed in terms of circular number 58/04-Customs (as amended). The Customs
authority accepting the bond shall check the eligibility of the authorization
holder and indicate the applicable quantum of Bank Guarantee. The assessing
officer at the port of import shall independently arrive at the quantum of Bank
Guarantee to be furnished by the importer / authorization holder and shall
satisfy himself that the authorization holder / importer has furnished adequate
Bank Guarantee before the imports are permitted. In case it is felt that the
importer has to furnish some more bank guarantee, the importer / authorization
holder shall be so advised by the assessing officer. The additional Bank
Guarantee thereafter shall be furnished by the importer.
(x) The Bank Guarantees shall be furnished by the authorization holder only at
the port where the common bond has been executed. This is considered mandatory
so as to ensure that the common bond and the Bank Guarantees linked to the
common bond are all kept physically together. The Bank guarantees linked to a
Common Bond would not be accepted at Customs locations other than the location
where the Common Bond is executed. The authorization holder shall ensure that
the Bank Guarantee furnished by him to the Customs authorities remains alive
during the life of the bond. The Customs authorities at the port where the
common bond has been executed shall also monitor the bank guarantees and take
action in case the bank guarantee expires.
(xi) Once a Common Bond has been executed along with the first authorization at
a particular Customs port, the subsequent authorizations need to be registered
at the port mentioned on the authorization. This port may be different from the
port where the common bond was executed.
(xii) The authorization holder, at the time of import, shall indicate the
authorization number against each item in his Bill of Entry. The EDI system
shall check whether the IEC number of the importer, the IEC of the bond holder
(the person who has executed the bond) and the IEC of the Authorization holder
are same and shall only permit imports, thereafter. The system shall debit the
common bond Authorization wise.
(xiii) The authorization holder, at the time of export, shall indicate the
authorization number in his Shipping Bill. The authorization holder shall
fulfill the export obligation and comply with all the conditions stipulated in
relevant Customs notifications and the Foreign Trade Policy under which the
goods have been imported. Although the primary responsibility of monitoring the
EO under the above mentioned schemes lies with the RA/DGFT officials, the
Customs officers at the port where the authorizations have been registered shall
also monitor the Export Obligation (EO) under these schemes in terms of the
conditions of the relevant Customs Notifications and the Board's circulars and
instructions issued from time to time. Once the Export Obligation Discharge
Certificate (EODC) is received from the DGFT for an authorization the Customs
officials at the port where the authorization is registered shall, if required,
check the import / export details, close the authorization and inform the
Customs authorities at the port where the common bond was executed so that the
Bank Guarantee can be released and the bond discharged to that extent. The
common bond shall be alive till all the EODCs against all the authorizations
registered against that common bond have been received.
(xiv) In case of default in fulfillment of Export obligation or non-compliance
of the terms and conditions of Customs Notification(s), the requisite action to
safeguard Government revenue shall be taken by the Customs authorities at the
port of registration of the authorization. For this purpose, the Customs
authorities at the port of registration of the authorization may seek details of
the common bond and/ or bank guarantee from the port where they were executed.
The action to safeguard revenue may include denial of the benefit of exemption
from the bank guarantee for future imports under the above mentioned schemes in
terms of para 3.2 of the circular No. 58/2004-Cus dated 21-10-2004(as amended).
(xv) The opinion of Law Ministry on legal implications of a single Bond across
different customs locations was sought in a similar issue. The Ministry of Law
and Justice had clarified that since the Bond is executed in favour of President
of India, the same is enforceable by any authorised Commissioner (Customs).
(xvi) The format of "Common Bond for EP Scheme" is annexed herewith.
5. The existing Bond sections in the Custom Houses may be suitably strengthened
to implement these instructions.
6. The ICES 1.5 has been suitably modified to support the proposed scheme. The
Directorate of Systems shall be issuing separate instructions in respect of the
new module for the convenience of the staff.
7. These instructions may be brought to the notice of the officers and trade by
issuing suitable instructions / public notice. Difficulties faced, if any in
implementation of the Instructions may please be brought to the notice of the
Board at an early date.
8. Receipt of this Circular may kindly be acknowledged.