Customs Circular No. 12/2011 dated 01/03/2011
Assessment under Project Import Regulations, 1986 - Requirement of cash security
in lieu of bank guarantee.
I am directed to refer Board's Circular No. 89 dated 9-8-1995 issued from F.No.
528/ 73/ 92 - (TU), in partial modification of letter F.No.521/192/ 90-Cus.(TU)
dated 9.1.1992, advising Customs Houses / Commissionerates to take cash security
equivalent to 2% of the CIF value of goods sought to be imported, subject to a
maximum of Rs. 50 lakhs, at the time of registration of Project Contract under
Project Import Regulations, 1986. It was further advised that in cases, where
cash security of 2% of the value of the contract exceeds Rs. 50 lakhs, importers
may be given an option to furnish cash security of Rs. 50 lakhs and balance
amount by a bank guarantee, backed by an undertaking to renew it till the
finalisation of the contract. Government Departments and Public Sector
Undertakings, however, continued to be exempted from furnishing the above cash
security in terms of the practice in vogue, Vide Board's letter F.No.
521/192/90-Cus.(TU) dated 14.3.1993.
2. The issue regarding furnishing of a cash security equal to 2% of the CIF
value of the goods sought to be imported under Project Import has further been
examined by the Board. In view of the reduction in import duty and the
inordinate delay associated with finalisation of the said project imports, it
has been decided to do away with the practice of taking cash security.
Henceforth, subject to a maximum of Rs. 1 Crore, only a bank guarantee,
equivalent to 2% of the CIF value of goods sought to be imported, would be taken
at the time of registration of the Project Contract under Project Import
Regulations, 1986. The said bank guarantee shall be backed by an undertaking
that it would be renewed from time to time.
However, the said bank guarantee need not be renewed on completion of a period
of six months from the date of submission of necessary documents, from the
jurisdictional Central Excise authority or any other specified authority, as
proof of utilisation / installation of goods for the finalisation of the
contract. The project import of Government Departments and Public Sector
Undertakings would continue to be covered by Board's letter F.No. 521/92/90-
Cus.(TU) dated 14.3.1993.
F.No. 334/03/2011 (TRU)
[F. No. 334/3/2011 - TRU]
(Sanjeev Kumar Singh)
Under Secretary to the Government of India