Procedure to export by trader without payment of excise??

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 December 2012 As per above mentioned query-Our company is not registered under Excise.Now Company has decided to do export.Company purchase the goods from manufacturer.Company wants to export these goods without payment of excise duties to the manufacturer.Please let me know the detailed procedure of above transaction.

Arun Kumar Singh

Arun Kumar Singh (Expert)
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15 December 2012 The merchant exporter is required to execute a bond so that goods can be cleared by the supplier-manufacturer without payment of duty. The bond can be executed by merchant exporter in form B-1. If bond is executed by merchant exporter, he will obtain certificates in form CT-1 from superintendent of central excise. Goods can be cleared by manufacturer on the strength of this certificate, without payment of duty. Forms of bond and CT-1 certificate have been given in notification NO. 42/2001-CE(NT).

Querist : Anonymous

Querist : Anonymous (Querist)

17 December 2012 Thank u sir.i would like to know that how much time will take to execute this bond,if we furnish B1 bond along with required documents.
Also,25% of bond value in the form of bank guarantee need to be issued.Then please let me know in which favour this BG should be issued??

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 August 2024 To export goods without payment of excise duty, especially when you are not registered under Excise, you need to follow a specific procedure. Here’s a detailed guide to the process, including how to handle the execution of bonds and the bank guarantee requirement:

### **1. Understanding the Excise Duty Exemption**

- **Excise Duty on Exports:** Generally, excise duty is exempted on goods exported out of India. The procedure involves ensuring that the manufacturer does not charge excise duty at the time of sale to you.

### **2. Procuring Goods from Manufacturer**

- **Manufacturer's Role:** The manufacturer should supply goods without charging excise duty. This is typically done by submitting a **B1 Bond** to the excise authorities, which allows the manufacturer to clear goods for export without payment of excise duty.

- **Documentation from Manufacturer:** Ensure you obtain an **Excise Invoice** showing that excise duty is not levied. The invoice should be marked as "Export under Bond" or similar.

### **3. Exporting Goods**

#### **A. Procedure for Bond Execution**

1. **Furnish Bond:**
- **B1 Bond:** You need to execute a bond (often B1 Bond) with the Central Excise Department. This bond is a commitment that you will export the goods and comply with all export obligations.
- **Bond Amount:** The bond amount typically covers the excise duty that would be payable if the goods were not exported.

2. **Bank Guarantee:**
- **Issuance:** A bank guarantee (BG) of 25% of the bond amount is required to ensure compliance. The BG acts as a security for the duty that would be payable in case of non-compliance.
- **In Favor Of:** The BG should be issued in favor of the **Assistant/Deputy Commissioner of Central Excise** or the relevant excise authority as directed by the excise department.
- **Format:** The format of the BG should comply with the requirements specified by the excise authorities.

3. **Documents Required:**
- **Bond Form (B1 Bond)**
- **Bank Guarantee Document**
- **Export Order/Invoice**
- **Purchase Order from Manufacturer**
- **Any other documents specified by the excise authorities**

#### **B. Execution Time**

- **Processing Time:** The time taken to process and execute the bond can vary. Typically, it may take 1-2 weeks for the excise department to review and approve the bond, provided all documents are in order.

### **4. Export and Compliance**

1. **Export Documentation:**
- **Shipping Bill/Bill of Lading:** Ensure proper documentation of export shipments.
- **Excise Invoice:** Ensure that the manufacturer’s invoice is in compliance with excise regulations and marked as "export."

2. **File Returns:**
- **Excise Returns:** Ensure timely filing of returns to the excise authorities, even if the company is not registered, if required by the excise department.

3. **Maintain Records:**
- **Export Records:** Keep detailed records of all export transactions, including invoices, shipping documents, and compliance with bond conditions.

### **5. After Export**

1. **Claim Refund (if applicable):**
- **Refund of Duty:** If you are registered under GST and the manufacturer has charged GST instead of excise, you may need to claim a refund of GST paid on export supplies.

2. **Bond Release:**
- **Completion of Export:** Once the export is completed, you should ensure that the bond is appropriately discharged. This might involve submitting proof of export and ensuring compliance with any post-export requirements.

### **Summary of Steps**

1. **Obtain Excise-Free Goods:**
- Ensure the manufacturer provides goods without excise duty.

2. **Execute Bond and BG:**
- Prepare and submit the B1 Bond and Bank Guarantee in favor of the excise authority.

3. **Export Goods:**
- Follow all export documentation requirements and ensure compliance.

4. **Post-Export Compliance:**
- Ensure the bond is discharged and maintain records for audits.

5. **Refunds and Adjustments:**
- If applicable, claim refunds for GST or adjust any duty-related payments.

**Note:** This procedure is subject to changes based on updates to excise and GST regulations, and it’s crucial to consult with a tax advisor or legal expert for precise guidance and compliance with current regulations.