dear vatsal shah,
please find enclosed herewith the short information regarding the your query :
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 Nepal and Bhutan do not qualify for export incentives as payment is received in Indian rupees. However, export rebate can be obtained if export to Nepal is made (a) on payment of free convertible foreign exchange or (b) for specified capital goods to Government of Nepal against global tender, even if payment is received in Indian currency.
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 PARA 1.1 OF CBE&C’S CE MANUAL, 2001.
EXPORT PROCEDURES FOR EXCISE - There are basically two procedures for dispatching the goods out of India. (a) In the first procedure, duties are paid and subsequently rebate (refund) is claimed after exportation of such goods. Alternatively, rebate is granted of duty paid on inputs used in the exported final product. (Rule 18 of Central Excise Rules). (b) Another procedure is to export goods under bond without payment of excise duty. On actual exportation of goods and on presentation of necessary proofs regarding exports, the bond is released. Regular Exporters can have a running bond for this purpose. (Rule 19 of Central Excise Rules).
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 91/2001 dated 25.10.2001.
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 and Bhutan. In case of Nepal, the rebate is granted to Government of Nepal. In case of export to Nepal, Invoice in prescribed form has to be prepared and prescribed procedure has to be followed.
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 -
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.
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.
When duty paid goods are proposed to be exported.
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 and Bhutan. Provision for granting such rebate is made in rule 18 of CE Rules.
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 has Rupee trade with Nepal and Bhutan and hence export incentives are not available if goods are exported to Nepal/Bhutan. The clearance should be on normal Invoice on payment of duty. Invoice should mention ‘For Exports to Nepal/Bhutan’ (as the case may be) and make declaration in prescribed form. Extra copy of Invoice should be made, which is to be used at India-Nepal border. After the goods are exported to Nepal, rebate is given to Government of Nepal (and not to the exporter). There is no rebate system for export to 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 border. Then, the goods along with Invoice will be handed over to Nepalese customs officer. The Nepalese customs Officer will have to endorse details of effective rate of duty if goods are imported from country other than India and the amount of import duty assessed. After his endorsement on the Invoice, the duplicate copy will be sent to Indian customs office who will then forward it to Director General of Inspection, Customs & Central Excise (Nepal Refund Wing), New Delhi. After verification, the rebate will be paid to His Majesty’s Government of Nepal (and not to the exporter).
Exports to Nepal / Bhutan without payment of duty - Export to Nepal/Bhutan are allowed under bond without payment of duty if (a) payment is to be received in convertible foreign exchange or (b) Export of specified capital goods exported to Nepal against global tender issued by Government of Nepal or export against some specified projects. The procedure and conditions are given in Notification No. 45/2001-CE(NT) dated 26.6.2001. It is further elaborated in Chapter 7 Part IV of CBE&C’s CE Manual, 2001.
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). IF IT CANNOT BE USED, REFUND CAN BE OBTAINED. THIS ASPECT HAS BEEN DISCUSSED UNDER ‘CENVAT’.
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, descripttion, 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 -
(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.
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 26-6-2001.
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 -
1. Warehouse should be registered by Excise Commissioner.
2. 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.
3. On arrival at destination, rewarehousing certificate will be sent duly countersigned by Range superintendent to his counterpart at the end of consignee.
4. If rewarehousing certificate is not received within 90 days, consignor shall pay the duty.
5. Proper accounts shall be maintained at the warehouse. He will be responsible for payment of duty, penalty etc.
6. 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.
7. 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.
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 descripttion 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 descripttion 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
(U.H. JADHAV)
DY. 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. 2006-07
2. 2007-08
3. 2008-09
4. 2009-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.
regards,
ramesh kumar verma
CAclubindia
