Subject: Issues related to Bond/letter of Undertaking for exports without payment of integrated tax - Reg. - Customs - No. 98

OFFICE OF THE COMMISSIONER OF CUSTOMS (EXPORT-II) NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI 400001 File No. S/6-B-26/17-18 EXP-II Date -26/07/2017 PUBLIC NOTICE No. 98 Subject: Issues related to Bond/letter of Undertaking for exports without payment of integrated tax - Reg. Attention of the Trade is invited to Board s Circular No. 2/2017 GST dated 04.07.2017 and Circular No. 4/4/2017 - Customs dated 07.07.2017 issued vide F. No. 349/82/2017-GST. 2. Various communications have been received from the field formations and exporters that difficulties are being faced in complying with the procedure prescribed for making exports of goods and services without payment of integrated tax with respect to furnishing of bonds/ Letter of Undertaking. Therefore, in exercise of powers conferred under section 168 (1) of the Central Goods and Services Tax Act, 2017, for the purpose of uniformity in the implementation of the Act, these issues are being clarified hereunder. 3. As per rule 96A of the Central Goods and Services Tax Rules, 2017 ( The CGST Rules), any registered person exporting goods or services without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11. 4. Thus, in exercise of the powers conferred by sub-section (3) of section 5 of the CGST Act, 2017, it is hereby stated that the acceptance of the Bond/Letter of Undertaking required to be furnished by the exporter under rule 96 of the said rules shall be done by the jurisdictional Deputy/Assistant Commissioner. 5. Further, in exercise of the powers. conferred by section 168 of the said Act, for the purpose of uniformity in the implementation of the said Act, the Bond/Letter of Undertaking required to be furnished under rule 96A of the said rules may be furnished manually to the jurisdictional Deputy/Assistant Commissioner in the format specified in FORM RFD-11 till the module for furnishing of FORM RFD-11 is available on the common portal. The exporters may download the FORM GST RFD-11 from the website of the Central Board of Excise and Customs (www.cbec.gov.in) and furnish the duly filled form to the jurisdictional Deputy/Assistant Commissioner. 6. Attention is invited to notification No. 16/2017-Central Tax dated 01-07-2017 vide which the category of exporters who are eligible to export under LUT has been specified along with the conditions and safeguards. All exporters, not covered by the said notification, would submit bond. The procedure for submission and acceptance of bond has already been prescribed vide circular No. 2/2/2017-GST dated 4th July, 017.The bond shall be furnished on non-judicial stamp paper of the value as applicable in the state in which bond is being furnished. 7. A clarification has been sought as to whether bond to be furnished for exports is a running bond (with debit / credit facility ) or a one-time bond (separate bond for each consignment / export). It is observed consignment wise bond would be a significant. compliance burden on the exporters. It is directed that the exporters shall furnish a running bond, in case he is required to furnish a bond, in FORM GST RFD -11. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter shall ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability. 8. FORM RED -11 under rule 96A of the CGST Rules requires furnishing a bank guarantee with bond. Field formations have requested for clarity on the amount of bank guarantee as a security for the bond. In this regard it is directed that the jurisdictional Commissioner may decide about the amount of bank guarantee depending upon the track record of the exporter. If Commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15% of the bond amount. 9. As regards LUT, it is clarified that it shall be valid for twelve months. If the exporter fails to comply with the conditions of the LUT he may be asked to furnish a bond. Exports may be allowed under existing LUTs/Bonds till 31st July 2017. Exporters shall submit the LUTs/bond in the revised format latest by 31st July, 017. 10. It is further stated that the Bond/LUT shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the bond/LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of tax payers to respective authority is implemented. However, if in a State, the Commissioner of State Tax so directs, by general instruction, to exporter, the Bond LUT in all cases be accepted by Central tax officer till such time the said administrative mechanism is implemented. Central Tax officers are directed to take every step to facilitate the exporters. 11. Attention is further invited to circular No. 26/2017 - Customs dated 1st July 2017, vide which it has been clarified that the existing practice of sealing the container with a bottle seal Page 3 of 3 under Central Excise supervision or otherwise would continue till 01st September, 2017. Such sealing shall be done under the supervision of the officer having physical jurisdiction over the place of business where the sealing is being done. A copy of the sealing report would be forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of business. 12. These instructions shall apply to exports on or after lst July, 2017. 13. Difficulties faced, if any, may be bought to the notice of the undersigned. ( Prachi Saroop) Commissioner of Customs ( Export-II)