Issues related to Bond/Letter of Undertaking for exports without payment of integrated tax - GST - Trade Notice No. 05/2017

GOVERNMENT OF INDIA OFFICE OF THE COMMISSIONER OF CENTRAL TAX (DELHI WEST) 4TH 5TH FLOOR. EIL ANNEXE BUILDING. BHIKAJI CAMA PLACE. NEW DELHI-110066 C. No. IV(16)/HQ/D-III/Tech./Trade/35/15 Dated: 14.07.2017 Trade Notice No. 05/2017 Subject: Issues related to Bond/Letter of Undertaking for exports without payment of integrated tax - Reg. Attention is invited to Circular No-04/04/2017- GST issued under F. No. 349/82/2017- GST dated 07.07.2017 by the Central Board of Excise and Customs (GST policy Wing) on the above mentioned subject. Various communications have been received by the Central Board of Excise and Customs (CBEC) 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 hands/ Letter of undertaking. In exercise of powers conferred under section 168 (1) of the Central Goods and Services Tax Act, 2017, tar the purpose of uniformity in the implementation of the Act. CBEC has clarified these issues as under. 2. 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. 3. Attention is invited to Notification No. 162017-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 4 th July. 2017. The bond shall be furnished on non-judicial stamp paper of the value applicable in the State in which bond is being furnished. 4. A clarification has been sought as to whether bond to furnished for exports is a running bond (with debit credit facility) or a one-time (separate bond for each consignment / export). It is observed consignment wise 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 tax liability as assessed by the exporter himself. The exporter shall ensure that the outstanding tax liability on is within the 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. 5. FORM RFD -11 under rule 96A Of the COST 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 amount. 6. As regards LUT. it is clarified that it shall 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 July 2017. shall submit the LUTs/bond in the revised format latest by 31 st July, 2017. 7. 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 taxpayers to 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. 8. Attention is further invited to circular No. 26/2017 - Customs dated 1 st July 2017, vide which it has been clarified that the existing practice of sealing the container with a bottle seal under Central Excise supervision or other wise would continue till 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 done. A copy Of the sealing report would be forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of business. 9. These instructions shall apply to exports on or after July, 2017. All Trade Associations are requested to give wide publicity to the contents of this Trade Notice among their Members in particular and trade in general. This issues with the approval of the Commissioner. (K R Madhar) Additional Commissioner