B-17 Bond - CBEC's Customs Manual 2023 - Customs

10. B-17 Bond: 10.1 Import/procurement of goods by an EOU for use in manufacture or in connection with production or packaging of goods for export is exempted from payment of customs and central excise duties. EOUs execute a general purpose B-17 bond along with surety or security covering the duty foregone on imported goods. This bond is prescribed under Notification No. 6/98-CE(N.T.)., dated 2-3-1998 as General Bond to be executed by the EOUs for provisional assessment of goods to Central Excise duty, for export of goods and for accounting/disposal of excisable goods procured without payment of duty. This bond also takes care of the interest of revenue against risks arising out of goods lost in transit, goods taken into Domestic Tariff Area for job work/ repair/ display etc but not brought back. Basically the B-17 bond is an all purpose bond covering liabilities of the EOU both under Customs and Central Excise Acts. However, it does not cover the differential duty amount against advance DTA sale for which a separate bond is to be executed. 10.2 The B-17 bond is executed with the jurisdictional Assistant/Deputy Commissioner of Central Excise and Customs, as the case may be. The bond is taken for an amount equivalent to 25% of the duty forgone on the sanctioned requirement of capital goods plus the duty forgone on raw materials required for three months. Surety or security equivalent to 5% of the bond amount in the form of bank guarantee or cash deposit or any other mode of security recognized by the Government is required to be given by the EOUs. In the case of surety, a letter from the person standing surety duly certified by a Chartered Accountant for solvency is also required to be submitted. 10.3 Units which have achieved positive NFE and are in existence for the last three years with unblemished track record having export turnover of Rs. 5 Crores or above and have not been issued a show cause notice or a confirmed demand, during the preceding 3 years are exempted from furnishing Bank Guarantee etc. or Surety along with B-17 bond. However, this facility will not be available to the Units where Show Cause Notices have been issued or cases booked on grounds other than procedural violations, under the penal provision of the Customs Act, the Central Excise Act, the Foreign Trade (Development Regulation) Act, the Foreign Exchange Management Act, the Finance Act, 1994 covering Service Tax or any allied Acts or the rules made thereunder, on account of fraud / collusion / wilful mis-statement/ suppression of facts or contravention of any of the provisions thereof. [Refer Circulars No. 14/98-Cus, dated 10-3-1998, No. 42/98-Cus, dated 19-6-1998, No.66/98-Cus, dated 15-9-1998, No.76/99-Cus, dated 17-11-1999, No. 54/2004-Cus, dated 13-10-2004 and No. 36/2011-Cus, dated. 12-8-2011] 10.4 The B-17 bond, being a general purpose running bond will serve the requirement of continuity bond to be submitted under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, and therefore EOU/STP/EHTP units are not required to submit separate continuity bond. The waiver of bank guarantee/ surety to EOUs would continue to be governed by various circulars issued from time to time by CBIC with regard to B-17 bonds executed by EOUs and will not be guided by the Circular no. 48/2017-Customs dated 08.12.2017 which governs the general importers and not the EOUs. [Refer Circular No. 29/2017-Customs dated 17.07.2017 Circular no. 27/2018-Customs dated 14.08.2018] 10.5 Original B-17 bond is to be kept safely after allotting Bond Nos. and bond values to be mentioned in the bond register for the purposes of debit/credit of duty foregone on the goods imported/procured duty free. Debits for duty foregone are to be made at the fresh import or at the time of local procurement of excisable goods under CT-3. For debit only 25% of the duty foregone (for Capital Goods) should be taken and not the entire duty amount. Similarly credits of duty foregone may be allowed for the duty contained in inputs used in the manufacture of finished goods exported or cleared in DTA on payment of applicable duties and taxes. Monitoring of Bond is to be done by AC/DC of Cus/CE on broad basis and it is to be ensured that Bond is discharged at the time of final debonding. [Circular No. 76/99-Customs dated 17.11.1999 and Circular No. 50/2000Customs dated 24.05.2000] 10.6 In case of B-17 bond executed by EOU/STP/EHTPs in capacity of Proprietorship or partnership firm, surety cannot be given by Proprietor/ partner himself. Such sureties must be given by an independent legal entity other than the Proprietor/ Partner of the concerned Proprietorship/ Partnership EOU firm. [Refer Circular No. 03/2021-Customs dated. 03.02.2021]