EXPORT WITHOUT PAYMENT OF DUTY

Chapter 7
EXPORT WITHOUT PAYMENT OF DUTY
Part-I
General
1. Introduction
1.1 The conditions and procedure relating to export without payment of duty (i.e.
duty under the Central Excise Act, 1944, the Additional Duties of Excise (Goods of Special
Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile
Articles) Act, 1978 (40 of 1978); and special excise duty collected under a Finance Act)
are contained in Notification Nos. 42/2001-Central Excise (N.T.) to 45/2001-Central Excise
(N.T.), all dated 26th June, 2001 issued under rule 19 of the Central Excise (No.2) Rules,
2001 (hereinafter referred to as the said Rules). The new rule 19 corresponds to rule 13 of
the Central Excise Rules, 1944.
1.2 Some important changes have been introduced under the present procedure,
which are mentioned below and explained in detail subsequently: –
1. The concept of furnishing of a ‘Letter of Undertaking’ by a manufacturerexporter
has been introduced. The clearances for export by a manufacturerexporter
will be effected similar to clearances for home consumption after he
furnishes Letter of Undertaking.
2. The merchant-exporters are required to file ‘bond’ in specified format. A
manufacturer-exporter may also file bond and follow the ‘bond-procedure’
specified in the notification.
3. Under bond procedure, the concept of ‘self-debit’ by the exporter has been
introduced. The exporter need not go to the ‘bond-accepting authority for a
‘debit-certificate’ before each removal.
4. The procedure of ‘acceptance of proof of export’ has been simplified. The
concept of ‘ Self-credit” based on the copy of A.R.E.1 duly certified by
Customs authorities at the place of export is being introduced.
5. In each Commissionerate of Central Excise, there will be an officer
designated as ‘Deputy/Assistant Commissioner of Central Excise (Exports)’
whose functions will be similar to the Maritime Commissioners.
6. Number of copies of ‘application for Removal (A.R.E.1)’ has been reduced
compared to AR-4. This will be further reduced after completion of computer
networking in the Department enabling ‘on-line verification’ of exports.
2. Categories of exports
2.1 There are two categories of export without payment of duty
(i) Export of finished goods without payment of duty under bond or
undertaking.
(ii) Export of manufactured/processed goods after procuring raw material
without payment of duty under bond.
Part-II
Export to all countries except Nepal and Bhutan
1. Introduction
1.1 Procedures and conditions for export to all countries except Nepal and Bhutan
are specified in notification No. 42/2001-CE(N.T.) dated 26.6.2001. The details are
mentioned in this part.
1. Conditions
2.1 An exporter shall furnish bond in Form B-1 and obtain certificate in Form CT-1. A
manufacturer-exporter may furnish annual Letter of Undertaking (no CT-1 is required in
this case). The export shall be subject to the following conditions”
(i) The goods shall be exported within six months from the date on which these
were cleared for export from the factory of the production or the
manufacture or warehouse or other approved premises within such extended
period as the Deputy/Assistant Commissioner of Central Excise or Maritime
Commissioner may in any particular case allow;
(ii) When the export is from a place other than registered factory or warehouse,
the excisable goods are in original packed condition and identifiable as to
their origin;
(iii) The exports of mineral oil products falling under Chapter 27 of the First
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as stores for
consumption on board of an aircraft on foreign run shall be subject to
conditions and limitations, to be applied mutatis mutandis, as notified in the
Notification No.40/2001-Central Excise (N.T.) dated 26th June, 2001 issued
under rule 18 of the said Rules.
3. Forms to be used
3.1 ARE.1 is the export document for export clearance (Annexure-14), which shall be
prepared in quintuplicate (5 copies). This is similar to the erstwhile AR.4. This document
shall bear running serial number beginning from the first day of the financial year. During
this year, for the sake of continuity, the serial number, as started from 1.4.2001, may
continue. The stationary for AR.4 Form may be used with modified name “ARE.1” during
this financial year. On A.R.E.1, certain declarations are required to be given by the
exporter. These should be signed by the exporter or his authorised agent. The different
copies of ARE.1 forms should be of different colours indicated below:
Original White
Duplicate Buff
Triplicate Pink
Quadruplicate Green
Quintuplicate Blue
3.2 It will be sufficient if the copies of ARE.1 contain a color band on the top or right
hand corner in accordance with above color scheme.
3.2 An invoice shall also be prepared in terms of rule 11 of the said Rules. It should be
prominently mentioned on top “FOR EXPORT WITHOUT PAYMENT OF DUTY”.
3.3 The Letter of Undertaking is to be furnished in the Form UT-1 specified in Annexure-
15 to Notification No. 42/2001-Central Excise (N.T.), supra. Any manufacturer, who is an
assessee for the purposes of the Central Excise (No.2) Rules, 2001, shall furnish a Letter of
Undertaking only to the Deputy/Assistant Commissioner of Central Excise having
jurisdiction over his factory from which he intends to export. The Letter of Undertaking
should not be furnished to the Maritime Commissioner or any other officer authorised by
the Board. A ‘Letter of Undertaking’ shall be valid for twelve calendar months provided
the exporter complies with the conditions of the Letter of Undertaking, especially the
procedure for ‘acceptance of proof of export’ under this instruction. In case of persistent
defaults or non-compliance causing threat to revenue, the manufacturer-exporter may
be asked to furnish bond with security/surety. For the sake of clarification, it is mentioned
that this Letter of Undertaking should not be taken for each consignment of export.
3.4 The obligation of the manufacturer flows from statutory requirement of exporting
the goods within six months or such extended period as the Deputy/Assistant
Commissioner of Central Excise may allow. Failing this, the exporter is required to deposit
the requisite sum (duty and interest) suo moto, considering that the manufacturer has to
do ‘self-assessment’. Any non-payment within 15 days of expiry of the stipulated time
period, shall be treated as arrears of revenue and the Department will proceed to
recover the same as ‘sum due to Government’. Suo moto payment within 15 days of
expiry of the stipulated time period will not be treated as ‘default’.
3.5 On repeated failure of the manufacturer-exporter to comply with the conditions
of the Letter of Undertaking or the procedure for ‘acceptance of proof of export’ under
this instruction, the Deputy/Assistant Commissioner of Central Excise may direct him in
writing that the letter of undertaking is not valid and he should furnish B-1 Bond with
sufficient security/surety.
3.6 The Letter of Undertaking shall not be discharged unless the goods are duly
exported, to the satisfaction of the Assistant Commissioner of Central Excise or the
Deputy Commissioner of Central Excise within the time allowed for such export or are
otherwise accounted for to the satisfaction of such officer, or until the full duty due upon
any deficiency of goods, not accounted so, and interest, if any, has been paid.
3.7 Though any exporter (Manufacturer-exporter or merchant-exporter) can furnish
bond, the merchant-exporters are necessarily required to furnish bond in the B-1 Form
specified in Annexure-16 of notification no. 42/2001-Central Excise (N.T.), supra with such
security or surety as may be specified by the concerned bond accepting authority. The
bond shall be in a sum equal at least to the duty chargeable on the goods for the due
arrival of export goods at the place of export and their export therefrom under Customs
or as the case may be postal supervision. The officer who will accept the bond, will also
be responsible for discharging that bond upon furnishing proof of export by the exporter.
3.8 The bond shall not be discharged unless the goods are duly exported, to the
satisfaction of the Deputy/Assistant Commissioner of Central Excise or Maritime
Commissioner or such other officer as may be authorised by the Board on this behalf
within the time allowed for such export or are otherwise accounted for to the satisfaction
of such officer, or until the full duty due upon any deficiency of goods, not accounted
so, and interest, if any, has been paid
3.9 Certificate ‘CT-1”, as specified in Annexure-17 have to be obtained by merchantexporters
for procuring goods from a factory or warehouse. Such certificates need not
be obtained for each consignment but will be given in lot of 25.
4. Bond Accepting Authority
4.1 Bond may be accepted by any of the following officers: –
(i) The Deputy/Assistant Commissioner of Central Excise having jurisdiction
over the factory or warehouse or any other premises approved by the
Commissioner for storing non-duty paid goods;
(ii) Maritime Commissioners at Mumbai, Chennai, Kolkata, Paradeep,
Kandla, Tuticorin, Visakhapatnam and Cochin.
(iii) The Deputy/Assistant Commissioner of Central Excise(Export) as officers
authorised by the Board for this purpose.
4.2 Exporters are required to clearly indicate on the ARE.1 the complete postal
address of the authority before whom the bond is executed and to whom the
documents are to be submitted/ transmitted for admission of proof of export.
5. Security or surety with bond
5.1 Wherever bond is taken, sufficient security or surety is also required as the per the
notifications issued under rule 19 of the said Rules. In 1996, Board had taken a decision
that in respect of exporters having good track record may be allowed to furnish bond
with nil security or surety. The Board in Circular No.284/118/96 dated 31.12.1996 issued an
instruction. Now, since the manufacturer-exporters, who are also assessee of the Central
Excise Department, have an option to furnish ‘Letter of Undertaking” (without any
security or surety), the question of furnishing of ‘security or surety’ is mainly relate to
merchant-exporters who are not assessees of the Central Excise Department. In this
scenario, the Board has decided that security (Bank Guarantee or Cash Guarantee or
Cash Security) or surety need not be insisted upon from Super Star Trading Houses, Star
Trading Houses, Trading Houses and Export Houses provided that –
(i) the exporter has not come to adverse notice of the Central Excise or
Customs Department in last three years from the date under
consideration;
(ii) all the formalities required under Central Excise Act and rules made
thereunder are regularly complied with by the exporter, especially
regarding timely submission of proof of export and deposit of duty with
interest in time where proof of export is not received within stipulated time
frame;
(iii) A self-attested copy of the proof of Status (Super Star Trading Houses, Star
Trading Houses, Trading Houses and Export Houses) from concerned
authority (Ministry of Commerce and Industry – Directorate General of
Foreign Trade) is submitted.
5.2 Other exporters shall be required to furnish surety equal to full bond amount or
security equal to twenty five percent. (25%) of the bond amount, along with the bond.
5.3 The bond shall be furnished on non-judicial stamp paper of the value as
applicable in the State in which bond is being furnished.
5.4 Where export is effected by merchant-exporter, the bond has to be necessarily
furnished. It is open for the manufacturer to furnish bond on behalf of the merchantexporter.
It is clarified that in such cases, the manufacturer will not take a stand that
since he is responsible for the duty liability, the export should be allowed on the basis of
the ‘Letter of Undertaking’, which he has already furnished to the Department. In such
circumstances, the application in Form ARE.1 will be in the name of the manufacturer
who executes the Bond. All other procedures for admission of the proof of export would
be the same as in the case of manufacturer-exporters.
5.5 It should be noted that once a manufacturer furnished bond for exports by
merchant exporters, it would be his responsibility to account for the export goods.
5.6 It may be noticed that only General bond (B-1) has been specified. Even where
bond is required for only one consignment, the Form will remain the same. The exporter
may get the bond redeemed immediately after he completes the exports and obtains
the proof of export.
5.7 In case of B-1 general bond a running bond account in proforma of Annexure-18
shall be maintained by the exporter because he is responsible for debit the bond before
preparation of ‘certificate’ for obtaining goods for export. He shall also take self-credit in
the manner specified in this instruction.
5.8 For the sake of clarity it is informed that the concept of ‘Block Transfer’ has lost its
relevance in the context of self-debit and self-credit of bond and the new system of
acceptance of proof of export [to be explained in subsequent paragraphs] by the
exporter.
5.9 It is further mentioned that where the merchant exporter executes bond, it shall
be necessary that both the merchant-exporter and the manufacturer sign the ARE.1.
6. Procedure for clearance from the factory or warehouse
6.1 A Manufacturer-exporter who has furnished a Letter of Undertaking will prepare
the export documents (A.R.E.1 and invoice under rule 11) for clearance from his factory
of production.
6.2 A Merchant-exporter who has furnished a bond shall be provided sufficient
number of certificates (CT-1), duly signed/certified, in multiples of 25 copies, normally
covering a period of one to three months, depending upon the track record of
compliance by the exporter. The ‘bond accepting authority’ shall be responsible for
verifying and accepting the proof of export and in case of any defaults by the exporter,
to recover the sum and enforcing the bond. The certificate should be provided
according to the volume of exports projected by the exporter (which should also reflect
in the amount of bond). The compliance of the exporter in submitting the requisite
documents towards ‘proof of export’ shall be another criterion.
6.2.1 The second part of CT-1 is very important. The exporter shall determine the
description of goods for procurement from a particular factory or warehouse or an
approved place of storage, quantum, value of procurement (provisional figures) and
duty involved therein (provisional figures – but based on correct rate of duty and
contracted transaction value). This ‘duty’ element will be debited provisionally. The
exporter shall ensure that at the time of debit, sufficient credit is available at that point of
time to cover the said debit. The provisional debit shall be converted into final debit
within a period of seven days form the date of removal of goods on A.R.E.1, based on
the ‘duty payable’ in goods cleared for export reflected in the said A.R.E.1 and invoice.
6.2.2 The manufacturer shall record the clearance in his Daily Stock Account
indicating, inter alia, the invoice number/date, A.R.E.1 number/date and duty payable
but foregone under rule 19.
6.3 The exporter has two optional procedures regarding the manner in which he may
clear the export consignments from the factory or warehouse or any other approved
premises, namely: –
1. Examination and sealing of goods at the place of despatch by a Central Excise
Officer
2. Under self-sealing and self-certification
7. Sealing of goods and examination at place of despatch
7.1 The exporter is required to prepare five copies of application in the Form ARE-1.
The Form is specified in Annexure-I to notification No. 42/2001-Central Excise (N.T.) dated
26.6.2001. The goods shall be assessed to duty in the same manner as the goods for
home consumption, though duty is not required to be paid considering clearance is
meant for export without payment of duty. The classification and rate of duty should be
in terms of Central Excise Tariff Act, 1985 read with any exemption notification and/or the
said Rules. The value shall be the “transaction value” and should conform to section 4 or
section 4A, as the case may be, of the Central Excise Act, 1944. It is clarified that this
value may be less than, equal to or more than the F.O.B. value indicated by the exporter
on the Shipping Bill.
7.2 The duty payable shall be determined on the ARE.1 and invoice and recorded in
the Daily Stock Account as “duty foregone on account of export under rule 19”.
7.3 The exporter may request the Superintendent or Inspector of Central Excise
having jurisdiction over the factory of production or manufacture, warehouse or
approved premises for examination and sealing at the place of despatch 24 hours in
advance, or such shorter period as may be mutually agreed upon, about the intended
time of removal so that arrangements can be made for necessary examination and
sealing.
7.4 In case of exports under Duty Exemption Entitlement Certificate Scheme (DEEC),
Duty Exemption Pass Book Scheme (DEPB) and claim for Drawback, the Superintendent
of Central Excise shall also examine and seal the consignment and sign the documents in
token of having done so. In exceptional cases, where the exporter has unblemished
track record of compliance (Central Excise) and where there is non-availability of
Superintendent of Central Excise due to leave, vacant post or other reasonable causes,
the jurisdictional Deputy/Assistant Commissioner of Central Excise may permit
examination and sealing by Inspector. All other types of export may be examined and
sealed by the Inspector of Central Excise.
7.5 The Superintendent or Inspector of Central Excise, as the case may be, will verify
the identity of goods mentioned in the application and also verify whether the duty selfassessed
is appropriate and that the particulars of the duty payable has been has
recorded in the Daily Stock Account. If he finds that the declaration in ARE.1 and the
invoices are correct from the point of view of identity of goods and its assessment to
duty, he shall seal each package or the container ensuring that the goods cannot be
tampered with after the examination. Normally, individual packages should be sealed by
using wire and lead seals and an all-sides-closed container by using numbered One time
Lock/Bottle seals or in such other manner as may be specified by the Commissioner of
Central Excise by a special or general written order. Thereafter, the said officer shall
endorse and sign each copy of the application in token of having such examination
done and put his stamp with his name and designation below his signature;
8. Distribution of ARE.1 in the case of export from the factory or warehouse
Original (First Copy) The said Superintendent or Inspector of Central Excise
shall return to the exporter immediately after
endorsements and signature
Duplicate (Second Copy) The said Superintendent or Inspector of Central Excise
shall return to the exporter immediately after
endorsements and signature.
Triplicate (Third Copy) Sent to the bond sanctioning authority, either by post or
by handing over to the exporter in a tamper proof sealed
cover after posting the particulars in official records.
Quadruplicate (Fourth
Copy)
Retain for official records
Quintuplicate (Fifth Copy) Optional copy – The said Superintendent or Inspector of
Central Excise shall return to the exporter immediately
after endorsements and signature.
9. Distribution of ARE.1 in the case of export from other than factory or warehouse
9.1 Where goods are not exported directly from the factory of manufacture or
warehouse, the distribution of A.R.E.1 will be same as above except that the triplicate
copy of application shall be sent by the Superintendent having jurisdiction over the
factory of manufacture or warehouse who shall, after verification forward the triplicate
copy in the manner specified above.
10. Despatch of goods by self-sealing and self-certification
10.1 Self-sealing and self-certification is a procedure by which the exporter who is a
manufacturer or owner of a warehouse, may remove the goods for export from his
factory or warehouse without examination by a Central Excise Officer. This procedure will
also be permitted in the cases where a merchant-exporter procures the goods directly
from a factory or warehouse. In both cases, the manufacturer of the export goods or
owner of the warehouse shall take the responsibility of sealing and certification. For this
purpose the owner, the working partner, the Managing Director or the Company
Secretary, of the manufacturing unit of the goods or the owner of warehouse or a person
(who should be permanent employee of the said manufacturer or owner of the
warehouse holding reasonably high position) duly authorised by such owner, working
partner or the Board of Directors of such Company, as the case may be, shall certify on
all the copies of the application (A.R.E. 1) that the goods have been sealed in his
presence. The exporter shall distribute of the copies of A.R.E. 1 in the following manner:
Original (First copy) and Duplicate
(Second copy)
Send to the place of export along with
the goods
Triplicate (Third copy) and Quadruplicate
(Fourth copy)
Superintendent or Inspector of Central
Excise having jurisdiction over the factory
or warehouse within twenty four hours of
removal of the goods
Quintuplicate (Fifth copy) Optional copy – Send to the place of
export along with the goods
10.2 The said Superintendent and Inspector of Central Excise shall verify the particulars
of assessment, the correctness of the amount of duty paid or duty payable, its entry in
the Daily Stock Account maintained under rule 10 of the Central Excise (No.2) Rules, 2001
(the manufacturer or warehouse owner will be required to present proof in this regard),
corresponding invoice issued under rule 11. If he is satisfied with the particulars, he will
endorse the relevant A.R.E. 1 and append their signatures at specified places in token of
having done the verification. In case of any discrepancy, he will take up the matter with
the assessee for rectification and also inform the jurisdictional Assistant/Deputy
Commissioner. Once verification is complete and the A.R.E. 1 is in order, he shall
distribute the documents (A.R.E. 1) in the following manner:
Triplicate (Third copy) Send to the bond accepting authority,
either by post or by handing over to the
exporter in a tamper proof sealed cover
after posting the particulars in official
records. Where manufacturer has given
LUT, triplicate shall be retained and will be
forwarded to the Deputy/Assistant
Commissioner of the Division along with
Statement, after matching them with
original copies of A.R.E.1s.
Quadruplicate (Fourth copy) Retain for Range records (The notification
does not specify this distribution of this
copy)
11. Export by parcel post
11.1 In case of export by parcel post after the goods intended for export has been
sealed, the exporter shall affix to the duplicate application sufficient postage stamps to
cover postal charges and shall present the documents, together with the package or
packages to which it refers, to the postmaster at the Office of booking.
12. Examination of goods at the place of export
12.1 The place of export may be a port, airport, Inland Container Depot, Customs
Freight Station or Land Customs Station.
12.2 The exporter shall present together with original, duplicate and quintuplicate
(optional) copies of the application (A.R.E. 1) to the Commissioner of Customs or other
duly appointed officer – normally goods are presented in the designated export shed.
12.3 The goods are examined by the Customs for the purposes of Central Excise to
establish the identity and quantity, i.e. the goods brought in the Customs area for export
on an A.R.E. 1 are the same which were cleared from the factory. The Customs
authorities also examine the goods for Customs purposes such as verifying for certain
export incentives such as drawback, DEEC, DEPB or for determining exportability of the
goods.
12.4 For Central Excise purposes, the Officers of Customs at the place of export shall
examine the consignments with the particulars as cited in the application (A.R.E. 1) and if
he finds that the same are correct and the goods are exportable in accordance with the
laws for the time being in force (for example, they are not prohibited or restricted from
being exported), shall allow export thereof. Thereafter, he will certify on the copies of the
A.R.E. 1 that the goods have been duly exported citing the shipping bill number and
date and other particulars of export and distribute in the following manner:
(i) The officer of customs shall return the original and quintuplicate (optional
copy for exporter) copies of application to the exporter and forward the
duplicate copy of application either by post or by handing over to the
exporter in a tamper proof sealed cover to the officer specified in the
application, from whom exporter wants to claim rebate.
(ii) Quintuplicate A.R.E. 1 is the Export Promotion Copy and the exporter shall
use this copy for the purposes of claiming any other export incentive.
13. Procedure relating proof of export and to re-credit against such proof
13.1 The procedure relating to acceptance of proof of export or the ‘validation’ of
actual export has been simplified. The original and duplicate copies of A.R.E. 1 are
presented to the Customs authorities at the place of export [with option for exporter to
also present quintuplicate copy]. The Customs authority certify the actual export on
these documents and distributes the copies as specified.
13.2 The exporter shall submit a Statement, at least once in a month, in Form specified
in Annexure-19 along with the Original copies of A.R.E. 1 with due certification of export
(Pass for Shipment Order) by Customs authorities at the place of export to the Divisional
office (through Range)or in the office of the bond-accepting authority. Other supporting
documents shall also be furnished, namely, Self-attested photocopy of Bill of Lading and
Self-attested photocopy of Shipping Bill (Export Promotion Copy). The Range office or the
Office of the bond-accepting authority immediately on receipt shall acknowledge the
Statement.
13.3 The exporter is permitted to take credit in his running bond account on the basis
of copy of the Statement referred to above, duly acknowledged the Range office or the
office of the bond-accepting authority
13.4 It shall be the responsibility of the Range Office and Division Office or the other
bond-accepting authority to verify the correctness of Statement and A.R.E.1 furnished by
the exporter within the shortest possible time. The Statement and A.R.E.1 will be tallied by
the Range Officers with the triplicate copies of A.R.E.1 already with them and the A.R.E.1
or its summary received directly from the place of export (hard copies or electronic
summary or e-mail) within 15 days of the receipt. The Divisional Officer shall accept the
proof of export or initiate necessary action in case of any discrepancy.
13.5 In case of other bond-accepting authority, their office will do this work. The bondaccepting
authority shall accept the proof of export or initiate necessary action in case
of any discrepancy. He will also intimate about the acceptance of proof of export or any
other action to the Deputy/Assistant Commissioner of Central Excise from whose
jurisdiction goods were cleared for export.
13.6 In case of non-export within the six month from the date of clearance for export
(or such extended period, if any, as may be permitted by the Deputy/Assistant
Commissioner of Central Excise or the bond-accepting authority) or discrepancy, the
exporter shall himself deposit the excise duties along with interest on his own immediately
on completion of the statutory time period or within ten days of the Memorandum given
to him by the Range/Division office or the Office of the bond-accepting authority.
Otherwise necessary action can be initiated to recover the excise duties along with
interest and fine/penalty. Failing this, the amount shall be recovered from the
manufacturer-exporter along with interest in terms of the Letter of Undertaking furnished
by the manufacturer. In case where the exporter has furnished bond, the said bond shall
be enforced and proceedings to recover duty and interest shall be initiated against the
exporter.
13.7 In case of any loss of document, the Divisional Officer or the bond accepting
authority may get the matter verified from the Customs authorities at the place of export
or may call for collateral evidences such as remittance certificate, Mate’s receipt etc. to
satisfy himself that the goods have actually been exported.
14. Functioning of Deputy/Assistant Commissioner of Central Excise (Export)
14.1 Under the normal export procedure, the merchant-exporters including those
manufacturer-exporters (Project-exporters who have to export bought out goods) have
to procure the excisable goods for export under bond manufactured in different parts
of the country. For this purpose, they have to have to furnish either several bonds with
the Deputy/Assistant Commissioner of Central Excise of the supplier’s area and submit
proof of exports for discharge of such bonds or furnish a bond with the Maritime
Commissioner who are located only at seven ports, namely, Considering that there have
been tremendous export potentials from the inland areas located at considerable
distance from a sea port and that there have been considerable growth of exports
from Inland Container Depots and the Air Cargo Units located in such inland areas, the
Board had appointed an officer in each Commissionerate except those
Commissionerates in which the Maritime Commissioner is posted as Deputy/Assistant
Commissioner of Central Excise (Export) for the purpose of facilitating export under bond
by Circular No. 500/66/99-CX dated 15th December, 1999, under authority of rule 19 of
the said Rules read with notification No.42/2001-Central Excise (N.T) dated 26.6.2001.
14.2 Any merchant exporter/manufacturer-cum-merchant exporter can file the
required bond with the Deputy/Assistant Commissioner of Central Excise(Export)
under whose jurisdiction his Head Office/factory is located (within the jurisdiction of
the Commissionerates). In such case the exporter can procure the goods from a
factory located anywhere in India.
14.3 For clarification it is mentioned that the Deputy/Assistant Commissioner of Central
Excise (Export) will not deal with the exports where the manufacturer-exporters are
permitted to export by furnishing an Annual Undertaking (UT-1) in lieu of bond.
Part-III
SIMPLIFIED EXPORT PROCEDURE FOR EXEMPTED UNITS
1. Introduction
1.1 Units, which are fully exempted from payment of duty by a notification granting
exemption based on value of clearances for home consumption, may be exempted
from filing ARE.1 and Bond till they remain within the full exemption limit. The following
simplified export procedure shall be followed in this regard by such units: –
2. Filing of declaration
2.1 Manufacturers exempted for payment of duty will not be required to take Central
Excise Registration. They shall however, file a declaration in terms of Para 2 of Notification
No. 36/2001-CE (NT) dated 26.6.2001, and obtain declarant code number
[notwithstanding they are exempted form declaration, but for this procedure].
3. Documentation
3.1 The clearance document will be, as follows:
i) Such manufacturers are permitted to use invoices or other similar
documents bearing printed Serial Numbers beginning from 1st day of a
financial year for the purpose of clearances for home consumption as
well as for exports. (The printing of Serial Numbers can be done by use of
franking machine). The invoices meant for use during a month shall be
pre-authenticated by the owner or partner or Director/Managing Director
of a Company or other authorised person.
ii) The declarant’s Code Number should be mentioned on all clearance
document.
iii) Such clearance document should contain particulars of the description of
goods, name and address of the buyer, destination, value, [progressive
total of total value of excisable goods cleared for home consumption
since beginning of the financial year], vehicle number, date and time of
the removal of the goods.
iv) The clearance document will be signed by the manufacturer or his
authorised agent at the time of clearance.
v) In case of export through merchant exporters, the manufacturer will also
mention on the top “EXPORT THROUGH MERCHANT EXPORTERS” and will
mention the Export-Import Code No. of such merchant exporters.
vi) In case of direct export by the manufacturer-exporters, he will mention on
the top “FOR EXPORT” and his own Export – Import Code No., if any.
3.2 Records
3.2.1 Such units shall maintain a simple record of quantity and value of production and
clearance. Entries in production record should either be allowed to be made at the
close of the day or before the commencement of the production on the following day.
Entries need not be made on days when there is no production or clearance of goods.
3.3 Statement
3.3.1 Such units shall file a prescribed quarterly statement to the Jurisdictional Range
Superintendent containing various particulars. (Annexure-20)
4. Proof of Export
4.1 Following documents shall be accepted as proof of export :
4.1.1 In the case of direct export by the Manufacture- exporter
(i) Duly attested photocopy of shipping bill (Export Promotion Copy) bearing
the particulars and date of clearance document under which the goods
are cleared from the factory of production, having endorsement on its
reverse by the Customs of the particulars of mate’s receipt no. (wherever
applicable), name of the ship/ flight no., of the aircraft, vehicle no. – by
which the goods were exported out, date of export, and EGM Number/
Airway Bill Number (wherever applicable);
(ii) Duly Custom’s attested copy of Bill of lading; and
(iii) Foreign Exchange Remittance Certificates.
4.1.2 In the case of export through Merchant-exporter the document prescribed by
Sales Tax Department will be accepted as the proof of export. Sales made by
manufacturer of the goods’ to the merchant exporter which ultimately are exported are
exempt from Central Sales Tax. The Sales Tax Department issues booklet to the merchant
exporters containing serially numbered H-Forms/ST-XXII form or equivalent Sales Tax form.
After the goods have been exported by the merchant exporters, the latter issues these
forms to the manufacturers of the goods. The merchant exporters in turn have to
account all these serially numbered forms to the sales Tax Department by furnishing a
proof that the goods have been exported out. These proofs are in the from of
presentation of the Shipping Bill duly completed by the customs, bill of landing, foreign
exchange remittance certificates etc. The liability of the manufacturers to the Central
Sales Tax gets discharged only when they submit these forms to the Sales Tax
Department. It is, therefore, seen that indirectly exports get accounted for through the
issue of H-form or ST-XXII Form. Thus, photocopy of H-form or ST-XXII Form or any other
equivalent Sales Tax form duly attested and stamped by the manufacturer or his
authorised agent will be accepted for purpose of proof of export.
4.2 Submission of proof of export and processing thereof
4.2.1 The proof of export should be submitted to the Range Officer within a period of 6
months from the date of clearance of goods from the factory of production.
4.2.2 If Range Superintendent finds that the clearances for home consumption, and
the clearances for export where proof of exports have not been furnished within 6
months, when taken together, are likely to exceed the exemption limit (which is presently
Rs. 100 lakhs for home consumption), he should issue show cause notices for
safeguarding revenue. These show cause notices, however, should be kept pending for
another three months by which time proof of exports are expected to be received.
4.2.3 The Range Superintendent will maintain manufacturer wise record on the basis of
the quarterly return and the proof of exports submitted by the manufacturer from time to
time in order to ascertain that the clearances for exports and the proofs of exports are
duly accounted for and in case of failure on the part of exporter to submit proof of
export, necessary action can be initiated promptly on the lines already mentioned in the
above para.
4.3 In case clearances of such manufacturers for home consumption plus clearance
for export where proof of export were not furnished within 6 months, exceed the
exemption limit, they should take Central Excise Registration and follow the regular
A.R.E.1 procedure.
4.4 This procedure will also be applicable to exports of ready-made garments.
Part-IV
EXPORT TO NEPAL AND BHUTAN WITHOUT PAYMENT OF DUTY
1. Introduction
1.1 The conditions and procedure for export to Nepal and the Board in Notification
No. 45/2001-Central Excise (N.T.) dated 26.6.2001(hereinafter referred to as the ‘said
notification’) has specified Bhutan without payment of duty (under bond).
2. Places from where goods can be exported
2.1 Under the said notification, export can be made from any of the following
places: –
(i) the factory of production or manufacture
(ii) warehouse, or
(iii) any other premises as may be approved by the Commissioner of Central
Excise.
3. Forms to be used
3.1 The export shall be required to file a general bond in the Form specified in the
said notification (Annexure-16) with such security or surety as may be specified by the
concerned bond accepting authority. The bond shall be in a sum equal at least to the
duty chargeable on the goods for the due arrival of export goods at the place of export
(Land Customs Station) and their export therefrom under Customs supervision. The officer
who will accept the bond, will also be responsible for discharging that bond upon
furnishing proof of export by the exporter.
3.2 The bond shall not be discharged unless the goods are duly exported, to the
satisfaction of the Deputy/Assistant Commissioner of Central Excise or Maritime
Commissioner or such other officer as may be authorised by the Board on this behalf
within the time allowed for such export or are otherwise accounted for to the satisfaction
of such officer, or until the full duty due upon any deficiency of goods, not accounted
so, and interest, if any, has been paid
3.3 Invoice in the Form specified in the said notification (Annexure-21) shall be used
for export clearances. Six copies of invoice shall be prepared. This document shall bear
running serial number beginning from the first day of the financial year. During this year,
for the sake of continuity, the serial number, as started from 1.4.2001, may continue. The
stationary for invoice under erstwhile notification no. 50/94-Central Excise (N.T.) dated
22.9.1994 may be used for the time being” during this financial year. On the invoice,
certain declarations are required to be given by the exporter. They should be signed by
the exporter or his authorised agent.
3.4 Certificate shall be required in the Form specified in the said notification
(Annexure-22) from the Reserve Bank of India or any other bank authorised to deal in
foreign exchange by the Reserve Bank of India, for the receipt of full payment in freely
convertible currency. Certificate may also be required where remittance is received in
Indian Rupee.
4. Categories of exports and the conditions and safeguards thereto
4.1 Export under bond to Nepal or Bhutan where payment is in freely convertible
currency
4.1.1 Export under bond to Nepal or Bhutan where payment is in freely convertible
currency, shall be subject to following conditions, namely: –
(i) The importer in Nepal or Bhutan, as the case may be, shall open an
irrevocable letter of credit in favour of the exporter in India, before the
export takes place. However, this is not necessary int eh following
cases of export:
(a) All excisable goods other than consumer goods and
(b) Motor vehicle,
if they are exported without payment of duty as –
(i) supplies to projects financed by any United Nations
agency, the International Bank for Reconstruction and
Development, International Development Association, the
Asian Development Bank or any other multilateral agency
of like nature; and
(ii) to all diplomatic missions in Nepal or Bhutan provided the
Indian Embassy or the Ministry of External Affairs certifies
that the import is for the personnel of the diplomatic
community;
(ii) The exporter shall furnish a bond in Form specified in Annexure-I of the
above-mentioned notification before the Deputy/Assistant
Commissioner of Central Excise having jurisdiction over the factory,
warehouse, or the approved premises or such other officer as
authorised by the Board on this behalf, from where the goods are
removed for export to Nepal, as the case may be, or Bhutan;
(iii) After the exports are effected the exporter shall furnish a certificate of
remittances from the Reserve Bank of India or an authorised bank in
India, showing that full payment for the goods has been duly received
in freely convertible currency, as defined in the said notification. On
receipt of such a certificate and on the satisfaction that the goods
have been exported in terms of the bond, the bond accepting
authority shall discharge the exporter of his liabilities under the bond.
4.2 Export to Nepal in bond against payment in Indian rupee
4.2.1 As an exception to the above category of export, capital goods, as defined in
the said notification may be exported under bond directly from the factory of
manufacture to Nepal against any global tender invited by His Majesty’s Government of
Nepal without payment of duty, for which payment is received in Indian currency. Such
exports shall be subject to the following further conditions, namely: –
(i) the exporter shall furnish a bond in specified Form before the Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central
Excise or such other officer as authorised by the Board on this behalf;
and
(ii) the exporter shall furnish a certificate of remittances in specified Form
from a bank in India showing that full payment for the goods has been
duly received in Indian currency by the said bank;
4.2.2 On receipt of the certificate of remittances and on the satisfaction that the
goods have been exported in terms of bond, the bond accepting authority shall
discharge the exporter of his liabilities under the bond.
4.3 Export in bond of petroleum oil and lubricant products to Nepal
4.3.1 The export in bond without payment of duty of excise of petroleum oil and
lubricant products to Nepal is permitted through the agency of Nepal Oil Corporation
from calibrated stocks of M/s Indian Oil Corporation registered as a warehouse in
accordance with the provisions rule 20 the said Rules, and situated at places notified for
the purpose or purchased without payment of duty from tanks of other Oil Companies or
Undertakings. For this facility, the Indian Oil Corporation shall be required to furnish a
bond in the specified Form to the Deputy/Assistant Commissioner of Central Excise
having jurisdiction over the installation from which the petroleum oil and lubricant
products are to be exported.
4.4 Export in bond for supplies to Government of India Aided Projects in Nepal and
the Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for the
bonafide use of officers and staff of the Embassy in Nepal
4.4.1 Export in bond for supplies to Government of India Aided Projects in Nepal and
the Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for the
bonafide use of officers and staff of the Embassy in Nepal shall be subject to the
following conditions, namely: –
(i) the exporter shall furnish a bond in specified Form to the
Deputy/Assistant Commissioner of Central Excise; and
(ii) the First Secretary (Economic), Embassy of India, Nepal, certifies the
signature and stamp or seal of the person authorised to place the
order for supply of excisable goods to the specified Government of
India Aided Projects in Nepal;
4.5 Export without payment of duty to Kurichu Hydro Electric Project and Tala Hydro
Electric Project in Bhutan
4.5.1 Export of all excisable goods without payment of duty to Kurichu Hydro Electric
Project and Tala Hydro Electric Project in Bhutan shall be subject to the following
conditions, namely: –
(i) The exporter shall furnish a bond in Form in specified Form before the
Deputy/Assistant Commissioner of Central Excise having jurisdiction over
the factory or warehouse from which the goods have to be cleared;
(ii) The goods are supplied against one or more specified contract which
have been registered with the Directorate General of Inspection, Customs
and Central Excise in the following manner:
(a) Every Project Authority specified in the notification (notification no.
45/2001-CE(N.T.), supra, desirous of obtaining supplies under
benefits of this notification shall apply in writing to the Director
General, Directorate General of Inspection (Customs and Central
Excise) [hereinafter referred to as DGICCE], 5th Floor, Drum Shape
Building, I.P. Estate, New Delhi for registration of the contract
through Ministry of External Affairs as soon as the contract has
been concluded with the suppliers;
(b) The application shall be accompanied by the original deed of
contract and list of items duly approved by the Ministry of External
Affairs;
(c) The Project Authority shall also furnish such other documents or
other particulars as may be required by the DGICCE in connection
with the project.
(d) DGICCE, on being satisfied, shall register the contract by entering
the particulars in a Register maintained separately for each
project and shall assign a number in token of registration and
communicate the same to the Project Authority and shall also
return to the project authority all original documents which are no
longer required. This number shall be indicated on all the invoices
and other related documents.
(e) A copy of the contract so registered along with the approved list
of items shall be forwarded to the Commissioner of Central Excise
having jurisdiction over the factory/warehouse to which the
contract pertains for extending benefits under this notification and
consequent benefits under the Central Excise CENVAT Credit
Rules, 2001 to the supplier.
4.5.2 Amendment of Contract
(a) If any contract referred to hereinabove is amended, whether
before or after registration, the Project Authority shall make an
application for registration of amendments to the said contract to
the DGICCE.
(b) The application shall be accompanied by the original deed of
contract relating to the amendment and a list of items pertaining
to amendment, if any, duly approved by the Ministry of External
Affairs.
(c) On being satisfied that the application is in order the DGICCE shall
make note of the amendments in the relevant entries.
(d) The DGICCE shall forward copy of the amended contract and the
amended list of items, if any, to the concerned Commissioner of
Central Excise.
4.5.3 Finalisation of Contract
(a) Each Project Authority shall submit a statement of supplies
received on quarterly basis along with relevant invoices and other
documents to the DGICCE within one month from the last date of
the quarter.
(b) The Commissioner of Central Excise to whom a registered contract
has been forwarded shall forward a statement, after all the items
covered under the contract have been exported, to the DGICCE.
(c) The DGICCE shall, on receipt of the statement, reconcile both
and, if satisfied, finalise the contract and close the entry in the
register.”
4.5.4 There should be a release order from the officer authorised by the General
Manager of the concerned project authority covering he goods;
4.5.5 The exporter shall furnish a bond in the specified Form to the Deputy/Assistant
Commissioner of Central Excise having jurisdiction over the factory or warehouse or the
approved premises or from where the goods are removed for export to the specified
project.
5. Export Procedure
5.1 Procedure at the place of despatch
5.1.1 Six copies of invoice shall be presented to the Superintendent or Inspector of
Central Excise having jurisdiction over the factory, warehouse or any other approved
premises along with the export goods;
5.1.2 In case of export for supplies to Government of India Aided Projects in Nepal and
the Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for the
bonafide use of officers and staff of the Embassy in Nepal, the order from Project
Implementation Authority shall also be presented;
5.1.3 the Superintendent or Inspector of Central Excise having jurisdiction over the
factory, warehouse or any other approved premises shall verify the identity of goods with
reference to description mentioned in the invoice and the particulars of the duty
payable but for export, and if found in order, he shall seal the consignment, tank or
container with Central Excise seal or in such other the manner as may be specified by
the Commissioner of Central Excise and endorse each copy of the export invoice in
token of having such verification and examination done by him;
5.1.4 The said Superintendent or Inspector will allow export and distribute invoices in
the following manner:
Original (First copy) Hand over to the exporter
Duplicate, triplicate and
quadruplicate (second, third and
fourth copies)
Hand over to the exporter or his agent in a
sealed cover for delivery to the Customs
officer in-charge of the Land Customs Station
through which the goods are intended to be
exported.
Quintuplicate copy (Fifth copy) Forwarded to the Assistant Commissioner of
Central Excise or the Deputy Commissioner of
Central Excise who has accepted the bond
Sixtuplicate (Sixth copy) Retain for official record
5.1.5 The exporter or his agent shall then be free to remove the goods for export to
Nepal through the Land Customs Station indicated on the respective invoices;
5.1.6 Where the goods are exported by land, the export shall take place through any
of the following land customs stations, namely, Sukhiapokhri, Panitanki, Jogbani,
Jayanagar, Bairgania, Bhimnagar, Bitamore (Sursand), Raxaul, Sonauli, Barhni, Nepalganj
Road, Shohratgar (Khunwa), Jarwa, Katarniaghat, Gauriphanta, Banbasa, Jhulaghat,
Dharchula, Naxalbari, Galgalia, Kunauli, Sonabarsa, Tikonia, or such other check-post as
may be specified by the Board;
6. Procedure at the Land Customs Station
6.1 The exporter or his agent shall present the goods to the officer of customs incharge
of the land customs station along with the original copy of the invoice and the
sealed cover containing duplicate, triplicate and quadruplicate copies and obtain
acknowledgement;
6.2 Where the contents of all the copies of invoices tally and the packages, goods or
container are satisfactorily identified with their seals in tact, the officer of customs incharge
of the land customs station shall make necessary entries in the register
maintained at the land customs station and allow the goods to cross into the territory of
Nepal or Bhutan and certify accordingly on each of the four copies of the invoice and
indicate the running serial number in red ink prominently visible and encircled. In case
the seals are not found intact, the officer of customs in charge of the land customs
station may re-seal the containers with his own seal after satisfying himself as to the
identity of the containers and the goods from the particulars shown on the invoice by
opening and examining the goods, if necessary;
6.3 Distribution of invoices by Customs Officer:
Original (First copy) Hand over to the exporter or his agent
alongwith the goods for presentation to the
Customs Officer of Nepal or Bhutan.
Duplicate and triplicate
(Second and third copy)
Send to the Nepalese or Bhutanese Customs
Officer in-charge of the check post through
which the goods are to be imported into Nepal
or Bhutan, as the case may be
6.4 Presentation of goods to Nepalese or Bhutanese Customs Officers: the goods are
then to be produced before the Nepalese or Bhutanese Customs Officer, as the case
may be, at the corresponding border check-post alongwith the original copies of the
invoice. The Nepalese or Bhutanese Customs Officer shall deal with the original and
triplicate copies of the invoice as directed by His Majesty’s Government of Nepal or His
Majesty’s Government of Bhutan and return the duplicate copy, after endorsing his
certificate of receipt of goods in Nepal or Bhutan, as the case may be, directly to the
officer of customs-in-charge of the land customs station in India;
6.5 Further distribution of invoices: The officer of customs in-charge of the land
customs station shall forward the duplicate copy to the Central Excise Officer in charge
of the factory or warehouse from which the goods were removed for export without
payment of duty. For this purpose, the said officer in charge of the land customs station
should keep a note of the return of duplicate copies from the Customs Officer of Nepal
or Bhutan and remind the exporter for such copies as have not been received, failing
which the exporter may be liable to pay full duty on such consignments;
6.6 The officer of customs officers, at the land customs station shall also maintain a
separate record of all such in-bond exports of the goods without payment of duty and
shall assign running serial number on the invoice at the time of export as indicated
earlier;
7. Procedure for discharge of bond or the duty liability
7.1 Essential ingredients for discharge of bond have already been mentioned under
each category of exports.
7.2 The general procedure would be – the exporter shall submit the quadruplicate
copy duly endorsed by the officer of customs in-charge of land customs station to the
Central Excise officer who has accepted the bond alongwith bank, certificate
evidencing receipt of payment in freely convertible currency (in Indian Rupee in
particular category), within six months from the date of removal of the goods. It may be
noticed that earlier, the above mentioned period has been extended from ‘three’
months to ‘six’ months, as compared to erstwhile notification.
7.3 The Central Excise officer will tally the particulars with quintuplicate copy of the
invoice received from the Central Excise officer who has allowed clearance from the
factory or warehouse or any other approved premises and make suitable entries in Bond
Account of the exporter, giving provisional credit or discharging the bond provisionally.
7.4 On receipt of the duplicate copy of invoice, duly endorsed by customs officer of
Nepal or Bhutan from the customs officer in charge of land customs station, certifying
export of the goods and after tallying the particulars with those in quadruplicate copy of
the invoice make suitable entries in Bond Account and the obligation under the said
bond will then be discharged.
7.5 In case of failure to export within six months from the date of removal from the
factory or warehouse or any other approved premises, or shortages noticed, the exporter
shall discharge the duty liability on the goods not so exported or shortage noticed along
with twenty four per cent. interest thereon from the date of removal for export without
payment of duty till the date of payment of duty in terms of the bond.
Part-V
Miscellaneous Export Provisions
1. Cancellation of Export documents
1.1 If the excisable goods cleared under A.R.E.1 are not exported for any reason and
the exporter intends to divert the goods for home consumption, he may request in writing
the authority who accepted the bond or letter of undertaking to allow cancellation of
application, and diversion of goods for consumption in India. He will be permitted to do
so if he pays the duty as specified in the application along with interest at the rate of
twenty four percent per annum on such duty from the date of removal for export from
the factory or warehouse till the date of payment of duty. The permission shall be
granted within 3 working days. Since duty assessment on A.R.E 1 has to be done in
normal course, there will not be any need for re-assessment by the Department or the
assessee unless there are reasons to believe that the assessment was not correct. After
the duty is discharged, the exporter may take credit in his running bond (where bond is
furnished) on the basis of letter of permission, invoice and TR-6 Challans on which duty is
paid. He shall record these facts in the Daily Stock Account
1.2 If the exporter, after clearing the goods for export without payment of duty,
intends to change the destination or buyer or port/place of export, he may do so
provided he informs the bond/LUT accepting authority in writing about the changes and
makes necessary changes in all the copies of A.R.E.1 and the invoices. If he intends to
cancel the original export documents and issue fresh ones, the same may be done
under permission and authentication by bond/LUT accepting authority who will ensure
that the serial no. and date of the initial documents are endorsed on the fresh
documents. In such cases, if bond was furnished for single consignment, fresh bond may
not be asked.
2. Re-entry of the goods, cleared for export under bond but not actually exported, in
the factory of manufacture.
2.1 The excisable goods cleared for export under bond or undertaking but not
actually exported for any genuine reasons may be returned to the same factory
provided –
(i) such goods are returned to the factory within six months along with
original documents (invoice and A.R.E.1);
(ii) the assessee shall give intimation of the re-entry of each consignment in
Form D-3 within twenty-four hours of such re-entry;
(iii) such goods are to be stored for separately at least for 48 hours from the
time intimation is furnished to Range Office or shorter period if verification
is done by the Superintendent of Central Excise in the manner mentioned
subsequently ; and
(iv) the assessee shall record details of such goods in the daily stock account
and taken in the stock in the factory;
2.2 The Superintendent of Central Excise will verify himself or though Inspector in
charge of the factory, about the identity of such goods with reference to invoice, A.R.E.1
and the daily stock account in respect of 5% of intimations, within another 24 hours of
receipt of intimation.
3. Re-import of exported goods for repairs etc. and subsequent re-export
3.1 It has been provided in the Notification 42/2001-Central Excise (N.T.), supra, that
the exported excisable goods which are re-imported for carrying out repairs, reconditioning,
refining, re-making or subject to any similar process may be returned to the
factory of manufacture for carrying out the said processes and subsequent re-export. It
may be noted that ‘re-import and re-export’ shall be governed by the provisions of the
Customs Act, 1962.
3.2 So far Central Excise is concerned, the manufacturer shall maintain separate
account for return of such goods in a daily stock account and make suitable entry on
the said account after goods are processed, repaired, re-conditioned, refined or remade.
When such goods are exported, the usual export procedure shall be followed.
3.3 Any waste or refuse arising as a result of the said processes shall be removed from
the factory on payment of appropriate duty or destroyed after informing the proper
officer in writing at least 7 days in advance and after observing such conditions and
procedure as may be specified by the Commissioner of Central Excise and thereupon
the duty payable on such waste or refuse may be remitted by the said Commissioner of
Central Excise.
4. Entry of goods in another factory of the same manufacturer for consolidation and
loading of consignment for export:
4.1 Goods removed without payment of duty for export on A.R.E.1 from one factory
(hereinafter referred to as ‘the first factory’) of a manufacturer are allowed to enter in
another factory of the said manufacturer (hereinafter referred to as the ‘subsequent
factory’) ONLY for the purpose of consolidation and loading of goods manufactured in
subsequent factory and export therefrom subject to following conditions: –
(i) The exporter shall be required to get his goods examined and sealed at
each factory [the places of despatch] by a Central Excise Officer.
(ii) The export goods shall be brought under cover on invoice and A.R.E.1 in
the subsequent factory in original packing and duly sealed by Central
Excise Officers. In case goods are stuffed in a container, Central Excise
Officer shall duly seal the container in the first factory and the sealing of
each package shall not be insisted upon. The Central Excise Officer
having jurisdiction over the subsequent factory shall supervise the opening
of the seal of container, loading of goods (duly sealed if these goods are
to be loaded in open truck/vehicle) belonging to the subsequent factory
in vehicle or container and sealing of the container.
(iii) The exporter or the manufacturer shall pay the supervision charges.
5. Samples of export goods
5.1 The Central Excise Officer examining the consignment would draw representative
samples wherever necessary in triplicate. He would hand over two sets of samples, duly
sealed, to the exporter or his authorized agent, for delivering to the Customs Officer at
the point of export. He would retain the third set for his records. The instructions and
procedure for drawl of samples specified by the Board should be followed.
Part-VI
Manufacture of export goods in bond
1. Introduction
1.1 The Board has, by Notification No. 43/2001-Central Excise (N.T.) dated 26.6.2001
[hereinafter referred to as the ‘said notification’] notified the conditions, safeguards and
procedures for procurement of the excisable without payment of duty for the purpose of
use in the manufacture or processing of export goods and their exportation out of India,
to any country except Nepal and Bhutan.
1.2 It may be noted that in rule 19 of the said Rules and in said notification, expression
‘export goods’ has been used. This refers to excisable goods (dutiable or exempted) as
well as non-excisable goods. Thus, the benefit of input stage rebate can be claimed on
export of all finished goods whether excisable or not.
1.3 It may be also noted that materials, as defined in the said rule 19 may be used
for manufacture or processing. In other words, any processing not amounting to
manufacture (such as packing, blending etc.) will also be eligible for the benefit under
said notification.
1.4 Removal without payment of duty of equipment and machinery in the nature of
capital goods used in relation to manufacture or process of finished goods shall not be
allowed.
2. Conditions and procedures
2.1 The conditions and procedure for manufacture of export goods in bond shall be,
as follows:
(i) The manufacturer or the processor intending to avail benefit of this
notification shall register himself under rule 9 of the said Rules; and
(ii) The procedure specified in the Central Excise (Removal of Goods at
Concessional Rate of Duty for Manufacture of Excisable Goods) Rules,
2001 shall be followed, mutatis mutandis. It is clarified that there is no need
for any separate exemption notification for applying this rule.
(iii) The manufacturer or processor shall file a declaration with the
Deputy/Assistant Commissioner of Central Excise having jurisdiction over
the factory of manufacture under the Central Excise (Removal of Goods
at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules,
2001, and also declare ratio of input and output and rate of duty payable
on excisable goods to be procured without payment of duty. Where there
are more than one export product, separate statement of the inputoutput
ratios may be furnished for each export product. The consumption
should be net of recycled materials. Where recoverable wastage are
generated but not recycled but sold on account of its unsuitability, the
same should be clearly reflected in the declaration. The declarant should
also enclose, in case of a new product or in case where the manufacturer
is not regularly manufacturing the export goods and clearing for home
consumption or export, a write up of manufacturing process.
2.2 Verification of Input–output ratio and grant of permission
2.2.1 The Deputy/Assistant Commissioner of Central Excise shall verify the correctness of
the ratio of input and output mentioned in the declaration filed before commencement
of export of such goods, if necessary, by calling for samples of finished goods or by
inspecting such goods in the factory of manufacture or process. If, after such verification,
the Deputy/Assistant Commissioner of Central Excise is also satisfied that there is no
likelihood of evasion of duty, he may grant permission to the applicant for manufacture
or processing and export of finished goods and countersign the application in the
manner specified in the Central Excise (Removal of Goods at Concessional Rate of Duty
for Manufacture of Excisable Goods) Rules, 2001;
2.2.2 It is clarified that for the sake of convenience and transparency, input output
norms notified under the Export Import Policy may be accepted by the Department
unless there are specific reasons for variation. However, in case, the input output norms
notified under the Export Import Policy does not include all the materials used in export
goods, the claim under this scheme should not be denied merely on that ground.
2.3 If for any reason the Deputy/Assistant Commissioner of Central Excise is not
satisfied with reference to the correctness of the consumption norms claimed by the
applicant, especially where the product is being manufactured for the first time in his
jurisdiction, he may permit the manufacturing operations and the verification of the
consumption norms should be completed while the process of manufacture is on. The
verification should be completed before allowing the export of the goods as the
manufacturer working under this Scheme is expected to declare the raw materials
costumed in ARE-2.
2.4 The permission granted by the Deputy/Assistant Commissioner of Central Excise
can be withdrawn at any time if any glaring misuse resulting into loss of revenue comes
to his notice.
2.5 Any change in the consumption ratio [input-output ratio] should be promptly
intimated by the manufacturer to the deputy/Assistant Commissioner of Central Excise
and the jurisdictional Range Superintendent giving reference of the permission granted.
If necessary, the Deputy/Assistant Commissioner of Central Excise may order fresh
verification.
3. Procurement of material
3.1 The procedure of procurement of material required for the manufacture shall be
governed by the provisions of the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.
4. Removal of materials or partially processed material for processing
4.1 The Deputy/Assistant Commissioner of Central Excise may permit a manufacturer
to remove the materials as such or after the said materials have been partially processed
during the course of manufacture or processing of finished goods to a place outside the
factory –
(a) for the purposes of test, repairs, refining, reconditioning or carrying out any
other operation necessary for the manufacture of the finished goods and
return the same to his factory without payment of duty for further use in
the manufacture of finished goods or remove the same without payment
of duty in bond for export, provided that the waste, if any, arising in the
course of such operation is also returned to the said factory of the
manufacture or process; or
(b) for the purpose of manufacture of intermediate products necessary for
the manufacture or processing of finished goods and return the said
intermediate products to his factory for further use in the manufacture or
process of finished goods without payment of duty or remove the same,
without payment of duty for export, provided that the waste, if any, arising
in the course of such operation is also returned to the factory of
manufacturer or processor;
(c) Any waste arising from the processing of materials may be removed on
payment of duty as if such waste is manufactured or processed in the
factory of the manufacturer or processor;
5. Procedure for export
5.1 The goods shall be exported on the application in Form A.R.E. 2 specified in the
Annexure-23 and the procedures specified in the Notification No. 42/2001-Central Excise
dated 26th June, 2001 shall be followed. It is mentioned that in such cases, fresh A.R.E.1 is
not required because export will be effected on A.R.E.2 itself. But the procedure
specified in the aforementioned notifications relating to removals, distribution of
documents at the place of despatch and place of export, acceptance of proof of
export etc. shall be followed mutatis mutandis.
5.2 The Deputy/Assistant Commissioner of Central Excise should point out deficiency,
if any within 15 days of filing of A.R.E.1 duly certified by Customs indicating actual export.
Queries/ deficiencies shall be pointed out at one go and piecemeal queries should be
avoided.
5,3 Only a manufacture or processor of finished goods who exports the goods can
claim benefit of input stage rebate. This facility shall not be extended where export are
through merchant exporters.
5.4 The benefit of input stage rebate cannot be claimed in any of the following
situations:
(i) where the finished goods are exported under Claim for Duty Drawback
(ii) where the finished goods are exported in discharge of export obligations
under a Value Advance Licence or a Quantity Based Advance Licence
issued before 31.03.95.
(iii) where facility of input stage credit is availed under CENVAT Credit Rules,
2001
6. Accounts & Returns
6.1 The manufacturer shall maintain register of duty free materials brought to the
factory for manufacture of finished goods for export and the account for finished goods
manufactured and exported. Any officer duly empowered by the Deputy/Assistant
Commissioner of Central Excise in this behalf shall have access at all reasonable times to
any premises indicated in the application. The applicant shall also permit the officer of
Central Excise access to any records relating to the production, storage and export of
goods.
6.2 The colour coding of A.R.E.2 will be as follows:-
Original White
Duplicate Buff
Triplicate Pink
Quadruplicate Green
Quintuplicate Blue
7. Checks by Customs Officers
7.1 Samples will be invariably drawn by the Customs Officers for testing at the place
of export in case the export goods are of sensitive nature considering that they are
made from materials bearing high Central Excise Duty.
7.2 Customs officer responsible for making endorsement in A.R.E.2 shall carefully
check that exports are not covered under any of the following:
– The Duty Drawback Scheme
– A Value Based Advance Licence issued prior to 31.03.95
– A Quantity Based Advance Licence issued prior to 31.03.95
8. The Deputy/Assistant Commissioner sanctioning rebate shall ensure that the
relevant transport copies (duplicate copies) of Duty paying document have been
suitably defaced before payment is made.