Bank Guarantee for Customs purposes - Provision for automatic extension of guarantee period - CBEC

By Vijay Kumar

BONDS are executed before Customs authorities along with Bank Guarantee for various purposes under the provisions of the Customs Act. An issue regarding the inclusion of provision for automatic extension of the guarantee period in the Bank Guarantee given in favour of Customs has been brought to the notice of the Board. While the Custom Houses require auto-extension clause to be incorporated in the Bank Guarantees, some of the banks are not ready to comply with this requirement.

Board clarifies that Reserve Bank of India has issued a Master Circular DBOD. No. Dir. BC 14/13.03.00/2009-10 dated 1st July, 2009 wherein it has been clarified to the Banks that “the Public Notice issued by the Customs Department stipulates, inter alia, that all bank guarantees furnished by an importer should contain a self-renewal clause inbuilt in the guarantee itself. As the stipulation in the Public Notice issued by the Customs Department is akin to the notice in the tender form floated by the DGS&D, the provision for automatic extension of the guarantee period in the bank guarantees issued to DGS&D, as at sub-paragraph (iv), should also be made applicable to the bank guarantees issued favouring the Customs Houses.”

Board states that the RBI Master Circular can be accessed at http:www.rbi.org.in/scripts/BS_ViewMasCir culardetails.aspx?Id+5130&Mode=0 [but you cannot access it at this url – you may try http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=5130#2.2.7 and perhaps Board is not aware that Master Circulars of the RBI are valid only up to 30 th June of every year and on 1st July again a fresh Master Circular is issued. Fortunately in this case, there is not much difference between the 2009 and 2010 Master Circular ]

Board wants the field to ensure that the provision for automatic extension of the guarantee to be got incorporated in the Bank Guarantees given in favour of Customs authorities.

CBEC F. No.473/04/2009-LC Dated: June 30, 2010