Bank Guarantee by EOUs - Board Amends Circular No. 54/2004 - Cus, but did they forget Circular No. 12/2008 – Cus?
AS per CBEC Circular No. 54/2004-Customs dated 13.10.2004, units, which are in existence for last three years with unblemished track record and have export turnover of Rs 5 Crore or above, were exempted from furnishing bank guarantee or surety along with B-17 Bond or for sending goods for job work [refer para 6.12(f) of the FTP].
It is brought to the notice of the Board that field formations are denying the benefit to EOUs on the ground that Show Cause Notices have been issued to them, thereby such units are unable to fulfil the condition of ‘unblemished track record'.
What is unblemished track record and will issue of a Show Cause Notice mar the unblemished track record?
Board notes that one of the conditions prescribed as per the Foreign Trade Policy is that the 'the unit has not been issued a show cause notice or a confirmed demand, during the preceding 3 years, on grounds other than procedural violations.” The FTP has been amended to make this provision in 2008, but the Customs field officers continued to deny the benefit based on Board's Circular No. 54/2004–Cus.
Now Board clarifies that “in simple cases of issue of show cause notices for procedural violation against such units, the entitlement of exemption from furnishing bank guarantee to EOU/EHTP/STP/BTP units need not be denied.”
Board also states that Circular No. 54/2004-Customs dated 13.10.2004 stands modified to the above extent and Board wants this to be given wide publicity.
Is the Board reacting to the changes in Foreign Trade Policy made in 2008 – after three years and should the EOUs express their gratitude to the Board for this very belated clarification?
Not exactly!
In Circular No. 12/2008 –Cus dated 24.07.2008, Board had clarified:
Parameter for ‘unblemished track record' to be observed for EOU/STP/EHTP/BTP unit:
Many facilities like waiver of Bank guarantee, permission for self bonding, issue of pre-authenticated procurement certificate/CT-3, etc. have been extended to units who have unblemished track record. It has been brought to the notice of the Board that different parameters have been adopted by the field formations in determining whether a unit has an unblemished track record.
In order to adopt a uniform practice in this regard, following parameters are being laid down to determine whether a unit has an unblemished track record.
The unit should have:
++ achieved NFE/ export obligation wherever applicable;
++ not been issued a show cause notice or a demand confirmed, during the preceding 3 years, on grounds other than procedural violations, invoking penal provision and/or on account of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Customs Act,1962, the Central Excise Act, 1944, the Finance Act, 1994 covering Service Tax, the Foreign Trade (Development & Regulation) Act, 1992, the Foreign Exchange Management Act,1999 or any allied Acts or the rules made thereunder.
The above parameters have also been incorporated under para 6.12(f) (iii) of the FTP.
Has the Board forgotten about this Circular? And is the field not aware of it?
CBEC Circular No. 36/2011 -Cus: Dated August 12 2011