LUTs and Bonds
SOME more questions raised in the RAC meeting were:
Many manufacturers - exporters are complaining that Divisional Assistant/Deputy Commissioners are insisting on several documents at the time of Renewal of Letter of Undertaking (LUT) which are legally not required to be given. For example, the proof of export is being demanded for CT1 exports where Merchant Exporter is the exporter and not the manufacturer. Secondly, department is insisting on Bank Realization Certificate (BRC) for renewal of LUT. Submission of BRCs are not mentioned anywhere in the Rules or Instructions or CBEC circular. In fact, for claiming rebate also the department is insisting for BRC which are not required to be submitted. The industry desires that a Trade Notice may be issued giving checklist of documents required for renewal of LUT, so that there is one uniform procedure followed in all the four Commissionerates.
Department is having a view that a manufacturer - exporter cannot execute a B1 General Bond and has to execute LUT only. According to department B1 bond can only be executed by a Merchant Exporter. Industry view is that LUT is optional and if a manufacturer exporter can also execute B1 Bond. The advantage of B1 Bond is that it does not require renewal every 12 months, as in the case of LUT. The department may confirm that a manufacturer-exporter can also execute B1 Bond by complying with requirements associated with such execution.
The Department clarified:
Renewal of LUT may not be rejected, as it will stop the exports. However, if conditions of the earlier LUT are not fulfilled, necessary recovery action may be initiated simultaneously.
The Commissioners will issue Trade facilities with regard to checklist for acceptance of LUT as well as B1 Bond.