Obtaining transferable duty credit scrips made easier
Source: TNC Rajagopalan / New Delhi April 06, 2009, 0:09 IST
Ref: Handbook of Procedures (FTP)
The Director General of Foreign Trade has notified the procedures for executing legal undertaking and bank guarantee for obtaining transferable duty credit scrips under Duty Entitlement Passbook scheme and under the reward schemes such as Focus Product Scheme, Focus Market Scheme etc. before realisation of export proceeds. The formats of legal undertaking and bank guarantee have also been notified
The good news is recognised export houses and PSUs need not furnish bank guarantees. Manufacturer exporters registered with Central Excise and with exports in the preceding two years of at least Rs 1 crore and manufacturer exporters who have paid excise duty of over Rs 1 crore in the preceding year need not execute bank guarantee.
The relevant Public Notice (no. 167/2008 dated 30th March 2009) says the applicant shall execute the legal undertaking and bank guarantee as per Customs circular no. 58/2004 dated 21st October 200 4. The said circular exempts exporters who have a turnover (physical exports) of Rs 5 crore in the current or preceding fiscal and having a track record of three years of exports.
Other manufacturer exporters need furnish bank guarantee of only 15 per cent of the amount of legal undertaking. Other exporters have to furnish bank guarantee covering 100 per cent of the amount involved.
Apparently, the amount of legal undertaking should cover the full duty credit amount. The exporter, however, has the option to file a revolving legal undertaking for a higher amount which will act as a limit i.e., within the limit, it will be debited if a duty credit scrip is issued and credited whenever the exporter submits evidence of realisation of export proceeds relating to any shipping bill against which the duty credit scrip was issued.
The revolving legal undertaking has to be submitted separately for each scheme. The legal undertaking/bank guarantee should be kept valid for 24 months from the let export order date. Perhaps, the DGFT expects that few payments will be delayed beyond 24 months from the date of exports.
The DGFT circular says that in case the export proceeds are not realised within 12 months of export, the exporter should either produce Reserve Bank approval extending the period for realisation of export proceeds or deposit amount equal to the duty credit or produce duty credit scrip for debit of equivalent amount within further 60 days failing which he will have to pay, in addition, 15 per cent per annum interest on the duty credit amount. The legal undertaking/bank guarantee will be enforced if the exporter does not surrender the benefits.
The Customs credit the duty drawback at All Industry Rates in the exporter’s bank account immediately after shipment based on only a declaration along with the shipping bill. The exporter is not required to submit a bond or bank guarantee but a six monthly certificate of export bills outstanding beyond the period allowed by RBI from authorised dealer(s) or chartered accountant.
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