Dated 1st July, 2019

 Recent Amendments in GST

Release of bond and bank guarantee pending in customs for importers/exporters who had availed advance authorization bearing notification number of physical exports instead of deemed exports.


One of the major issues for large number of exporters had been the issuance of Advance Authorization bearing Notification No. 96/2009 specifically governing Physical Export, instead of Notification No.112/2009 covering deemed export. Though these exporters had been somehow successful in getting their discharge certificates after fulfilment of export obligation from the zonal Director General of Foreign Trade, however the problem arose when they approached their respective customs houses for release of Bond/Bank guarantee(BG) executed at the time of registration of such Advance licenses. The custom houses under no circumstances were ready to give cancellation of such Bond and Bank Guarantee on the pretext that they have submitted Tax Invoices for the indigenous supplies and also observed that DGFT had inadvertently mentioned the notification number governing Physical Export, instead deemed export.

Though these exporters had been somehow successful in getting their discharge certificates after fulfilment of export obligation from the zonal Director General of Foreign Trade, however the problem arose when they approached their respective customs houses for release of Bond/Bank guarantee(BG) executed at the time of registration of such Advance licenses. The custom houses under no circumstances were ready to give cancellation of such Bond and Bank Guarantee on the pretext that they have submitted Tax Invoices for the indigenous supplies and also observed that DGFT had inadvertently mentioned the notification number governing Physical Export, instead deemed export.

Moreover, such an issue has been pointed out in similar cases wherein the CRAD has raised objection on similar issues and accordingly, the matter has been referred back to the DGFT, Delhi to examine the same matter and take corrective action on the same. Therefore, such cases were held up both by Customs authorities either for release of Bond/BG or by the DGFT in granting of EODCs.

It is also to be stated that large number of exporters were suffering due to non-cancellation of Bond/BG which in turn was becoming a financial constraint for these exporters and such a situation arose because of a glitch between the DGFT and the Customs House, with no fault being there of the exporters involved as the ultimate responsibility of mentioning the correct notification number is of the DGFT.

Such a situation also arose for one of the esteemed clients of BT Associates (hereinafter referred to as BTA) who had also taken Advance Authorisation for Deemed Exports against proper invalidation letter, however inadvertently the notification no. mentioned in the license was that of Physical exports.Thereupon, BTA took up the matter with the concerned authorities to provide relief to its client in cancellation of their long pending Bond and BG at Customs House, Kolkata.

BTA had initially taken up the matter at the Zonal DGFT at Kolkata and numerous communications were made at various levels so that a relief could be granted to its client. As no solution could be obtainedfrom the Zonal DGFT, BTA further moved to take up the matter with the DGFT, Head Quarters at New Delhi. The concerned Additional Director General (ADGFT) at DGFT Headquarters, Delhi was presented the facts of the matter and was also aware of such situation. Moreover, it was also appraised that the license had been taken against proper invalidation for deemed exports and not physical exports and it was also assured that soon a decision would be taken so that the grievances of such exporters could be dealt with.

In furtherance to the above and with repeated efforts from BTA recently a decision has been finally arrived from the headquarters giving relief to such cases, specifically directing the Custom authorities that there was wrong printing of Notification number on the copy of advance licence viz. physical exports instead of deemed exports. Moreover, for cases wherein the EODC is pending for such issue a direction will also be given to the respective DGFT for discharge of such cases.Thus, with such decision taken at DGFT, we understand that in most likely circmstances, such cases will be released by both Customs and DGFT authorities in a timely manner and shall put an end to the grievances of the exporters who had been facing unnecessary hurdles since a long time.


Recent Amendments in GST

BT Associates is a premier indirect tax consultant in kolkata, delivering high quality services to client in the area of indirect taxation.GST idea is a unit of BT Associates formed to share knowledge on stakeholders. We cover entire gamut from technical papers to recent development including IT under GST

Recent Amendments in GST

Recent Amendments in GST
Founder Member

Bhaskar Thakkar

Chief Executive officer

BT Associates, India

thakkar@btassociate.com

Twenty years of exprience in tax practice, specialist in structuring & planing and tax optimization under indirect tax. Lead eastern India indirect tax practice of Ernst & Young in past.