Dated 6th April, 2020

The taxability dispute on ocean freight has been finally decided by the Gujarat High Court, which held that taxing ocean freight is ultra vires and leads to double-taxation

Relaxation in furnishing of Bond as per the Customs Act during the Lockdown period

The pandemic of Covid-19 in the country has compelled the Government to take certain steps for the easy movement of trade and one amongst it being relaxation extended in furnishing of Bond by the Importer/Exporter where ever required as per the Customs Act, 19621.  Such relaxation has been given for a certain period of time i.e. upto 30.04.2020 and on fulfillment of certain conditions, with an objective of easy customs clearance.

A circular1 has been issued by the board in this regards and it has been stated in the circular that instead of submitting bond, the importer/Exporter may submit an undertaking to avail relaxation. The relaxation will however apply to the following category of Importer/Exporter–

  1. Government/Public Sector Undertakings (Central/State/UT Govts/Administrations and their undertakings)
  2. Manufacturer/Actual User importer
  3. Authorised Economic Operators
  4. Status holder (5)All importers availing warehouse facility in terms of section 59 of the Customs Act, 1962

The aforesaid relaxation is subject to the following conditions as stated below:

  • The content of the undertaking should as far as possible be same as mentioned in the bond.
  • The undertaking should be duly signed by the IEC holder on their business letter head and submitted by their registered e-mail ID or their authorized customs broker.
  • The undertaking should include a commitment to submit the proper bond in prescribed format on notarized stamp paper etc. on or before 07.05.2020.
  • The undertaking will not be treated as substitute of security, wherever mandated.
  • For warehoused goods, subsequent movement shall only be allowed to manufacture/actual user importer /AEO/ status holder. For request for change in ownership, will only be considered in cases where the prospective buyer is either manufacture/actual user importer/AEO/status holder. 

Such relaxation will be considered for any other Importer/Exporter on case to case basis on the requests for the same, with such additional safeguards as deemed fit by the Jurisdictional Commissioner. Also Importer/Exporter using this facility shall ensure submission of proper bond before 07.05.2020.The relaxation is however subject to review by the board at the end of lockdown period i.e. 14.04.2020.

1Circular No.17/2020-Customs dated 03.04.2020

2Section 18, Section 59 and Section 143 of the Customs Act, 1962 and Notifications issued under Section 25 of the Customs Act, 1962.

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Twenty years of experience in tax practice. Specialist in structuring & planning and tax optimization under indirect tax. Lead eastern India indirect tax practice of Ernst & Young in past.