Execution of BG / Legal Undertaking.

Before clearance of goods through customs, the importer shall execute a legal undertaking (LUT) / Bank Guarantee (BG) with the customs authorities in the manner as may be prescribed by them.

In case of indigenous sourcing, the licence holder shall furnish BG/LUT to the licensing authority before sourcing the material from the nominated agencies or indigenous supplier.

The Status Holders / PSU"s and Manufacturer exporter registered with excise authority with export of Rs.1 crore and above in preceding year and who has not been penalised under the Customs Act, Excise Act, Foreign Trade (Development and Regulation) Act, 1992 and FERA shall be required to furnish Legal Undertaking in the form given in Appendix-24B. Other Manufacturer exporters shall be required to furnish bond supported by Bank Guarantee to the extent of 25% of Excise duty saved and merchant exporters (other than Status Holders / PSU"s ) shall be required to furnish bond supported by Bank Guarantee to the extent of 100% of excise duty saved on the items which they intend to procure indigenously in lieu of direct imports.

In case, the firm has already executed BG / LUT for full value of the licence covering the item indigenously procured as well to the Customs and furnishes proof of the same, no separate BG / LUT shall be required to be executed with the licensing authority.