CHAPTER 7

EXPORT WITHOUT PAYMENT OF DUTY

Part-IV

EXPORT TO NEPAL AND BHUTAN WITHOUT PAYMENT OF DUTY
1. Introduction

1.1 The conditions and procedure for export to Nepal and the Board in NotificationNo.45/2001-CE(N.T.), dated 26.6.2001(hereinafter referred to as the ‘saidnotification’) has specified Bhutan without payment of duty (under bond).

2. Places from where goods can be exported

2.1 Under the said notification, export can be made from any of the followingplaces: -

(i) the factory of production or manufacture

(ii) warehouse, or

(iii) any other premises as may be approved by the Commissioner of CentralExcise.

3. Forms to be used

3.1 The export shall be required to file a general bond in the Form specified in thesaid notification (Annexure-16) with such security or surety as may be specified by theconcerned bond accepting authority. The bond shall be in a sum equal at least to theduty chargeable on the goods for the due arrival of export goods at the place of export(Land Customs Station) and their export therefrom under Customs supervision. The officer who will accept the bond, will also be responsible for discharging that bond uponfurnishing proof of export by the exporter.

3.2 The bond shall not be discharged unless the goods are duly exported, to thesatisfaction of the Deputy/Assistant Commissioner of Central Excise or MaritimeCommissioner or such other officer as may be authorised by the Board on this behalfwithin the time allowed for such export or are otherwise accounted for to the satisfactionof such officer, or until the full duty due upon any deficiency of goods, not accountedso, and interest, if any, has been paid

3.3 Invoice in the Form specified in the said notification (Annexure-21) shall be usedfor export clearances. Six copies of invoice shall be prepared. This document shall bearrunning serial number beginning from the first day of the financial year. During this year,for the sake of continuity, the serial number, as started from 1.4.2001, may continue. Thestationary for invoice under erstwhile notification no. 50/94-CE(N.T.), dated22.9.1994 may be used for the time being” during this financial year. On the invoice,certain declarations are required to be given by the exporter. They should be signed bythe exporter or his authorised agent.

3.4 Certificate shall be required in the Form specified in the said notification(Annexure-22) from the Reserve Bank of India or any other bank authorised to deal inforeign exchange by the Reserve Bank of India, for the receipt of full payment in freelyconvertible currency. Certificate may also be required where remittance is received inIndian Rupee.

4. Categories of exports and the conditions and safeguards thereto

4.1 Export under bond to Nepal or Bhutan where payment is in freely convertiblecurrency

4.1.1 Export under bond to Nepal or Bhutan where payment is in freely convertiblecurrency, shall be subject to following conditions, namely: -

(i) The importer in Nepal or Bhutan, as the case may be, shall open anirrevocable letter of credit in favour of the exporter in India, before theexport takes place. However, this is not necessary int eh followingcases of export:

(a) All excisable goods other than consumer goods and

(b) Motor vehicle,

if they are exported without payment of duty as –

(i) supplies to projects financed by any United Nationsagency, the International Bank for Reconstruction andDevelopment, International Development Association, theAsian Development Bank or any other multilateral agencyof like nature; and

(ii) to all diplomatic missions in Nepal or Bhutan provided theIndian Embassy or the Ministry of External Affairs certifiesthat the import is for the personnel of the diplomaticcommunity;

(ii) The exporter shall furnish a bond in Form specified in Annexure-I of theabove-mentioned notification before the Deputy/AssistantCommissioner of Central Excise having jurisdiction over the factory,warehouse, or the approved premises or such other officer asauthorised by the Board on this behalf, from where the goods areremoved for export to Nepal, as the case may be, or Bhutan;

(iii) After the exports are effected the exporter shall furnish a certificate ofremittances from the Reserve Bank of India or an authorised bank inIndia, showing that full payment for the goods has been duly receivedin freely convertible currency, as defined in the said notification. Onreceipt of such a certificate and on the satisfaction that the goodshave been exported in terms of the bond, the bond acceptingauthority shall discharge the exporter of his liabilities under the bond.

4.2 Export to Nepal in bond against payment in Indian rupee

4.2.1 As an exception to the above category of export, capital goods, as defined inthe said notification may be exported under bond directly from the factory ofmanufacture to Nepal against any global tender invited by His Majestys Government ofNepal without payment of duty, for which payment is received in Indian currency. Suchexports shall be subject to the following further conditions, namely: -

(i) the exporter shall furnish a bond in specified Form before the AssistantCommissioner of Central Excise or the Deputy Commissioner of CentralExcise or such other officer as authorised by the Board on this behalf;and

(ii) the exporter shall furnish a certificate of remittances in specified Formfrom a bank in India showing that full payment for the goods has beenduly received in Indian currency by the said bank;

4.2.2 On receipt of the certificate of remittances and on the satisfaction that thegoods have been exported in terms of bond, the bond accepting authority shalldischarge the exporter of his liabilities under the bond.

4.3 Export in bond of petroleum oil and lubricant products to Nepal

4.3.1 The export in bond without payment of duty of excise of petroleum oil andlubricant products to Nepal is permitted through the agency of Nepal Oil Corporationfrom calibrated stocks of M/s Indian Oil Corporation registered as a warehouse inaccordance with the provisions rule 20 the said Rules, and situated at places notified forthe purpose or purchased without payment of duty from tanks of other Oil Companies orUndertakings. For this facility, the Indian Oil Corporation shall be required to furnish abond in the specified Form to the Deputy/Assistant Commissioner of Central Excisehaving jurisdiction over the installation from which the petroleum oil and lubricantproducts are to be exported.

4.4 Export in bond for supplies to Government of India Aided Projects in Nepal andthe Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for thebonafide use of officers and staff of the Embassy in Nepal

4.4.1 Export in bond for supplies to Government of India Aided Projects in Nepal andthe Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for thebonafide use of officers and staff of the Embassy in Nepal shall be subject to thefollowing conditions, namely: -

(i) the exporter shall furnish a bond in specified Form to theDeputy/Assistant Commissioner of Central Excise; and

(ii) the First Secretary (Economic), Embassy of India, Nepal, certifies thesignature and stamp or seal of the person authorised to place theorder for supply of excisable goods to the specified Government ofIndia Aided Projects in Nepal;

4.5 Export without payment of duty to Kurichu Hydro Electric Project and Tala HydroElectric Project in Bhutan

4.5.1 Export of all excisable goods without payment of duty to Kurichu Hydro ElectricProject and Tala Hydro Electric Project in Bhutan shall be subject to the followingconditions, namely: -

(i) The exporter shall furnish a bond in Form in specified Form before theDeputy/Assistant Commissioner of Central Excise having jurisdiction overthe factory or warehouse from which the goods have to be cleared;

(ii) The goods are supplied against one or more specified contract whichhave been registered with the Directorate General of Inspection, Customsand Central Excise in the following manner:

(a) Every Project Authority specified in the notification (notification no.45/2001-CE(N.T.), supra, desirous of obtaining supplies underbenefits of this notification shall apply in writing to the DirectorGeneral, Directorate General of Inspection (Customs and CentralExcise) [hereinafter referred to as DGICCE], 5 th Floor, Drum ShapeBuilding, I.P. Estate, New Delhi for registration of the contractthrough Ministry of External Affairs as soon as the contract hasbeen concluded with the suppliers;

(b) The application shall be accompanied by the original deed ofcontract and list of items duly approved by the Ministry of ExternalAffairs;

(c) The Project Authority shall also furnish such other documents orother particulars as may be required by the DGICCE in connectionwith the project.

(d) DGICCE, on being satisfied, shall register the contract by enteringthe particulars in a Register maintained separately for eachproject and shall assign a number in token of registration andcommunicate the same to the Project Authority and shall alsoreturn to the project authority all original documents which are nolonger required. This number shall be indicated on all the invoicesand other related documents.

(e) A copy of the contract so registered along with the approved listof items shall be forwarded to the Commissioner of Central Excisehaving jurisdiction over the factory/warehouse to which thecontract pertains for extending benefits under this notification andconsequent benefits under the Central Excise CENVAT Credit Rules, 2001 to the supplier.

4.5.2 Amendment of Contract

(a) If any contract referred to hereinabove is amended, whetherbefore or after registration, the Project Authority shall make anapplication for registration of amendments to the said contract tothe DGICCE.

(b) The application shall be accompanied by the original deed ofcontract relating to the amendment and a list of items pertainingto amendment, if any, duly approved by the Ministry of ExternalAffairs.

(c) On being satisfied that the application is in order the DGICCE shallmake note of the amendments in the relevant entries.

(d) The DGICCE shall forward copy of the amended contract and theamended list of items, if any, to the concerned Commissioner ofCentral Excise.

4.5.3 Finalisation of Contract

(a) Each Project Authority shall submit a statement of suppliesreceived on quarterly basis along with relevant invoices and otherdocuments to the DGICCE within one month from the last date ofthe quarter.

(b) The Commissioner of Central Excise to whom a registered contracthas been forwarded shall forward a statement, after all the itemscovered under the contract have been exported, to the DGICCE.

(c) The DGICCE shall, on receipt of the statement, reconcile bothand, if satisfied, finalise the contract and close the entry in theregister.”

4.5.4 There should be a release order from the officer authorised by the GeneralManager of the concerned project authority covering he goods;

4.5.5 The exporter shall furnish a bond in the specified Form to the Deputy/AssistantCommissioner of Central Excise having jurisdiction over the factory or warehouse or theapproved premises or from where the goods are removed for export to the specifiedproject.

5. Export Procedure

5.1 Procedure at the place of despatch

5.1.1 Six copies of invoice shall be presented to the Superintendent or Inspector ofCentral Excise having jurisdiction over the factory, warehouse or any other approvedpremises along with the export goods;

5.1.2 In case of export for supplies to Government of India Aided Projects in Nepal andthe Embassy Cooperative Store and Embassy Petrol Pump located in Nepal for thebonafide use of officers and staff of the Embassy in Nepal, the order from ProjectImplementation Authority shall also be presented;

5.1.3 the Superintendent or Inspector of Central Excise having jurisdiction over thefactory, warehouse or any other approved premises shall verify the identity of goods withreference to description mentioned in the invoice and the particulars of the dutypayable but for export, and if found in order, he shall seal the consignment, tank orcontainer with Central Excise seal or in such other the manner as may be specified bythe Commissioner of Central Excise and endorse each copy of the export invoice intoken of having such verification and examination done by him;

5.1.4 The said Superintendent or Inspector will allow export and distribute invoices inthe following manner:

Original (First copy)	Hand over to the exporter
Duplicate, triplicate and quadruplicate (second, third and fourth copies)	Hand over to the exporter or his agent in asealed cover for delivery to the Customsofficer in-charge of the Land Customs Stationthrough which the goods are intended to beexported.
Quintuplicate copy (Fifth copy)	Forwarded to the Assistant Commissioner ofCentral Excise or the Deputy Commissioner ofCentral Excise who has accepted the bond
Sixtuplicate (Sixth copy)	Retain for official record

5.1.5 The exporter or his agent shall then be free to remove the goods for export toNepal through the Land Customs Station indicated on the respective invoices;

5.1.6 Where the goods are exported by land, the export shall take place through anyof the following land customs stations, namely, Sukhiapokhri, Panitanki, Jogbani,Jayanagar, Bairgania, Bhimnagar, Bitamore (Sursand), Raxaul, Sonauli, Barhni, NepalganjRoad, Shohratgar (Khunwa), Jarwa, Katarniaghat, Gauriphanta, Banbasa, Jhulaghat,Dharchula, Naxalbari, Galgalia, Kunauli, Sonabarsa, Tikonia, or such other check-post asmay be specified by the Board;

6. Procedure at the Land Customs Station

6.1 The exporter or his agent shall present the goods to the officer of customs in-chargeof the land customs station along with the original copy of the invoice and the sealed cover containing duplicate, triplicate and quadruplicate copies and obtainacknowledgement;

6.2 Where the contents of all the copies of invoices tally and the packages, goods orcontainer are satisfactorily identified with their seals in tact, the officer of customs in-chargeof the land customs station shall make necessary entries in the registermaintained at the land customs station and allow the goods to cross into the territory ofNepal or Bhutan and certify accordingly on each of the four copies of the invoice andindicate the running serial number in red ink prominently visible and encircled. In casethe seals are not found intact, the officer of customs in charge of the land customsstation may re-seal the containers with his own seal after satisfying himself as to theidentity of the containers and the goods from the particulars shown on the invoice byopening and examining the goods, if necessary;

6.3 Distribution of invoices by Customs Officer:

Original (First copy)	Hand over to the exporter or his agentalongwith the goods for presentation to theCustoms Officer of Nepal or Bhutan.
Duplicate and triplicate(Second and third copy)	Send to the Nepalese or Bhutanese CustomsOfficer in-charge of the check post throughwhich the goods are to be imported into Nepalor Bhutan, as the case may be

6.4 Presentation of goods to Nepalese or Bhutanese Customs Officers: the goods arethen to be produced before the Nepalese or Bhutanese Customs Officer, as the casemay be, at the corresponding border check-post alongwith the original copies of theinvoice. The Nepalese or Bhutanese Customs Officer shall deal with the original andtriplicate copies of the invoice as directed by His Majestys Government of Nepal or HisMajesty’s Government of Bhutan and return the duplicate copy, after endorsing hiscertificate of receipt of goods in Nepal or Bhutan, as the case may be, directly to theofficer of customs-in-charge of the land customs station in India;

6.5 Further distribution of invoices: The officer of customs in-charge of the landcustoms station shall forward the duplicate copy to the Central Excise Officer in chargeof the factory or warehouse from which the goods were removed for export withoutpayment of duty. For this purpose, the said officer in charge of the land customs stationshould keep a note of the return of duplicate copies from the Customs Officer of Nepalor Bhutan and remind the exporter for such copies as have not been received, failingwhich the exporter may be liable to pay full duty on such consignments;

6.6 The officer of customs officers, at the land customs station shall also maintain aseparate record of all such in-bond exports of the goods without payment of duty andshall assign running serial number on the invoice at the time of export as indicatedearlier;

7. Procedure for discharge of bond or the duty liability

7.1 Essential ingredients for discharge of bond have already been mentioned undereach category of exports.

7.2 The general procedure would be - the exporter shall submit the quadruplicatecopy duly endorsed by the officer of customs in-charge of land customs station to theCentral Excise officer who has accepted the bond alongwith bank, certificateevidencing receipt of payment in freely convertible currency (in Indian Rupee inparticular category), within six months from the date of removal of the goods. It may benoticed that earlier, the above mentioned period has been extended from ‘three’months to ‘six’ months, as compared to erstwhile notification.

7.3 The Central Excise officer will tally the particulars with quintuplicate copy of theinvoice received from the Central Excise officer who has allowed clearance from thefactory or warehouse or any other approved premises and make suitable entries in BondAccount of the exporter, giving provisional credit or discharging the bond provisionally.

7.4 On receipt of the duplicate copy of invoice, duly endorsed by customs officer ofNepal or Bhutan from the customs officer in charge of land customs station, certifyingexport of the goods and after tallying the particulars with those in quadruplicate copy ofthe invoice make suitable entries in Bond Account and the obligation under the saidbond will then be discharged.

7.5 In case of failure to export within six months from the date of removal from thefactory or warehouse or any other approved premises, or shortages noticed, the exportershall discharge the duty liability on the goods not so exported or shortage noticed alongwith twenty four per cent. interest thereon from the date of removal for export withoutpayment of duty till the date of payment of duty in terms of the bond.

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