Policy Circular No.35(RE-2000)/2000-2001 Dated: 19th December, 2000

Subject:Execution of BG/LUT in respect of EPCG Licences.

Attention is invited to Para 4.19 of the Export and Import Policy, 1997-2002 (RE-2000), which stipulates that wherever any duty free import is allowed or where otherwise specifically stated, the importer shall execute a Legal Undertaking (LUT)/ Bank Guarantee (BG) with the Customs Authority before clearance of goods through the Customs, in the manner as may be prescribed by them. Attention is also invited to para 4.24 of Handbook of Procedures.

References have been received from the exporters that some licensing authorities are imposing condition of 100% Bank Guarantee (BG) in respect of EPCG licences issued by them.

After consideration of the matter it has been decided that since the LUT/ BG in respect of licences where any duty free import has been allowed is to be executed with the Customs authorities in the manner as may be prescribed by them, the licensing authority should not impose any condition regarding the quantum of Bank Guarantee in respect of EPCG licences issued by them. All the licensing authorities are, therefore, advised that in respect of the quantum of Bank guarantee amount they should only impose a condition on the EPCG Licences issued by them, to the effect that the Bank Guarantee will be executed by the EPCG Licence holder in terms of para 4.19 of the Export and Import Policy, 1997-2002 (RE-2000) with the Customs authorities concerned before clearance of goods in the manner as may be prescribed by the Customs authorities.

This issues with the approval of Director General of Foreign Trade.

Yours faithfully,

(A. K. Sinha)
Dy. Director General of Foreign Trade
for Director General of Foreign Trade

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