Avoid changing norms on surety too often

Exim Matters

 The latest circular no. 74/2003, dated August 21, however, clarifies certain issues but leaves others unresolved.

 The good news is that manufacturer exporters, who are not status holders or do not have export performance or pay excise duty of over Rs 1 crore in the preceding year, need not give bank guarantee up to 100 per cent of the amount on the bond.

 They need to furnish bank guarantee only to the extent of 25 per cent on the bond amount.

 Also, those allowed to furnish surety need not give the same in the form of a bank guarantee or cash security. The surety of a third party, certified as a solvent by a Bank or chartered accountant can also back the bond. Public Sector Undertakings need not furnish surety.

 The CBEC is, however, concerned about frauds. A system has thus been put in place to verify existence of license holders and their supporting manufacturers.

 Also, customs authorities will accept the certificate of export performance issued by central excise authorities.

 Frequent revisions in the norms for execution of bank guarantees show the CBEC in poor light.

 It was in April