EXPORT PROCEDURES IN CENTRAL EXCISE

In relation to Central Excise and customs, following are the concessions/incentives for exports:
(1) Exemption from duty on final products (or refund of duty paid).
(2) Exemption/Refund of excise and customs duties paid on inputs.
INPUTS FREE OF DUTY - Exporting units need raw materials without payment of customs/excise duty,
to enable them to compete with world market. Government has devised following schemes for this
purpose: (a) Special Economic Zones at various places where inputs are allowed to be imported
without payment of duty and finished goods are exported. (b) Export Oriented Undertakings (c)
Permission to avail Cenvat on inputs for other similar products (d) Refund of duty on inputs if
Cenvat credit cannot be used (e) Duty Drawback Scheme. Elaborate procedures have been
prescribed for the above, to ensure that the benefits are not misused.
EXPORTS FREE OF DUTY ON FINISHED PRODUCT - Exports of almost all excise goods except
hides, skin and leather and salt and exports to all countries except to Nepal and Bhutan are exempt
from Central Excise Duties. Exports to Nepal and Bhutan do not qualify for export incentives as
payment is received in Indian rupees. However, export rebate can be obtained if export to Nepal is
made (a) on payment of free convertible foreign exchange or (b) for specified capital goods to
Government of Nepal against global tender, even if payment is received in Indian currency.
EVEN INPUTS RECEIVED BY THE FACTORY CAN BE EXPORTED AS SUCH WITHOUT PAYMENT
OF EXCISE DUTY. IF MANUFACTURER HAD AVAILED CENVAT CREDIT OF DUTY ON SUCH
INPUTS, IT NEED NOT BE REVERSED [THE CENVAT CREDIT CAN BE UTILISED FOR PAYMENT
OF DUTY ON PRODUCTS CLEARED FOR HOME CONSUMPTION].
EXPORT CAN BE MADE WITHOUT PAYMENT OF ALL TYPES OF DUTIES LIKE BASIC,
SPECIAL, ADE(GSI) AND ADE (TTA) - CHAPTER 7 PART I PARA 1.1 OF CBE&CS CE
MANUAL, 2001.
EXPORT PROCEDURES FOR EXCISE - There are basically two procedures for dispatching the goods
out of India. (a) In the first procedure, duties are paid and subsequently rebate (refund) is claimed after
exportation of such goods. Alternatively, rebate is granted of duty paid on inputs used in the exported
final product. (Rule 18 of Central Excise Rules). (b) Another procedure is to export goods under bond
without payment of excise duty. On actual exportation of goods and on presentation of necessary proofs
regarding exports, the bond is released. Regular Exporters can have a running bond for this purpose.
(Rule 19 of Central Excise Rules).
CBE&C has clarified that exports under 'claim of rebate' and 'export under bond'
are at parity, since intention of both the procedures is to make duty incidence
'Nil'. - CBE&C circular No. 283/117/96-CX dated 31-12-1996.

General procedures for exports Export can be under bond without payment of duty or after
payment of duty and then claiming rebate. Some procedures are common. These are discussed first.
DOCUMENTS FOR EXPORT - THE GOODS HAVE TO BE CLEARED FROM FACTORY UNDER
INVOICE. IN ADDITION TO THE INVOICE, A PRESCRIBED FORM ARE-1 HAS TO BE FILLED IN BY
EXPORTER. [EARLIER AR-4].
INVOICE FOR EXPORT Invoice for export can be from same series from which goods for home
consumption are cleared or a separate series of invoice can be maintained for export. General
permission has been given to maintain separate series of Invoice for export purposes. The Invoice
should be prominently marked as FOR EXPORT WITHOUT PAYMENT OF DUTY.
COPIES AND COLOUR OF ARE-1 FORM - The copies of ARE-1 form should have following colour : (i)
Original : White. (ii) Duplicate: Buff (iii) Triplicate: Pink (IV) Quadruplicate: Green. Assessee can
optionally have quintuplicate form which can be used for claiming other export incentives. - - It is
sufficient if copies of ARE-1 (that time AR-4) contain a colour band on the top or right hand corner as
per the aforesaid colour scheme. Thus, it is possible to take out copies on plain/computer stationery
and affix colour band.
The 'Assessable Value' as per section 4 of CEA should be mentioned on ARE-1 and the Invoice. In view
of new section 4, 'Transaction Value' is Assessable Value. Hence, strictly legally, the value can be
equal to, less or more than FOB Value. [Practically, FOB Value is usually accepted as value]. The
running bond account should be debited by value as shown in the Invoice and ARE-1.
HANDLING OF ARE-1 FORMS - If export consignment is cleared under supervision of Excise
Superintendent or Inspector, the excise officer will make endorsement on all copies of ARE-1. He will
return original and duplicate copies to the exporter-assessee. He will send triplicate copy of ARE-1
directly to officer to whom bond was executed or letter of undertaking was given. This copy can also be
handed over to the exporter in a tamper proof sealed cover to be submitted to the authority.
Quadruplicate copy will be retained by excise officer. Exporter can have optionally quintuplicate copy
which will be dealt with in same manner as the original copy.
At the time of export, original, duplicate and quintuplicate (optional) will be submitted to customs officer,
along with the goods. These will be examined and then export will be allowed. He will make
endorsement of export on all copies of ARE-1. He will cite shipping bill number and date and other
particulars of export on ARE-1. Original and quintuplicate (optional) will be returned to exporter. The
duplicate copy will be sent directly by customs officer to the officer with whom bond was executed or to
whom letter of undertaking was given. The duplicate copy can be sent either by post or by handing over
to the exporter in tamper proof sealed cover.
Thus, the officer where bond is executed will get two copies one from Superintendent of
Central Excise when goods are cleared from factory and other from customs officer after export.
This will enable him to keep track to ensure that all goods cleared from factory or warehouse
without payment of duty are actually exported.
If the goods are sent under self sealing and self certification, the export goods along with original,
duplicate and quintuplicate (optional) copies of ARE-1 will be sent after self sealing and self certification
to the port for export. [There will be no endorsement of excise officer on these copies]. Triplicate and
quadruplicate copies will be submitted to Superintendent or Inspector of Central Excise within 24 hours
after clearance from the factory. The excise officer will make endorsement on both the copies and then
hand over triplicate copy to exporter in sealed envelope for submitting the same to authority to whom
bond or letter of undertaking was given. Further procedure at the port will be same as above.

In case of export after payment of duty, under claim of rebate, the basic procedure is same as above,
except that the triplicate copy (by excise officer) and duplicate copy (by customs officer) will be sent to
the officer to whom rebate claim is filed. If claim of rebate is by electronic submission, these copies will
be sent to excise rebate audit section at the place of export.
SIGNING OF ARE-1 FORM The ARE-1 form is required to be signed by manufacturer. If the export is
under bond executed by Merchant Exporter, the form should be signed by both manufacturer as well as
Merchant Exporter.
Sealing of goods for export - Goods can be cleared from factory duly sealed. Goods can be cleared for
export without sealing also. Self sealing and self certification is also permissible.
CLEARANCE WITH SEAL OF CENTRAL EXCISE - In this method, export goods are examined before
despatch by Central Excise Officers. In such case, the goods are not examined by Customs Officers at
the port or airport of shipment, unless seals are found to be tampered or if there is specific information.
The CE officer will verify the goods, DSA and documents. If these are in order, he will seal the
consignment. Sealing can be done of each package or container. Individual packages may be sealed
by using wire and lead seals. An all side container may be sealed by using one time lock / bottled seals.
The officer will then make necessary endorsement on ARE-1.
FACTORY STUFFING OF CONTAINERS - Now most of the exports are through containers. Goods can
be stuffed in containers at inland container depots (ICDs) situated in various places. Stuffing of
containers inside the factory, under supervision of central excise officers is also permissible. Preshipment quality inspection, where required, should be carried out before stuffing. After the inspection
by Central Excise Inspector and Superintendent, samples will be taken out as per guidelines. Then, the
container is sealed.
The Superintendent of Central Excise shall send an examination report of factory sealed
packages/containers in form Annexure C1 as given in CBE&C circular No. 6/2002-Cus dated 23-12002. It has been reiterated that the examination report must accompany the export goods to
port/airport of export. CBE&C circular No. 630/21/2002-CX dated 27-3-2002.
After such sealing, the containers are not normally opened at the port, unless the seal is found to be
tampered with or there is specific intelligence, in which case, permission of AC/DC is required before
checking.
CONSOLIDATION OF CARGO OF DIFFERENT EXPORTERS Often export goods of more than one
manufacturers is required to be consolidated. For this, export goods of one factory have to be taken to
another factory. This is permissible if done under supervision of excise authorities. - Chapter 7 Part V
Para 4.1 and chapter 8 part IV para 3 of CBE&Cs CE Manual, 2001.
CLEARANCE WITH SELF-SEALING -. Any exporter who is a manufacturer or owner of warehouse can
clear export consignment with self sealing and self certification. Such sealing should be done under
supervision of owner, working partner, managing director or Company Secretary or a person duly
authorised by such owner, working partner or Board of Directors of the company.
He should certify on all copies of ARE-1 that goods have been sealed in his presence. If such
certification is not done, the packages may be opened at port for detailed customs examination. CCE,
Rajkot TN 91/2001 dated 25.10.2001.
At the gateway port, examination will be carried out as per norms. It is clarified that self-certification
and self-sealing is permissible, but these will be examined at the port of export on the basis of

examination norms prescribed under circular No. 6/2002-cus dated 23-1-2002. MF(DR) circular No.
31/2002-Cus dated 7-6-2002. - - The permission for factory stuffing will be given on permanent basis
and need not be renewed every 6 months. CBE&C circular No. 60/2001-Cus dated 1.11.2001.
SELF SEALING EVEN IF EXPORT THROUGH MERCHANT EXPORTER Self sealing is permitted
even when goods are exported through merchant exporter. The sealing will be done by manufacturer
following the same procedure as above.
Removal under bond without payment of duty The basic procedures for removal of goods without
payment of duty under rule 19 are (a) Execute a bond (in case of merchant exporter) or issue letter of
undertaking (in case of manufacturer exporter) (b) Clear goods from factory under bond without
payment of duty (c) Export the goods and obtain certificate of export on ARE-1 from customs
authorities. Submit the proof of export and get self-credit in Running Bond Account. - - The procedures
are prescribed in Notification No. 42/2001-CE(NT) dated 26.6.2001.
ALL DUTIES EXEMPT INCLUDING NCCD CBE&C has clarified that National Calamity Contingent
Duty (NCCD) is also exempt when goods are exported under bond. It is policy of Government to grant
relief from domestic taxes on goods which are exported. CBEC circular No. 641/32/2002-CX dated
26-6-2002.
BOND BY MERCHANT EXPORTER Merchant exporter is required to execute a bond. The bond can
be executed by merchant-exporter in form B-1. Merchant exporter registered with recognised Export
Promotion Council and Status Holders (Export House, Trading Hose etc.) do not have to furnish any
security/surety while executing bond, unless they have come to adverse notice of department.
CBE&C circular No. 613/4/2001-CX dated 31-1-2002, confirmed in CBE&C circular No. 711/27/2003CX dated 30-4-2003. - - - If bond is executed by merchant exporter, he will obtain certificates in form
CT-1 from Superintendent of Central Excise.
The exporter shall ensure that debit in bond does not exceed the credit available in the bond any time.
Goods can be cleared by manufacturer on the strength of this certificate, without payment of duty.
Forms of bond, letter of undertaking and CT-1 certificate have been given in Notification No. 42/2001CE(NT). If export is through merchant exporter, ARE-1 form should be signed both by manufacturer as
well as merchant exporter.
TYPES OF BOND FOR EXPORT - The exporter has to execute B-1 bond. The bond can be with surety
or security or only guarantee. The bond should be at least equal to the duty chargeable on the goods,
with such surety or security as the excise officer may approve. [For instructions about security / surety
etc. see under Bonds]
WHERE BOND CAN BE EXECUTED The bond can be executed with any one of the following (a)
Maritime Commissioners (b) Asstt. / Dy Commissioner under whose jurisdiction the factory is situated.
(c) Assistant / Deputy Commissioner (Export) as officer authorised by Board.
The ARE-1 should clearly indicate the full postal address of authority before whom the bond is
executed, so that documents are submitted / transmitted to him for proof of export.
PROCEDURE OF CT-1 CERTIFICATE The merchant exporter can obtain CT-1 forms in lot of 25. Part
I of the form is certified by Superintendent of CE regarding bond executed. It is not necessary to obtain
CT-1 for each consignment separately. CT-1 forms in lot of 25 should be issued to merchant exporter
covering period of one to three months, depending on his track record. The merchant exporter shall
send CT-1 form to the manufacturer from whom goods are to be procured for export. Before sending
CT-1, the merchant exporter should debit estimated amount of duty liability. This amount is required to
be specified in part II form CT-1. On the basis of this CT-1, the manufacturer can clear goods for export
without payment of duty by making suitable entries in part II of CT-1. This provisional debit will be

converted into actual debit after the goods are cleared from the place of manufacturer. - Chapter 7 Part
II Para 6.2 and 6.2-1 of CBE&Cs CE Manual, 2001.
LETTER OF UNDERTAKING - The manufacturer exporter can furnish a letter of undertaking (LUT) in
form UT-1 as given in Annexure II of Notification No. 42/2001-CE(NT). The manufacturer exporter need
not execute a bond. The LUT once given is valid for 12 calendar months. It is not necessary to submit
LUT for each consignment. Though manufacturer exporter is not executing bond, submission of proof of
export is required. If the manufacturer exporter repeatedly fails to comply with conditions of LUT, he can
be asked to furnish B-1 bond with security / surety. The LUT will not be discharged unless proof of
export is submitted or duty is paid upon deficiency with interest. - Chapter 7 Part II Paras 3.3 and 3.5 of
CBE&Cs CE Manual, 2001.
PROCEDURE AT THE TIME OF EXPORT - THE EXPORTER OR HIS AGENT WILL SUBMIT COPIES
OF ARE-1 FORM TO CUSTOMS OFFICER AT THE TIME OF EXPORT. THESE WILL BE
ENDORSED BY HIM CERTIFYING EXPORT OF GOODS. THIS WILL SERVICE AS PROOF OF
EXPORT.
RUNNING BOND ACCOUNT The merchant exporter will maintain a Running Bond Account (RBA).
Once bond is executed, the RBA will be credited by the bond amount i.e. the amount for which bond is
executed.
A manufacturer exporter does not execute a bond and hence need not maintain Running Bond Account.
However, he should maintain similar record and submit proof of export following same procedure.
EXPORT WITHIN 6 MONTHS - Goods must be exported within 6 months from date of removal from the
factory, unless extension is granted. Extension can be granted by AC / DC / Maritime commissioner. Chapter 7 Part II Para 2.2(i) of CBE&Cs CE Manual, 2001.
PROOF OF EXPORT The exporter will get copy of ARE-1 with certificate from customs authorities
certifying export of goods. The duplicate copy of ARE-1 will be obtained in sealed envelope to be
submitted to the authority with whom the bond is executed. The exporter is required to submit a
statement at least once a month to the authority with whom bond is executed. If bond was executed
with jurisdictional AC / DC, the statement should be submitted to him through range office. The
statement will be in form as given in Annexure 19 of CBE&Cs CE Manual, 2001. Assessee should
submit duly certified copy of ARE-1, self attested copy of Bill of Lading and self attested copy of
Shipping Bill (export promotion copy). This statement will be immediately acknowledged by office of
bond accepting authority. On submission of the statement, the assessee can take credit in his running
bond account. It is not necessary to wait for their approval or permission. The excise office will verify the
correctness of statement and match ARE-1 sullied by range office with triplicate copy which is already
with them. If goods are not exported within 6 months or extended period permitted, action for recovery
should be initiated. - Chapter 7 Part II Paras 13.1 to 13.6 of CBE&Cs CE Manual, 2001.
CONTROL OF BOND - Control over bond is exercised by the authority before whom the bond is
executed and all proofs of export have to be submitted to that authority. Any demand for duty in case
goods are not exported will have to be raised by authority before whom the bond is executed.
Bombay Dyeing and Mfg Co In re 2001(134) ELT 591 = 45 RLT 860 (GOI) quoted and followed in
Supreme Industries Ltd. In re 2002(144) ELT 729 (GOI).
CHANGE OF DESTINATION OR BUYER If exporter intends to change destination or buyer or port /
place of export after goods were cleared for export, he can do so. He should submit details to authority
with whom bond was executed and make necessary changes in ARE-1 and Invoices. Alternatively, he
can cancel previous invoice and ARE-1 and prepare fresh invoice and ARE-1 with permission and
authentication by bond / LUT accepting authorities. The serial number and date of initial documents are
endorsed on the fresh documents. - Chapter 7 Part V Para 1.2 of CBE&Cs CE Manual, 2001.

EXPORT UNDER CLAIM OF REBATE - THE REBATE OF EXCISE DUTY PAID ON EXPORTED
GOODS IS GRANTED UNDER RULE 18. THE PROCEDURE HAS BEEN PRESCRIBED IN
NOTIFICATION NO 40/2001-CE(NT) DATED 26.6.2001, SUPPLEMENTED IN CHAPTER 8 PART I OF
CBE&CS CE MANUAL, 2001.
The rebate is available on all exports except exports to Nepal and Bhutan. In case of Nepal, the rebate
is granted to Government of Nepal. In case of export to Nepal, Invoice in prescribed form has to be
prepared and prescribed procedure has to be followed.
CLEARANCE WITHOUT BOND, BUT UNDER FORM ARE-1 - Export under claim for rebate should be
made under ARE-1 form. Since the goods are being cleared after full payment of duty, execution of any
bond is not necessary. Copies of ARE-1 form and its distribution is same as that for export under bond.
Export can be under seal of Central Excise or without seal. Procedure for export and distribution of
copies of ARE-1 after export is also identical.
REBATE CLAIM - The rebate claim can be filed with Maritime Commissioner (if there is one for the
port/airport/post). As per section 11B of CEA, claim must be filed within one year from date of export.
Rebate claim can also be lodged with jurisdictional Assistant / Deputy Commissioner of Central Excise.
Authorities are expected to point out deficiencies in application within 15 days. Rebate claim below Rs
500 is not acceptable. No form has been prescribed for submitting application for rebate. Application on
letter head is sufficient. - - Supplementary Rebate Claim can also be filed, but that claim also must be
within time limit. - Chapter 8 Part IV of CBE&Cs CE Manual, 2001.
DUTY CAN BE PAID BY CASH OR CENVAT CREDIT - It is not necessary that rebate can be obtained
only if duty is paid by cash. Duty on final products can be paid either through cash or PLA or Cenvat
credit ( that time RG23A part II or RG23C part II) - CBE&C Circular No 262/96/96-CX 6 dated
6.11.1996.
RESTRICTIONS ON GRANT OF REBATE - The rebate will not be granted if (i) The market price of
goods exported is less than the amount of rebate. (ii) The amount of rebate of duty is less than Rs. 500.
WHEN REBATE PROCEDURE MAY BE USEFUL - It is naturally advisable not to pay duty, than to pay
it and then wait for refund from Government. However, in following situations, it may be beneficial to pay
duty and claim rebate If assessee has balance of duty in Capital Goods Cenvat Credit Account, it will be
advisable to pay duty and claim refund, as balance in Capital goods Cenvat Credit
Account is never refundable. This may happen when duty paid on capital goods is heavy
and assessee may not be able to utilise the credit.
An SSI unit may pay 60% duty and claim rebate, as getting refund of Cenvat credit of
inputs is not an easy procedure. Moreover, he is not entitled to get refund of duty paid
on capital goods.
When duty paid goods are proposed to be exported.
DUTIES ELIGIBLE FOR REBATE Following duties are eligible for rebate (a) Basic Duty paid
under Central Excise Act (b) Special excise duty (c) ADE (GSI) and (d) ADE (TTA).
Explanation I to Notification No. 40/2001-CE(NT).
Rebate of duty on inputs used in manufacture of export goods - Some times, final goods may be
exempt from duty. In such case, the exporter can claim rebate of duty paid on excisable materials used
in manufacture of export goods, except in case of export to Nepal and Bhutan. Provision for granting
such rebate is made in rule 18 of CE Rules.

Input output ratio has to be informed to AC/DC. Goods can be procured at concessional rate of duty by
following procedure prescribed under Central Excise (Removal of Goods at concessional rate of duty
for manufacture of excisable goods), Rules. Inputs can be sent outside for job work and return. Export
is required to be made under form ARE-2. After export, rebate claim should be filed. Procedure and
form has been specified in Notification No. 41/2001-CE(NT) dated 26.6.2001.
Inputs free of Central Excise duty - A manufacturer of export goods can get his inputs without
payment of Central Excise Duty. Input output ratio should be informed to Assistant / Deputy
Commissioner. Goods can be procured without payment of duty by following procedure prescribed
under Central Excise (Removal of Goods at concessional rate of duty for manufacture of excisable
goods), Rules. Inputs received can be sent outside for job work and return. Final product has to be
exported. Clearance for export is required to be made under form ARE-2. See Notification No. 43/2001CE(NT) and Chapter 7 Part VI of CBE&Cs CE Manual, 2001 for detailed procedure.
Exports to Nepal/Bhutan - India has Rupee trade with Nepal and Bhutan and hence export incentives
are not available if goods are exported to Nepal/Bhutan. The clearance should be on normal Invoice on
payment of duty. Invoice should mention For Exports to Nepal/Bhutan (as the case may be) and make
declaration in prescribed form. Extra copy of Invoice should be made, which is to be used at IndiaNepal border. After the goods are exported to Nepal, rebate is given to Government of Nepal (and not to
the exporter). There is no rebate system for export to Bhutan.
Detailed procedure has been prescribed in para 4 of Notification No. 40/2001-CE-NT dated 26.6.2001
supplemented in Chapter 8 Part II of CBE&Cs CE Manual, 2001.
Invoice in prescribed form has to be prepared in quadruplicate. This will be endorsed by excise officer.
Its copies should be submitted at land customs station at Nepal border. Then, the goods along with
Invoice will be handed over to Nepalese customs officer. The Nepalese customs Officer will have to
endorse details of effective rate of duty if goods are imported from country other than India and the
amount of import duty assessed. After his endorsement on the Invoice, the duplicate copy will be sent to
Indian customs office who will then forward it to Director General of Inspection, Customs & Central
Excise (Nepal Refund Wing), New Delhi. After verification, the rebate will be paid to His Majestys
Government of Nepal (and not to the exporter).
Exports to Nepal / Bhutan without payment of duty - Export to Nepal/Bhutan are allowed under bond
without payment of duty if (a) payment is to be received in convertible foreign exchange or (b) Export of
specified capital goods exported to Nepal against global tender issued by Government of Nepal or
export against some specified projects. The procedure and conditions are given in Notification No.
45/2001-CE(NT) dated 26.6.2001. It is further elaborated in Chapter 7 Part IV of CBE&Cs CE Manual,
2001.
EXPORT INCENTIVES THROUGH CENVAT - CENVAT CREDIT AVAILED ON INPUTS USED FOR
EXPORTED GOODS CAN BE USED FOR PAYMENT OF DUTY ON OTHER SIMILAR PRODUCTS
CLEARED FOR HOME CONSUMPTION (I.E. WITHIN INDIA). IF IT CANNOT BE USED, REFUND
CAN BE OBTAINED. THIS ASPECT HAS BEEN DISCUSSED UNDER CENVAT.
CERTIFICATE REGARDING NON-AVAILMENT OF CENVAT ON INPUTS IF DUTY DRAWBACK TO
BE CLAIMED (A) IF THE MANUFACTURER-EXPORTER OR SUPPORTING MANUFACTURER OF
MERCHANT EXPORTER IS REGISTERED WITH CENTRAL EXCISE, FACT OF NON-AVAILMENT OF
CENVAT CREDIT CAN BE VERIFIED FROM ARE-1 FORM FURNISHED (B) IF THE
MANUFACTURER-EXPORTER OR SUPPORTING MANUFACTURER OF MERCHANT EXPORTER
IS NOT REGISTERED WITH CENTRAL EXCISE, THEY HAVE TO SUBMIT SELF-DECLARATION
ABOUT NON-AVAILMENT OF CENVAT. MF(DR) CIRCULAR NO. 8/2003-CUS DATED 17-2-2003.

The drawback rate consists of two components - customs portion (consisting of basic customs duty,
surcharge and SAD) and excise portion (consisting of basic excise duty, special excise duty and CVD).
The Cenvat credit is only in respect of central excise. Hence, it has been clarified that even if Cenvat
credit has been availed, duty drawback in respect of customs portion will be available.
Export procedures by exempt SSI units and manufacturers of readymade garments - Small Scale
Industries and manufacturers of readymade garments which are exempted from Central Excise Duty on
account of their turnover below prescribe limit, do not have to follow ARE-1 and bond procedure.
However, they have to follow simplified procedure as specified in Chapter 7 Part III Paras 1 to 4 of
CBE&Cs CE Manual, 2001. [The simplified procedure is really quite complicated].
The simplified procedure is applicable to exporters of readymade garments, i.e. they can clear under
their own documents and ARE-1 procedure is not required. CBE&C circular No. 705/21/2003-CX
dated 8-4-2003.
(a) Clearance should be under own invoice of the SSI unit. The SSI unit need not have separate series
of Invoice for export (b) The Invoice should be machine serial numbered (or by franking machine)
starting from 1 from 1st April every year (c) Invoice should be pre-authenticated by the SSI unit himself
(d) Invoice should indicate name and address of buyer, destination, description, value, progressive total
of total value of excisable goods cleared for home consumption since beginning of financial year,
transport vehicle number, date and time of removal of goods from his factory. (e) If the export is direct,
the SSI unit should mention "FOR EXPORT" on top and his own Export-Import Code Number, if any. If
export is through merchant exporter, manufacturer should mention at top of Invoice - 'EXPORT
THROUGH MERCHANT EXPORTER'. Export Import code No. of such merchant exporter should be
mentioned in such case.
The SSI unit should maintain a simple record of production and clearance. Entries in production record
should be made at close of the day or beginning of next day. No entry is necessary on the days when
there is no production. The SSI unit should file a quarterly statement to jurisdictional Range
Superintendent in prescribed form given in Annexure 20 of CE Manual, 2001.
Bringing goods for repairs, re-making etc.
It is often necessary to bring the final products for various purposes like refining, repairs, re-making,
reconditioning, testing etc. Rule 16 of Central Excise Rules make provisions in this regard.
Procedure for receipt and clearance - As per the provisions, if the goods are brought for being remade, refined, re-conditioned or for any other reason, assessee should take Cenvat credit of duty paid
as if such goods are received as inputs under Cenvat Credit Rules.
Goods can be brought for any other reason. Thus, if goods are returned to assessee by buyer as they
were in excess or if buyer refuses to accept the goods, the goods can be brought back. There is no time
limit for bringing goods for repairs and goods can be brought any time.
GOODS MANUFACTURED BY OTHERS CAN ALSO BE BROUGHT FOR REPAIRS ETC. - Rule 16
uses the words, brought to the factory. Thus, the goods brought for repairs/reconditioning /refining
need not have been manufactured by assessee. Goods manufactured by any other person can be
brought in the factory for repairs etc. However, if such goods brought are not accompanied by duty
paying document, permission from Commissioner under rule 16(3) will be required.
DOCUMENT FOR AVAILING CENVAT CREDIT - If the person sending the goods sends goods under
his invoice after payment of duty, Cenvat credit can be taken on the basis of that invoice. However,
such credit can be taken even on the basis of own Invoice which was raised when the goods were

originally cleared. In Gujarat Containers Ltd. v. CCE 2000(125) ELT 495 (CEGAT), it has been held that
assessee can take Cenvat credit on basis of his own invoice on returned goods.
In the opinion of author, Cenvat credit can be availed even on the basis of triplicate copy of invoice
which is in record of assessee. The reason for the view is that triplicate copy is also an invoice issued
under Central Excise Rules. [However, a Xerox copy is not an invoice issued under Central Excise
Rules].
REMOVAL AFTER REPAIRS / RE-MAKING ETC. - At the time of clearance, duty should be paid under
Invoice as follows - (a) If the process carried out on the goods brought amounts to manufacture,
assessee should pay duty at the rate applicable on date of removal. Value shall be determined under
section 3(2), 4 or 4A as applicable. (b) If the process does not amount to manufacture, an amount
equal to Cenvat credit taken at the time of receipt of final product is payable. The buyer can avail
Cenvat credit of this amount. [rule 16(2)]. - - The Cenvat credit available with assessee can be utilised
for payment of duty payable under rule 16(1) or amount payable under rule 16(2). [Cenvat Credit Rule
3(3)(d)].
GOODS CAN BE SENT TO ANYONE AFTER REPAIRS - Note that after repairs, reconditioning etc.,
goods can be sent to any one. There is no requirement that goods must be sent only to the person from
whom these were received.
GOODS BROUGHT THEMSELVES MUST BE REPROCESSED Note that the goods brought must
themselves be reprocessed and then sent. If the goods brought are scrapped and fresh goods are sent,
it is new manufacture. Fresh duty is payable and Cenvat credit of goods returned cannot be availed.
CENVAT CREDIT OF AMOUNT The buyer can avail Cenvat credit of amount paid under rule 16(2)
Explanation to Rule 16(2).
If above procedure cannot be followed - At times, it may not be possible to follow aforesaid
procedure. e.g. (a) the Invoice on which original goods were cleared may not be available, or (b) the
invoice may be for full machine, out of which only some components might have been brought back for
repairs / reconditioning.
There might be any other reason too. If there is any difficulty in following the procedure, permission has
to be obtained from Commissioner for bringing the goods for repairs, reconditioning etc.
PROCEDURE PRESCRIBED The assessee should obtain prior permission in obtaining such goods.
If obtaining prior permission is not possible, intimation about receipt of goods should be given to Range
Superintendent within 24 hours and then apply for permission through Range Superintendent in
triplicate, indicating reasons for not applying in advance. Proper records should be maintained. The
goods should be re-cleared within six months or the extended period as may be permitted by
Commissioner. - CCE Pune-I TN 66/2001 dated 5.10.2001 * CCE, Ahmedabad II TN 20/2003 dated 62-2003 [152 ELT T46]

Bonds under Central Excise

The word bond is used quite often in excise and customs e.g. manufacture under bond, clearance
under bond, export under bond etc. Bond means an undertaking given by the assessee to Government
for due fulfilment of certain obligation e.g. export under bond means a bond that goods cleared without
payment of duty from factory for export will be exported and if not, appropriate duty will be paid.
Bond is an instrument by which the obligation to pay money is created expressly. It is also a legal
agreement whereby a person undertakes to do or not to do anything subject to conditions stipulated in

the agreement. Primary purpose of the bond is to secure due compliance with the rules and procedures
laid down under CE Law. A bond is a collateral security, which the department is securing to ensure
payment of appropriate duty, in addition to the statutory provisions available. - Chapter 14 Para 1.1 of
CBE&Cs CE Manual, 2001.
NATURE OF BOND - Bond is an agreement where a person executing a bond undertakes to fulfil
certain conditions as per agreement. Bond does not need registration unless it relates to immovable
property. Primary purpose of bond under excise is to secure due compliance with rules and procedures
as per Act and Rules and to provide for payments to be made if the conditions are not complied with.
Bond is a supplementary security which the Central Excise department can take in addition to
provisions of duty payment. Thus, duty can be recovered under law even if bond is not executed or
bond amount is not adequate.
Execution of Bonds - Assessee has to execute bond under various provisions of Act. Form of bond
has been standardised by excise department and numbers have been given for identification. Bonds
should be executed on a non-judicial stamp paper. If adhesive stamps are affixed to any instrument
chargeable to duty, the stamps shall be cancelled so that it cannot be used again. Such cancellation
may be done by drawing two lines across or by signing on the stamp or in any other effectual manner [If
not cancelled, the instrument is treated as unstamped].- - Amount of stamp depends on the State in
which it is executed. Indian Stamp Act authorises each State to prescribe stamp duty chargeable on
various documents and hence it varies from State to State.
Bond should be executed in favour of and in name of President of India.
SIGNING OF BOND - If the assessee is a Company, bond can be signed by a person authorised by the
Board of Directors by a resolution. In case of registered partnership firm, any partner can sign on behalf
of the firm.
ACCEPTANCE OF BOND As per earlier instructions, bond should be executed before Superintendent
of Central Excise or officer above that rank or Notary public or Magistrate. Bond should be accepted by
Assistant/Deputy Commissioner of CE. [Presumably, the instructions are still valid].
RELEASE OF BOND Bond will be preserved by excise officers till all the obligations are not
discharged. After discharge of obligation, the bond can be got released if the terms of bond are fulfilled.
Securities offered can be released and then encashed by guarantor. He can also get interest accrued
on such securities.
Forms of Bonds - Bonds are of different nature and for various purposes. Forms of bond etc. have
been standardised. The main bonds are as follows :
B-1 GENERAL BOND - The bond is for due dispatch of excisable goods removed for export without
payment of duty. The bond can be with surety or security. New form of B-1 bond has been given in
Annexure-I of Notification No. 42/2001-CE(NT) dated 26.6.2001.
An exporter-manufacturer can execute simple Letter of Undertaking (LOU) in form UT-1 without
executing any bond. The UT-1 form is given in Annexure-II of Notification No. 42/2001-CE(NT) dated
26.6.2001. It is clarified that if export is through merchant exporter, execution of bond is necessary.
Export on basis of LUT of the manufacturer is not permissible in such case. - Chapter 7 Part II Para 5.4
of CBE&Cs CE Manual, 2001.
B-2 BOND - This is a General Bond for provisional assessment. It can be with security or surety.

B-4 BOND - The bond is for provisional release of seized goods. It can be only security bond. Bond
should be for whole value of seized goods. Amount of security will be as determined by adjudicating
authority taking into consideration of gravity of offence (normally 25% ). [Earlier B-11 bond]. [The name
B-4 has been mentioned in Chapter 14 para 2.2 of CE Manual, 2001, but actually, no form has been
prescribed. Chapter 17 para 3.2 states that old form under previous rules may be used. This para
mentioned B-8 bond. Later it is clarified that it should be read as B-11 CBE&C circular No.
686/2/2003-CX dated 2-1-2003.].
B-8 BOND - This bond is for obtaining goods at Nil or concessional rate of duty under Central Excise
(Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules. A bond is
required to be executed under these rules. Since no form of bond has been prescribed, earlier form B8, which was prescribed under earlier Chapter X procedure may be used after making necessary
changes.
B-11 BOND This is not prescribed under new rules. However, it has been clarified that the old B-11
form should be used to clear seized goods on provisional basis. CBE&C circular No. 686/2/2003-CX
dated 2-1-2003. [Then what is B-4 bond which is mentioned but not printed anywhere ?] or
departmental instructions, read under B-4.
B-17 BOND - This is a general surety / security bond to be executed by EOU, EHTP/ STP units. It is for
provisional assessment of goods for export of goods to foreign countries without payment of duty and
for accountal / disposal of excisable goods procured without payment of duty.
Types of Bond - Bonds are either surety or security type. Surety bonds are covered under provisions
of Contract Act. Under Surety Bond, another person stands as surety to guarantee the performance on
the part of obligor. Surety should be for full value of bond and the person standing as surety should be
solvent to the extent of bond amount. Under the Contract Act, the liability of surety is co-extensive with
that of the principal debtor and hence the department is at liberty to enforce the recovery of dues either
from the obligor or from the surety. - Chapter 14 Paras 2.1 of CBE&Cs CE Manual, 2001.
Security Bond - Security Bonds are executed where security is offered instead of guarantee. Security
can be in nature of Post Office saving deposit, National Saving Certificate or similar realisable
Government papers of Central or State Government. Bank deposit receipt of large scheduled banks is
also acceptable. Interest on such securities will accrue to person making such deposit. Security can
also be furnished by cash deposit, but no interest will be receivable on such cash deposit (and hence it
is advisable to provide security by way of NSC, Bank FD etc.). Cash should be deposited by way of TR6 challan mentioning proper account head and other details. - Chapter 14 Para 7.1 of CBE&Cs CE
Manual, 2001.
Bank Guarantee as surety/security - Form of bank guarantee has been prescribed, both for
scheduled and un-scheduled banks. Bank guarantee form when Court orders release of goods against
bank guarantee has also been prescribed.
LEGAL POSITION OF BANK GUARANTEE - The bank guarantee is given is respect of some contract.
Such contract is called 'underlying contract', e.g. in case of excise bond, the bond executed by
assessee is the 'underlying contract'. Supreme Court has consistently held that bank guarantee is
independent of the underlying contract. The bank must honour the bank guarantee except in case of
fraud or irretrievable injustice. The fraud should be of beneficiary and not of some one else. If Banks do
not honour their guarantees, trust in commerce would be irreparably damaged.
Further, even if bank guarantee specifies a limited period for enforcement of bank guarantee (e.g. one
year etc.). The bank guarantee can be enforced any time during the period of limitation, which is usually
three years in most of the cases.

One sided conditions in Bond - Many of the conditions in the standard form of bond are totally one
sided, i.e. favouring revenue. Some times, the conditions are even against the provisions of law. The
assessee has to sign the bond as per standard format as he has no option. These are dotted line
contracts or contracts of adhesion. Normally, standard forms of contract are binding on the person even
if the person has not read them. However, if the contracting parties do not have equal bargaining power,
these are often one sided. Such contracts are Adhesion Contracts. These are standardised form of
contract form offered on essentially take it or leave it basis without affording consumer realistic
opportunity to bargain. Court can grant relief if clauses in such contract are unreasonable and
unconscionable. The aggrieved person can approach Courts for relief in case of such one sided
contracts [see discussions and case law under General Principles of Law].

Receipt of Goods at concessional rate of duty

Some users of excisable goods can obtain goods at nil or lower rate of duty, subject to certain
conditions. If they are entitled to obtain excisable goods at nil or concessional rate of duty, they are
required to follow prescribed procedure. The provisions are contained in Central Excise (Removal of
Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.
PROCEDURE PRESCRIBED IN SOME EXEMPTION NOTIFICATIONS - Some exemption notifications
prescribe that procedure as contained in Central Excise (Removal of Goods at Concessional Rate of
Duty for Manufacture of Excisable Goods) Rules shall be followed. In such cases, the exemption will be
available only if the required procedure is followed.
PROCEDURE FOR AVAILING THE BENEFIT - THE MANUFACTURER INTENDING TO AVAIL THE
BENEFIT OF EXEMPTION NOTIFICATION ISSUED U/S 5A SHALL APPLY TO ASSISTANT / DEPUTY
COMMISSIONER IN QUADRUPLICATE IN FORM SPECIFIED AT ANNEXURE I TO CENTRAL
EXCISE (REMOVAL OF GOODS AT CONCESSIONAL RATE OF DUTY FOR MANUFACTURE OF
EXCISABLE GOODS) RULES. SEPARATE APPLICATION SHALL BE FILED FOR EACH SUPPLIER.
BOND TO BE EXECUTED - A bond in prescribed form should be executed with surety or security. Bond
amount will be prescribed by Assistant / Deputy Commissioner, considering duty liability estimated to be
involved at any given time. Form of new bond has not been prescribed. Hence, earlier B-8 bond form
may be used with suitable modifications. [See under Bonds for instructions about B-8 bond].
CERTIFICATE BY AC/DC - The AC / DC will countersign the application submitted, certifying that
necessary bond has been executed.
SUBSEQUENT PROCEDURE - Copy of this application duly signed by AC/DC will be sent to suppliermanufacturer. [The earlier procedure of CT-2 certificate has been discontinued]. The supplier can clear
goods on receipt of the certificate duly countersigned by AC / DC. The removal details will be recorded
on the application by the supplier-manufacturer.
ACCOUNTS AFTER RECEIPT OF GOODS - Goods obtained by the manufacture at concessional rate
of duty should be properly accounted for and should be used only for the purpose for which they are
brought. Simple account indicating quantity and value of subject goods, quantity consumed for intended
purpose and quantity remaining in stock shall be maintained invoice wise.
CLEARANCE TO ANOTHER UNIT Goods received without payment of duty can be sent to another
eligible unit/manufacturer under the same procedure. However, the another unit/manufacturer should be
registered under rule 3 of Central Excise (Removal of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001. [CBE&C circular No. 617/8/2002-CX dated 6-2-2002].

RETURN OF GOODS TO SUPPLIER It may happen that goods received under the rules without
payment of duty, may be found to be defective, damaged, unsuitable or surplus to the needs of
manufacturer. In such case, the manufacturer can return the goods to supplier, i.e. original
manufacturer. The original manufacturer will add this to his non-duty paid stock (in Daily Stock Account)
and then deal with it. [Proviso to rule 6 of Removal of Goods at Concessional Rate of Duty Rules].
MONTHLY RETURN - A monthly return in prescribed form should be submitted by 10th of following
month. Form of monthly return has been prescribed in Annexure II to Central Excise (Removal of Goods
at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules.
Goods received at concessional rate not used for intended purpose - If the material received at
concessional rate of duty is not used for intended purpose, manufacturer is liable to pay differential duty
along with interest.
DUTY PAYABLE IF GOODS LOST OR DESTROYED DURING TRANSPORT - It has been clarified that
if the goods are lost or destroyed by natural causes or by unavoidable accident during transport from
place of procurement to the manufacturers premises or from place of manufacturer to the place of
procurer (if goods are returned), during handling or storage in the manufacturers premises, it will not be
treated as used for intended purpose. In other words, in such case, differential duty and interest will
become payable. - Explanation to rule 6.
INTENTION TO USE IS NOT ENOUGH - ACTUAL USE NECESSARY - Goods should be used for
intended purpose. Mere intention to use is not sufficient. If the goods are not used for intended purpose,
duty is payable by the consignee along with interest. Provisions of sections 11A and 11AB shall apply.
Thus, demand has to be raised within period prescribed u/s 11A.
LIABILITY IS OF CONSIGNEE - The bond is executed by consignee. He has to give undertaking to pay
differential duty. Thus, the duty liability is of the consignee.
No Cenvat to buyer in respect of goods received under the procedure - Since goods are cleared
by supplier-manufacturer without payment of duty, the buyer will not be entitled to any Cenvat credit. [Board Circular No. 33/33/94-CX-8 dated 4-5-1994 in respect of earlier Chapter X].
Moreover, supplier will have to pay 8% amount of goods are removed at Nil rate of duty. This amount
cannot be utilised for Cenvat purposes.
Thus, the procedure of sending material at concessional rate of duty is not of use if buyer wants to avail
Cenvat on inputs.
Reversal of Cenvat on inputs or payment of 8% amount - If the final product is cleared under
Chapter X procedure, Cenvat credit taken on inputs will have to be reversed or amount of 8% of price
will have to be paid as per Cenvat provisions. The buyer cannot avail Cenvat credit of this amount as
Cenvat credit can be taken only of duty. Hence, in the opinion of author, if buyer is in a position to
avail Cenvat credit, it is advisable to pay full duty instead of availing the concession.
Rewarehousing certificate not required - In some cases, range superintendent having jurisdiction
over manufacturer's factory insist on rewarehousing certificate from the user (to whom goods were
despatched at concessional rate of duty). Rules do not provide for any such requirement.

WAREHOUSING
Normally, goods are removed from factory on payment of duty. However, in respect of certain goods,
provision has been made to store the goods in warehouses without payment of duty. - - The provisions

are also available for goods cleared for export on payment of duty under claim for rebate of duty under
rule 18 of CE Rules.
As per Rule 20 of Central Excise Rules, facility of warehousing can be extended for removal of
excisable goods from factory of production to a warehouse or from one warehouse to another
warehouse without payment of duty. CBE&C can prescribe conditions, limitations and safeguards. The
rule clarifies that responsibility for payment of duty on the goods removed from factory or warehouse to
another warehouse is that of consignee. However, if goods do not reach the destination warehouse, the
duty liability is that of consignee.
At present, these provisions are applicable to following (i) Petroleum products (ii) benzene, toluene and xylene (iii) Goods transferred to customs bonded
warehouse as Stores. [These goods are cigarettes, aerated waters, prepared and preserved foods,
Aluminium foil covers, stainless steel cutlery, butter and cheese]. These stores are issued to foreign
going vessels without payment of duty - Notification No. 47/2001-CE(NT) dated 26-6-2001.
Goods removed by export houses or star trading houses for subsequent exports under rule 18 or rule
19 of Central Excise Rules - Notification No. 46/2001-CE(NT) dated 26-6-2001.
The warehouses can be public or private. Permission for such warehouses has to be obtained from
Commissioner. The goods are in custody of officer-in-charge of the warehouse. Goods can be removed
from warehouse on payment of duty plus penalty, godown rent etc. Transfer from one warehouse to
another without payment of duty is also permissible. Goods can be stored for maximum period of 3
years. [It may be noted that provisions of customs bonded warehouse also exist in respect of imported
goods. That facility is available for all imported goods.]
PROCEDURES TO BE FOLLOWED - Procedure, as prescribed in CBE&C circular No.
579/16/2001-CX dated 26-6-2001 supplemented in Chapter 10 Part I of CBE&Cs CE
Manual, 2001, is briefly as follows 1. Warehouse should be registered by Excise Commissioner.
2. Consignor is required to prepare application in quadruplicate in form attached to aforesaid
notification. [Earlier AR-3]. He is also required to prepare invoice as required. Three copies of
application and duplicate of invoice should be sent along with goods to consignee.

3. On arrival at destination, rewarehousing certificate will be sent duly countersigned by Range

superintendent to his counterpart at the end of consignee.
4. If rewarehousing certificate is not received within 90 days, consignor shall pay the duty.

5. Proper accounts shall be maintained at the warehouse. He will be responsible for payment of
duty, penalty etc.

6. Registered person can keep only goods belonging to him and not to someone else. He can
keep others goods only with permission of Commissioner.
7. Owner of warehouse can sort, pack or repack the goods in warehouse and make such
alterations as may be necessary for preservation, sale or disposal thereof

PLEASE READ ALSO PUBLIC NOTIFICATION NO.85 /2001 DTD.13.07.2001

PUBLIC NOTICE NO.85/2001 Date: 13.07.2001

Norms for granting permission for factory/warehouse stuffing of export goods
and procedure- reg.
Attention of the Exporters, CHAs and all concerned is invited to this Custom House Notices
Nos. 112/89 dated 8.9.89, 168/95 dated 11.10.95 and 138/99 dated 23.12.99 prescribing
norms for granting permission for factory/warehouse stuffing of export goods and
procedure
therefore.
2. Representations have since been received from various exporters and trade to review
the procedure for obtaining permission for factory/warehouse stuffing and examination of
the export goods under the DBK, Free, DEPB, DEEC and DFRC schemes. It has been
represented that currently exporter/CHA apply for factory stuffing permission separately
for various export promotion schemes to different sections of Export deptt., which causes
inconvenience to them. Therefore, in order to streamline the procedure and with a view to
further facilitate exports it has been decided that the exporters/CHAs may apply to AC/DC
(Gr.7 Exports) for a single permission for factory stuffing under DEEC, DEPB, DFRC
schemes. Similarly for factory stuffing permission for DBK and Free exports, single
application
may
be
made
to
DC
(Export).
3. AC/DC of Customs (Export/Gr.7)/ (Export) will grant such permission for a period of
three (3) months at a time for examination and stuffing of export consignments under
supervision of Central Excise Officers or Customs Officers, as the case may be, on M.O.T.
basis. In each such case a model examination order would be issued to the jurisdictional
AC/DC of Central Excise in case of stuffing under C. Ex supervision or to the AC/DC
(Docks) for stuffing under Customs supervision, as the case may be. The permission letter
will be sent in a sealed cover to the concerned officers to examine the cargo to be stuffed.
4. The category of goods which will be so allowed to be stuffed at such places are as
follows:(a) All goods in the factory of production whether or not such goods are excisable;
(b) Perishable frozen sea food/fish/meat/similar item and agricultural horticulture and
similar
goods;
(c) Articles of foods and pharmaceutical goods which require specialized packing in order
to
be
protected
from
contamination,
deterioration
etc;
(d)
(e)

Glassware
Goods

to

and
be

similar

articles

of

fragile

exported

under

duty

free

nature

and

shipping

bills.

5. In case of exporters having their factories in Mumbai, either they can obtain such
permission for 3 months or obtain permission for individual shipments, as the case may
be, for stuffing/examination. These exporters will have the option to stuff and examine
their export cargo either under Central Excise/Customs supervision. Customs staff for the
supervision/examination of export cargo will be available on overtime only on holidays or
after
normal
office
hours.

6. In cases of export other than under claim for drawback, DEFC, DEPB or DFRC Schemes
and where the manufacturer exporter is a Central Excise Licencee, such export cargo may
not be subjected or re-examination in the Docks if it has been examined and sealed under
Central Excise supervision. In respect of such free shipping bills, (wherein no claim for
Drawback or DEPB or part of export obligation of DEEC or DFRC scheme is envisaged)
exporters can avail of the Central Excise supervision facility for examination/stuffing of the
containers subject to the condition that such examination is supervised by an officer not
less than the rank of Supdt. of Central Excise. This facility would be applicable to all export
products which are manufactured in factories under Central Excise Control and which
follow the procedure for clearance of goods under Central Excise invoice and the exports
are required to be done under AR4 procedure. Small scale units registered with Central
Excise
can
also
avail
of
the
above
procedure.
7. In respect of goods which are manufactured in factories which are not under Central
Excise control, the facility of factory stuffing under Central Excise supervision can be
availed by such factories which are situated outside the jurisdiction of Greater Mumbai on
M.O.T. basis. In respect of units situated in Greater Mumbai, the examination/stuffing of
export cargo have to be normally done only under the supervision of the Customs officers.
For this purpose, the services of Customs officers will be available only after office hours
and on holidays. However, if such exporters have to execute export orders on urgent basis
and during working hours from Monday to Friday (excluding public holidays) they can avail
the service of Central Excise Officers for examination/stuffing of the goods at such factory
premises
on
MOT
basis.
8. Documents, information to be submitted at the time of making application for the grant
of requisite permission by the manufacturer exporter/merchant exporter are as follows:(A)

IN

CASE

OF

FACTORY

STUFFING

BY

MANUFACTURER

EXPORTER:

(i) A request letter for factory stuffing in original mentioning the details reasons for such
factory
stuffing.
(ii) A copy of Central Excise registration certificate, duly attested by the concerned Central
Excise authority in case of units registered with Central Excise, or an attested copy of
Small Scale industries Certificate, duly attested, in case of SSI units not registered with
Central
Excise;
(iii) In case of not-excisable goods or SSI units not registered with Central Excise, original
copy of NOC from AC/DC Central Excise mentioning therein their willingness for deputing
the Central Excise officers to supervise the examination and stuffing operations in such
factory.
(iv) Items to be stuffed with address of factory for every such request or renewal of
permission along with their respective DEPB heading No/SION entry Nos. etc.
(v)

Export

(B)

IN

performance
CASE

OF

in

format

FACTORY

Annexure
STUFFING

A,

duly

BY

signed

by

MERCHAND

the

exporter.

EXPORTERS:

(i) Request letter for factory stuffing mentioned therein the detailed reasons for such
factory
stuffing;
(ii)

NOC

from

supporting

manufacturer

with

every

such

application;

(iii) A copy of Central excise registration certificate, duly attested by the concerned Central
Excise authority in case of units registered with Central Excise or attested copy of SSI
registration certificate in case of S.S.I. units, not registered with Central Excise;
(iv) Original copy of NOC duly signed by the AC/DC of Central Excise, in case of nonexcisable goods or S.S.I. units not registered with Central Excise, mentioning their
willingness for deputing Central Excise Officers to supervise the examination and stuffing
operations,
in
such
factory;
(v) Items to be stuffed with address of factory for every such request or renewal of
permission along with their respective DEPB heading No./SION entry Nos. etc.
(vi)

Export

performance

in

format

Annexure

duly

signed

by

the

Exporter.

(C) IN CASE OF WAREHOUSE STUFFING OF GOODS UNDER FREE, DUTIABLE OR

EX-BOND
S/BILL:
(i) Request letter for warehouse stuffing permission mentioning therein detailed reasons
for
such
warehouse
stuffing;
(ii) Original copy of the NOC from the or warehouse owner with every such request or
renewal
of
permission;
(iii) Original copy of NOC duly signed by AC/DC, Central Excise mentioning therein
willingness of deputing the Central Excise officers to supervise the operation;
(iv) Items to be stuffed alongwith address of the warehouse and the exporter for every
such
request
or
renewal
of
permission;
(v) Export performance of the exporter in the format Annexure A duly signed by the
exporter;
D.

IN

CASE

OF

WAREHOUSE

STUFFING

FOR

OTHERS

:-

(i) Request letter mentioning therein the detailed reason for factory/warehousing stuffing;
(ii)

NOC

from

Warehouse

owner;

(iii) Original letter from jurisdictional AC/DC of Central Excise mentioning therein their No
Objection and willingness for deputing Central Excise officers to supervise the stuffing
operation
at
the
place
of
such
stuffing.
(iv) Items to be stuffed along with address of the warehouse and the exporter for every
such request or renewal of permission along with their respective DEPB heading No/SION
entry
No.,
etc.
(v) Export performance of the exporter in the format at Annexure A duly signed by the
exporter.
9. While applying for such permission the exporter should specify the description of the
product to be exported and the details of the inputs claimed under the respective scheme.
This one time permission shall be valid for a period of three months and for a particular

exporter

and

the

(a) There is no change

particulars/specification;

place
in

the

of
description

stuffing
of

the

provided
commodity

that:and

its

(b) There is no change in the DEPB/DBK rates and the conditions laid down therein;
(c) There is no change in the EXIM policy or other relevant and allied Acts.
10. Exporters shall present the goods along with relevant invoices (in quadruplicate for
export under DBK claims and triplicate for other exports.) packing list, GR form etc. with a
written request for prior examination to the jurisdictional Supdt. of Central Excise. The
goods will be examined and sealed by the inspector of Central Excise under supervision of
Supdt. Central Excise. In case of containers, after examination, the Supdt. Central Excise
will supervise stuffing and sealing of the container (after verifying it to be empty) with
Customs Bottle Seal only. In case of consignments of value exceeding Rs.25 lacs and all
consignments of sensitive commodities established to be prone to malpractices,
examination, stuffing and sealing of the containers will be carried out under supervision of
AC/DC, Central Excise and necessary orders to this effect will be given on the Model
Examination Order. The details of examination carried out (including verification of
particulars for duty drawback) and sealing of packages/containers, the container No, and
seal No., will be recorded on the invoice/packing list and countersigned by the supervising
officer. The Supdt. of Central Excise as well as the inspector of Central Excise will examine
the Export cargo as per the model examination orders given by the Custom House. In all
cases, unless specifically waived, sealed samples are required to be forwarded to the
Custom House. The representative samples should be drawn by the Supdt. of Central
Excise and should be sealed with Central Excise seals and should bear indication of
shipping bill No., wherever filed in advance or the invoice No., and accompanying
documents.
(11) In case the goods under export are subject to compulsory pre-shipment quality
inspection, the same can be carried out simultaneously with the Central excise
examination and this fact of inspection and sealing of goods by export inspection
agency/Agmark official may also be incorporated in the report of Central Excise Inspector.
(12) Whenever export cargo is moved from places under AR4, an extra copy of AR4 should
invariably be attached to the S/Bills. The examination report by Central Excise Officers
should also be endorsed on the reverse of S/Bills (duplicate and DBK/DEFC etc. copies)
where S/Bill is presented to Excise officer after obtaining examination order from Custom
House
and
in
other
cases
on
reverse
of
Invoice.
(13) Thereafter, the exporters are required to file the shipping bill in the Export Deptt of
the Custom House along with Central Excise certified copies of invoices, packing lists, G.R.
forms etc. Ordinarily there will be no further examination at the docks provided the
Central Excise seals and export inspection agency/Agmark seals, if any, are found intact.
14. Exporters are advised to correctly follow the procedure prescribed to avoid reexamination of cargo at the Port. In cases where it comes to notice that the examination
by Central Excise Officer has not been carried out in accordance with the prescribed
procedures as required under the scheme or where Customs officer has doubts, such
cargo shall be subjected to re-examination by Customs in the Docks.
15. In the case of export cargo examined outside the Port by the Customs officers, the

Customs seal will be verified by the P. Os in charge of the Division under whose
supervision
the
shipment
is
to
be
effected.
16. In other cases not covered by the above, Commissioner (EP) may grant special
sanction
in
individual
cases
depending
on
the
merits
of
such
cases.
17. This Public Notice supercedes all other Public Notices issued earlier on this subject.

Sd/(M.
COMMISSIONER

OF

Copy

to:

CUSTOMS

11.07.2001
DWIVEDI)
(EP)

All

concerned

ATTESTED
(U.H.
DY.
GROUP VII

COMMISSIONER

OF

JADHAV)
CUSTOMS

A N N E X U R E A
FORMAT TO BE ENCLOSED WITH APPLICATION FOR FACTORY/WAREHOUSE
STUFFING PERMISSION
1. NAME OF EXPORTER
2. FULL ADDRESS
3. NAME AND ADDRESS OF SUPPORTING MANUFACTURER
4. DESCRIPTION OF EXPORT GOODS
5. DEPB HEADING
6. SION ENTRY NO.
7. DEEC LICENSE NO./ APPLICATION NO.
8. PLACE OF STUFFING
9. PERIOD FOR WHICH PERMSSION IS SOUGHT
10. WAS ANY PERMISSION FOR W/H OR FACTORY STUFFING GRANTED EARLIER
11. EXPORT HOUSE STATUS

12. EXPORT PERFORMANCE DURING LAST THREE YEARS

1.
2.
3.
4.

2006-07
2007-08
2008-09
2009-TILL DATE

13. FREQUENCY OF EXPORT

14. DESTINATION OF EXPORT
15. CENTRAL EXCISE REGISTRAION; CERTIFICATE NO.
16. REASONS FOR FACTORY STUFFING

(SIGNATURE OF EXPORTER)
F.NO. S/16-MISC-536/01-GR.VII

Role & liability of customs house agent:Section 146 of the Customs Act 1962 is the enabling provision, which allows agents of importers and
exporters to act on behalf of importers and exporters. This is necessitated by the highly involved and
technical nature of the work to be done in connection with clearance of imports into and exports out of
country. The importers and exporters themselves may have neither time nor the requisite knowledge on
their own. Therefore, agents are allowed to act on their behalf. The work of the agents is governed by
the Customs House Agents Licensing Regulations, 1984 framed under this section read with Section
157.
There are certain liabilities fastened on the agent of the importer or exporter under Section 147. Some
of these liabilities are in the nature of extension of and exceptions to the liability of an agent under the
Indian Contracts Act, 1872. Sub-section (1) empowers the agent to do everything that an importer or an
exporter can do. Filing a bill of entry, shipping bill, submitting supporting documents therewith, helping
in examination of goods, payment of duty on behalf of the principal, warehousing of goods, removal
from warehouse and the like. The common law principle that an agents actions bind the principal is
given the status of a legal presumption. The consequences of all actions of a CHA will bind the
importers and exporters on whose behalf they act. An agent who is authorized to act on behalf of the
importer or exporter is treated as the owner of imported or exports goods. In respect of that particular
transaction, a notice could be given to that agent. This does not normally extend to recovery of duty not
paid or short paid by the owner, importer or exporter of goods. As an exception, this is permissible when
the Deputy/Assistant Commissioner is of the opinion that such recovery from the owner, importer or
exporter of goods is not possible.
Clearances only against authorization
A CHA is required to clear goods for import or export only against specific authorization from
the principal and must produce it whenever required by the Deputy/Assistant Commissioner.

Method of transacting business

The CHA has to either personally clear the goods or clear it through an employee who is
approved by the Deputy/Assistant Commissioner who is designated for this purpose by the
Commissioner. All the documents prepared by him should prominently bear the CHAs name at the top
of the document. The CHA should not attempt to influence the conduct of Customs officers in matters
pending before him or his subordinates. There should be no threats, false accusations or duress
against such officers. No promise of advantage or benefit or gift should be made or bestowed on such
officers. Duty of CHA should be discharged with utmost speed and avoid delays. He cannot charge for
his services in excess of rates approved by the Commissioner.
Personal interests of CHA
If the CHA is a former officer of the department, he cannot represent any matter before a
Customs officer, which he had personally considered as such officer. He cannot also use facts which
came to his knowledge when he was an officer.
Duty to tender correct advice
The CHA is duty-bound to advise the client to comply with the provisions of the Act and the
regulations. If there is non-compliance of provisions by any client, he is required to bring it to the
knowledge of the Deputy/Assistant Commissioner. This regulation requires the CHAs to act as source
of information to the department.
The CHA has to exercise diligence and ensure that he passes on correct information to the
client, ensure that all information relevant for clearance or cargo or baggage is passed on to the client if
it is relevant for clearance of cargo or baggage.
Accounting for money received
The CHA has a duty to promptly pay to Government all money received from client for payment
of duties and taxes. Similarly, any money received by him from the client or from the Government
should be promptly and fully accounted to the client.
Liability as to information
CHA should not attempt to gather information from Government records if it is not granted by
the proper officer. Access to record maintained by him should not be denied, nor removed or concealed
when sought by the Commissioner. There is a duty to maintain records and accounts as directed by the
Deputy/Assistant Commissioner and produce them before that officer for inspection. All documents
have to be prepared strictly in accordance with the rules and orders.