Circular No.- 12/2011-Customs                                                 
Dated: 01 /03/2011
F.No. 334/03/2011 (TRU)
Government of India
Ministry of Finance
Department of Revenue, New Delhi
Subject:    Assessment under Project Import Regulations, 1986 - Requirement of cash 
security in lieu of bank guarantee.

I am directed to refer Board's Circular No. 89 dated 9-8-1995 issued from F.No. 528/ 73/ 92 
- (TU), in partial modification of letter F.No.521/192/ 90-Cus.(TU) dated 9.1.1992, advising 
Customs Houses / Commissionerates  to take cash security equivalent to 2% of the CIF value 
of goods sought to be imported, subject to a maximum of Rs. 50 lakhs, at the time of
registration of Project Contract under Project Import Regulations, 1986. It was further 
advised that in cases, where cash security of 2% of the value of the contract exceeds Rs. 50 
lakhs, importers may be given an option to furnish cash security of Rs. 50 lakhs and balance 
amount by a bank guarantee, backed by an undertaking to renew it till the finalisation of the 
contract.  Government Departments and Public Sector Undertakings, however, continued to 
be exempted from furnishing the above cash security in terms of the practice in vogue, Vide 
Board's letter F.No. 521/192/90-Cus.(TU) dated 14.3.1993.
2.    The issue regarding furnishing of a cash security equal to  2% of the CIF value of the 
goods sought to be imported under Project Import has further been examined by the Board. In 
view of the reduction in import duty and the inordinate delay associated with finalisation of 
the said project imports, it has been decided  to do away with the practice of taking cash
security. Henceforth, subject to a maximum of Rs. 1 Crore, only a bank guarantee, equivalent 
to 2% of the CIF value of goods sought to be imported, would be taken at the time  of 
registration of the Project Contract under Project Import Regulations, 1986. The said bank 
guarantee shall be backed by an undertaking  that it would be renewed from time to time. 
However, the said bank guarantee need not be renewed on completion of a period of six 
months from the date of submission of necessary documents, from the jurisdictional Central 
Excise authority or any other specified authority, as proof of utilisation / installation of goods 
for the finalisation of the contract. The project import of Government Departments and Public 
Sector Undertakings would continue to be  covered by Board's letter F.No. 521/92/90-
Cus.(TU) dated 14.3.1993
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