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    Mar 17, 2011

    CUSTOM REQUIRES CASH IN LIEU OF BANK GURANTEE

    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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