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Circular No. 27/97
dated 8/7/97

F.No. 305/92/97-FTT
Government of India
Ministry  of Finance
Department of Revenue, New Delhi

Subject : Import of Gold/Silver/Platinum by the nominated agency for sale/loan to jewellery exporters – procedures -reg.

Under para 8.19 to 8.37 of the EXIM Policy read with the various relevant customs exemption notification (Nos. 177/94-Cus, 3/88- Cus, 277/90-Cus, 144/93-Cus and Circular No. 38/96 dated 9.7.96), MMTC/ SBI/ STC/ HHEC and any agency authorised by Reserve Bank of India (hereinafter referred to as the Nominated Agency) are authorised to import precious metals and supply in advance on outright purchase or loan basis or as replenishment to exporters after exports in the various EPZs/ EOUs or in LTA with an export obligation imposed thereon.

2. In the light of operation of the above schemes for past one year, the procedure was reviewed in consultation with the Ministry of Commerce and it has been decided that the following procedure be  adopted in respect of gold/silver/platinum imported by Nominated Agencies under any of the above said duty exemption schemes for manufacture of jewellery for export. The Nominated Agencies would also be eligible to operate other gold/ silver import schemes as advised from time to time.

(a) The Nominated Agency other than SBI or Banks nominated by RBI may be allowed to open private bonded warehouses subject to the observance  of the Board’s existing instructions on setting up such warehouses, wherein the imported gold would be kept by the nominated agency. In case of SBI or other banks nominated by RBI, they may be allowed to utilise its own vaults in lieu of opening separate private bonded ware house subject to the observance of the Board’s existing instruction on setting up such warehouses wherein the imported gold would be kept by the nominated agency.

(b) Gold/Silver/Platinum from the said bonded warehouse may be taken be all categories of exporters  covered by these exemption schemes by filing ex-bond Bills of Entry in their own name;

(c) The exporter shall make a request in writing for duty exemption to the Customs as above mentioned and he will also execute the necessary bonds as mentioned in the said exemption schemes;

(d) The bond should be secured by a Bank Guarantee for 10% of the duty amount leviable on the gold but for the duty exemption. If any exporter so desires be may be allowed to maintain a Running Bond Account with the Customs House so that he does not have to obtain and file fresh Bond/ Bank Guarantees for each Bill of Entry.

(e) The Nominated Agency shall be responsible for sale keeping of the gold/ silver/ platinum for making physical delivery thereof to the ex-porters against duly addressed Bill of Entry on which ex-bond clearance has been allowed by a proper Officer and for rendering to customs a complete account of gold/ silver/ platinum received and kept by them in bond. In their capacity as a bonder they will also maintain the prescribed records, including the name, address and other specified details fro exporters and quantity of gold/silver/platinum released to and exported by each exporter. They shall also keep the Customs authorities informed of any exports which are due but have not taken place within the permissible period.

(f) Presently as per the EXIM Policy, the exports are required to be completed within a specified time from the date of release/ purchase of gold, for various schemes. In the event of an exporter failing to discharge the export obligation within the prescribed period, the respon-sibility for either retrieving the gold delivered or loaned by the Nominated Agency or to recover the value thereof shall continue to remain with the Nominated Agency. However, the responsibility of fulfilling export obligation shall continue with the exporters only, in case of missing gold from the units, the exporters shall be held responsible. The bond officers for EOU/ EPZ units shall remain alert and make periodic surprise check of the stock of metal in the unit.

(g) The record regarding execution of bond and submission of the bank guarantees by the intending exporters, as prescribed, shall be maintained by the Assistant Commissioner of Customs in the same way as is required to be maintained for exports of excisable goods under bond. However, on submission of proof of exports, the corresponding guarantee may be recredited to the exporter’s account and may be allowed to be used for the subsequent ex-bond clearances provided the validity period of the bond and the bank guarantee so permits. However, in the event of the exporter failing to produce proof of export on the expiry of the prescribed period, the Asst. Commissioner shall take immediate action to recover the amount of Customs duty leviable on the quantity of gold released to the exporter free of duty and to encash the bank guarantee. In addition, he may proceed to recover the balance of Customs duty if any, not covered by the bank guarantee, and further penal action as per law.

(h) The performance of exporters who have received duty free clearance of gold should be carefully watched. The Commissionerates should devise an affidavit monitoring system to ensure that no bond/ guarantees lapses for want of action and no defaulter is allowed to draw any further gold.

3. The above said procedures may be brought into effect immediately, and the trade be informed suitably.

4. This supersedes instructions contained in Circular No. 38/96 dated 9th July, 1996 issued from F. No. 305/80/94- FTT.

 Sd /-
(O.P. Khanduja)
Senior Technical Officer (F.T.T.)

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