Circular No. 4/4/2017-CGST, (F. No. 349/82/2017-GST), Issues related to Bond/Letter of Undertaking for exports without payment of integrated tax – Reg.

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Circular No. 4/4/2017-GST
F. No. 349/82/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
(GST Policy Wing)
New Delhi, the 7
th July, 2017
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners/
Commissioners of Central Tax (All)
Subject: Issues related to Bond/Letter of Undertaking for exports without payment
of integrated tax – Reg.
Various communications have been received from the field formations and exporters that
difficulties are being faced in complying with the procedure prescribed for making exports of
goods and services without payment of integrated tax with respect to furnishing of bonds/Letter
of Undertaking. Therefore, in exercise of powers conferred under section 168 (1) of the Central
Goods and Services Tax Act, 2017, for the purpose of uniformity in the implementation of the
Act, these issues are being clarified hereunder.
2. As per rule 96A of the Central Goods and Services Tax Rules, 2017 ( The CGST Rules),
any registered person exporting goods or services without payment of integrated tax is required
to furnisha bond or a Letter of Undertaking (LUT) in FORM GST RFD-11.
3. Attention is invited to notification No. 16/2017-Central Tax dated 01-07-2017vide which
the category of exporters who are eligible to export under LUT has been specified along with the
conditions and safeguards. All exporters, not covered by the said notification, would submit
bond. The procedure for submission and acceptance of bond has already been prescribed vide
circular No. 2/2/2017-GSTdated 4
th July, 2017.The bond shall be furnished on non-judicial
stamp paper of the value as applicable in the State in which bond is being furnished.
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4. A clarification has been soughtas to whether bond to be furnished for exports is a running
bond (with debit / credit facility) or a one-time bond (separate bond for each consignment /
export). It is observed consignment wise bond would be a significant compliance burden on the
exporters. It is directedthat the exporters shall furnish a running bond, in case he is required to
furnish a bond, in FORM GST RFD -11. The bond would cover the amount of tax involved in
the export based on estimated tax liability as assessed by the exporter himself. The exporter shall
ensure that the outstanding tax liability on exports is within the bond amount. In case the bond
amount is insufficient to cover the tax liability in yet to be completed exports, the exporter shall
furnish a fresh bond to cover such liability.
5. FORM RFD -11 under rule 96A of the CGST Rules requires furnishing a bank guarantee
with bond. Field formations have requested for clarity on the amount of bank guarantee as a
security for the bond. In this regard it is directed that the jurisdictional Commissioner may decide
about the amount of bank guarantee depending upon the track record of the exporter. If
Commissioner is satisfied with the track record of an exporter then furnishing of bond without
bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15%
of the bond amount.
6. As regards LUT, it is clarified that it shall be valid for twelve months. If the exporter fails
to comply with the conditions of the LUT he may be asked to furnish a bond.Exports may be
allowed under existing LUTs/Bonds till 31st July 2017. Exporters shall submit the LUTs/bond in
the revised format latest by 31st July, 2017.
7. It is further stated that the Bond/LUTshall be accepted by the jurisdictional
Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the
exporter. The exporter is at liberty to furnish the bond/LUT before Central Tax Authority or
State Tax Authority till the administrative mechanism forassigning of taxpayersto respective
authority is implemented.However, if in a State, the Commissioner of State Tax so directs, by
general instruction, to exporter, the Bond/LUT in all cases be accepted by Central tax officer till
such time the said administrative mechanism is implemented. Central Tax officers are directed to
take every step to facilitate the exporters.
8. Attention is further invited to circular No. 26/2017 – Customs dated 1st July 2017, vide
which it has been clarified that the existing practice of sealing the container with a bottle seal
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under Central Excise supervision or otherwise would continue till 01st September, 2017. Such
sealing shall be done under the supervision of the officer having physical jurisdiction over the
place of business where the sealing is being done. A copy of the sealing report would be
forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of
9. These instructions shall apply to exports on or after 1st July, 2017. It is requested that
suitable trade notices may be issued to publicize the contents of this circular.Difficulty, if any, in
the implementation of the above instructions may please be brought to the notice of the Board.
Hindi version would follow.
(Upender Gupta)
Commissioner (GST)