Export to all countries except Bhutan:

Procedures and conditions for export to all countries except Bhutan are specified in Notification No. 42/2001-CE (N.T.) dated 26.6.2001. The details are mentioned in this part.

Bond and CT-1 by the merchant exporter: Merchant exporter shall furnish a bond in Form B-1 so that goods can be cleared by supplier-manufacturer (from whom the goods are being procured by him for export) without payment of duty and obtain certificate in Form CT-1 from excise office. Such certificates need not be obtained for each consignment but will be given in lots of 25.

He would then send the Form CT-1 to the supplier manufacturer for export without payment of duty. On the basis of Form CT-1, the manufacturer-exporter can clear the goods for export without payment of duty.

Though any exporter (manufacturer-exporter or merchant-exporter) can furnish bond, the merchant-exporters are necessarily required to furnish bond in the B-1 Form specified in Notification No. 42/2001-Central Excise (N.T.), with such security or surety as may be specified by the concerned bond accepting authority. The bond shall be in a sum equal at least to the duty chargeable on the goods for the due arrival of export goods at the place of export and their export therefrom under Customs or as the case may be postal supervision. The officer who will accept the bond, will also be responsible for discharging that bond upon furnishing proof of export by the exporter.

The bond shall not be discharged unless the goods are duly exported, to the satisfaction of the Deputy/Assistant Commissioner of Central Excise or Maritime Commissioner or such other officer as may be authorised by the Board on this behalf within the time allowed for such export or are otherwise accounted for to the satisfaction of such officer, or until the full duty due upon any deficiency of goods, not accounted so, and interest, if any, has been paid.

Letter of undertaking by the manufacturer-exporter: Manufacturer-exporter may furnish annual Letter of Undertaking in Form UT-1. The manufacturer-exporter need not necessarily execute a bond. The Letter of Undertaking (LUT) is to be furnished in the Form UT-1 specified in the Notification No. 42/2001-Central Excise (N.T.). Any manufacturer, who is an assessee for the purposes of the Central Excise Rules, 2002, shall furnish a Letter of Undertaking only to the Deputy/Assistant Commissioner of Central Excise having jurisdiction over his factory from which he intends to export.

The Letter of Undertaking should not be furnished to the Maritime Commissioner or any other officer authorised by the Board.

A ‘Letter of Undertaking‘ shall be valid for twelve calendar months provided the e xporter complies with the conditions of the Letter of Undertaking, especially the prescribed procedure for ‘acceptance of proof of export‘. In case of persistent defaults or non -compliance causing threat to revenue, the manufacturer-exporter may be asked to furnish bond with security/surety. For the sake of clarification, it is mentioned that this Letter of Undertaking should not be taken for each consignment of export. In case of CCE v. Nemlaxmi India Pvt Ltd 2009 (236) E.L.T. 260 (Tri), it was held that the letter of undertaking (LUT) has to be executed even for the exempted goods on which no duty is payable and therefore it was held that it can be validly issued for excisable as well as exempted goods.

The obligation of the manufacturer flows from statutory requirement of exporting the goods within six months or such extended period as the Deputy/Assistant Commissioner of Central Excise may allow. Failing this, the exporter is required to deposit the requisite sum (duty and interest) suo motu, considering that the manufacturer has to do ‘self-assessment‘. Any nonpayment within 15 days of expiry of the stipulated time period, shall be treated as arrears of revenue and the Department will proceed to recover the same as ‘sum due to Government‘. Suo motu payment within 15 days of expiry of the stipulated time period will not be treated as ‘default‘.

On repeated failure of the manufacturer-exporter to comply with the conditions of the Letter of Undertaking or the prescribed procedure for ‘acceptance of proof of export‘, the Deputy/Assistant Commissioner of Central Excise may direct him in writing that the Letter of Undertaking is not valid and he should furnish B-1 Bond with sufficient security/surety.

The Letter of Undertaking shall not be discharged unless the goods are duly exported, to the satisfaction of the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise within the time allowed for such export or are otherwise accounted for to the satisfaction of such officer, or until the full duty due upon any deficiency of goods, not accounted so, and interest, if any, has been paid.

1. Conditions: The export shall be subject to the following conditions:

(i) The goods shall be exported within six months from the date on which these were cleared for export from the factory of the production or the manufacture or warehouse or other approved premises within such extended period as the Deputy/Assistant Commissioner of Central Excise or Maritime Commissioner may in any particular case allow;

(ii) When the export is from a place other than registered factory or warehouse, the excisable goods are in original packed condition and identifiable as to their origin;

(iii) Export of excisable goods which are chargeable to nil rate of duty or are wholly exempted from payment of duty, other than goods cleared by a hundred per cent export oriented undertaking, shall not be allowed under this notification.

Clarification: The rationale behind third condition mentioned above is explained via Circular No. 928/18/2010-CX dated 28.06.2010 as follows:-

For exempted goods, Department has prescribed a detailed procedure for refund of input taxes through Notification No. 21/2004-CE (NT) dated 06.09.2004, wherein a detailed procedure requiring verification of details like manufacturing process, input-output ratio, wastages etc., by the Departmental officer is prescribed. The reason for the same is that in case of exempted goods, the Department does not exercise control.

In order to avoid such detailed verification and scrutiny by the Department for claiming of refund of input taxes, some of the exporters were exporting the exempted goods under bond and claiming refund under rule 5 of the CENVAT Credit Rules, 2004, though a bond is executed only when goods are liable for payment of excise duty. Hence, if there is no excise duty then there is no question of exporting under bond.

2. Forms/documents to be used:

(i) ARE. 1: ARE.1 is the export document for export clearance which shall be prepared in quintuplicate (5 copies). This document shall bear running serial number beginning from the first day of the financial year. On A.R.E.1, certain declarations are required to be given by the exporter. These should be signed by the exporter or his authorised agent. If the export is under bond executed by merchant exporter, the form should be signed by both manufacturer as well as merchant exporter. The different copies of ARE.1 forms should be of different colours indicated below:

Original	White
Duplicate	Buff
Triplicate	Pink
Quadruplicate	Green
Quintuplicate	Blue

It will be sufficient if the copies of ARE.1 contain a color band on the top or right hand corner in accordance with above color scheme.

(ii) Invoice: An invoice shall also be prepared in terms of rule 11 of the said Rules. It should be prominently mentioned on top “FOR EXPORT WITHOUT PAYMENT OF DUTY”.

3. Procedure for clearance from the factory or warehouse: A manufacturer-exporter who has furnished a Letter of Undertaking will prepare the export documents (A.R.E.1 and invoice under rule 11) for clearance from his factory of production.

A merchant-exporter who has furnished a bond shall be provided sufficient number of certificates (CT-1), duly signed/certified, in multiples of 25 copies, normally cover ing a period of one to three months, depending upon the track record of compliance by the exporter. The ‘bond accepting authority‘ shall be responsible for verifying and accepting the proof of export and in case of any defaults by the exporter, to recover the sum and enforcing the bond. The certificate should be provided according to the volume of exports projected by the exporter (which should also reflect in the amount of bond). The compliance of the exporter in submitting the requisite documents towards ‘proof of export‘ shall be another criterion.

Part-II of CT-1 is very important. The exporter shall determine the description of goods for procurement from a particular factory or warehouse or an approved place of storage, quantum, value of procurement (provisional figures) and duty involved therein (provisional figures – but based on correct rate of duty and contracted transaction value). This ‘duty‘ element will be debited provisionally. The exporter shall ensure that at the time of debit, sufficient credit is available at that point of time to cover the said debit. The provisional debit shall be converted into final debit within a period of 7 days from the date of removal of goods on A.R.E.1, based on the ‘duty payable‘ in goods cleared for export reflected in the said A.R.E.1 and invoice.

The manufacturer shall record the clearance in his Daily Stock Account indicating, inter alia, the invoice number/date, A.R.E.1 number/date and duty payable but foregone under rule 19.

The exporter has two optional procedures regarding the manner in which he may clear the export consignments from the factory or warehouse or any other approved premises, namely: (i) Examination and sealing of goods at the place of despatch by a Central Excise Officer (ii) Self-sealing and self-certification

4. Sealing of goods and examination at place of despatch: In this method, export goods are examined before despatch by the Central Excise officers. Then the goods are not examined by Customs authorities at the port/airport unless seals are found tampered/any specific information is there.

The exporter is required to prepare five copies** of application in the Form ARE-1. The Form is specified in Annexure-I to Notification No. 42/2001-Central Excise (N.T.) dated 26.6.2001. The goods shall be assessed to duty in the same manner as the goods for home consumption, though duty is not required to be paid considering clearance is meant for export without payment of duty. The classification and rate of duty should be in terms of Central Ex cise Tariff Act, 1985 read with any exemption notification and/or the said Rules. The value shall be the “transaction value” and should conform to section 4 or section 4A, as the case may be, of the Central Excise Act, 1944. It is clarified that this value may be less than, equal to or more than the F.O.B. value indicated by the exporter on the Shipping Bill.

**Quintuplicate A.R.E. 1 (fifth copy) is the Export Promotion Copy and is optional for the exporter. Exporter shall use this copy for the purposes of claiming any other export incentive.

The duty payable shall be determined on the ARE.1 and invoice and recorded in the Daily Stock Account as “duty foregone on account of export under rule 19”.

The exporter may request the Superintendent or Inspector of Central Excise having jurisdiction over the factory of production or manufacture, warehouse or approved premises for examination and sealing at the place of despatch 24 hours in advance, or such shorter period as may be mutually agreed upon, about the intended time of removal so that arrangements can be made for necessary examination and sealing.

In case of exports under Duty Exemption Entitlement Certificate Scheme (DEEC), Duty Exemption Pass Book Scheme (DEPB) and claim for Drawback, the Superintendent of Central Excise shall also examine and seal the consignment and sign the documents in token of having done so. In exceptional cases, where the exporter has unblemished track record of compliance (Central Excise) and where there is non-availability of Superintendent of Central Excise due to leave, vacant post or other reasonable causes, the jurisdictional Deputy/Assistant Commissioner of Central Excise may permit examination and sealing by Inspector. All other types of export may be examined and sealed by the Inspector of Central Excise.

The Superintendent or Inspector of Central Excise, as the case may be, will verify the identity of goods mentioned in the application and also verify whether the duty self -assessed is appropriate and that the particulars of the duty payable has been has recorded in the Daily Stock Account. If he finds that the declaration in ARE.1 and the invoices are correct from the point of view of identity of goods and its assessment to duty, he shall seal each package or the container ensuring that the goods cannot be tampered with after the examination. Normally, individual packages should be sealed by using wire and lead seals and an all -sidesclosed container by using numbered one time Lock/Bottle seals or in such other manner as may be specified by the Commissioner of Central Excise by a special or general written order. Thereafter, the said officer shall endorse and sign each copy of the application in token of having such examination done and put his stamp with his name and designation below his signature.

Distribution of ARE.1 in the case of export from the factory or warehouse:

Original (First Copy)	The said Superintendent or Inspector of Central Excise shall return to the exporter immediately after endorsements and signature.
Duplicate (Second Copy)	The said Superintendent or Inspector of Central Excise shall return to the exporter immediately after endorsements and signature.
Triplicate (Third Copy)	Sent to the bond sanctioning authority, either by post or by handing over to the exporter in a tamper proof sealed cover after posting the particulars in official records.
Quadruplicate (Fourth Copy)	Retain for official records.
Quintuplicate (Fifth Copy)	Optional copy – The said Superintendent or Inspector of Central Excise shall return to the exporter immediately after endorsements and signature.

Distribution of ARE.1 in the case of export from other than factory or warehouse: Where goods are not exported directly from the factory of manufacture or warehouse, the distribution of A.R.E.1 will be the same as above except that the triplicate copy of application shall be sent to the Superintendent having jurisdiction over the factory of manufacture or warehouse who shall, after verification forward the triplicate copy in the manner specified above.

5. Despatch of goods by self-sealing and self-certification: Self-sealing and selfcertification is a procedure by which the exporter who is a manufacturer or owner of a warehouse, may remove the goods for export from his factory or warehouse without examination by a Central Excise Officer. This procedure will also be permitted in the cases where a merchant-exporter procures the goods directly from a factory or warehouse. In both cases, the manufacturer of the export goods or owner of the warehouse shall take the responsibility of sealing and certification.

For this purpose the owner, the working partner, the Managing Director or the Company Secretary, of the manufacturing unit of the goods or the owner of warehouse or a person (who should be permanent employee of the said manufacturer or owner of the warehouse holding reasonably high position) duly authorised by such owner, working partner or the Board of Directors of such company, as the case may be, shall certify on all the copies of the application (A.R.E. 1) that the goods have been sealed in his presence.

It may be noted that such self-sealing and self-certification is NOT permissible for exports to Bhutan.

The exporter shall distribute the copies of A.R.E. 1 in the following manner:

Original (First copy) and Duplicate (Second copy)	Send to the place of export along with the goods
Triplicate (Third copy) and Quadruplicate (Fourth copy)	Superintendent or Inspector of Central Excise having jurisdiction over the factory or warehouse within twenty four hours of removal of the goods
Quintuplicate (Fifth copy)	Optional copy – Send to the place of export along with the goods

The said Superintendent or Inspector of Central Excise shall verify the particulars of assessment, the correctness of the amount of duty paid or duty payable, its entry in the Daily Stock Account maintained under Rule 10 of the Central Excise Rules, 2002 (the manufacturer or warehouse owner will be required to present proof in this regard), corresponding invoice issued under Rule 11. If he is satisfied with the particulars, he will endorse the relevant A.R.E. 1 and append his signatures at specified places in token of having done the verification. In case of any discrepancy, he will take up the matter with the assessee for rectification and also inform the jurisdictional Assistant/Deputy Commissioner. Once verification is complete and the A.R.E. 1 is in order, he shall distribute the documents (A.R.E. 1) in the following manner:

Triplicate (Third copy)	Send to the bond accepting authority, either by post or by handing over to the exporter in a tamper proof sealed cover after posting the particulars in official records. Where manufacturer has given LUT, triplicate shall be retained and will be forwarded to the Deputy/Assistant Commissioner of the Division along with Statement, after matching them with original copies of A.R.E.1s.
Quadruplicate (Fourth copy)	Retain for Range records (The notification does not specify this distribution of this copy)

6. Export by parcel post: In case of export by parcel post after the goods intended for export has been sealed, the exporter shall affix to the duplicate application sufficient postage stamps to cover postal charges and shall present the documents, together with the package or packages to which it refers, to the postmaster at the office of booking.

7. Examination of goods at the place of export: The place of export may be a port, airport, Inland Container Depot, Customs Freight Station or Land Customs Station.

The exporter shall present together with original, duplicate and quintuplicate (optional) copies of the application (A.R.E. 1) to the Commissioner of Customs or other duly appointed officer – normally goods are presented in the designated export shed.

The goods are examined by the Custom officers for the purposes of Central Excise to establish the identity and quantity, i.e. the goods brought in the Customs area for export on an A.R.E. 1 are the same which were cleared from the factory. The Customs authorities also examine the goods for Customs purposes such as verifying for certain export incentives such as drawback, DEEC, DEPB or for determining exportability of the goods.

For Central Excise purposes, the Officers of Customs at the place of export shall examine the consignments with the particulars as cited in the application (A.R.E. 1) and if he finds that the same are correct and the goods are exportable in accordance with the laws for the time being in force (for example, they are not prohibited or restricted from being exported), shall allow export thereof. Thereafter, he will certify on the copies of the A.R.E. 1 that the goods have been duly exported citing the shipping bill number and date and other particulars of export and distribute in the following manner:

The officer of customs shall return the original and quintuplicate (optional copy for exporter) copies of application to the exporter and forward the duplicate copy of application either by post or by handing over to the exporter in a tamper proof sealed cover to the officer specified in the application, from whom exporter wants to claim rebate.

8. Procedure relating to proof of export and re-credit against such proof: The procedure relating to acceptance of proof of export or the ‘validation‘ of actual export has been simplified. The original and duplicate copies of A.R.E. 1 are presented to the Customs authorities at the place of export [with option for exporter to also present quintuplicate copy]. The Customs authority certifies the actual export on these documents and distributes the copies as specified.

The exporter shall submit a Statement, at least once in a month, in specified form along with the original copies of A.R.E. 1 with due certification of export (Pass for Shipment Order) by Customs authorities at the place of export to the Divisional office (through Range) or in the office of the bond-accepting authority. Other supporting documents shall also be furnished, namely, self-attested photocopy of Bill of Lading and self-attested photocopy of Shipping Bill (Export Promotion Copy). The Range office or the Office of the bond-accepting authority immediately on receipt shall acknowledge the Statement.

The exporter is permitted to take credit in his running bond account on the basis of copy of the Statement referred to above, duly acknowledged by the Range office or the office of the bond – accepting authority

It shall be the responsibility of the Range Office and Division Office or the other bond – accepting authority to verify the correctness of Statement and A.R.E.1 furnished by the exporter within the shortest possible time. The Statement and A.R.E.1 will be tallied by the Range Officers with the triplicate copies of A.R.E.1 already with them and the A.R.E.1 or its summary received directly from the place of export (hard copies or electronic summary or email) within 15 days of the receipt. The Divisional Officer shall accept the proof of export or initiate necessary action in case of any discrepancy.

In case of other bond-accepting authority, their office will do this work. The bond-accepting authority shall accept the proof of export or initiate necessary action in case of any discrepancy. He will also intimate about the acceptance of proof of export or any other action to the Deputy/Assistant Commissioner of Central Excise from whose jurisdiction goods were cleared for export.

In case of non-export within six months from the date of clearance for export (or such extended period, if any, as may be permitted by the Deputy/Assistant Commissioner of Central Excise or the bond-accepting authority) or discrepancy, the exporter shall himself deposit the excise duties along with interest on his own immediately on completion of the statutory time period or within ten days of the Memorandum given to him by the Range/Division office or the Office of the bond-accepting authority. On failure to do so necessary action can be initiated to recover the excise duties along with interest and fine/penalty. Failing this, the amount shall be recovered from the manufacturer-exporter along with interest in terms of the Letter of Undertaking furnished by the manufacturer. In cases where the exporter has furnished bond, the said bond shall be enforced and proceedings to recover duty and interest shall be initiated against the exporter.

In case of any loss of document, the Divisional Officer or the bond accepting authority may get the matter verified from the Customs authorities at the place of export or may call for collateral evidences such as remittance certificate, Mate‘s receipt etc. to satisfy himself that the goods have actually been exported.

Synopsis of procedure for export to countries other than Bhutan by a merchant – exporter

1. B1 Bond: The exporter should first of all submit a general bond in Form B-1 annexed to the said notification for an amount equal to the duty chargeable on the goods, to the ACCE/DCCE having jurisdiction over the factory/warehouse or such other approved premises from where the goods are cleared for export. The bond will be with adequate surety or security as may be approved by the concerned officer. The security is normally 25% of the bond amount and surety is for the full bond amount. The bond shall be on non-judicial stamp paper of the value as applicable to the state in which it is being furnished.

2. CT-1 Certificate: The exporter shall then obtain certificates in form CT-1 from the jurisdictional SCE for the purpose of procuring excisable goods without payment of duty.

3. Export Goods details: The exporter shall issue CT-1 to the manufacturer from whom the excisable goods are to be procured without payment of duty for the purposes of export. The CT-1 should be clear in terms of the description of goods sought, the quantities, value and duty involved.

4. Running Bond Register: The exporter shall maintain a running bond register wherein the duty amount on the excisable goods received under CT-1 would be debited. The debit cannot exceed the credits in the bond account at any point of time and where it is about to happen, another bond for additional amount is to be furnished. (The concept here is of self debit and self credit and one need not go the bond accepting authority for making the entries in the register)

5. Sealing: The exporter shall take steps to get the goods ready for despatch. He shall examine the packages and seal them himself in the presence of either the owner/partner/Managing Director of the entity or a person who has been duly authorized in this regard.

6. Export Invoice and Certification: He shall raise his invoice and in addition to the invoice, a specified form (Form ARE 1) in quadruplicate (a quintuplicate copy can be raised to claim any other export incentive desired). Each of the copies of ARE 1 will have
to be certified by the owner/Managing Director/partner of the entity or the person duly authorized to oversee the self-sealing and self-certification process. The certification should be to the effect that the sealing of the goods has been done in his presence. The ARE 1 shall also be signed by the person authorized by the manufacturer (as required by Chapter 7 of CBEC Manual).

7. Procedure at Place of Export: The Original and Duplicate copies of ARE1 would accompany the goods to the place of export and the Triplicate and Quadruplicate copies would be sent to the jurisdictional SCE within 24 hours of the removal. (Where a quintuplicate copy is maintained, the same may be sent with the Original and can be used for claiming any other export incentive). (Where the goods are to be exported by post, the duplicate copy is to be affixed with stamps of adequate value and the copy with the goods is to be delivered to the post master for booking). At the place of export, the Customs officer authorized would examine the goods and documents and certify on the copies that the goods have been exported by citing the Shipping Bill reference and other details of export.

8. Disposal of ARE 1 Copies: The said officer would return the original and quintuplicate (if filed) to the exporter and the duplicate may be sent either directly to the ACCE/DCCE with whom the LUT is filed or given in a tamper proof cover to the exporter to be given to such officer.

9. Proof of Export: The exporter shall file a statement in the prescribed format at least once in a month giving details of exports made and the proof of shipment received for earlier clearances as well as the cases where the proof is pending along with the copies of ARE 1 form as specified above.

10. Once the proof of export as stated above is submitted and acknowledged by the ACCE/DCCE, the exporter shall claim the credit in the bond register maintained which had been debited at the time of procurement of materials for the sake of export. Synopsis of Procedure for export to countries other than Bhutan by a manufacturer exporter

1. Submission of Letter of Undertaking: The exporter should submit a Letter of Undertaking in Form UT-1 to the ACCE/DCCE having jurisdiction over the factory/ warehouse or such other approved premises from where the goods are cleared for export. The LUT is normally valid for a period of twelve calendar months.

2. Sealing of Goods: The exporter shall take steps to get the goods ready for despatch. He shall examine the packages and seal them himself in the presence of either the owner/partner/Managing Director of the entity or a person who has been duly authorized in this regard.

3. Export Invoice and ARE1: He shall raise an Excise invoice which shall state prominently “FOR EXPORT WITHOUT PAYMENT OF DUTY” and in addition to the invoice, a specified form (Form ARE 1) in quadruplicate (a quintuplicate copy can be raised to claim any other export incentive desired). The details of the clearance to be made are to be entered in the Daily Stock Account.

4. Certification: Each of the copies of ARE 1 will have to be certified by the owner/Managing Director/partner of the entity or the person duly authorized to oversee the self-sealing and self-certification process. The certification should be to the effect that the sealing of the goods has been done in his presence.

5. Distribution of ARE1: The Original and Duplicate copies of ARE 1 would accompany the goods to the place of export and the Triplicate and Quadruplicate copies would be sent to the jurisdictional SCE within 24 hours of the removal. (Where a quintuplicate copy is maintained, the same may be sent with the Original and can be used for claiming any other export incentive). (Where the goods are to be exported by post, the duplicate copy is to be affixed with stamps of adequate value and the copy with the goods is to be delivered to the post master for booking).

6. Procedure at Place of export: At the place of export, the Customs officer authorized would examine the goods and documents and certify on the copies that the goods have been exported by citing the Shipping Bill reference and other details of export.

7. Disposal of ARE1: The said officer would return the original and quintuplicate (if filed) to the exporter and the duplicate may be sent either directly to the ACCE/DCCE with whom the LUT is filed or given in a tamper proof cover to the exporter to be given to such officer.

8. Proof of Export: The exporter shall file a statement in the prescribed format at least once in a month giving details of exports made and the proof of shipment received for earlier clearances as well as the cases where the proof is pending along with the copies of ARE 1 form as specified above.