Types of bonds :

Bonds are basically two types, i.e. surety and security. Under a surety bond another person stands as surety to guarantee the performance on the part of obligor. The surety should be for the full value of the bond and the person standing as surety should be solvent to the extent of the bond amount. Under the Contract Act the liability of the surety is co-extensive with that of the principal debtor and hence the department is at liberty to enforce the recovery of the dues either from the obligor or from the surety.

The following are the types of bonds, which are presently in vogue:

(a) B-1 Surety / Security (General Bond) – for export of goods without payment of duty under Rule 19;

(b) B-2 Bond Surety / Security (General Bond) – for provisional assessment;

(c) B-3 Bond (General Bond) – for due dispatch of excisable goods removed for rewarehousing and export there from without payment of duty.

(d) B-11 Bond – for provisional release of seized goods, and

(e) B-17 Bond (General) Surety / Security -composite bond of EPZ/ 100% EOUs for assessment, export, accounting and disposal of excisable goods obtained free of duty.

(f) In terms of Rule 3(3) and 3(4) of the Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001, the receiver of the goods is also required to execute a General Bond with the jurisdictional A.C./D.C.

Also, a surety for a bond is to be for the full amount of the bond, and it should be ensured that surety is financially sound.

Further, undertaking owned and managed directly through any Ministry, Directorate/ Directorates by the Central Government or State Government is exempt from furnishing any security or surety or a bond.