Export is a key area of the economy. It is an important means of earning foreign exchange and is thus vital for financing imports. The Central Excise department attaches considerable importance to export. The law affords several benefits of substantive nature as well as procedural nature. In this Chapter, a passing reference has been made to the substantive benefits. The procedure however, has been described in detail.

The benefit in respect of duties on inputs used in the manufacture of goods meant to be exported as well as in respect of duty on the finished goods exported is envisaged under the Central Excise law. These benefits are available either in the form of rebate or the clearances of such inputs or finished goods under bond. The scheme under which the benefits are made available, is incorporated in Rule 12 and Rule 13 of the Central Excise Rules, 1944. The benefit in respect of duties on inputs used in the manufacture of goods exported, is available if the exporter does not claim drawback under the Central Excise Duties Drawback Rules, 1995. The rebate of duty in respect of inputs is also not available if the credit of duty paid on inputs has been availed of.

Under Rule 12 of the Central Excise Rules, 1944, rebate on duty paid on the exported goods or the duty paid on materials used in the exported goods, notified for the purpose, is granted to the exporter subject to the conditions laid down in the notifications. The various notifications issued under Rule 12 are as given below

The assessee’s desirous of exporting goods under claim for rebate can clear excisable goods for export or materials for use in the manufacture of excisable goods to be exported on payment of duty either through PLA or through RG-23A pt.-II or RG-23C pt.-II and may subsequently claim the rebate of duty paid, from the jurisdictional Assistant Commissioner or the Maritime Commissioner, as the case may be, in accordance with the provisions of Rule 189 of the Central Excise Rules, 1944.

Under Rule 13, the following operations with regard to export are permissible :- (I) export of excisable goods under bond ; (ii) utilisation of raw materials, consumables, components etc. without payment of duty for the manufacture of export goods and (iii) removal of excisable goods without payment of duty for the manufacture of specified excisable goods to be exported or for replenishment of duty paid materials used in the manufacture of such export goods, already exported. The Central Govt. has notified the excisable goods and materials to be used in the manufacture of excisable goods to be exported, as per the notifications listed below:-

50. Notification no. 47/94-CE (NT) dated 22.9.94 (as amended) (exemption to inputs for manufacture in bond);

51. Notification no. 48/94-CE (NT) dated 22.9.94 (as amended) (export in bond of all excisable goods);

52. Notification no. 49/94-CE(NT) dated 22.9.94 (as amended) (movement of intermediate goods without payment of duty for supply to manufacturers of export goods in terms of advance intermediate licence scheme).

The assessee’s desirous exporting excisable goods under bond are required to execute B-1(General Security/Surety) or B-16 (General Security/Surety) bond under Rule –14 either with the jurisdictional Assistant Commissioner or with the Maritime Commissioner and maintain a running bond account with the Range Superintendent. The goods will be allowed to be cleared for export under bond without payment of duty by debiting the amount of duty in the running bond account. The credit in respect of duty debited is made available on furnishing the proof of export of the goods. The assessee’s desirous of obtaining materials for manufacture of export products or in terms of advance licence under notification no.49/94-CE (NT) dated 22.9.94 as amended, are required to follow the Chapter X procedure.

The assessee has the option to clear the export goods with or without sealing of the consignment at the place of removal. In case he opts for factory sealing, the goods would be examined at the factory. Otherwise, the goods would be examined by the customs officer at the port of exportation.

The assessee has to file AR-4 application duly filled in, normally 24 hrs. in advance with the jurisdictional Superintendent in six copies. The proper officer after identification and verification of the goods with AR- 4, and the duty payment particulars (in case the export is under claim for rebate) or after debiting the running bond account or against the specific bond, shall seal the consignment with the Central Excise seal and make necessary endorsement of the same on the AR – 4. The original duplicate and the 6^th copy of the AR-4 are thereafter handed over to the exporter. The exporter desirous of exporting the goods in a container, are required to obtain the permission of the proper officer and shall also present the shipping bill duly processed by the customs authorities of the port of exportation or the ICD as the case may be, along with the AR-4 at the time of sealing of the container. The inspector supervising the container’s stuffing as well as the Range Superintendent will make an endorsement on the body of the shipping bill.

The assessees opting for sealing of their consignment or container are required to pay the supervision charges in terms of the provisions of, and at the rates prescribed in the Customs (Fees for rendering services by Customs Officers) Regulation, 1968.

The assessee can clear the export goods either on payment of duty under claim for rebate or under bond under the cover of an invoice and shall send the original, duplicate and six triplicate copies of the AR-4 with the consignment. The triplicate and quadruplicate and quintuplicate copies of the AR-4 shall be submitted to the Range Superintendent within 24 hrs. of clearance of such consignment, after verifying the particulars of duty paying or payable shall forward the triplicate copy to the jurisdictional Assistant Commissioner of Central Excise or the Maritime Commissioner as the case may be, either by post or on request handing over the same to the exporter in a sealed cover. Quadruplicate copy of the AR-4 is sent to Chief Accounts Officer and quintuplicate copy is retained by the Range for record.

Where the goods are not exported directly from the factory of the manufacturer, the triplicate and quadruplicate copies of the AR-4 are sent by the proper officer to the Superintendent having jurisdiction over the factory of the manufacturer, who after verification, would forward the triplicate copy to the Maritime Commissioner either by post or by handing over to the exporter in a tamper proof sealed cover, or the Assistant Commissioner of Central Excise having jurisdiction over the factory, as the case may be. The quadruplicate copy is sent to the Chief Accounts Officer by the Superintendent.

The exempted units desirous of exporting their goods are required to file declaration under notification no. 13/92- CE (NT) dated 14.5.92 as amended and obtain declarants code number. The code number is mentioned in all the clearance documents which are pre-authenticated by the manufacturer or his authorised agent. In case of export through merchant exporter, the clearance documents shall be marked ‘Export through merchant exporter’ and the merchant exporter’s export - import Code number should also be mentioned. The exempted units are required to maintain simple account of production and clearance and they shall file a quarterly statement to the jurisdictional Range Superintendent and also submit proof of export.

The exporter is required to give the following information on the AR-4 form

31. running sl. No. of the AR-4 beginning from each financial year;

32. scheme under which export has been made, i.e. value based advanced licencing scheme/ quantity based advanced licencing scheme/ under claim for duty drawback etc.;

33. whether the exported goods have been manufactured availing/without availing Modvat credit under Rule 57A; and

34. particulars of bond executed or the duty debit particulars as the case may be.

A merchant exporter can export excisable goods either directly from the premises of the manufacturer, with or without sealing of export consignment, or through his premises under claim for rebate of duty or under bond. In case of export under bond, the merchant exporter is required to execute bond either with the jurisdictional Assistant Commissioner having jurisdiction over the factory of the manufacturer or with the Maritime Commissioner. The merchant exporter can execute consolidated B-1 general bond with the Maritime Commissioner and obtain "Block Transfers" from him along with attested copies of B-1 consolidated bond executed for various ports or manufacturers and export the goods under bond. The merchant exporter can also export goods on manufacturer’s bond. He can also claim rebate of duty paid on exported goods either from the Assistant Commissioner of Central Excise having jurisdiction over the factory of the manufacturer or from the Maritime Commissioner. The merchant exporter is also required to take disclaimer certificate from the manufacturer as well, in case he wants to avail the export benefits.

Under Rule 57F(13) an exporter can take Modvat credit on the inputs used in or in relation to the manufacture of goods exported under bond and utilised the same towards payment of duty on similar final products cleared for home consumption or for export on payment of duty. Where for any reason such adjustment is not possible, the credit can be refunded in cash to the exporter, subject to such other conditions as provided in the said Rule or in the notification no.85/87 (NT) dated 1.3.87 as amended issued under Rule 57F(13).

Export to Nepal is governed by special procedure provided in notifications issued under Rule 12 & 13. The procedure is as explained below

Goods for export to Nepal are to be cleared from the registered factory on Nepal Invoice prepared in quadruplicate and marked ‘For Export to Nepal’ on payment of duty. The Nepal Invoice is to be presented along with the goods to be exported before the Central Excise officer. The Central excise officer shall verify the goods and seal the packages with the Central Excise seal. After making necessary endorsement on the Nepal invoice to this effect, he will hand over the original copy of the invoice to the exporter. Duplicate and triplicate copies of the Nepal invoice after being put in a sealed cover are handed over to the exporter for giving the same to the Customs officer incharge of the Land Customs Station, mentioned on the invoice and through which the goods are to be exported to Nepal. On arrival at the Land Customs Station, exported goods are to be presented to the Customs officer along with the original copy of the Nepal invoice and sealed cover containing duplicate and triplicate copy of invoice. The Customs officer incharge, after verification of the goods with the invoice makes an endorsement on all copies of the invoice. The original copy is handed over to the exporter and the duplicate and triplicate copies are sent directly to the Nepalese Customs Officer incharge of the check post through which the goods are to be imported into Nepal. The Nepalese Customs officer will return the duplicate copy of the invoice after endorsement regarding verification and allowing import into sNepal, to the Customs officer incharge at Indian Land Customs Station who is to forward the same to the Deputy Director of Inspection, Customs and Central Excise, Nepal Wing, for grant of rebate to His Majesty’s Government of Nepal.

Export under bond without payment of duty to Nepal and Bhutan is subject to the following conditions

26. the payment for goods shall be in freely convertible foreign currency; and

27. the importer shall open an irrevokable letter of credit in favour of the exporter in India before the export takes place, subject to certain conditions prescribed in the notification.

• The exporter is required to execute a bond in Rule 13 before the Assistant Commissioner of Central Excise having jurisdiction over the factory of the manufacturer or any other place from where the goods are to be exported and is to furnish a certificate in Appendix 1 to the said notification from the Reserve Bank of India or any other bank duly authorised to deal in foreign exchange showing that full payment has been received. On receipt of the said certificate and on completion of the conditions of the bond, the exporter shall be discharged of his liabilities under the bond. Capital goods are permitted to be exported to Nepal against any global tender invited by His Majesty’s Government of Nepal and the payment for which is received in the Indian currency, without payment of duty, subject to the condition that the exporter executes a bond and furnishes a certificate duly signed by the concerned Bank of India that full payment has been received in Indian currency by the said bank. On receipt of such certificate and on completion of the conditions of the bond, the exporter is discharged of his liabilities under the bond.
• The exporter is to follow the procedure as provided in Appendix 2 to the said notification. The procedure is explained below
• The exporter is to make 6 copies of the invoice as prescribed in Annexure-A to the notification and make the following declaration on the same:
• " I/we declare that the goods entered herein are intended for export to Nepal/Bhutan in bond, and shall not be diverted or delivered en route to any other country".
• The exporter shall present all the 6 copies of the invoice duly filled in along with the goods before the proper officer of Central Excise. The proper officer after verification of the goods and sealing them would make an endorsement on all the copies of the invoices. The original copy of the invoice is given to the exporter. Duplicate, triplicate and quadruplicate copies under sealed cover are given to the exporter for delivering the same to the Customs officer incharge of the Land Customs Station through which the goods are to be exported. The quadruplicate copy is forwarded to the Central Excise officer who has accepted the bond and quintuplicate copy is retained by the proper officer. On arrival at the Land Customs Station, the goods are presented before the Customs officer incharge along with original copy of the invoice and the sealed cover containing copies of invoices. The Customs officer, after verification of the goods with the invoices would make the endorsement on the invoice and hand over the original copy to the exporter. The duplicate and triplicate copies are sent directly to the Napalese or Bhutanese, as the case may be, Custom officer incharge Land Customs Station through which the goods are to be imported into Nepal or Bhutan. The Customs officer incharge of Land Customs Station at Nepal or Bhutan will return the duplicate copy of the invoice, after making an endorsement thereon regarding verification and allowing of import into Nepal or Bhutan, directly to the Customs officer incharge Land Customs Station in India. The same is eventually forwarded to the Central Excise officer incharge of the factory or warehouse from where the goods were removed for export.

Rule 185 provides for legible marking of export packages in ink or oil colour with a progressive number commencing with the sr.no.1 for each calendar year and with the exporter’s name and special mark, if any. Assessee seeking exemption from the provisions of Rule 185 are to apply to the Assistant Commissioner of Central Excise having jurisdiction over the factory.

In case the exporter who has removed the goods for export under bond, fails to produce proof of export before the proper officer in the manner provided in the relevant notification issued under Rule 13, he shall be liable to pay duty leviable on such goods upon written demand made by the proper officer and shall also be liable to penalty equal to twice the amount of duty and subject to a maximum of Rs.2000/- under Rule 14A. Penalty up to Rs.2000/- under Rule 14B can also be imposed if the exporter removes excisable goods under bond on which duty involved is more than bond amount or the balance in the running bond account. Under both the Rules i.e. 14A and 14B, the proper officer can also refuse to permit such offender further export of excisable goods under bond.

Please check whether

27. the goods intended for export are permitted for export to the country to which exports are intended to be made and their export is not prohibited under any law for the time being in force;

28. the quantity of goods to be exported has been ascertained well in advance of the date of export;

29. the duty involved on the goods meant for export has been ascertained and appropriate bond covering the duty element has been furnished;

30. the inspection and sealing of the goods to be exported is desired in the factory or warehouse or other point of storage and not at the point of export.

in case the answer is yes, then:-

i) whether prior intimation of the intended export in the form AR-4 (in sixtuplicate) properly filled, has been submitted to the jurisdictional range Superintendent well in time i.e. at least 24 hrs. in advance;

ii) whether the goods to be exported have been inspected by the Central Excise officer and the packages containing such goods are properly sealed with the Central Excise seal;

iii) whether the packages in which the goods are to be exported are legibly marked in ink or oil colour or in such other durable manner with the progressive number commencing with number 1 for each calendar year and with the exporter’s name and special mark, if any.

Iv) whether the description of goods furnished in AR-4 corresponds the goods packed for export;

v) whether the particulars of goods in AR-4 correspond to the particulars in the shipping bill filed by the exporter;

vi) whether, on completion of inspection, the invoice has been prepared and issued for removal of goods in accordance with the AR-4 and bond amount and whether the duty amount has been incorporated in the AR-4;

vii) whether after inspection the packages of the goods intended for export, the necessary endorsement has been made by the Central Excise officer on the AR-4;

viii) whether original, duplicate and sixtuplicate copies of the AR-4 have been received from the Central Excise officer after proper endorsement.

If the examination of the goods is desired at the point of shipment, then:-

5. whether the original, duplicate and sixtuplicate copies of properly filled AR-4 along with the invoice and the goods have been sent to the place of export;

6. whether the triplicate, quadruplicate and quintuplicate copies of the AR-4 have been sent to the Range Superintendent within 24 hrs. of the removal of the consignment;

7. whether the condition given in iv), v) & vi) in para d A above have been complied with.

If required, the triplicate copy of AR-4, duly endorsed has been obtained from the Central Excise officer in a tamper proof sealed cover for delivery to the Assistant Commissioner of Central Excise or Maritime Commissioner, as the case may be.

1. the running bond account has been maintained properly and all the relevant entries have been made in the account;

2. the proof of export of a particular consignment has been obtained within a period of 6 months from the date of removal of the factory, warehouse or place of storage and is sent to the Central Excise officer within the stipulated period of 6 months.

In addition to observing the points mentioned in the preceding check list, it must be checked whether the AR-4 contains a specific declaration regarding the authority with whom the rebate shall be filed.