Customs Insisting on Bank Guarantees in 90% FTA Cases

ABS News Service

New Delhi: 25 October 2020.

Following the clampdown on FTA imports, our sources say that customs field formations have unwritten instructions not to clear FTA import without 100 percent bank guarantee. This road block is hampering clearances as importers rush to arrange for finances to back the full import value.

The interest charge on the guarantee is irksome and specially painful for large volumes importers. Small parties are also affected as banks are not ready to issue the guarantee without the backup of 100 percent deposit.

Eventually, the guarantee has to be released since the Board will not find any merit in the offer of the field officer to ask for the BG as a condition for provisional assessment at the concessional rate for import under the FTA import.

The notification requires the invocation of the bank guarantee only where the assessing officer has a doubt of whether the minimum value addition. The 35 percent value addition condition within the FTA area has been met.

Importers say that universal extension of the BG condition is not in the FTA spirit.

Vietnam, Thailand, Japan and Korea are the major countries affected by the clamp down. Customs are keen to impose the condition since they are losing revenue on the zero duty import in FTA import.

More firing can be expected in this front in the near future.