Clarification on issues related to furnishing of Bond/LUT for exports.

Circular No.: 8/8/2017-GST
Date of Circular: 4th October 2017
Relevant Sections and Rules:

• Central GST Act, 2017:
  • Section 5(3): Powers of officers
  • Section 168(1): Power to issue instructions for uniformity
• Central GST Rules, 2017:
  • Rule 96A: Export under Bond or LUT
• Superseding Notification:
  • Notification No. 37/2017-Central Tax dated 4th October 2017 (supersedes Notification No. 16/2017)
• Rescinded Circulars:
  • Circulars 2/2/2017-GST, 4/4/2017-GST, 5/5/2017-GST (partially, to the extent not acted upon)

Summary of Circular:

This consolidated circular updates and replaces earlier circulars regarding procedures for export under LUT/Bond after issuance of Notification No. 37/2017-Central Tax, extending LUT facility to all exporters with certain safeguards.

1. Eligibility for LUT:
   LUT facility is now extended to all registered exporters, except those prosecuted under GST or earlier laws involving tax evasion > ₹2.5 crore. This broadens eligibility beyond the earlier criteria of remittance limits or status holder certificates.
2. Validity and Revocation of LUT:
   LUT is valid for the entire financial year. However, failure to export within prescribed timelines or to pay tax will revoke the LUT facility, requiring either IGST payment or bond with bank guarantee until restoration.
3. Format and Execution of LUT/Bond:
   • FORM GST RFD-11 may be downloaded and submitted manually until portal availability.
   • LUT must be submitted on letterhead, signed by authorized signatory.
   • Bond must be executed on non-judicial stamp paper as per State law.
4. Self-declaration and Processing Timelines:
   • Self-declaration of compliance with LUT conditions suffices unless specific adverse info is available.
   • LUT/Bond must be processed within 3 working days, else deemed accepted.
5. Bank Guarantee Requirement:
   • Applicable only for exporters prosecuted for tax evasion > ₹2.5 crore.
   • A bank guarantee of 15% of the bond value must accompany such bonds.
6. Running Bond System:
   • Exporters must maintain a running bond covering the estimated IGST liability.
   • Responsibility for tracking debit/credit entries lies with the exporter and must be available for inspection.
7. Sealing of Containers:
   • Until self-sealing is operational, container sealing (if required) must be done under the supervision of the Central Excise Officer.
8. Merchant Exporters and CT-1:
   • No CT-1 facility exists under GST.
   • Supplies between manufacturer and merchant exporter are taxable.
9. EOU Transactions:
   • Supplies to EOUs are not zero-rated.
   • EOUs themselves are entitled to zero rating only on their exports.
10. Realization in Indian Rupees:

• LUT is valid for exports to Nepal, Bhutan, or SEZ irrespective of payment currency (INR or convertible foreign exchange) as per RBI guidelines.
• For services to Nepal/Bhutan, only foreign exchange receipts qualify as export.

1. Jurisdictional Officer:

• LUT/Bond shall be accepted by the jurisdictional Deputy/Assistant Commissioner over the principal place of business.
• Exporters can submit to either Central or State Authority until administrative assignments are finalized.

1. Rescission of Earlier Circulars:
   Circulars 2/2/2017, 4/4/2017, and 5/5/2017 are rescinded except as respects actions already taken under them.

Source: Circular No.: 8/8/2017-GST