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Circular No.- 12/2011-Customs
Dated: 01 /03/2011

F.No. 334/03/2011 (TRU)
Government of India
Ministry of Finance
Department of Revenue, New Delhi

Subject: Assessment under Project Import Regulations, 1986 - Requirement of cash
security in lieu of bank guarantee.

I am directed to refer Board's Circular No. 89 dated 9-8-1995 issued from F.No. 528/ 73/ 92
- (TU), in partial modification of letter F.No.521/192/ 90-Cus.(TU) dated 9.1.1992, advising
Customs Houses / Commissionerates to take cash security equivalent to 2% of the CIF value
of goods sought to be imported, subject to a maximum of Rs. 50 lakhs, at the time of
registration of Project Contract under Project Import Regulations, 1986. It was further
advised that in cases, where cash security of 2% of the value of the contract exceeds Rs. 50
lakhs, importers may be given an option to furnish cash security of Rs. 50 lakhs and balance
amount by a bank guarantee, backed by an undertaking to renew it till the finalisation of the
contract. Government Departments and Public Sector Undertakings, however, continued to
be exempted from furnishing the above cash security in terms of the practice in vogue, Vide
Board's letter F.No. 521/192/90-Cus.(TU) dated 14.3.1993.
2. The issue regarding furnishing of a cash security equal to 2% of the CIF value of the
goods sought to be imported under Project Import has further been examined by the Board. In
view of the reduction in import duty and the inordinate delay associated with finalisation of
the said project imports, it has been decided to do away with the practice of taking cash
security. Henceforth, subject to a maximum of Rs. 1 Crore, only a bank guarantee, equivalent
to 2% of the CIF value of goods sought to be imported, would be taken at the time of
registration of the Project Contract under Project Import Regulations, 1986. The said bank
guarantee shall be backed by an undertaking that it would be renewed from time to time.
However, the said bank guarantee need not be renewed on completion of a period of six
months from the date of submission of necessary documents, from the jurisdictional Central
Excise authority or any other specified authority, as proof of utilisation / installation of goods
for the finalisation of the contract. The project import of Government Departments and Public
Sector Undertakings would continue to be covered by Board's letter F.No. 521/92/90-
Cus.(TU) dated 14.3.1993.
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