Circular No. 38 /2016-Customs
[As amended vide Board’s Circular 42/2020, dated 29.09.2020]
F.No: 465 / 01 /2016 — Cus V
Govt. of India
Ministry of Finance
Dept. of Revenue
Central Board of Excise & Customs
Dated 22
nd
August 2016
To,
All Principal Chief Commissioners of Customs / Customs & Central Excise
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise,
All Directorate-Generals, Chief Departmental Representative,
All Principal Commissioners of Customs,
All Principal Commissioners of Customs & Central Excise,
All Commissioners of Customs,
All Commissioners of Customs & Central & Excise
Subject:- Guidelines regarding Provisional Assessment under section 18 of the
Customs Act, 1962
The Customs (Provisional Duty Assessment) Regulations 2011 issued under notification no.
81/2011 — Customs (NT) dated 25.11.2011 were reviewed in view of references from the field
formations regarding guidelines on the implementation of Regulation 2(2) and Regulation 4.
2. Regulations 2(2), 3 and 4 require three elements — namely, (a) deposit of 20% of the differential
duty between "provisional duty" and duty to be "finally assessed or re-assessed"; (b) execution of a
bond; and (c) surety or security or both, as deemed fit.
2.1 Section 18 of the Customs Act, 1962 defines the cases where provisional assessment may
be resorted, as under:
- (1) Notwithstanding anything contained in this Act but
without prejudice to the provisions of section 46,-
(a) where the importer or exporter is unable to make self-
assessment under sub-section (1) of section 17 and makes a
request in writing to the proper officer for assessment; or
(b) where the proper officer deems it necessary to subject
any imported goods or export goods to any chemical or other test;
or
(c) where the importer or exporter has produced all the
necessary documents and furnished full information but the
proper officer deems it necessary to make further enquiry; or
(d) where necessary documents have not been produced or
information has not been furnished and the proper officer deems
it necessary to make further enquiry,
2.2 Further, Section 18 goes on to state how a provisional assessment is to be carried out:
“the proper officer may direct that the duty leviable on such
goods be assessed provisionally if the importer or the exporter,
as the case may be, furnishes such security as the proper officer
deems fit for the payment of the deficiency, if any, between the
duty as may be finally assessed and the duty provisionally
assessed."
2.3 Thus, the provisions of section 18 of the Customs Act, 1962, require that in cases
where goods are to be provisionally assessed:
(a) the importer binds himself for the payment of deficiency, if
any, between the duty as may be finally assessed and the duty
provisionally assessed; and
(b) furnishes such security as the proper officer deems fit for
the payment of the deficiency.
2.4 In view of the requirement that the importer binds himself to pay the deficiency, if
any, between the duty as may be finally assessed and the duty provisionally assessed, it
would be necessary to obtain a bond for meeting the aforesaid condition.
2.5 Insofar as the requirement of obtaining a 20% deposit of the duty provisionally
assessed, the Board has decided that this condition be dispensed, particularly, as it
necessitates following the procedure of refunds in cases where final assessment is in
favour of the importer. Such requirements add to the transaction costs, lead to delays in
clearance and detract from the ease of doing business.
2.6 It was also noted that Regulation 4 required that the importer should furnish such surety
or security or both, as deemed fit, along with the Bond. In this connection, it was felt that
acceptance of a surety requires making an evaluation of the underlying asset value or of the
net worth of the person executing the same. This poses difficulties to the importers as
well as administrative challenges to the Department in valuing sureties. Therefore, the
Board has decided that the requirement of security needs to be met by either obtaining a
bank guarantee or a cash deposit, as convenient to the importer, and that no sureties shall be
obtained.
2.7 In view of the aforesaid, the Board has rescinded "The Customs (Provisional Duty
Assessment) Regulations 2011" vide notification no. 113/2016 — Cus (NT) dated 22
nd
August
2016 since section 18 itself lays down the procedure to be followed in the case of provisional
assessment. The only issue which is required to be addressed is regarding the amount of security
since section 18 requires the same to be obtained as "deemed fit" by the proper officer. For the
sake of uniformity of practice, transparency and predictability for the tax payer, the Board has
decided that the following procedure and guidelines will be followed by all Customs stations while
assessing goods provisionally:
2.8 Wherever, duty is to be assessed provisionally, the importer shall:
(a) for the purposes of undertaking to pay on demand the deficiency, if any, between the duty as may
be finally assessed and the duty provisionally assessed, execute a bond in the prescribed form
(enclosed); and
(b) furnish such security for the payment of the duty deficiency, as indicated in para 3 below.
2.9 The security to be obtained shall be in the form of a bank guarantee or a cash deposit, as
convenient to the importer.
3. The following guidelines shall be followed while obtaining security where provisional
assessment under section 18 of the Customs Act is being undertaken:
Sl.
No.
Class of Importer Amount of Bank Guarantee
or Cash deposit to be
obtained as "security" of the
differential duty
Remarks
1 Imports by Authorised
Economic Operators (AEO
– T3)
0 %
(including cases at Sl. No. 4
to 6b, except 5(a) and 5(c)).
1
In terms of Circular
no.33/2016-Customs dated
22
nd
July 2016, as amended.
2 Imports by Authorised
Economic Operators (AEO
– T1 and AEO – T2)
(excluding importers
mentioned at Sl. No. 3)
(a) 0% (in terms of SI.
No. 5 (b), 6(a) and 6(b)
(2)
(b) 50% (for AEO-T1)
or 25% (for AEO-T2)
of the applicable bank
guarantee or cash
deposit specified at
SI. No. 4, 6(b)(1).
2
In terms of Circular
no.33/2016-Customs dated
22
nd
July 2016, as amended.
3 Imports by Public
Sector Undertakings/
Government
(Central/State/UT and
their Undertakings)
0%
(including cases at Sl. No. 4
to 6b.)
Sl.
No.
Nature of Import Amount of Bank Guarantee
or Cash deposit to be obtained
as "security" of the differential
duty
Remarks
4 Cases referred to SVB As per Circular no. 5/2016 –
Customs dated 09.02.2016
issued form F. No.
465/12/2010-Cus V
5 (a) Cases related to
determination
3
of origin
under FTAs based on the
reasonable belief that the
matter involves mis-
declaration of origin.
4
100% In terms of Rule 5 or Rule
6(1)(b) of CAROTAR, 2020
(notification no. 81/2020 -
Customs (N.T.) dated
21.08.2020)
5
5 (b) Cases selected on random
basis for verification of
origin.
0 %
5 (c) Cases related to verification
of signatures and seals under
FTAs
100% In terms of Rule 6(1)(a) of
CAROTAR, 2020
(notification no. 81/2020 -
Customs (N.T.) dated
21.08.2020)
6
6 (a) Cases, where the importer is
not able to make self-
assessment and has sought
provisional assessment.
Not applicable As this such cases will be
provisionally assessed by
the proper officer as deemed
fit.
6 (b) Cases, where the proper
officer deems it necessary to
order a provisional
assessment, whether for the
purposes of
chemical test or requirement
of Information or causing
inquiries:
(1) Where differential duty
has been estimated.
(2) Where, despite best
efforts by the proper officer,
differential duty cannot be
computed
100%
0%
Provided that the Principal
Commissioner of Customs
or the Commissioner of
Customs may reduce the
amount of security where
there are good & justifiable
reasons to do so.
N.A.
1, 2, 3, 4, 5 and 6 replaced vide Board’s Circular 42/2020 dated 29.09.2020
3.1 By way of a clarification, attention is also drawn to an earlier instruction of the Ministry
contained in F.No. 511/7/77-Cus VI dated 09.01.1978, to the effect that the amount of security shall
be determined on the basis of duty differential and not the CIF value of goods.
3.2 It is also clarified that provisional assessments under section 18 are to be carried out with
respect to cases where the duty is in dispute. Cases relating to execution of a bond or undertaking
specified as a condition to a notification or those requiring compliance of conditions under allied
acts are not to be provisionally assessed under section 18 of the Customs Act. This position had
been earlier clarified by the Ministry of Law and Justice and circulated vide Ministry F. No. 353/91/74
- Cus dated 28
th
January 1977.
4. Difficulties, if any. may be brought to the notice of the Board.
5. Hindi version follows.
Encl: Format of bonds
Yours faithfully,
(S.Kumar)
Commissioner (Customs)
Bond
Individual Importation
(With Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act,
1962 (52 of 1962)
(Circular No.38 /2016-Customs dated 22/08/2016 issued from CBEC F.No: 465/01/2016 - Cus V)
KNOW ALL MEN BY THESE PRESENTS THAT We M/s
having our registered office located at and
holding Import-Export Code No hereinafter called the "Importer" (which expression
shall include its successors/heirs, executors, administrators and legal representatives) are held and
firmly bound unto the President of India hereinafter called the "President" (which expression shall
include his successors and assigns) in the sum of Rs
Rupees (please fill amount in words) to be paid to the
President for which payment well and truly to be made, we bind ourselves, our successors, heirs,
executors, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this day of 20_
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs
at the (place), (hereinafter called the "proper officer") has agreed to make
provisional assessment of the goods imported by us, pending submission of further documents
and/or furnishing information and/or completion of further enquiries and/or chemical test and/or
other test and the Proper Officer has agreed to allow provisional assessment of the goods
mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as is
herein contained; and
WHEREAS the importer has deposited with the Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, at (location),
1 a bank guarantee;
OR
1 a cash deposit
mentioned in the schedule hereunder for the due observance of and performance of the terms
and undertakings on the part of the importer and for being applied in part or full towards the
indemnity hereby given or otherwise according to law.
1 strike out whatever is not applicable
NOW THE CONDITION of the above written bond is such that —
(1) If the importer shall within days or within such extended period as the Proper
Officer may allow, produce such documents and furnish such information as may be called for by the
Proper Officer, and
(2) If the importer pays to the President, the difference between the duty finally assessed
and the duty provisionally assessed in respect of the imported goods and mentioned in the Schedule
hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in
full force and virtue.
AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:-
1. This bond and cash deposit/bank guarantee are given under the orders of the Central
Government for the performance of an act which is in public interest.
2. The President through the [Deputy Commissioner / Assistant Commissioner of
Customs] or other officer may recover the said sum of Rs in the manner laid
down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery.
IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the
day, month and year first above written.
SIGNED AND DELIVERED by and on behalf of the importer at (place) in
the presence of:-
(Signature of Authorised Signatory and Corporate Seal)
Witnesses:
1.
2.
Accepted for and on behalf of the President of India
(Signature of the Proper Officer)
Schedule to Bond
(individual importation)
(With Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act,
1962 (52 of 1962)
(Circular No.38 /2016-Customs dated 22/08/2016 issued from CBEC F. No: 465/01/2016 - Cus V)
Bill of
Entry
number
Date Value at which
provisionally
assessed
Bond
Value
Details of
security deposit
or bank
guarantee
whichever is
applicable
Remarks (attach bank
guarantee/cash deposit
receipt in original)
Signature/date/name/designation
of officer making the entry
(1) (2) (3) (4) (5) (6) (7)
Bond
Individual Importation
(Without Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs
Act, 1962 (52 of 1962 )
(Circular No. 38 / 2016-Customs dated 22/08/2016 issued from CBEC F. No: 465/01/2016 - Cus V)
KNOW ALL MEN BY THESE PRESENTS THAT We M/s
having our registered office located at and
holding Import-Export Code No hereinafter called the "Importer" (which expression
shall include its successors/heirs, executors, administrators and legal representatives) are held and
firmly bound unto the President of India hereinafter called the "President" (which expression shall
include his successors and assigns) in the sum of Rs
Rupees (please fill amount in words) to be paid to the
President for which payment well and truly to be made, we bind ourselves, our successors, heirs,
executors, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this day of 20_
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs
at the (place), (hereinafter called the "proper officer") has agreed to make
provisional assessment of the goods imported by us, pending submission of further documents
and/or furnishing information and/or completion of further enquiries and/or chemical test and/or
other test and the Proper Officer has agreed to allow provisional assessment of the goods
mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as
is herein contained; and
NOW THE CONDITION of the above written bond is such that
(1) If the importer shall within days or within such extended period as the
Proper Officer may allow, produce such documents and furnish such information as may be
called for by the Proper Officer, and
(2) If the importer pays to the President, the difference between the duty finally
assessed and the duty provisionally assessed in respect of the imported goods and
mentioned in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall
remain in full force and virtue.
AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:-
1. This bond is given under the orders of the Central Government for the performance
of an act which is in public interest.
2. The President through the [Deputy Commissioner/ Assistant Commissioner of
Customs] or other officer may recover the said sum of Rs in the manner laid
down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of
recovery.
IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals
the day, month and year first above written.
SIGNED AND DELIVERED by and on behalf of the importer at (place) in
the presence of:-
(Signature of Authorised Signatory and Corporate Seal)
Witnesses:
1.
2.
Accepted for and on behalf of the President of India
(Signature of the Proper Officer)
Schedule to Bond
(Individual importation)
(Without Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs
Act, 1962 (52 of 1962 )
(Circular No. 38/2016—Customs dated 22/08/2016 issued from CBEC F. No: 465/01/2016 - Cus V)
Bill of
Entry
number
Date Value at
which
provisionally
assessed
Bond Value Remarks (if any) Signature/date/name/designation
of officer making the entry
(1) (2) (3) (4) (5) (6)
Continuity Bond
(With Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act,
1962 (52 of 1962)
(Circular No.38 /2016-Customs dated 22/08/2016 issued from CBEC F.No: 465/01/2016 - Cus V)
KNOW ALL MEN BY THESE PRESENTS THAT We M/s
having our registered office located at and
holding Import-Export Code No hereinafter called the "Importer" (which expression
shall include its successors/heirs, executors, administrators and legal representatives) are held and
firmly bound unto the President of India hereinafter called the "President" (which expression shall
include his successors and assigns) in the sum of Rs
Rupees (please fill amount in words) to be paid to the
President for which payment well and truly to be made, we bind ourselves, our successors, heirs,
executors, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this day of 20_
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs
at the (place), (hereinafter called the "proper officer") has agreed to make
provisional assessment of the goods imported from time to time by us, pending submission of
further documents and/or furnishing information and/or completion of further enquiries and/or
chemical test and/or other test and the Proper Officer has agreed to allow provisional
assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to
furnish such bond as is herein contained; and
WHEREAS the importer has deposited with the Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, at (location),
1 a bank guarantee;
OR
1 a cash deposit
mentioned in the schedule hereunder for the due observance of and performance of the terms and
undertakings on the part of the importer and for being applied in part or full towards the indemnity
hereby given or otherwise according to law.
1 strike out whatever is not applicable
NOW THE CONDITION of the above written bond is such that —
(1) If the importer shall within days or within such extended period as the Proper
Officer may allow, produce such documents and furnish such information as may be called for by the
Proper Officer, and
(2) If the importer pays to the President, the difference between the duty finally assessed
and the duty provisionally assessed in respect of the goods imported from time to time and mentioned
in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in
full force and virtue.
AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:-
1. This bond and cash deposit/bank guarantee are given under the orders of the Central
Government for the performance of an act which is in public interest.
2. The President through the [Deputy Commissioner / Assistant Commissioner of
Customs] or other officer may recover the said sum of Rs in the manner laid
down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of
recovery.
3. This bond and the cash deposit/bank guarantee shall remain in force from the date hereof
and the obligation and liability of the importer shall be a continuing one in respect of all goods
imported from time to time by the importer between the period of and the
payment by the importer of the difference between the duty finally assessed and the duty
provisionally assessed in respect of the goods imported from time to time.
IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the
day, month and year first above written.
SIGNED AND DELIVERED by and on behalf of the importer at (place) in
the presence of:-
(Signature of Authorised Signatory and Corporate Seal)
Witnesses:
1.
2.
Accepted for and on behalf of the President of India
(Signature of the Proper Officer)
Schedule to Continuity Bond
(With Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act,
1962 (52 of 1962)
(Circular No. 38 /2016-Customs dated 22/08/2016 issued from CBEC F. No: 465/01/2016 - Cus V)
Bill of
Entry
number
Date Value at
which
provisionally
assessed
Bond
Value
Balance
of Bond
Value
Details of
security
deposit or
bank
guarantee
whichever
is
applicable
Balance of
security
deposit or
bank
guarantee
value
(whichever
is
applicable)
Remarks (attach
bank
guarantee/cash
deposit receipt in
original)
Signature/date/name/designation
of officer making the entry
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Continuity Bond
(Without Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs
Act, 1962 (52 of 1962)
(Circular No.38 /2016-Customs dated 22/08/2016 issued from CBEC F.No: 465/01/2016 - Cus V)
KNOW ALL MEN BY THESE PRESENTS THAT We M/s
having our registered office located at and
holding Import-Export Code No hereinafter called the "Importer" (which expression
shall include its successors/heirs, executors, administrators and legal representatives) are held and
firmly bound unto the President of India hereinafter called the "President" (which expression shall
include his successors and assigns) in the sum of Rs
Rupees (please fill amount in words) to be paid to the
President for which payment well and truly to be made, we bind ourselves, our successors, heirs,
executors, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this day of 20_
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs
at the (place), (hereinafter called the "proper officer") has agreed to make
provisional assessment of the goods imported from time to time by us, pending submission of
further documents and/or furnishing information and/or completion of further enquiries and/or
chemical test and/or other test and the Proper Officer has agreed to allow provisional
assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to
furnish such bond as is herein contained; and
NOW THE CONDITION of the above written bond is such that —
(1) If the importer shall within days or within such extended period as the
Proper Officer may allow, produce such documents and furnish such information as may
be called for by the Proper Officer, and
(2) If the importer pays to the President, the difference between the duty finally assessed
and the duty provisionally assessed in respect of the goods imported from time to time and mentioned
in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in
full force and virtue.
AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:-
1. This bond is given under the orders of the Central Government for the performance
of an act which is in public interest.
2. The President through the [Deputy Commissioner / Assistant Commissioner of
Customs] or other officer may recover the said sum of Rs in the manner laid
down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of
recovery.
3. This bond shall remain in force from the date hereof and the obligation and
liability of the importer shall be a continuing one in respect of all goods imported from time to
time by the importer between the period of and the payment by the importer of the
difference between the duty finally assessed and the duty provisionally assessed in respect of the
goods imported from time to time.
IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals
the day, month and year first above written.
SIGNED AND DELIVERED by and on behalf of the importer at (place) in
the presence of:-
(Signature of Authorised Signatory and Corporate Seal)
Witnesses:
1.
2.
Accepted for and on behalf of the President of India
(Signature of the Proper Officer)
Schedule to Continuity Bond
(Without Bank Guarantee or Cash Deposit)
(To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs
Act, 1962 (52 of 1962)
(Circular No. 38 /2016-Customs dated 22/08/2016 issued from CBEC F.No: 465/01/2016 - Cus V)
Bill of
Entry
number
Date Value at which
provisionally
assessed
Bond
Value
Balance of
Bond Value
Remarks (if any) Signature/date/name/designation
of officer making the entry
(1) (2) (3) (4) (5) (6) (7)
