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Former Member

Difference betwenn Bond & LOU

Hi,

1 what is the diffrerence between 1. BOND & LOU

2 No bond & export under clain for rebate

2. when we create excise invoice (J1IIN)

for domestic in utilization -Excise invoice type is LOCAL

for EXPORTS in utilization -Excise invoice type is EXPORT Bond / No Bond / Deemed / LoU

how system differentiates between domestic & exports excise invoice

& on what criteria this local/ Bond / No Bond / Deemed / LoU comes automatically.

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2 Answers

  • Best Answer
    Oct 16, 2008 at 05:43 AM

    1) Exports Under Bond

    Exporters are classified into two categories. Manufacturer-Exporters who manufacture and export the goods in his own name without payment of excise duty and Merchant Exporters who buy the goods without payment of excise duty from a manufacturer and export the goods in his name. For getting the goods without payment of duty, the merchant exporter has to necessarily execute a bond (standard forms are prescribed for various types of bonds, in which the assessee gives an undertaking to export the goods within a stipulated period as per the law). The execution of bond is to ensure that in case of non-fulfillment of obligation, the central excise duty amount liable to be paid on the goods can be realized from him. Normally the bond is executed for an amount equivalent to the duty amount payable on the goods that the exporter is planning to export. Whenever the goods are cleared from the factory without payment of duty for export, the duty amount payable on the goods will be debited from the Running Bond Account. Whenever the goods are actually exported (after the proof of export is received from the Division/Maritime Commissioner), the manufacturer will take credit of the duty amount debited earlier by him. The manufacturer also has the option to maintain a running bond account by executing a bond with the Central Excise authorities. Though it is optional for a manufacturer-exporter to execute a bond for export clearances, it is very much necessary for merchant exporters.

    2) Exports under Letter of Undertaking

    The manufacturer exporters have another option for clearing their goods for export without payment of duty. They have to give a letter of undertaking which is valid for a year. This procedure of giving a letter of undertaking was introduced as a liberalization measure. The assessee will not have to follow the difficult legal procedures involved in executing a bond (providing surety/security in the form of Bank Guarantee etc). It will be sufficient if he just gives the letter of undertaking in the form prescribed.

    3) Exports under Rebate

    Export under Rebate is the procedure in which the exporters first pay the central excise duty before clearing the goods from the factory and subsequently get it back by applying for rebate after the goods are exported. They have to apply to the Division or to the Maritime Commissioner (designated exclusively to look after all Export related issues) as the case may be, along with the required documents (usually the Export Promotion copy of the Shipping Bill and Bill of Lading) to prove that their goods had actually been exported. Rebate can be claimed for both the inputs (purchased from indigenous markets and used in the manufacture of exported goods) as well as for the final products. Normally, rebate is being widely opted by non-excise assessees (for example garment exporters) who procure raw materials locally, manufacture their final products and export them. It is similar to Drawback of Customs duties in respect of Imported raw materials.

    With regard to number range for domestic and exports, you have to maintain a seperate number range for each in T.Code SNUM and the Objects are

    - J_1IEXCEXP:::::for Export excise invoice number range

    - J_1IEXCLOC:::::for Local excise invoice number range

    thanks

    G. Lakshmipathi

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    • Former Member Jyoti Prakash

      Thanks J Prakash, I am following you since long on SDN, Even i was looking for some information on the same issue,meanwhile i found this and  to posted my views.

      I really appreciate your suggestion and will keep it wiht me.

      Regards

      Sudip Sinha

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    Former Member
    Oct 16, 2008 at 05:39 AM

    1) A document that effectively licenses a manufacturing plant to remove goods from its premises without paying basic excise duty, on condition that the goods are then exported.

    An excise bond covers a fixed amount of excise duty. The excise duty of the goods exported under bond cannot exceed the bond value.

    In most respects the letter of undertaking is the same as an excise bond. However, the letter of undertaking is not printed on stamp paper.

    2) Bond/No bond has to be selected manually.

    System will recognize as per the customer and the delivering plant whether it an export or domestic.

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