CBEC clarifies issues regarding furnishing of bond/LUT for exports without tax

CBEC issues clarification on issues related to furnishing of Bond/Letter of Undertaking (LUT) for exports pursuant to communications received from field formations and exporters regarding interpretation of Notification and Circular dated July 7, 2017 and Circular dated July 5, 2017; Clarifies that, only such exporter who has received a remittance of Rs. 1 crore or 10% of export turnover, whichever is higher, in previous financial year (FY) is eligible for LUT facility, however, such condition is inapplicable to a status holder specified in paragraphs 3.20 and 3.21 of Foreign Trade Policy 2015-2020; Bonds shall be furnished on non-judicial stamp paper, while LUTs can be submitted on letterhead containing signature and seal of person or authorized person, further, LUT/bond being a priori requirement for export, including supplies to a SEZ developer/SEZ unit, should be processed on top most priority and be accepted within a period of 3 working days from date of submission along with complete documents by exporter; CT-1 Form holds no relevance under GST since transaction between manufacturer and merchant exporter is not exempted even on submission of LUT/bond;  Zero rating of exports, including supplies to SEZ, is allowed only with respect to supply by actual exporter under LUT/bond or payment of IGST, further, zero rating is inapplicable to EOU supplies as there is no special dispensation for them;  LUT acceptance instead of a bond for supplies of goods to Nepal or Bhutan or SEZ developer or SEZ unit will be permissible irrespective of whether payments is received in Indian currency or convertible foreign exchange as long as same is in accordance with RBI guidelines, however, supply of services to Nepal or Bhutan shall be deemed to be export of services only if payment is received in convertible foreign exchange; Further, exporter is at liberty to furnish bond/LUT before Central Tax Authority or State Tax Authority till administrative mechanism for assigning taxpayers to respective authority is implemented; Unless there is any evidence to the contrary, documents submitted as proof of fulfilling LUT conditions shall be accepted and self-declaration shall be accepted unless there is specific information otherwise; Reiterates that instructions issued vide circular dated July 7 and this circular shall apply to all exports made on or after July 1, 2017: CBEC Circular