Letter of Undertaking(LOUT)

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Aranya Dey (Querist)
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12 April 2010 Plz. answer the following as soon as possible:-
1)What is Letter of Undertaking(LOUT) ??
2)What is Letter of Credit(LC) ???

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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12 April 2010 1)A letter of Credit is Basically a Document issued by bank Guaranteing a clients Ability to pay for goods or services. A bank or finance copany issues a letter of credit on
behalf of an importer or Buyer.

2)This term is commonly used in Central Excise when goods are cleared for export without payment of duty.A manufacturer is no more required to give Bond.He is required to give only letter of undertaking to pay duty in case goods are not exported.

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