Lut

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26 September 2011 Please explain me difference between LUT letter undertaking and advance license

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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27 September 2011 ADVANCE LICENCE:
An advance licence is granted for the import of inputs without payment of basic customs duty. Such licences shall be issued in accordance with the policy and procedure in force on the date of issue of the licence and shall be subject to the fulfillment of a time-bound export obligation, and value addition as maybe specified. Advance licences maybe either value based or quantity based.
As per the latest amendments to the EXIM Policy, the facility of Back to Back Inland Letter of Credit has been introduced, to enable an Advance Licence holder to source his inputs from domestic suppliers.

Value Based Advance LicenseUnder a value based advance licence, any of the inputs specified in the licence maybe imported within the total CIF value indicated for those inputs, except inputs specified as sensitive items.
Under a value based advance licence, both the quantity and the FOB value of the exports to be achieved shall be specified. It shall be obligatory on the part of the licence holder to achieve both the quantity and FOB value of the exports specified in the licence.

Policy relating to Duty Exemption / Remission Scheme is prescribed in Chapter 4 of FTP.

AS PER CHAPTER4 , PARA 4.2:

An application for grant of an Advance Authorisation / Advance Authorisation for Annual Requirement / DEPB / DFIA may be made by Registered office or Head office or a branch office or manufacturing unit of eligible exporter, to RA concerned.

Where applicant is branch office or manufacturing unit(s) of an exporter, it shall furnish self certified copy of valid RCMC where name of branch office or manufacturing unit is given.

Where SION have been published, an application in ANF 4A, along with documents prescribed therein, shall be submitted to RA concerned.

AS PER PARA 4.18 OF HANDBOOK OF PROCEDURES VOL-I 2009-2014,

LUT:
At the time of issue of authorisation, acceptance of undertaking given by applicant to RA concerned in relevant ANF will be endorsed on the reverse of Advance Authorisation. Authorisation holder shall execute Bank Guarantee / Legal Undertaking, as the case may be, in terms of para 2.20 of HBP v1.
Port of Registration 4.19 Advance Authorisation shall be issued for purpose of import and export through one of sea ports or airports or ICDs or LCS specified below. Authorisation holder shall register authorisation at the port specified in authorisation and thereafter all imports against said authorisation shall be made only through that port, unless the authorisation holder obtains permission from customs authority concerned to import through any other specified port. However, exports may be made through any of the specified ports.

FOR MORE TO MORE INFORMATION PLEASE CLICK THE BELOW MENTIONED LINK:

http://www.eximguru.com/exim-procedures/2009-2014/chapter_4_duty_exemption_remission_scheme.aspx#4.4_

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