What is Bank Guarantee to customs in Import

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Bank Guarantee to customs and licensing authorities


What is Bank Guarantee executing procedures with customs and import incensing authorities? When to cancel bank guarantee with customs? Does bank reserve fund against bank guarantee?


In certain cases of imports, you need to execute a bank guarantee along with the bond for the purpose of availing exemption of import duty amount. Later stage, if customs (government) finds default on fulfilling your obligation as per the details of executed bond, customs collects the duties or taxes under the said import shipment by forfeiting such bank guarantee. Many cases, the bank guarantee with bond are executed with customs department assuring obligation on different duty exemptions by importers.


What is Bank Guarantee to customs in Import copy


For example, you (importer) want to import machinery from a foreign country and required to avail import duty exemption. You intend to import under EPCGC scheme (Export Promotion Capital Goods) where in you can avail import duty exemption on capital goods subjected to terms and conditions under the scheme.

Under EPCG scheme, importer has to fulfill certain norms and required to complete export obligation on quantity, value or both as per the instruction of Licensing authority. Normally, EPCG (export promotion capital goods) scheme is allotted for 5 years duration period. Within the said period of 5 years, the export obligation has to be fulfilled. If bond with bank guarantee is insisted by the licensing authority of EPCGC (Export Promotion Capital Goods), bond and bank guarantee is executed by importer while importing goods under EPCGC scheme. Bank guarantee is the guarantee by bank assuring to pay the amount mentioned in the document, if any default by his (Bank’s) customer (you-importer).


Normally bank reserves a bank guarantee margin amount from your account while issuing bank guarantee. The reserve margin amount can be 100% of amount mentioned on Bank guarantee or 5% or nil depends up on your relationship with bank on your credit worthiness. 


Once after completion of export obligation as per the scheme and bond executed, the importer files the necessary proof on fulfilling export obligation. Normally, Export promotion copy of shipping bill, payment realization certificate from Bank, FIRC (Foreign Inward remittance certificate), Bill of Lading or Airway bill etc. are taken as a proof of exports. The authorities may demand part or full of said documents or any other documents specified by the licensing authorities and customs authorities.  Also read  How and when to cancel Bank guarantee and bond.   Difference between Letter of credit and Bank Guarantee

Do you have different thoughts on execution of Bank Guarantee and bond?


Share your experience in handling Bank guarantee with customs or licensing authorities under import.


The above information is a part of Online Training Course on howtoexportimport

Comment below your thoughts on execution of BG and Bond under import and export.


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Raju Sagar: Hello Sir If we made bank Guarantee Under EPCG Scheme and for any reason our EPCG Licences not Registered in Custom then our bank guarantee not enter in custom department so my question are what the processes of cancel bank guarantee . Thanks Raju Sagar

VIJAY: Dear sir , thank for the notes , i need to know where the bank guarantee , is 100 % important to show the customs or cant we show any other guarantee like property ? and also pls give me the brief if we fail to full fill the guarantee

RAJEYA ENAGURTI: Dear sir My friends to import DGITAL BOXES FOR CABLE TV from Dubai and want to apply for fresh import and export licence. Please advice. RAJEYA ENAGURTI

Kamal Sahoo: Dear Sir, Can we expect a book in "Import & Export Management" from u sir in ur own simple language for start up exporter & importer. If it is available plz suggest me ? With Rgds Kamal FIEO,Odisha Chapter M:9437226712

Ronies: what is the difference between shipping guarantee and customs guarantee? ( both are same or different)

Bob Tayler: Please note we are aware of a pending shipment for you from Redsail. The shipment cannot be boarded at origin until the US Customs ISF requirement is fulfilled. Please advise if you will be using Delmar USA Customs brokerage services or if you have selected a different customs broker to represent you on this side.

Gopal Srivastava: Dear Sir, Our company is purchasing Machine Worth Rs. 1 cr. what will be the amount for Bank Gurantee & How this bank Gurantee calculation done. Regards

amit kumar: Hi. Sir, I want know procedure how can get the original BG with bond from the custom house which was applying form import and export . now we had export the shipment so . kindly advice how can get the same. and are the procedures.

GOKULRAJ: dear sir, we pay the 100% cash margin to the bank guarantee how i calculate the bank guarantee value from my duty saved value. somebody says 15% of the duty saved value to the bank guarantee. but the value was differed. so any other charges for taking the bank guarantee please ckarify me sir. thanks®ards V,Gokulraj

john Robinson: How much do banks charge for providing the guarantee service? Thanks, John

Jun: Dear Sir, Currently our company is registered and stationed in Malaysia with granted of Bank Guarantee facility for customs purpose but the business activity is going transfer to Taiwan company which registered in Taiwan address (i.e relationship with this Taiwan company is related party). However, all the documentation still maintaining/conducting in Malaysia, warehouse also will be stationed in Malaysia, sales invoice header will be changed to Taiwan's company name and address. Based on the scenario above, does the Taiwan bank guarantee facility could be used for Malaysia's customs? Could you please advise further on the procedures for this case. Thanks in advance for your advise.

Yuffie: Dear Sir, does Custom request for any specific BG format for us to apply?

Amar Nath Bhola: I wish to import Wire drawing machine from Taiwan. I have no EPCG licence. Please let me have the procedure. I am having only Importer Exporter Code.

abdur: I’m doing here Bank Instrument Business as a consultant, I need , Foreign 3rd country Lc,BG, SBLc,D.Lc for my client. Please write me your terms and conditions: your earliest response will be highly appriciated.

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