Pharmaceutical exporters are irked by the insistence of the customs houses in various ports in the country to submit bank guarantees if they have been served a show cause notice on any export related issue in the past.

In order to ensure the genuineness of the exporter, the customs houses have been collecting information from the excise authorities on previous actions if any against the exporting firms or individuals prior to issuance of advance authorisation registration to the respective applicant.

The customs division has mandated submission of bank guarantees in case if the exporter is served with a show cause notice or penalised during the last three consecutive years. The procedure is even followed with firms holding star export house status and has created difficulties to the exporter in meeting the timeline of the consignment, says Indian Drug Manufacturers Association (IDMA).

The association, in a letter to the chairman of the Central Board of Excise and Customs (CBEC), under the Department of Revenue, Union Ministry of Finance, requested that the exporter should not be considered as penalised until the case against it has not been finalised. Unnecessary delays in clearance from customs authorities in such issues are hampering the country's export, which may result to delays or non compliance of committed orders or even cancellation of orders by the overseas clients.

“In case, the exporter has been issued show cause notice/Demand by local Excise Authorities and his case is under scrutiny with higher authorities, Tribunal or Court and the case has not been finalised, then the exporter should not be treated as penalised, unless the final verdict is given by the respective authority,” requests the association in its letter.

Moreover, the discrepancies in interpreting service tax regulations, tax matters and cenvat are the reason behind many of the show cause notices which generally do not reflect the legitimacy of the exporter. In such cases, the authenticity of the exporter must not be doubted, adds the appeal.

The customs offices in various ports and airports has initiated cross checking the genuineness of the exporter with the excise authorities following a circular – circular No. 58/2004 – issued in October 2004 through tracking the records on whether the applicant have been penalised during the last three years.

IDMA, in its letter, plead the authority to look into the genuineness of the appeal and issue necessary instructions to the customs authorities or insert clause in the relevant circular to exclude the exporter till the case against him is finalised. The association also requested to omit exporters star export house status from submitting bank guarantee in similar cases.