A.P. (DIR Series) (2000-2001) Circular No. 12, dated 9-9-2000
Attention
of authorised dealers is invited to the Notification No. FEMA 23/2000-RB dated
3rd May, 2000, issued by Reserve Bank in exercise of the powers conferred by
clause (a) of sub-section (1), sub-section (3) of section 7 and sub-section (2)
of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), under
which the “Foreign Exchange Management (Export of Goods and Services) Regulations,
2000” have been made. Synopsis of these Regulations have already been advised
vide Annexure III to A.D (M.A. Series) Circular No. 11 dated May 16, 2000. The
Annexure attached to this circular contains detailed directions relating to
dealings of authorised dealers with their exporter clients. These directions
supersede the existing instructions contained in Chapter 6 of Exchange Control
Manual, 1993 edition.
2. Export
trade is regulated by the Directorate General of Foreign Trade (DGFT) functioning
under the Ministry of Commerce and Industries, Department of Commerce,
Government of India. Exporters are required to follow the
Notifications/Directions issued by DGFT from time to time.
3. The
Reserve Bank has made the Foreign Exchange Management (Export and Import of
Currency) Regulations, 2000 vide its Notification No. FEMA 6/RB-2000 dated 3rd
May, 2000. Any export of Indian currency except to the extent permitted under
any general permission granted under the Regulations, will require prior permission
of Reserve Bank.
4. In terms
of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations,
2000, notified vide Reserve Bank Notification No. FEMA 8/2000-RB dated 3rd May,
2000, authorised dealers have been permitted to issue guarantees on behalf of
exporter clients on account of exports out of India.
5. Export
of goods and services against repayment of state credits granted by erstwhile
Soviet Union will continue to be governed by the extant directions issued by
Reserve Bank, as amended from time to time. Further, Reserve Bank will continue
to consider as hitherto, counter trade proposals from Indian exporters with
Romania involving adjustment of value of exports from India against value of
imports made into India in terms of a voluntarily entered arrangement between
the concerned parties.
6. It is
further clarified that the Directions contained in the Annexure should
be read with the Regulations notified by the Reserve Bank vide its Notification
No. FEMA 23/2000 -RB dated 3rd May, 2000, referred to above.
7. Authorised
dealers may bring the contents of this circular to the notice of their
constituents, concerned.
8. The
directions contained in this circular have been issued under section 10(4) and
section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Any
contravention or non-observance of these directions is subject to the penalties
prescribed under the Act.
Export
of goods, software etc.
(i) In
exercise of the powers conferred by clause (a) of sub-section (1), sub-section
(3) of section 7 and sub-section (2) of section 47 of the Foreign Exchange
Management Act, 1999 (42 of 1999), the Reserve Bank has made the Foreign
Exchange Management (Export of Goods and Services) Regulations, 2000 relating
to export of goods and services from India, hereinafter referred to as the
‘Export Regulations’. These Regulations have been notified vide Notification No. FEMA 23/2000-RB dated 3rd
May, 2000.
(ii) Any
reference to Reserve Bank should be made to the office of Exchange Control
Department within whose jurisdiction the applicant person, firm or company
resides or functions unless otherwise indicated. If for any particular reason,
a firm or company desires to deal with a different office of the Exchange
Control Department, it may approach the office within whose jurisdiction it
functions for necessary approval.
(i) The
requirement of declaration of export of goods and software in the prescribed form
will not apply to the cases indicated in Regulation No. 4 ibid. The requirement
of declaration also shall not apply to goods sent for testing abroad, subject
to re-import.
(ii)
Gift of goods exceeding rupees one
lakh in value require approval of the Reserve Bank.
(iii) Export
of goods not involving any foreign exchange transaction directly or indirectly,
requires the waiver of GR/PP procedure from Reserve Bank.
GR,
PP and SOFTEX forms will bear specific identification numbers. In all
applications/correspondence with the Reserve Bank, this identification number
should invariably be cited. In the case of declarations made on SDF form, the
port code number and shipping bill number should be cited.
(i) The
amount representing the full export value of the goods exported shall be
received through an authorised dealer in the manner specified in the Foreign
Exchange Management (Manner of Receipt and Payment) Regulations, 2000 notified
vide Notification No. FEMA 14/2000-RB dated 3rd May, 2000.
(ii)
Payment for export may also be
received by the exporter in the following manner:
(a) In
the form of bank draft, pay order, banker’s or personal cheques.
(b) Foreign currency notes/foreign currency
travellers’ cheques from the buyer during his visit to India.
(c) Payment
out of funds held in the FCNR/NRE account maintained by the buyer.
(d) Through International Credit Cards. When
payment, in respect of goods sold to overseas buyers during their visits is
received in this manner the GR/SDF (duplicate) should be released by the
authorised dealers only on receipt of funds in their Nostro account or on
production of a certificate by the exporter from the Credit Card servicing bank
in India to the effect that it has received the equivalent amount in foreign
exchange, if the authorised dealer concerned is not the Credit Card servicing
bank.
Prior
approval of Reserve Bank should be obtained by authorised dealers for issue of
guarantees in respect of caution-listed exporters.
(i) Foreign
Currency Accounts - Reserve Bank may consider applications in form EFC from
exporters having good track record for opening foreign currency accounts with
banks subject to certain terms and conditions. Applications for opening such an
account with a branch of an authorised dealer in India may be submitted through
the branch at which the foreign currency account is to be maintained. If the
foreign currency account is to be maintained abroad the application should be
made by the exporter giving details of the bank with which the account will be
maintained.
(ii) Diamond
Dollar Account - Under the scheme of Government of India, firms and companies
dealing in purchase/sale of rough or cut and polished diamonds, with track
record of at least three years in import or export of diamonds and having an
average annual turnover of Rs. 5 crores or above during preceding three
licensing years (licensing year is from April to March) are permitted to
transact their business through Diamond Dollar Accounts, with not more than two
authorised dealers in India. Accordingly, eligible forms and companies may
apply for permission to the Chief General Manager, Exchange Control Department,
Exports Division, Reserve Bank of India, Central Office, Mumbai 400 001,
through their authorised dealer.
(i) Counter
trade proposals involving adjustment of value of goods imported into India
against value of goods exported from India in terms of an arrangement
voluntarily entered into between the Indian party and the overseas party
through an Escrow Account opened in India in U.S. dollar will be considered by
the Reserve Bank. All imports and exports under the arrangement should be at
international prices in conformity with the Exim Policy and Foreign Exchange
Management Act, 1999 and the Rules and Regulations made thereunder. No
interest will be payable on balances standing to the credit of the Escrow
Account but the funds temporarily rendered surplus may be held in a short-term
deposit up to a total period of three months in a year (i.e., in a block of 12
months) and the banks may pay interest at the applicable rate. No fund based/or
non-fund based facilities would be permitted against the balances in the Escrow
Account.
(ii) Application
for permission for opening an Escrow Account may be made by the overseas
exporter/organisation through the authorised dealer with whom the account is
proposed to be opened, to the office of Reserve Bank under whose jurisdiction
the authorised dealer is functioning.
Export of goods on lease, hire, etc.
Export
of machinery, equipment, etc., on lease, hire, etc., basis under agreement with
the overseas lessee against collection of lease rentals/hire charges and
ultimate re-import require prior approval of the Reserve Bank. Exporters should
apply for necessary permission, through an authorised dealer, to the concerned
Regional Office of the Reserve Bank, giving full particulars of the goods to
be exported.
(i) Participants
in international exhibition/trade fair have been granted general permission
vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency
Account by a Person resident in India) Regulations, 2000 notified under
Notification No. FEMA 10/2000-RB dated 3rd May, 2000 for opening temporary
foreign currency account abroad. Exporters may deposit the foreign exchange
obtained, by sale of goods, at the international exhibition/trade fair and
operate the account during their stay outside India provided that the balance
in the account is repatriated to India within a period of one month from the
date of closure of the exhibition/trade fair and full details are submitted to
the concerned authorised dealer.
(ii) Firms/Companies
and other organisations participating in Trade Fair/Exhibition abroad should
obtain approval on GR Form from the concerned office of Reserve Bank for export
of exhibits and other items for display-cum-sale in the trade fair/exhibition.
On closure of the fair/exhibition, they should re-import the exhibits or
repatriate the value of goods sold within one month of the closure of the
fair/exhibition and submit necessary documentary evidence to the concerned
Regional Office of Reserve Bank in support of the re-import of repatriation.
(i) Export
of engineering goods on deferred payment terms and execution of turnkey
projects and civil construction contracts abroad are collectively referred to
as ‘Project Exports’. Indian exporters offering deferred payment terms to
overseas buyers and those participating in global tenders for undertaking
turnkey/civil construction contracts abroad are required to obtain approval of
Authorised dealer/Exim Bank/Working Group at post-award stage before
undertaking execution of such contracts. Regulations relating to ‘Project
Exports’ and ‘Service Exports’ are laid down in the Memorandum on Project
Exports (PEM).
(ii) Pure
supply contracts (contracts for export of goods) where at least 90 per cent of
the export value is realised within the prescribed period i.e., six months from
the date of export and the balance amount within a maximum period of two years
from the date of export are not treated as deferred payment exports, provided
the exporter does not require/avail of any funded or non-funded facility/ies
for such exports from authorised dealers.
Exporters
intending to export goods on elongated credit terms may submit their proposals
giving full particulars through their banks to the concerned Regional Office of
Reserve Bank for consideration.
Export-Import
Bank of India (Exim Bank) and authorised dealers have been permitted to
undertake forfeiting, for financing of export receivables. It would be in
order for authorised dealers to allow remittance of commitment fee/service
charges, etc., payable by the exporter as approved by the Exim Bank/the
concerned authorised dealer. Such remittance may be permitted in advance in one
lump sum or at monthly intervals as approved by the concerned agency.
Disposal of Copies of Export Declaration Forms
(i)
Copies of export declaration forms
should be disposed of as under:
(a) GR forms should be completed by the
exporter in duplicate and both the copies submitted to the Customs at the port
of shipment along with the shipping bill. Customs will give their running
serial number on both the copies after admitting the corresponding shipping
bill. The Customs serial number will have ten numerals denoting the code number
of the port of shipment, the calendar year and a six digit running serial
number. Customs will certify the value declared by the exporter on both the
copies of the GR form at the space earmarked and will also record the assessed
value. They will then return the duplicate copy of the form to the exporter and
retain the original for transmission to Reserve Bank. Exporters should submit
the duplicate copy of the GR form again to Customs along with the cargo to be
shipped. After examination of the goods and certifying the quantity passed for
shipment on the duplicate copy, Customs will return it to the exporter for
submission to the authorised dealer for negotiation or collection of export
bills.
(b) Within twenty one days from the date of
export, exporter should lodge the duplicate copy together with relative
shipping documents and an extra copy of the invoice with the authorised dealer
named in the GR form. After the documents have been negotiated/sent for
collection, the authorised dealer should report the transaction to Reserve Bank
in statement ENC under cover of appropriate R-Supplementary Return. The
duplicate copy of the form together with a copy of invoice will be retained by
the authorised dealer till full export proceeds have been realised and
thereafter submitted to Reserve Bank duly certified under cover of appropriate
R-Supplementary Return.
Notes :
(i) In the case of exports made under
deferred credit arrangement or to joint ventures abroad against equity
participation or under rupee credit agreement, the number and date of Reserve
Bank approval and/or number and date of the relative RBI circular should be
recorded at the appropriate place on the GR form.
(ii) Where Duplicate copy of GR form is
misplaced or lost, authorised dealer may accept another copy of duplicate GR
form duly certified by Customs.
(c) On account of introduction of Electronic
Data Interchange (EDI) System at certain Customs offices where shipping bills
are processed electronically, the existing declaration in GR form is replaced
by a declaration in form SDF (Statutory Declaration Form). The SDF form should
be submitted in duplicate (to be annexed to the relative shipping bill) to the
concerned Commissioner of Customs. After verifying and authenticating the
declaration in form SDF, the Commissioner of Customs will hand over to the
exporter, one copy of the shipping bill marked ‘Exchange Control Copy’ in
which form SDF has been appended for being submitted to the authorised dealer
within 21 days from the date of export. The authorised dealer should accept the
Exchange Control (EC) copy of the shipping bill and form SDF appended thereto,
submitted by the exporter for collection/negotiation of Shipping documents. The
manner of disposal of EC copy of shipping bill (and form SDF appended thereto)
is same as that for GR forms.
(d) In cases where ECGC initially settles the claims of exporters
in respect of exports insured with them and subsequently receives the export
proceeds from the buyer/buyer’s country through the efforts made by them, the
share of exporters in the amount so received is disbursed through the bank
which had handled the shipping documents. In such cases, ECGC will issue a
certificate to the bank which had handled the relevant shipping documents after
full proceeds have been received. The certificate will indicate the number of
declaration form, name of the exporter, name of the authorised dealer, date of
negotiation, bill number, invoice value and the amount actually received by
ECGC. It will be in order for authorised dealers to certify the duplicate GR
form/EC copy of shipping bill on the basis of the certificate issued by ECGC
and submit them to Reserve Bank. The certificate issued by ECGC may also be
attached to the duplicate GR/SDF/PP form while forwarding them to Reserve Bank.
(e) Where a part of export proceeds are credited to EEFC account,
the export declaration (duplicate) form may be certified as under:
“Proceeds amounting to .........
representing ........% of the export realisation credited to EEFC account
maintained by the exporter with.......”
(ii) The manner of disposal of PP forms is same as that for GR
forms. Postal authorities will allow export of goods by post only if the
original copy of the form has been countersigned by an authorised dealer.
Therefore, PP forms should be first presented by the exporter to an authorised
dealer for countersignature. Authorised dealer will countersign the forms in
accordance with directions in paragraph B.2 and return the original copy to the
exporter, who should submit the form to the post office with the parcel. The
duplicate copy of the PP form will be retained by the authorised dealer to whom
the exporter should submit relevant documents together with an extra copy of
invoice for negotiation/collection, within the prescribed period of twenty-one
days.
PP
forms will be presented by the exporter to an authorised dealer for
countersignature. Authorised dealers should countersign the PP forms after
ensuring that the parcel is being addressed to their branch or correspondent
bank in the country of import. The concerned overseas branch or correspondent
should be instructed to deliver the parcel to consignee against payment or
acceptance of relative bill. Authorised dealers may, however, countersign PP
forms covering parcels addressed direct to the consignees, provided—
(a) an irrevocable letter of credit for the full value of the
export has been opened in favour of exporter and has been advised through
authorised dealer concerned;or
(b) the full value of the shipment has been received in
advance by the exporter through an authorised dealer;or
(c) the authorised dealer is satisfied, on the basis of the
standing and track record of the exporter and the arrangements made for realisation
of the export proceeds, that he could do so.
In
such cases, particulars of advance payment/letter of credit/authorised dealer’s
certification of standing etc., of the exporter should be furnished on the form
under proper authentication. Any alteration in the name and address of
consignee on the PP form should also be authenticated by the authorised dealer
under his stamp and signature.
Terms of payment - Invoicing - (Software)
(i) In
respect of long duration contracts involving series of transmissions, the
exporters should bill their overseas clients periodically, i.e., at least once
a month or on reaching the “milestone” as provided in the contract entered into
with the overseas client and the last invoice/bill should be raised not later
than 15 days from the date of completion of the contract. It would be in order
for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client,
including advance remittances received in a month.
(ii) In
respect of contracts involving only ‘one shot operation’, the invoice/bill
should be raised within 15 days from the date of transmission.
(iii) The
exporter should submit SOFTEX form to the concerned official of Government of
India at STPI/EPZ for valuation/certification not later than 30 days from the
date of invoice/the date of last invoice raised in a month, as indicated above.
(iv) The
invoices raised on overseas clients as at (i) to (iii) above will be subject to
valuation of export declared on SOFTEX form by the designated official of
Government of India and consequent amendment made in the invoice value, if
necessary.
As
for disposal of SOFTEX forms the procedure indicated in Regulation 6 of Export
Regulations is to be observed. The authorised dealers on receipt of the
duplicate copy of the SOFTEX form from the exporter will after full realisation
of value declared on the form or as certified by the designated officials
(whichever is higher) submit it to Reserve Bank duly certified, under cover of
an appropriate “R” return along with a copy/ies of invoice/s.
(i) When
part of a shipment covered by a GR form already filed with Customs is
short-shipped, exporter must give notice of short shipment to Customs in form
and manner prescribed. In case of delay in obtaining certified short shipment
notice from Customs, exporter should give an undertaking to the authorised
dealer to the effect that he has filed the short-shipment notice with the
Customs and that he will furnish it as soon as it is obtained. Authorised
dealer should send the short shipment notice along with the GR duplicate to
Reserve Bank.
(ii) Where
a shipment has been entirely shut out and there is delay in making arrangements
to re-ship, exporter will give notice in duplicate to Customs in the manner and
in form prescribed for the purpose, attaching thereto the unused duplicate
copy of GR form and the shipping bill. Customs will verify that the shipment
was actually shut out, certify copy of the notice as correct and forward it to
Reserve Bank together with unused duplicate copy of the GR form. In this case,
the original GR form received earlier from Customs will be cancelled. If the
shipment is made subsequently, a fresh set of GR form should be completed.
Where
air cargo is shipped under consolidation, the airline company’s Master Airway
Bill will be issued to the Consolidating Cargo Agent who will in turn issue his
own House Airway Bills (HAWBs) to individual shippers. Authorised dealers may
negotiate HAWBs only if the relative letter of credit specifically provides for
negotiation of these documents in lieu of Airway Bills issued by the airline
company.
Following
procedure should be adopted by exporters for filing original copies of GR/SDF
forms where exports are made to neighbouring countries by road, rail or river
transport :
(a) In case of exports by barges/country craft/road transport,
the form should be presented by exporter or his agent at the Customs station at
the border through which the vessel or vehicle has to pass before crossing over
to the foreign territory. For this purpose, exporter may arrange either to give
the form to the person in charge of the vessel or vehicle or forward it to his
agent at the border for submission to Customs.
(b) As regards exports by rail, Customs staff have been posted
at certain designated railway stations for attending to Customs formalities.
They will collect the GR/SDF forms in respect of goods loaded at these stations
so that the goods may move straight on to the foreign country without further
formalities at the border. The list of designated railway stations is
obtainable from the Railways. In respect of goods loaded at stations other than
the designated stations, exporters must arrange to present GR/SDF forms to the
Customs Officer at the Border Land Customs Station where Customs formalities
are completed.
(c) In terms of an agreement on Border Trade between India
and Myanmar, exchange of certain specified locally produced commodities, by
people living along the India-Myanmar border on both sides under barter trade
arrangement as also trade in freely convertible currency, has been permitted as
per guidelines issued by Reserve Bank to authorised dealers from time to time.
Authorised dealers should follow strictly the guidelines.
In
cases where exporters present documents pertaining to exports after the
prescribed period of twenty-one days from date of export, authorised dealers
may handle them without prior approval of Reserve Bank, provided they are
satisfied with the reasons for the delay.
Authorised
dealer/exporter should verify the following :
(i) Authorised dealer should ensure that the number on the
duplicate copy of a GR form presented to them is the same as that of the
original which is usually recorded on the Bill of Lading/Shipping bill and the
duplicate has been duly verified and authenticated by appropriate Customs
authorities. In the case of SDF form, the Shipping Bill No. should be the same
as that appearing on the Bill of Lading.
(ii) Bill of Lading/Airway Bill issued on ‘freight prepaid’
basis may be accepted where the sale contract is on f.o.b., f.a.s., etc., basis
provided the amount of freight has been included in the invoice and the bill.
Conversely, in the case of c.i.f., c. & f., etc., contracts whose freight
is sought to be paid at destination, it should be ensured that the deduction
made is only to the extent of freight declared on GR/SDF form or the actual
amount of freight indicated on the Bill of Lading/Airway Bill, whichever is
less. Likewise, where the marine insurance is taken by the exporters on buyer’s
account, authorised dealer should verify that the actual amount paid is
received from the buyer through invoice and the bill.
(iii) The documents submitted do not reveal any material inter se
discrepancies in regard to description of goods exported, export value
or country of destination.
Notes :
A. The export realisable value may be more than what was
originally declared to/accepted by Customs on the GR/SDF form in certain
circumstances such as where in c.i.f. or c. & f. contracts, part or whole
of any freight increase taking place after the contract was concluded is agreed
to be borne by buyers or where as a result of subsequent devaluation of the
currency of the contract, buyers have agreed to an increase in price.
B. In cases where the documents are being negotiated by a
person other than the exporter who has signed GR/PP/SDF/SOFTEX Form in respect
of the concerned consignment of export, authorised dealers may negotiate the
documents after ensuring compliance with Regulation 12 of “Export
Regulations”.
C. In certain lines of export trade, final settlement of
price may be dependent on the results of quality analysis of samples drawn at
the time of shipment; but the results of such analysis will become available
only after the shipment has been made. Sometimes, contracts may provide for
payment of penalty for late shipment of goods in conformity with trade practice
consuming the commodity. In these cases, while exporters declare to Customs the
full export value based on the contract price, invoices submitted along with
shipping documents for negotiation/collection may reflect a different value
arrived at after taking into account the results of analysis of samples or late
shipment penalty, as the case may be.
As
such variations stem from the terms of contract, authorised dealers may accept
them on production of documentary evidence after verifying the arithmetical
accuracy of the calculations and on conforming the terms of underlying
contracts.
Bills
in respect of exports by sea or air which fall short of the value declared on
GR/SDF forms on account of trade discount may be accepted for negotiation or
collection only if the discount has been declared by exporter on relative
GR/SDF form at the time of shipment and accepted by Customs.
Exporters
may receive advance payments (with or without interest) from their overseas
buyers. It should, however, be ensured that the shipments made against the
advance payments are monitored by the authorised dealer through whom the
advance payment is received. The appropriations made against every shipment
must be endorsed on the original copy of the inward remittance certificate
issued for advance remittance.
Note : Purchase of foreign exchange from the market for refunding
advance payment credited to EEFC account may be allowed only after utilising
the entire balances held in the exporter’s EEFC accounts maintained at
different branches/banks.
In
certain lines of export trade, it is the practice to leave a small part of the
invoice value undrawn for payment after adjustment due to differences in
weight, quality, etc., to be ascertained after arrival and inspection,
weighment or analysis of the goods. In such cases, authorised dealers may
negotiate bills, provided
(a) the amount of undrawn balance is considered normal in the
particular line of export trade, subject to a maximum of 10 per cent of the
full export value; and
(b) an undertaking is obtained from exporter on the duplicate
of GR/SDF/PP forms that he will surrender/account for the balance proceeds of
the shipment within the period prescribed for realisation.
Note : In
cases where exporter has not been able to arrange for repatriation of the
undrawn balance in spite of best efforts authorised dealers, on being satisfied
with the bona fides of the case, may submit duplicate copies of GR/PP/SDF forms
to Reserve Bank duly certified for the amount actually realised. Authorised
dealers should, however, ensure that the exporter has realised at least the
value for which the bill was initially drawn (excluding undrawn balances) or
90% of the value declared on GR/PP/SDF forms, whichever is more and a period of
one year has elapsed from the date of shipment.
(i) When
goods have been exported on consignment basis, authorised dealer, while
forwarding shipping documents to his overseas branch/correspondent, should
instruct the latter to deliver them only against trust receipt/undertaking to
deliver sale proceeds by a specified date within the period prescribed for
realisation of proceeds of the export. This procedure should be followed even
if, according to the practice in certain trades, a bill for part of the
estimated value is drawn in advance against the exports.
(ii) The
agents/consignees may deduct from sale proceeds of the goods expenses normally
incurred towards receipt, storage and sale of the goods, such as landing
charges, warehouse rent, handling charges, etc., and remit the net proceeds to the
exporter.
(iii) The
Account Sales received from the Agent/Consignee should be verified by the
authorised dealer before it is sent to Reserve Bank along with the relative
duplicate GR/SDF/PP forms. Deductions in Account Sales should be supported by
bills/receipts in original except in case of petty items like postage/cable
charges, stamp duty, etc.
Notes :
A. In case of goods exported on consignment basis, freight
and marine insurance must be arranged in India.
B. Reserve Bank, on an application made to it may, permit
individual exporters to hire warehouses abroad subject to such terms and
conditions as it may stipulate.
C. Reserve Bank will permit, on application, exporters with
satisfactory track record a longer period up to twelve months for realisation
of exports proceeds for exports on consignments basis made to CIS countries
and East European countries financed in any permitted currency.
(i) While
authorised dealers should normally despatch shipping documents to their
overseas branches/correspondents expeditiously, they may despatch shipping
documents direct to the consignees or their agents resident in the country of
final destination of goods in cases where advance payment or an irrevocable
letter of credit has been received for the full value of the export shipment
and the underlying sale contract/letter of credit provides for despatch of
documents direct to the consignee or his agent resident in the country of final
destination of goods.
(ii) In
cases not covered by (i) above also, authorised dealers may accede to the
request of the exporter, for despatch of documents for whatever reason, direct
to the consignee/agent provided the exporter is a regular customer and the
authorised dealer is satisfied, on the basis of standing and track record of
the exporter and the arrangements made for realisation of export proceeds, that
the request can be acceded to.
(iii) Documents
in respect of goods or software which are accompanied with a declaration by the
exporter that they are not more than rupees twenty-five thousand in value and
not declared on GR/SDF/PP/SOFTEX form, in terms of paragraph A.2 may be directly
sent by the exporter to the consignee.
(iv) Documents
in respect of goods exported against 100% advance remittance, in terms of
paragraph C.4 may be directly sent by the exporter to the consignee.
Handing over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative
Authorised
dealers may deliver one negotiable copy of the Bill of Lading to the Master of
the carrying vessel or trade representative, in respect of exports to certain
landlocked countries if the shipment is covered by an irrevocable letter of
credit and the documents conform strictly to the terms of the Letter of Credit
which, inter alia, provides for such delivery.
(i) Authorised
dealers should maintain Export Bills Register, in physical or electronic form.
Details of GR/SDF/PP form number, due date of payment, the fortnightly period
of R-Supplementary Return with which ENC statement covering the transaction
was sent to Reserve Bank and the period of R- Supplementary Return with which
the duplicate copy of GR/SDF/PP form is submitted to Reserve Bank should be
available.
(ii) Authorised
dealers should ensure that all types of export transactions are entered in the
Export Bills Register and are given bill numbers on calendar year basis (i.e.,
January to December). The bill numbers should be recorded in ENC statement and
other relevant returns submitted to Reserve Bank.
(i) Authorised
dealers should closely watch realisation of bills and in cases where bills
remain outstanding, beyond the due date for payment or 6 months from the date
of export, the matter should be promptly taken up with concerned exporter. If
the exporter fails to arrange for delivery of the proceeds, within six months
or seek extension of time beyond six months the matter should be reported to
Reserve Bank stating, where possible, the reason for the delay in realisation
of proceeds. The duplicate copies of GR/SDF/PP forms should, however, continue
to be held by authorised dealer until full proceeds are realised except in case
of undrawn balances covered by Note under paragraph C.5. Authorised dealers
should follow up export outstandings with exporters systematically and
vigorously so that action against defaulting exporters does not get delayed.
Any laxity in the follow-up of realisation of export proceeds by authorised
dealers will be viewed seriously by Reserve Bank leading to the invocation of
the penal provision under FEMA, 1999.
(ii) Authorised
dealers should furnish to Reserve Bank, on half-yearly basis, a consolidated
statement in Form XOX (XOS) giving details of all export bills outstanding
beyond six months from the date of export as at the end of June and December
every year. The statement should be submitted in triplicate within fifteen days
from the close of the relative half-year.
Reduction in Invoice Value on account of Prepayment of Usance Bills
Occasionally,
exporters may approach authorised dealers for reduction in invoice value on
account of cash discount to overseas buyers for prepayment of the usance
bills. In such cases authorised dealers may allow cash discount to the extent
of amount of proportionate interest on the unexpired period of usance,
calculated at the rate of interest stipulated in the export contract or at the
prime rate/LIBOR of the currency of invoice where rate of interest is not
stipulated in the contract.
If,
after a bill has been negotiated or sent for collection, the amount thereof is
desired to be reduced for any reason, authorised dealer may approve such
reduction, if satisfied about genuineness of the request, provided :
(a) the
reduction does not exceed 10% of invoice value,
(b) it
does not relate to an export of—
(i) gold
or silver jewellery or articles made out of cut and polished diamonds,
(ii) commodities subject to floor price stipulations,
(c) the
exporter is not on the exporters’ caution list of Reserve Bank, and
(d) the
exporter is advised to surrender proportionate export incentives availed of, if
any:
In
the case of exporters who have been in the export business for more than three
years, reduction in invoice value may be allowed, without any percentage
ceiling, subject to the above conditions as also subject to their track record
being satisfactory, i.e., the export outstanding do not exceed 5% of the
average annual export realisation during preceding three calendar years. For
the purpose of reckoning the percentage of outstanding export bills to average
export realisations during the preceding three calendar years, outstanding in
respect of exports made to countries facing externalisation problems may be
ignored provided the payments have been made by the buyers in the local
currency.
Authorised
dealers may remit export claims on application, provided the relative export
proceeds have already been realised and repatriated to India and the exporter
is not on the caution list of Reserve Bank. In all such cases of remittances,
the exporter should be advised to surrender proportionate export incentive, if
any, received by him.
Prior
approval of Reserve Bank is not required if, after goods have been shipped,
they are to be transferred to a buyer other than the original buyer in the
event of default by the later, provided the reduction in value, if any,
involved does not exceed 10% and the realisation of export proceeds is not
delayed beyond the period of six months from the date of export. Where the
reduction in value exceeds 10%, all other relevant conditions stipulated in
paragraph C.12 should also be satisfied.
In
cases where an exporter has not been able to realise proceeds of a shipment
made within the period prescribed (i.e., within six months from the date of
export), for reasons beyond his control, but expects to be able to realise
proceeds if extension of the period is allowed to him, necessary application
(in duplicate) should be made to the concerned Regional Office of Reserve Bank
in form ETX through his authorised dealer with appropriate documentary
evidence. Extension will not ordinarily be granted unless Reserve Bank is
satisfied that the exporter is in no way directly or indirectly responsible for
the delay in realisation of proceeds and that by grant of a short extension the
exporter will be able to realise proceeds.
When
shipments from India for which payment has not already been received either by
negotiation of bills under letters of credit or otherwise are lost in transit,
authorised dealer must ensure that insurance claim is made as soon as the loss
is known. The duplicate copy of GR/SDF/PP forms should be forwarded to Reserve
Bank with following particulars:
(a) Amount for which shipment was
insured.
(b) Name and address of insurance
company.
(c) Place where claim is payable.
In
cases where claim is payable abroad, authorised dealer must arrange to collect
the full amount of claim due on the lost shipment, through the medium of his
overseas branch/correspondent and forward the duplicate copy of GR/SDF/PP form
to Reserve Bank only after the amount has been collected. A certificate for the
amount of claim received should be furnished on the reverse of the duplicate
copy.
Note : Sometimes
claims on shipments lost in transit are also partially settled directly by
shipping companies/airlines under carriers’ liability authorised dealers should
ensure that amounts of such claims if settled abroad are also repatriated to
India by exporters.
Where
export has been covered by a policy issued by ECGC, settlement of a claim by
the Corporation does not absolve the exporter of the statutory obligation
undertaken on the GR/SDF/PP form to realise proceeds of the export within
prescribed period. In such cases, export should, in consultation with ECGC,
take all necessary steps for realising the proceeds. Authorised dealers should
also continue to hold the duplicate copies of GR/SDF/PP forms in their custody
and initiate follow-up measures in the normal manner.
(i) An
exporter who has not been able to realise the outstanding export dues despite
best efforts, may approach the authorised dealer, who had handled the relevant
shipping documents, with appropriate supporting documentary evidence with a
request for write off of the unrealised portion. Authorised dealers may accede
to such requests subject to the undernoted conditions :
(a) The relevant amount has remained
outstanding for one year or more;
(b) The aggregate amount of write off allowed by the authorised
dealer during a calendar year does not exceed 10% of the total export proceeds
realised by the concerned exporter through the concerned authorised dealer
during the previous calendar year;
(c) Satisfactory documentary evidence is furnished in support
of the exporter having made all efforts to realise the dues;
(d) The case falls under any of the
undernoted categories :
(i) The overseas buyer has been declared insolvent and a
certificate from the official liquidator indicating that there is no
possibility of recovery of export proceeds produced.
(ii) The overseas buyer is not traceable over
a reasonably long period of time.
(iii) The goods exported have been auctioned or destroyed by the
Port/Customs/Health authorities in the importing country.
(iv) The unrealised amount represents the
balance due in a case settled through the intervention of the Indian Embassy,
Foreign Chamber of Commerce or similar Organisation.
(v) The unrealised amount represents the
undrawn balance of an export bill (not exceeding 10% of the invoice value)
remained outstanding and turned out to be unrealisable despite all efforts made
by the exporter.
(vi) The cost of resorting to legal action
would be disproportionate to the unrealised amount of the export bill or where
the exporter even after winning the Court case against the overseas buyer could
not execute the Court decree due to reasons beyond his control.
(vii) Bills were drawn for the difference
between the latter of credit value and actual export value or between the
provisional and the actual freight charges but the amount has remained
unrealised consequent on dishonour of the bills by the overseas buyer and there
are no prospects of realisation.
(e) The case is not the subject-matter of any
pending civil or criminal suit.
(f) The exporter has not come to the
adverse notice of the Enforcement Directorate or the Central Bureau of
Investigation or any such other law enforcement agency.
(g) The exporter has surrendered
proportionate export incentives, if any, availed of in respect of the relative
shipments.
(ii)
Where there is no further amount to be realised against the GR/SDF/PP form
covered by the write off, authorised dealer should submit the duplicate thereof
to Reserve Bank along with ‘R’ return, duly certified, as under :
“Write off
of............................................................................................................................
(Amount in words and figures)
permitted in terms of paragraph C.18 of Directions to
Authorised Dealers.
Date.....................
.................................................
Stamp
& Signature of
Authorised Dealer”
The
duplicate copies of GR/SDF/PP Forms and shipping documents, once submitted to
authorised dealers for negotiation, collection, etc., should not ordinarily be
returned to exporters, except for rectification of errors and resubmission.
Authorised
dealers will also be advised whenever exporters are cautioned in terms of
provisions contained in Regulation 17 of “Export Regulations”. Authorised
dealers should not accept for negotiation/collection shipping documents
covering exports declared on GR/SDF/PP forms completed by such exporters nor
countersign PP forms completed by them unless the GR/SDF/PP forms bear
approval of Reserve Bank.
(i) Authorised
dealers may allow payment of commission, either by remittance or by deduction
from invoice value, on application submitted by the exporter. The remittance on
agency commission may be allowed subject to the following conditions :
(a) Amount of commission has been
declared on GR/SDF/PP/SOFTEX form and accepted by Customs authorities or
Department of Electronics, Government of India/EPZ authorities as the case may
be. In case where the commission has not been declared on GR/SDF/PP/SOFTEX
form, remittance thereof may be allowed after satisfying about the reasons
adduced by the exporter for not declaring commission on Export Declaration
Form, provided a valid agreement/written understanding between the exporter
and/or beneficiary for payment of commission subsists.
(b) The
relative shipment has already been made.
(ii) Authorised
dealers may allow payment of commission by Indian exporters, in respect of
their exports covered under counter trade arrangement through Escrow Accounts
designated in U.S. dollar, subject to the following conditions:—
(a) The payment of commission satisfies
the conditions as at (a) and (b) stipulated in paragraph above.
(b) The
commission is not payable to Escrow Account holders themselves.
(c) The
commission should not be allowed by deduction from the invoice value.
Note :Payment of commission is prohibited on exports made by
Indian partners towards equity participation
in an overseas joint venture/wholly owned subsidiary as also exports under
Rupee Credit Route.
Refund
of export proceeds may be allowed by authorised dealers through whom the
proceeds were originally received, provided such goods are re-imported into
India on account of poor quality, etc., and evidence of re-import has been
submitted. In all such cases, exporters should be advised to surrender the
proportionate incentives availed of, if any, against the relevant export.