A.P.(DIR Series) (2002-2003) Circular No. 106, dated 19-6-2003
Attention of
authorised dealers is invited to the Annexure to A.P.(DIR Series) Circular No.
9 dated August 24, 2000 containing directions to be followed by authorised
dealers while dealing with applications relating to import of goods into India.
With a view to liberalising and simplifying the procedure for import, existing
guidelines have been reviewed and the revised directions are laid down in the
Annexure to this circular.
2. As import trade is regulated by the
Directorate General of Foreign Trade(DGFT) under Ministry of Commerce &
Industry, Department of Commerce, Government of India, authorised dealers,
while undertaking import transactions, should ensure that the imports into
India are in conformity with the Export-Import Policy in force and Foreign
Exchange Management (Current Account Transactions) Rules, 2000 framed by
Government of India vide Notification No. G.S.R.381 (E), dated May 3, 2000 and
the directions issued by Reserve Bank under Foreign Exchange Management Act
from time to time.
3. Authorised dealers have to follow normal
banking procedures and adhere to the provisions of Uniform Customs and
Practices for Documentary Credits (UCPDC), etc. while opening letters of credit
for import into India on behalf of their constituents. In respect of import of
drawings and designs, compliance with the provisions of Research &
Development Cess Act, 1986 may be ensured. Authorised dealers may also advise
importers to ensure compliance with the provisions of Income-tax Act, wherever
applicable.
4. Authorised dealers may bring the
contents of this circular to the notice of their constituents concerned.
5. 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).
Annexure
Import of Goods
Section A
Rules and Regulations from the Exchange
Control angle to be followed by the authorised dealers while undertaking import
payment transactions on behalf of their clients are set out in the following
paragraphs. Where specific regulations do not exist, authorised dealers may be
governed by normal trade practices. Authorised dealers may particularly note
to adhere to “Know Your Customer” (KYC) guidelines issued by Reserve Bank
(Department of Banking Operations & Development)in all their dealings.
Applications by persons, firms and
companies for making payments, exceeding USD 500 or its equivalent, towards
imports into India must be made on appropriate form A 1.
Authorised dealers may freely open
letters of credit and allow remittances for import of goods unless they are
included in the negative list requiring licence under the EXIM Policy in force.
In such cases, licences marked ‘For Exchange Control purposes’ should be called
for and special conditions, if any, attached to such licences adhered to.
Exchange Control copy of the import licence submitted by importer for opening
of Letter of Credit or making remittance, when fully utilised, should be
retained by authorised dealers and may be preserved till its scrutiny by the
internal auditors or inspectors is completed.
Obligation of Purchaser
of Foreign Exchange
(i) In
terms of section 10(6) of the Foreign Exchange Management Act,1999 (FEMA), any
person acquiring foreign exchange is permitted to use it either for the purpose
mentioned in the declaration made by him to an authorised dealer under section
10(5) of the Act or to use it for any other purpose for which acquisition of
exchange is permissible under the said Act, or Rules or Regulations framed
thereunder.
(ii) Where
foreign exchange acquired has been utilised for import of goods into India the
authorised dealer should ensure that importer furnishes an evidence of import
to his satisfaction, as laid down in paragraph A.10.
(iii) In addition to the permitted methods of payment for
imports laid down in Notification No. FEMA14/2000-RB, dated 3rd May 2000,
payment for import can also be made by way of credit to non-resident account of
the overseas exporter maintained with a bank in India. In such cases also
authorised dealer should ensure compliance with the instructions contained in
sub-paragraphs (i) and (ii) above.
Time Limit for
Settlement of Import Payments
(i) In
terms of the extant regulations, remittances against imports should be
completed not later than six months from the date of shipment except in cases
where amounts are withheld towards guarantee of performance etc. Deferred
payment arrangements including payments beyond a period of six months from
date of shipment are treated as External Commercial Borrowings (ECBs). For
deferred or delayed payment imports, authorised dealers may adhere to the
instructions issued vide A.P.(DIR Series) Circular No. 25, dated September 27,
2002 read with regulations 5(3) of Notification No. FEMA 3/2000-RB, dated 3rd
May 2000.
(ii) Authorised
dealers may permit settlement of import dues delayed due to disputes, financial
difficulties etc. Interest in respect of such delayed payments may be permitted
in terms of the directions in para A.7 below.
Note : Remittances
against import of books may be allowed without restriction as to time limit,
provided, interest payment, if any, is as per the instructions in para A.7
Authorised dealers may allow advance
remittance for import of goods without any ceiling subject to the following
conditions :
(a) If
the amount of advance remittance exceeds USD 100,000 or its equivalent, an
unconditional, irrevocable standby Letter of Credit or a guarantee from an
international bank of repute situated outside India or a guarantee of an
authorised dealer in India, if such a guarantee is issued against the
counter-guarantee of an international bank of repute situated outside India,
is obtained.
(b) Physical
import of goods into India is made within six months (three years in case of
capital goods) from the date of remittance and the importer gives an
undertaking to furnish documentary evidence of import within fifteen days from
the close of the relevant period.
(c) In
the event of non-import of goods, authorised dealer should ensure that the
amount of advance remittance is repatriated to India or is utilised for any
other purposes for which release of exchange is permissible under the Act,
Rules or Regulations made thereunder.
Authorised dealers may allow payment of
interest on usance bills or overdue interest for a period of less than three
years from the date of shipment at the rate prescribed in A.P. (DIR Series)
Circular No. 25, dated September 27, 2002 without prior approval of Reserve
Bank.
Where goods are short-supplied, damaged,
short-landed or lost in transit and the Exchange Control copy of the import
licence has already been utilised to cover the opening of a letter of credit
against the original goods which have been lost, the original endorsement to
the extent of the value of the lost goods may be cancelled by authorised
dealers and fresh endorsement to the extent of the remittance for replacement
imports may be made and permitted without reference to Reserve Bank, provided
the insurance claim relating to the lost goods has been settled in favour of
the importer. It may be ensured that the consignment being replaced is shipped
within the validity period of the licence.
In case replacement goods for defective
import are being sent by the overseas supplier before the defective goods
imported earlier are reshipped out of India, authorised dealers may issue
guarantees at the request of importer client for despatch/return of the
defective goods, according to their commercial judgment.
(i) In
case of all imports, where value of foreign exchange remitted/paid for import
into India exceeds USD 25,000 or its equivalent, it is obligatory on the part
of the authorised dealers through whom
the relative remittance was made, to ensure that the importer submits :—
(a) the
Exchange Control copy of the Bill of Entry for home consumption, or
(b) in case of 100% Export Oriented Units the
Exchange Control copy of the Bill of Entry for warehousing, or
(c) Customs Assessment Certificate or Postal
Appraisal Form, as declared by the importer to the Customs Authorities, where
import has been made by post, as an evidence that the goods for which the
payment was made have actually been imported into India.
(ii) Where
imports are made in non-physical form, i.e., software or data through
internet/datacom channels and drawings and designs through e-mail/fax, a
certificate from a Chartered Accountant that the software/data/ drawing/ design
has been received by the importer, may be obtained.
Note : Authorised
dealers should advise importers to keep Customs Authorities informed of the
imports made by them under this clause.
(iii) In respect of imports on D/A basis, authorised dealers should
insist on production of evidence of import at the time of effecting remittance
of import bill. However, if importers fail to produce documentary evidence due
to genuine reasons such as non-arrival of consignment, delay in
delivery/customs clearance of consignment, etc., authorised dealers may, if
satisfied with the genuiness of request, allow reasonable time, not exceeding
three months from the date of remittance, to the importer to submit the
evidence of import.
(iv) Authorised
dealers should acknowledge receipt of evidence of import e.g. Exchange Control
copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment
Certificate, etc., from importers by issuing acknowledgement slips containing
all relevant particulars relating to the import transactions.
(v) Internal
inspectors or auditors (including external auditors appointed by authorised
dealers) should carry out 100 per cent verification of the documents evidencing
import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal
Forms or Customs Assessment Certificates, etc.,
(vi) Documents
evidencing import into India should be preserved by authorised dealers for a
period of one year from the date of its verification. However, in respect of
cases which are under investigation by investigating agencies, the documents
may be destroyed only after obtaining clearance from the investigating agency
concerned.
Authorised dealers may accept either
Exchange Control copy of Bill of Entry for home consumption or a certificate
from the Chief Executive Officer (CEO) or auditor of the company that the goods
for which remittance was made have actually been imported into India provided
:—
(i) the amount of foreign exchange
remitted is less than USD 1,00,000 or its equivalent,
(ii) the
importer is a company listed on a stock exchange in India and whose net worth
is not less than Rs. 100 crores as on the date of its last audited balance
sheet, or the importer is a public sector company or an undertaking of the
Government of India or its departments.
The above facility may also be extended
to autonomous bodies, including scientific bodies/academic institutions, such
as Indian Institute of Science/Indian Institute of Technology etc. whose
accounts are audited by the Comptroller and Auditor General of India(CAG).
Authorised dealers may insist on a declaration from the auditor/CEO of such institutions
that their accounts are audited by CAG.
(i) In
case an importer does not furnish any documentary evidence of import, as
required under paragraphs A.10.1 and 2 above, within 3 months from the date of
remittance involving foreign exchange exceeding USD 25,000, the authorised
dealer should rigorously follow-up for the next 3 months, including issue of
registered letters to the importer.
(ii) Authorised
dealers should forward to Reserve Bank a statement on half- yearly basis as at
the end of June & December of every year, in form BEF (format enclosed)
furnishing details of import transactions, exceeding USD 25,000 in respect of
which importers have defaulted in submission of appropriate document evidencing
import within 6 months from the date of remittance. The said half-yearly
statement should be submitted to the Regional Office of Reserve Bank under
whose jurisdiction the authorised dealer is functioning, within 15 days from
the close of the half-year to which the statement relates.
(i) Import
bills and documents should be received from the banker of the supplier by the
banker of the importer in India. Authorised dealers should not, therefore, make
remittances where import bills have been received directly by the importers
from the overseas supplier, except in the following cases:
a. Where
the value of import bill does not exceed USD 10,000.
b. Import bills received by wholly-owned
Indian subsidiaries of foreign companies from their principals.
c. Import bills received by Super Star
Trading Houses, Star Trading Houses, Trading Houses, Export Houses,100% Export
Oriented Units/ Units in Free Trade Zones, Public Sector Undertakings and
Limited Companies.
d. Where the value of import bill does not
exceed USD 25,000 in respect of import of—
i. books and magazines
ii. life saving drugs/equipments by
Hospitals, etc. and
iii. imports
by reputed research and other development institutions like Tata Institute of
Fundamental Research, C-DOT, Indian Institute of Technology, Indian Institute
of Science and Universities.
e. Import bills received by all limited
companies viz. public limited, deemed public limited and private limited companies.
(ii) In
all other cases, at the request of importer clients, authorised dealers may
receive bills direct from the overseas supplier up to USD 25,000 (U.S. Dollars
Twenty five thousand only), provided the authorised dealer is fully satisfied
about the financial standing/status and track record of the importer customer.
Before extending the facility, authorised dealer should obtain report on each
individual overseas supplier from the overseas banker or reputed credit agency.
(i) Import
of gold on consignment basis - Gold may be imported by the nominated
agencies/banks on consignment basis where the ownership will remain with the
supplier and the importer (consignee) will be acting as an agent of the supplier
(consignor). Remittances towards the cost of import shall be made as and when
sales take place and in terms of the provisions of agreement entered into between
the overseas supplier and nominated agency/bank.
(ii) Import
of gold on unfixed price basis - The nominated agency/bank may import gold on
outright purchase basis subject to the condition that although ownership of the
gold shall be passed on to the importer at the time of import itself, the price
of gold shall be fixed later, as and when the importer sells the gold to the
users.
Note : Instructions
contained in this paragraph would also apply to import of platinum and silver.
Authorised dealers may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International, without approval of Reserve Bank. However, authorised dealers will have to ensure compliance with the extant exchange control directions relating to imports, EXIM policy in force and any other guidelines/directives issued by Reserve Bank in this regard.
Section-B
Authorised dealers may take necessary
precautions in handling merchanting trade transactions or intermediary trade
transactions to ensure that (a) goods involved in the transactions are permitted
to be imported into India, (b) such transactions do not involve foreign
exchange outlay for a period exceeding three months, and (c) all rules,
regulations and directions applicable to export out of India (except Export
Declaration Form) are complied with in respect of the export leg and all rules,
regulations and directions applicable to import (except Bill of Entry) are
complied with in respect of the import leg of merchanting trade transactions.
Authorised dealers are also required to ensure timely receipt of payment for
the export leg of such transactions.
Section-C
Import of currency, including cheques, is governed by clause (g) of sub-section (3) of section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000, made by Reserve Bank vide Notification No. FEMA 6/RB- 2000, dated May 3, 2000 and No. FEMA 38/RB-2001, dated February 27, 2001.