MASTER CIRCULAR NO. 7/2004‑05, DATED
1‑7‑2004, ISSUED BY
Import of
Goods and Services into India is being allowed in terms of section 5 of the
Foreign Exchange Management Act, 1999 (42 of 1999), read with Notification No.
GSR 381(E), dated May 3,2000 as amended from time to time.
2. This Master Circular
consolidates the existing instructions on the subject of "Import of Goods
and Services" at one place. The list of underlying circulars is set out at
Annex‑ 1.
3. As recommended by the
Committee on Procedures and Performance Audit on Public Services (CPPAPS)
(Chairman: Shri S. S. Tarapore) set up by the Reserve Bank, this Master
Circular is being issued with a sunset clause of one year. This circular will
stand withdrawn on July 1, 2005 and be replaced by an updated Master Circular
on the subject.
LIST OF CIRCULARS WHICH HAVE BEEN CONSOLIDATED IN THIS MASTER CIRCULAR ON IMPORT OF GOODS AND SERVICES
|
Sr.No |
Circular No. |
Date |
|
1. |
AP (DIR Series) circular No. 106 |
June 19, 2003 |
|
2. |
AP (DIR Series) circular No. 4 |
July 19,2003 |
|
3. |
AP (DIR Series) circular No. 9 |
August 18, 2003 |
|
4. |
AT (DIR Series) circular No. 15 |
September 17, 2003 |
|
5. |
AP (DIR Series) circular No. 49 |
December 15,2003 |
|
6. |
AP (DIR Series) circular No. 66 |
February 06, 2004 |
|
7. |
AP (DIR Series) circular No. 72 |
February 20, 2004 |
Import
trade is regulated by the Directorate General of Foreign Trade(DGFT) under
Ministry of Commerce and 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 14de 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.
Authorised
dealers should 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,
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 mire 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 USE, 500 or its
equivalent, towards imports into India must be made car 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 mar ked '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 its
scrutiny by the internal auditors or inspectors is completed.
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 famed 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. FEMA
14/2000RB, dated 3rd May 2000, payment for import can also be made he 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.
(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 "here amounts are
withheld towards guarantee of performance etc. Deferred payment arrangements
including suppliers and hovers credit providing for payments beyond a period of
six months from date of shipment upto a period of less than three years are
treated as trade credits for which the procedural guidelines laid down in the
Master Circular for trade credits may be followed.
(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 paraA.7 below.
Note: Remittances against import of
books maybe allowed without restriction as to time limit, provided, interest
payment, if an * v, 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. (i) 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 rotor national 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 art
international bank of repute situated outside India, is obtained,
(ii) In cases where the
importer (other than a Public Sector Company or a Department/Undertaking of the
Government of India /State Governments) is unable to obtain bank guarantee from
overseas suppliers and the Authorised Dealer is satisfied about the track
record and bona fides of the importer, the requirement of the bank guarantee
/standby Letter of Credit may not be insisted upon for advance remittances upto
USD 1,000,000 (US dollar one million). Authorised Dealers may frame their own
internal guidelines to deal with such cases as per a suitable policy framed by
the bank's Board of Directors.
(iii) A Public Sector
Company or a Department /Undertaking of the Central/ State Government/s which
is not in a position to obtain u guarantee from an international bank of repute
against an advance payment, is required to obtain a specific waiver for the
bank guarantee from the Ministry of Finance, Government of India before making advance
remittance exceeding USD 100,000.
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 air under taking 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 front the date of shipment at the rates
prescribed in the Master Circular on trade credits.
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 endorsment to the extent of the value of the lost
goods may be cancelled by authorised dealers and It fresh remittance for
replacement imports 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 then commercial judgment.
i. In case of all
imports, where value of foreign exchange remitted/paid for import into India
exceeds USD 100,000 or its equivalent, it is obligatory on the part of the
authorised dealers though 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, is 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 an 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, it satisfied with the genuineness of
request, allow reasonable time, not exceeding three months from the date
of remittance, to the importer to submit 'he 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. lnternal inspectors or
auditors (including external auditors appointed by authorised dealers) should
carry out 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
orb 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 1,000,000 (USD one million) 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
importers 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 & 2 above, within 3 months from the date of remittance
involving foreign exchange exceeding USD 100,000, 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 and December of every year, in fee in BEF (format enclosed)
furnishing details of import transactions, exceeding USD 100,000 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 100,000.
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. Import bills received
by all limited companies viz. public limited, deemed public limited and private
limited companies.
ii At the request of
importer clients, authorised dealers may receive bills direct from the overseas
supplier as above, 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.
MERCHANTING TRADE
Authorised
dealers may take necessary precautions in handling merchanting trade
transactions or intermediary trade transactions to ensures that (a) goods
involved in the transactions are permitted to be in 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 requited to
ensure timely receipt of payment fur the export leg of such transactions.
Authorized
Dealers may note that short‑term credit either by way of suppliers'
credit or buyers' credit is not available for merchanting trade or intermediary
trade transactions. While undertaking bona fide
merchanting trade transactions on behalf of then trader clients, authorized
dealers should ensure that the terms of payment for the import leg and the
export leg of the transactions are
such that
i the liability for the
import leg of the transaction is extinguished by the payment received for the
export leg of the transaction, without any delay and
ii. the entire merchant trade transaction
is completed within a period of 6 months.
IMPORT OF CURRENCY
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.
(See
paragraph A. 11)
Statement
showing the details of remittances effected towards import in respect of which
documentary evidence has not been received despite reminders
Name and address of AD branch
..........
Name of
Controlling Office of AD branch ..........
Statement
for the half‑IN ear ended ........
Notes :
i. The statement should
be submitted in duplicate, to the Regional Office of Reserve Bank under whose
jurisdiction the A.D. branch is functioning.
ii. Details of
transactions where the amount of remittance exceeds USD 100,000 or its
equivalent should only be included in the statement.
iii. In cases where, at
the time of advance remittance, purpose of remittance was as import and
subsequently the exchange has been used for other purpose for which sale of
exchange is permissible, and a document to the satisfaction of authorised
dealer as been produced, such cases should not be treated as default and hence
be excluded from the BEF statement.
iv, Authorised dealers may
accept 'Into Bond Bill of Entry' as a provisional evidence of import into
India. However, they may ensure submission of Exchange Control cup, of the Bill
of Entry for Home consumption within a reasonable period of time. Where EDI
system has been implemented by customs and the importer receives only one copy
of the "ex‑Bond Bill of Entry" from the customs, Authorised
Dealers may advise importer to submit a photocopy of the "ex‑Bond
Bill of Entry" for home consumption after clearance of the goods from the
warehouse/bond, which may be duly verified by the Authorised Dealer and
accepted as final evidence of import. Cases where 'Into Bond Bill of Entry' has
been submitted need not be reported in BEF statement.
v. The statement should
include details of all remittances, exceeding USD 100,000 from India or
payments from abroad in connection with imports, including advance payments,
delayed payments, etc. irrespective of the source of funding (i.e. EEFC
accounts/ foreign currency accounts maintained in India and abroad, payments
out of external commercial borrowings, foreign investments in the shares of
importers etc.).
vi, The cases reported in
Part I of statement for the previous half‑year should not be reported
again in Pan I of the statement for the current half‑ year,
vii. In case no transaction is required to be reported 'NIL'
statement should be submitted.
viii. Statement should be submitted within 15 days from the close
of the half‑year to which it relates.
INFORMATION REGARDING IMPORTERS WHO HAVE DEFAULTED IN
SUBMISSION OF THE DOCUMENTARY EVIDENCE OF IMPORT
|
Sr. No. |
Importer/ Exporter code No. |
Name and address of the Importer |
No. and Date of import Licences,
if any |
Brief description of goods |
Date of remittance/ payment |
Currency and amount |
Rupee equivalent |
Remark |
||||||||
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
||||||||
|
A. Import by parties other than public sector Undertakings/Government
Departments |
||||||||||||||||
|
1 |
|
|
|
|
|
|
|
|
||||||||
|
2 |
|
|
|
|
|
|
|
|
||||||||
|
3 |
|
|
|
|
|
|
|
|
||||||||
|
4 |
|
|
|
|
|
|
|
|
||||||||
|
Etc. |
|
|
|
|
|
|
|
|
||||||||
|
Sr. No. |
Importer/ Exporter code No. |
Name and address of the Importer |
No. and Date of import Licences,
if any |
Brief description of goods |
Date of remittance/ payment |
Currency and amount |
Rupee equivalent |
Remark |
||||||||
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
||||||||
|
B. Import by Public Sector
Undertaking/Government Department |
||||||||||||||||
|
1 |
|
|
|
|
|
|
|
|
||||||||
|
2 |
|
|
|
|
|
|
|
|
||||||||
|
3 |
|
|
|
|
|
|
|
|
||||||||
|
4 |
|
|
|
|
|
|
|
|
||||||||
|
5 |
|
|
|
|
|
|
|
|
||||||||
|
Etc. |
|
|
|
|
|
|
|
|
||||||||
Information regarding subsequent
receipt of documentary evidence of Import from importers whose names were
reported in Part I of earlier BEF statement/s
|
Sr. No. |
Name and address of the importer |
Period of the BEF statement and serial No. of the
transaction reported earlier in Part I of BEF statement |
Date of receipt |
Amount
of remittance Currency & Rupee Amount equivalent |
Remarks |
|
1 |
2 |
3 |
4 |
5 |
6 |
|
A. Import by parties other than Public Sector Undertakings/Government
Departments |
|||||
|
1 |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
3 |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
Etc. |
|
|
|
|
|
|
B. Import by Public Sector Undertakings/Government
Departments |
|||||
|
|
|||||
|
|
|||||
Note : The
transactions reported in Part II of BEE statement of earlier half‑year
should not be repeated in Part Ii of the current half‑year.
i. We
certify that the particulars furnished above are true and correct as per our
records.
ii. We further certify that the statement
includes all cases which are required to be reported under the prescribed
procedure,
iii. We undertake to continue to pursue the cases with the
importers reported in Part I of the statement.
Stamp
(Signature
of the Authorised Official)
Place:
Date:
Name:
Designation:
[Not Reproduced]