MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

MASTER CIRCULAR NO. 8/2004‑05, DATED 1‑7‑2004, ISSUED BY FOREIGN EXCHANGE DEPARTMENT, RBI

Export of Goods and Services from India is allowed in terms of clause (a) of sub‑section (1) and sub‑section (3) of section 7 of the Foreign Exchange Management Act, 1999 (42 of 1999), read with Notification No. GSR 381 (E) dated May 3, 2000 and FEMA Notification 23 /RB‑2000 dated May 3, 2000 as amended from time to time.

2. This Master Circular consolidates the existing instructions on the subject of "Export 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 This circular will stand withdrawn on July 1, 2003 and be replaced by an updated Master Circular on the subject.

ANNEX I

LIST OF CIRCULARS WHICH HAVE BEEN CONSOLIDATED IN THIS MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

Sr. No.	Circular No.	Date
1.	A.P. (DIR Series) Circular No. 4	August 27,2001
	A.P. (DIR Series) Circular No. 5	August 27, 2001
3.	A.P. (DIR Series) Circular No. 6	September 24, 2001
4.	A.P. (DIR Series) Circular No. 9	October 25, 2001
5.	A.P. (DIR Series) Circular No. 10	November 1, 2001
6.	A.P. (DIR Series) Circular No. 20	January 28, 2002
7.	A.P. (DIR Series) Circular No. 30	March 26 2002
8.	A.P. (DIR Series) Circular No. 34	April 1, 2002
9.	A.P. (DIR Series) Circular No. 35	April 1, 2002
10.	A.P. (DIR Series) Circular No. 38	April 12, 2002
11.	A.R (DIR Series) Circular No. 53	June 27, 2002
12.	A.P. (DIR Series) Circular No. 54	June 29, 2002
13.	A.P. (DIR Series) Circular No. 2	July 4, 2002
14.	A.P. (DIR Series) Circular No. 10	August 14, 2662
15.	A.P. (DIR cries) Circular No. 11	August 14, 2002
16.	A.P. (DIR Series) Circular No. 12	August 28, 2002
17.	A.P. (DIR Series) Circular No. 21	September 16, 2002
18.	A.P. (DIR Series) Circular No. 28	October 3, 2002

Sr. No.	Circular No.	Date
19.	A.P. (DIR Series) Circular No. 33	October 23, 2002
20.	A.P. (DIR Series) Circular No. 34	October 31, 2002
21.	A.P. (DIR Series) Circular No. 41	November 8, 2002
22.	A.P. (DIR Series) Circular No. 61	December 14, 2002
23.	A.P. (DIR Series) Circular No. 62	December 17, 2002
24.	AT, (DIR Series) Circular No. 78	February 14, 2003
25.	A.P. (DIR Set test Circular No. 91	April 1, 2003
26.	A.P. (DIR Series) Circular No. 94	April 26, 2003
27.	AT, (DIR Series) Circular No. 100	May 2, 2003
28.	A.P. (DIR Series) Circular No. 104	May 31, 2003
29.	A.P. (DIR Series) Circular No. 105	June 16,2003
30.	A.P. (DIR Series) Circular No. 8	August 16, 2003
31.	A.P. (DIR Series) Circular No. 12	August 20, 2003
32.	A.P. (DIR Series) Circular No 20	September 23,2003
33.	A.P. (DIR Series) Circular No. 22	September 24, 2003
34.	A.P. (DIR Series) Circular No. 26	October 3, 2003
35	A.P. (DIR Series) Circular No. 30	October 21, 2003
36	A.P. (DIR Series) Circular No. 32	October 28, 2003
37.	A.P. (DIR Series) Circular No. 40	December 5, 2003
38.	A.P. (DIR Series) Circular No. 61	January 31, 2004
39	A.P. (DIR Series) Circular No. 68	February 11, 2004
40.	A.P. (DIR Series) Circular No. 73	February 20, 2004
41.	A.P. (DIR Series) Circular No. 94	June 7, 2004
42.	A.P. (DIR Series) Circular No. 96	June 15, 2004

PARTI

INTRODUCTION

Expoit uade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices,

functioning under the Ministry of Commerce and Industi ics, Department of Commei ce, Government of India.

Policies and procedures t equired tube followed for expon Is from India ate announced by the DGFT. Authoi ised

dealers may conduct export transactions in conformitv with the Export‑Import Policy in vogue and the Rules

framed by the Government of India and the Fit ectionsissued by ReNerve Bank ft om time to time under the Act.

2. Attention of authonsed dealers is invited to the Government of India Notification No. G.S.R.38 I (E) dated Mav

3,2000, notifying the Foreign Exchange Management (Current Account Transactions) Rules, 2000, in terms of

which drawal of exchange for certain current account transactions has been prohibited and restrictions have

been placed on certain other transactions. In terms of Rule 4 ibid, the transactions specified in Schcciule II to

tile said Notification requite prior approval of the Gowrnment of India and in terms of tile Rule 5, the

It ansactions specified in Schedule III to the Notification require pi ior approval of the Reserx a Bank. Authoribed

dealers may follow directions contained in Part III while dealing with applications j elating to export of goods

and scri ices from India. It is toy ther clarified that tire directions contained in this Circular should be lead with

the Rules notified by the Govet nment of India, Ministr v of Finance, vide Notif ication dated May 3 200n, and

annexed as Part II of this circular as also Regulations notified by Reserve Bank vide its Notification No.FEMA

23/2000‑RB dated 3rd May, 2000 as amended from time to time.

MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES 101

3. The Reserve Bank has made the Foreign Exchange Management (Export and ftnpbrt of Currency) Regulations, 2000 vide its Notification NoTEMA 6/RB‑2000 doted 3rd May, 2000 and subsequently modified vide Notification NoTEMA 38/2001 ‑ RB dated 27th February, 2001. Anv export of Indian currency of value exceeding Rs. 5000 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 NoTEMA 8/RB dated 3rd MaN, 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 scrvices against repayment of state credits grapted by erstwhile Soviet Union will continue to be governed by the extant directions issued by Reserve Bahk, 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 iinports made into India in terms of a voluntarily entered arrangement between the concerned parties, subject to thL'condition, among others that the Indian exporter should utilise the funds for import of goods from Romania into judia within six months from the date of credit to Esci ow Accounts allowed to be opened.

PARTH

EXPORT OF GOODS AND SERVICES

SECTION 'A'

GENERAL

A. 1 Trade and Exchange Control

(i) In exercise of the powers conferred by clause (a) of sub‑section (1), sub‑section (3) of section 7 and scbsection (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 videNotification No. TEMA 23"2000‑RB, dated 3rdMay,2000, as amended fi orn nine to time.

(it) Any reference to Reserve Bank should be made to the office of Foreign Exchange Department within whosejurisdiction the applicant person, firm orcomparry resides orfunctions unless otherwise indicated. If for any particular reason, a fit m or comparo, desires to deal with a diffei Car office of the Foreign Exchange Department, it may approach the office within whose jurisdiction it functions for necessary approval.

A.2 Exemptions from Declarations

(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. Exporters have been exempted from submission of declaration in prescribed format for exports of value not exceeding US $ 25,000 or its equivalent. The exporters shall however, be liable to realize and repatriate export proceeds as per FEMA Regulations.

(it) Gift of goods exceeding rupees five Jakhs; in value require approval of the Reserve Bank,

(iii) Authorised Dealers mav consider requests for grant of GR waiver from exporters for export of goods free of cost, for export promotion upto 2 per cent of average annual exports of the applicant during the preceding thi ce years subject to a ceiling of Rs. 5 lakhs.

fir) Export of goods not involving any foreign exchange transaction directly or indirectly, requires the waiver of GR/PP procedure from Reserve Bank.

A.3 Numbering of forms

GR, PP and SO FTEX forms will bear specific identification numbers. In all applications/correspondence with the Reserve Bank, this identification numbershould invariablv be cited. In the case of declarations made on SDF form, the port code number and shipping bill number should be cited.

102 MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

AA Manner of Payment

(d The amount representing the full export N aluc of tire goods exported shall he received through an authurised dealer in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA 14/2000‑RB, dated 3h d May 2000.

(n) Payment for export mav also be received by the exporter in the following mannet

a in the form of bank draft, pay order, banker's or personal cbeques.

b. Foreign currency notes/funeign currency travellers' cbeques 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 & GR/SDF (duplicate) should be released by the authorised dealers only on receipt of funds in their Nosti o account or on production of a certificate by the exporter from the Credit Card servicing bank in India to the effect that it has i eceived the equivalent amount in foreign exchange, if the authorised dealer concerned is not the Credit Card servicing bank, ADs mro also i eccive payment for experts made out of India by debit to the credit card of an importer where the reimbursement from the card issuing bank/oiganisation pill be received in foreign exchange

e. All ti ansactions; between a person resident in India and a per‑son resident in Nepal may be settled in Rupees. However, in case of export of goods to Nepal, where an impoi tct resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such priNments shall be jouted through the ACU mechanism.

,&~PaYnncntof export may also be received by the Gem & Jewellery units in SEZs and EOUs in the form of precious metals ~e. Gold /Silver/Platinum equixalent to value of jewellerv exported on the condition that the sale contract piovidesfoi the same and the approximate iairic of theprecious metals is indicated in the relevant GR/SJDF/PP Forms.

A.5 Guarantees against Exports

Prior approval of Reserve Bank should be obtained by authorised dealers for issue of guarantees in respect of caution‑listed exporter s.

A.6 (I) Foreign Currency Accounts

Reserve Bank may consider applications in Form EFC h om exporter s having good track occur d for opening foreign currency accounts with banks subject to cei tain tet nis and conditions. Applicatioris let opening such an account With a branch of an authm, ised dealer in India may be submitted through the branch at which the f('Feigll cur rencN account is to be maintained If the foreign curi enev account is to be maintained abroad the application should be made bv theexporter giving details of the bank with which the accourit will be maintained. An Indian cruity has also been permitted to open, hold and maintain in the name of its office/branch set up outside India, a foreign cur renev account with a bank outside by making remittance for the purpose of normal business operations of the said office/branch or repi eentative subject to certain conditions.

Indian corporates who have set up overseas offices abroad have beenpermitted to acquire immovable property outside India for their business as also staff residential purposes with prior permission of RBI, until further notice.

A unit located in a Special Economic Zone (SEZ) may be allowed to open, hold and maintain a Inteigir Cut relarv Account with an authonsed dealer in India subject to certain specified conditions.

A person resident in India being a project/service exporter may open, hold and maintain Foreign Currencv Account "oh a bank outside or in India, subject to cei tain ter ms and conditions.

(it) Diamond Dollar Account

Under the scheme of Government of India, firms and companies dealing in purchase/sale of rough or cut and polished diamonds/diamond studded jewellerv, with track record of at least three years in import or export of diamonds and havingo air averigeannual tu‑nover of Rs. 5 croi es or above during preceding three licensing veat s (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts and may be allowed to open not more than five Diamond Dollar Accounts with their banks.

MASTEWCIRCULAR ON EXPORT OF GOODS AND SERVICFS 103

Accordingly, eligible firms and companies may apply for permission to the Chief General Manager, Foreign Exchange Department, Trade Dbisioll, Reserve Bank of India, Ceirt al Office, Mumbal 400 001, through then authutised dealer,

(!it) Exchange Earners' Foreign Currency (EEFC) Account

A person resident in India may open, hold arid maintain with an authorised dealcl ill India, a foreign currency accouritto be known as Exchange Earners'Foreign Currency (EEFQ Account. This account will be maintained only in the form of rion‑irucrest bearing current account and no credit facilities either fund‑based or nun4 und based, should be permitted against tire security of balances held in EEFC accounts, by the authorised dealers. The limits of eligible ci edits tothe EEFC accounts are I 00tc forStaux Holder Exporter (as defined in Exim Policy in force), a resident in India fin ptofesionalseivicus rendered in his personal capacity and 100()6 Export Oriented Unit/&, Unit/s in Export Processing Zones (EPZs), Software Technology Park (STP) and Electronic Hardware Technology Pat k (EHTPs) and 50% for other pin sons resident in India in respect of in%vat d remitt once T eccived through normal banking channel, other than the remittance received pursuant to any under taking given to the Rcserx c Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder.

Payments received in foreign exchange by a unit in Domestic Tariff Area (DTA) for supply of goods to a unit in Special Economic Zones out of its foreign currency A/c. are to be ti cored as eligible foreign exchange earnings for the purpose of credit to the EEFC A /c. Authorised Dealers may credit such payments receii ed in foreign exchange by a unit in DTA to its EEFC A/c.

Authorised Dealers may till furthei notice, permit their exporter constituents to extend trade related loans/ tel,ances to overseas importers out of their EEFC balances without any ceiling subject to compliance of provisions of Notification No.FEMA 3/2000‑RB dated 31d May, 2000 as amended It in time to time.

Authorised Dealers may permit exporters to repay packing credit advances whether availed in Rupee or in foreign currency from balances in their EEFC A/c. and/or rupee resources to the extent exports have actually taken place.

IN) Supply of goods from units in Special Economic Zones (SEZs) to units In Domestic Tariff Area

(DTA)

Authonsed Dealers may permit units in DTAs to put chase foreign exchange for making payment for goods supplied to them by units in SFZs.

A.7 Counter‑trade Arrangement

(i) Countertrade proposals involving adjustment of value of goods imported into India against valueof goods exported from India in ternis, of an arrangement voluntarily entered into between the Indian party and the oN ersects party thi oulph an Escrow Account opened in India in U.S. dollar will be considered by the Reserve Bank. All imports and exports under the to i angernerit should be at international prices in conformity xvith the Exim Policy and Foreign Exchange Manalocluent Act, 1999 and the Rules arid Regulations made thereundet, No interest willbe pay able 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 late. No fund hased/or non‑fund based facilities would be permitted against the balances in the Fserow Account.

(a) Application for permission for opening an Esciow Account may be made by the oyciscas exporter/ orgarlisation through the authorised dealerwithwhom theaQcount is proposed tobcopened, to theoffice of Reserve Bank under "nose jurisdiction the authorised dealer is functioning.

A.8 Export of goods on lease, hire, etc.

Export of machinery, equipment, etc., cry lease,hire, etc., basis underagreement with the overseas lessee against collection af lease rentals/hire charges and ultimate i e‑import require In ior approval of the Reserve Bank. Exporters should apply for necessary permission, through an authonsed dealer, to the concerned Regional office of the Reserve Bank, gining full particulars of the goods to be exported.

A.9 Participation in Trade Fairs abroad

(i) Participants in international exhibition /trade fair have been granted general permission vide Regulation

7(7) of the Foreign Exchan ' ge Management (Foreign Currency Account by a Person Resident in India)

Regulations, 2000 notilied under Notification No. FEMA 10/2000‑RB, dated 3rd May, 2000 for opening

104 MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

temporary foreign currency account abroad. Exporters may deposit tile foreign exchange obtained, by sale of goods, at the international exhibition/ trade fair and operate the account during their staN outside India pro% ided that the balance in the account is i epitriated to India within a period of one month it out the date of closure of the exhibition/tracte fair and full details at c submitted to the concerned authorised dealer.

(it) Firms/Crunpanies and other orgamsations participating in Trade Fair/ Exhibition abroad are now permitted to take/expoit goods for exhibition and sale outside India without the prior approval of the Reserve Bank of India. Unsold exhibit items may be sold outside the exhibition/trade fair in the sarne country or in another third country. Such sales at discounted value are also permissible. It would also be permissible to'gift'unsold goods upto the value of US $ 5000 per exporter, per exhibition/ trade fair.

Authorised Dealers may approve GR Form of export items for display or display‑cu"r‑sale in trade fairs/ exhibitions outside India subject to the following :

i The exporter shall produce relative Bill of Entry within one month of re‑import into India of the unsold items.

L The sale proceeds of the items sold are repatriated to India in accordance with Foreign Exchange Management (Realisation, Repatriation, and Surrender of Foreign Exchange) Regulations, 2000.

iii. The exporter shall report to the Authorised Dealer the method of disposal of all items exported, as well as the repatriation of proceeds to India.

Such transactions approved by the Author ised Dealers will be subject to 10006 audit by the internal inspectors/ auditors of the Authorised Dealer concerned.

A. 10 Project Exports and Service Exports

Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construc. tion 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/Exiin Bank/Working Group at post‑award stage before undertaking execution of such contracts. Regulations i elating to 'Project Expurts'and 'Service Exports'are laid down in the revised Memorandum on Project Expolts(PEM).

A. 11 Export on Elongated Credit Terms

Exporters intending to export goods on elongated credit terms mav submit their proposals giving full particulars through their banks to the concerned Regional Office of Reserve Bank for consideration,

In the case of expel t of books on consignment basis, ADs mav approve such proposals allowing for readisation

of export proceeds upto 360davs from the date of shipment. The exportersmaybe allowed toallainclonthe books

which i emain unsold at the expirv of the period of (he sale contract. Accordingly, the value of the unsold books

may be shown b ' v the exporters as deduction from the export proceeds in the Account Sales.

A. 12 Export of goods by Special Economic Zone . Job work abroad

Units in SEZs are permitted to undertake job work abroad and export goods from that country itself subject to the conditions that

L Processing/ manufacturing charges are suitably loaded in the export price and are borne by the ultimate bu ver.

E The exporter has made satisfactory arrangements for realisation of full export proceeds subject to the usual GR procedure.

A. 13 Forfeiting

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 iuthorised dealers to allow remittance of commitment fee/service charges, etc., pavable be the exporter as approved by the Exint Bank/the concerned authorised dealer. Such remittance may be permitted in advance in one lump sum or at monfliIN intervals as approved bv the concerned agency.

MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES 105

SECTIONZI

GR/PP/SOFTEX PROCEDURE

1.1 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 (fie shipping bill. Customs will give their 1 unning serial number on both the copies after admitting the corresponding shipping bill. The Customs serial nuorbei will have ton numerals dcnoting the code number of the port of shipment, the calendar year and a six digit running serial number. Customs wilt certify the value declared bN the exporter on both the copies of the GR format 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 quantitx passed fua 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 expoi t, exporter should lodge the duplicate copy together with relative shipping documents and an extracopv of theinvoice with the authorised dealernamed inthe GRfia rn. After the documents have been negotiated /sent forcollection, the authonsed dealer should report the transaction to Reserve Bank in ~tatement ENC under cover of appropriate RSuplatementarv Return, However, the duplicate copy of the form together with a copy of invoice etc.will hencefoi th be Yetainedby the authorised dealerand maynot be submitted to Reserve Bank.

Note:

0) In the case of exports made under defer red ci edit arrangement or to joint ventures abroad against equity participation or under rupee credit agreement, the number and clate of Reserve Bank approval and/or number and date of the relative RBI circular should be i ecrit den at the appropi iate 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 (EDDSystem at certainCustoms offices where shipping bills ai c la ocessed clecti onically, the existing declaration in GR form is i eplaced by a declai ation in Form SDF (Statutory Declaration Form). The SDF form should be submitted in duplicate (to be annexed to the i clative shipping bill) to the concet tied Commissioner of Customs. After venfNing and autbenticatinlo 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 tire authorised dealer within 21 days from the date of export. The authorised dcilez 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 Bin (and Form SDF appended thereto) is same as that fut GR forms.

(d) in cases where ECGC initially settles the claims of exporters in respect of exports insured with them and subsequently receives theexpon proceeds from the buyei /buyer's country tbi ough the efforts made by them, the share of expot ters in the animint so received isdisbursed through the bank which had handled the shipping documents. In such cases, ECGC will issue a certificate (o the bank which hadhandled the i elevant shipping der uments afterfull proceeds havebeen received. The certificate will indicate the number of declaration form, name of the exportei, name of the authorised dealer, date of negotiation, bill number, invoice value and the amount actually received by ECGC.

(e) The authorised dealer should ensure by random check of the relevant duplicate forms by their internal /concurrent auditors to confirm that non‑realisation or short realization allowed, if any, is w ithm the powers delegated to them ot has been duly appi oved by Reserve Bank, wherever necessary,

106 MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

(fl Where a part of exism t proceeds are credited to EEFC account, the export declaration (dvplicate~l form maN be cet tified asunder:

'Proceeds amounting to representing 0o of the export realisation credited to EEFC account

maintained bv the expornei with .

(h) The manocr of disposal of PP forms is same as that for GR for ms. Postal authorities will allow export of goods by post only if the original cop) oi the fin in has been countei signed bv an authorised dealer Therefore, PP furmsshould be first m esentedbythe exportertoart author ised dealer forcountersignalure. Authorised dealer will countei sign the forms in accordance with directions in paragraph B.2 and i etum the onginal cop~ 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 bN the authorised dealer to whom the exporter should submit relevant documents together with anextracopyof invoice for negotiation/collection, "ithin the prescribed period of t"entv‑one days.

B. 2 Countersignature on PP Forms

PP forms will be presented by the exporter to an authorised dealer for countersignature. Authorised dealet s should countersign the PP forms after ensuring that the parcel is being addressed to their branch or coti,,spondent bank in the courtiv of import, The concerned overseas branch or correspondent should be

instructed tudeliverthe parcelto consignee againsrpawrient oracceptance of relative bii].Authorised dealeis

may, however, countersign PP forms covering parcels addressed direct to the consignees, provide,] :‑ I

a an irrevocable letter of credit for the full value of the export has been opened in favow of exporter and has been advised thn ough authonsed dealer concerned;

or

the full value of the shipmenthas beenreceivedin advariceby the exporter through an authorised dealer; or

b. 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.

Inbuch cases, particulars of advance payment/letter of credit/aulliorised dealer's ceitificationof standing, etc., of the exporter should be furnished on the form under propei authentication. Any alteration in the name and addressof consigneeon the PPmr1n should also be authenticated by theauthorised dealer under his stamp and signature.

B.3.A. Terms of payment ‑ Invoicing ‑ (Software)

(i) In respect of long duration contracts involving series of transmissions, the exporters should bill then overseas clients periodically, i.e., at least once a month or on reaching the'milestone'as provided in the corn act entered into with the overseas client and the last inx oice/bill hould be raised not later than IS 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 over‑seas client, including advance remittances i eceived in a month.

(it) In respect of contracts involving ooly'one shot operation', the invoice/bill should be raised within 15 days from the date of transmission.

(in) The exporter should submit declaration in Form SOFTEX in triplicate in respect of expoi I of computer software and audio/video/television software to the concerned designated official of Government of India at S"I*PI/EPZ/F7Z/SEZ for valuation/certitication not latertbap 30daysfrorn thedatcof invoi~c!

thedatemi list in% nice raised in a month, as indicated above. The designated officials may also certify the SOFTEX Forms in respect of EOUs which are registered with them.

(iv) The invoices raised on overseas clients as at(i) to (in) above will be subject to valuation of export declared on SOFTEX form by the concerned designated official of Government of India and consequent amendment made in the invoice value, if ncc~ssary.

13.3,B. Disposal of SOFTEX forms

As for disposal of SOFTEX forms the procedure indicated in Regulation 6 of Export Regulations is to be observed. However the duplicate copy of the form together with a copy of invoice etc. will henceforth be retained by the authorised dealer and may not be submitted to Reserve Bank.

MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES 107

B.4 Shut out shipments and Short Shipments

(i) When part of a shipment covered bN a GR form alread) 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‑shipincirt notice front Customs, exporter should give air 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.

(u) Where a shipment has been entirely shut out and there is dela ‑ v 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 for in 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 for in. In this casc, the original GR form received eat bet

from Customs will be cancelled. If the shipment is made subsequently, a fresh set of GR form should be

completed.

B.5 Consolidation of Air Cargo

Where air cargo is shipped under consolidation, the air line company's Master Airway Bill will be issued to the Consolidating Cargo Agent who will in turn issue his own House Airwav Bills (HAWBs) to individual shippers. Author ised dealers may negotiate HAWBsonIv if the relative Ictterof credit specifically provides fornegotiation of these documents in lieu of Air way Bills issued by the air line company. Authorised dealers may also accept Forwarder's Cargo Receipts (FCR) issued by steamship companies or then, agents (instead of'IAiA'approved agents), in lieu of bills of lading, for negoTiation/collection of shipping documents, in respect of export transactions backed by letters of credit, only if the j clative letter of ci edit specifically pi o\ ides for negotitnion of this document, in lieu of bill of lading. For ther, i clative sale contract with the overseas buyer should also provide that FCR may be accepted in lieu of bill of lading as a shipping document.

B.6 Exports by Barges/Country Craft/Road Transport

Following procedure should be adoptedbv exporters forfiling miginalcopies of GR/SDF forms where exports are made to neighbouring countries by road, rail or river ti ansPort:

a In case of exports by barges/countr ' v craft/road transport, the form should be presented lt~ expoiteror

his agent at the Customs station at the hot der tin ough which tire N essel or N chicle has to pass before

crossing over to the foreign territoi y. For this purpose, exporter may at i inge either to give the I orm to

the person in charge of the vessel or vehicle or fen ward 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. The ‑ v will collect t he GR/SDF forms in respect of goods loaded at these

station, so that the goods nmN move sit aight on to the I ce eign country without further f,)rmaluics at the

border. The list of designated i ailwav stations is obtainable froin the Ratilwa vs. In respect of goods)oaded

at stations other than the designated stations, exporters must at range to pa esent GR/S DF forms to the

Customs Officer at the Border Land Customs Station whet e Customs formalities are completed.

c. fit tcrms of an agreement on Bar dei Trade between India and Mvimmar, exchange of cei tain specified locally prod need commodities, by people living along the Incha‑kt, anmai border on both sides a ncei barter trade arrangement as also trade in freely convertible currency, has been permitted. Authorised dealer s should follow sit ictly I he revised guidelines issued in terms of A.P.(DIR Series) Circular No. 17, dated 16‑10‑2000.

SECTION C

AUTHORISED DEALER'S OBLIGATION

C. I Delay in submistoon of shipping documents by exporters

In cases where exact i ci s present documents pertaining it, expoi i s after the preset ibed per rod of bventy‑one days fi on‑, date of expoi t, an( hurised dealers may handle thern without prior approval of Reserve Ba us, provided they ate satisfied with the i easons for the deW.

isi nar wart tire i easons Yor me crew.

108 MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

C. 2 Check‑list for Scrutiny of Forms

Authoritsed dealer/exporter should verify the following:

c Authorised dealer should ensure that the number on the duplicate copy of a GR for m presented to them is the same as that (if the original which is usually recorded on the Bill of Lading/Shipping Bill and the duplicate has been duty verified and authenticated by appropriate Customs authorities. In the case of SDF for an, the Shipping Bill No. should be the same as that appearing on the Bill of Lading.

ii. Bill of Lading/Airwav 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.& I. 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 forin or the actual amount of freight indicated on the Bill off‑ading/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.

in. The documents submitted do not reveal an~ material inter se discrepancies in regard to description of goods exported, export value or country of destination.

Note:

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. & I. contracts, par I (it whole of any freight merease 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, buyer s have agreed to an increase in price.

B. In cases where the documents at c 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 w ith Regulation 12 of "Export Regulations".

C~ In certainlines of exporttrade, final settlement of price maybe dependent onthe resultsof quality analysis

of samples ch awn at the thme of shipment; but the results of suchanalvsis will become available only after

the shipment has been made. Sometimes, contracts may provide for payment of penalty forlate shipment

of goods in confoi mity witf, trade practice concerning the commodity. In these cases, while expoi ter s

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 penalt ' v, 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.

C.3 Trade Discount

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 maN 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.

CA Advance Payments against Exports

Exporters may receive advance payments (whir 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 ach once remittance.

Note: Purchase of foreign exchangefrom the market for refunding advance payment credited to FEFC account may be allowed only after milising the entire balances held in the exporter's EEFC accounts maintained at

different braDches/bankb.

C.5 Part Drawings

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

MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES  109

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 fur realisation.

Note : In cases where exporter has not been able to arrange for repatriation of the undrawa balance in spite of bestefforts, authorised dealet son being satisfied with thebona lidesof thecase,should ensure that the exporter has reati,ect at least the value for which the bill was initially drawn (excluding undrawn balances) or90% of the value declared on GR/PP/SDF form, whichever is more and a period of one yearhas elapsed from the date of shipment.

C.6 Consignment Exports

(i) When goods have been exported on consignment basis, authorised dealer, while forwarding shipping documents to his overseas branch /correspondent, should instructthe latterto deliver them onlv against trust receipt / undertaking to delixei safe proceeds by a specified date within the period prescribed for realisationof proceedsof 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.

(n) The agents/consignees may deduct from sale proceedsof thegoods expenses normally incurredtowards receipt, storage and sale ofthe goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter.

(fit) The account sales received from the Agent/Consignee should be verified by the authorised dealer. Deductions inAccount Salesshould be supported by bifls/reccipts in original except in cascof pett% items like postage/cable charges, stamp duty etc.

Notes:

A. Incaseof goods Qxporledorr consignment basis, freight andmarine insurance must be arranged in India.

B. Reserve Bank will permit, on application, exporters with satisfactorv track record a longer pet iod up to twelve months for realisation of export proceeds for exports on consignment hasis made to CIS countries and East Em opean countries financed in any permitted currency.

C~ Authorised Dealers may consider the applications received from exporters and grant permission fur opening/hiring warehouses ahroad subject to the following conditions:

a Applicant's export outstanding does not exceed 5 percent of export s made during the previous year.

b. Applicant has a minimum export turnover of USD 1,00,000 during the last year.

c. Period of realisatiun should be as applicable Le., 180 days for non‑status holder exporters and 365 days for status holder exporters.

d. All transactions should be routed through the designated branch of the authorized dealer,

The above permissions may be granted to the exporters initially for a period of one year and the renewal thereof may be considered subject to the applicant satisfying the requirement at (a) above. Authorised Dealersgranting such permission/ approvals should maintain a proper record of the approvals granted,

C.7 Despatch of Shtpping Documents

(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 conti act/letter of ci edit provides for despatch of documents dii cut to the consignee or his agent resident in the country of final destination of goods.

(it) In cases not covered by (t) above also, authorised dealers may accede to the request of the exporter; for despatch of documents for whatever reason, direct to the cunsignee/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 i equest can be acceded

110 MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

(in) Docurrientsin respectof goods orsoftwarewhich areaccomparried with a declaration by the exporter that they are lot more than rupees tw eniv live thousand in value and not declared on GR/SDF/PP/SOFTEX form, in terms of paragraph A.2 may be dit ccrv sent by the exporter to the consignee.

(iv) Documcritsm respect of goods exported against 100% advance remittance, in terms of paragraph CA may be direeth, sent by tbeerciantertiotbe consignee.

(v) Authorised Dealers mav permit'Status Holder Expel teis'(a~ delined in the EXIM Policy), and units in Special Economic Zones (SEZ) to despatch the export documents to the consigneesoutside India subject to the terms and conditions that

a. the expoi t proceeds are i epatriated throuidt the authorised dealta named in the GR Fomi and

b. the duplicate copy of the GR form is submitted to the Authorised Dealer for monitoring purposes, by the exporters within 21 days from the date of export.

C.8 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative

Authorised dealer s mav deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative, in rcspect of cNpurts to certain landlocked colon ics if the shipment is covered by an irrevocable lettei of credit and the documents conform strictly to tire let ms of the Letter of Credit which, truer alia, provides for such delivery.

C.9 Export Hills Register

i. Audionsed dealers should maintain Export Bills Register, in physical or electronic form. Details of GR/ SDF/PP form number, due date of payment, the for mightly period of R Supplementary Return with which ENC statement covering the transaction %,as sent to Reserve Bank, should 1yeavailable.

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. JarluarytoDecember). The billnumbers should be recorded in ENC statement and other relevant returns submitted to Reserve Bank.

C.10 Follow‑up of Overdue Bills

(i) Authorised dealers shouid closely watch realisation of billsand in cases wherebills remain outstanding,

beyond the due date forpavirient orsix monthsirom the date of export, the matter should bepromptly

taken upwith the concerned exporter. If the extiorter fails to arrange fordelivervof the proceeds, within

six months orseek extensionof time beyond sixtymnims thernaltershould be reported to Reserve Bank

stating, where possible, the reason fur the delay in realising the proceeds. The duplicate copies of GR/

SDF/ PPFor‑nissh.Lild,hOWCVCI',COnttl~Lictobelielib ' vautlunieddealci until full or oceeds are realisord

except in caseof undrawn balances covered byNote underparagraph C 5.Authmised dealersshould

follow up export outstanding with exporters systematicalb and iigoroush, so that action against

defaulting exporter s does not get delived. Any laxity in [fie follow up of i calisation of export proceeds by

authorised dealers will be viewed seriously by Reserve Bank leading to the invocation ot the penal

provisurn under TEMA 1999.

(d) Exporters whodhave been certified asStatus Holder'ni terms of EXIM Policy are permitted to realise and repatriate the full value of export proceeds within a period of 12 months from tile date of shipment.

(ih) The stipulation of twelve months orextoreded period thereof forrealisation of export proceeds is no longer applicable foi units located in Special Economic Zones (SEZs). The units in SEZs will however continue to follow the GR/PP/Softex export fa ocedure utfined in Section B ‑ Par'[ III of this circular.

(w) Acthoriseddeiters should furnish to ReserveBank, on half‑yearly basis, aconsolidated statement in Form XOS living details of all export hills outstanding beyond six months from the date of export as at the end of June and December everv vcai. The statement should be submitted in triplicate within fifteen days fi oin the close of the relative half‑yean

C. I I Reduction in invoice value on account of prepayment of usance bills

Occasionally, exportei s our, appi each author ised dealers for reduction in invoice value on account of cash discount tooverseas buyers forpreprovinem of the usance bills. In such cases authorised dealers may allow cash discuunt to the extent of amount of proportionate interest on the unexpii ed period of usance, calculated at the rate of interest stipulated in the expui I conti act or at the prime ratc/LIBOR of the cut rencv of invoice where rate of interest is not stipulated in the contract.

MASTER CIRCULAR ON EXPORT OF GOODS AND SFRVICFS

C.12 Reduction in Value

If, after a bill has been negotiated or sent for collection, the amount thereof is desired to be reduced for any reason, author ised dea3er 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 export of commodities subject to floor price stipulations,,

c. the exporter is not on the exporters'ciulion list of Rescrv e Bank, and

d. the exporter is advised to surrender proportionate export incentives availed of, if any.

In the case of expoi ter s who hai e been in the export business for more than three years, reduction in invoice

value may be allowed, without anv, percentage ceiling, subject to the above conditions as also subject to their

track record being satisfactory, i.e., the export outstanding do not exceed 5iJo of the average annual export

realisation during pi eceding three calendar ' vest s. For tire purpose of i eckoning the percentage of outstanding

export hills to aver age export realisations din ing tire preceding three calendar years, outstanding in i espect of

exports made to countries facing externalisation problems may be ignored provided the pavinents have been

made bv the hovers in the local , in i ericy.

C. 13 Export Claims

Authoriged dealers may remit export claims on application, provided the relative expoi i pi oceeds have already been realised and repatriatedto India and the exporteris not on the caution list of Reserve Bank. In all such cases of remittances, the exporter should be advised to sort order proportionate expon incentive, if any, received by him.

CA Change of buyer/consignee

Prior approval of Reserve Bank is nDt required if, after goods have been shipped, they are to be transferred to abuyerotherthan the original buiverin the evernof default by the latter, pi ovided thereduction invalue,if any, involved does not exceed 10% and the i ealisatiQn 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.

C.15 Self wrae‑off and extension of time

All exporters (including Status Holder) have been allowed, subject to certain terov; and condition‑s, to

(a) write off (including reduction in invoice value) outstanding export dues and,

(b) extend the prescribed period of realization beyond 180 days or further period as applicable,

• for exports mado after I st July, 2003 and pi occeds are due an January 1, 2004 and in case of exports wber, Reserve Bank has pi escribed longer period of realization the facility would be available for expoi is made prior to Job, 2003 but pi oceeds of which are due for realization within the presQ, ibed period of one year,

• provided aggregate value of such export bills written off (including reduction in invoice value) and bills extended for realization does not exceed 10 per cent of the expoi t proceeds due doting the calendar year and such export bills are not a subject of investigation bN FnfincerucritDirecturate/ Central Bureau of Investigation or any other investigating agencies.

Exporters dealing with inure than one authorized dealer can avail of this facility through each AD. Exporters operating under a consortium of banks or with multiple banks can also compute the 10 per cent limit on aggregate basis with all the banks provided the lead bank of the consortium or nodal bank in case of multiple banking undertakes to yet fly the annual perfin mance of the expel ter on behalf of all the banks.

C.16 Extension of time limit in other cases

1. in In cases where an exporter has not been able to realise proceeds of a hipment made within the period pi escribed, for reasons beyond his control, but expects to be able to realise pi occeds if extension of the period is allowed to him, necessary application (in duplicatc) shWd be made to the concerned Regional Office of Rcsci N c Bank in Form ETX through his authurised dealer with appropriate documentary evidence in respect

of cases not failing under Para (it) below.

(it) Reserve Bank of India have permitted authorised dealers to extend the period of realization of export proceeds beyond 6 months from the date of export where the invoice value does not exceed US $ 1,00,000 subject to following conditions :

112       MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES

a The Authorised Dealer is satisfied that the exporter hasnot been able to realisc export 6roceedsf6rreasons beyond his coup of.

b. The exporter submits a declaration that he will realise the export proceeds during the extended period.

c. The extension may be granted uptc, a period of 3 months at a time and while considering the extension beyond one year from the date of export the total export outstanding of the expof ter should not be more than 10% of the average of export realisitions during the preceding 3 financial years.

2. The ceiling of US $ 1,00,000 would not apply where the exporter has filed suits against the importer abroad. In such cases extension may be granted upto six months at a time, irrespective of the amount involl ed.

3. Cases which are not coveredby the above instructions and cases indicated bolowwould require priorapproval from the Regional Office of the Reserve Bank:

1. Where the export invoices are under investigation by Enforcement Directorate/Central Bureau of Investigation or other investigating agencies.

H. Where invoice value exceeds US $ 1,00,000 (except in cases covered under paragraph 2 above)

All the export bills outstanding beyond six months from the date of export may be reported in XOS statement as usual. However, where extension of time has been granted bv authorized dealer, the date upto which extension has been granted may be indicated in the Remarks'column.

4. As a temporary measure for a period of one year w.c.f. September 1, 2001, exporters were allowed a period of 360days h om the date of shipment, forrealismicat and repatriation of full value of goods/software for exports to certain specified countries. Ihis relaxation has been further extended upto August 3 1, 2004.

5. Manufacturers/exporters of certain specified products and having export contracts of Rs.100 crores and above in value term in one year have been allowed w.e.f. I st October, 200 1, for a period of 363 days from the date of shipment for tealisation and repatriation of full xame of the exports of the products specified. This relaxation has been further extended uptu September 30, 2004.

6. There is no time limit fur realisation of export proceeds for export made by units in Special Economic Zone (SEZ).

C.17 Shipments Lost in Transit

When shipments from India for which payment has not already beenreceived either by negotiation of bills under letters of ci edit or otherwise are lost in transit, a uthorised dealer must ensure that insurance claim is made as soon as the loss is known. The duplicate copy of GR/SDFIIPP form 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 pavable 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 fol the amount of claim received should be furnished on the reverse of the duplicate cop.~.

Note: Sometimes claims on shipments lost in transit are also partially settled directly by shipping companies/ airlines under carrier's liability. Authonsed dealers should ensure that amounts of such claims if settled abroad are also repatriated to India by exporters.

C.18 Payment of Claims by ECGC

Authorised Dealers shall, on an application received from the exporter supported b\ documentary evidence from the ECGC confirming that the claim in respect of the outstanding bills has been settled bN them, write off the relative expoi t billsand deletethem fromtheXOS statement.Such write‑offNOII notbe restricted to the limit of 10 per cent indicated in paragraph C.19 (A) below, Surrender of incentives, if any, in such cases will be as provided in the Exim Policy.

It is clarified that the claims settled in t upees bv ECGC should not be construed as export realisation inforeign exchange.

MASTER CIRCULAR ON PXPORT OF GOODS'A"ISERVICES 113

C. 19 A "Write off" of Unreallsed Export Billo

(i) An expin ter who has not been able to realise the outstanding export dues despite best efforts, may approach the autlimised dealer, who had handled the relevant shipping documents, with appropriate suppoi ling docunientai v evidence with a request for write off of the wircatised portion. Authorised dealers mai, accede to such requests subject to the undeiroted conditions:

a. The relevant amount has remained outstanding for one year or more;

b. The aggregate amount of write off allowed bv the authorised dealer during a calendar year does not exceed 10% of the total export proceeds realised by the concerned expoi ter through the concerned authorised dealet during the previous calendar vear,

c. Satisfactory documentary evidence is furnished in support of the exporterhaving made allefforts to realise the dues;

d. The case falls under any of the undernoted categories:

i. The overseas buyer has been declared insolvent and acertificate from the official liquidator indicating that there is no po.~sibilitv of iecovery of export proceeds produced;

ii. The overseas buyer is not traceable over a reasonably lung period of time;

in. The goods exported have been auctioned ordestroved 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 EinhassN, Foreign Chamber of Commerce or similar Organisation,

v, The unrealised amount i epresents the unchawn balance of anexport bill (not exceeding 10% of the invoice value) remained outstanding and turned out to be unicilisable despite all efforts made by the expoi ter;

vL The cost (if resorting to legal action would be disproportionate to the out cali~cd amount of the export bill or where the cxportei even after winning the Court case against the overseas hover could not execute the Court deci ee due to i easons beyond his control;

vii~ Bills were drawn mi the difference between the lettei of credit value and actual export value or between the pinvisional and the actual freight charges but the amount has remained unrealised consequent on dishonour of the bills by the overseas buyer and thei e are no prospects of realisation.

e. The case is not the subject matter of any pending civil or criminal suit;

The exportei has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agencv;

g. The exporter has surrendered proportionate export incentives, if any, availed of in respect of the relative shipments. The authorised dealer should obtain documents evidencing surrenderof export incentives availed of before permitting the relevant bills to be written off. Authorised dealers are input in place U SYSleol Under which their internal inspectors or auditors carry out random sample check/percentage check of outstanding export bills written off.

(ii) Where there is no further amount to be realised against the GR/SDF/PP form covered by the write off, authorised dealer should certify the duplicate form 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

(it,) Status holders exporters (viz. Export Houses, Trading Houses, Star Trading Houses, Superstar Trading Houses) and manufacturer exporters exporting more than 50% of their production, and recognised as such by DGFT, rmo be permitted to " write off"outstanding export bills upto an annual limit of 5% of their average annual realisations (not turnover) during the pf cceding three calendar years. The limit of 506 will be cumulatively available in a year a:.d subject to the following conditions:

1. The exporter should submit to the concerned authorised dealer a Chartered Accountant's certificate indicating

114 MASTER CIRCULAR ON EXPORT OF COODS AND SERVICES

a the export i ealisation in the preceding three calendar years and also the amount of 'write off" already availed of during the year, if anv.

b. the relevant GR/SDF Nos. to be written off, Bill No.. invoice value, commodity exported, country of export.

c. the export benefits, if am, ax ailed of by the exporter have been surf endered.

2. It is clarified that the following do not quality lot the "write off" facilitv

a Exports made to countries with cxternalisation problem ie. where the overseas buyer has deposited the value of export in local cur, ency hut the amount has not been allowed to be repatriated by the central banking authorities of the country.

b. GR/SDF forms which are under investigation by agencies like, Enforcement Directorate, Direcun ate of Re\ enue intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil/ criminal suft.

3. After the 'write off" has been permitted authorised dealer may certify the duplicate form as

under:

"Write off of (Amount in words and figures) per rutted in terms of AP(DIR Series) Circular

No. 30 dated April 4, 2001."

Date

Stamp & Signature of Authorised Dealer

4. Authorised dealers may note to take into account the amount written off under this facility while arriving at the cligible amount under paragraph C.18 of AP (DIR Series) Circular No.12 of September 9, 2000.

5. Authorised dealers may forward a statement in Form EBW to the Regional Office of Reserve Bank under whose jurisdiction they are functioning, indicating details of writeoffs etc.

C.19B'Netting off'of export receivables against Import payments ‑ Units in Special Economic Zones (SEZs) 'Authorised dealers ma% allow requests received front exporters for'netting off'of export receivables against import payments for units located in Special Economic Zones subject to the following:

i. The'netting off'of export receivables against import payments is in respect of thesame Indian entire and the overseas buyer/supplier (bilateral netting). The netting may be done as on date of balance sheet of the unit in SEZ.

it The details of export of goods is documented in GR(O) forms/DTR as the case may be while details of import of goods/services is recorded through At /A2 form as the case may be.The relative GR/SDFforms will be treated as complete by the designated authorized dealer only after the entii e proceeds are adjusted/received.

im Both the transactions of sale and purchase in 'R'Returns under FET‑ERS are reported separately. iv. The export/import transactions with ACU countries are kept outside the arrangement.

v. All the relevant documents no submitted to the concerned authorised dealer who should comply with all the regulatory requirements relating to the transactions.

C.20 Return of Documents to Exporters

The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to autherised dealers for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission.

C.21 Exporters' Caution List

Authorised dealers " ill also be advised whenever exporters are cautioned in terms of provisions contained in Regulation 17 of"Export Regulations"ADs may approve GR/SDF/PP forms of exporters whohave been placed on caution list if the exporter concerned produce evidence of having received an advance pavment or a irrevocable letter of credit in his favour co% cring the full value of the proposed exports. Such appro~ at may be given ei en cases where usance bills are to be drawn for the shipment provided the relative letteroi credit covers

MASTER CIRCULAR ON EXPORT OF GOODS AND SERVICES 115

the full export value and also permits such drawings and the usance bill mature within six months It orn the date of shipment.

SECTIOND

REMITTANCES CONNECTED WITH EXPORT

D.1 Agency Commission on Exports

(i) Authorised dealers mavallow payment ofcommission, either be remittance orby deduction from invoice value, on application submitted by the expoi m. The remittance on agency commi .

sston troy bo allow ed subject to the following conditions:

a. Amount of commission has been declared on GR/SDF/PP/SOFTFX form and accepted by Customs authorities or Minisarv oAnfol rnationTechnologv, Gov,f nment of India/ EPZ authorities asthecasciino be. in cases whet e the commission has not been declared on GR/SDF/PP,'SOFTEX foi on, i emittance thei cufmavitic allowed aftersatisfvingabout the reasons adduccdby the exporter for Dot declaring Commission on Export Declaration Form, provided a valid avreement/wiitten understanding between the exporter aid/or bencticuoN forpayment of cmrrnis~iou subsists.

b. The relative shipment has aheady been made.

(it) Authorised dealers ma, allow payment ol commission by Indian exporters, in respect of their exports Covered undIct counter it ade at rangeolent Through Esci use Accounts designated in U.S.dollat, subject to the following conditions

a The pqvmcnt of commission satisfies the conditions as at (a) and (h) stipulated in paragi aph above.

IT. 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 pi olubited on exports made by Indian Partners towards equity Pat ticipation in an overseas joint venture/ wholly owned subsidiarv is also exports under Rupee Credit Route except for tea & tobacco.

D.2 Refund of Export Proceeds

Refund ofexpoit proceeds mav be allowed bv authorised dealers through whom the proceeds were originally, received, provided such goods are ic‑Impoi ted into India on account (if poor quali1% etc. and evidence of reimport has been submitted. In all such cases, expojtQys should he advised to surrender the proportionate incentives availed of, it an~, against the relevant export.

ANNEX2

FOREIGN EXCHANGE MANAGEMENT (CURRENT ACCOUNT

TRANSACTIONS) RUT ES

[Not Reproduced]

ANNEX3

NOTIFICATION NOXEMA 23/2000‑RB DATED 3RD MAY, 2000

(AS AMENDED UPTO 31ST DECEMBER, 2003‑)

[Not Rcproduce(~

[Not Rcproduce(~