Master Circular on Exports of Goods and Services
14/2013-14 Dated:- 1-7-2013 Master Circular
FEMA
RBI/2013-14/14
Master Circular No.14/2013-14
July 1, 2013
To,
All Category – I Authorised Dealer Banks
Madam / Sir,
Master Circular on Exports of Goods and Services
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. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account) Rules, 2000, as amended from time to time.
2. This Master Circular consolidates the existing instructions on the subject of “Export of Goods and Services from India” at one place. The list of underlying circulars/notifications consolidated in this Master Circular is furnished in Appendix.
3. This Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 01, 2014 and be re
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.19
Export on Elongated Credit Terms
B.20
Export of goods by Special Economic Zones (SEZs)
B.21
Project Exports and Service Exports
B.22
Export of Currency
B.23
Forfaiting
B.24
Exports to neighbouring countries by Road, Rail or River
B.25
Border Trade with Myanmar
B.26
Repayment of State Credits
B.27
Counter -Trade Arrangements with Romania
PART – 3
C.
Operational Guidelines for AD Category – I banks
C.1
Citing of Specific Identification Numbers
C.2
GR/SDF/PP/SOFTEX procedure
C.3(A)
GR forms
C.3(B)
Mid-Sea Trans-Shipment of catch by Deep Sea Fishing Vessels
C.4
SDF
C.5
PP Forms
C.6
SOFTEX Forms
C.7
Random verification
C.8
Certification for EEFC Credits
C.9
Consolidation of Air Cargo/ Sea Cargo
C.10
Delay in submission of shipping documents by exporters
C.11
Check-list for Scrutiny of Forms
C.12
Return of Documents to Exporters
C.13
Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative
C.14
Export Bills
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dated 3rd May 2000
Annex- 4
Annex- 5
Annex- 6
Annex- 7
Annex- 8
Appendix
PART-1
A. Introduction
(i) Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and Industry, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT, from time to time.
(ii) AD Category – I banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time. In exercise of the powers conferred by clause (a) of sub-section (1) and sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank has notified the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 relating to export of goods and services
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ections framed under the Foreign Exchange Management Act 1999. Further, in terms of Para 2.40 of the Foreign Trade Policy (August 27, 2009 – March 31, 2014), “All export contracts and invoices shall be denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realised in freely convertible currency. However, export proceeds against specific exports may also be realised in rupees provided it is through a freely convertible Vostro account of a non-resident bank situated in any country, other than a member country of the ACU or Nepal or Bhutan”. Indian Rupee is not a freely convertible currency, as yet.
(vi) Any reference to the Reserve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Departm
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is Rs.10 lakhs or 2 per cent of the average annual export realization during the preceding three licensing years (April-March), whichever is higher.
(ii) Export of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP procedure from the Reserve Bank.
B.2 Manner of Receipt and Payment
The amount representing the full export value of the goods exported shall be received through an AD Bank in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA.14/2000-RB dated May 3, 2000 (Annex-3) in the following manner:
a. Bank draft, pay order, banker's or personal cheques.
b. Foreign currency notes/foreign currency travellers' cheques from the buyer during his visit to India.
c. Payment out of funds held in the FCNR/NRE account maintained by the buyer
d. International Credit Cards of the buyer.
Note: When payment for goods sold to overseas buyers during
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l be routed through the ACU mechanism.
b. In precious metals i.e. Gold / Silver / Platinum by the Gem & Jewellery units in SEZs and EOUs, equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metals is indicated in the relevant GR / SDF / PP Forms.*
(iii) Processing of export related receipts through Online Payment Gateway Service Providers (OPGSPs)
Authorised Dealer Category – I (AD Category – I) banks have been allowed to offer the facility of repatriation of export related remittances by entering into standing arrangements with Online Payment Gateway Service Providers (OPGSPs) subject to the following conditions –
a. The AD Category-I banks offering this facility shall carry out the due diligence of the OPGSP.
b. This facility shall only be available for export of goods and services of value not exceeding USD 10,000 (US Dollar ten thousand). (effective from June 11, 2013)
[Ref: A.P. (DI
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t; and
III. Charge back to the importer where the exporter has failed in discharging his obligations under the sale contract.
f. The balances held in the NOSTRO collection account shall be repatriated and credited to the respective exporter's account with a bank in India immediately on receipt of the confirmation from the importer and, in no case, later than seven days from the date of credit to the NOSTRO collection account.
g. AD Category -I banks shall satisfy themselves as to the bonafides of the transactions and ensure that the purpose codes reported to the Reserve Bank in the online payment gateways are appropriate.
h. AD Category -I banks shall submit all the relevant information relating to any transaction under this arrangement to the Reserve Bank, as and when advised to do so.
i. Each NOSTRO collection account should be subject to reconciliation and audit on a quarterly basis.
j. Resolution of all payment related complaints of exporters in India shall remain the respon
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U Euro. Accordingly, the Asian Monetary Unit (AMU) shall be denominated as 'ACU Dollar' and 'ACU Euro' which shall be equivalent in value to one US Dollar and one Euro, respectively.
b) Further, AD Category – I banks are allowed to open and maintain ACU Dollar and ACU Euro accounts with their correspondent banks in other participating countries. All eligible payments are required to be settled by the concerned banks through these accounts.
c) Relaxation from ACU Mechanism- Indo-Myanmar Trade – Trade transactions with Myanmar can be settled in any freely convertible currency in addition to the ACU mechanism.
d) In view of the difficulties being experienced by importers/exporters in payments to / receipts from Iran, it has been decided that with effect from December 27, 2010, all eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the ACU mechanism, until further notice.
B.3 Realisation and Repatriation of e
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de India : As soon as it is realised and in any case within fifteen months from the date of shipment of goods; and
v. . In all other cases: With effect from May 20, 2013 this period of realization and repatriation to India has been brought down to nine months from the date of export, till September 30, 2013.
[Ref: . A.P.(DIR Series) Circular No.105 dtd 20-05-2013]
B.4 Foreign Currency Account
(i) Participants in international exhibition/trade fair have been granted general permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified vide Notification No. FEMA 10/2000-RB dated May 3, 2000 for opening a temporary foreign currency account abroad. Exporters may deposit the foreign exchange obtained by sale of goods at the international exhibition/trade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India through normal bankin
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stipulated in Regulation 7 of Notification No. FEMA 10/2000-RB dated May 3, 2000 and as amended from time to time.
(iv) A unit located in a Special Economic Zone (SEZ) may open, hold and maintain a Foreign Currency Account with an AD Category – I bank in India subject to conditions stipulated in Regulation 6 (A) of Notification No. FEMA 10/2000-RB dated May 3, 2000 and as amended from time to time.
(v) A person resident in India being a project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions in the Memorandum PEM.
B.5 Diamond Dollar Account (DDA)
(i) Under the scheme of Government of India, firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 2 years in import / export of diamonds / coloured gemstones / diamond an
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nces maintained by them on a fortnightly basis within seven days of close of the fortnight to which it relates, to the Foreign Exchange Department, Reserve Bank of India, Central Office, Trade Division, Mumbai.
(vi) Condition mentioned at Para B.6 (iv) shall also apply.
B.6 Exchange Earners' Foreign Currency (EEFC) Account
(i) A person resident in India may open with, an AD Category – I bank in India, an account in foreign currency called the Exchange Earners' Foreign Currency (EEFC) Account, in terms of Regulation 4 of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 as amended from time to time.
Resident individuals are permitted to include resident close relative(s) as defined in the Companies Act, 1956 as a joint holder(s) in their EEFC bank accounts on former or survivor basis. However, such resident Indian close relative, being made eligible to become j
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s to save on conversion/transaction costs while undertaking forex transactions. This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still not fully convertible on Capital Account.
(iv) It may be noted that the provisions at paragraph (iii) a) and (iii) b) above will apply, mutatis mutandis, also to holder of either a Resident Foreign Currency Account (Domestic) or a Diamond Dollar Account (DDA).
[ Ref: A.P. (DIR Series) Circular No.12 dated 31-07-2012
A.P. (DIR Series) Circular No.79 dtd 22-01-2013]
(v) The eligible credits represent –
a. inward remittance received through normal banking channel, other than the remittance received pursuant to any undertaking given to the Reserve 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.
b. Payments received in foreign exchange by a unit in Domestic Tariff Area (DTA
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er is higher.
(ii) For recurring expenses, remittances up to ten per cent of the average annual sales/income or turnover during the last two financial years may be sent for the purpose of normal business operations of the office (trading / non-trading) / branch or representative office outside India subject to the following terms and conditions:
* the overseas branch/office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity;
* the overseas branch/office/representative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under;
* the overseas office (trading / non-trading) / branch / representative should not create any financial liabilities, contingent or otherwise, for the head office in India and also not invest surplus funds abroad without prior approval of the Reserve Bank. Any funds rendered surplus should be repatriated to India.
(iii) The details of ban
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May 3, 2000, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure that –
* the shipment of goods is made within one year from the date of receipt of advance payment;
* the rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points; and
* the documents covering the shipment are routed through the AD Category – I bank through whom the advance payment is received.
Provided that in the event of the exporter's inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank.
(2) 'AD Category- I banks may allow exporters to receive advance payment for export of goo
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ears;
vii. the documents covering the shipment should be routed through the same authorised dealer bank; and
viii. in the event of the exporter's inability to make the shipment, partly or fully, no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the Reserve Bank.'
(3) AD Category – I banks may allow the purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only after utilizing the entire balances held in the exporter's EEFC accounts maintained at different branches/banks.
Note: AD Category – I banks may also be guided by the Master Circular on Guarantees and Co-acceptances issued by DBOD.
B.9 GR Approval for Trade Fair/Exhibitions abroad
Firms / Companies and other organizations participating in Trade Fair/Exhibition abroad can take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank. Unsold exhi
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their internal inspectors/auditors.
B.10 GR approval for Export of Goods for re-imports
(i) AD Category – I banks may consider request from exporters for granting GR approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration, etc., subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of the exported item from India.
(ii) Where the goods being exported for testing are destroyed during testing, AD Category – I banks may obtain a certificate issued by the testing agency that the goods have been destroyed during testing, in lieu of Bill of Entry for import.
B.11 Part Drawings /Undrawn Balances
(i) 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, AD C
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forwarding shipping documents to his overseas branch/ correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export. This procedure should be followed even if, according to the practice in certain trades, a bill for part of the estimated value is drawn in advance against the exports.
(ii) The agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter.
(iii) The account sales received from the Agent/Consignee should be verified by the AD Category – I banks. Deductions in Account Sales should be supported by bills/receipts in original except in case of petty items like postage/cable charges, stamp duty, etc.
(iv) In case of goods exported on consignment ba
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onsidered subject to the applicant satisfying the requirement above.
* AD Category – I banks granting such permission/approvals should maintain a proper record of the approvals granted.
B.14 Direct dispatch of documents by the exporter
(i) AD Category – I banks should normally dispatch shipping documents to their overseas branches/correspondents expeditiously. However, they may dispatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where:
* Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for dispatch of documents direct to the consignee or his agent resident in the country of final destination of goods.
* The AD Category – I banks may also accede to the request of the exporter provided the exporter is a regular customer and the AD Category – I bank is satisfied, on the basis of stan
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to USD 1 million or its equivalent, per export shipment, subject to the following conditions:
a) The export proceeds have been realised in full.
b) The exporter is a regular customer of AD Category – I bank for a period of at least six months.
c) The exporter's account with the AD Category – I bank is fully compliant with the Reserve Bank's extant KYC / AML guidelines.
d) The AD Category – I bank is satisfied about the bonafides of the transaction.
In case of doubt, the AD Category – I bank may consider filing Suspicious Transaction Report (STR) with FIU_IND (Financial Intelligence Unit in India).
B.15 Invoicing of Software Exports
(i) For long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e., at least once a month or on reaching the 'milestone' as provided in the contract entered into with the overseas client and the last invoice / bill should be raised not later than 15 days from the date of completion of
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e Government of India and consequent amendment made in the invoice value, if necessary.
B.16 Short Shipments and Shut out Shipments
(i) When part of a shipment covered by a GR form already filed with Customs is short-shipped, the exporter must give notice of short-shipment to the Customs in the form and manner prescribed. In case of delay in obtaining certified short-shipment notice from the Customs, the exporter should give an undertaking to the AD banks 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.
(ii) Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs in the form and manner prescribed, attaching thereto the unused duplicate copy of GR form and the shipping bill. The Customs will verify that the shipment was actually shut out, certify the copy of the notice as correct and forward it to the Rese
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it up to a total period of three months in a year (i.e., in a block of 12 months) and the banks may pay interest at the applicable rate.
(iii) No fund based/or non-fund based facilities would be permitted against the balances in the Escrow Account.
(iv) Application for permission for opening an Escrow Account may be made by the overseas exporter / organisation through his / their AD Category – I bank to the Regional Office concerned of the Reserve Bank.
B.18 Export of Goods on Lease, Hire, etc.
Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission, through an AD Category – I banks, to the Regional Office concerned of the Reserve Bank, giving full particulars of the goods to be exported.
B.19 Export on Elongated Credit Terms
Exporters intending to export goods on elo
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in SEZ) to a DTA unit. It must be ensured that in the Letter of Approval (LoA) issued to the SEZ unit by the Development Commissioner(DC) of the SEZ, the provisions pertaining to the goods / services supplied by the SEZ unit to the DTA unit and for payment in foreign exchange for the same should be mentioned.
[Ref: A. P. (DIR Series) Circular No.46 dated 23-10-2012]
B.21 Project Exports and Service Exports
Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as 'Project Exports'. Indian exporters offering deferred payment terms to overseas buyers and those participating in global tenders for undertaking turnkey/civil construction contracts abroad are required to obtain the approval of the AD Category – I banks/ EXIM Bank/ Working Group at post-award stage before undertaking execution of such contracts. Regulations relating to ' Project Exports' and 'Service Exports' are laid down
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would be monitored by the AD Category – I bank(s) / EXIM Bank / Working Group.
(ii) Inter-Project Transfer of Funds [D 1 (i) & D 3]
AD Category – I bank(s) / EXIM Bank / Working Group may permit exporters to open, maintain and operate one or more foreign currency account/s in a currency(ies) of their choice with inter-project transferability of funds in any currency or country. The Inter-project transfer of funds will be monitored by the AD Category – I bank(s) / EXIM Bank / Working Group.
(iii) Deployment of Temporary Cash Surpluses
Project / Service exporters may deploy their temporary cash surpluses, generated outside India, in the following instruments / products, subject to monitoring by the AD Category – I bank(s) / EXIM Bank / Working Group :
* investments in short-term paper abroad including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less and the rating of which should be at least A-1/AAA by Standard & Poor or P-1/A
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have been permitted to undertake forfaiting, for financing of export receivables. Remittance of commitment fee / service charges, etc., payable by the exporter as approved by the EXIM Bank / AD Category – I banks concerned may be done through an AD bank. Such remittances may be made in advance in one lump sum or at monthly intervals as approved by the authority concerned.
B.24 Exports to neighbouring countries by Road, Rail or River
The following procedure should be adopted by exporters for filing original copies of GR/SDF forms where exports are made to neighboring countries by road, rail or river transport:
(i) In case of exports by barges/country craft/road transport, the form should be presented by exporter or his agent at the Customs station at the border through which the vessel or vehicle has to pass before crossing over to the foreign territory. For this purpose, exporter may arrange either to give the form to the person in charge of the vessel or vehicle or forward it to hi
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should follow the guidelines stipulated in A.P.(DIR Series) Circular No.17 dated October 16, 2000.
B.26 Repayment of State Credits
Export of goods and services against repayment of state credits granted by erstwhile USSR will continue to be governed by the extant directions issued by the Reserve Bank, as amended from time to time.
B.27 Counter -Trade Arrangements with Romania
The Reserve Bank will consider counter trade proposals from Indian exporters with Romania involving adjustment of value of exports from India against value of imports made into India in terms of a voluntarily entered arrangement between the concerned parties, subject to the condition, among others that the Indian exporter should utilize the funds for import of goods from Romania into India within six months from the date of credit to Escrow Accounts allowed to be opened.
PART – 3
C. Operational Guidelines for AD Category – I banks
C.1 Citing of Specific Identification Numbers
(i) In all applications / corr
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* Customs will certify the value declared by the exporter on both the copies of the GR form at the space earmarked and will also record the assessed value.
* They will then return the duplicate copy of the form to the exporter and retain the original for transmission to the Reserve Bank.
* Exporters should submit the duplicate copy of the GR form again to Customs along with the cargo to be shipped.
* After examination of the goods and certifying the quantity passed for shipment on the duplicate copy, Customs will return it to the exporter for submission to the AD Category – I banks for negotiation or collection of export bills.
* Within 21 days from the date of export, exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the AD Category – I banks named in the GR form.
* After the documents have been negotiated / sent for collection, the AD Category – I banks should report the transaction to the Reserve Bank
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res, GR Forms are now made available on-line on the Reserve Bank's website www.rbi.org.in.
(Link :- Notification → FEMA → Forms → For Printing of GR Form)
Accordingly, the exporters have the option to use the GR Forms available on-line as well.
C.3 (B) Mid-Sea Trans-shipment of catch by Deep Sea Fishing Vessels (effective from November 21, 2011).
Since deep sea fishing involves continuous sailing outside the territorial limit, trans-shipment of catches takes place in the high sea leading to procedural constraints in regulatory reporting requirement viz. the Declaration of Export in terms of Notification No. FEMA 23/2000-RB dated May 3, 2000.
For mid-sea trans-shipment of catches by Indian owned vessels, as per the norms prescribed by the Ministry of agriculture, Government of India, the GR declaration procedure in this regard has been rationalized in consultation with the Government of India as outlined below should be followed by the exporter in conformity with Reg
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mber and date of Letter of Permit issued by Ministry of Agriculture for operation of the vessel.
(viii) The exporter will complete the GR Form in duplicate and both the copies may be submitted to the Customs at the registered port of the vessel or any other port as approved by Ministry of Agriculture. GR (Original) will be retained by the Customs for capturing of data in Customs' Electronic Data Interchange.
(ix) Customs will give their running serial number on both the copies of GR Form and will return the duplicate copy to the exporter as the value certification of the export has already been done as mentioned above.
(x) Rules, Regulations and Directions issued in respect of the procedure for submission of the GR form by exporter to the AD Category-I banks, and the disposal of these forms by these banks will be same as applicable to the other exporters.
C.4 SDF
The following system may be followed in case of SDF:
(i) The SDF should be submitted in duplicate (to be annexed to th
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s the claims of exporters in respect of exports insured with them and subsequently receives the export proceeds from the buyer/buyer's country through the efforts made by them, the share of exporters in the amount so received is disbursed through the bank which had handled the shipping documents. In such cases, ECGC and private insurance companies regulated by IRDA will issue a certificate to the bank, which had handled the relevant shipping documents after full proceeds have been received. The certificate will indicate the number of declaration form, name of the exporter, name of the AD Category – I banks, date of negotiation, bill number, invoice value and the amount actually received by ECGC and private insurance companies regulated by IRDA.
C.5 PP Forms
The manner of disposal of PP forms is the same as that for GR forms. Postal Authorities will allow export of goods by post only if the original copy of the form has been countersigned by an AD Category – I bank. Therefore, PP form
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er and has been advised through the AD Category – I banks concerned.
Or
* The full value of the shipment has been received in advance by the exporter through an AD Category – I banks.
Or
* The AD Category – I bank is satisfied, on the basis of the standing and track record of the exporter and the arrangements made for realization of the export proceeds, that he could do so.
In such cases, particulars of advance payment/letter of credit / AD Category – I bank's certification of standing, etc., of the exporter should be furnished on the form under proper authentication.
(v) Any alteration in the name and address of consignee on the PP form should also be authenticated by the AD Category – I banks under his stamp and signature.
C.6 SOFTEX Forms
A software exporter, whose annual turnover is at least Rs. 1000 crore or who files at least 600 SOFTEX forms annually, will be eligible to submit a statement in excel format as per Annexure A, giving all particulars alongwith quadrupli
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ure for submission of the Softex form and other relevant documents are detailed in the Annex 8 of the Master Circular]
[ Ref: A. P. (DIR Series) Circular No.46 dated 23-10-2012]
The new procedure has been made effective at all STPIs and SEZs / EPZs / 100%EOU / DTA since 1.1.2013.
[Ref: A.P. (DIR Series) Circular No.66 dtd 01-01-2013]
C.7 Random verification
In all the above procedures, AD Category – I bank should ensure, by random check of the relevant duplicate forms by their internal / concurrent auditors, that non-realization or short realization allowed, if any, is within the powers delegated to them or has been duly approved by the Reserve Bank, wherever necessary.
C.8 Certification for EEFC Credits
Where a part of the export proceeds are credited to an EEFC account, the export declaration (duplicate) form may be certified as under:
“Proceeds amounting to …… representing ….. per cent of the export realisation credited to the EEFC account maintained by
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provide for acceptance of FCR as a shipping document, in lieu of bill of lading
* Further, authorized dealers may, at their discretion, also accept FCR issued by Shipping companies of repute/IATA approved agents (in lieu of bill of lading), for purchase/discount/collection of shipping documents even in cases, where export transactions are not backed by letters of credit, provided their 'relative sale contract' with overseas buyer provides for acceptance of FCR as a shipping document in lieu of bill of lading. However, the acceptance of such FCR for purchase/discount would purely be the credit decision of the bank concerned who, among others, should satisfy itself about the bona fides of the transaction and the track record of the overseas buyer and the Indian supplier since FCRs are not negotiable documents. It would be advisable for the exporters to ensure due diligence on the overseas buyer, in such cases.
C.10 Delay in submission of shipping documents by exporters
In cases wher
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do not reveal any material inter se discrepancies in regard to description of goods exported; export value or country of destination.
* Where the marine insurance is taken by the exporters on buyer's account to verify, that the actual amount paid is received from the buyer through invoice and the bill.
* To accept the Bill of Lading/Airway Bill issued on 'freight prepaid' basis 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.
* To negotiate the documents, in cases where the documents are being negotiated by a person other than the exporter who has signed GR/PP/SDF /SOFTEX Form for the export consignment concerned, after ensuring compliance with Regulation 12 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000.
* To accept the variations in the value declared to the customs authorities and that is reflected on the export documents which stem from the terms of contract
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contracts may provide for payment of penalty for late shipment of goods in conformity with trade practice concerning the commodity. In these cases, while exporters declare to the Customs the full export value based on the contract price, invoices submitted along with shipping documents for negotiation/ collection may reflect a different value arrived at after taking into account the results of analysis of samples or late shipment penalty, as the case may be.
* To accept for negotiation or collection the bills for exports by sea or air which fall short of the value declared on GR/SDF forms on account of trade, only if the discount has been declared by the exporter on relative GR/SDF form at the time of shipment and accepted by Customs.
C.12 Return of Documents to Exporters
The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to the AD Category – I banks for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectificat
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r basis (i.e. April to March).
(iii) The bill numbers should be recorded in ENC statement and other relevant returns submitted to the Reserve Bank.
C.15 Follow-up of Overdue Bills
(i) AD Category – I banks should closely watch realization of bills and in cases where bills remain outstanding, beyond the due date for payment or 12 months from the date of export, the matter should be promptly taken up with the concerned exporter. If the exporter fails to arrange for delivery of the proceeds within 12 months or seek extension of time beyond 12 months, the matter should be reported to the Regional Office concerned of the Reserve Bank stating, where possible, the reason for the delay in realizing the proceeds.
(ii) The duplicate copies of GR / SDF / PP / SOFTEX Forms should, continue to be held by AD Category – I banks until the full proceeds are realised, except in case of undrawn balances.
(iii) AD Category – I banks should follow up export outstandings with exporters systematically a
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alue on Account of Prepayment of Usance Bills
Occasionally, exporters may approach AD Category – I banks for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. AD Category – I banks may allow cash discount to the extent of amount of proportionate interest on the unexpired period of usance, calculated at the rate of interest stipulated in the export contract or at the prime rate/LIBOR of the currency of invoice where rate of interest is not stipulated in the contract.
C.17 Reduction in Invoice Value in other cases
(i) If, after a bill has been negotiated or sent for collection, its amount is to be reduced for any reason, AD Category – I banks may approve such reduction, if satisfied about genuineness of the request, provided:
* The reduction does not exceed 25 per cent of invoice value:
* It does not relate to export of commodities subject to floor price stipulations
* The exporter is not on the exporters' caution list
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iated to India and the exporter is not on the caution list of the Reserve Bank.
(ii) In all such cases of remittances, the exporter should be advised to surrender proportionate export incentives, if any, received by him.
C.19 Change of buyer/consignee
Prior approval of the Reserve Bank is not required if, after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 25 per cent of the invoice value and the realization of export proceeds is not delayed beyond the period of 12 months from the date of export.
C.20 Extension of time and Self write-off by the exporters
(i) For export proceeds due within the prescribed period during a financial year all exporters (Including Status Holder exporters) have been allowed to write-off (including reduction in invoice value) outstanding export dues and extend the prescribed period of realization beyond 12
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the consortium or in case of multiple banking, a nodal bank, undertakes to verify the exporters' annual performance on behalf of all the banks.
(iv) Within a month from the close of the financial year, exporters should submit a statement (Annex 4), giving details of export proceeds due, realised and not realised to the AD Category – I banks concerned.
(v) The AD Category – I banks will be required to verify the statement with their records and review the export performance of the exporter during the financial year to ascertain that in cases where the 10 per cent limit of self extension, write-off (including reduction in invoice value) and non-realization has been breached, the exporter has sought necessary approval for write-off, reduction in invoice value or extension of time, as the case may be, for the excess over the 10 per cent limit before the end of the financial year. Export bills due in the financial year for which the exporter has extended the period of realization on his o
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ct to the following conditions:
* The export transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies,
* The AD Category – I bank is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control,
* The exporter submits a declaration that the export proceeds will be realised during the extended period,
* While considering extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years, whichever is higher.
* All the export bills outstanding beyond six months from the date of export may be reported in XOS statement. However, where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the 'Remarks' column.
*
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ion subject to the fulfilment of stipulations regarding surrender of incentives prior to “write-off” adduced in the A.P. (DIR Series) Circular No. 03 dated 22 July 2010. After liberalizing and simplifying the procedure, limits prescribed for “write-offs” of unrealized export bills are as under:
* Self “write-off” by an exporter
(Other than Status Holder Exporter) 5%*
* Self “write-off” by Status Holder Exporters 10%*
* 'Write-off” by Authorized Dealer Bank- 10%*
*of the total export proceeds realized during the previous calendar year.
(ii). The above limits will be related to total export proceeds realized during the previous calendar year and will be cumulatively available in a year.
(iii) The above “write-off” will be subject to conditions that the relevant amount has remained outstanding for more than one year, satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues, and the case falls under any of the under no
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execute the Court decree due to reasons beyond his control;
g) Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealized consequent on dishonour of the bills by the overseas buyer and there are no prospects of realization.
iv) The exporter has surrendered proportionate export incentives (for the cases not covered under A. P. (DIR. Series) Circular No.03 dated July 22, 2010), if any, availed of in respect of the relative shipments. The AD Category – I banks should obtain documents evidencing surrender of export incentives availed of before permitting the relevant bills to be written off.
v) In case of self write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant's certificate, indicating the export realization in the preceding calendar year and also the amount of write-off already availed of during the year, if any, the re
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-offs allowed under this circular.
viii) AD banks are advised to put in place a system under which their internal inspectors or auditors (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of “write-off” outstanding export bills.
ix) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.
[Ref: A. P. (DIR Series) Circular No.88 dtd 12-03-2013]
C.23 Write off in cases of Payment of Claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA)
(i) AD Category – I banks shall, on an application received from the exporter supported by documentary evidence from the ECGC and private insurance companies regulated by IRDA confirming that the claim in respect of the outstanding bills has been settled by them, write off the relative export bills and delete them from the XOS statement.
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ned, about the fact of non-recovery of export proceeds from the buyer; and
* this would not be applicable in self write off cases.
The above relaxation is applicable for the exports made with effect from August 27, 2009.
The AD Category – I banks are advised not to insist on the surrender of proportionate export incentives, other than under the Duty Drawback Scheme, if availed of, by the exporter under any of the Export Promotion Schemes under FTP 2009-14 , subject to fulfillment of conditions as stated above. The drawback amount has to be recovered even if the claim is settled by the Export Credit Guarantee Corporation of India Limited (ECGC) or the write -off is allowed by the Reserve Bank.
C.26 Shipments Lost in Transit
When shipments from India for which payment has not been received either by negotiation of bills under letters of credit or otherwise are lost in transit, the AD Category – I banks must ensure that insurance claim is made as soon as the loss is known.
In cases
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nts is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting) and the netting may be done as on the date of balance sheet of the unit in SEZ.
(ii) The details of export of goods are documented in GR (O) forms / DTR as the case may be while details of import of goods / services are recorded through A1 / A2 form as the case may be. The relative GR / SDF forms will be treated as complete by the designated AD Category – I banks only after the entire proceeds are adjusted / received.
(iii) 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 are submitted to the concerned AD Category – I banks who should comply with all the regulatory requirements relating to the transactions.
C.27 (B) – Set-off of export receivables against import payables : (effective from November 17, 2011).
AD cat
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ncerned AD bank who should comply with all the regulatory requirements relating to the transactions.
C.28 Agency Commission on Exports
(i) AD Category – I banks may allow payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter. The remittance on agency commission may be allowed subject to the following conditions:
* Amount of commission has been declared on GR/SDF/PP/SOFTEX form and accepted by the Customs authorities or Ministry of Information Technology, Government of India / EPZ authorities as the case may be. In cases where the commission has not been declared on GR/SDF/PP/SOFTEX form, remittance may be allowed after satisfying the reasons adduced by the exporter for not declaring commission on Export Declaration Form, provided a valid agreement/written understanding between the exporters and/or beneficiary for payment of commission exists.
* The relative shipment has already been made.
(ii) AD Category – I ban
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or quality. While permitting such transactions, AD Category – I banks are required to :
(i) exercise due diligence regarding the track record of the exporter
(ii) verify the bonafides of the transactions
(iii) obtain from the exporter a certificate issued by DGFT / Custom authorities that no incentives have been availed by the exporter against the relevant export or the proportionate incentives availed, if any, for the relevant export have been surrendered
(iv) obtain an undertaking from the exporter that the goods will be re-imported within three months from the date of remittance and
(v) ensure that all procedures as applicable to normal imports are adhered to.
C.30 Exporters' Caution List
(i) AD Category – I banks will also be advised whenever exporters are cautioned in terms of provisions contained in Regulation 17 of “Export Regulations” (Annex 2). They may approve GR/SDF/PP forms of exporters who have been placed on caution list if the exporters concerned produce evidence
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makes the following rules, namely :
1. Short title and commencement.(1) These rules may be called the Foreign Exchange Management (Current Account Transcation) Rules, 2000);
(2) They shall come into effect on the 1st day of June 2000.
2. Definitions. In these rules, unless the context otherwise requires :
(a) “Act” means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) “Drawal” means drawal of foreign exchange from an ealizatio person and includes opening of Letter of Credit or use of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability;
I “Schedule” means a schedule appended to these rules;
(d) The words and expressions not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act.
3. Prohibition on drawal of Foreign Exchange.Drawal of foreign exchange by any person for the following purpose is
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n rule 4 or rule 5 shall apply to drawal made out of funds held in Exchange Earners' Foreign Currency (EEFC) account of the remitter.
(2) Notwithstanding anything contained in sub-rule (1), restrictions imposed under rule 4 or rule 5 shall continue to apply where the drawal of foreign exchange from the Exchange Earners Foreign Currency (EEFC) Account is for the purpose specified in items 10 and 11 of Schedule II, or item 3, 4, 11, 16 & 17 of Schedule III as the case may be.
7. Use of International Credit Card while outside India
Nothing contained in Rule 5 shall apply to the use of International Credit Card for making payment by a person towards meeting expenses while such person is on a visit outside India.
Schedule I
Transactions which are Prohibited (see rule 3)
1. Remittance out of lottery winnings.
2. Remittance of income from racing/riding etc. or any other hobby.
3. Remittance for purchase of lottery tickets, banned/proscribed magazines, football pools, sweepstakes, etc
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te Government and its Public Sector Undertakings
Ministry of Finance, (Department of Economic Affairs)
3. Remittance of freight of vessel chartered by a PSU
Ministry of Surface Transport, (Chartering Wing)
4. Payment of import through ocean transport by a Govt. Department or a PSU on c.i.f. basis (i.e. other than f.o.b. and f.a.s. basis)
Ministry of Surface Transport, (Chartering Wing)
5. Multi-modal transport operators making remittance to their agents abroad
Registration Certificate from the Director General of Shipping
6. Remittance of hiring charges of transponders by
(a) TV Channels
(b) Internet Service providers
Ministry of Information and Broadcasting
Ministry of Communication and Information Technology
7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping
Ministry of Surface Transport (Director General of Shipping)
8. Remittances under technical collaboration agreements where payment of royalty exceeds 5% on
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tion.
7. Remittance for maintenance of close relatives abroad, @@
* exceeding net salary (after deduction of taxes, contribution to provident fund and other deductions) of a person who is resident but not permanently resident in India and –
(a) is a citizen of a foreign State other than Pakistan; or
(b) is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company.
* exceeding USD 100,000 per year, per recipient, in all other cases.
Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignment; the duration of which does not exceed three years, is a resident but not permanently resident.
8. Release of foreign exchange, exceeding USD 25,000 to a person, irrespective of period of stay, for business travel, or attending a conference or specialized training or for main
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port and air port,
(vi) Industrial parks, and
(vii) Urban Infrastructure (water supply, sanitation and sewage)
16. Omitted
17. Remittance exceeding USD 100,000 by an entity in India by way of reimbursement of pre-incorporation expenses.
18. Omitted
(Amendments)
(Notification G.S.R..663 (E) dated August 17,2000,S.O.301(E) dated March 30, 2001, G.S.R..442 dated November 2,2002, G.S.R..831(E) dated December 20,2002, G.S.R..33(E) dated January 16,2003,G.S.R..397(E) dated May 14,2003, G.S.R..731(E) dated September 11,2003, G.S.R..849 (E) dated October 29,2003, G.S.R..608(E) dated September 13,2004), G.S.R.511(E) and G.S.R.512(E) dated July 28,2005 , G.S.R.412(E) dated July 11,2006., G.S.R.349(E) dated July 28, 2006, G.S.R.349 (E) dated May 22, 2009 and G.S.R.382(E) dated May 5, 2010.
Please Note:
@ @May be read with A.P.(DIR Series)Circular No.26 dated January 14,2010.
PART 5
Appendix
List of Circulars which have been consolidated in the
Master Circular on Export of Goods and
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r No.12
August 28, 2002
19.
A.P. (DIR Series) Circular No.21
September 16, 2002
20.
A.P. (DIR Series) Circular No.28
October 3, 2002
21.
A.P. (DIR Series) Circular No.33
October 23, 2002
22.
A.P. (DIR Series) Circular No.34
October 31, 2002
23.
A.P. (DIR Series) Circular No.41
November 8, 2002
24.
A.P. (DIR Series) Circular No.61
December 14, 2002
25.
A.P. (DIR Series) Circular No.62
December 17, 2002
26.
A.P. (DIR Series) Circular No.78
February 14, 2003
27.
A.P. (DIR Series) Circular No.91
April 1, 2003
28.
A.P. (DIR Series) Circular No.94
April 26, 2003
29.
A.P. (DIR Series) Circular No.100
May 2, 2003
30.
A.P. (DIR Series) Circular No.104
May 31, 2003
31.
A.P. (DIR Series) Circular No.105
June 16, 2003
32.
A.P. (DIR Series) Circular No.8
August 16, 2003
33.
A.P. (DIR Series) Circular No.12
August 20, 2003
34.
A.P. (DIR Series) Circular No.20
September 23, 2003
35.
A.P. (DIR Series) Circular No.22
September 24, 2003
36.
A.P. (DIR
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54.
A.P. (DIR Series) Circular No.26
January 8, 2007
55.
A.P. (DIR Series) Circular No.33
February 28, 2007
56.
A.P. (DIR Series) Circular No.37
April 5, 2007
57.
A.P. (DIR Series) Circular No.13
October 6, 2007
58.
A.P. (DIR Series) Circular No.49
June 3, 2008
59.
A.P. (DIR Series) Circular No.50
June 3, 2008
60.
A.P (DIR Series) Circular No.4
August 4, 2008
61.
A.P (DIR Series) Circular No.6
August 13, 2008
62.
A.P (DIR Series) Circular No.43
December 26, 2008
63.
A.P (DIR Series) Circular No.51
February 13, 2009
64.
A.P. (DIR Series) Circular No.60
March 26, 2009
65.
A.P. (DIR Series) Circular No.70
June 30, 2009
66.
A.P (DIR Series) Circular No.13
October 29, 2009
67.
A.P. (DIR Series) Circular No.14
October 30, 2009
68.
A.P. (DIR Series) Circular No.03
July 22, 2010
69.
A.P. (DIR Series) Circular No.17
November 16, 2010
70.
A.P. (DIR Series) Circular No.30
December 23, 2010
71.
A.P. (DIR Series) Circular No.31
December 27, 201
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