Master Circular on Exports of Goods and Services (Updated upto May 14, 2015)
14/2014-15 Dated:- 1-7-2014 Master Circular
FEMA
RBI/2014-15/5
Master Circular No.14/2014-15
July 01, 2014
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 updated from time to time as and when the fresh instructions are
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n Balances
B.12
Consignment Exports
B.13
Opening / Hiring of Ware houses abroad
B.14
Direct dispatch of documents by the exporter
B.15
Invoicing of Software Exports
B.16
Short Shipments and Shut out Shipments
B.17
Counter-Trade Arrangement
B.18
Export of Goods on Lease, Hire, etc.
B.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
EDF/SOFTEX procedure
C.3.1.
EDF Form (Erstwhile GR and PP Form)
C.3.2.
Mid-Sea Trans-Shipment of catch by Deep Sea Fishing Vessels
C.4
In case of export of goods / software taking place through EDI ports
C.5
SOFTEX F
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ceivables against import payables
C.26
Agency Commission on Exports
C.27
Refund of Export Proceeds
C.28
Exporters' Caution List
PART – 4
Annex-1 – Current Account Transaction Rules
Annex-2 – Form EFC
Annex- 3 – Common SOFTEX Form
Annex- 4 – Revised SOFTEX Procedure
Annex -5 – Delay in Utilization of Advance Received for Exports
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) a
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ermitted to issue guarantees on behalf of exporter clients on account of exports out of India subject to specified conditions.
(v) There is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions 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 t
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oods free of cost, for export promotion up to 2 per cent of the average annual exports of the applicant during the preceding three financial years subject to a ceiling of ₹ 5 lakhs. For status holder exporters, the limit as per the present Foreign Trade Policy is ₹ 10 lakhs or 2 per cent of the average annual export realization during the preceding three licensing years (April-March), whichever is higher.
(iii) Expo of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of EDF procedure from the Reserve Bank.
B.2 Manner of Receipt and Payment
(i) 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 in the following manner:
a. Bank draft, pay order, banker's or personal cheques.
b. Foreign currency note
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resident in India and a person resident in Nepal or Bhutan may be settled in Indian Rupees. However, in case of export of goods to Nepal, where the importer has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall 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 EDF 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 o
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a for credit to the exporters' account, payment of fee/commission to the OPGSP as per the predetermined rates / frequency/ arrangement; and 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 bona-fides 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 reconcilia
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01, 2009, participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU 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 transac
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tance in the Export Declaration Form and it would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF;
d. It would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF;
e. Reporting of outstanding, if any, in the XOS would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realised, the name of the declared third party should appear in the XOS;
f. In case of shipments being made to a country in Group II of Restricted Cover Countries, (e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country; and
g. In case of imports, the Invoice should contain a narration that the related payment has to be made to the (named) third party, the Bill of Entry should mention the name of the shipper as also the narration that the related payment ha
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onal 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 banking channels within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the AD Category – I banks concerned.
(ii) Reserve Bank may consider applications in Form EFC (Annex 2) from exporters having good track record for opening a foreign currency account with banks in India and outside India subject to certain terms and conditions. Applications for opening the account wi
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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 and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of ₹ 3 crores or above during the preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts.
(ii) They may be allowed to open not more than five Diamond Dollar Accounts with their banks.
(iii) Eligible firms and companies may apply fo
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eign 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.
(ii) 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 joint account holder, shall not be eligible to operate the account during the life time of the resident account holder
(iii) This account shall be maintained only in the form of non-interest bearing current account. No credit facilities, either fund-based or non-fund based, shall be permitted against the security of balances held in EEFC accounts by the AD Category – I banks.
(iv) All categories of foreign exchange ea
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a Diamond Dollar Account (DDA).
(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) for supplying goods to a unit in Special Economic Zone out of its foreign currency account.
(vi) AD Category – I banks may permit their exporter constituents to extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling subject to compliance of provisions of Notification No. FEMA 3/2000-RB dated May 3, 2000 as amended from time to time.
(vii) AD Category – I banks may permit exporters to repay packing credit advances whether availed in Rupee or in foreign currency from balance
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sentative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under;
c. 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 bank accounts opened in the overseas country should be promptly reported to the AD Bank.
(iv) AD Category – I banks may also allow remittances by a company incorporated in India having overseas offices, within the above limits for initial and recurring expenses, to acquire immovable property outside India for its business and for residential purpose of its staff.
(v) The overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each 'off-site' contract.
(vi) In case
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ed 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 can also allow exporters having a minimum of three years' satisfactory track record to receive long term export advance up to a maximum tenor of 10 years to be utilized for execution of long term supply contracts for export of goods subject to the conditions as under:
(i) Firm irrevocable supply orders and contracts should be in place. Product pricing should be in consonance with prevailing international prices.
(ii) Company should have capacity, systems and processes in place to ensure that the orders over the duration of the said tenure can actually be executed.
(iii) The facility is to be provided o
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the issuance should be rigorously evaluated as any other credit proposal keeping in view, among others, prudential requirements based on board approved policy.
b. BG / SBLC may be issued for a term not exceeding two years at a time and further rollover of not more than two years at a time may be allowed subject to satisfaction with relative export performance as per the contract.
c. BG / SBLC should cover only the advance on reducing balance basis.
d. BG / SBLC issued from India in favour of overseas buyer should not be discounted by the overseas branch / subsidiary of bank in India.
(xii) 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.
(3) 'AD Category- I ban
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f refund exceeding 10% of the advance payment received in the last three years;
(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.'
(4) (i) As it has been observed that there is substantial increase in the number and amount of advances received for exports remaining outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods), AD Category -I banks are advised to efficiently follow up with the concerned exporters in order to ensure that export performance (shipments in case of export of goods) are completed within the stipulated time period.
(ii) It is further reiterated that AD category -I banks should exercise prop
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prove EDF of export items for display or display-cum-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.
(ii) The sale proceeds of the items sold are repatriated to India in accordance with the Foreign Exchange Management (Realisation, Repatriation, and Surrender of Foreign Exchange) Regulations, 2000.
(iii) The exporter shall report to the AD Category – I banks the method of disposal of all items exported, as well as the repatriation of proceeds to India.
(iv) Such transactions approved by the AD Category – I banks will be subject to 100 per cent audit by their internal inspectors/auditors.
B.10 EDF approval for Export of Goods for re-imports
(i) AD Category – I banks may consider request from exporters for granting EDF approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration, etc., subje
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e will surrender/account for the balance proceeds of the shipment within the period prescribed for realization.
(ii) In cases where the exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts, AD Category – I banks, on being satisfied with the bona fides of the case, should ensure that the exporter has realised at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on EDF form, whichever is more and a period of one year has elapsed from the date of shipment.
B.12 Consignment Exports
(i) When goods have been exported on consignment basis, the AD Category-I bank, while forwarding shipping documents to his overseas branch/ correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export. This procedure should be followed even
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ceeds in the Account Sales.
B.13 Opening / Hiring of Ware houses abroad
AD Category – I banks may consider the applications received from exporters and grant permission for opening / hiring warehouses abroad subject to the following conditions:
(i) Applicant's export outstanding does not exceed 5 per cent of exports made during the previous financial year.
(ii) Applicant has a minimum export turnover of USD 100,000/- during the last financial year.
(iii) Period of realisation should be as applicable.
(iv) All transactions should be routed through the designated branch of the AD Banks.
(v) The above permission may be granted to the exporters initially for a period of one year and renewal may be considered subject to the applicant satisfying the requirement above.
(vi) 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
1. AD Category – I banks should normally dispat
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documents to the consignees outside India subject to the terms and conditions that:
(i) The export proceeds are repatriated through the AD banks named in the EDF.
(ii) The duplicate copy of the EDF is submitted to the AD banks for monitoring purposes, by the exporters within 21 days from the date of shipment of export.
3. AD Category – I banks may regularize cases of dispatch of shipping documents by the exporter direct to the consignee or his agent resident in the country of the final destination of goods, up to USD 1 million or its equivalent, per export shipment, subject to the following conditions:
(i) The export proceeds have been realised in full.
(ii) The exporter is a regular customer of AD Category – I bank for a period of at least six months.
(iii) The exporter's account with the AD Category – I bank is fully compliant with the Reserve Bank's extant KYC / AML guidelines.
(iv) The AD Category – I bank is satisfied about the bona-fides of the transaction.
(v) In case of
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o / television software to the designated official concerned of the Government of India at STPI / EPZ /FTZ /SEZ for valuation / certification not later than 30 days from the date of invoice / the date of last invoice raised in a month, as indicated above. The designated officials may also certify the SOFTEX Forms of EOUs, which are registered with them.
(iv) The invoices raised on overseas clients as at (i) and (ii) above will be subject to valuation of export declared on SOFTEX form by the designated official concerned of the 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 an EDF 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 ef
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rough an Escrow Account opened in India in US Dollar will be considered by the Reserve Bank subject to following conditions:
(i) All imports and exports under the arrangement should be at international prices in conformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made there under.
(ii) No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e., in a block of 12 months) and the banks may pay interest at the applicable rate.
(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 Leas
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s made satisfactory arrangements for realisation of full export proceeds subject to the usual EDF procedure.
AD Category – I banks may permit units in DTAs to purchase foreign exchange for making payment for goods supplied to them by units in SEZs.
(ii) Export of Services by Special Economic Zones (SEZs) to DTA Unit. Authorised Dealer Banks are permitted to sell foreign exchange to a unit in the DTA for making payment in foreign exchange to a unit in the SEZ for the services rendered by it (i.e. a unit 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.
B.21 Project Exports and Service Exports
(i) Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are
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of time limit of 30 days for the exporter undertaking Project Exports and Service contracts abroad to submit form DPX1/ PEX-1 /TCS-1 to the Approving Authority (AA) for seeking post award approval will not apply henceforth.
(iv) In order to provide greater flexibility to project & service exporters in conducting their overseas transactions, facilities have been provided as under:
(a) Inter-Project Transfer of Machinery
The stipulation regarding recovery of market value (not less than book value) of the machinery, etc., from the transferee project has been withdrawn. Further, exporters may use the machinery / equipment for performing any other contract secured by them in any country subject to the satisfaction of the sponsoring AD Category – I bank(s) / Exim Bank and also subject to the reporting requirement and would be monitored by the AD Category – I bank(s) / Exim Bank.
(b) Inter-Project Transfer of Funds
AD Category – I bank(s) / Exim Bank may permit exporters to open, maintai
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software exporter company / firm has been dispensed with. They should, however, repatriate the profits of on-site contracts after completion of the contracts.
B.22 Export of Currency
In terms of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 notified vide Notification No. FEMA 6/ 2000-RB dated 3rd May 2000, as amended from time to time, permission of Reserve Bank is required for any export of Indian currency except to the extent permitted under any general permission granted under the Regulations as under:
(i) Any person resident in India may take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding ₹ 25,000 (Rupees twenty five thousand only); and
(ii) Any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveller coming from and going to Pakistan and Bangladesh, and visiting India may take outside India curre
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the Customs station at the border through which the vessel or vehicle has to pass before crossing over to the foreign territory. For this purpose, exporter may arrange either to give the form to the person in charge of the vessel or vehicle or forward it to his agent at the border for submission to Customs.
(ii) As regards exports by rail, Customs staff has been posted at certain designated railway stations for attending to Customs formalities. They will collect the EDF for goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. The list of designated railway stations can be obtained from the Railways. For goods loaded at stations other than the designated stations, exporters must arrange to present EDF to the Customs Officer at the Border Land Customs Station where Customs formalities are completed.
B.25 Border Trade with Myanmar
This is governed by the Agreement on Border Trade between India and Myanma
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omania 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
In all applications / correspondence with the Reserve Bank, the specific identification number as available on the EDF and SOFTEX forms should invariably be cited.
C.2 EDF/SOFTEX procedure
In terms of Regulation 6 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 notified vide Notification No. FEMA.23/2000-RB dated 3rd May 2000, as amended from time to time export declaration forms should be disposed of as under:
C.3.1. EDF Form (Erstwhile GR and PP Form)
(i) The EDF will replace the existing GR form used for declaration of export of Goods at Non-EDI ports. The procedure relating to the exports of goods through EDI ports will remain the same. However, the requirement of declaring the exports of goods / software in the SDF in case of exports tak
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g with the cargo to be shipped.
(vii) 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.
(viii) 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 EDF form.
(ix) After the documents have been negotiated / sent for collection, the AD Category – I banks should report the transaction to the Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return.
(x) The duplicate copy of the form together with a copy of invoice etc. shall be retained by the AD Category – I banks and may not be submitted to the Reserve Bank.
(xi) In the case of exports made under deferred credit arrangement or to joint ventures abroad against equity participation or und
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ng that the parcel is being addressed to their branch or correspondent bank in the country of import and return the original copy to the exporter, who should submit the form to the post office with the parcel.
(b) The duplicate copy of the EDF form will be retained by the AD banks to whom the exporter should submit relevant documents together with an extra copy of invoice for negotiation/collection, within the prescribed period of 21 days.
(c) The concerned overseas branch or correspondent should be instructed to deliver the parcel to consignee against payment or acceptance of relative bill.
(d) AD Category – I banks may, however, countersign EDF forms covering parcels addressed direct to the consignees, provided:
(e) An irrevocable letter of credit for the full value of the export has been opened in favour of the exporter 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
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dian owned vessels, as per the norms prescribed by the Ministry of agriculture, Government of India, the EDF 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 Regulation 3 of Notification No.FEMA.23/2000-RB dated May 3, 2000.
(a) The exporters may submit the EDF, duly signed by the Master of the Vessel in lieu of Custom Certification, indicating the composition of the catch, quantity, export value, date of transfer of catch, etc.
(b) The date of transfer of catch may be indicated in the column for 'Date of Shipment' with suitable remarks.
(c) Bill of Lading / Receipt of Trans-shipment issued by the carrier vessel should include the EDF Number.
(d) The EDF should be duly supported by a certificate from an international cargo surveyor.
(e) The prescribed period of realization and repatriation should be reckoned with reference to the date of transfer of catch
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exporters.
C.4 In case of export of goods / software done through EDI ports
(i) The relative shipping bill should be submitted in duplicate to the Commissioner of Customs concerned.
(ii) After verifying and authenticating, the Commissioner of Customs will hand over to the exporter, one copy of the shipping bill marked 'Exchange Control Copy' for being submitted to the AD Category – I banks within 21 days from the date of export.
(iii) The AD Category – I banks should accept the Exchange Control (EC) copy of the shipping bill submitted by the exporter for collection/negotiation of shipping documents.
(iv) The manner of disposal of EC copy of Shipping Bill is the same as that for EDF. The duplicate copy of the form together with a copy of invoice etc. shall be retained by the AD Category – I banks and may not be submitted to the Reserve Bank.
(v) In cases where ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) initially settles
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ng with quadruplicate set of SOFTEX form to the nearest STPI. STPI will then verify the details and decide on a percentage sample check of the documents in details. Software companies will submit all the documents on demand to STPI within 30 days of their advice or any reasonable/extended time at the discretion of the Director, STPI, at the request from the exporter. STPI will thus certify the statement and SOFTEX forms in bulk on the “Top Sheet” regarding the values etc. and will thereafter forward the first copy of the revised SOFTEX format to the concerned Regional Office of RBI, the duplicate copy along with bulk statement in excel format to Authorised Dealers for negotiation / collection / settlement, the third copy to the exporter and the last copy will be retained by STPI for its own record. Under the revised procedure, the exporters, however, will have to provide information about all the invoices including the ones lesser than US$25000, in the bulk statement in excel format. [
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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 ….. percent of the export realisation credited to the EEFC account maintained by the exporter with……”
C.8 Consolidation of Air Cargo/Sea Cargo
(i) Consolidation of Air Cargo
(a) Where air cargo is shipped under consolidation, the airline company's Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue his own House Airway Bills (HAWBs) to individual shippers.
(b) AD Category – I banks may negotiate HAWBs only if the relative letter of credit specifically provides for negotiation of these documents in lieu of Airway Bills issued by the airline company.
(ii) Consolidation of Sea Cargo
(a) AD Category – I banks may accept Forwarder's Cargo Receipts (FCR) issued by IATA approved agents, in lieu of
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bout 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.9 Delay in submission of shipping documents by exporters
In cases where exporters present documents pertaining to exports after the prescribed period of 21 days from date of export, AD Category – I banks may handle them without prior approval of the Reserve Bank, provided they are satisfied with the reasons for the delay.
C.10 Check-list for Scrutiny of Forms
AD Category – I banks may ensure:
(i) The number on the duplicate copy of the EDF presented to them is the same as that of the original which is usually recorded on the Bill of Lading/Shipping Bill and the duplicate has been duly verified and authenticated by appropriate Customs authorities.
(ii) In the case of c.i.f., c.& f. etc. contracts where the freight is sought to be paid
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ent (Export of Goods and Services) Regulations, 2000.
(vii) 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, on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts. Some such instances (where the values declared to the customs authorities and that shown on the documents may differ) are enumerated hereunder:
(viii) The export realizable value may be more than what was originally declared to/accepted by the Customs on the EDF in certain circumstances such as where in c.i.f. or c. & f. contracts, part or whole of any freight increase taking place after the contract was concluded is agreed to be borne by buyers or where as a result of subsequent devaluation of the currency of the contract, buyers have agreed to an increase in price.
(ix) In certain lines of export trade, the final se
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e copies of EDF and shipping documents, once submitted to the AD Category – I banks for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission.
C.12 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative
AD Category – I banks may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative for exports to certain landlocked countries if the shipment is covered by an irrevocable letter of credit and the documents conform strictly to the terms of the Letter of Credit which, inter alia, provides for such delivery.
C.13 Export Bills Register
(i) AD Category – I banks should maintain Export Bills Register, in physical or electronic form. Details of EDF/SOFTEX form number, due date of payment, the fortnightly period of R Supplementary Return with which the ENC statement covering the transaction was sent to the Reserve Bank, should b
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banks until the full proceeds are realised, except in case of undrawn balances.
(iii) AD Category – I banks should follow up export outstanding with exporters systematically and vigorously so that action against defaulting exporters does not get delayed. Any laxity in the follow up of realization of export proceeds by AD Category – I banks will be viewed seriously by the Reserve Bank, leading to the invocation of the penal provision under FEMA, 1999.
(iv) With effect from the half year ending December 2013, half yearly XOS submission should be made online and Bank-wide instead of the present system of branch-wise submission through the respective Regional Offices of Reserve Bank of India
C.15 Reduction in Invoice Value 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
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entage ceiling, subject to the above conditions as also subject to their track record being satisfactory, i.e., the export outstanding do not exceed 5 per cent of the average annual export realization during the preceding three financial years.
(iii) For the purpose of reckoning the percentage of export bills outstanding to the average export realizations during the preceding three financial years, outstanding of exports made to countries facing externalization problems may be ignored provided the payments have been made by the buyers in the local currency.
C.17 Export Claims
(i) AD Category – I banks may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list of 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.18 Change of buyer/consignee
Prior approval of
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yond his control,
(c) The exporter submits a declaration that the export proceeds will be realised during the extended period,
(d) 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.
(e) 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.
(f) In cases where the exporter has filed suits abroad against the buyer, extension may be granted irrespective of the amount involved / outstanding.
(ii) In cases where an exporter has not been able to realise proceeds of a shipment made within the extended period for reasons beyond his control, but expects to be able to rea
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(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 undernoted categories:
(a) The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery of export proceeds has been produced.
(b) The overseas buyer is not traceable over a reasonably long period of time.
(c) The goods exported have been auctioned or destroye
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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 relevant EDF to be written off, Bill No., invoice value, commodity exported, country of export. The CA certificate may also indicate that the export benefits, if any, availed of by the exporter have been surrendered.
(vi) However, the following would not qualify for the “write off” facility :
(a) Exports made to countries with e
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beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.
C.21 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.
(ii) Such write-off will not be restricted to the limit of 10 per cent indicated above.
(iii) Surrender of incentives, if any, in such cases will be as provided in the Foreign Trade Policy.
(iv) The claims settled in rupees by ECGC and private insurance companies regulated by IRDA should not be construed as export realization in foreign exchange.
C.22 Write-off – Relaxation
As announced in the Fore
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ration of India Limited (ECGC) or the write -off is allowed by the Reserve Bank.
C.23 Shipments Lost in Transit
(i) 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.
(ii) In cases where the claim is payable abroad, the AD Category – banks must arrange to collect the full amount of claim due on the lost shipment, through the medium of their overseas branch/correspondent and release the duplicate copy of EDF only after the amount has been collected.
(iii) A certificate for the amount of claim received should be furnished on the reverse of the duplicate copy.
(iv) AD Category – I banks should ensure that amounts of claims on shipments lost in transit which are partially settled directly by shipping companies/airlines under carrier's liability abroad are also repatriated to India by exp
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v) 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.25 – Set-off of export receivables against import payables
AD category -I banks may deal with the cases of set-off of export receivables against import payables, subject to following terms and conditions:
(i) The import is as per the Foreign Trade Policy in force.
(ii) Invoices/Bills of Lading/Airway Bills and Exchange Control copies of Bills of Entry for home consumption have been submitted by the importer to the Authorized Dealer bank.
(iii) Payment for the import is still outstanding in the books of the importer.
(iv) Both the transactions of sale and purchase may be reported separately in 'R' Returns.
(v) The relative EDF will be released by the AD bank only after the entire export proceeds are adjusted / received.
(v
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e 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.
(b) The relative shipment has already been made.
(ii) AD Category – I banks may allow payment of commission by Indian exporters, in respect of their exports covered under counter trade arrangement through Escrow Accounts designated in US Dollar, subject to the following conditions:
(a) The payment of commission satisfies the conditions as at (a) and (b) stipulated in paragraph (i) above.
(b) The commission is not payable to Escrow Account holders themselves.
(c) The commission should not be allowed by deduction from the invoice value.
(iii) Payment of commission is prohibited on exports made by Indian Partners towards equity participation in an overseas joint venture / wholly owned subsidiary as also exports under Rupee Credit Route
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to.
C.28 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 EDF of exporters who have been placed on caution list if the exporters concerned produce evidence of having received an advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports.
(ii) Such approval may be given even in cases where usance bills are to be drawn for the shipment provided the relative letter of credit covers the full export value and also permits such drawings and the usance bill mature within twelve months from the date of shipment.
(iii) AD Category – I banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters.
Annex – 1 -Foreign Exchange Management (Current Account Transactions) Rules, 2000
Annex-2 – Form EFC
Annex 3- Common SOFTEX Form
Annex-4- R
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No.30
Export of Goods for Exhibition / Trade Fairs outside India
March 26, 2002
10
A.P. (DIR Series) Circular No.34
Facilities to Status Holder ExportersCredit to the EEFC account
April 1, 2002
11
A.P. (DIR Series) Circular No.35
Export of Goods and Services -Facilities to Status Holder Exporters
April 1, 2002
12
A.P. (DIR Series) Circular No.38
Foreign Exchange Management Act, 1999 – Export of goods and services – Reduction in value
April 12, 2002
13
A.P. (DIR Series) Circular No.53
Use of Credit Cards AP (DIR Series) Circular No.53 (June 27, 2002)
June 27, 2002
14
A.P. (DIR Series) Circular No.54
Maintenance of foreign currency account abroad by a company/firm/a body corporate registered or incorporated in India
June 29, 2002
15
A.P. (DIR Series) Circular No.2
Export of Goods and Services
July 4, 2002
16
A.P. (DIR Series) Circular No.10)
Export of Goods and Services – Facilities to units in Special Economic Zones (SEZs
August 14, 2002
17
A.P. (DIR Ser
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urrency (EEFC) Account Scheme
December 17, 2002
26
A.P. (DIR Series) Circular No.78
Exchange Earners' Foreign Currency (EEFC) Account Scheme
February 14, 2003
27
A.P. (DIR Series) Circular No.91
Export of Goods and Services – Facilities to Units in Special Economic Zones (SEZs)
April 1, 2003
28
A.P. (DIR Series) Circular No.94
Export of Goods and Services – Export of goods on promotional grounds
April 26, 2003
29
A.P. (DIR Series) Circular No.100
Export of Goods and Services – Exports to Warehouses Abroad
May 2, 2003
30
A.P. (DIR Series) Circular No.104
Foreign Exchange Management Act, 1999 – Liberalisation
May 31, 2003
31
A.P. (DIR Series) Circular No.105
Supply of goods by Special Economic Zones (SEZs) to Units in Domestic Tariff Area (DTA) against payment in foreign exchange
June 16, 2003
32
A.P. (DIR Series) Circular No.8
Foreign Exchange Management Act, 1999
August 16, 2003
33
A.P. (DIR Series) Circular No.12
Export of Goods and Services
August 20,
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Liberalisation –
February 20, 2004
43
A.P. (DIR Series) Circular No.94
Exchange Earners' Foreign Currency (EEFC) Account Scheme – Trade Related Loans/Advances
June 7, 2004
44
A.P. (DIR Series) Circular No.96
Exchange Earner's Foreign Currency (EEFC) Account Scheme – Liberalisation –
June 15, 2004
45
A.P. (DIR Series) Circular No.97
Foreign Exchange Management Act, 1999 –
June 21, 2004
46
A.P. (DIR Series) Circular No.9
Foreign Exchange Management Act, 1999
September 1, 2004
47
A.P. (DIR Series) Circular No.10
Export of Goods and Services to Latin American Countries
September 13, 2004
48
A.P. (DIR Series) Circular No.25
Period of Realisation for 100% EOUs Extended to One Year
November 1, 2004
49
A,P. (DIR Series) Circular No.21
Export of Goods and Services – Liberalisation – GR Approval for export
January 10, 2006
50
A.P. (DIR Series) Circular No.31
Export of Goods and Services – Extension of period of realization
April 21, 2006
51
A.P. (DIR S
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Services- Realisation and Repatriation of Export Proceeds-Liberalisation
June 3, 2008
60
A.P (DIR Series) Circular No.4
Exchange Earner's Foreign Currency (EEFC) Account
August 4, 2008
61
A.P (DIR Series) Circular No.6
Export of Goods and Services- Direct Dispatch of Shipping Documents Realisation and Repatriation of Export Proceeds – Liberalisation
August 13, 2008
62
A.P (DIR Series) Circular No.43
Settlement system under ACU Mechanism
December 26, 2008
63
A.P (DIR Series) Circular No.51
Opening of Diamond Dollar Accounts – Liberalisation
February 13, 2009
64
A.P. (DIR Series) Circular No.60
On-line downloading of GR Forms
March 26, 2009
65
A.P. (DIR Series) Circular No.70
Export of Goods and Software – Realisation and Repatriation of export Proceeds – Liberalisation
June 30, 2009
66
A.P (DIR Series) Circular No.13
Opening of Diamond Dollar Accounts (DDAs) – Modification
October 29, 2009
67
A.P. (DIR Series) Circular No.14
Maldives Monetary Authori
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ays – Enhancement of the value of transaction
October 14, 2011
75
A.P. (DIR Series) Circular No.40
Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation
November 01, 2011
76
A.P. (DIR Series) Circular No.47
“Set-off” of export receivables against import payables – Liberalization of Procedure
November 17, 2011
77
A.P. (DIR Series) Circular No.48
Mid – Sea Trans-shipment of catch by Deep Sea Fishing Vessel
November 21, 2011
78
A.P. (DIR Series) Circular No.65
Export of Goods and Services – Forwarder's Cargo Receipt
January 12, 2012
79
A.P. (DIR Series) Circular No.73
Opening of Diamond Dollar Accounts (DDAs
January 31, 2012
80
A.P. (DIR Series) Circular No.80
Export of Goods and Services- Simplification and Revision of Softex Procedure
February 15, 2012
81
A.P. (DIR Series) Circular No.81
Export of Goods and Services – Receipt of advance payment for export of goods Involving shipment (manufacture and ship) beyond one y
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of export proceeds – Liberalisation
November 20, 2012
90
A.P. (DIR Series) Circular No.66
Export of Goods and Services – Simplification and Revision of Softex Procedure at SEZs
January 01, 2013
91
A.P. (DIR Series) Circular No.79
Exchange Earner's Foreign Currency Account, Diamond Dollar Account & Resident Foreign Currency Domestic Account
January 22, 2013
92
A.P. (DIR Series) Circular No.88
“Write-off” of unrealized export bills – Export of Goods and Services – Simplification of procedure
March 12, 2013
93
A.P. (DIR Series) Circular No.105
Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation
May 20, 2013
94
A.P. (DIR Series) Circular No.108
Export of Goods and Services – Realization and Repatriation period for units in Special Economic Zones (SEZ)
June 13, 2013
95
A.P. (DIR Series) Circular No.109
Processing and Settlement of Export related receipts facilitated by Online Payment Gateways – Enhancement of the value
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