CHAPTER 6
EXPORT OF GOODS, SOFTWARE, CURRENCY ETC.
PART A -GENERAL
6A.1 Trade and Exchange Control
6A.2 Exemptions from declarations
6A.3 Export Declaration Forms
6A.4 Numbering of forms
6A.5 Importer-Exporter Code Number
6A.6 Methods of Payment
6A.7 Time limit for Realisation of Export Proceeds
6A.8 Exports under Trade Agreements/ Rupee Credits
6A.9 Protection against Transit Risks under f.o.b., c.& f.,
etc. Contracts
6A.10 Bid Bonds and Other Guarantees against Commodity Exports
6A.11 Minor Guarantees
6A.12 Foreign Currency Accounts
6A.13 Counter Trade
6A.14 Export of goods on lease, hire, etc.
6A.15 Participation in Trade Fairs Abroad
6A.16 Project Exports and Service Exports
6A.17 Export on Elongated Credit Terms
6A.18 Forfaiting
PART B -GR/PP PROCEDURE
6B.1 Disposal of Copies of Export Declaration Forms
6B.2 Shut out Shipments and Short Shipments
6B.3 Exports by Air
6B.4 Consolidation of Air Cargo
6B.5 Exports by Barges/ Country Craft/Road Transport
PART C -AUTHORISED DEALERS' OBLIGATION
6C.1 Countersignature on PP forms
6C.1A Exports by Government/Public Sector Undertakings, etc.
6C.2 Delay in Submission of Shipping Documents by Exporters
6C.3 Check-list for Scrutiny of Forms
6C.4 Transfer of Documents
6C.5 Trade Discount
6C.6 Advance Payments against Exports
6C.7 Part Drawings
6C.8 Consignment Exports
6C.9 Despatch of Shipping Documents
6C.10 Handing Over Negotiable Copy of Bill of Lading to Master
of Vessel/ Trade Representative
6C.11 Export Bills Register
6C.12 Follow-up of Overdue Bills
6C.13A Reduction in invoice value on account of Prepayment of
usance bills.
6C.13B Reduction in Value
6C.14 Write off of unrealised Export Bills
6C.15 Change of Buyer/Consignee
6C.16 Extension of Time Limit
6C.17 Shipments Lost in Transit
6C.18 Payment of Claims by ECGC
6C.19 Return of Documents to Exporters
6C.20 Exporters' Caution List
PART D -EXPORT OF COMPUTER SOFTWARE
6D.1 Declaration of Software Exports
6D.2 Valuation of Software Exports and Certification of SOFTEX
Forms
6D.3 Time Limit for Realisation of Proceeds of Software Export
6D.4 Terms of payment - Invoicing
6D.5 Time limit for realisation of export value
PART E -REMITTANCES CONNECTED WITH EXPORTS
6E.1 General
6E.2 Agency Commission on Exports
6E.3 Overprice
6E.4 Export Claims
6E.5 Other Remittances
6E.6 Refund of Export Proceeds
PART F -DESPATCH OF GOODS NOT INVOLVING FOREIGN EXCHANGE (WAIVER OF
GR/PP FORM PROCEDURE)
6F.1 Gift Parcels
6F.2 Export of Defective Goods for Replacement or Repairs and
Return
6F.3 Export of Replacement Goods
PART G -EXPORT OF JEWELLERY, INDIAN CURRENCY, FOREIGN EXCHANGE,
SECURITIES, ETC.
6G.1 Export of Jewellery, etc.
6G.2 Export of Indian Currency
6G.3 Export of Foreign Exchange
6G.4 Export of cheques, etc. by Authorised Dealers and others
6G.5 Export of securities
Annexure
List of Export Promotion Council and other Grantee Organisations
EXPORT OF GOODS, SOFTWARE, CURRENCY ETC.
PART A - GENERAL
Trade and Exchange Control
6A.1
- The offices of the Director General of Foreign Trade regulate the
physical export of commodities. They may prohibit under the Exim Policy, the
export of certain commodities, stipulate that the export of certain other
commodities would be subject to licence, prescribe minimum export prices or
methods by which payments for exports of some commodities will have to be
received. Export of certain commodities might be subject to restrictions
placed in other statutes also. Nothing in the Exchange Control regulations
outlined in this Manual shall relieve the exporter from complying with those
laws and/or conditions imposed under those laws.
- In exercise of the powers conferred by section 18(1) of Foreign Exchange
Regulation Act, 1973, Government of India have issued Notifications No.
F1/67/EC/73-1 and No. F1/67/EC/73-2 both dated 1st January 1974, prohibiting
the export of any goods directly or indirectly to any place outside India,
other than Nepal and Bhutan, unless a declaration in the prescribed form is
furnished to the prescribed authority. The various forms of declarations
have been prescribed in the Second Schedule to the Foreign Exchange
Regulation Rules, 1974. These Rules also lay down regulations relating to
the prescribed period for realisation of export proceeds and the manner of
payment of export value of goods.
Exemptions from Declarations
6A.2 In terms of Notifications Nos.F1/67/EC/73-1 and 2 both
dated 1st January 1974, the requirement of declaration on one of the prescribed
forms does not apply to the exports listed therein. Copies of these
notifications are given in Volume II of the Manual. In terms of these
notifications, the requirement of declaration does not, inter alia, apply to
goods despatched by air freight or post parcel provided the packet is
accompanied by a declaration by the sender that the value of the goods is not
more than Rs.10,000 and that the export does not involve any transaction in
foreign exchange. Reserve Bank, by its Order No. EC.CO.COX.126/5/Policy/93 dated
5th March 1993, has granted general permission to airline companies/air taxi
operators to despatch aircraft engines and spare parts out of India for
overhauling/repairs and their subsequent return to India, free of payment,
without furnishing a declaration on GR / PP form. [Please also see paragraph
6F.3 regarding replacement of goods]
Export Declaration Forms
6A.3 The Foreign Exchange Regulation Rules, 1974 prescribe
export declaration forms called Exchange Control Declaration (GR) form,
hereafter referred to as GR form, PP and VP/COD forms. All exports to which the
requirement of declaration applies must be declared on appropriate forms as
indicated below:
| (a) |
Exchange Control Declaration (GR)Form |
: Exports to all countries made otherwise than by post. |
| (b) |
PP Form |
: Exports to all countries by parcel post, except when
made on 'value payable' or 'cash on delivery' basis. |
| (c) |
VP/COD Form |
: Exports to all countries by parcel post, under arrangements
to realise proceeds through postal channels on 'value payable' or 'cash
on delivery' basis. |
| NOTE: |
Export declarations are to be made in a set of two
copies (original and duplicate) of GR or PP form. VP/COD forms are to be
submitted in a single copy. |
A.D.(M.A. Series) Circular No.4
Numbering of forms
6A.4 GR and PP forms are printed by Reserve Bank for sale to
authorised dealers for supply to their customers. VP/COD forms are sold directly
to exporters by the offices of the Exchange Control Department of Reserve Bank.
GR / PP forms are printed in distinctive colours and each set bears a printed
number which appears on both copies in the set. In all remittance applications
and correspondence with the Reserve Bank relating to any export transaction, the
printed number of GR / PP form on which the relative export was declared should
invariably be cited. In case of exports declared on GR form, the 10 digit number
allotted to the GR form by Customs should also be cited in full.
Importer-Exporter Code Number
6A.5 Every person/firm/company engaged in export business in
India should obtain Importer-Exporter Code Number from the Director General of
Foreign Trade (DGFT) as required under the Export and Import Policy. The
Head/Registered office as well as its branches in India should invariably cite
the number so allotted by DGFT on GR, PP or VP/COD forms as also SOFTEX form
used for declaration of exports. Customs/Post Office/Department of Electronics
will not entertain any export forms which do not bear the Importer-Exporter Code
Number issued by DGFT.
Methods of Payment
6A.6
- The methods for receipt of payment for exports are given in Chapter 2.
Normally, payment must be received through the medium of an authorised
dealer. It will, however, be in order for authorised dealers to handle
documents in cases where the exporter has received the export proceeds
directly from the overseas buyer in the form of bank draft, pay order,
banker's cheque, personal cheque, foreign currency notes, foreign currency
travellers' cheques, etc., without any monetary limit provided the
exporter's track record is good, he is a customer of the concerned
authorised dealer and prima facie the instrument represents payment for
exports.
- It will also be in order for authorised dealers to handle documents in
cases where the exporter has received the export proceeds in respect of
goods sold to overseas buyers during their visits to India in rupees from
the Credit Card Servicing banks either by way of reimbursement against
charge slips signed by the ICC holders (overseas buyers) or as instantaneous
credit to his bank account in India. GR(duplicate) should be released by the
authorised dealers on receipt of funds in their Nostro account or on
production of a certificate by the exporter from the Credit Card Servicing
bank in India to the effect that it has received the equivalent amount in
foreign exchange, if the authorised dealer concerned is not the Credit Card
Servicing bank.
- Payments towards export proceeds out of funds held in the Foreign
Currency (Non-resident) account and Non-resident (External) Rupee account is
also permitted.
- Payments towards export proceeds from a rupee account, held in the name
of an Exchange House with an authorised dealer, is also permissible up to
Rs.2,00,000 per transaction.
Time limit for Realisation of Export Proceeds
6A.7 In terms of Rule 8 of the Foreign Exchange Regulation
Rules, 1974, as amended, the amount representing the full export value of goods
exported must be realised by an exporter on the due date for payment or within
six months from the date of shipment, whichever is earlier. In respect of
exports made to Indian-owned Warehouses abroad established with the permission
of the Reserve Bank, a maximum period of 15 months is allowed for realisation of
export proceeds. As regards consignment exports to CIS countries and East
European countries, see Note C under paragraph 6C.8(ii).
Exports under Trade Agreements/Rupee Credits
6A.8
- Export of goods under special arrangements or rupee credits extended by
Government of India to foreign Governments will be governed by terms and
conditions set out by Export Trade Control authorities in the relative
Public Notices. These notices will cover various aspects such as type of
goods eligible for export, procedure for obtaining approval for individual
export contracts, manner of receiving payment and other matters. Important
instructions relating to such exports will also be communicated by Reserve
Bank to authorised dealers in the form of A.D. Circulars. Authorised dealers
should refer to these Public Notices and A.D. Circulars while handling
documents covering exports under these arrangements and ensure that
prescribed procedure is meticulously followed.
- The Export-Import Bank of India (Exim Bank) also extends, from time to
time, lines of credit to commercial banks/financial institutions in foreign
countries for financing exports from India to those countries. Terms and
conditions governing such credits are communicated by Reserve Bank to
authorised dealers by means of A.D. Circulars. Authorised dealers should be
guided by the instructions contained in such circulars while handling
documents covering exports under these arrangements and should meticulously
follow the procedure prescribed therein.
Protection against Transit Risks under f.o.b., c.& f.,etc. Contracts
6A.9 In case of exports contracted on f.o.b., c.& f., etc.
terms and not covered by irrevocable letter of credit opened by buyers,
exporters will be well advised to ensure even before cargoes are shipped that
the shipment has been adequately insured against all risks of loss or damage
during the entire course of transit and that such insurance cover incorporates
seller's interest clause in the relative policy, permitting claims being paid to
exporter in India in the event of loss/damage to the shipment before ownership
in the goods passes to buyer (See Note under paragraph 15A.2 and also paragraph
15A.3).
Bid Bonds and Other Guarantees against Commodity Exports
6A.10 In terms of the Notification No. FERA.132/93-RB dated
26th April 1993, issued under Section 26 of FERA 1973, authorised dealers have
the permission to give performance bond or guarantee in favour of overseas
buyers on account of bonafide exports from India. Before issuing any such
guarantees, they should satisfy themselves with the bona fides of the applicant
and his ability to perform the contract and also that the value of the
bid/guarantee as a percentage of the value of the contract/tender is reasonable
and according to the normal practice in international trade and that the terms
of the contract are in accordance with the Exchange Control regulations.
Authorised dealers may also, subject to what has been stated above, issue
counter-guarantees in favour of their branches/correspondents abroad in cover of
guarantees required to be issued by the latter on behalf of Indian exporters in
cases where guarantees of only resident banks are acceptable to overseas buyers
in accordance with local laws/regulations. If and when the bond/guarantee is
invoked, authorised dealers may make payments due thereunder to non-resident
beneficiaries but a report should be sent to Reserve Bank where the amount of
the remittance exceeds U.S.$ 5000 or its equivalent.
NOTE:
Prior approval of Reserve Bank should be obtained by authorised dealers for
issue of performance bonds/guarantees in respect of caution-listed exporters.
Minor Guarantees
6A.11 Authorised dealers may freely give on behalf of their
customers and overseas branches and correspondents, guarantees in the ordinary
course of business in respect of missing or defective documents, authenticity of
signatures and for other similar purposes.
Foreign Currency Accounts
6A.12 Reserve Bank may consider selectively applications from
exporters having good track record for opening foreign currency accounts with
banks abroad for crediting the proceeds of export shipments made (except to
countries which are members of Asian Clearing Union) subject to certain terms
and conditions. The facility will generally be extended to Export/Trading/Star
Trading/Super Star Trading Houses and other exporters whose net foreign exchange
earnings during the preceding year on account of exports after adjusting
payments towards imports are not less than Rs.4 crores. A designated branch of
an authorised dealer in India will monitor the operations in the account abroad.
Applications for this purpose may be submitted through the designated branch on
form EFC to the concerned office of the Exchange Control Department under whose
jurisdiction the exporter is functioning.
Counter Trade
6A.13
- Counter-trade proposals involving adjustment of value of goods imported
into India against value of goods exported from India in terms of an
arrangement voluntarily entered into between the Indian party and the
overseas party through an Escrow Account opened in India in U.S. dollar will
be considered by the Reserve Bank. All imports and exports under the 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. No overdraft will be
permitted in the Escrow Account nor any loans will be permitted to be
granted against funds in the account.
- Application for permission for opening an Escrow Account may be made by
the overseas exporter/organisation through the authorised dealer with whom
the account is proposed to be opened, to the office of Reserve Bank under
whose jurisdiction the authorised dealer is functioning.
- Reserve Bank will also consider counter trade proposals from Indian
exporters with Romania involving adjustment of value of goods exported from
India to Romania against value of goods imported from Romania into India in
terms of an arrangement voluntarily entered into with a party in Romania
through an Escrow account in U.S. Dollar maintained with a bank in Romania
for the purpose. The Indian exporter should utilise the Escrow account funds
within three months from the date of credit to the Escrow account for import
of goods from Romania into India. Application for necessary permission to
open a U.S. Dollar Escrow Account may be submitted by an Indian exporter
through an authorised dealer to the concerned office of Reserve Bank under
whose jurisdiction the applicant is situated. The concerned authorised
dealer will be required to monitor the transactions in the U.S. Dollar
Escrow Account with banks in Romania through a mirror account.
Export of goods on lease, hire, etc.
6A.14 Machinery, equipment, etc. are sometimes exported on
lease, hire, etc. basis under agreement with the overseas lessee against
collection of hire charges and ultimate reimport of the goods exported.
Exporters who wish to export goods on such terms should approach, through an
authorised dealer, the office of the Reserve Bank under whose jurisdiction the
exporter is situated, giving full particulars.
Participation in Trade Fairs Abroad
6A.15
- Firms, companies as also Export Promotion Councils and other grantee
organisations (list given in the Annexure) which are autonomous
organisations under the Ministries of Commerce and Textiles of the
Government of India and other Agencies/Commodity Boards regarded as Export
Promotion Councils which are notified in the Export and Import Policy
wishing to participate in trade fairs and exhibitions abroad and private
publishers, printers etc. wishing to participate in book fairs/exhibitions
abroad should apply to authorised dealers for exchange with necessary
particulars. Authorised dealers may, on receipt of application from the
aforesaid entities, release exchange subject to the condition that the
participants render proper account of the expenditure incurred for the above
purpose.
- Exporters participating in international exhibition/trade fairs have
been granted general permission vide Reserve Bank Notification
No.FERA.161/95-RB dated 31st January 1995 for opening temporary foreign
currency account abroad for depositing the foreign exchange obtained by sale
of goods sent for display-cum-sale at the international exhibition/trade
fair and operate thereon during their stay outside India provided that the
account is closed immediately after close of exhibition/trade fair and the
balances therein is repatriated to India through normal banking channel.
Exporters are also required to render full account of the transactions and
the sale of goods exported for display-cum-sale in exhibition/trade fair to
Reserve Bank duly certified by their bankers and produce documentary
evidence regarding reimport of goods unsold within a period of 15 days from
the close of the exhibition/fair.
NOTE:
Authorised dealers may release exchange up to the amount requested for, on
application to the All-India trade / industry bodies for organising trade
fairs/exhibitions abroad. Authorised dealers should ensure that proper
account of the expenditure incurred in foreign exchange so released for the
above purpose is rendered by the organisation as soon as the trade
fair/exhibition is over.
Project Exports and Service Exports
6A.16
- 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'. Project export contracts are generally of
high value and exporters undertaking them are required to offer competitive
credit terms to be able to secure orders from foreign buyers in the face of
stiff international competition. Indian exporters offering deferred payment
terms to overseas buyers in respect of export of goods and those
participating in global tenders for undertaking turnkey/civil construction
contracts abroad require specific prior approval of Reserve Bank for credit
terms to be offered, third country imports and opening of liaison office.
Regulations relating to 'Project Exports' and 'Service Exports' are laid
down in the Memorandum on Project Exports (PEM).
- Pure supply contracts i.e. contracts for export of goods where at least
90 per cent of the export value is realised within the prescribed period
i.e. six months from the date of shipment and the balance amount within a
maximum period of two years from the date of shipment, are not treated as
deferred payment exports, provided the exporter does not require/avail of
any funded or non-funded facility/ies for such exports from authorised
dealers. Exporters should, therefore, directly approach ECGC for appropriate
cover and Reserve Bank for approval of the terms of payment in accordance
with the procedure laid down in Memorandum PEM.
Export on Elongated Credit Terms
6A.17 Normally, proceeds of export of goods, other than those
for which exporters have been permitted to offer commercial credit, (cf.
paragraph 6A.16) have to be realised on the due date for payment or within six
months from the date of shipment whichever is earlier (or 15 months from the
date of shipment in respect of exports to Indian-owned warehouses established
abroad with the permission of the Reserve Bank). In some cases, however, the
overseas buyers may be seeking longer period for payment of proceeds of
commodities which are normally exported from India on 'cash' terms generally on
the ground that remittances of proceeds are not permitted within 6 months or
earlier by the buyers' country, in view of its difficult balance of payments
position. Exporters intending to export goods on such terms may submit their
proposals in form ECT through their banks to the concerned regional office of
Reserve Bank for consideration.
Forfaiting
6A.18
- Export-Import Bank of India (Exim Bank) has introduced a scheme of
forfaiting as an instrument of financing exports. It would be in order for
authorised dealers to allow remittance of commitment fee/service charges
payable by the exporter as certified by the Exim Bank. Such remittance may
be permitted in advance in one lump-sum or at monthly intervals as certified
by the Exim Bank. Payment of these fees may be treated analogous to bank
charges. In case, however, the commitment fee and other charges exceed 1.5%
of the invoice value, the exporter should be advised to obtain prior
approval of Reserve Bank.
- Authorised dealers have also been permitted to introduce a scheme of
forfaiting of medium term export receivables, if they so desire. The
procedure as followed by Exim Bank may be followed by authorised dealers in
this regard.
PART B - GR/PP PROCEDURE
Disposal of
Copies of Export Declaration Forms
6B.1
- Copies of export declaration forms should be disposed of as under:
- GR forms should be completed by the exporter in duplicate and both
the copies submitted to the Customs at the port of shipment along with
the shipping bill. Customs will give their running serial number on both
the copies after admitting the corresponding shipping bill. The Customs
serial number will have ten numerals denoting the code number of the
port of shipment, the calendar year and a six digit running serial
number. 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 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
authorised dealer for negotiation or collection of export bills.
- Within twenty one days from shipment of goods, exporter should lodge
the duplicate copy together with relative shipping documents and an
extra copy of the invoice with the authorised dealer named on the GR
form. After the documents have been negotiated/sent for collection, the
authorised dealer should report the transaction to Reserve Bank in
statement ENC under cover of appropriate R-Supplementary Return. The
duplicate copy of the form together with a copy of invoice will be
retained by the authorised dealer till full export proceeds have been realised and thereafter submitted to Reserve Bank duly certified under
cover of appropriate R-Supplementary Return.
NOTE: In the case of exports made under deferred credit arrangement or
to joint ventures abroad against equity participation or under rupee
credit agreement, the number and date of Reserve Bank approval and/or
number and date of the relative A.D. circular should be recorded at the
appropriate place on the GR form.
- In cases where ECGC initially settles 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 will issue a certificate to the bank which had handled the
relevant shipping documents after full proceeds have been received by
them. The certificate will indicate the number of GR / PP form, name of
the exporter, name of the authorised dealer, date of negotiation/bill
number, invoice value and the amount actually received by ECGC against
the relevant GR / PP form. It will be in order for authorised dealers to
certify the duplicate GR/PP form on the basis of the certificate issued
by ECGC and submit them to Reserve Bank. The certificates issued by ECGC
may also be attached to the duplicate GR / PP forms while forwarding
them to Reserve Bank.
- Where a part of export proceeds are credited to EEFC account (paragraph
6E.1), the GR / PP / SOFTEX duplicate forms may be certified as under:
'Proceeds amounting to ......... representing ....... % of the value of
shipment credited to EEFC account maintained by the exporter
with..........'
- 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 authorised dealer. PP forms
should, therefore, be first presented by exporter to an authorised
dealer for countersignature. Authorised dealers will countersign the
forms in accordance with regulations explained in paragraph 6C.1 and
return the original copy to the exporter, who should submit the form to
the post office with the parcel. The duplicate copy of PP form will be
retained by the authorised dealer to whom the exporter should submit
relevant documents together with an extra copy of invoice for
negotiation/collection, within the prescribed period of twenty one days.
- In the case of VP/COD form, only one copy is required to be completed
and.
submitted to post office along with the relative parcel at the time of
despatch.
Shut out Shipments and Short Shipments
6B.2
- When part of a shipment covered by a GR form already filed with Customs
is
short-shipped, exporter must give notice of short shipment to Customs in
form and
manner prescribed. In case of delay in obtaining certified short
shipment notice from Customs, exporter should give an undertaking to the
authorised dealer to the effect that he has filed the short-shipment
notice with the Customs and that he will furnish it as soon as it is
obtained. Authorised dealer should send the short shipment notice along
with the GR duplicate to Reserve Bank.
- Where a shipment has been entirely shut out and there is delay in making
arrangements to re-ship, exporter will give notice in duplicate to
Customs in the manner and in form prescribed for the purpose attaching
thereto the unused duplicate copy of GR form and the shipping bill.
Customs will verify that the goods were actually shut out, certify copy
of the notice as correct and forward it to Reserve Bank together with
unused duplicate copy of the GR form. In this case, the original GR form
received earlier from Customs will be cancelled. If the shipment is made
subsequently, a fresh set of GR form must be completed.
Exports by Air
6B.3
In the absence of negotiable shipping documents in case of air
consignments, exporters sending goods by air run the risk of losing
value of goods, if they are consigned directly
to overseas buyer/consignee and not to the overseas branch/correspondent
of an authorised dealer, except where they are covered by irrevocable
letter of credit opened by buyer for the full value of the goods or
payment towards the full value of the goods has been received in
advance. Exporters will, therefore, be well advised to consign the goods
in such cases to the concerned overseas branch/correspondent of the
authorised dealer through whom shipping documents will be forwarded for
collection, to enable the latter to instruct the overseas
branch/correspondent to arrange for issue of delivery order in favour of
buyer on payment or acceptance of bill drawn by the shipper.
Consolidation of Air Cargo
6B.4
Where air cargo is shipped under consolidation, the airline company's
Master Airway Bill will be issued to the Consolidating Cargo Agent who
will in turn issue his own House Airway
Bills (HAWBs) to individual shippers. Authorised dealers will negotiate
HAWBs only if the relative letter of credit specifically provides for
negotiation of these documents in lieu of Airway Bills issued by airline
company. Authorised dealers will, however, accept freely HAWBs where
documents are to be sent on collection basis. Exporters wishing to ship
air cargoes through consolidators will be well advised to provide in the
relative sale contracts with their overseas buyers for payment being
made against either HAWBs or the customary Airline Company's Airway
Bills. When, however, a letter of credit has been opened, it is the duty
of the exporter to ensure that it provides for negotiation of HAWB
before forwarding the consignment.
Exports by Barges/Country Craft/Road Transport
6B.5
Following procedure should be adopted by exporters for filing original
copies of GR
forms where exports are made to neighbouring countries by road, rail or
river transport:
- 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 his agent at the border for submission to
Customs.
- As regards exports by rail, Customs staff have been posted at certain
designated railway stations for attending to Customs formalities in
respect of goods consigned to Pakistan, Afghanistan or Bangladesh. They
will collect the GR forms in respect of 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 is obtainable from Railways. In respect of goods loaded at
stations other than the designated stations, exporters must arrange to
present GR forms to the Customs Officer at the Border Land Customs
Station where Customs formalities are completed.
PART C - AUTHORISED DEALERS' OBLIGATIONS
Countersignature on PP forms
6C.1 PP Forms will be presented by the exporter to an
authorised dealer for countersignature. Authorised dealers should countersign PP
forms after ensuring that the parcel is being addressed to their branch or
correspondent bank in the country of import. The concerned overseas branch or
correspondent should be instructed to deliver the parcel to consignee against
payment or acceptance of relative bill. Authorised dealers may, however,
countersign PP forms covering parcels addressed direct to the consignees,
provided -
- an irrevocable letter of credit for the full value of the export has
been opened in favour of exporter and has been advised through authorised
dealer concerned;
or
- the full value of the shipment has been received in advance by the
exporter through an authorised dealer;
or
- the authorised dealer is satisfied, on the basis of the standing and
track record of the exporter and the arrangements made for realisation of
the export proceeds, that he could do so.
In such cases, particulars of advance payment/letter of credit/authorised
dealer's certification of standing etc. of the exporter should be furnished
on the form under proper authentication. Any alteration in the name and
address of consignee on the PP form should also be authenticated by the
authorised dealer under his stamp and signature.
Exports by Government/Public Sector Undertakings, etc.
6C.1A As per the procedure laid down by Government of India,
export contracts by Central/State Governments, Central & State Public Sector
undertakings and autonomous bodies should be made on CIF basis only in respect
of transportation of Government owned/controlled cargo by foreign flag vessels
(i.e. ocean transportation of cargo). In case of the contracts entered into on
terms other than CIF, a `No Objection Certificate' from the Ministry of Surface
Transport (MOST), Government of India is required to be obtained. While
negotiating export documents on behalf of aforesaid exporters, authorised
dealers should ensure that necessary No Objection Certificate from MOST has been
obtained by the concerned exporters in cases of the exports made on terms other
than CIF.
Delay
in Submission of Shipping Documents by Exporters
6C.2 In cases where exporters present documents pertaining to
exports after the prescribed period of twenty one days from date of export (see
paragraph 6B.1), authorised dealers may handle them without prior approval of
Reserve Bank, provided they are satisfied that it was due to reasons beyond the
control of exporters.
Check-list for Scrutiny of Forms
6C.3
- Authorised dealer should ensure that the number of the duplicate copy of
a GR form presented to them is the same as that of the original which is
usually recorded on the Bill of Lading and the duplicate has been duly
verified and authenticated by appropriate Customs authorities.
- Authorised dealers may accept 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. Conversely,
in the case of c.i.f., c.&f. etc. contracts where freight is sought to be
paid at destination, authorised dealers should ensure that the deduction
made is only to the extent of freight declared on GR form or the actual
amount of freight indicated on the Bill of Lading/Airway Bill, whichever is
less. Likewise, where the marine insurance is taken by the exporters on
buyer's account, authorised dealer should verify that the actual amount paid
is received from the buyer through invoice and the bill.
- Authorised dealers should ensure that the documents submitted do not
reveal any material inter se discrepancies in regard to description of goods
exported, export value or country of destination.
NOTES:
A. The export realisable value may be more than what was originally
declared to/accepted by Customs on the GR form 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.
B. In certain lines of export trade, final settlement of price may be
dependent on the results of quality analysis of samples drawn at the
time of shipment; but the results of such analysis will become available
only after the shipment has been made. Sometimes, 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 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.
As such variations stem from the terms of contract, authorised dealers
may accept them on production of documentary evidence after verifying
that the arithmetical calculations showing the variations are correct
and are based on the terms of underlying contracts.
Transfer of Documents
6C.4
Authorised dealers may accept from their constituents for negotiation or
collection,
shipping documents covering exports even where the original declaration
on
GR forms had been signed by some other party provided the constituent
drawing the bill countersigns on the duplicate copy of GR form, the
undertaking to deliver to the authorised dealer the foreign exchange
proceeds of the shipment within the prescribed period. In case the
constituent exporter is one who is placed on exporters' caution list by
Reserve Bank, authorised dealer may negotiate the documents provided the
shipment is covered by advance remittance or by irrevocable letter of
credit where the documents conform strictly to the terms of the letter
of credit.
Trade Discount
6C.5
- Bills in respect of exports by sea or air which fall short of the value
declared on
GR forms on account of trade discount may be accepted for negotiation or
collection by
authorised dealers only if the discount has been declared by exporter on
relative GR form at the time of shipment and accepted by Customs.
- In case of exports by post parcel against declaration on PP forms, post
offices ill not undertake scrutiny of trade discount deductions, if any,
declared on the forms. Authorised dealers may accept deductions towards
trade discount in such cases, provided the discount declared is in
conformity with the normal level of discount usually offered in the
particular line of export trade.
Advance Payments against Exports
6C.6
- Exporters may receive advance payments (with our without interest) from
their overseas buyers provided (a) the shipments are made within one
year from
the date of receipt of advance payment, (b) the rate of interest payable
does not exceed LIBOR + 100 basis points and (c) the shipments made
against the advance payments are monitored by the authorised dealer
through whom the advance payment is received. The appropriations made
against every shipment must be endorsed on the original copy of the
inward remittance certificate issued for advance remittance.
- In cases where exporters are unable to make shipments against advance
payments received by them for exports, authorised dealers may allow
remittances towards refund thereof (partly or fully), provided the
unutilised portion of the advance is refunded within a period of one
year of its receipt on production of (a) a Chartered Accountant's
certificate that the amount is still outstanding in the books of the
exporter and has not been adjusted in any manner and (b) a declaration
that the advance was not against exports to be made in pursuance of any
undertaking given to Import Trade Control authorities in regard to
fulfilment of export obligation. If, however, the advance payment was
received in fulfilment of export obligation, the refund may be allowed
on production of a 'No Objection Certificate' from Import Trade Control
authorities for refund of the amount. The inward remittance certificate
issued at the time of receipt of advance payment should be called for
and cancelled/suitably endorsed.
NOTE:
If a portion of advance payment against exports credited to EEFC account
is to be refunded, the refund should be allowed by debit to the EEFC
account in proportion to the amount originally credited to the account.
Where the balance in the EEFC account is insufficient to cover the
proportionate amount originally credited to EEFC account, exporters
should be advised to arrange replenishment of funds from EEFC accounts
maintained with other branches/authorised dealers. Purchase of foreign
exchange from the market may be allowed only after utilising balances
held in exporter's all EEFC accounts. For this purpose, a suitable
declaration may be obtained from the exporter concerned.
- Authorised dealers freely grant pre-shipment advances against `Red
clause'
letters of credit in favour of their exporter-constituents. Advances
made by the letter of credit opening bank will, however, be treated as
advance remittances against exports.
Part Drawings
6C.7
In certain lines of export trade, it is the practice of exporters not to
draw bills for the
full invoice value of the goods but to leave a small part undrawn for
payment after
adjustment due to differences in weight, quality, etc. ascertained after
arrival and inspection, weighment or analysis of the goods. In such
cases, authorised dealers may negotiate bills, provided -
- undrawn balance is in conformity with the normal level of balance left undrawn in the particular line of export trade, subject to a maximum of
10 per cent of the full export value;
and
- an undertaking is obtained from exporter that he will surrender/account
for the balance proceeds of the shipment within the period prescribed
for realisation.
Authorised dealers should obtain the above undertaking from exporter on
the
duplicate copy of GR / PP form and should vigorously follow up such
undertakings.
NOTE:
In cases where exporter has not been able to arrange for repatriation of
the undrawn balance in spite of best efforts, authorised dealers, on
being satisfied with the bona fides of the case, may submit duplicate
copies of GR / PP forms to Reserve Bank duly certified for the amount
actually realised, provided the exporter has realised at least the value
for which the bill was initially drawn (excluding undrawn balances) or
90% of the value declared on GR / PP form, whichever is more and a
period of one year has elapsed from the date of shipment.
Consignment Exports
6C.8
- When goods have been exported on consignment basis at the risk of
exporter for
sale and eventual remittance of sale proceeds to him by the
agent/consignee abroad,
authorised dealer, 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 which should be within the period prescribed for
realisation 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.
- 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.
NOTES:
A.
In case of goods exported on consignment basis, freight and marine
insurance must be arranged in India.
B.
In order to enable Indian exporters to arrange off-the-shelf sales for
achieving greater penetration of overseas export markets, some Indian
organisations have been permitted by Reserve Bank to establish
warehouses for stocking the goods. Considering various stages in the
cycle of despatch of merchandise to an overseas warehouse for eventual
sale to buyers from different parts, the prescribed period for
realisation of proceeds of export consignments to any Indian-owned
warehouse established abroad with the permission of Reserve Bank has
been fixed at fifteen months from the date of shipment.
C.
Reserve Bank will permit, on application, exporters with satisfactory
track record a longer period up to twelve months for realisation of
export proceeds for exports on consignment basis made to CIS countries
and East European countries financed in any permitted currency.
- The Account Sales received from the Agent/Consignee should be verified
by
the authorised dealer before it is sent to Reserve Bank along with the
relative duplicate GR / PP forms. 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.
Despatch of Shipping Documents
6C.9
- Authorised dealers should despatch shipping documents to their overseas
branches/
correspondents as expeditiously as possible. Authorised dealers should
ensure, particularly
in case of exports to neighbouring countries, that shipping documents
are despatched to their overseas branches / correspondents expeditiously
so that documents reach the buyer before the carrying steamer discharges
the cargo at the port of destination.
- Authorised dealers may despatch shipping documents direct to the
consignees or their
agents resident in the country of final destination of goods in cases
where advance payment or an irrevocable letter of credit has been
received for the full value of the export shipment and the underlying
sale contract/letter of credit provides for despatch of documents direct
to the consignee or his agent resident in the country of final
destination of goods.
- In cases not covered by (ii) above also, authorised dealers may accede
to
the request of the exporter, for despatch of documents by the authorised
dealer, for whatever reason, direct to the consignee/agent provided the
exporter is a regular customer of the authorised dealer and the
authorised dealer is satisfied, on the basis of standing and track
record of the exporter and the arrangements made for realisation of
export proceeds, that the request can be acceded to.
Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade
Representative
6C.10
Authorised dealers may deliver one negotiable copy of the Bill of Lading
to the Master
of the carrying vessel or trade representative, in respect of 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.
Export Bills Register
6C.11
- Authorised dealers should provide columns in their Export Bills Register
for
recording GR/PP form number, due date of payment, the fortnightly period
of R
Supplementary Return with which ENC statement covering the transaction
was sent to Reserve Bank and the period of R Supplementary Return with
which the duplicate copy of GR / PP form is submitted to Reserve Bank.
These entries will enable authorised dealers to watch closely
realisation of bills and also to ensure that they have reported all
transactions to Reserve Bank.
- Authorised dealers should ensure that all types of export transactions
are
entered in the Bills Register and are given bill numbers on calendar
year basis (i.e. January to December). The bill numbers should be
recorded in ENC statement and other relevant returns submitted to
Reserve Bank.
- While handling documents against exports, authorised dealers should
record against
relative entry in Bills Register, the amount of commission and/or
discount declared by exporters on GR / PP forms to facilitate reference
while dealing with applications for remittance/deduction from the
invoice on account of commission/discount.
Follow-up of Overdue Bills
6C.12
- Authorised dealers should closely watch realisation of bills through
Bills Register and,
in cases where bills remain outstanding beyond the due date for payment,
they should take
up the matter promptly with exporter concerned. If exporter fails to
arrange for delivery of the proceeds on the due date, the matter should
be reported to Reserve Bank by letter stating, where possible, the
reason for the delay in realisation of proceeds of the exports unless
exporter has sought permission for extension of time (see paragraph
6C.16). The duplicate copies of GR / PP forms should, however, continue
to be held by authorised dealer until full proceeds are realised except
in case of undrawn balances covered by Note under paragraph 6C.7.
Authorised dealers should follow up export outstandings with exporters
systematically and vigorously so that action against defaulting
exporters does not get delayed. Any laxity noticed in the follow up of
realisation of export proceeds by authorised dealers will be viewed
seriously by Reserve Bank leading to the invocation of the provision in
FERA 1973, authorising it to impose penalty on an authorised dealer.
- Authorised dealers should furnish to Reserve Bank a consolidated
statement
in form XOS giving details of all export bills which remained unrealised
beyond the period of 180 days from the date of shipment as at the end of
June and December every year. The statements should be submitted in
triplicate within fifteen days from the close of the relative half year.
However, authorised dealers should ensure that export bills which
remained unrealised and unpaid on the due date of payment are treated as
outstanding export bills for all purposes.
Reduction in Invoice Value on account of
Pre-payment of Usance Bills
6C.13A
Occasionally, exporters may approach Authorised dealers for reduction in
invoice value
on account of cash discount to overseas buyers for pre-payment of usance
bills. In such
cases authorised dealers may agree to the exporter granting cash
discount to the overseas buyer 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 of the
currency of invoice where rate of interest is not stipulated in the
contract.
Reduction in Value
6C.13B
If after a bill has been negotiated or sent for collection, the amount
thereof is desired to be
reduced for any reason, authorised dealer may approve such reduction, on
submission of an
application by a letter with full particulars of shipment, an attested
copy of invoice and documentary evidence in support of the reduction
sought for, provided:
- the reduction does not exceed 10% of invoice value
- it does not relate to an export of
- gold or silver jewellery or articles made out of cut and polished
diamonds,
- commodities or subject to floor price stipulations, and
- the exporter is not on the exporters' caution list of Reserve Bank.
- the exporter should be advised to surrender proportionate export
incentives availed of, if any.
In the case of exporters who have been in the export business for more
than
three years, reduction in invoice value may be allowed, without any
percentage ceiling, subject to the above conditions as also subject to
their track record being satisfactory i.e. the export outstandings do
not exceed 5% of the average annual export realisations during the
preceding three calendar years. For this purpose, the exporters'
declaration, duly certified by his auditor or by a Chartered Accountant,
indicating the total export realisations during each of the preceding
three calendar years and the export bills outstanding beyond the
prescribed period for realisation of export proceeds and average
outstandings in absolute and percentage terms would be required to be
furnished. For the purpose of reckoning the percentage of outstanding
export bills to average export realisations during the preceding three
calendar years, outstanding export bills in respect of exports made to
countries facing externalisation problems may be ignored provided the
payments have been made by the buyers in the local currency. Authorised
dealers should obtain the above declaration duly certified, as on
January and July every year.
Write off of unrealised Export Bills
6C.14
- In cases where the exporter has not been able to realise the outstanding
export dues despite his best efforts, he may approach the authorised
dealer, who had
handled the relevant shipping documents, with appropriate supporting
documentary evidence with a request for write off of the unrealised
portion. Authorised dealers may accede to such requests (the branch
concerned should obtain the approval of its controlling office) subject
to the undernoted conditions:
- The relevant amount has remained outstanding for 360 days or more.
- The aggregate amount of write off allowed by the authorised dealer (at
all branches put together) during a calendar year should not exceed 10%
of the total export proceeds realised by the exporter through the
concerned authorised dealer during the previous calendar year.
- Satisfactory documentary evidence has been furnished in support of the
exporter having made all efforts to realise the dues but has been
unsuccessful due to reasons beyond his control.
- The case falls under any of the undernoted categories:
- 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. (Names, addresses and
other relevant particulars of the overseas buyers who have been declared
insolvent may be intimated to ECGC for updating their files on buyers).
- The overseas buyer has not been traceable over a reasonably long period
of time and suitable supporting documentary evidence to that effect has
been produced. (His name, original address and other relevant
particulars may be reported to ECGC, for updating their files).
- The goods exported have been auctioned or destroyed by the
Port/Customs/Health authorities in the importing country and a
certificate issued by the said authorities or the Indian Mission or
Chamber of Commerce in the country of destination indicating that the
goods have been auctioned or destroyed has been produced.
- The unrealised amount represents the balance due in a case settled
through the intervention of the Indian Embassy, Foreign Chamber of
Commerce or similar Organisation.
- The unrealised amount represents the undrawn balance of an export bill
(not exceeding 10 per cent of the invoice value) and has remained
outstanding and turned out to be unrealisable despite all efforts made
by the exporter. The authorised dealer should take into consideration
the track record of the exporter, documentary evidence/correspondence
showing that there is no possibility of recovery of the undrawn balance,
frequency of similar cases considered in the past and the antecedents of
the overseas buyer, if available, before allowing the closure.
- The cost of resorting to legal action would be disproportionate to the
unrealised amount of the export bill or where the exporter even after
winning the Court case against the overseas buyer could not execute the
Court decree due to reasons beyond his control and sufficient
documentary evidence is produced to fully satisfy the authorised dealer.
- 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 unrealised consequent on
dishonour of the bills by the overseas buyer and documentary evidence is
produced to show that there are no prospects of realisation.
- The case is not the subject matter of any civil or criminal suit which
is pending.
- The exporter has not come to the adverse notice of the Enforcement
Directorate or the Central Bureau of Investigation or such other law
enforcement agency.
- The exporter has surrendered proportionate export incentives, if any,
availed in respect of the relative shipments.
- The documentary evidence received by the authorised dealer should be
kept
for a period of two years or till their verification by the Reserve
Bank's Inspectors, whichever is earlier. A half yearly statement, as on
June 30 and December 31, showing particulars of export bills allowed to
be written off should be furnished to Reserve Bank in form EBW. The
statement should be submitted within fifteen days from the close of the
relative half year. Where there is no further amount to be realised
against the GR / PP form covered by the write off, authorised dealer
should submit the duplicate thereof to Reserve Bank along with 'R'
return, duly certified, as under:
Write off of ...................................................
(Amount in words and figures)
permitted in terms of paragraph 6C.14 of Exchange Control Manual.
Date
Stamp & Signature of
Authorised Dealer
Change of Buyer/Consignee
6C.15
Prior approval of 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 10% and the realisation of export proceeds is not delayed
beyond the period of six months from the date of shipment. Where the
reduction in value exceeds 10%, the conditions stipulated in paragraph
6C.13 should also be satisfied.
Extension of Time Limit
6C.16
In cases where an exporter has not been able to realise proceeds of a
shipment made
by him within the period prescribed (i.e the due date for payment which
has to
fall within six months from the date of shipment, vide Rule 8 of Foreign
Exchange Regulation Rules, 1974) for reasons beyond his control, but
expects to be able to realise proceeds if extension of the period is
allowed to him, necessary application (in duplicate) for the purpose
should be made to Reserve Bank in form ETX together with appropriate
documentary evidence. Extension will not ordinarily be granted unless
Reserve Bank is satisfied that the exporter is in no way directly or
indirectly responsible for the delay in realisation of proceeds and that
by grant of a short extension the exporter will be able to realise
proceeds.
Shipments Lost in Transit
6C.17
When shipments from India for which payment has not already been
received either by
negotiation of bills under letters of credit or otherwise are lost in
transit, authorised dealer
must see that insurance claim is made as soon as loss is known. The
duplicate copy of GR / PP form should be forwarded to Reserve Bank with
following particulars regarding insurance:
- Amount for which shipment was insured.
- Name and address of insurance company
- Place where claim is payable.
In cases where claim is payable abroad, authorised dealer must arrange
to collect
the full amount of claim due on the lost shipment, through the medium of
his overseas branch/correspondent and forward the duplicate copy of
GR/PP form to Reserve Bank only after the amount has been collected. A
certificate for the amount of claim received should be furnished on the
reverse of the duplicate copy.
NOTE:
Sometimes claims on shipments lost in transit are also partially settled
directly by shipping companies/airlines under carriers' liability.
Authorised dealers should ensure that amounts of such claims if settled
abroad are also repatriated to India by exporters.
Payment of Claims by ECGC
6C.18
Where export has been covered by a policy issued by ECGC, settlement of
a claim by the
Corporation does not absolve the exporter of the obligation to Exchange
Control undertaken
on the GR / PP form to realise proceeds of the export within prescribed
period. In such cases, exporter should, in consultation with ECGC, take
all necessary steps for realising the proceeds. Authorised dealers
should also continue to hold the duplicate copies of GR / PP forms in
their custody and initiate follow-up measures in the normal manner.
Return of Documents to
Exporters
6C.19
The duplicate copies of GR / PP forms and shipping documents, once
submitted
to authorised dealers for negotiation, collection, etc, should not
ordinarily be
returned to exporters, except for rectification of errors and
resubmission.
Exporters' Caution List
6C.20
- In terms of Section 18(9) of FERA 1973, Reserve Bank may subject exports
of
certain exporters who have come to its adverse notice in regard to
realisation
of export value, to the conditions stipulated in clauses (b) and (d)
thereof, in order to ensure that the full export value of further
exports to be made by them will be realised in proper time or without
delay as required under the law. In such cases, Reserve Bank will issue
caution-listing order directing that the exporter should submit GR / PP
form through an authorised dealer to Reserve Bank for its prior
approval, supported by documentary evidence to show that the exporter
has received advance payment or an irrevocable letter of credit in his
favour covering the full value of goods to be exported. Copies of the
caution-listing order will be furnished, among others, to all Customs
authorities in India, for the purpose of ensuring that the conditions of
the order are fulfilled. Authorised dealers will also be advised
whenever exporters are caution-listed. Authorised dealers should not
accept for negotiation/collection shipping documents covering exports
declared on GR forms completed by such exporters nor countersign PP
forms completed by them unless the GR / PP forms bear approval of
Reserve Bank. If a caution-listed exporter presents documents to an
authorised dealer together with the GR form which does not bear the
approval of Reserve Bank, authorised dealer should withhold the
documents and not handle them in any manner without prior approval of
Reserve Bank.
- Ordinarily, Reserve Bank will include in the caution-listing order, not
only
the names of the exporters (including proprietor/partners in case of
firms) but also their associate concerns. If authorised dealers come to
know of other associate firms of a caution-listed exporter who are in
the export field, they should bring the matter to the notice of Reserve
Bank promptly.
- When firms and companies included in the caution-list are removed from
the list by Reserve Bank, the relative de-caution-listing order will
also be forwarded to Customs authorities and authorised dealers will
also be advised. Shipping documents etc. submitted by de-caution-listed
exporters may be dealt with by authorised dealers according to normal
regulations.
PART D - EXPORT OF COMPUTER SOFTWARE
Declaration of Software Exports
6D.1 Export of software is undertaken in physical form i.e.
software prepared on magnetic tapes and paper media as well as in non-physical
form i.e. direct transmission abroad through dedicated earth stations/satellite
links. As far as export of software in physical form is concerned the procedure
relating to declaration of shipments on GR / PP forms, handling of export
documents by authorised dealers and other allied matters is the same as
applicable to export of other goods. Export of software, in non-physical form
including Video/TV software and all other types of software products/packages,
should be declared on SOFTEX form. Each set of SOFTEX forms comprises three
copies marked Original, Duplicate and Triplicate which carry an identical
pre-printed serial number. All the three forms in each set should be completed
and the entire set submitted for the purpose of valuation together with relevant
documents to the officials of Department of Electronics (DOE), Government of
India.
6D.2 Valuation of Software Exports/Certification of SOFTEX form
The valuation of exports declared on SOFTEX form will be done by the designated
official/s of the Department of Electronics (DOE) at the Software Technology
Parks of India (STPI). The SOFTEX form of exporters located outside STPI as also
forms in respect of export of video/TV software will also be certified by
designated official/s at the nearest STPI. DOE have made necessary arrangement
for certification/valuation of the Video/TV software declared on SOFTEX form
with the Ministry of Information and Broadcasting, Government of India, once in
a week at the STPI. The valuation of exports declared on SOFTEX form by Units
located in Export Processing Zones will be done by the designated authority of
the Export Processing Zone.
6D.3 Disposal of SOFTEX forms
- After certifying all the three copies of the SOFTEX form, the designated
officials of Government of India at STPI and designated authorities of
Export Processing Zones will forward the original directly to the nearest
office of the Exchange Control Department of Reserve Bank the day it is
received or the next day and return the duplicate to the exporter. The
triplicate will be retained by the Department of Electronics for their
record.
- Within 21 days form the date of certification of the SOFTEX form, the
exporter should submit the duplicate copy together with a copy of each of
the supporting documents to the authorised dealer for
negotiation/collection. The duplicate copy of the form together with
documents will be retained by the authorised dealer till full export value
declared on the form or as certified by the designated officials at STPI,
whichever is higher has been realised and repatriated to India and
thereafter will be submitted to the Reserve Bank duly certified under cover
of an appropriate R Return along with a copy/ies of invoice/s.
- After the documents have been negotiated/sent for collection, authorised
dealers should report the transaction to Reserve Bank in a fortnightly
statement in form ENC under the cover of appropriate R Return. Entries in
the ENC statement should be made in chronological order of the transactions
as recorded in the internal register (Export Bills Register) of the
authorised dealer.
6D.4 Terms of payment - Invoicing
- In respect of long duration contracts involving series of transmissions,
the exporter 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 form the date of completion of the contract.
It would be in order for the exporters to submit a combined SOFTEX form for
all the invoices raised on a particular overseas client, including advance
remittances received in a month.
- In respect of contracts involving only 'one shot operation', the
invoice/bill should be raised within 15 days from the date of transmission.
- The exporter should submit SOFTEX form to the concerned official of
Government of India at STPI 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 invoices raised on overseas clients as at (i) to (iii) above will be
subject to valuation of export value declared on SOFTEX form by the
designated official of Government of India (cf. paragraph 6D.2 above) and
consequent amendment made in the invoice value, if necessary.
6D.5 Time limit for realisation of export value
The full value of the software exported as declared on theSOFTEX form or as
certified by the official of Government of India at STPI, whichever is higher
should be repatriated to India on due date of payment or within 180 days from
the date of invoice, whichever is earlier in the manner prescribed in Rule 9 of
the Foreign Exchange Regulation Rules, 1974.
PART E - REMITTANCES CONNECTED WITH EXPORTS
General
6E.1 Exporters are permitted to retain up to 50% (70% in the
case of 100% EOUs/Units located in EPZ/Software Technology Parks/Electronic
Hardware Technology Parks) of the receipts from export of goods in a foreign
currency account with an authorised dealer in India titled 'Exchange Earners'
Foreign Currency (EEFC) account' (opened in terms of provisions contained in
Chapter 14). The account may be maintained in any permitted currency and in any
form [current, savings (without cheque facility) or term deposit account]. The
balances in these accounts may be utilised for all bona fide payments of the
account holder for purposes listed in Annexure I to Chapter 14 subject to the
production, to the authorised dealer, of the necessary documentary evidence in
support of the amount to be remitted (See paragraph 14D.4). Exporters
maintaining foreign currency accounts in terms of paragraph 6A.12 are not
allowed to maintain EEFC accounts.
NOTE:
Release of exchange towards charges for advertisements on overseas TV media, by
debit to the EEFC Account, will be subject to the following
conditions/documentation:
(a) An application in form ADV giving
brief description of advertisement against item 5 of the form.
(b) Exporter's declaration at the end of form ADV to the
effect that the advertisement is aimed at promoting their exports.
(c) Bill/Invoice from the overseas TV company as also their
confirmation that the advertisement has already been telecast on their media, is
produced.
(d) The amount of agency commission, if any, due to the Indian
agent of overseas beneficiary should be deducted before allowing the remittance.
(e) No advance remittance should be allowed.
(f) Production of Undertaking/certificate regarding payment of
Income-tax (cf. Paragraph 3B.10).
Agency Commission on Exports
6E.2
- Authorised dealers may allow payment of commission, either by remittance
or by deduction from invoice value, on application submitted by the
exporter. The application, by letter, should give particulars such as
Importer-Exporter code number, customs/shipping bill number and date, name
of commodity, name and address of buyer/agent and export value and should be
supported by an attested copy of invoice and documentary evidence in support
of the amount to be remitted. The remittance may be allowed subject to the
following conditions:
- (a) Amount of commission has been declared on GR / PP / SOFTEX form and
accepted by Custom authorities or Department of Electronics, Government of
India as the case may be. In cases where the commission has not been
declared on GR / PP / SOFTEX form, remittance thereof may be allowed after
satisfying about the reasons adduced by the exporter for not declaring
commission on Export Declaration Form, provided a valid agreement/written
understanding between the exporter and/or agent/beneficiary for payment of
commission subsists.
- Rate of commission does not exceed 12.5% of invoice value.
- Commission sought to be remitted is not on export of a canalised item,
project exports, or exports financed under lines of credit extended by
Government of India or Exim Bank, or exports made by Indian partners towards
equity participation in an overseas joint venture/wholly owned subsidiary.
- The relative shipment has already been made.
- Authorised dealers may allow payment of commission by Indian exporters, in
respect of their exports covered under counter trade arrangement through
Escrow Accounts designated in U.S. dollar, subject to the following
conditions;-
- The payment of commission satisfies the conditions as at (a) to (d)
stipulated in paragraph 6E.2(i) above.
- The commission is not payable to Escrow Account holders themselves.
- The commission should not be allowed by deduction from the invoice value.
Overprice
6E.3
Overprice arrangements by exporters are prohibited and no remittance towards
overprice on exports will be permitted by Reserve Bank. Cases having
exceptional features may be
referred to Reserve Bank explaining why the exporter is unable to remunerate
overseas intermediary by payment of agency commission instead of overprice.
Export Claims
6E.4
Authorised dealers are permitted to remit export claims, by exporters, on
application by letter containing particulars such as Importer-Exporter code
number, GR / PP form number, date of
shipment, name of commodity, invoice value, name and address of claimant,
nature and amount of claim as also documentary evidence in support of the
claim, provided-
- the amount does not exceed 15% of invoice value;
and
- the relative export proceeds have already been realised and repatriated to
India.
In case of exporters who have been in the export business for more than
three years,
remittances may be allowed without any percentage ceiling, provided-
- the exporter is not on the Exporters' caution list of Reserve Bank;
and
- his track record is satisfactory (cf. para 6C.13)
In all such cases of remittances, the exporter should be advised to
surrender proportionate
incentives, if any, received by him.
Other remittances
6E.5
Authorised dealers may effect, on behalf of their exporter constituents,
remittances connected with exports like controlling charges, expenses
incurred on dishonoured/unaccepted export
bills, legal expenses related to trade disputes, testing charges etc.
provided adequate supporting documents are submitted by the applicants.
Refund of Export Proceeds
6E.6
Refund of export proceeds in respect of goods exported from India may be
allowed by authorised dealers through whom the proceeds were originally
received, provided such
goods are reimported into India on account of poor quality, etc. and
provided satisfactory documentary evidence regarding reimport of goods into
India viz., Exchange Control Copy of Bill of Entry, or postal wrappers and
reasons for re-export of the goods by the foreign buyer are produced. In all
such cases exporters should be advised to surrender the proportionate
incentives availed of, if any, against the relevant export.
PART F - DESPATCH OF GOODS NOT INVOLVING FOREIGN EXCHANGE
(WAIVER OF GR/PP FORM PROCEDURE)
Gift Parcels
6F.1
- In terms of Government of India Notifications No. F1/67/EC/73-1 and No.
F1/67/EC/ 73-2 both dated 1st January 1974 (as amended), the requirement of
declaration on GR / PP form is not applicable to exports by air-freight and
post parcel which are covered by certificates issued by authorised dealers
confirming that the exports do not involve any transaction in foreign
exchange. Authorised dealers may issue to their regular constituents, on
application, certificates stating that the export does not involve any
transaction in foreign exchange, to enable them to send out gift parcels,
publicity materials, etc. provided, inter alia, the following conditions are
fulfilled:
- Export is made by post parcel or air-freight
- Authorised dealer is satisfied that the export does not involve any
transaction in foreign exchange
and
- The value of the shipment does not exceed Rs.one lakh.The certificate issued by the authorised dealer should also carry a
notation to the effect
that the value of the shipment shall be subject to acceptance by
Customs.
- Authorised dealers may also issue such certificates to their
constituents to enable
them to send samples for testing (paragraph 6E.5) and defective goods
for repairs (paragraph 6F.2). They should follow-up these cases to
ensure reimport of the samples after testing (or submission of a
destruction certificate from the overseas laboratory in case the sample
is destroyed during the tests)/reimport of the goods after repairs.
Export of Defective Goods for Replacement or Repairs and Return
6F.2
Authorised dealers may permit remittances towards repair charges of
goods sent abroad for repair/replacement, subject to verification of
suitable documentary evidence and
reimport of goods into India after repairs.
Export of Replacement Goods
6F.3
In terms of Notification No.FERA.179/97-RB dated 18th October 1997
issued by Reserve Bank, general permission has been granted to exporters
resident in India to
export replacement goods free of charge, strictly in accordance with the
provisions of paragraph 11.9 - Chapter 11 of the Exim Policy (April 1997
- March 2002) without furnishing a declaration in the prescribed form to
the prescribed authority.
PART G - EXPORT OF JEWELLERY, INDIAN CURRENCY, FOREIGN EXCHANGE,
SECURITIES, ETC.
Export of Jewellery, etc.
6G.1 Taking out of India personal jewellery by travellers is
regulated under the Baggage Rules framed by the Ministry of Commerce under the
Export-Import Policy.
Export of Indian Currency
6G.2
- Section 13(2) of FERA 1973 prohibits the taking or sending out of India,
Indian currency notes and coins without general or special permission of
Reserve Bank. The following general permissions have been granted by Reserve
Bank, through its Notifications, for taking out Indian currency notes and
coins.
| To Nepal |
Indian currency notes of denominations up to Rs.100 and Indian coins by
any person without limit.
|
| To countries other than Nepal
|
Indian currency notes and coins not exceeding Rs.1000 per person
by any resident Indian proceeding abroad on a temporary visit.
|
- Reserve Bank has also granted general permission to any person vide its
Notification No. FERA.156/93-RB dated 4th November 1993 to take or send out
of India currency in the form of commemorative coins up to two coins each of
Rs.50 and Rs.10 denomination.
- Indian currency exported or attempted to be exported except within the
terms of the general or special permission granted by Reserve Bank is liable
to be confiscated and offenders are also liable to punishment.
Export of Foreign Exchange
6G.3
- Export of foreign exchange in any form including currency notes or bank notes,
other than foreign exchange obtained from an authorised dealer or authorised
money-changer by the person exporting, is prohibited unless it is covered by a general
or special permission of Reserve Bank. In terms of Reserve Bank Notification
No.FERA 80/89-RB dated 9th August 1989 general permission has been granted to
persons in or resident in India to take out of India foreign currency or
currencies equivalent to U.S.$2000 held by them for personal purposes (see Note
D to paragraph 3E.1).
- A person in India but not resident therein will be permitted by Customs to
take out his unspent foreign currency provided (i) the amount being taken out
does not exceed the amount that he had declared to the Customs authorities, in
form CDF, on arrival in India, or (ii) the amount being taken out of India in
foreign exchange is less than the amount specified by the Reserve Bank from time
to time for which a declaration in form CDF is required to be made at the time
of arrival in India to the Customs authorities.
- Authorised dealers may sell foreign currency notes and coins to travellers
proceeding abroad only in conformity with the provisions of Chapter 3 of the
Manual. Foreign currency notes/coins thus acquired will be allowed by Customs to
be taken out of India on the strength of the relative endorsement made by an
authorised dealer in the traveller's passport.
Export of cheques, etc. by Authorised Dealers and Others
6G.4
General permission has been granted by Reserve Bank under its Notification No.
FERA.36/76-RB dated 10th May 1976 (as amended) to:
- authorised dealers to send out of India foreign currency in the form of currency
notes, coins, cheques, drafts or bills of exchange acquired by them in the
normal course of their business and within the terms of their authorisation, and
- foreign citizens in or resident in India, but not permanently resident therein
as also resident Indians maintaining foreign currency accounts abroad in
pursuance of Notification No. FERA.116/92-RB dated 7th September 1992, to take
or send out of India cheques drawn on their foreign currency accounts.
Export of Securities
6G.5
Export of securities to any place outside India requires permission of Reserve
Bank. Persons in India who are holders of foreign securities and wish to send
the securities to banks or agents
abroad for purposes of sale, transfer, etc. should apply to Reserve Bank through
an authorised dealer for the necessary export permit. Permission for export of
foreign securities will be granted, provided the authorised dealer gives an
undertaking in the case of sale that the foreign currency proceeds of the
securities sold will be repatriated to India and in the case of transfer that
the securities after transfer will be received back in India within a reasonable
period. In regard to rupee securities held by non-residents, general permission
for export of the share/debenture certificates is granted by Reserve Bank at the
time of granting approval for the non-resident investment.
NOTES:
A.
These restrictions do not apply to export of securities outside India by a
person who has returned to India after a continuous stay of not less than one
year abroad in respect of securities acquired or held in pursuance of Reserve
Bank Notification No. FERA. 118/92-RB dated 7th September 1992.
B.
Unit Trust of India has been granted general permission by Reserve Bank to
export certificates covering units purchased by non-resident investors from out
of foreign exchange remittances in India or from their non-resident accounts in
India.
C.
Regulations governing export of life insurance policies are given in Memorandum
LIM.