TaxTMI 
TaxTMI 
Foreign Exchange Management Act 1999 – Export of Goods and Services
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....ng to dealings of authorised dealers with their exporter clients. These directions supersede the existing instructions contained in Chapter 6 of Exchange Control Manual, 1993 edition. 2. Export trade is regulated by the Directorate General of Foreign Trade (DGFT) functioning under the Ministry of Commerce and Industries, Department of Commerce, Government of India. Exporters are required to follow the Notifications/Directions issued by DGFT from time to time. 3. The Reserve Bank has made the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 vide its Notification No. FEMA 6/RB-2000 dated 3^rd May 2000. Any export of Indian currency except to the extent permitted under any general permission granted under the Regulations, will require prior permission of Reserve Bank. 4. In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Reserve Bank Notification No FEMA 8/2000-RB dated 3^rd May 2000, authorised dealers have been permitted to issue guarantees on behalf of exporter clients on account of exports out of India. 5. Export of goods and services against repayment of state credits granted by erstwh....
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....abroad, subject to re-import. (ii) Gift of goods exceeding rupees one lakh in value require approval of the Reserve Bank. (iii) Export of goods not involving any foreign exchange transaction directly or indirectly, requires the waiver of GR/PP procedure from Reserve Bank. A.3 Numbering of forms GR, PP and SOFTEX forms will bear specific identification numbers. In all applications/ correspondence with the Reserve Bank, this identification number should invariably be cited. In the case of declarations made on SDF form, the port code number and shipping bill number should be cited. A.4 Manner of Payment (i) The amount representing the full export value of the goods exported shall be received through an authorised dealer in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA 14/2000-RB dated 3^rd May, 2000 (ii) Payment for export may also be received by the exporter in the following manner : (a) In the form of bank draft, pay order, banker's or personal cheques. (b) Foreign currency notes/foreign currency travellers' cheques from the buyer during his visit to India....
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....dollar will be considered by the Reserve Bank. All imports and exports under the arrangement should be at international prices in conformity with the Exim Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder. 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. No fund based / or non-fund based facilities would be permitted against the balances in the Escrow Account. (ii) 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. A.8 Export of goods on lease, hire, etc. Export of machinery, equipment, etc. on lease, hire, etc. basis under agreement with the overseas lessee against collection of lease rentals / hire charges and ultimate re-import require prior approval of the Re....
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....om the date of export and the balance amount within a maximum period of two years from the date of export 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. A.11 Export on Elongated Credit Terms Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks to the concerned Regional Office of Reserve Bank for consideration. A.12 Forfaiting Export-Import Bank of India (Exim Bank) and authorised dealers have been permitted to undertake forfaiting, for financing of export receivables. It would be in order for authorised dealers to allow remittance of commitment fee/ service charges, etc. payable by the exporter as approved by the Exim Bank/ the concerned authorised dealer. Such remittance may be permitted in advance in one lumpsum or at monthly intervals as approved by the concerned agency. PART B - GR/PP/SOFTEX PROCEDURE B.1 Disposal of Copies of Export Declaration Forms (i) Copies of export declaration forms should be disposed of as under: (a) GR forms should b....
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....in form SDF (Statutory Declaration Form). The SDF form should be submitted in duplicate (to be annexed to the relative shipping bill) to the concerned Commissioner of Customs. After verifying and authenticating the declaration in form SDF, the Commissioner of Customs will hand over to the exporter, one copy of the shipping bill marked 'Exchange Control Copy' in which form SDF has been appended for being submitted to the authorised dealer within 21 days from the date of export. The authorised dealer should accept the Exchange Control (EC) copy of the shipping bill and form SDF appended thereto, submitted by the exporter for collection/ negotiation of Shipping documents. The manner of disposal of EC copy of shipping Bill (and form SDF appended thereto) is same as that for GR forms. (d) 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....
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....d; or (b) the full value of the shipment has been received in advance by the exporter through an authorised dealer; or (c) 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. B.3.A. Terms of payment - Invoicing - (Software) (i) In respect of long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e. at least once a month or on reaching the 'milestone' as provided in the contract entered into with the overseas client and the last invoice/bill should be raised not later than 15 days 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 ....
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....ipment is made subsequently, a fresh set of GR form should be completed. B.5 Consolidation of Air Cargo Where air cargo is shipped under consolidation, the 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 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. B.6 Exports by Barges/Country Craft/Road Transport Following procedure should be adopted by exporters for filing original copies of GR/SDF forms where exports are made to neighbouring countries by road, rail or river transport : a. 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. b. As reg....
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....ight 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. iii. The documents submitted do not reveal any material inter se discrepancies in regard to description of goods exported, export value or country of destination. NOTE: A. The export realisable value may be more than what was originally declared to/accepted by Customs on the GR/SDF form in certain circumstances such as where in c.i.f. or c.&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 cases where the documents are being negotiated by a person other than the exporter who has signed GR/PP/SDF/SOFTEX Form in respect of the concerned consignment of export, authorised dealers may negotiate the documents after ensuring compliance with Regulation 12 of "Export Regulations". C. In certain ....
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....r line of export trade, subject to a maximum of 10 per cent of the full export value; and (b) an undertaking is obtained from exporter on the duplicate of GR/SDF/PP that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation. 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/SDF forms to Reserve Bank duly certified for the amount actually realised. Authorised dealers should however, ensure that 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/SDF form, whichever is more and a period of one year has elapsed from the date of shipment. C.6 Consignment Exports i. When goods have been exported on consignment basis, authorised dealer, while forwarding shipping documents to his overseas branch/ correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date wit....
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....request can be acceded to. iii. Documents in respect of goods or software which are accompanied with a declaration by the exporter that they are not more than rupees twenty five thousand in value and not declared on GR/SDF/PP/ SOFTEX form, in terms of paragraph A.2 may be directly sent by the exporter to the consignee. iv. Documents in respect of goods exported against 100% advance remittance, in terms of paragraph C.4 may be directly sent by the exporter to the consignee. C.8 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative 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. C.9 Export Bills Register i. Authorised dealers should maintain Export Bills Register, in physical or electronic form. Details of GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return with which ENC stat....
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....xport contract or at the prime rate/LIBOR of the currency of invoice where rate of interest is not stipulated in the contract. C.12 Reduction in Value If, after a bill has been negotiated or sent for collection, the amount thereof is desired to be reduced for any reason, authorised dealer may approve such reduction, if satisfied about genuineness of the request, provided; a. the reduction does not exceed 10% of invoice value b. it does not relate to an export of i. gold or silver jewellery or articles made out of cut and polished diamonds, ii. commodities subject to floor price stipulations, c. the exporter is not on the exporters' caution list of Reserve Bank, and d. the exporter is 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 realisation during preceding three calendar years. For the purpos....
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....as insured. b. Name and address of insurance company c. 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/SDF/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. C.17 Payment of Claims by ECGC 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 statutory obligation undertaken on the GR/SDF/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 al....
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....re are no prospects of realisation. e. The case is not the subject matter of any pending civil or criminal suit. f. The exporter has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency. g. The exporter has surrendered proportionate export incentives, if any, availed of in respect of the relative shipments. (ii) Where there is no further amount to be realised against the GR/SDF/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 C.18 of Directions to Authorised Dealers. Date Stamp & Signature of Authorised Dealer " C.19 Return of Documents to Exporters The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to authorised dealers for negotiation, collection, etc, should not ordinarily be returned to exporters, exce....