TaxTMI 
TaxTMI 
Master Circular on Import of Goods and Services
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....EX PART - I 4 Section A - Introduction. 4 PART - II 4 Section B - General Guidelines for Import 4 B.1. General Guidelines 4 B. 2. Form A-1. 5 B. 3. Import Licenses 5 B. 4. Obligation of Purchaser of Foreign Exchange 5 B. 5. Time Limit for Settlement of Import Payments 6 B. 6. Import of Foreign exchange / Indian Rupees 6 PART - III 8 Section C - Operational Guidelines for Imports 8 C.1. Advance Remittance. 8 C.1.1. Advance Remittance for import of goods 8 C.1.2. Advance Remittance for Import of Rough Diamonds 9 C.1.3. Advance Remittance for Import of Aircrafts / Helicopters and other Aviation related purchases. 10 C.1.4. Advance Remittance for Import of services .11 C.2. Interest on Import Bills 12 C.3. Remittance against Replacement Imports 12 C.4. Guarantee for Replacement Import 12 C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites 13 C.6. Receipt of Import Documents 13 C.6.1. Receipt of Import documents directly from overseas supplier 13 C.6.2. Receipt of Import documents directly from overseas supplier 2 in specified sectors. C.6.3. Receipt of Im....
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.... not exist, AD Category - I banks may be governed by normal trade practices. AD Category - I banks may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Operations & Development) in all their dealings. 4 B.2. Form A-1 Applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made in Form A-1 (Annex- 4). B.3. Import Licenses Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category - I banks may freely open letters of credit and allow remittances for import. While opening letters of credit, the 'For Exchange Control purposes' copy of the licence should be called for and special conditions, if any, attached to such licences should be adhered to. After effecting remittances under the licence, AD Category - I banks may preserve the copies of the utilised licence /s till they are verified by the internal auditors or inspectors. B.4. Obligation of Purchaser of Foreign Exchange (i) In terms of Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA), any....
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....ra 5 of Part III below. B.6. Import of Foreign exchange / Indian Rupees (i) Except as otherwise provided in the Regulations, no person shall, without the general or special permission of the Reserve Bank, import or bring into India, any foreign currency. Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000, made by Reserve Bank vide Notification No. FEMA 6/RB- 2000 dated May 3, 2000 as amended from time to time. 6 (ii) Reserve Bank may allow a person to bring into India currency notes of Government of India and / or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate. B.6.1. Import of foreign exchange into India A person may - (i) send into India without limit foreign exchange in any form other than currency notes, bank notes and travelers cheques; (ii) bring into India from any place outside India, without limit foreign exchange (other than unissued notes), which shall be subject to the condition that such person makes, on arrival in India, a ....
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....(c) A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance, Government of India before making advance remittance exceeding USD 100, 000. (ii) All payments towards advance remittance for imports shall be subject to the specified conditions. 8 C.1.2. Advance Remittance for Import of Rough Diamonds (i) AD Category - I bank are permitted to allow advance remittance without any limit and without bank guarantee or standby Letter of Credit, by an importer (other than a Public Sector Company or a Department / Undertaking of the Government of India / State Government/s), for import of rough diamonds into India from the under noted mining companies, viz. a) De Beers UK Ltd, b) RIO TINTO, UK, c) BHP Billiton, Australia, d) ENDIAMA, E. P. Angola, e) ALROSA, Russia, f) GOKHARAN, Russia, g) Rio Tinto, Belgium, and h) BHP Billiton, Belgium. (ii) While allowing the advance remittance, AD Category-I bank may ensur....
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.... can make advance remittance without bank guarantee, up to USD 50 million. Accordingly, AD Category - I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable standby Letter of Credit, up to USD 50 million, for direct import of each aircraft, helicopter and other aviation related purchases. The remittances for the above transactions shall be subject to the following conditions: (i) The AD Category - I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafide of the transactions. KYC and due diligence exercise should be done by the AD Category - I banks for the Indian importer entity and the overseas manufacturer company as well. 10 (ii) Advance payments should be made strictly as per the terms of the sale contract and are made directly to the account of the manufacturer (supplier) concerned. (iii) AD Category - I bank may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. (iv) In the case of a Public Sector Company or a Department / Undertaking of Central /State Governments, the AD Category - I bank sh....
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.... reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR of the currency in which the goods have been invoiced, whichever is applicable. Where interest is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice. C.3. Remittances against Replacement Imports Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category - I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license. C.4. Guarantee for Replacement Import In case re....
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....ort documents by the importer directly from overseas suppliers in case of specified sectors As a sector specific measure, AD Category - I banks are permitted to allow remittance for imports up to USD 300,000 where the importer of rough diamonds, rough precious and semi-precious stones has received the import bills / documents directly from the overseas supplier and the documentary evidence for import is submitted by the importer at the time of remittance. AD Category - I banks may undertake such transactions subject to the following conditions: (i) The import would be subject to the prevailing Foreign Trade Policy. (ii) The transactions are based on their commercial judgment and they are satisfied about the bonafides of the transactions. (iii) AD Category - I banks should do the KYC and due diligence exercise and should be fully satisfied about the financial standing / status and track record of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed credit rating agency overseas. C.6.3. Receipt of import documents by the AD Category - I bank directly from overseas....
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.... of foreign exchange remitted is less than USD 1,000,000 or its equivalent, (b) the importer is a company listed on a stock exchange in India and whose net worth is not less than Rs. 100 crore as on the date of its last audited balance sheet, or the importer is a public sector company or an undertaking of the Government of India or its departments. (ii) The above facility may also be extended to autonomous bodies, including scientific bodies/academic institutions, such as Indian Institute of Science / Indian Institute of Technology, etc. whose accounts are audited by the Comptroller and Auditor General of India (CAG). AD Category - I bank may insist on a declaration from the auditor/CEO of such institutions that their accounts are audited by CAG. C.7.3. Non Physical Imports (i) Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail/fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained. (ii) AD Category - I bank should advise importers to keep Customs Authorities informed of the imports made ....
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....s are permitted to issue guarantee on behalf of their importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3, 2000, as amended from time to time. C.12. Import of Gold / Platinum / Silver by Nominated Banks / Agencies C.12.1. Import on consignment basis Gold may be imported by the nominated agencies/banks on consignment basis where the ownership will remain with the supplier and the importer (consignee) will 17 be acting as an agent of the supplier (consignor). Remittances towards the cost of import shall be made as and when sales take place and in terms of the provisions of agreement entered into between the overseas supplier and nominated agency/bank. These instructions would also apply to import of platinum and silver. C.12.2. Import on unfixed price basis The nominated agency/bank may import gold on outright purchase basis subject to the condition that although ownership of the gold shall be passed on to the importer at the time of import itself, the price of gold shall be fixed later, as and when the importer sells the gold to the users. These instructions would also apply to import of platinum and silver. C.13. Direct Import of Gold ....
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....I banks should ensure that due diligence is undertaken and Know- Your-Customer (KYC) norms and Anti-Money Laundering (AML) guidelines, issued by the Reserve Bank are adhered to while undertaking import of these metals. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. All other instructions relating to import of these metals shall continue. C.15. Gold Loans (i) Nominated agencies / authorised banks can import gold on loan basis for on lending to exporters of jewellery under this scheme. (ii) EOUs and units in SEZ who are in the Gem and Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own account only. (iii) The maximum tenor of gold loan would be as per the Foreign Trade Policy 2004- 2009, or as notified by the Government of India from time to time in this regard. 19 (iv) AD bank may open Standby Letters of Credit (SBLC), for import of gold on loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003. The tenor of the SBLC should be in line with the tenor ....
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....ransactions. 21 PART IV Section D - Annex Annex (notifications and the forms for imports) Annex-1 BEF (See paragraph C.10. (ii) of Part III of Master Circular) Statement showing the details of remittances effected towards import in respect of which documentary evidence has not been received despite reminders Name and address of AD branch. Name of Controlling Office of AD branch Statement for the half-year ended NOTES: i. The statement should be submitted in duplicate, to the Regional Office of Reserve Bank under whose jurisdiction the AD branch is functioning. ii. Details of transactions where the amount of remittance exceeds USD 100,000 or its equivalent should only be included in the statement. iii. In cases where, at the time of advance remittance, purpose of remittance was as import and subsequently the exchange has been used for other purpose for which sale of exchange is permissible, and a document to the satisfaction of Authorised Dealer bank has been produced, such cases should not be treated as default and hence be excluded from the BEF statement. iv. Authorised Dealer bank may accept 'Into Bond Bill of Entry' as a provisional evid....
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....quivalent 1 2 3 4 5 6 7 A. Import by parties other than Public Sector Undertakings/Government Departments 1 2 3 4 Etc B. Import by Public Sector Undertakings / Government Departments 1. 2. 3. Etc Note : Transactions reported in Part II of BEF statement of earlier half-year should not be repeated in Part II of the current half-year. 24 CERTIFICATE i. We certify that the particulars furnished above are true and correct as per our records. ii. We further certify that the statement includes all cases which are required to be reported under the prescribed procedure. iii. We undertake to continue to pursue the cases with the importers reported in Part I of the statement. (Signature of the Authorised Official of the bank) Stamp Name: Designation: Date: Place: 25 Annex - 2 {see paragraph C.1.2. (iv) of Part III of Master Circular} [A. P. (DIR Series) Circular No. 34 dated March 02, 2007] Statement of Advance Remittance without bank guarantee or standby letter of credit where the amount of advance is equivalent to or more than USD 5 million for import of Rough Diamonds for the period ended Name of the AD ....
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....of goods imported or to be imported into India Section A: Import Licence particulars Import Licence Date of Issue Date of expiry Face value of licence Amount to be endorsed (in Rs.) @ Prefix Licence No. Suffixes Date Mont h Year Date Mont h Year 1 2 1234 5 @ Actual amount endorsed in rupees against each licence involved, should be stated under this column. Note: If more than one licence is involved, particulars of all licences should be furnished. If the space is inadequate, separate statement may be attached. The amount utilised against each licence should invariably be indicated. Section B: Import particulars Invoice Details Quan tity Descript ion Harmonis ed Country of Countr y from Mode of shipm Date of shipment No Terms Curr Amount of of System of origin (if not and (c.i.f., enc goods goods Classificat of which ent known date f.o.b., y ion goods good (air, approxi- c.&.f. s are sea mate etc.) consi gned post, rail river, transp ort port, etc.) date) 29 Section C: Other particulars 1. Details of forward purchase contract if any, booked against the import (No.& date of Contract) (Currency and Amount contract....
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....ealer Certificate to be Furnished by Authorised Dealer Bank(Importer's Banker) We hereby certify that Put a tick ( v) in the through us relevant (a) (i) this payment is an advance remittance block (ii) in retirement of bills under Letter of Credit opened through collection (iii) against documents received through our medium for (iv) on account of documents received direct by the applicant/s against undertaking furnished by the latter to submit Customs-stamped Exchange Con Control copy of Bill of Entry of Post Parcel/courier wrapper within three months (v) (vi) on account of documents received direct by the applicant/s against Customs- stamped Exchange Control copy of Bill of Entry/post parcel/courier wrapper (attached) submitted by the latter (any other case, to be explained) ( v) in the through us relevant 31 (b) all the Exchange Control regulations applicable to the remittance have been complied with (c) the payment to the supplier of the goods has been made will be* through (Name & Address of the foreign bank) We also certify/undertake that the relevant Customs-stamped Exchange Control copy of Bill of Entry or post parcel/c....
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....nce under the Contract) 2 If remittance to be made is less than invoice value, reasons therefore (i.e. part remittance, instalment etc.) I/We hereby declare that the statements made by me/us on this form are true and that I/we have not applied for an authorisation through any other bank. I/We declare and also understand that the foreign exchange to be acquired by me/us pursuant to this application shall be used by me/us only for the purpose for which it is acquired and that the conditions subject to which the exchange is granted will be complied with. (Signature of Applicant/Authorised Official) @ Name and Address of Applicant Importer's Code Number. @ Nationality @ To be filled in capital letters Date :. NOTE : For remittances covering intermediary trade, form A2 should be used. Declaration to be furnished by Applicant I/We declare that (e) the import licence/s against which the remittance is sought is/are valid and has/have not been cancelled by DGFT. (f) the goods to which this application relates have been* imported into India on my/our account* own will be * * and (g) the import is on behalf of @ (h) the invoice value of....
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.... the supplier of the goods has been* made through will be* (Name & Address of the foreign bank) We also certify/undertake that the relevant Customs-stamped Exchange Control copy of Bill of Entry or post parcel/courier wrapper . shall be verified by us within three months [vide certificate (a)(ii) and (iii) above]. . has been verified [vide certificate (a) (v) above]. . shall be obtained from the applicant/s within three months [vide certificate (a) (i) and (iv) above]. (Signature of Authorised Official) Stamp Name Designation Name and Address of Date: Authorised dealer * Strike out item not applicable 37 Form A1-Application for payments through Asian Clearing Union (To be printed on Light Yellow paper) A.D.Code No. Form No. (To be filled by authorised dealer) Form A1 (For Import Payments only) Application for Payment through Asian Clearing Union Serial No. (for use of Reserve Bank of India) Amount Currency remitted Amount Equivalent to Rupee (To be completed by authorised dealer) I/We wish to remit through ASIAN CLEARING UNION (Name of currency) through for (Name and address of the designated ba....
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....) the goods to which this application relates have been* imported into India on my/our own will be * account* (c) the import is on behalf of @ * and (d) the invoice value of the goods which is declared on this form is the real value of the goods imported * into in India. to be imported* If the I/We attach the relative Customs-stamped Exchange Control copy of Bill of Entry * Post parcel wrapper (for imports by post)*/Courier Wrapper has been (for imports through courier)* Import 40 made or If the I/We undertake to produce within three months to the authorised dealer the relative Customs-stamped Exchange Control copy of Bill of Entry * Post parcel wrapper (for imports by post)*/Courier wrapper import is to be made (for imports through Courier)* * Strike out item not applicable @ Where the import is on behalf of Central/State Government Department or a company owned by Central/State Government/Statutory Corporation, Local Body, etc. the name of the Government Department, Corporation etc. should be stated. Date: (Signature of Applicant/Authorised Official) Space for comments of the authorised dealer (While forwarding the application to....