TaxTMI 
TaxTMI 
Master Circular on Import of Goods and Services
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....rchaser of Foreign Exchange B.5. Time Limit for Settlement of Import Payments. B.6. Import of Foreign exchange / Indian Rupees. Section C - Operational Guidelines for Imports C.1. Advance Remittance. 2 3 3 3 3 3 4 5 7 .7 C.2. Interest on Import Bills. 11 C.3. Remittances 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. 12 C.6. Receipt of Import Bills/Documents 13 C.7. Evidence of Import. 14 C.8. Issue of acknowledgement. 16 C.9. Verification and Preservation 16 C.10. Follow up for Import Evidence 17 C.11. Issue of Bank Guarantee. 17 C.12. Import of Gold / Platinum / Silver by Nominated Banks / Agencies. C.13. Direct Import of Gold... .17 18 C.14. Import of Platinum, Palladium, Rhodium and Silver 19 C.15. Gold Loans. 19 C.16. Import factoring.. 20 C.17. Merchanting Trade... .20 Annex-1... Annex - 2. Annex-3 Annex- 4. 28 Appendix .43 List of Circulars consolidated in the Master Circular.. 43 .....
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.... 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 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 person acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to an Authorised Dealer 3 4 of 44 Category - I bank under Section 10(5) of the Act or to use it for any other purpose for which acquisition of foreign exchange is permissible under the said Act or Rules or Regulations framed there under. (ii) Where foreign exchange acquired has been utilised for import of goods into India, the AD Category - I bank should ensure that the importer furnishes evidence of import viz., Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to the value of remittance have been imported. (iii) In addition to the per....
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....o 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 declaration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF) annexed to these Regulations; provided further that it shall not be necessary to make such declaration where the 5 6 of 44 aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in by such person at any one time does not exceed USD10,000 (US Dollars ten thousand) or its equivalent and/or the aggregate value of foreign currency notes (cash portion) alone brought in by such person at any one time does not exceed USD 5,000 (US Dollars five thousand) or its....
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.... imports shall be subject to the specified conditions. 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, h) BHP Billiton, Belgium and i) (ii) Namibia Diamond Trading Company (PTY) Ltd. (NDTC). While allowing the advance remittance, AD bank may ensure the following: (a) The importer should be a recognized processor of rough diamonds as per the list to be approved by Gems and Jewellery Export Promotion Council (GJEPC) in this regard and should have a good track record of export realisation; (b) (c) AD Category - I bank should undertake the transaction based on their commerci....
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....of 44 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- banks for the Indian importer entity and the overseas manufacturer company as well. (ii) (iii) (iv) (v) (vi) (vii) 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. AD Category - I bank may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. In the case of a Public Sector Company or a Department / Undertaking of Central/State Governments, the AD Category - I bank shall ensure that the requirement of bank guarantee has been specifically waived by the Ministry of Finance, Government of India for advance remittances exce....
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.... of interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the rate prescribed for trade credit from time to time. (ii) In case of pre-payment of usance import bills, remittances may be made only after 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 11 12 of 44 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....
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.... companies from their principals. (iii) Import bills received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public Sector Undertakings and Limited Companies. (iv) Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies. C.6.2. Receipt of import 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 13 14 of 44 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 transacti....
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....t, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import. C.7.2. Evidence of import in lieu of Bill of Entry (i) AD Category – I bank may accept, in lieu of Exchange Control copy of Bill of Entry for home consumption, a certificate from the Chief Executive Officer (CEO) or auditor of the company that the goods for which remittance was made have actually been imported into India provided :- (a) the amount 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. 15 16 of 44 (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 t....
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....of appropriate document evidencing import within 6 months from the date of remittance, to the Regional Office of Reserve Bank under whose jurisdiction the AD Category - I bank is functioning, within 15 days from the close of the half-year to which the statement relates. (iii) AD Category - I bank need not follow up submission of evidence of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter. A suitable policy may be framed by the bank's Board of Directors and AD Category – I bank may set their own internal guidelines to deal with such cases. C.11. Issue of Bank Guarantee AD Category - I banks 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 be acting as a....
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.... pertaining to such transactions must be preserved for at least five years. (v) AD Category - I bank should follow up submission of the Bill of Entry by the importers as stipulated. (vi) Head Offices/International Banking Divisions of AD Category - I banks undertaking gold import transactions are required to submit as per the format enclosed at Annex-3, a monthly statement thereof, to the Chief General Manager, Trade Division, Foreign Exchange Department, Amar Building, Central Office, Reserve Bank of India, Sir P.M. Road, Fort, Mumbai 400001. C.14. Import of Platinum, Palladium, Rhodium and Silver (a) Suppliers' and Buyers' credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver should not exceed 90 days from the date of shipment. (b) AD Category - 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 t....
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.... are permitted to be imported into India and all the rules, regulations and directions applicable to export (except Export Declaration Form) and import (except Bill of Entry) are complied with for the export leg and import leg, respectively. (b) The entire merchant trade transaction is completed within a period of 6 months. (c) The transactions do not involve foreign exchange outlay for a period exceeding three months. (d) Payment is received in time for the export leg. (e) Where the payment for export leg of the transaction precedes the payment for import leg, AD Category - I banks should ensure that the terms of payment are such that the liability for the import leg of the transaction is extinguished by the payment received for the export leg of the transaction, without any delay. AD Category - I banks may note that short-term credit either by way of suppliers' credit or buyers' credit is not available for merchanting trade or intermediary trade transactions. 21 22 of 44 Annex-1 BEF (See paragraph C.10. (ii) of Section-C of Master Circular) Statement showing the details of remittances effected towards import in res....
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....atement should be submitted within 15 days from the close of the half-year to which it relates. Part - I Information regarding importers who have defaulted in submission of the documentary evidence of import No / Sr. Importer Name and No. and date of Exporter address import Brief description of goods Date of Currency remitta and nce/ Rupee equival amount ent Remarks Code of the licences, payme No. 1 2 3 4 5 1 Importer if any A. Import by parties other than Public Sector Undertakings/Government Departments nt 6 7 8 9 2 3 4 Et C B. Import by Public Sector Undertakings/Government Departments 3 4 Et 0 Part-II 23 24 of 44 Information regarding subsequent receipt of documentary evidence of Import from importers whose names were reported in Part I of earlier BEF statement/s Sr. Name Period of the Date Amount of Remarks No. and BEF of Remittance address statement receipt of and serial No. of the transaction Currency Rupee and equivalent reported Amount earl....
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....Nom. Agency Bank Payment Basis (ii) Suppliers' Credit Basis (iii) Consignment Basis (iv) Unfixed Price Basis Note: 1. Full details of transactions may be provided in cases where the number of transactions in respect of a single importer exceeds ten transactions in a month or the aggregate value of imports exceeds US Dollar 50 million. 2. Details of EOUs/Units in SEZ and Nominated Agencies should be given separately. 27 27 28 of 44 Annex-4 {see paragraph B.2. of Section B of Master Circular} [Ref: AP (DIR Series) Circular No. 106 dated June 19, 2003] Form A 1- Application for Transfer of Indian Rupees to the account of a Non-Resident Bank Form A1 (For Import Payments only) Application for Transfer of Indian Rupees to the Account of a Non-resident Bank (To be printed on Light Blue paper) A.D.Code No. Form No. (To be filled by authorised dealer) Serial No. (for use of Reserve Bank of India) Amount remitted Currency Amount Equivalent to Rupees_ (To be completed by authorised dealer) I/We wish to transfer Rs. from the account of (in words) (Name & ....
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....ted will be complied with. (Signature of Applicant/Authorised Official) @Name and Address of Applicant.. Importer's Code Number @Nationality @To be filled in capital letter Date: NOTE: For remittances covering intermediary trade, form A2 should be used. Declaration to be furnished by Applicant I/We declare that (a) the import licence/s against which the remittance is sought is/are valid and has/have not been cancelled by DGFT. (b) the goods to which this application relates have been* imported into India on my/our own account* will be * (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 Import has I/We attach the relative Customs-stamped Exchange Control copy of Bill of Entry * been made Post parcel wrapper (for imports by post) */Courier Wrapper (for imports through courier)* 30 30 31 of 44 Date: @ 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 C....
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.... 32 33 of 44 Form A1-Application for remittance in Foreign Currency (To be printed on White paper) A.D.Code No. Form No. (To be filled by authorised dealer) Form A1 (For Import Payments only) Application for Remittance in Foreign Currency Serial No (for use of Reserve Bank of India Amount remitted Currency Amount Equivalent to Rupees_ (To be completed by authorised dealer) I/We wish to purchase through payment to (Name of currency) (Name and address of the authorised dealer) in payment of imports into India, detailed below: (Name and address of the beneficiary of the remittance) 33 (Amount in words) for 34 of 44 Details of goods imported or to be imported into India Section A: Import Licence particulars Details of goods imported or to be imported into India Section A: Import Licence particulars Import Licence Prefix Licence No. Suffixes 12 12345 Date of Issue Date of expiry Face Amount to value be of endorsed Date Mont Year Date h Mont h Year licence (in Rs.) @ @ Actual amount endorsed in rupees against each licence inv....
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....ia. * to be imported own 35 36 of 44 If the Import has been made I/We attach the relative Customs-stamped Exchange Control copy of Bill of Entry * Post parcel wrapper (for imports by post)*/Courier Wrapper (for imports through courier)* or If the Import has been made I/We undertake to produce within three months to the authorised dealer the relative Customs-stamped Exchange Control copy of Bill of Entry * * Strike out item not applicable Post parcel wrapper (for imports by post) */Courier wrapper (for imports through Courier)* @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 Reserve Bank for approval, reference to Exchange Control Manual paragraph/ A.D.Circular in terms of which the reference is made should invariably be cited. If any remittance application on account of the same import....
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....SIAN CLEARING UNION_ through (Amount in words) payment to (Name of currency) for (Name and address of the designated bank in India) in payment of imports (Name and address of the beneficiary of remittance) into India, detailed below: 38 38 39 of 44 Details of goods imported or to be imported into India Section A: Import Licence particulars Import Licence Date of Issue Date of expiry Face Value Amount to be of endorsed licence (in Rs.) @ Prefix Licence Suffixes Date Month Year Date Month Year No. 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, a separate statement may be attached. The amount utilized against each licence should invariably be indicated. Section B: Import particulars Invoice Details Descrip No. and (c.e.f., Ency date f.o.b., Terms Curr- Amount Quantity |tion of of goods goods Harmoni sed System Country Country Mode Da....
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....r wrapper (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. (Signature of Applicant/Authorised Official) Space for comments of the authorised dealer (While forwarding the application to Reserve Bank for approval, reference to Exchange Control Manual paragraph/ A.D.Circular in terms of which the reference is made should invariably be cited. If any remittance application on account of the same import was referred to Reserve Bank earlier, reference to the last correspondence/approval should also be cited). Date: Stamp (Signature of Authorised Official) Name... Designation...... Name and Address of... Authorised dealer Put a tick ( ) in the relevant block Certificate to be Furnished by Authorised Dealer (Importer's Banker) We hereby certify that (a) this payment is (i) an advance remittance (ii) in retirement of bills under Letter of Credit opened through us ....