TaxTMI 
TaxTMI 
Master Circular on Import of Goods and Services
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....ents. 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 .27 AANNN! 22 26 1 2 of 44 Section A - Introduction (i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Depa....
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....r 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 permitted methods of payment for imports laid down in Notification No. FEMA14/2000-RB dated 3rd May 2000, payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India. In such cases also AD Category - I banks should ensure compliance with t....
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....ia, 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 equivalent. B.6.2. Import of Indian currency and currency notes (i) Any person resident in India who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank notes up to an amount not exceeding Rs.7,500/- per person. (ii) A person may bring into India from Nepal or Bhuta....
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....P 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 commercial judgment and after being satisfied about the bonafides of the transaction; Advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned, that is, to the ultimate beneficiary and not 8 9 of 44 (d) (e) through numbered accounts or otherwise. Further, due caution may be exercised to ensure that remittance is not permitted for import of conflict diamonds; KYC and due diligence exercise should be done by the AD Category - I bank for the Indian importer entity and the overseas company; and ....
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....e 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 exceeding USD100,000. Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period. It is clarified that where advance is paid as milestone payments, the date of last remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import. Prior to making the remittance, the AD Category - I bank may ensure that the requisite approval of the Ministry of Civil Aviation / DGCA / other agencies in terms of the extant Foreign Trade Policy has been obtained by the ....
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.... 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 replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD Category-l banks may issue guarantees at the request of importer client for dispatch/return of the defective goods, according to their commercial judgment. C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites AD Category - I bank may allow BPO companies in India to make remittances towards the cost of equipment to....
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....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 suppliers - - (i) At the request of importer clients, AD Category – I bank may receive bills directly from the overseas supplier as above, provided the AD Category – I bank is fully satisfied about the financial standing/status and track record of the importer customer. (ii) Before extending the facility, the AD Category - I bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed credit agency. However, such credit report on t....
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....ademic 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 by them under this clause. C.8. Issue of acknowledgement AD Category - I bank should acknowledge receipt of evidence of import e.g. Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions. C.9. Verification and Preservation (i) Internal inspectors or auditors (including....
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....will be acting as an agent of the supplier (consignor). Remittances towards the cost of 17 18 of 44 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 AD Category - I bank can open Letters of Credit and allow remittances on behalf of EOUS, units in SEZs in the Gem & Jewellery sector and the nominated agencies/banks, for direct import of gold, subject to the following (i) The import of gold should be strictly in accordance with the Foreign Trade Policy. (ii) Suppliers' and Buyers' Credit, including the usance period of LCs opened for direct import of gold, should no....
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....l 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. 19 20 of 44 (iii) The maximum tenor of gold loan would be as per the Foreign Trade Policy 2009-2014, or as notified by the Government of India from time to time in this regard. (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 of the gold loan. (v) SBLC can be opened only on behalf of entities permitted to import gold on loan basis, viz. nominated agencies and 100% EOUs/units in SEZ, which are in the Gem and Jewellery sector. (vi) SBLC should be in favour of internationally renowned bullion banks only. AD Category - I bank can obtain a detailed list of internationally renowned bullion banks from the Gem & Jewellery Export....
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....ould 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 evidence of import into India. However, they may ensure submission of Exchange Control copy of the Bill of Entry for Home consumption within a reasonable period of time. Where EDI system has bee implemented by customs and the importer receives only one copy of the "ex-Bond Bill of Entry" from the customs, Authorised Dealer bank may advise importer to submit a photocopy of the "ex-Bond Bill of Entry" for home consumption after clearance of the goods from the warehouse ....
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....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. 24 24 25 of 44 Stamp Name: Designation: Date: (Signature of the Authorised Official of the bank) Place: 25 25 26 of 44 Annex - 2 {see paragraph C.1.2. (iv) of Section-C 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 Category - I Bank: AD Code (14 digits): Sr. Name of the Name of the Amount of No. Company Importer Entity Advance Payment Whether document for evidence of and IEC No. made without import BG/Stand by submitted LC 1 De Beers UK Ltd. 2 RIO TINTO, UK 3 BHP Billiton, Australia ENDIAMA E.P. Angola 5 ALROSA, Russia 6 GOKHARAN, Russia 7 Rio Tinto, Belgium BHP Billiton, Belgium 9 Namibia Diamond Trading ....
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....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 of Descript ion Harmonis ed No Terms Curr Amount goods of goods System of Country of origin of goods Countr y Mode of and (c.i.f., enc Classificat from which shipm ent date f.o.b., c.&.f. ion good (air, Date of shipment (if not known approxi- s are sea mate etc.) consi post, date) gned rail river, transp ort 29 29 port, etc.) 30 of 44 Section C: Other particulars 1. Details of forward purchase contract if any, booked against (No.& date of Contract) the import (Currency and Amount contract) (Balance under the Contract) 2 If remittance to be made is less than invoice value, reasons therefor (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 acqui....
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....pplicant/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 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 (v) (vi) to be explained) (any other case, 31 32 of 44 (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 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) Designation....... Name. Stamp Date:. Name and Address of Authorised dealer * Strike out item not applicable 32 32 33 of 44 Form A1-A....
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....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. Date: (Signature of Applicant/Authorised Official) @Name and Address of Applicant Importer's Code Number Nationality @To be filled in capital letters 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* (g) the import is on behalf of @_ will be * and (h) 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 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 th....
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....hs [vide certificate (a) (i) and (iv) above]. Date:. (Signature of Authorised Official) Stamp Name Strike out item not applicable Designation.......... Name and Address of Authorised dealer 37 37 38 of 44 Form A1 Form A1-Application for payments through Asian Clearing Union (For Import Payments only) Application for Payment through Asian Clearing Union (To be printed on Light Yellow 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 Equivalent to Rupee Amount (To be completed by authorised dealer) I/We wish to remit through ASIAN 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 @ Actu....
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....imports by post) */Courier Wrapper (for imports through courier)* 40 41 of 44 made or If the import is to be made Date:.. 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 (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... Auth....