Group E (Departure):

1)   EXW - Ex Works (...named place): Ex works means that the seller (exporter) delivers when he places the goods at the disposal of the buyer (importer) at the seller's premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.

This term thus represents the minimum obligation for the seller (exporter), and the buyer (importer) has to bear all costs and risks involved in taking the goods from the seller's premises. However, if the parties wish the seller (exporter) to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale.

Group F (Main carriage unpaid):

2)   FCA - Free Carrier (...named place): Free Carrier means that the seller (exporter) delivers the goods, cleared for export, to the carrier nominated by the buyer (importer) at the named place. It should be noted that the chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller's premises, the seller (exporter) is responsible for loading. If delivery occurs at any other place, the seller (exporter) is not responsible for unloading.

This term may be used irrespective of the mode of transport, including multimodal transport.

A Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway or by a combination of such modes.

If the buyer (importer) nominates a person other than a carrier to receive the goods, the seller (exporter) is deemed to have fulfilled his obligation to deliver the goods when they are delivered to that person.

3)   FAS - Free Alongside Ship (...named port of shipment): Free Alongside Ship means that the seller (exporter) delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer (importer) has to bear all costs and risks of loss of or damage to the goods from that moment.

The FAS term requires the seller (exporter) to clear the goods for export. However, if the parties wish the buyer (importer) to clear the goods for export, this should be made clear by adding explicit wording to this effect in the contract of sale.

This term can be used only for sea or inland waterway transport.

4)   FOB - Free On Board (...named port of shipment): Free on Board means that the seller (exporter) delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer (importer) has to bear all costs and risks of loss of or damage to the goods from that point.

The FOB term requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used.

This term can be used only for sea or inland waterway transport.

Group C (Main carriage paid)

5)   CFR - Cost & Freight (...named port of destination): Cost and Freight means that the seller (exporter) delivers when the goods pass the ship's rail in the port of shipment. The seller (exporter) must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller (exporter) to the buyer (importer).

The CFR term requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods across the ship's rail, the CPT term should be used.

This term can be used only for sea and inland waterway transport.

6)   CIF - Cost, Insurance & Freight (...named port of destination): Cost, Insurance and Freight means that the seller (exporter) delivers when the goods pass the ship's rail in the port of shipment. The seller (exporter) must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller (exporter) to the buyer (importer).

However, in CIF the seller (exporter) also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.

Consequently, the seller (exporter) contracts for insurance and pays the insurance premium. The buyer (importer) should note that under the CIF term the seller (exporter) is required to obtain insurance only on minimum cover. Should the buyer (importer) wish to have the protection of greater cover, he would either need to agree as much expressly with the seller (exporter) or to make his own extra insurance arrangements.

The CIF term requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods across the ship's rail, the CIP term should be used.

This term can be used only for sea and inland waterway transport.

7)   CPT - Carriage Paid To (...named place of destination): "Carriage paid to..." means that the seller (exporter) delivers the goods to the carrier nominated by him but the seller (exporter) must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer (importer) bears all risks and any other costs occurring after the goods have been so delivered.

Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport, by rail, road, air, sea, inland waterway or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. The CPT term requires the seller (exporter) to clear the goods for export.

This term may be used irrespective of the mode of transport including multimodal transport

8)   CIP - Carriage and Insurance Paid To (...named place of destination): "Carriage and Insurance paid to..." means that the seller (exporter) delivers the goods to the carrier nominated by him but the seller (exporter) must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer (importer) bears all risks and any

additional costs occurring after the goods have been so delivered. However, in CIP the seller (exporter) also has to procure insurance against the buyer's risk of loss of or damage to the goods during the carriage.

Consequently, the seller (exporter) contracts for insurance and pays the insurance premium. The buyer (importer) should note that under the CIP term the seller (exporter) is required to obtain insurance only on minimum cover. Should the buyer (importer) wish to have the protection of greater cover, he would either need to agree as much expressly with the seller (exporter) or to make his own extra insurance arrangements.

Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport, by rail, road, air, sea, inland waterway or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. The CIP term requires the seller (exporter) to clear the goods for export.

This term may be used irrespective of the mode of transport including multimodal transport.

Group D (Arrival):

9)   DAF - Delivered at Frontier (...named place): Delivered at Frontier means that the seller (exporter) delivers when the goods are placed at the disposal of the buyer (importer) on the arriving means of transport not unloaded, cleared for export, but not cleared for import at the named point and place at the frontier, but before the customs border of the adjoining country. The term "frontier" may be used for any frontier including that of the country of export. Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term.

However, if the parties wish the seller (exporter) to be responsible for the unloading of the goods from the arriving means of transport and to bear the risks and costs of unloading, this should be made clear by adding explicit wording to this effect in the contract of sale.

This term may be used irrespective of the mode of transport when goods are to be delivered at a land frontier. When delivery is to take place in the port of destination, on board a vessel or on the quay (wharf), the DES or DEQ terms should be used.

 

10)   DES - Delivered Ex-Ship (...named port of destination): Delivered Ex Ship means that the seller (exporter) delivers when the goods are placed at the disposal of the buyer (importer) on board the ship not cleared for import at the named port of destination. The seller (exporter) has to bear all the costs and risks involved in bringing the goods to the named port of destination before discharging.

If the parties wish the seller (exporter) to bear the costs and risks of discharging the goods, then the DEQ term should be used.

This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on a vessel in the port of destination.

11)   DEQ - Delivered Ex-Quay (...named port of destination): Delivered Ex Quay means that the seller (exporter) delivers when the goods are placed at the disposal of the buyer (importer) not cleared for import on the quay (wharf) at the named port of destination. The seller (exporter) has

to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf).The DEQ term requires the buyer (importer) to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import.

If the parties wish to include in the seller's obligations all or part of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale.

This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on discharging from a vessel onto the quay (wharf) in the port of destination. However if the parties wish to include in the seller's obligations the risks and costs of the handling of the goods from the quay to another place (warehouse, terminal, transport station, etc.) in or outside the port, the DDU or DDP terms should be used.

12)   DDU - Delivered Duty Unpaid (...named port of destination): Delivered duty unpaid means that the seller (exporter) delivers the goods to the buyer (importer), not cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller (exporter) has to bear the costs and risks involved in bringing the goods thereto, other than, where applicable, any "duty" (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination. Such "duty" has to be borne by the buyer (importer) as well as any costs and risks caused by his failure to clear the goods for import in time.

However, if the parties wish the seller (exporter) to carry out customs formalities and bear the costs and risks resulting therefrom as well as some of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale.

This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used.

13)   DDP - Delivered Duty Paid (...named port of destination): Delivered duty paid means that the seller (exporter) delivers the goods to the buyer (importer), cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller (exporter) has to bear all the costs and risks involved in bringing the goods thereto including, where applicable (Refer to Introduction paragraph 14), any "duty" (which term includes the responsibility for and the risk of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination.

Whilst the EXW term represents the minimum obligation for the seller (exporter), DDP represents the maximum obligation. This term should not be used if the seller (exporter) is unable directly or indirectly to obtain the import license.

However, if the parties wish to exclude from the seller's obligations some of the costs payable upon import of the goods (such as VAT), this should be made clear by adding explicit wording to this effect in the contract of sale.

If the parties wish the buyer (importer) to bear all risks and costs of the import, the DDU term should be used. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used.

Q. What is Importer Exporter Code (IEC) and where can this be obtained?A. CImporter Exporter Code (IEC) is required for carrying out import or export activity. The units located in the EPZ or the EOUs can obtain the same from the Development Commissioners concerned. In respect of units operating in the Domestic Tariff Area, IEC can be obtained from the office of the Director General of Foreign Trade. This form can be downloaded from the DGFT website or from this site under the Heading Exim Policy and Procedures.

Q. What is DTA?A. Domestic Tariff Area. The Units operating under certain specific schemes such as EPZ/SEZ/EOU are expected to carryout their activities within customs bonded area. The area which is not coming under the jurisdiction of custom bonded are called Domestic Tariff Area.

Q. What is EEFC account?A. Exporters of goods / services and other recipients of inward remittances in convertible foreign currency can open EEFC account to keep their foreign exchange earnings in the account.

Q. What are the limits prescribed by Reserve Bank to keep the amount received by way of inward foreign remittances in EEFC accounts?A. 100% EOU or a Unit in EPZ / STP / EHTP can keep upto 70% of their foreign exchange earnings in their account and use it for authorised, bonafide purposes and any other person resident in India can keep upto 50% of the foreign exchange earnings in this account.

RUPEE EXPORT CREDIT (PRE-SHIPMENT AND POST-SHIPMENT)SBBJ understands and values your Pre shipment and post shipment commitments. We offer both Pre shipment and Post shipment credit in rupee denominated terms to exporters having firm export orders or confirmed letters of credit.

Avail Rupee export credit at most competitive rates at 67 branches.

Book forward contracts in respect of future export credit drawals.

Pre-Shipment Export CreditWe offer Pre-shipment Credit (Packing Credit) to the exporters, for financing purchase, processing, manufacturing or packing of goods prior to shipment.

You can avail any loan or advance from us on the basis of:(a) Letter of Credit opened in your favor or in favor of some other person, by an overseas buyer;(b) a confirmed and irrevocable order for the export of goods from India; (c) any other evidence of an order or export from India having been placed on the exporter or some other person, unless lodgement of export order or Letter of Credit with the bank has been waived.

Packing Credit is granted for a period depending upon the circumstances of the individual case, such as the time required for procuring, manufacturing or processing (where necessary) and shipping the relative goods. Packing credit is released in one lump sum or in stages, as per the requirement for executing the orders/LC.

The pre-shipment / packing credit granted has to be liquidated out of the proceeds of the bill dawn for the exported commodities, once the bill is purchased/discounted etc., thereby converting pre-shipment credit into post-shipment credit.

Post-Shipment Export CreditWe extend Post-shipment Credit that is any loan / advance granted or any other credit provided by us for purposes such as export of goods from India.

It runs from the date of extending credit, after shipment of goods to the date of realization of export proceeds and includes any loan / advance granted on the security of any duty drawback allowed by the Govt. from time to time. Post-shipment credit has to be liquidated by the proceeds of export bills received from abroad in respect of goods exported.

The exporter has the following options at post-shipment stage:

i. To get export bills purchased /discounted / negotiated; ii. To get advances against bills for collection; iii. To receive advances against duty drawback receivable from Govt.

The exporter has the option to avail of pre-shipment and post-shipment credit either in rupee or in foreign currency. However, if the pre-shipment credit has been availed in foreign currency, the post-shipment credit has necessarily to be under EBR Scheme since foreign currency pre-shipment credit has to be liquidated in foreign currency. The details of pre-shipment and post-shipment credit in foreign currency are mentioned below.

PRE-SHIPMENT CREDIT IN FOREIGN CURRENCY (PCFC)Our Pre-shipment Credit in Foreign Currency (PCFC) is just what you need, when you are looking for funds in foreign currency. Avail it to meet your manufacturing, processing and packing fund requirements at international interest rates. You can also cover the cost of both domestic as well as imported inputs. Our PCFC gives you choice of four different currencies in which to operate the scheme - the US Dollar, Pound Sterling, Euro and the Japanese Yen.

We have… branches across the country handling the PCFC facility for your convenience. The list of A & B category designated branches, with addresses/phone and fax nos. etc. are given above.

Our International Banking Department, at Kolkatta, is the nodal centre for raising and deploying offshore and onshore funds for lending under PCFC.

Operating PCFCPCFC is to be repaid only with the proceeds of the export bill tendered, under the export bill-rediscounting scheme. In case of cancellation of export order, the PCFC line may be closed by selling equivalent amount of foreign exchange at TT selling rate prevalent on the date of liquidation.

Q. How do the schemes operate?A. PCFC & EBR schemes go hand in hand. The operation of these schemes is in three stages, viz. (i) Disbursement of PCFC (ii) Disbursement of EBR and simultaneous repayment of PCFC and (iii) Repayment of EBR.

When the exporter has sufficient drawing power available within his overall limit to accommodate the proposed PCFC advance, PCFC is made available to him either in foreign currency for payment of his import bills or in Indian rupees for purchase of domestic raw material by converting the foreign currency of PCFC at T.T. Buying rate.

PCFC is operated like cash credit account with balances in foreign currency. The liability of the exporter to the Bank on account of PCFC is in foreign currency. The rupee equivalent will be shown in the account only at notional rates which really doesn't concern the exporter.Interest on PCFC will be arrived in foreign currency and the rupee equivalent thereof will be recovered at quarterly intervals from the exporter's CC or Current account.

Q. Is there any withholding tax on SBBJ PCFC?A. No withholding tax is payable on the PCFC, if the interest on the foreign currency line is to be remitted to SBI foreign offices.

Q. Can PCFC drawals be booked on a forward basis?A. Yes, forward contracts can be booked in respect of future PCFC drawals.

Q. What about cross currency drawals?A. At SBBJ, PCFC drawals in cross currencies are allowed, subject to the exporter bearing the risk in currency fluctuations. However, cross currency drawals are restricted to the US Dollar. For instance, for an export order in a non-designated currency like the Swiss Franc, PCFC will be given only in USD. However, for orders in Pound Sterling, Euro and the Japanese Yen, pre-shipment credit may be availed in the respective currencies or USD. Multiple currency drawals against the same order are not permitted, for the sake of operational convenience.

Q. What are the special advantages in availing PCFC & EBR from us? A.

Network of designated branches to handle the schemes No minimum amount is prescribed for drawals under PCFC and EBR schemes No withholding tax need be paid by the exporters, as the lines of credit for funding PCFC and

EBR are drawn by SBI from its own foreign offices. Competitive rates of interest for customers with good credit rating and high value business.

Q. Is there any withholding tax on SBBJ's EBR facility?A. No withholding tax is payable on the PCFC, if the interest on the foreign currency line is remitted to SBI foreign offices. Since the bank dispenses lines of credit only from its foreign offices, exporters need not pay withholding tax.

Q. What are the provisions governing exports from India?A. Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and Industries, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT. Branches should conduct export transactions in conformity with the Export-Import Policy in vogue and the Rules framed by the Government of India). Further, RBI has made the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 relating to export of goods and services from India. These Regulations have been notified vide Notification No. FEMA 23/2000-RB, dated 3rd May, 2000, as amended from time to time.

Q. What are forms on which exports are required to be declared?A. GR, PP and SOFTEX forms are forms on which exports are required to be declared. GR forms are required to be completed in duplicate for export otherwise than by Post including export of software in physical form i.e. magnetic tapes/discs and paper media. PP forms are required to be completed in duplicate for export by Post. SOFTEX forms are required to be completed in triplicate for declaration of export of software otherwise than in physical form, i.e. magnetic tapes/discs, and paper media.

Q. What is form SDF?A. On account of introduction of Electronic Data Interchange (EDI) System at certain Customs offices where shipping bills are processed electronically, the existing declaration in GR form is replaced by a declaration 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.

Q. How should the GR/PP/SOFTEX form should be disposed?A. (i) Copies of export declaration forms should be disposed of as under :(a) 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.(b) Within twenty-one days from the date of export, exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the authorised dealer named in 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. However, the duplicate copy of the form together with a copy of invoice etc. will henceforth be retained by the branch and may not be submitted to Reserve Bank.

(c) Where a part of export proceeds are credited to EEFC account, the export declaration (duplicate) form may be certified as under :

"Proceeds amounting to....... representing......% of the export realisation credited to EEFC account maintained by the exporter with......"

(ii) The manner of disposal of PP forms is 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. Therefore, PP forms should be first presented by the exporter to an authorised dealer for countersignature. Authorised dealer will countersign the forms in accordance with directions of RBI and return the original copy to the exporter, who should submit the form to the post office with the parcel. The duplicate copy of the PP form will be retained by the branch 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.

(iii) The exporter should submit declaration in Form SOFTEX in triplicate in respect of export of computer software and audio / video / television software to the concerned designated official of Government of India at STPI / EPZ /FTZ /SEZ 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 designated officials may also certify the SOFTEX Forms in respect of EOUs which are registered with them. As for disposal of SOFTEX forms the procedure indicated in Regulation 6 of Export Regulations is to be observed. However, the duplicate copy of the form together with a copy of invoice etc. will henceforth be retained by the branch and may not be submitted to Reserve Bank.

Q. Are there any exemptions permitted by RBI from declarations?A. (i) The requirement of declaration of export of goods and software in the prescribed form will not apply to the cases indicated in Regulation No. 4 of FEMA Notification 23/RB-2000 dated May 3, 2000 as amended from time to time. The requirement of declaration also shall not apply to goods sent for testing abroad, subject to re-import. Exporters have been exempted from submission of declaration in prescribed format for exports of value not exceeding US $ 25,000 or its equivalent. The exporters shall however, be liable to realize and repatriate export proceeds as per FEMA regulations.

(ii) Branches may consider requests for grant of GR waiver from exporters for export of goods free of cost, for export promotion upto 2 percent of average annual exports of the applicant during the preceding three years subject to a ceiling of Rs.5 lakhs.

Q. What is the manner in which payment for goods exported can be received from abroad?A. (i) The amount representing the full export value of the goods exported shall be received through an authorized 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 3rd 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.c. Payment out of funds held in the FCNR/NRE account maintained by the Buyer.d. Through International Credit Cards. When payment, in respect of goods sold to overseas buyers

during their visits is received in this manner the GR/SDF (duplicate) should be released by the authorised dealers only 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. Branches may also receive payment for exports made out of India by debit to the credit card of an importer where the reimbursement from the card issuing bank/organisation will be received in foreign exchange.

e. All transactions between a person resident in India and a person resident in Nepal may be settled in Rupees. However, in case of export of goods to Nepal, where an importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.

f. Payment of export may also be received by the Gem & Jewellery units in SEZs and EOUs in the form of precious metals i.e. Gold / Silver / Platinum equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metals is indicated in the relevant GR / SDF / PP Forms.

Q. What happens in case of short shipment/shut-out shipment?A. (i) 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 branch 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.

(ii) 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 shipment was 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 should be completed.

Q. Who regulate Import Trade in India?A. Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. Branches while undertaking import transactions, should ensure that the imports into India are in conformity with the Export Import Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the directions issued by RBI under Foreign Exchange Management Act from time to time.

Q. What is the time limit of settlement of Import payments?A. (i) In terms of the extant regulations, remittances against imports should be completed not later than six months from the date of shipment except in cases where amounts are withheld towards guarantee of performance etc. Deferred payment arrangements including suppliers and buyers credit providing for payments beyond a period of six months from date of shipment upto a period of less than three years are treated as trade credits (Suppliers Credit and Buyers Credit).

(ii) Branches may permit settlement of import dues delayed due to disputes, financial difficulties etc. Interest in respect of such delayed payments may be permitted for a period of less than three years from the date of shipment at the rates prescribed by RBI from time to time.

Q. What are the RBI guidelines on Evidence of Imports and follow-up?

A. Import of goods value exceeding USD 100,000:i. In case of all imports, where value of foreign exchange remitted/paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory on the part of the authorised dealers through whom the relative remittance was made, to ensure that the importer submits :-

a. the Exchange Control copy of the Bill of Entry for home consumption, or

b. in case of 100% Export Oriented Units the Exchange Control copy of the Bill of Entry for warehousing, or

c. Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where import has been made by post, as an evidence that the goods for which the payment was made have actually been imported into India.

ii. 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.

Note: Authorised dealers should advise importers to keep Customs Authorities informed of the imports made by them under this clause.

iii. In respect of imports on D/A basis, authorised dealers should insist on production of evidence of import at the time of effecting remittance of import bill. However, if importers fail to produce documentary evidence due to genuine reasons such as non-arrival of consignment, delay in delivery/customs clearance of consignment, etc., authorised dealers may, if satisfied with the genuiness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import. iv. Authorised dealers 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.

v. Internal inspectors or auditors (including external auditors appointed by authorised dealers) should carry out 100 per cent verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms or Customs Assessment Certificates, etc.

vi. Documents evidencing import into India should be preserved by authorised dealers for a period of one year from the date of its verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after obtaining clearance from the investigating agency concerned.

Follow up for Import Evidence

vii. In case an importer does not furnish any documentary evidence of import, as required under paragraphs A.1 & 2 above, within 3 months from the date of remittance involving foreign exchange exceeding USD 100,000, the authorised dealer should rigorously follow-up for the next 3 months, including issue of registered letters to the importer.

viii. Authorised dealers should forward to Reserve Bank a statement on half- yearly basis as at the end of June & December of every year, in form BEF ( Annexure VI ) furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance. The said half-yearly statement should be submitted to the Regional Office of Reserve Bank under whose jurisdiction the authorised dealer is functioning, within 15 days from the close of the half-year to which the statement relates.

ix. In terms of RBI instructions branches have been permitted to accept "Into-Bond Bill of Entry" as provisional evidence of import. Branches, however, have to ensure that the importer submits Exchange Control copy of the Bill of Exchange for home consumption within a reasonable period of time.

x. Consequent upon implementation of the EDI system by the Customs Authorities, a revised procedure has been introduced for issue of Bill of Entry for ex-bond clearance of goods. Under the revised procedure, Exchange Control copy of the Bill of Entry for home consumption is no longer being issued and only two copies of “ex-Bond Bill of Entry” are generated; one copy is required to be submitted for clearance of goods from the warehouse and the other copy is given to the importer.

xi. It has, therefore, been decided and advised by RBI vide their A.P.(DIR Series) Circular No.72 dated 20.02.2004 that where EDI system has been implemented by customs and the importer receives only one copy of the “ex-Bond Bill of Entry” from the customs, Branches 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 / bond, which may be duly verified by the branches and accepted as final evidence of import.

NOTE: (A) In cases where at the time of advance remittance purpose of remittance was indicated as import and subsequently the exchange has been used for a purpose for which sale of exchange is permissible, and a document to the satisfaction of authorised dealer has been produced, such cases should not be treated as default and hence be excluded from the BEF statement.

(B) Authorised dealers 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. Wherever Into Bond Bill of Entry has been submitted such cases need not be reported in BEF statement.

B. Import of Goods of Value USD 100,000 and Less : Regarding the follow-up of submission of evidence of import where the amount of remittance is USD 100,000 or less, it is clarified by RBI vide their A.P.(DIR Series) Circular No.01 dated 12.07.05 that

branches 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. In this regard, RBI has permitted the Board of Directors of the Bank to formulate suitable internal policy guidelines to deal with such cases. Accordingly, our internal policy guidelines on the follow-up of evidence of import of goods of value upto USD 100,000 have been framed and approved by the Central Board as given below:

Q. Where Imports are on DP (Delivery against payment) basis:

Category Proposed Action

iCustomers having borrowing arrangements with us.

In case of customers having credit relationship with us, observance of KYC guidelines is ensured. Moreover, on account of regular transactional relationship with the borrower, the bonafides of the customer and genuineness of the transactions is also established. It is, therefore, proposed that for such category of customers, follow-up for submission of evidence of import need not be done in case of borrowers having Credit Rating up to SB-5. In case of borrowers having Credit Rating below SB-5, such waiver may be permitted on case-to-case basis by the sanctioning authority.

iiCustomers not having any borrowing arrangements with us.

In such cases while the KYC requirements are fulfilled, there is no credit relationship, which will enable the Bank to establish genuineness of transaction on an ongoing basis. It is, therefore, proposed that for customers under this category, a suitable self-declaration, furnishing particulars like details of Bill of Entry, purpose of import etc. may be obtained. This will adequately address the issue of establishing the genuineness of the transaction.

iii

Imports made by non-customers (i.e. customers of other Banks, customers who have received Bills direct from the overseas exporters).

In such cases since KYC guidelines will not be complied with, we propose the following :- 1. The rupee equivalent of the remittance should be invariably received through normal banking channels like Crossed Cheques/Drafts/Pay Orders etc. 2. In order to ascertain the genuineness of the transaction, Branches should obtain declarations giving details of the import, like particulars of Bill of Entry, purpose of import etc. as under : a. If the value of import is upto USD 25000, self declaration from the importer. b. Where the value of import falls between USD 25000 and USD 100,000 or its equivalent, Certificate from the Chartered Accountant of the importer.The cut-off limit for self-declaration has been proposed keeping in view the liberalization measures where remittances for all eligible purposes for an amount upto USD 25000 or equivalent has been permitted.

a. In respect of imports made on DA basis or imports in non-physical form, the existing/prescribed procedure of follow-up, as laid down in Section VI, Para 8 of Codified FD Circulars updated as on the 30th June, 2005, which briefly are as under, shall continue:

Imports made on DA (Delivery Against Acceptance)Production of evidence of import at the time of effecting remittance of import bill will be insisted upon.

However, if the importer fails to produce documentary evidence due to genuine reasons, reasonable time, not exceeding three months from the date of remittance, will be allowed to the importer to submit the evidence of import.

 i. Imports made on non-physical form i.e. in software or data through internet 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, shall be obtained.

Q. What are Bank's instructions on Advance Remittance for Import based on RBI guidelines? A. 1. Authorised dealers may allow advance remittance for import of goods without any ceiling subject to the following conditions:

a. The importer should hold the EC copy of a valid import licence if the goods to be imported are those included in the negative list of imports in the Export and Import policy in force.

b. Remittance is made direct to the suppliers.

c. If the amount of advance remittance exceeds USD 100,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an authorised dealer in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, is obtained.

d. 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.

e. In the event of non-import of goods, authorised dealer should ensure that the amount of advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible under the Act, Rules or Regulations made thereunder.

RBI has permitted the Board of Directors of the Bank to formulate guidelines for allowing advance remittance by an importer (other than a PSU or Department / Undertaking of GOI / State Governments) in excess of USD 100,000 (USD One hundred thousand only) and upto USD 1,000,000 (USD One million only) without insistence on a Bank Guarantee. Accordingly, the ECCB has approved guidelines governing the advance remittance for the cases referred to in Para 2(b) of the RBI circular.

Q. What is Trade Credit? A. Trade Credits' refers to credits extended for imports directly by the overseas supplier, bank and financial institution for original maturity of less than 3 years. Depending on the source of finance, such trade credits include suppliers' credit or buyers' credit.

Q. What is Suppliers' Credit? A. Suppliers' Credit relates to credit for imports into India extended by the overseas supplier.

Q. What is Buyers' Credit? A. Buyers' Credit refers to loans for payment of imports into India arranged by the importer from a bank or financial institution outside India for maturity of less than 3 years.

Q. What is the Stamp Duty on usance import bills? A. i. Usance bills of exchange and promissory notes drawn out of India must have foreign bill stamps of proper value affixed as soon as they are received.

ii. The stamp duty on bills of exchange drawn or made for securing finance from the Bank for bonafide commercial transactions and such other specified purposes shall bear the rates at 1/5 of the rates specified in para b and c, article 13 of Indian Stamp Act. If a bill of exchange is considered not drawn or made for securing finance from the Bank for bonafide commercial or trade transactions, then it would attract stamp duty at half the rate specified.

It may please be ensured that the correct rate of duty, depending on the nature of transaction, is invariably applied by the branches. Further, under section 19 of the Indian Stamp Act, the first holder in India of a foreign bill (including bill, paper or demand note) shall, before he presents the same for acceptance or payment or endorses, transfers, or otherwise negotiates the same in India, affix a proper stamp to it and cancel it. The affixing of stamp and its cancellation must be done before the transfer in India. Branches must follow the instructions meticulously.

iii. The practice of applying various conversion rates on foreign currency amounts of the bills by our offices has also been brought to our notice. We quote for your ready reference, extract of Section 20 of the Indian Stamp Act. "Section 20 :conversion of amount expressed in foreign currencies- (1) Where an instrument is chargeable with ad-valorem duty in respect of any money expressed in any currency other than of India, such duty shall be calculated on the value of such money in the currency of India according to the current rate of exchange on the day of the date of the instrument.

The Central Government may, from time to time, by notification in the official gazette, prescribe a rate of exchange for the conversion of British or any foreign currency into the currency of India for the purpose of calculating stamp duty, and such rate shall be deemed to be the current rate for the purpose of sub-section (1).

iv. The Government of India have vide their gazette Notification No.40/89 Stamps F. No 33/13/89-51 dated 1st august '89' remitted stamp duties chargeable on usance bills routed through Bank where: a. such bills of exchange are payable not more than 3 months after date or sight. b. such bills of exchange are drawn on or made by or in favour of a Commercial Bank or cooperative Bank and c. such bills of exchange arise out of bona fide commercial or trade transactions.

Q. Which are the exceptions to the following rule:'Import bills and documents should be received from the banker of the supplier by the banker of the Importer in India. Authorised Dealers should not, therefore, make remittances here import bills have received directly by the importers from the overseas supplier.'

a. Where the value of import bill does not exceed USD 100,000.

b. Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals.

c. Import bills received by Super Star Trading Houses, Star Trading Houses, Trading Houses, and Export Houses, 100% Export Oriented Units / Units in Free Trade Zones, Public Sector Undertakings and

Limited Companies.

d. Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies.

ii. At the request of importer clients, Authorised Dealers may receive bills direct from the overseas supplier as above, provided the Authorised Dealer is fully satisfied about the financial standing/status and track record of the importer customer. Before extending the facility, Authorised Dealer should obtain report on each individual overseas supplier from the overseas banker or reputed credit agency

Q. What is the Procedure for remittances against replacement Imports? A.1. i. In case import of an item does not require license under the Export-Import Policy in force and there is a need for remittance of foreign exchange for import of replacement goods for a defective item imported earlier, the remittance should be made after ensuring that there is no double payment for the same import.

ii. Where goods are short-supplied, damaged, short-landed or lost in transit, the procedure laid down below should be followed for payment against replacement goods :

a. In cases where no letter of credit has been opened or remittances made, Exchange Control copy of the import license may be automatically treated as valid for the replacement consignment, provided it is shipped within the validity period of the license.

b. If the Exchange Control copy has already been utilized 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 branches without reference to the Reserve Bank, provided the insurance claim relating to the lost goods has been settled in favour of the importer by remittance from abroad through an authorized dealer, if insurance was covered abroad and by local payment in rupees if insurance was covered in India. Payment for the replacement goods may then be made against suitable endorsement on the import license subject to the conditions that the replacement consignment is shipped within the validity period of the license.

c. If replacement goods are to be shipped after the expiry of import license, the importer should be asked to apply to DGFT for replacement or for revalidation of the expired license.

2. A Guarantee for Replacement Import In case replacement goods for a defective import are being sent by the overseas supplier before the defective goods imported earlier are dispatched out of India, branches may issue guarantees at the request of importer clients for the despatch/return of defective goods, according to their commercial judgement.