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TMI BlogMaster Circular on Import of Goods and ServicesX X X X Extracts X X X X X X X X Extracts X X X X ..... Purchaser 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 C.2. Interest on Import Bills C.3. Remittances against Replacement Imports C.4. Guarantee for Replacement Import C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites C.6. Receipt of Import Bills/Documents C.7. Evidence of Import C.8. Issue of acknowledgement C.9. Verification and Preservation C.10. Follow up for Import Evidence C.11. Issue of Bank Guarantee C.12. Import of Gold / Platinum / Silver by Nominated Banks / Nominated Agencies C.13. Import of gold in any form including jewellery made of gold/precious metals or/and studded with diamonds/semi precious/precious stones C.14. Import of Platinum, Palladium, Rhodium, Silver and rough, cut & polished diamonds C.15. Import factoring C.16. Merchanting Trade Annex -1 Annex - 2 Annex-3 Annex- 4 Annex-5 Appendix List of Circulars consolidated in the Master Circular Section A - Introduction (i) Import trade is regulated by the Directorate General of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended from time to time, the amount does not exceed USD 5000 or its equivalent and the payment is made by a cheque drawn on the applicant's bank account or by a Demand Draft. B.3. Import Licenses Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category - I banks may freely open letters of credit and allow remittances for import. While opening letters of credit, the 'For Exchange Control purposes' copy of the licence should be called for and special conditions, if any, attached to such licences should be adhered to. After effecting remittances under the licence, AD Category - I banks may preserve the copies of 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000, made by Reserve Bank vide Notification No. FEMA 6/2000-RB dated May 3, 2000, as amended from time to time. (ii) Reserve Bank may allow a person to bring into India currency notes of Government of India and / or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate. B.6.1. Import of foreign exchange into India A person may - (i) send into India without limit foreign exchange in any form other than currency notes, bank notes and travellers 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 aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance, Government of India before making advance remittance exceeding USD 100, 000. (ii) All payments towards advance remittance for imports shall be subject to the specified conditions. 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) Namibia Diamond Trading Company (PTY) Ltd. (NDTC). (ii) 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) AD Category - I bank should undertake t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related purchases. The remittances for the above transactions shall be subject to the following conditions: * The AD Category - I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafide of the transactions. KYC and due diligence exercise should be done by the AD Category-I banks for the Indian importer entity and the overseas manufacturer company as well. * 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 guaranteehas been specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000. * 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 beallowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice. C.3. Remittances against Replacement Imports Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category - I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license. C.4. Guarantee for Replacement Import In case replacement goods for defective import are be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors As a sector specific measure, AD Category - I banks are permitted to allow remittance for imports up to USD 300,000 where the importer of rough diamonds, rough precious and semi-precious stones has received the import bills / documents directly from the overseas supplier and the documentary evidence for import is submitted by the importer at the time of remittance. AD Category - I banks may undertake such transactions subject to the following conditions: (i) The import would be subject to the prevailing Foreign Trade Policy. (ii) The transactions are based on their commercial judgment and they are satisfied about the bonafides of the transactions. (iii) AD Category - I banks should do the KYC and due diligence exercise and should be fully satisfied about the financial standing / status and track record of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency. 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 direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck exchange in India and whose net worth is not less than Rs.100 crore as on the date of its last audited balance sheet, or, the importer is a public sector company or an undertaking of the Government of India or its departments. (ii) The above facility may also be extended to autonomous bodies, including scientific bodies/academic institutions, such as Indian Institute of Science / Indian Institute of Technology, etc. whose accounts are audited by the Comptroller and Auditor General of India (CAG). AD Category - I bank may insist on a declaration from the auditor/CEO of such institutions that their accounts are audited by CAG. C.7.3. Non Physical Imports (i) Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail/fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained. (ii) AD Category - I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause. C.8. Issue of acknowledgement AD Category - I bank should acknowledge receipt of evidence of import e.g. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C.12. Import of Gold / Platinum / Silver by Nominated Banks / Nominated Agencies Nominated banks/agencies are permitted to import gold on loan basis, Suppliers Credit/Buyers Credit basis, consignment basis as also on unfixed price basis. However, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permitted. These restrictions will however not apply to import of gold to meet the needs of exporters of gold jewellery. Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis. It is clarified that, consequent upon the issue of above instructions, import of gold against suppliers/buyers credit, as also import of gold on unfixed price basis has to necessarily observe the discipline stipulated relating to cash margins and Documents against Payment (DP) basis. In other words, AD Category I Banks are required to ensure that credit in any form or name is not enabled for import of any form of gold. [A.P.(Dir Series) Circular No.107 dated June 4, 2013, A.P.(Dir Series) Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line of business and the net worth of the importer customer should be commensurate with the volume of business turnover. Apart from the above, in case of such transactions banks should also make discreet enquiries from other banks to assess the actual position. Further, in order to establish audit trail of import/export transactions, all documents 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 shall henceforth submit the following statements to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Trade Division, Amar Building, Fort, Mumbai-400001: (a) Statement on half yearly basis (end March / end September) showing the quantity and value of gold imported by the nominated banks/ agencies/ EOUs/ SEZs in Gem & Jewellery sector, mode of payment-wise, as per Annex'3'; (b) Statement on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUs/ SEZs in Gem & Jewellery sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any form including jewellery made of gold/precious metals or/and studded with diamonds/semi precious/precious stones should not exceed 90 days from the date of shipment and only on 100 per cent cash margin basis. C.14. Import of Platinum, Palladium, Rhodium, Silver, precious & semi-precious stones and rough, cut & polished diamonds (a) Suppliers' and Buyers' credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver, precious & semi-precious stonesand rough, cut and polished diamonds 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 the metals and rough, cut and polished diamonds. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. All other instructions relating to import of these metals and rough, cut and polished diamonds shall continue. [A.P.(DIR Serie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, 2007 * AP (DIR Series) Circular No. 34 dated March 2, 2007 * AP (DIR Series) Circular No. 63 dated May 25, 2007 * AP (DIR Series) Circular No. 77 dated June 29, 2007 * AP (DIR Series) Circular No. 18 dated November 7, 2007 * AP (DIR Series) Circular No. 37 dated April 16, 2008 * AP (DIR Series) Circular No. 03 dated August 4, 2008 * AP (DIR Series) Circular No. 08 dated August 21, 2008 * AP (DIR Series) Circular No. 09 dated August 21, 2008 * AP (DIR Series) Circular No. 12 dated August 28, 2008 * AP (DIR Series) Circular No. 13 dated September 1, 2008 * AP (DIR Series) Circular No. 15 dated September 8, 2008 * AP (DIR Series) Circular No.21 dated December 29, 2009 * AP (DIR Series) Circular No.56 dated April 29, 2011 * AP (DIR Series) Circular No. 59 dated May 06, 2011 * AP (DIR Series) Circular No. 82 dated February 21, 2012 * AP (DIR Series) Circular No. 83 dated February 27, 2012 * AP (DIR Series) Circular No. 103 dated April 03, 2012 * A.P.(DIR Series) Circular No.83 dated February 20, 2013 * A.P.(Dir Series) Circular No.103 dated May 13, 2013 * A.P.(Dir Series) Circular No.107 dated June 4, 2013 * A.P. (DIR Series) Circular No. 122 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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