TMI BlogMaster Circular on Import of Goods and Services (As amended up to June 18, 2015)X X X X Extracts X X X X X X X X Extracts X X X X ..... fer to respective circulars/ notifications for detailed information, if so needed. Yours faithfully, (C.D.Srinivasan) Chief General Manager INDEX Section I - Introduction Section II - General Guidelines for imports B.1. General Guidelines B.2. Form A-1 B.3. Import Licenses B.4. Obligation of Purchaser of Foreign Exchange B.5. Time Limit for Settlement of Import Payments B.6. Import of Foreign exchange / Indian Rupees B.7. Third Party Payment for Import Transactions Section III - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of its jurisdiction for necessary approval. Section II - General Guidelines for Imports B.1. General Guidelines Rules and regulations to be followed by the AD Category I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Category I banks may be governed by normal trade practices. AD Category I banks may particularly note to adhere to Know Your Customer (KYC) guidelines issued by Reserve Bank (Department of Banking Operations Development) in all their dealings. B.2. Form A-1 Henceforth submission of Form A-1 to AD banks will not be necessary and before making the remittance for making payments towards imports in India, the AD bank will have to ensure that all the requisite details are made available by the importer and the remittance is for bona fide trade transactions as per applicable laws in force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of less than three years from the date of shipment may be permitted in terms of the directions in para C.2 of Section III below. B.5.2. Time Limit for Deferred Payment Arrangements Deferred payment arrangements, including suppliers and buyers credit, providing for payments beyond a period of six months from date of shipment up to a period of less than three years, are treated as trade credits for which the procedural guidelines laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed. B.5.3. Time Limit for Import of Books Remittances against import of books may be allowed without restriction as to the time limit, provided, interest payment, if any, is as per the instructions in para C.2 of Section III of this Circular. B.6. Import of Foreign Exchange / Indian Rupees (i) Except as otherwise provided in the Regulations, no person shall, without the general or special permission of the Reserve Bank, import or bring into India, any foreign currency. Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice has been produced. AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) statement before handling the transactions; The Invoice should contain a narration that the related payment has to be made to the (named) third party; Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party; Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods. Section III - Operational Guidelines for Imports C.1. Advance Remittance C.1.1. Advance Remittance for Import of Goods (i) AD Category I bank may allow advance remittance for import of goods without any ceiling subject to the following conditions: (a) If the amount of advance remittance exceeds USD 200,000 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 AD Category I bank in India, if such a guarantee is issued against the counter-guarantee of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vii. AD Category - I banks should follow-up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, in terms of the Act / Rules / Regulations / Directions issued in this regard. viii. In case of an importer entity in the Public Sector or a Department / Undertaking of the Government of India / State Government/s, AD Category - I banks may permit the advance remittance subject to the above conditions and a specific waiver of bank guarantee from the Ministry of Finance, Government of India, where the advance payments is equivalent to or exceeds USD 100,000/- (USD one hundred thousand only). C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation Related Purchases As a sector specific measure, airline companies which have been permitted by the Directorate General of Civil Aviation to operate as a schedule air transport service, can make advance remittance without bank guarantee, up to USD 50 million. Accordingly, AD Category I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million, for direct impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. (b) In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required. (c) AD Category I banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter in India, failing which, the amount should be repatriated to India. C.2. Interest on Import Bills (i) AD Category I bank may allow payment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) The AD Category I banks should also obtain a certificate as evidence of import from the Chief Executive Officer (CEO) or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites. C.6. Receipt of Import Bills/Documents C.6.1. Receipt of import documents by the importer directly from overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: (i) Where the value of import bill does not exceed USD 300,000. (ii) Import bills received by wholly-owned Indian subsidiaries of foreign 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Control Copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, 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 evidence that the goods for which the payment was made have actually been imported into India. (ii) In respect of imports on D/A basis, AD Category I bank 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., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under paragraph C.7. of Section III, within 3 months from the date of remittance involving foreign exchange exceeding USD 100,000, the AD Category I bank should rigorously follow-up for the next 3 months, including issuing registered letters to the importer. (ii) AD Category - I banks should submit a statement on half-yearly basis as at the end of June December of every year, in form BEF 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 using eXtensible Business Reporting Language (XBRL) system online and Bank-wise instead of the present system of branch-wise submission, to the respective Regional Offices of the RBI. The Statement should be submitted 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 Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gold Jewellery Including Jewellery Made of Precious Metals or/and Studded With Diamonds / Precious Stones /Semi-precious. Suppliers and Buyers credit (trade credit) including the usance period of Letters of Credit opened for import of gold 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. C.13. Import of Other Precious Metals C.13.1. Import of Platinum /Palladium/Rhodium/ Silver/ Rough, Cut Polished Diamonds / Precious and Semi-precious Stones. (a) Suppliers and Buyers Credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver and rough, cut and polished Diamonds, Precious and semi-precious stones; should not exceed 90 days from the date of shipment. However for the Clean Credit i.e. credit given by a foreign supplier to its Indian customer/ buyer, without any Letter of Credit (Suppliers Credit) / Letter of Undertaking (Buyers Credit) / Fixed Deposits from any Indian financial institution for import of Rough, Cut and Polished Diamonds, may be permitted for a period not excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts may be taken) and satisfy itself about the genuineness of the trade. (c) The entire Merchanting Trade Transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months. (d) The commencement of Merchanting Trade would be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last; (e) Short-term credit either by way of suppliers' credit or buyers' credit will be available for Merchanting Trade Transactions, to the extent not backed by advance remittance for the export lag, including the discounting of export leg LC by an AD bank, as in the case of import transactions ; (f) In case advance against the export leg is received by the Merchanting Trader, AD bank should ensure that the same is earmarked for making payment for the respective import leg. However, AD bank may allow short-term deployment of such funds for the intervening period in an interest bearing account; (g) Merchanting Traders may be allowed to make advance payment for the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods are otherwise compliant with the provisions of the India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit respectively. Appendix Consolidated List of Circulars on Import of Goods and Services Sr. No Circular No Subject Date of Circular 1 AP(DIR Series) Circular No. 106 Import of goods and services into India. June 19, 2003 2 AP(DIR Series) Circular No. 4 Merchanting Trade Transactions Clarifications - Short term credit July 19, 2003 3 AP(DIR Series) Circular No. 9 Evidence of Import Liberalisation August 18, 2003 4 AP(DIR Series) Circular No. 15 Advance Remittance for Imports September 17, 2003 5 AP(DIR Series) Circular No. 49 Advance Remittance for Imports December 15, 2003 6 AP(DIR Series) Circular No. 66 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rough Diamonds August 21, 2008 19 AP(DIR Series) Circular No. 09 Foreign Exchange Management Act, 1999- Advance Remittance for Import of Goods - Liberalisation August 21, 2008 20 AP(DIR Series) Circular No. 12 Foreign Exchange Management Act, 1999 Import of Platinum / Palladium / Rhodium / Silver August 28, 2008 21 AP(DIR Series) Circular No. 13 Direct Receipt of Import Bills / Documents - Liberalisation September 1, 2008 22 AP(DIR Series) Circular No. 15 Foreign Exchange Management Act, 1999 Advance Remittances for Import of Services September 8, 2008 23 AP(DIR Series) Circular No.21 Advance Remittance for Import of Rough Diamonds December 29, 2009 24 AP(DIR Series) Circular No.56 Advance Remittance for Import of Goods Liberalisation April 29, 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Comfort (LoC) by ADs November 19, 2013 39 AP(DIR Series) Circular No.82 Import of Gold by Nominated Banks/Agencies/Entities December 31, 2013 40 AP(DIR Series) Circular No.95 Merchanting Trade Transactions January 17, 2014 41 AP(DIR Series) Circular No.100 Third party payments for export / import transactions February 04, 2014 42 AP(DIR Series) Circular No.103 Import of Gold / Gold Dore by Nominated Banks /Agencies /Entities - Clarifications February 14, 2014 43 AP(DIR Series) Circular No.115 Merchanting Trade Transactions - Revised guidelines March 28, 2014 44 A P (DIR Series) Circular No.116 Advance Remittance for Import of Rough Diamonds April 01, 2014 45 AP(DIR Series) Circular No.122 Trade Credits for Imports ..... X X X X Extracts X X X X X X X X Extracts X X X X
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