• Q. Who regulate Import Trade in India?
• Q. What is the time limit of settlement of Import payments?
• Q. What are the RBI guidelines on Evidence of Imports and follow-up?
• Q. Where Imports are on DP (Delivery against payment) basis:
• Q. What are Bank's instructions on Advance Remittance for Import based on RBI guidelines?
• Q. What is Trade Credit?
• Q. What is Suppliers' Credit?
• Q. What is Buyers' Credit?
• Q. What is the Stamp Duty on usance import bills?
• Q. Which are the exceptions to the following rule:
• Q. What is the Procedure for remittances against replacement Imports?

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.

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:

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 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.