A
Above board - On or above the deck, in plain view, not hiding anything.
Act of Pardon / Act of Grace - A letter from a state or power authorising action by a privateer. Also see Letter of Marque.
Abaft - Towards the stern, relative to some object ("abaft the fore hatch")
Abaft the beam - A relative bearing of greater than 90 degrees from the bow. e.g. "two points abaft the port beam."
Abandon Ship - An imperative to leave the vessel immediately, usually in the face of some imminent danger.
Abeam - 'On the beam', a relative bearing at right angles to the centerline of the ship's keel.
Abel Brown - A sea song (shanty) about a young sailor trying to sleep with a maiden. [1].
Aboard - On or in a vessel. - Close aboard means near a ship.
Absentee pennant - Special pennant flown to indicate absence of commanding officer, admiral, his chief of staff, or officer whose flag is flying (division, squadron, or flotilla commander).
Accommodation ladder - A portable flight of steps down a ship's side.
Admiralty - a high naval authority in charge of a state's Navy or a major territorial component. In the Royal Navy (UK) the Board of Admiralty, executing the office of the Lord High Admiral, promulgates Naval law in the form of Queen's (or King's) Regulations and Admiralty Instructions.
Admiralty law - Body of law that deals with maritime cases. In UK administered by the Probate, Divorce and Admiralty Division of the High Court of Justice.
Adrift - Afloat and unattached in any way to the shore or seabed. It may also imply that a vessel is not anchored and not under control, therefore goes where the wind and current take her, (Loose from moorings, or out of place).
Advance note - A note for one month's wages issued to sailors on their signing a ship's articles.
Aft - Towards the stern (of the vessel)
Afternoon watch - The 1200-1600 watch.
Aground - Resting on or touching the ground or bottom.
Ahead - Forward of the bow.
Ahoy - A cry to draw attention. Term used to hail a boat or a ship, as "Boat ahoy!"
Aid to Navigation - (ATON) Any device external to a vessel or aircraft specifically intended to assist navigators in determining their position or safe course, or to warn them of dangers or obstructions to navigation.
All hands - Entire ship's company, both officers and enlisted personnel.
All night in - Having no night watches.
Aloft - Above the ship's uppermost solid structure; overhead or high above.
Alongside - By the side of a ship or pier.
Amidships (or midships) - In the middle portion of ship, along the line of the keel.
Anchor - An object designed to prevent or slow the drift of a ship, attached to the ship by a line or chain; typically a metal, hook like, object designed to grip the bottom under the body of water.
Anchorage - A suitable place for a ship to anchor. Area of a port or harbor.
Anchor's aweigh - Said of an anchor when just clear of the bottom.
Anchor ball - Black shape hoisted in forepart of a ship to show that ship is anchored in a fairway.
Anchor buoy - A small buoy secured by a light line to anchor to indicate position of anchor on bottom.
Anchor cable - Wire or line running between anchor and ship.
Anchor chain - Heavy stud-linked chain running between anchor and ship.
Anchor detail - Group of men who handle ground tackle when the ship is anchoring or getting underway.
Anchor light - White light displayed by a ship at anchor. Two such lights are displayed by a ship over 150 feet in length.
Anchor watch - Making sure that the anchor is holding and the vessel is not drifting. Important during rough weather and at night. Most marine GPS units have an Anchor Watch alarm capability.
Arc of Visibility - The portion of the horizon over which a lighted aid to navigation is visible from seaward.
Armament - A ship's weapons.
Articles of War - Regulations governing the military and naval forces of UK and USA; read to every ship's company on commissioning and at specified intervals during the commission.
Ashore - On the beach, shore or land.
Astern - Toward the stern; an object or vessel that is abaft another vessel or object.
ASW - Anti-submarine warfare.
Athwart, athwartships - At right angles to the fore and aft or centerline of a ship
Avast - Stop! Cease or desist from whatever is being done.
Awash - So low in the water that the water is constantly washing across the surface.
Aweigh - Position of an anchor just clear of the bottom.
Aye, aye - Reply to an order or command to indicate that it first heard, and second is understood and will be carried out. ("Aye, aye, sir" to officers)
Azimuth compass - An instrument employed for ascertaining the sun's magnetic azimuth. The azimuth of an object is its bearing from the observer measured as an angle clockwise from true north.
Azimuth circle - Instrument used to take bearings of celestial objects.
B
Back and fill - To use the advantage of the tide being with you when the wind is not.
Backstays - Long lines or cables, reaching from the rear of the vessel to the mast heads, used to support the mast.
Baggywrinkle - A soft covering for cables (or any other obstructions) that prevents sail chafing from occurring.
Bank (sea floor) - A large area of elevated sea floor
Bar - Large mass of sand or earth, formed by the surge of the sea. They are mostly found at the entrances of great rivers or havens, and often render navigation extremely dangerous, but confer tranquility once inside. See also: Touch and go, grounding. Alfred Lord Tenneyson's poem 'Crossing the bar' an allegory for death.
Bar pilot - A bar pilot guides ships over the dangerous sandbars at the mouth of rivers and bays.
Beacon - A lighted or unlighted fixed aid to navigation attached directly to the earth’s surface. (Lights and daybeacons both constitute beacons.)
Beam - The beam of a ship is its width at the widest point, or a point alongside the ship at the mid-point of its length.
Bear - Large squared off stone used for scraping clean the deck of a sailing man-of-war.
Bear down - Turn away from the wind, often with reference to a transit.
Bearing - The horizontal direction of a line of sight between two objects on the surface of the earth.
Before the mast - Literally, the area of a ship before the foremast (the forecastle). Most often used to describe men whose living quarters are located here, officers being housed behind (abaft) the mast and enlisted men before the mast. This was because the midships area where the officers were berthed is more stable, being closer to the center of gravity, and thus more comfortable. It is less subject to the up and down movement resulting from the ship's pitching.
Belaying pins - Bars of iron or hard wood to which running rigging may be secured, or belayed.
Berth - A bed on a boat, or a space in a port or harbour where a vessel can be tied up.
Between the Devil and the deep blue sea - See Devil seam.
Bilged on her anchor - A ship that has run upon her own anchor.
Bimini - Weather-resistant fabric stretched over a stainless steel frame, fastened above the cockpit of a sailboat or flybridge of a power yacht which serves as a rain or sun shade.
Bimmy - A punitive instrument
Binnacle - The stand on which the ship's compass is mounted.
Binnacle list - A ship's sick list. The list of men unable to report for duty was given to the officer or mate of the watch by the ship's surgeon. The list was kept at the binnacle.
Bitt, plural Bitts - Posts mounted on the ship's bow, merely comprising two wooden uprights supporting a crossbar, for fastening ropes or cables; also used on various ships to tie boys over for painful (posterior) discipline, more informally then kissing the gunner's daughter.
Bitter end - The anchor cable is tied to the bitts, when the cable is fully paid out, the bitter end has been reached. The last part of a rope or cable.
Bloody - An intensive derived from the substantive 'blood', a name applied to the Bucks, Scrowers, and Mohocks of the seventeenth centuries.
Blue Peter - A blue and white flag hoisted at the foretrucks of ships about to sail.
Boat - A craft or vessel designed to float on, and provide transport over, water.
Boatswain or bosun - A non-commissioned officer responsible for the sails, ropes and boats on a ship who issues "piped" commands to seamen.
Bollard - From 'bol' or 'bole', the round trunk of a tree. A substantial vertical pillar to which lines may be made fast. Generally on the quayside rather than the ship.
Bombay runner - Large cockroach.
Bonded Jacky - A type of tobacco or sweet cake.
Booby - A type of bird that has little fear and therefore is particularly easy to catch, hence booby prize.
Booby hatch - A sliding hatch or cover.
Boom - A spar used to extend the foot of a sail.
Booms - Masts or yards, lying on board in reserve.
Boom vang (vang) - A sail control that lets one apply downward tension on the boom, countering the upward tension provided by the mainsail. The boom vang adds an element of control to mainsail shape when the mainsheet is let out enough that it no longer pulls the boom down. Boom vang tension helps control leech twist, a primary component of sail power.
Buoy - A floating object of defined shape and color, which is anchored at a given position and serves as an aid to navigation.
Bow - The front of a ship.
Bow-chaser, chase or chase-piece - A long gun with a relatively small bore, placed in the bow-port to fire directly ahead. Used especially while chasing an enemy vessel to damage its sails and rigging. (quoted from A Sea of Words)
Bowline - A type of knot, producing a strong loop of a fixed size, topologically similar to a sheet bend. Also a rope attached to the side of a sail to pull it towards the bow (for keeping the windward edge of the sail steady).
Bowse - To pull or hoist.
Bowsprit - A spar projecting from the bow used as an anchor for the forestay and other rigging.
Boy seaman - a young sailor, still in training
Brail - To furl or truss a sail by pulling it in towards the mast, or the ropes used to do so.
Brake - The handle of the pump, by which it is worked.
Brass monkeys or brass monkey weather - Very cold weather, origin unknown. A widely circulated folk etymology claiming to explain what a brass monkey is has been discredited by several people including Snopes [2] and the Oxford English Dictionary.
Bridge - A structure above the weather deck, extending the full width of the vessel, which houses a command centre, itself called by association, the bridge.
Bring to - Cause a ship to be stationary by arranging the sails.
Broaching-to - A sudden movement in navigation, when the ship, while scudding before the wind, accidentally turns her leeward side to windward, also use to describe the point when water starts to come over the gunwhale due to this turn.
Buffer - The chief bosun's mate (in the Royal Navy), responsible for discipline.
Bulkhead - An upright wall within the hull of a ship.
Bull of Barney - A beast mentioned in an obscene sea proverb.
Bulwark - The extension of the ship's side above the level of the weather deck.
Bumboat - A private boat selling goods.
Bumpkin - An iron bar (projecting out-board from a ship's side) to which the lower and topsail brace blocks are sometimes hooked. Chains supporting/stabilising the bowsprit.
Bunked - One's afflicted disposition after being talked to by a driveling idiot.
Buntline - One of the lines tied to the bottom of a square sail and used to haul it up to the yard when furling.
Bunting Tosser - A signalman who prepares and flys flag hoists.
Buoyed Up - Lifted by a buoy, especially a cable that has been lifted to prevent it from trailing on the bottom.
By and Large - By means into the wind, while large means with the wind. By and large is used to indicate all possible situations "the ship handles well both by and large".
By the board - Anything that has gone overboard.
C
Cabin - an enclosed room on a deck or flat.
Cabin boy - attendant on passengers and crew
Cable - A large rope. Also a measure of length or distance - (UK) 1/10 nautical mile, approx. 600 feet; (USA) 120 fathoms, 720 feet (219 m); Other countries use different values.
Canister - a type of anti personnel canon load in which lead balls or other loose metallic items were enclosed in a tin or iron shell. On firing the shell would disintegrate releasing the smaller metal objects.
Cape Horn fever - The name of the fake illness a malingerer is pretending to suffer from.
Capsize - When a ship or boat lists too far and rolls over, exposing the keel. On large vessels, this often results in the sinking of the ship.
Capstan - A rotating wheel mounted vertically, used to wind in anchors or other heavy objects; and sometimes to administer flogging over.
Captain's daughter - The cat o' nine tails, which in principle is only used on board on the captain's (or a court martial's) personal orders
Careening - Cause the ship to tilt on its side, usually to clean or repair the hull below the water line.
Cat - 1. To prepare an anchor, after raising it by lifting it with a tackle to the Cat Head, prior to securing (fishing) it alongside for sea. (An anchor raised to the Cat Head is said to be catted). 2. The Cat o' Nine Tails (see below). 3. A cat-rigged boat or catboat.
Catamaran - A vessel with two hulls.
Catboat - A cat-rigged vessel with only one sail, usually on a gaff.
Cat o' nine tails - A short nine-tailed whip kept by the bosun's mate to flog sailors (and soldiers in the Army).
Cat Head - A beam extending out from the hull used to support an anchor when raised in order to secure or 'fish' it.
Centreboard - A removable keel used to resist leeway.
Chafing - Wear on line or sail caused by constant rubbing against another surface.
Chafing Gear - Material applied to a line or spar to prevent or reduce chafing. See Baggywrinkle.
Chain shot - Cannon balls linked with chain - used to damage rigging and masts.
Chain-wale or channel - A broad, thick plank that projects horizontally from each of a ship's sides abreast a mast, distinguished as the fore, main, or mizzen channel accordingly, serving to extend the base for the shrouds, which supports the mast.
Chase guns - Cannons mounted on the bow or stern. Those on the bow could be used to fire upon a ship ahead, while those on the rear could be used to ward off pursuing vessels.
Chine - A relatively sharp angle in the hull, as compared to the rounded bottoms of most traditional boat hulls.
Chock-a-block - Rigging blocks that are so tight against one another that they cannot be further tightened.
Clean bill of health - A certificate issued by a port indicating that the ship carries no infectious diseases.
Clean slate - At the helm, the watch keeper would record details of speed, distances, headings, etc. on a slate. At the beginning of a new watch the slate would be wiped clean.
Cleat - A stationary device used to secure a rope aboard a vessel.
Clew-lines - Used to truss up the clews, the lower corners of square sails.
Club Hauling The ship drops one of its anchors at high speed to turn abruptly. This was sometimes used as a means to get a good firing angle on a pursuing vessel.
Coaming - The raised edge of a hatchway used to help keep out water.
Compass - Navigational instrument that revolutionised travel.
Corrector - a device to correct the ship's compass.
Courses - The mainsail, foresail, and the mizzen.
Coxswain or cockswain - The helmsman or crew member in command of a boat.
As the crow flies - A direct line between two points (which might cross land) which is the way crows travel rather than ships which must go around land.
Crow's nest - Specifically a masthead constructed with sides and sometimes a roof to shelter the lookouts from the weather, generally by whaling vessels, this term has become a generic term for what is properly called masthead. See masthead.
Cuddy - A small cabin in a boat.
Cunningham - A line invented by Briggs Cunningham, used to control the shape of a sail.
Cunt splice - A join between two lines, similar to an eye-splice, where each rope end is joined to the other a short distance along, making an opening which closes under tension.
Cuntline - The "valley" between the strands of a rope or cable. Before serving a section of laid rope e.g. to protect it from chafing, it may be "wormed" by laying yarns in the cuntlines, giving that section an even cylindrical shape.
Cut and run - When wanting to make a quick escape, a ship might cut lashings to sails or cables for anchors, causing damage to the rigging, or losing an anchor, but shortening the time needed to make ready by bypassing the proper procedures.
Cut of his jib - The "cut" of a sail refers to its shape. Since this would vary between ships, it could be used both to identify a familiar vessel at a distance, and to judge the possible sailing qualities of an unknown one.
D
Daggerboard - A type of centerboard that is removed vertically.
Daybeacon - An unlighted fixed structure which is equipped with a dayboard for daytime identification.
Dayboard - The daytime identifier of an aid to navigation presenting one of several standard shapes (square, triangle, rectangle) and colors (red, green, white, orange, yellow, or black).
Decks - the structures forming the approximately horizontal surfaces in the ship's general structure. Unlike flats, they are a structural part of the ship.
Deckhead - The under-side of the deck above. Sometimes panelled over to hide the pipe work. This panelling, like that lining the bottom and sides of the holds, is the ceiling.
Deadeye - A round wooden blank which serves a similar purpose to a block in the standing rigging of large sailing vessels.
Deadrise - The design angle between the keel (q.v.) and horizontal.
Derrick - A lifting device composed of one mast or pole and a boom or jib which is hinged freely at the bottom.
Devil seam - The curved seam in the deck planking closest to the side of the ship, next to the scuppers. A sailor slipping on the deck would be "between the Devil and the deep blue sea".
Devil to pay - 'Paying' the Devil is sealing the devil seam. It is a difficult and unpleasant job (with no resources) because of the shape of the seam (closest to the hull).
Directional Light - A light illuminating a sector or very narrow angle and intended to mark a direction to be followed.
Dog watch - A short watch period, generally half the usual time (eg a two hour watch between two four hour ones). Such a watch might be included in order to slowly rotate the system over several days for fairness, or to allow both watches to eat their meals at approximately normal times.
Dolphin - A structure consisting of a number of piles driven into the seabed or riverbed in a circular pattern and drawn together with wire rope.
Downhaul - A line used to control either a mobile spar, or the shape of a sail.
Draft - The depth of a ship's keel below the waterline.
Draught - See draft.
Dressing down - Treating old sails with oil or wax to renew them, or a verbal reprimand.
Driver - The large sail flown from the mizzen gaff.
E
Earrings - Small lines, by which the uppermost corners of the largest sails are secured to the yardarms.
Embayed - The condition where a sailing vessel is confined between two capes or headlands, typically where the wind is blowing directly onshore.
Extremis – (also known as “in extremis”) the point under International Rules of the Road (Navigation Rules) at which the privileged (or stand-on) vessel on collision course with a burdened (or give-way) vessel determines it must maneuver to avoid a collision. Prior to extremis, the privileged vessel must maintain course and speed and the burdened vessel must maneuver to avoid collision.
F
Fathom - A unit of length equal to 6 feet, roughly measured as the distance between a man's outstretched hands.
Fender - An air or foam filled bumper used in boating to keep boats from banging into docks or each other.
Figurehead - symbolic image at the head of a traditional sailing ship or early steamer.
Fireship - A ship loaded with flammable materials and explosives and sailed into an enemy port or fleet either already burning or ready to be set alight by its crew (who would then abandon it) in order to collide with and set fire to enemy ships.
First rate - The classification for the largest sailing warships of the 17th through 19th centuries. They had 3 masts, 850+ crew and 100+ guns.
Fish - 1. To repair a mast or spar with a fillet of wood. 2. To secure an anchor on the side of the ship for sea (otherwise known as "catting".)
First Lieutenant - In the Royal Navy, the senior lieutenant on board; responsible to the Commander for the domestic affairs of the ship's company. Also known as 'Jimmy the One' or 'Number One'. Removes his cap when visiting the mess decks as token of respect for the privacy of the crew in those quarters. Officer i/c cables on the forecastle.
First Mate - The Second in command of a ship
Flag hoist - A number of signal flags strung together to convey a message, e.g. 'England expects...'.
Flank - The maximum speed of a ship. Faster than "full speed".
Flatback -A Great Lakes slang term for a vessel without any self unloading equipment.
Fluke - The wedge-shaped part of an anchor's arms that digs into the bottom.
Fly by night - A large sail used only for sailing downwind, requiring little attention.
Foot - The bottom of a sail.
Footloose - If the foot of a sail is not secured properly, it is footloose, blowing around in the wind.
Footrope - Each yard on a square rigged sailing ship is equipped with a footrope for sailors to stand on while setting or stowing the sails
Forecastle - A partial deck, above the upper deck and at the head of the vessel; traditionally the sailors' living quarters.
Founder - To fill with water and sink → Wiktionary
Fore - Towards the bow (of the vessel).
Foremast jack - An enlisted sailor, one who is housed before the foremast.
Forestays - Long lines or cables, reaching from the front of the vessel to the mast heads, used to support the mast.
Freeboard - The height of a ship's hull (excluding superstructure) above the waterline. The vertical distance from the current waterline to the lowest point on the highest continuous watertight deck. This usually varies from one part to another.
Furl - To roll or wrap a sail around the mast or spar to which it is attached.
G
Gaff - The spar that holds the upper edge of a sail. Also a long hook with a sharp point to haul fish in.
Galley - the kitchen of the ship
Garbled - Garbling was the (illegal) practice of mixing cargo with garbage.
Global Positioning System - (GPS) A satellite based radionavigation system providing continuous worldwide coverage. It provides navigation, position, and timing information to air, marine, and land users.
Grapeshot - Small balls of lead fired from a cannon, similar to shotgun shot on a larger scale. Used to hurt people, rather than cause structural damage.
Grog - Watered-down Pusser's rum - half a gill with equal part of water issued to all seamen over twenty. (CPOs and POs were issued with neat rum) From the British Admiral Vernon who, in 1740, ordered the men's ration of rum to be watered down. He was called "Old Grogram" because he often wore a grogram coat), and the watered rum came to be called 'grog'. Often used (illegally) as currency in exchange for favours in quantities prescribed as 'sippers' and 'gulpers'. Additional issues of grog were made on the command 'splice the mainbrace' for celebrations or as a reward for performing especially onerous duties. The RN discontinued the practice of issuing rum in 1970.
Groggy - Drunk from having consumed a lot of grog.
Gunner's daughter - see Kissing the G.'s D.
Gunwale - Upper edge of the hull.
H
Halyard or Halliard - Originally, ropes used for hoisting a spar with a sail attached; today, a line used to raise the head of any sail.
Hammock - Canvas sheets, slung from the deckhead in messdecks, in which seamen slept. "Lash up and stow" a piped command to tie up hammocks and stow them (typically) in racks inboard of the ship's side to protect crew from splinters from shot and provide a ready means of preventing flooding caused by damage.
Hand Bomber - A ship who's boilers are fueled by coal shoveled in by hand.
Hand over fist - To climb steadily upwards, from the motion of a sailor climbing shrouds on a sailing ship (originally "hand over hand").
Hank - A fastener attached to the luff of the headsail that attaches the headsail to the forestay. Typical designs include a bronze or plastic hook with a spring-operated gate, or a strip of cloth webbing with a snap fastener.
Harbor - A harbor or harbour, or haven, is a place where ships may shelter from the weather or are stored. Harbours can be man-made or natural.
Haul wind - To point the ship so as to be heading in the same direction as the wind, to maximise speed.
Hawse-hole - A hole in a ship's bow for a cable, such as for an anchor, to pass through.
Hawsepiper - An informal maritime industry term used to refer to a merchant ship’s officer who began his or her career as an unlicensed merchant seaman and did not attend a traditional maritime college/academy to earn the officer license.
Head - The toilet or latrine of a vessel, which for sailing ships projected from the bows
Head of navigation - A term used to describe the farthest point above the mouth of a river that can be navigated by ships.
Headsail - Any sail flown in front of the most forward mast.
Heave - A vessel's transient up-and-down motion.
Heaving to - To stop a sailing vessel by lashing the helm in opposition to the sails. The vessel will gradually drift to leeward, the speed of the drift depending on the vessel's design.
Heave down - Turn a ship on its side (for cleaning).
Helmsman - A person who steers a ship
Hogging or hog - The distortion of the hull where the ends of the keel are lower than the center.
Hold - In earlier use, below the orlop deck, the lower part of the interior of a ship's hull, especially when considered as storage space, as for cargo. In later merchant vessels it extended up through the decks to the underside of the weather deck.
Holiday - A gap in the coverage of newly applied paint, slush, tar or other preservative.
Holystone - A chunk of sandstone used to scrub the decks. The name comes from both the kneeling position sailors adopt to scrub the deck (reminiscent of genuflection for prayer), and the stone itself (which resembled a Bible in shape and size).
Horn - A sound signal which uses electricity or compressed air to vibrate a disc diaphragm.
Horse - Attachment of sheets to deck of vessel ('Main-sheet horse).
Hounds - Attachments of stays to masts.
Hull - The shell and framework of the basic flotation-oriented part of a ship
Hydrofoil - A boat with wing-like foils mounted on struts below the hull.
I
Icing - A serious hazard where cold temperatures (below about -10°C) combined with high wind speed (typically force 8 or above on the Beaufort scale) result in spray blown off the sea freezing immediately on contact with the ship
In the offing - In the water visible from on board a ship, now used to mean something imminent.
Inboard-Outboard drive system - A larger Power Boating alternative drive system to transom mounted outboard motors.
J
Jack - Either a flag, or a sailor. Typically the flag was talked about as if it were a member of the crew.
Jacklines or Jack Stays - Lines, often steel wire with a plastic jacket, from the bow to the stern on both port and starboard. The Jack Lines are used to clip on the safety harness to secure the crew to the vessel while giving them the freedom to walk on the deck.
Jack Tar - A sailor dressed in 'square rig' - (now) with square collar - (formerly) with tarred pigtail.
Jib - A triangular staysail at the front of a ship.
K
Killick - A small anchor. A fouled killick is the substantive badge of non-commissioned officers in the RN. Seamen promoted to the first step in the promotion ladder are called 'Killick'. The badge signifies that here is an Able Seaman skilled to cope with the awkward job of dealing with a fouled anchor.
Keel - The central structural basis of the hull
Keelhauling - Maritime punishment: to punish by dragging under the keel of a ship.
Kelson - The timber immediately above the keel of a wooden ship.
Kissing the gunner's daughter - bend over the barrel of a gun for punitive spanking with a cane or cat
Know the ropes - A sailor who 'knows the ropes' is familiar with the miles of cordage and ropes involved in running a ship.
L
Ladder - On board a ship, all "stairs" are called ladders, except for literal staircases aboard passenger ships. Most "stairs" on a ship are narrow and nearly vertical, hence the name. Believed to be from the Anglo-Saxon word hiaeder, meaning ladder.
Laker -Great Lakes slang for a vessel who spends all its time on the 5 Great Lakes.
Land lubber - A person unfamiliar with being on the sea.
Lanyard - A rope that ties something off.
Larboard - The left side of the ship (archaic, see port)- cf. starboard.
Large - See By and large.
Lateral System - A system of aids to navigation in which characteristics of buoys and beacons indicate the sides of the channel or route relative to a conventional direction of buoyage (usually upstream).
Lay - To come and go, used in giving orders to the crew, such as "lay forward" or "lay aloft". To direct the course of vessel. Also, to twist the strands of a rope together.
Lay down - To lay a ship down is to begin construction in a shipyard.
League - A unit of length, normally equal to three nautical miles.
Leech - The aft or trailing edge of a fore-and-aft sail; the leeward edge of a spinnaker; a vertical edge of a square sail. The leech is susceptible to twist, which is controlled by the boom vang and mainsheet.
Lee side - The side of a ship sheltered from the wind (cf. weather side).
Lee shore - A shore downwind of a ship. A ship which cannot sail well to windward risks being blown onto a lee shore and grounded.
Leeway - The amount that a ship is blown leeward by the wind. See also weatherly.
Leeward - In the direction that the wind is blowing towards.
Let go and haul - An order indicating that the ship is in line with the wind.
Let the cat out of the bag - To break bad news (the "cat o' nine tails" being taken out of the bag by the bosun was bad news, announcing a flogging).
Letter of marque and reprisal - A warrant granted to a privateer condoning specific acts of piracy against a target as a redress for grievances.
Lifeboat - A small steel or wood boat located near the stern of a vessel. Used to get the crew to safety if something happens to the mothership.
Line - the correct nautical term for the majority of the cordage or "ropes" used on a vessel. A line will always have a more specific name, such as mizzen topsail halyard, which describes its use.
Liner - Ship of The Line: a major warship capable of taking its place in the main (battle) line of fighting ships. Hence modern term for most prestigious passenger vessel: Liner.
List - The vessel's angle of lean or tilt to one side, in the direction called roll.
Loaded to the gunwales - Literally, having cargo loaded as high as the ship's rail; also means extremely drunk.
Loggerhead - An iron ball attached to a long handle, used for driving caulking into seams and (occasionally) in a fight. Hence: 'at loggerheads'.
Lubber's line - A vertical line inside a compass case indicating the direction of the ship's head.
Luff - 1. The foreward edge of a sail. 2. To head a sailing vessel more towards the direction of the wind.
Luffing 1. When a sailing vessel is steered more to windward. 2. Loosening a sheet past optimal trim. 3. The flapping of the sail(s) which results.
Lying ahull - Waiting out a storm by dousing all sails and simply letting the boat drift.
M
Mainbrace - The brace attached to the mainmast.
Mainmast (or Main) - The tallest mast on a ship.
Mainsheet - Sail control line that allows the most obvious effect on mainsail trim. Primarily used to control the angle of the boom, and thereby the mainsail, this control can also increase or decrease downward tension on the boom while sailing upwind, significantly affecting sail shape. For more control over downward tension on the boom, use a boom vang.
Man of war - a warship from the age of sail
Man overboard! - A cry let out when a seaman has gone overboard
Marina - a docking facility for small ships and yachts.
Marines Soldiers afloat. Royal Marines formed as the Duke of York and Albany's Maritime Regiment of Foot in 1664 with many and varied duties including providing guard to ship's officers should there be mutiny aboard. Sometimes thought by seamen to be rather gullible - hence 'tell it to the marines' who might believe your tall tale.
Mast - A verticle pole on a ship which supports sails or rigging.
Masthead - A small platform partway up the mast, just above the height of the mast's main yard. A lookout is stationed here, and men who are working on the main yard will embark from here. See also Crow's Nest.
Master - Either the commander of commercial vessel, or a senior officer of a naval sailing ship in charge of routine seamanship and navigation but not in command during combat.
Master-at-Arms - A non-commissioned officer responsible for discipline on a naval ship. Standing between the officers and the crew, commonly known in the Royal Navy as 'the Buffer'.
Mess - An eating place aboard ship. A group of crew who live and feed together,
Mess deck catering - A system of catering in which a standard ration is issued to a mess supplemented by a money allowance which may be used by the mess to buy additional victuals from the Pusser's stores or elsewhere. Each mess was autonomous and self-regulating. Seaman cooks, often members of the mess, prepared the meals and took them, in a tin canteen, to the galley to be cooked by the ship's cooks. As distinct from 'cafeteria messing' where food is issued to the individual hand - now the general practice.
Midshipman - A non-commissioned officer below the rank of Lieutenant. Usually regarded as being "in training" to some degree. Also known as 'Snotty'. 'The lowest form of animal life in the Royal Navy' where he has authority over and responsibility for more junior ranks, yet, at the same time, relying on their experience and learning his trade from them.
Mizzenmast (or Mizzen) - The third mast on a ship.
Mizzen staysail - Sail on a ketch or yawl, usually lightweight, set from, and forward of, the mizzen mast while reaching in light to moderate air.
Moor - to attach a boat to a mooring buoy or post. Also, to a dock a ship.
N
Navigation rules - Rules of the road that provide guidance on how to avoid collision and also used to assign blame when a collision does occur.
Nipper - Short rope used to bind a cable to the "messenger" (a moving line propelled by the capstan) so that the cable is dragged along too (Used because the cable is too large to be wrapped round the capstan itself). During the raising of an anchor the nippers were attached and detached from the (endless) messenger by the ship's boys. Hence the term for small boys: 'nippers'.
No room to swing a cat - The entire ship's company was expected to witness floggings, assembled on deck. If it was very crowded, the bosun might not have room to swing the 'cat o' nine tails' (the whip).
O
Oilskin Foul-weather gear worn by sailors.
Oreboat -Great Lakes Term for a vessel primarily used in the transport of iron ore.
Orlop deck The lowest deck of a ship of the line. The deck covering in the hold.
Outhaul - A line used to control the shape of a sail.
Overbear - To sail downwind directly at another ship, stealing the wind from its sails.
Overhaul - Hauling the buntline ropes over the sails to prevent them from chaffing.
Overhead - The "ceiling," or, essentially, the bottom of the deck above you.
Overreach - When tacking, to hold a course too long.
Over the barrel - Adult sailors were flogged on the back or shoulders while tied to a grating, but boys were beaten instead on the posterior (often bared), with a cane or cat, while bending, often tied down, over the barrel of a gun, known as (kissing) the gunner's daughter.
Overwhelmed - Capsized or foundered.
Ox-Eye - A cloud or other weather phenomenon that may be indicative of an upcoming storm.
P
Parrel - A movable loop, used to fasten the yard to its respective mast.
Part brass rags - Fall out with a friend. From the days when cleaning materials were shared between sailors.
Pay - Fill a seam (with caulking or pitch); see 'The Devil to Pay', or to lubricate the running rigging: 'pay' with slush (qv) or protect from the weather by covering with slush.
Paymaster - The officer responsible for all money matters in RN ships including the paying and provisioning of the crew, all stores, tools and spare parts.
Pilot - Navigator. A specially knowledgeable person qualified to navigate a vessel through difficult waters, e.g harbour pilot etc.
Pipe (Bos'n's) - or a Bos'n's Call - A whistle used by Boatswains (bosuns or bos'ns) to issue commands. Consisting of a metal tube which directs the breath over an aperture on the top of a hollow ball to produce high pitched notes. The pitch of the notes can be changed by partly covering the aperture with the finger of the hand in which the pipe is held. The shape of the instrument is similar to that of a smoking pipe.
Pipe down - A signal on the bosun's pipe to signal the end of the day, requiring lights (and smoking pipes) to be extinguished and silence from the crew.
Piping the side - A salute on the bos'n's pipe(s) performed in the company of the deck watch on the starboard side of the quarterdeck or at the head of the gangway, to welcome or bid farewell to the ship's Captain, senior officers and honoured visitors.
Pitch - A vessel's motion, rotating about the beam axis, so the bow pitches up and down.
Pontoon - A flat-bottomed vessel used as a ferry or a barge or float moored alongside a jetty or a ship to facilitate boarding.
Poop deck - A high deck on the aft superstructure of a ship.
Pooped - 1. Swamped by a high, following sea. 2. Exhausted.
Port - Towards the left-hand side of the ship facing forward (formerly Larboard). Denoted with a red light at night.
Press gang - Formed body of personnel from a ship of the Royal Navy (either a ship seeking personnel for its own crew or from a 'press tender' seeking men for a number of ships) that would identify and force (press) men, usually merchant sailors into service on naval ships usually against their will.
Preventer (Gybe preventer, Jibe preventer) - A sail control line originating at some point on the boom leading to a fixed point on the boat's deck or rail (usually a cleat or pad eye) used to prevent an accidental jibe while sailing downwind.
Privateer - A privately-owned ship authorised by a national power (by means of a Letter of Marque) to conduct hostilities against an enemy. Also called a private man of war.
Prow - a poetical alternative term for bows.
Pusser - Purser, the one who is buys, stores and sells all stores on board RN ships, including victuals, rum and tobacco. originally a private merchant, latterly a warrant officer.
Q
Queen's (King's) Regulations - The standing orders governing the Royal Navy of UK issued in the name of the current Monarch.
Quayside - Refers to the dock or platform used to fasten a vessel to
R
Radar - An electronic system designed to transmit radio signals and receive reflected images of those signals from a "target" in order to determine the bearing and distance to the "target".
Radar reflector - A special fixture fitted to a vessel or incorporated into the design of certain aids to navigation to enhance their ability to reflect radar energy. In general, these fixtures will materially improve the visibility for use by vessels with radar.
Range lights - Two lights associated to form a range (a line formed by the extension of a line connecting two charted points) which often, but not necessarily, indicates the channel centerline. The front range light is the lower of the two, and nearer to the mariner using the range. The rear light is higher and further from the mariner.
Ratlines - Rope ladders permanently rigged from bulwarks and tops to the mast to enable access to top masts and yards. Also serve to provide lateral stability to the masts.
Reach - A point of sail from about 60° to about 160° off the wind. Reaching consists of "close reaching" (about 60° to 80°), "beam reaching" (about 90°) and "broad reaching" (about 120° to 160°)
Reduced cat - A light version on the cat o'nine tails for use on boys; also called "boys' pussy".
Reef
1. Reef: To temporarily reduce the area of a sail exposed to the wind, usually to guard against adverse effects of strong wind or to slow the vessel.
2. Reef: Rock or coral, possibly only revealed at low tide, shallow enough that the vessel will at least touch if not go aground.
Reef points - Small lengths of cord attached to a sail, used to secure the excess fabric after reefing.
Reef-bands - Long pieces of rough canvas sewed across the sails to give them additional strength.
Reef-tackles - Ropes employed in the operation of reefing.
Rigging - The system of masts and lines on ships and other sailing vessels.
Roll - A vessel's motion rotating from side to side, about the fore-aft axis. List (qv) is a lasting tilt in the roll direction.
Rolling-tackle - A number of pulleys, engaged to confine the yard to the weather side of the mast; this tackle is much used in a rough sea.
the Ropes' refers to the lines in the rigging.
Rope's end A summary punishment device.
Rummage sale - A sale of damaged cargo (from French arrimage).
Running rigging - Rigging used to manipulate sails, spars, etc. in order to control the movement of the ship. Cf. standing rigging.
S
Sagging - When a trough of a wave is amidship.
Sail-plan - A set of drawings showing various sail combinations recommended for use in various situations.
Saltie - Great Lakes term for a vessel that sails the oceans.
Scandalize - To reduce the area of a sail by expedient means (slacking the peak and tricing up the tack) without properly reefing it.
Scud - A name given by sailors to the lowest clouds, which are mostly observed in squally weather.
Scudding - A term applied to a vessel when carried furiously along by a tempest.
Scuppers - An opening on the side rail that allows water to run off the deck.
Scuttle - A small opening, or lid thereof, in a ship's deck or hull. To cut a hole in, or sink something.
Scuttlebutt - A barrel with a hole in used to hold water that sailors would drink from. Also: gossip.
Sea anchor - A stabilizer deployed in the water for heaving to in heavy weather. It acts as a brake and keeps the hull in line with the wind and perpendicular to waves.
Seaman - generic term for sailor, or (part of) a low naval rank
Self-Unloader - Great Lakes slang term for a vessel with a conveyor or some other method of unloading the cargo without shoreside equipment.
Sennet whip - a summary punitive implement
Shakes - Pieces of barrels or casks broken down to save space. They are worth very little, leading to the phrase "no great shakes".
Sheer - The upward curve of a vessel's longitudinal lines as viewed from the side.
Sheet - A rope used to control the setting of a sail in relation to the direction of the wind.
Ship's bell - Striking the ship's bell is the traditional method of marking time and regulating the crew's watches.
Ship's company - The crew of a ship.
Shrouds- Standing rigging running from a mast to the sides of a ships.
Siren A sound signal which uses electricity or compressed air to actuate either a disc or a cup shaped rotor.
Skysail - A sail set very high, above the royals. Only carried by a few ships.
Skyscraper - A small, triangular sail, above the skysail. Used in light winds on a few ships.
Slush - Greasy substance obtained by boiling or scraping the fat from empty salted meat storage barrels, or the floating fat residue after boiling the crew's meal. In the Royal Navy the perquisite of the cook who could sell it or exchange it (usually for alcohol) with other members of the crew. Used for greasing parts of the running rigging of the ship and therefore valuable to the master and bosun.
Slush fund - The money obtained by the cook selling slush ashore. Used for the benefit of the crew (or the cook).
Son of a gun - The space between the guns was used as a semi-private place for trysts with prostitutes and wives, which sometimes led to pregnancies.
Spanker - A fore and aft, gaff-rigged sail on the aft-most mast of a square-rigged vessel.
Spar - A wooden pole used to support various pieces of rigging and sails.
Spindrift - Finely-divided water swept from crest of waves by strong winds.
Spinnaker - A large sail flown in front of the vessel while heading downwind.
Spinnaker pole - A spar used to help control a spinnaker or other headsail.
Splice - To join lines (ropes, cables etc.) by unravelling their ends and intertwining them to form a continuous line. To form an eye or a knot by splicing.
Standing rigging - Rigging which is used to support masts and spars, and is not normally manipulated during normal operations. Cf. running rigging.
Starboard - Towards the right-hand side of a vessel facing forward. Denoted with a green light at night.
Square meal - A sufficient quantity of food. Meals on board ship were served to the crew on a square wooden plate in harbour or at sea in good weather. Food in the Royal Navy was invariably better or at least in greater quantity than that available to the average landsman. However, while square wooden plates were indeed used on board ship, there is no established link between them and this particular term. The OED gives the earliest reference from the U.S. in the mid 19th century.
Stay - Rigging running fore (forestay) and aft (backstay) from a mast to the hull.
Staysail - A sail whose luff is attached to a forestay.
Steering oar or steering board - A long, flat board or oar that went from the stern to well underwater, used to control the vessel in the absence of a rudder.
Stem - the extension of keel at the forward of a ship.
Stern - The rear part of a ship, technically defined as the area built up over the sternpost, extending upwards from the counter to the taffrail.
Stern tube - the tube under the hull to bear the tailshaft for propulsion(usually at stern).
Stonnacky - a punitive device
Studding-sails (pronounced 'stunsail') - Long and narrow sails, used only in fine weather, on the outside of the large square sails.
Surge - A vessel's transient motion in a fore and aft direction.
Sway - A vessel's motion from side to side.
Swinging the compass - Measuring the accuracy in a ship's magnetic compass so its readings can be adjusted - often by turning the ship and taking bearings on reference points.
Swinging the lamp - Telling sea stories. Referring to lamps slung from the deckhead which swing while at sea. Often used to indicate that the story teller is exaggerating.
Swinging the lead - Measuring the depth of water beneath a ship using a lead-weighted sounding line. A sailor who was feigning illness etc to avoid a hard job was said to be 'swinging the lead'.
T
Tailshaft - a kind of metallic shafting (a rod of metal) to hold the propeller and connected to the power engine. When the tailshaft is moved, the propeller may also be moved for propulsion.
Taken aback - An inattentive helmsmen might allow the dangerous situation to arise where the wind is blowing into the sails 'backwards', causing a sudden (and possibly dangerous) shift in the position of the sails.
Taking the wind out of his sails - To sail in a way that steals the wind from another ship. cf. overbear.
Tally - The operation of hauling aft the sheets, or drawing them in the direction of the ship's stern.
Teazer - A rope used as a punitive device.
Three sheets to the wind - On a three-masted ship, having the sheets of the three lower courses loose will result in the ship meandering aimlessly downwind. Also, a sailor who has drunk strong spirits beyond his capacity.
Timoneer - From the French timonnier, is a name given, on particular occasions, to the steersman of a ship.
Toe the line or Toe the mark - At parade, sailors and soldiers were required to stand in line, their toes in line with a seam of the deck.
Togey - A rope used as a punitive device
Topsail - The second sail (counting from the bottom) up a mast. These may be either square sails or fore-and-aft ones, in which case they often "fill in" between the mast and the gaff of the sail below.
Topmast - The second section of the mast above the deck; formerly the upper mast, later surmounted by the topgallant mast; carrying the topsails.
Topgallant - the mast or sails above the tops.
Touch and go - The bottom of the ship touching the bottom, but not grounding.
Towing - The operation of drawing a vessel forward by means of long lines.
Travellers - Small fittings that slide on a rod or line. The most common use is for the inboard end of the mainsheet; a more esoteric form of traveller consists of "slight iron rings, encircling the backstays, which are used for hoisting the top-gallant yards, and confining them to the backstays".
Traffic Separation Scheme - Shipping corridors marked by buoys which separate incoming from outgoing vessels. Improperly called Sea Lanes.
Trick - A period of time spent at the wheel ("my trick's over").
Turtling - When a sailboat (in particular a dinghy) capsizes to a point where the mast is pointed straight down and the hull is on the surface resembling a turtle shell.
U
Under the weather - Serving a watch on the weather side of the ship, exposed to wind and spray.
Underway - A vessel that is not at anchor, or made fast to the shore, or aground.
Upper-yardmen - Specially selected personnel destined for high office.
W
Wales - A number of strong and thick planks running length-wise along the ship, covering the lower part of the ship's side.
Watch - A period of time during which a part of the crew is on duty. Changes of watch are marked by strokes on the ship's bell.
Watercraft - Water transport vessels. Ships, boats, personal water craft.
Weather gage - Favorable position over another sailing vessel to with respect to the wind.
Weather deck - Whichever deck is that exposed to the weather – usually either the main deck or, in larger vessels, the upper deck.
Weather side - The weather side of a ship is the side exposed to the wind.
Weatherly - A ship that is easily sailed and maneuvered; makes little leeway when sailing to windward.
Weigh anchor - To heave up (an anchor) preparatory to sailing.
Wells - Places in the ship's hold for the pumps.
White Horses – Waves in wind strong enough to produce foam or spray on the wave tops.
Wheelhouse - Location on a ship where the steering wheel is located, often interchanged with pilothouse and bridge.
Wide berth - To leave room between two ships moored (berthed) to allow space for maneuver.
Windage - Wind resistance of the boat.
Windbound - A condition wherein the ship is detained in one particular station by contrary winds.
Windward - In the direction that the wind is coming from.
Windlass - A winch mechanism, usually with a horizontal axis. Used where mechanical advantage greater than that obtainable by block and tackle was needed (such as raising the anchor on small ships).
Y
Yard - The horizontal spar from which a square sail is suspended.
Yardarm The very end of a yard. Often mistaken for a "yard", which refers to the entire spar. As in to hang 'from the yardarm' and the sun being 'over the yardarm' (late enough to have a drink).
Yaw - A vessel's motion rotating about the vertical axis, so the bow yaws from side to side.
Sunday, March 11, 2007
Saturday, March 10, 2007
Glossary-International Trade
Acceptance The act of giving a written undertaking on the face of a usance bill of exchange to pay a stated sum on the maturity date indicated by the drawee of the bill, (usually in exchange for documents of title to goods shipped on D/A terms) - see Collections Introduction.
Acceptance Credit A documentary credit which requires the beneficiary to draw a usance bill for subsequent acceptance by the issuing bank or the advising bank or any other bank as the credit stipulates - see Documentary Credits.
Accommodation Bill In the context of fraud, a bill drawn without a genuine underlying commercial transaction.
Accountee Another name for the applicant/opener of a documentary credit i.e. the importer = the person for whose account the transaction is made.
Advice of Fate The Collecting Bank informs the Remitting Bank of non- payment/non-acceptance or (for D/A bills) of acceptance and the bill maturity date - see Handling Import Collections.
Advising Act of conveying the terms and conditions of a DC to the beneficiary. The advising bank is the issuing bank agent, usually located in the beneficiary country - see Export - DC Advising.
Advising also involves authentication i.e. advising bank should take reasonable care to check the apparent authenticity of the credit (ICC UCC 500 Art 7).
Amendment Alteration to the terms of a DC; amendments must stem from the applicant, be issued and advised to the beneficiary; the beneficiary has the right to refuse an amendment if the credit is irrevocable - see Amendments to DCs.
Applicant One who applies to his bank to issue a documentary credit; in the majority of credits issued the applicant is an importer of goods.
Avalise The act by a bank in guaranteeing payment of a bill of exchange or promissory note by endorsing the reverse with the words good per aval and signed by the bank, or by the issuance of a separate guarantee.
Back-to-Back Credit A credit issued against the security back of another credit (master credit) on the understanding that reimbursement will stem from documents eventually presented under the first credit (master credit) issued - see Special DCs. It follows therefore that each side of a B/B transaction covers the shipment of the same goods.
Beneficiary A payee or recipient, usually of money. A party in whose favour a documentary credit is established, usually the exporter.
Bill for Collection (BC) Document(s) or cheque submitted through a bank for collection of payment from the drawee.
Bill of Exchange (B/E) An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer.
Bill of Lading (B/L) A receipt for goods for shipment by sea. It is a Document of Title: see Documents.
Bill Receivable (BR) Bills which are financed by the receiving branch, whether drawn under a DC or not, are treated as BRs by both the remitting branch and the receiving branches - see Bills Receivable.
Blank Endorsed When a bill of lading is made out to order or shipper order and the shipper has signed on the back of it, it is said to be blank endorsed. The bill of lading then becomes a bearer instrument and the holder can present it to the shipping company to take delivery of the goods.
Carrier Person or company undertaking for hire the conveyance of goods e.g. shipping company
Case of Need Agent nominated by a principal, to whom the collecting bank may refer in specified circumstances concerning collections - see the sections on Collections.
Chaser Reminder sent by the collecting (or DC issuing) bank to the importer, repeating a request for payment - see Handling Import Collections.
Clean Used to describe a draft/cheque with no shipping documents - see Collections Introduction.
Used to describe a bill of lading without clauses that expressly declare a defective condition of the goods or the packing.
Clean Bill Purchased A collection bill purchased with no shipping Purchase documents - see Financing Export Collections.
Clean Bill Receivable (CBR) BR (Bill Receivable) with no shipping documents. The term is more often used for non-trade bills such as travellers cheques.
Clean Collection A draft with no documents Collection attached –
Clean Import Loan (CIL) A loan granted to an importer for payment of import bills, without the Bank having any claim to the goods.
Collection Bank Bank in the drawee country that is instructed to collect payment from the drawee - see Collections Introduction.
Collection Order Form submitted, with documents, to the Remitting/Negotiating Bank by an exporter with his instructions - see Collections Introduction.
Confirming Act of a bank other than the issuing bank assuming the liability for payment, acceptance or negotiation of correctly presented documents under a DC -
Consignee The person/company/bank to whom the goods are delivered - usually the importer or the Collecting Bank - see Handling Import Collections.
Consignor Also called shipper, is the person/company who sends goods by ship, by land or air.
Contingent Liability A liability that arises only under specified conditions, e.g. when a bank opens a DC it incurs an obligation to make a future payment on condition that the terms are fully met.
DC Bills Bills drawn under documentary credits.
Deferred Payment Credit (DPC) A DC which allows the nomination of a bank, or the issuing bank to effect payment against stipulated documents at a maturity date as specified or determinable from the wording of the credit.
Demurrage A charge made by a shipping company or a port authority for failure to load or remove goods within the time allowed.
Discounting Act of purchasing an accepted usance bill of exchange at an amount less than the face value.
Discrepancy Any deviation from the terms and conditions of a DC, or the documents presented thereunder, or any inconsistency between the documents themselves - see Negotiation under DCs.
Dishonour Non-payment or non-acceptance.
Documentary Credit (DC) A conditional undertaking by a bank to make payment, often abbreviated to credit. More precisely, it is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request of the buyer (applicant) to pay a sum of money against presentation of documents complying with the terms of the credit within a set time limit.
Documents The characteristics and importance of the various documents associated with Import/Export operations are explained and illustrated in Deciding on Documents.
Documents Against Acceptance (D/A) Instruction for commercial documents to be released to the drawee on acceptance of the Bill of Exchange -.
Documents Against Payment (D/P) Instruction for documents to be released to the drawee only on payment –
.
Documents of Title Documents that give their owner the right to the goods, i.e. Bill of Lading.
Draft Bill of exchange issued by an exporter and submitted to his bank for collection, or under a DC - usually submitted with attached shipping documents - not to be confused with a bankers draft which is sometimes used as a vehicle for reimbursement.
Drawee Party on whom a bill is drawn and the one to whom presentation is to be made according to the collection order - the importer (NB: for DC bills, the drawee is usually the DC issuing bank).
Drawer The exporter, who draws the Bill of Exchange/draft which in itself is a claim for payment.
Due Date Maturity date for payment
Expiry Date Latest date, usually in the country of the beneficiary, on which negotiation/payment of a DC can take place.
Financed Bills Bills sent on collection in which the remitting branch has a financial interest.
Foreign Bill Purchased (FBP) A bill remitted to a correspondent bank in which the remitting branch is financing the exporter - see Financing Export Collections.
Forward Exchange Contract Contract between the Bank and its customer to buy/sell a fixed amount of foreign currency at a future date at a specified rate. This could be for a customer to make payment under a DC or to sell the proceeds received from an export negotiation.
Freight Goods OR the cost of transporting goods.
General Average Loss which is the result of a sacrifice voluntarily made or an expense incurred; for the sole purpose of saving a ship and its cargo in face of a common danger (e.g. jettison of cargo to lighten a ship in distress). The loss is borne proportionately by ship and cargo owners according to their respective interests in the voyage.
Gross Weight The weight of the merchandise in its shipping form, i.e. including all its packaging.
ICC 322 Uniform Rules for Collections
ICC 323 Standard Forms for Issuing Documentary Credits
ICC 420 Guide to the Prevention of International Trade Fraud.
ICC 460 Incoterms 1990. Explains the 13 standard Incoterms.
ICC 500 Uniform Customs and Practice for Documentary Credits (1993 revision) replaced the previous ICC 400 as from 1 January 1994.
ICC 522 Uniform Customs and Practice for Documentary Credits (1995 revision) replaced the previous ICC 322 as from 1 January 1996.
Import License A permit issued by the importing country's authorities in respect of goods subject to import licensing restrictions.
Incoterms Shipping Terms - see "Introduction to International Trade.
Indemnity Also known as Letter of Guarantee (L/G), it is an undertaking given in respect of discrepancies in documents presented under a credit. The beneficiary who issues the indemnity is primarily liable to repay funds received from the negotiating bank in settlement under the credit, if the negotiating bank cannot obtain reimbursement from the issuing bank as a result of documents being rejected by the applicant.
Inherent Vice The propensity of a commodity to self-destruction which gives rise to a high insurance risk, therefore cover is given only after payment of an additional premium (e.g. fruit rots, coal-dust spontaneously ignites).
International Chamber of Commerce (ICC) The international body which promotes and facilitates world trade, and which codifies world trade practices in various publications –
Irrevocable Credit Constitutes a definite undertaking of the issuing bank and the confirming bank, if any, to honour the credit provided the terms of the credit are observed. It may be advised to the beneficiary without engagement by the advising bank, and cannot be amended or cancelled unless the issuing bank, the confirming bank and the beneficiary agree.
Issuing Bank The bank that opens a documentary credit at the request of its customer, the applicant.
Letter of Credit (L/C) American term for documentary credit. In the United States, the terms D/C can often be confused for documentary collection.
Letter of Hypothecation A promise to hold goods as security taken from customers who are granted loans against goods imported on a collection basis.
Loan Against Imports (LAI) Loans granted to import customers for payment of bills.
Master Credit In back-to-back operations, the original export credit against which the second credit is opened
Maturity Due date of payment of a usance bill or promissory note.
Negotiable/Non-Negotiable Usually used with regard to Bills of Lading: a negotiable B/L is a valid document of title, while a non-negotiable B/L is not - the beneficiary of a DC (the exporter) may send the importer a non-negotiable B/L for information.
Negotiation Purchase of drafts under a documentary credit which the issuing bank has undertaken to pay.
Net Weight The weight of the merchandise before any packaging.
Non-DC Bills Bills not drawn under DC i.e. sent on a collection basis (D/P or D/A). In common usage we distinguish between Non DC bills which are financed collections and DCs which are non-financed.
Non-Financed Bills Bills sent on collection in which the remitting branch has no financial interest.
Noting The first stage in protest of a dishonoured bill: if instructed to protest for non-payment/non- acceptance, the collecting bank must send the bill to a notary public who will represent it to the drawee on the same day it was refused, or the next business day. If the drawee still refuses the bill the notary public notes on the bill: the amount of his charges, the date and his initials. The reason for refusal is shown on a note attached to the bill. The bill is then protested - see Protest.
Opener See Applicant.
Opening Bank See Issuing Bank.
Order (To) The phrase To Order is sometimes shown on Bills of Lading against consignee: this means that the Bill of Lading must be endorsed in blank by the shipper (i.e. not to any particular named party which makes it bearer document and it becomes transferable by delivery.)
Packing Credit A loan given to the beneficiary by the bank to enable him to purchase raw materials. The beneficiary is usually requested to deposit the DC with the bank as security.
Past Due Bill or loan that has not been paid on the maturity date/due date.
Paying Bank The bank that makes payment to the beneficiary of a payment DC after presentation to it of documents stipulated in the DC.
Perils of the Seas They are accidents or casualties of the sea. The ordinary actions of the winds and waves are not included. Heavy or tempestuous weather on a voyage is of sufficient violence to constitute a peril of the sea.
Power of Attorney Authority given to one party to act for another.
Presentation Act of requesting the importer's payment/acceptance of an import bill. - See Handling Import Collections.
Presenting Bank The bank that requests payment of a collection bill - may be the Collecting Bank or its nominated branch or local correspondent, which is better placed to contact the importer.
Principal The exporter in collection transactions, being the initiator of the transaction, whose instructions are followed at all stages (may be used to refer to any customer who initiates a transaction e.g. the opener of a DC).
Promissory Note A signed statement containing a written promise to pay a stated sum to specified person at a specified date or on demand.
Protest The formal representation of a dishonoured bill of exchange: the bill is presented by a notary public to the drawee - if refused again, it is noted" - see noting. The notary public then issues a formal protest, an official certificate that the bill has been refused: the drawer can use this certificate to sue the drawee in court.
Recourse The right to claim a refund from another party which has handled a bill at an earlier stage.
Red Clause Credit A credit with a clause which authorises the advising bank to make an advance payment to the beneficiary - see special DCs.
Reimbursing Bank The bank nominated by the DC issuing bank that will pay the value of the DC to the negotiating/paying bank.
Remitting Bank The exporter's bank in collection transactions, which remits the bill to the collecting bank.
The exporter's bank in DC transactions, which dispatches the documents to the issuing bank.
Retirement The act of paying or settling an outstanding bill or import loan; i.e. payment by the importer to the Bank.
Revocable Credit One that may be amended or cancelled without notice to the beneficiary.
Revolving Credit A credit automatically reinstated after each drawing or upon receipt of authorisation from DC issuing bank, with limits as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing - see Special DCs.
Schedule The Remitting/Negotiating Bank's letter covering a bill sent to the Collecting/Issuing Bank, which lists the documents attached and gives collection and/or payment instructions.
Self-Liquidating A transaction is said to be self-liquidating when there is a known source of funds available for its settlement on due date.
Shipment Date The date inserted on the bills of lading evidencing goods received on board is regarded for documentary credit purposes as being the date of shipment.
Shipper See consignor
Shipping Guarantee (SG) Guarantees of this nature are required to enable customers to obtain goods before the arrival of the documents of title, and are issued to the shipping companies by the Bank against an undertaking to forward the bills of lading when they are received. The Bank normally take 100% cash margin against the value of the goods if the customer does not have T/R facility.
Shipping Terms See Incoterms
Sight A bill payable at sight is payable on presentation to the drawee i.e. on demand.
Standby Credit This may be established as security for facilities granted at another branch or bank, usually to a subsidiary of the DC applicant. - see Special DCs.
Status Report Produced by a bank's TCI department or a credit information bureau, giving details of the creditworthiness and business background of traders and manufacturers.
Substitution The act whereby the prime beneficiary substitutes his own documents i.e. invoices and drafts, in back-to-back and transferable credit operations prior to negotiation of the master credits.
Tenor Term or Period of credit granted by the drawer. See Usance Bill.
Tracer See Chaser.
Trade and Credit Information (TCI) A bank department that prepares and distributes status reports on its own customers, and maintains records of traders and manufacturers with whom its customers deal.
Transferable Credit Permits the beneficiary to transfer all or some of the rights and obligations under the credit to a second beneficiary or beneficiaries - see Special DCs.
Transferee A party (2nd beneficiary) to whom a transferable credit is transferred in whole or in part.
Transferor A party (1st beneficiary) at whose request a transferable credit is transferred to a second beneficiary in whole or in part.
Usance Bill A Bill of Exchange which allows the drawee a term or period of credit (this period is also called usance).
The term is usually stated in days (e.g. 30 days) or months and starts either from the date of the bill (e.g. 30 days date) or from the date of bill of lading, or from sight by the drawee (e.g. 30 days sight) which in practice means from the date of acceptance.
An essential feature of acceptance credits and D/A collections.
Waive To relinquish a right: used in collections with BC charges and/or interest to be collected from the drawee: these can be waived in certain circumstances as set out in ICC 522.
Acceptance Credit A documentary credit which requires the beneficiary to draw a usance bill for subsequent acceptance by the issuing bank or the advising bank or any other bank as the credit stipulates - see Documentary Credits.
Accommodation Bill In the context of fraud, a bill drawn without a genuine underlying commercial transaction.
Accountee Another name for the applicant/opener of a documentary credit i.e. the importer = the person for whose account the transaction is made.
Advice of Fate The Collecting Bank informs the Remitting Bank of non- payment/non-acceptance or (for D/A bills) of acceptance and the bill maturity date - see Handling Import Collections.
Advising Act of conveying the terms and conditions of a DC to the beneficiary. The advising bank is the issuing bank agent, usually located in the beneficiary country - see Export - DC Advising.
Advising also involves authentication i.e. advising bank should take reasonable care to check the apparent authenticity of the credit (ICC UCC 500 Art 7).
Amendment Alteration to the terms of a DC; amendments must stem from the applicant, be issued and advised to the beneficiary; the beneficiary has the right to refuse an amendment if the credit is irrevocable - see Amendments to DCs.
Applicant One who applies to his bank to issue a documentary credit; in the majority of credits issued the applicant is an importer of goods.
Avalise The act by a bank in guaranteeing payment of a bill of exchange or promissory note by endorsing the reverse with the words good per aval and signed by the bank, or by the issuance of a separate guarantee.
Back-to-Back Credit A credit issued against the security back of another credit (master credit) on the understanding that reimbursement will stem from documents eventually presented under the first credit (master credit) issued - see Special DCs. It follows therefore that each side of a B/B transaction covers the shipment of the same goods.
Beneficiary A payee or recipient, usually of money. A party in whose favour a documentary credit is established, usually the exporter.
Bill for Collection (BC) Document(s) or cheque submitted through a bank for collection of payment from the drawee.
Bill of Exchange (B/E) An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer.
Bill of Lading (B/L) A receipt for goods for shipment by sea. It is a Document of Title: see Documents.
Bill Receivable (BR) Bills which are financed by the receiving branch, whether drawn under a DC or not, are treated as BRs by both the remitting branch and the receiving branches - see Bills Receivable.
Blank Endorsed When a bill of lading is made out to order or shipper order and the shipper has signed on the back of it, it is said to be blank endorsed. The bill of lading then becomes a bearer instrument and the holder can present it to the shipping company to take delivery of the goods.
Carrier Person or company undertaking for hire the conveyance of goods e.g. shipping company
Case of Need Agent nominated by a principal, to whom the collecting bank may refer in specified circumstances concerning collections - see the sections on Collections.
Chaser Reminder sent by the collecting (or DC issuing) bank to the importer, repeating a request for payment - see Handling Import Collections.
Clean Used to describe a draft/cheque with no shipping documents - see Collections Introduction.
Used to describe a bill of lading without clauses that expressly declare a defective condition of the goods or the packing.
Clean Bill Purchased A collection bill purchased with no shipping Purchase documents - see Financing Export Collections.
Clean Bill Receivable (CBR) BR (Bill Receivable) with no shipping documents. The term is more often used for non-trade bills such as travellers cheques.
Clean Collection A draft with no documents Collection attached –
Clean Import Loan (CIL) A loan granted to an importer for payment of import bills, without the Bank having any claim to the goods.
Collection Bank Bank in the drawee country that is instructed to collect payment from the drawee - see Collections Introduction.
Collection Order Form submitted, with documents, to the Remitting/Negotiating Bank by an exporter with his instructions - see Collections Introduction.
Confirming Act of a bank other than the issuing bank assuming the liability for payment, acceptance or negotiation of correctly presented documents under a DC -
Consignee The person/company/bank to whom the goods are delivered - usually the importer or the Collecting Bank - see Handling Import Collections.
Consignor Also called shipper, is the person/company who sends goods by ship, by land or air.
Contingent Liability A liability that arises only under specified conditions, e.g. when a bank opens a DC it incurs an obligation to make a future payment on condition that the terms are fully met.
DC Bills Bills drawn under documentary credits.
Deferred Payment Credit (DPC) A DC which allows the nomination of a bank, or the issuing bank to effect payment against stipulated documents at a maturity date as specified or determinable from the wording of the credit.
Demurrage A charge made by a shipping company or a port authority for failure to load or remove goods within the time allowed.
Discounting Act of purchasing an accepted usance bill of exchange at an amount less than the face value.
Discrepancy Any deviation from the terms and conditions of a DC, or the documents presented thereunder, or any inconsistency between the documents themselves - see Negotiation under DCs.
Dishonour Non-payment or non-acceptance.
Documentary Credit (DC) A conditional undertaking by a bank to make payment, often abbreviated to credit. More precisely, it is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request of the buyer (applicant) to pay a sum of money against presentation of documents complying with the terms of the credit within a set time limit.
Documents The characteristics and importance of the various documents associated with Import/Export operations are explained and illustrated in Deciding on Documents.
Documents Against Acceptance (D/A) Instruction for commercial documents to be released to the drawee on acceptance of the Bill of Exchange -.
Documents Against Payment (D/P) Instruction for documents to be released to the drawee only on payment –
.
Documents of Title Documents that give their owner the right to the goods, i.e. Bill of Lading.
Draft Bill of exchange issued by an exporter and submitted to his bank for collection, or under a DC - usually submitted with attached shipping documents - not to be confused with a bankers draft which is sometimes used as a vehicle for reimbursement.
Drawee Party on whom a bill is drawn and the one to whom presentation is to be made according to the collection order - the importer (NB: for DC bills, the drawee is usually the DC issuing bank).
Drawer The exporter, who draws the Bill of Exchange/draft which in itself is a claim for payment.
Due Date Maturity date for payment
Expiry Date Latest date, usually in the country of the beneficiary, on which negotiation/payment of a DC can take place.
Financed Bills Bills sent on collection in which the remitting branch has a financial interest.
Foreign Bill Purchased (FBP) A bill remitted to a correspondent bank in which the remitting branch is financing the exporter - see Financing Export Collections.
Forward Exchange Contract Contract between the Bank and its customer to buy/sell a fixed amount of foreign currency at a future date at a specified rate. This could be for a customer to make payment under a DC or to sell the proceeds received from an export negotiation.
Freight Goods OR the cost of transporting goods.
General Average Loss which is the result of a sacrifice voluntarily made or an expense incurred; for the sole purpose of saving a ship and its cargo in face of a common danger (e.g. jettison of cargo to lighten a ship in distress). The loss is borne proportionately by ship and cargo owners according to their respective interests in the voyage.
Gross Weight The weight of the merchandise in its shipping form, i.e. including all its packaging.
ICC 322 Uniform Rules for Collections
ICC 323 Standard Forms for Issuing Documentary Credits
ICC 420 Guide to the Prevention of International Trade Fraud.
ICC 460 Incoterms 1990. Explains the 13 standard Incoterms.
ICC 500 Uniform Customs and Practice for Documentary Credits (1993 revision) replaced the previous ICC 400 as from 1 January 1994.
ICC 522 Uniform Customs and Practice for Documentary Credits (1995 revision) replaced the previous ICC 322 as from 1 January 1996.
Import License A permit issued by the importing country's authorities in respect of goods subject to import licensing restrictions.
Incoterms Shipping Terms - see "Introduction to International Trade.
Indemnity Also known as Letter of Guarantee (L/G), it is an undertaking given in respect of discrepancies in documents presented under a credit. The beneficiary who issues the indemnity is primarily liable to repay funds received from the negotiating bank in settlement under the credit, if the negotiating bank cannot obtain reimbursement from the issuing bank as a result of documents being rejected by the applicant.
Inherent Vice The propensity of a commodity to self-destruction which gives rise to a high insurance risk, therefore cover is given only after payment of an additional premium (e.g. fruit rots, coal-dust spontaneously ignites).
International Chamber of Commerce (ICC) The international body which promotes and facilitates world trade, and which codifies world trade practices in various publications –
Irrevocable Credit Constitutes a definite undertaking of the issuing bank and the confirming bank, if any, to honour the credit provided the terms of the credit are observed. It may be advised to the beneficiary without engagement by the advising bank, and cannot be amended or cancelled unless the issuing bank, the confirming bank and the beneficiary agree.
Issuing Bank The bank that opens a documentary credit at the request of its customer, the applicant.
Letter of Credit (L/C) American term for documentary credit. In the United States, the terms D/C can often be confused for documentary collection.
Letter of Hypothecation A promise to hold goods as security taken from customers who are granted loans against goods imported on a collection basis.
Loan Against Imports (LAI) Loans granted to import customers for payment of bills.
Master Credit In back-to-back operations, the original export credit against which the second credit is opened
Maturity Due date of payment of a usance bill or promissory note.
Negotiable/Non-Negotiable Usually used with regard to Bills of Lading: a negotiable B/L is a valid document of title, while a non-negotiable B/L is not - the beneficiary of a DC (the exporter) may send the importer a non-negotiable B/L for information.
Negotiation Purchase of drafts under a documentary credit which the issuing bank has undertaken to pay.
Net Weight The weight of the merchandise before any packaging.
Non-DC Bills Bills not drawn under DC i.e. sent on a collection basis (D/P or D/A). In common usage we distinguish between Non DC bills which are financed collections and DCs which are non-financed.
Non-Financed Bills Bills sent on collection in which the remitting branch has no financial interest.
Noting The first stage in protest of a dishonoured bill: if instructed to protest for non-payment/non- acceptance, the collecting bank must send the bill to a notary public who will represent it to the drawee on the same day it was refused, or the next business day. If the drawee still refuses the bill the notary public notes on the bill: the amount of his charges, the date and his initials. The reason for refusal is shown on a note attached to the bill. The bill is then protested - see Protest.
Opener See Applicant.
Opening Bank See Issuing Bank.
Order (To) The phrase To Order is sometimes shown on Bills of Lading against consignee: this means that the Bill of Lading must be endorsed in blank by the shipper (i.e. not to any particular named party which makes it bearer document and it becomes transferable by delivery.)
Packing Credit A loan given to the beneficiary by the bank to enable him to purchase raw materials. The beneficiary is usually requested to deposit the DC with the bank as security.
Past Due Bill or loan that has not been paid on the maturity date/due date.
Paying Bank The bank that makes payment to the beneficiary of a payment DC after presentation to it of documents stipulated in the DC.
Perils of the Seas They are accidents or casualties of the sea. The ordinary actions of the winds and waves are not included. Heavy or tempestuous weather on a voyage is of sufficient violence to constitute a peril of the sea.
Power of Attorney Authority given to one party to act for another.
Presentation Act of requesting the importer's payment/acceptance of an import bill. - See Handling Import Collections.
Presenting Bank The bank that requests payment of a collection bill - may be the Collecting Bank or its nominated branch or local correspondent, which is better placed to contact the importer.
Principal The exporter in collection transactions, being the initiator of the transaction, whose instructions are followed at all stages (may be used to refer to any customer who initiates a transaction e.g. the opener of a DC).
Promissory Note A signed statement containing a written promise to pay a stated sum to specified person at a specified date or on demand.
Protest The formal representation of a dishonoured bill of exchange: the bill is presented by a notary public to the drawee - if refused again, it is noted" - see noting. The notary public then issues a formal protest, an official certificate that the bill has been refused: the drawer can use this certificate to sue the drawee in court.
Recourse The right to claim a refund from another party which has handled a bill at an earlier stage.
Red Clause Credit A credit with a clause which authorises the advising bank to make an advance payment to the beneficiary - see special DCs.
Reimbursing Bank The bank nominated by the DC issuing bank that will pay the value of the DC to the negotiating/paying bank.
Remitting Bank The exporter's bank in collection transactions, which remits the bill to the collecting bank.
The exporter's bank in DC transactions, which dispatches the documents to the issuing bank.
Retirement The act of paying or settling an outstanding bill or import loan; i.e. payment by the importer to the Bank.
Revocable Credit One that may be amended or cancelled without notice to the beneficiary.
Revolving Credit A credit automatically reinstated after each drawing or upon receipt of authorisation from DC issuing bank, with limits as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing - see Special DCs.
Schedule The Remitting/Negotiating Bank's letter covering a bill sent to the Collecting/Issuing Bank, which lists the documents attached and gives collection and/or payment instructions.
Self-Liquidating A transaction is said to be self-liquidating when there is a known source of funds available for its settlement on due date.
Shipment Date The date inserted on the bills of lading evidencing goods received on board is regarded for documentary credit purposes as being the date of shipment.
Shipper See consignor
Shipping Guarantee (SG) Guarantees of this nature are required to enable customers to obtain goods before the arrival of the documents of title, and are issued to the shipping companies by the Bank against an undertaking to forward the bills of lading when they are received. The Bank normally take 100% cash margin against the value of the goods if the customer does not have T/R facility.
Shipping Terms See Incoterms
Sight A bill payable at sight is payable on presentation to the drawee i.e. on demand.
Standby Credit This may be established as security for facilities granted at another branch or bank, usually to a subsidiary of the DC applicant. - see Special DCs.
Status Report Produced by a bank's TCI department or a credit information bureau, giving details of the creditworthiness and business background of traders and manufacturers.
Substitution The act whereby the prime beneficiary substitutes his own documents i.e. invoices and drafts, in back-to-back and transferable credit operations prior to negotiation of the master credits.
Tenor Term or Period of credit granted by the drawer. See Usance Bill.
Tracer See Chaser.
Trade and Credit Information (TCI) A bank department that prepares and distributes status reports on its own customers, and maintains records of traders and manufacturers with whom its customers deal.
Transferable Credit Permits the beneficiary to transfer all or some of the rights and obligations under the credit to a second beneficiary or beneficiaries - see Special DCs.
Transferee A party (2nd beneficiary) to whom a transferable credit is transferred in whole or in part.
Transferor A party (1st beneficiary) at whose request a transferable credit is transferred to a second beneficiary in whole or in part.
Usance Bill A Bill of Exchange which allows the drawee a term or period of credit (this period is also called usance).
The term is usually stated in days (e.g. 30 days) or months and starts either from the date of the bill (e.g. 30 days date) or from the date of bill of lading, or from sight by the drawee (e.g. 30 days sight) which in practice means from the date of acceptance.
An essential feature of acceptance credits and D/A collections.
Waive To relinquish a right: used in collections with BC charges and/or interest to be collected from the drawee: these can be waived in certain circumstances as set out in ICC 522.
Friday, March 9, 2007
Import of Goods and Services -Indian regulations
Import of Goods and Services
• RBI/2006-07/26 Master Circular No. /08 /2006-07 July 1, 2006
• Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. GSR 381(E) dated May 3, 2000
IMPORT OF GOODS
• A.1 GENERAL A.2 FORM A-1 A.3 IMPORT LICENSES A.4 OBLIGATION OF PURCHASER OF FOREIGN EXCHANGE A.5 TIME LIMIT FOR SETTLEMENT OF IMPORT PAYMENTS A.6 ADVANCE REMITTANCE
• A.7 INTEREST ON IMPORT BILLS A.8 REMITTANCES AGAINST REPLACEMENT IMPORTS A.9 GUARANTEE FOR REPLACEMENT IMPORT
• A.10 EVIDENCE OF IMPORT A.11 FOLLOW UP FOR IMPORT EVIDENCE
• A.12 RECEIPT OF IMPORT BILLS/DOCUMENTS A.13 (I) IMPORT OF GOLD/PLATINUM/SILVER BY NOMINATED BANKS/AGENCIES
• A.13 (II) DIRECT IMPORT OF GOLD A.13 (III) GOLD LOANS
• A.14 IMPORT FACTORING
MERCHANTING TRADE
IMPORT OF CURRENCY
Import of Goods and Services
• regulated by the Directorate General of Foreign Trade (DGFT) under Ministry of Commerce & Industry, Department of Commerce
• FEMA (Current Account Transactions) Rules, 2000 No. G.S.R.381 (E) dated May 3, 2000
• Uniform Customs and Practices for Documentary Credits (UCPDC)
• Research & Development Cess Act, 1986 -for import of drawings and designs
• provisions of Income Tax Act, wherever applicable
• particularly note to adhere to "Know Your Customer" (KYC)
• guidelines issued by Reserve Bank (Department of Banking Operations & Development)
• Foreign Trade Policy 2004-2009
• Public Notice No.28/ 2004-09 dated December 1, 2004.
• DBOD.AML.BC.18/14.01.001/2002-03, Dated August 16, 2002,
• Applications for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made to AD on Form A-1
• freely open letters of credit and allow remittances for import of goods unless they are included in the negative list
• licences marked ‘For Exchange Control purposes’ should be called for and special conditions, if any, attached to such licences adhered to
• 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 under Section 10(5) of the Act
• Where foreign exchange acquired has been utilised for import of goods , the importer furnishes an evidence of import to his satisfaction ie BEF
• permitted methods of payment for imports .. FEMA14/2000-RB dated 3rd May 2000
• payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India
• remittances against imports should be completed not later than six months from the date of shipment
• 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
• Remittances against import of books may be allowed without restriction as to time limit, provided, interest payment, if any is duly taken care of ..
• allow advance remittance for import of goods without any ceiling ..!
• 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
• the importer unable to obtain bank guarantee (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Governments) the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances upto USD 1,000,000 as per a suitable policy framed by the bank's Board
• Public Sector Company or a Department/Undertaking of the Central/State Government/s is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance
• The remittance is made directly to the supplier or manufacturer of the goods and not to any third party or to a numbered account
• Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance
• importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period.
• In the event of non-import of goods advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible
• interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the rates prescribed in the Master Circular on trade credits
• pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR
• Where goods are short-supplied, damaged, short-landed or lost in transit , 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
• replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD banks may issue guarantees at the request of importer client for despatch/return of the defective goods
• where value of foreign exchange remitted/paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory to ensure that the importer submits
– Exchange Control copy of the Bill of Entry for home consumption
– Exchange Control copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units
– Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities
– If imports are made in non-physical form, i.e., software certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer
– For imports on D/A basis insist on evidence of import at the time of effecting remittance of import bill
• AD banks may allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import
• Exchange Control copy of Bill of Entry for home consumption or 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 into India provided
– less than USD 1,000,000
– importer is a company listed on a stock exchange in India , net worth is not less than Rs.100 crores
– the importer is a public sector company or an undertaking of the Government
• If importer does not furnish, evidence of import , , within 3 months from the date of remittance , > USD 100,000 , exceeding USD100,000, the AD bank should rigorously follow-up for the next 3 months , should forward to Reserve Bank a statement on half-yearly basis as at the end of June & December of every year, in form BEF , for non submission within 6 months from the date of remittance, , within 15 days from the close of the half-year to which the statement relates
• Import bills and documents should be received from the banker of the supplier by the banker of the importer in India
• AD banks should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases
– of import bill does not exceed USD 100,000
– received by wholly-owned Indian subsidiaries of foreign companies from their principals
– received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Free Trade Zones, Public Sector Undertakings and Limited Companies
– received by all limited companies viz. public limited, deemed public limited and private limited companies
• AD banks may receive bills direct from the overseas supplier as above but AD bank should obtain report on each individual overseas supplier from the overseas banker or reputed credit agency
• Gold/ Platinum/ Silver may be imported by the nominated agencies/banks on consignment basis where the ownership will remain with the supplier . Remittances towards the cost of import shall be made as and when sales take place and in terms of the provisions of agreement
• The nominated agency/bank may import Gold/ Platinum/ Silver on outright purchase basis subject to the condition that although ownership of the gold shall be passed on to the importer at the time of import itself, the price of gold shall be fixed later, as and when the importer sells the gold to the users
• AD banks can open Letters of Credit and allow remittances on behalf of EOUs, units in SEZs in the Gem & Jewellery sector and nominated agencies, for direct import of gold, subject to the following
– strictly in accordance with the Foreign Trade Policy.
– Suppliers’ and Buyers’ Credit, including the usance period of LCs opened for direct import of gold, should not exceed 90 days
– Any large or abnormal increase in the volume of business of the importer should be closely examined to ensure that the transactions are bonafide trade transactions
– the credentials of the supplier should also be ascertained before opening the LCs
– required to submit as per the format enclosed at Annex-2, a monthly statement thereof, to the Trade Division, Foreign Exchange Department, Amar Building, Central Office, Reserve Bank of India, Sir P.M. Road, Fort, Mumbai 400001
• Nominated agencies / approved banks can import gold on loan basis for on lending to exporters of jewellery under this scheme. On the other hand EOUs and units in SEZ who are in the Gem and Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own account only
• maximum tenor of gold loan is 240 days at present
• Standby Letters of Credit (SBLC), for import of gold on loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003 , usance period not exceeding 90 days
Importing 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 Management (Export and Import of Currency) Regulations 2000, made by Reserve Bank vide Notification No.FEMA 6/RB- 2000 dated May 3, 2000 and No.FEMA 38/RB-2001 dated February 27, 2001.
• AD banks may take necessary precautions in handling merchanting trade transactions or intermediary trade transactions to ensure that
• (a) Goods involved in the transactions are permitted to be imported into India,
• (b) Such transactions do not involve foreign exchange outlay for a period exceeding three months, and
• (c) All rules, regulations and directions applicable to export (except Export Declaration Form) and import (except Bill of Entry) are complied with for the export leg and import leg, respectively, of the merchanting trade transactions.
• (d) Payment is received in time for the export leg.
– The liability for the import leg of the transaction is extinguished by the payment received for the export leg of the transaction, without any delay and
– The entire merchant trade transaction is completed within a period of 6 months.
• Short-term credit either by way of suppliers' credit or buyers' credit is not available for merchanting trade or intermediary trade transactions
• RBI/2006-07/26 Master Circular No. /08 /2006-07 July 1, 2006
• Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. GSR 381(E) dated May 3, 2000
IMPORT OF GOODS
• A.1 GENERAL A.2 FORM A-1 A.3 IMPORT LICENSES A.4 OBLIGATION OF PURCHASER OF FOREIGN EXCHANGE A.5 TIME LIMIT FOR SETTLEMENT OF IMPORT PAYMENTS A.6 ADVANCE REMITTANCE
• A.7 INTEREST ON IMPORT BILLS A.8 REMITTANCES AGAINST REPLACEMENT IMPORTS A.9 GUARANTEE FOR REPLACEMENT IMPORT
• A.10 EVIDENCE OF IMPORT A.11 FOLLOW UP FOR IMPORT EVIDENCE
• A.12 RECEIPT OF IMPORT BILLS/DOCUMENTS A.13 (I) IMPORT OF GOLD/PLATINUM/SILVER BY NOMINATED BANKS/AGENCIES
• A.13 (II) DIRECT IMPORT OF GOLD A.13 (III) GOLD LOANS
• A.14 IMPORT FACTORING
MERCHANTING TRADE
IMPORT OF CURRENCY
Import of Goods and Services
• regulated by the Directorate General of Foreign Trade (DGFT) under Ministry of Commerce & Industry, Department of Commerce
• FEMA (Current Account Transactions) Rules, 2000 No. G.S.R.381 (E) dated May 3, 2000
• Uniform Customs and Practices for Documentary Credits (UCPDC)
• Research & Development Cess Act, 1986 -for import of drawings and designs
• provisions of Income Tax Act, wherever applicable
• particularly note to adhere to "Know Your Customer" (KYC)
• guidelines issued by Reserve Bank (Department of Banking Operations & Development)
• Foreign Trade Policy 2004-2009
• Public Notice No.28/ 2004-09 dated December 1, 2004.
• DBOD.AML.BC.18/14.01.001/2002-03, Dated August 16, 2002,
• Applications for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made to AD on Form A-1
• freely open letters of credit and allow remittances for import of goods unless they are included in the negative list
• licences marked ‘For Exchange Control purposes’ should be called for and special conditions, if any, attached to such licences adhered to
• 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 under Section 10(5) of the Act
• Where foreign exchange acquired has been utilised for import of goods , the importer furnishes an evidence of import to his satisfaction ie BEF
• permitted methods of payment for imports .. FEMA14/2000-RB dated 3rd May 2000
• payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India
• remittances against imports should be completed not later than six months from the date of shipment
• 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
• Remittances against import of books may be allowed without restriction as to time limit, provided, interest payment, if any is duly taken care of ..
• allow advance remittance for import of goods without any ceiling ..!
• 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
• the importer unable to obtain bank guarantee (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Governments) the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances upto USD 1,000,000 as per a suitable policy framed by the bank's Board
• Public Sector Company or a Department/Undertaking of the Central/State Government/s is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance
• The remittance is made directly to the supplier or manufacturer of the goods and not to any third party or to a numbered account
• Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance
• importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period.
• In the event of non-import of goods advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible
• interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the rates prescribed in the Master Circular on trade credits
• pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR
• Where goods are short-supplied, damaged, short-landed or lost in transit , 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
• replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD banks may issue guarantees at the request of importer client for despatch/return of the defective goods
• where value of foreign exchange remitted/paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory to ensure that the importer submits
– Exchange Control copy of the Bill of Entry for home consumption
– Exchange Control copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units
– Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities
– If imports are made in non-physical form, i.e., software certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer
– For imports on D/A basis insist on evidence of import at the time of effecting remittance of import bill
• AD banks may allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import
• Exchange Control copy of Bill of Entry for home consumption or 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 into India provided
– less than USD 1,000,000
– importer is a company listed on a stock exchange in India , net worth is not less than Rs.100 crores
– the importer is a public sector company or an undertaking of the Government
• If importer does not furnish, evidence of import , , within 3 months from the date of remittance , > USD 100,000 , exceeding USD100,000, the AD bank should rigorously follow-up for the next 3 months , should forward to Reserve Bank a statement on half-yearly basis as at the end of June & December of every year, in form BEF , for non submission within 6 months from the date of remittance, , within 15 days from the close of the half-year to which the statement relates
• Import bills and documents should be received from the banker of the supplier by the banker of the importer in India
• AD banks should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases
– of import bill does not exceed USD 100,000
– received by wholly-owned Indian subsidiaries of foreign companies from their principals
– received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Free Trade Zones, Public Sector Undertakings and Limited Companies
– received by all limited companies viz. public limited, deemed public limited and private limited companies
• AD banks may receive bills direct from the overseas supplier as above but AD bank should obtain report on each individual overseas supplier from the overseas banker or reputed credit agency
• Gold/ Platinum/ Silver may be imported by the nominated agencies/banks on consignment basis where the ownership will remain with the supplier . Remittances towards the cost of import shall be made as and when sales take place and in terms of the provisions of agreement
• The nominated agency/bank may import Gold/ Platinum/ Silver on outright purchase basis subject to the condition that although ownership of the gold shall be passed on to the importer at the time of import itself, the price of gold shall be fixed later, as and when the importer sells the gold to the users
• AD banks can open Letters of Credit and allow remittances on behalf of EOUs, units in SEZs in the Gem & Jewellery sector and nominated agencies, for direct import of gold, subject to the following
– strictly in accordance with the Foreign Trade Policy.
– Suppliers’ and Buyers’ Credit, including the usance period of LCs opened for direct import of gold, should not exceed 90 days
– Any large or abnormal increase in the volume of business of the importer should be closely examined to ensure that the transactions are bonafide trade transactions
– the credentials of the supplier should also be ascertained before opening the LCs
– required to submit as per the format enclosed at Annex-2, a monthly statement thereof, to the Trade Division, Foreign Exchange Department, Amar Building, Central Office, Reserve Bank of India, Sir P.M. Road, Fort, Mumbai 400001
• Nominated agencies / approved banks can import gold on loan basis for on lending to exporters of jewellery under this scheme. On the other hand EOUs and units in SEZ who are in the Gem and Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own account only
• maximum tenor of gold loan is 240 days at present
• Standby Letters of Credit (SBLC), for import of gold on loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003 , usance period not exceeding 90 days
Importing 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 Management (Export and Import of Currency) Regulations 2000, made by Reserve Bank vide Notification No.FEMA 6/RB- 2000 dated May 3, 2000 and No.FEMA 38/RB-2001 dated February 27, 2001.
• AD banks may take necessary precautions in handling merchanting trade transactions or intermediary trade transactions to ensure that
• (a) Goods involved in the transactions are permitted to be imported into India,
• (b) Such transactions do not involve foreign exchange outlay for a period exceeding three months, and
• (c) All rules, regulations and directions applicable to export (except Export Declaration Form) and import (except Bill of Entry) are complied with for the export leg and import leg, respectively, of the merchanting trade transactions.
• (d) Payment is received in time for the export leg.
– The liability for the import leg of the transaction is extinguished by the payment received for the export leg of the transaction, without any delay and
– The entire merchant trade transaction is completed within a period of 6 months.
• Short-term credit either by way of suppliers' credit or buyers' credit is not available for merchanting trade or intermediary trade transactions
Export of Goods and Services -Indian regularions
Export of Goods and Services
RBI/2006-07/27 Master Circular No/09/2006-07 July 1, 2006
SECTION A: GENERAL
SECTION B – GR/ SDF / PP / SOFTEX PROCEDURE
SECTION C –OBLIGATIONS OF AUTHORISED DEALER BANKS
SECTION D – REMITTANCES CONNECTED WITH EXPORT
A.1 Trade and Foreign Exchange Regulations
Section 7 and section 47 of the Foreign Exchange Management Act 1999 (42 of 1999)
Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
Notification No. GSR 381(E) dated May 3, 2000 and
FEMA Notification 23/RB-2000 dated May 3, 2000
Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA 14/2000-RB dated May 3, 2000.
Notification No. FEMA 47/2001-RB dated December 5, 2001
A.P. (DIR Series) Circular No. 32 dated 21st April 2006
A.2 Exemptions from Declarations
exempted from submission of declaration in the prescribed format for exports of value not exceeding US $ 25,000 eqvt
exporters shall be liable to realise and repatriate export proceeds
Gift of goods exceeding Rupees Five lakhs -RBI Approval rqd
May grant GR Waiver for exporters for export of goods free of cost, for export promotion up to 2 percent of the three years average annual exports , subject to a ceiling of Rs.5 lakhs and Rs.10 lakhs for status holders
Export of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP
A.3 Numbering of Forms
GR, PP and SOFTEX forms will bear specific identification numbers ,
the port code number and shipping bill number should be cited inSDF
A. 4 Manner of Payment
full export value of the goods exported shall be received through an Authorised Dealer
a. Bank draft, pay order, banker’s or personal cheques.
b.Foreign currency notes/foreign currency TCs
c.Payment out of funds held in the FCNR/NRE account
d.International Credit Cards
GR/SDF (duplicate) should be released by the AD banks only on receipt of funds in Nostro
e.Between person resident in India and a person resident in Nepal may be settled in Indian Rupees
f.Precious metals i.e. Gold / Silver / Platinum by the Gem & Jewellery units in SEZs and EOUs in equivalent to value of jewellery exported
A. 5 Guarantees against Exports
obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters
A.6 Accounts in Foreign Currency
general permission for Participants in international exhibition/trade fair for opening a temporary foreign currency account abroad , balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair .
Reserve Bank may consider applications , thru Authorised Dealer bank in India ,in Form EFC from exporters having good track record for opening a foreign currency account , giving details of the bank with which the account will be maintained abroad.
An Indian entity has also been permitted to open, hold and maintain in the name of its office/branch set up outside India, a foreign currency account with a bank outside by making remittance for the purpose of normal business operations
project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India subject to P E M
(II) Diamond Dollar Account
Firms permitted to transact their business through Diamond Dollar Accounts and may be allowed to open not more than five Diamond Dollar Accounts with their banks, with RBI permission, if at least three years in import or export of diamonds and having an average annual turnover of Rs. 5 crores or above .
(III) Exchange Earners’ Foreign Currency (EEFC) Account
A person resident in India may open Exchange Earners’ Foreign Currency (EEFC) Account, with AD, in the form of non-interest bearing current account , and no credit facilities granted against the balance held as security.
Eligible credits are , inward remittance , foreign currency loan raised or investment received from outside , received in foreign exchange by a unit in (DTA) for supplying goods to a unit in SEZ out of its Foreign currency
is 100 Pct for Status Holder Exporter , professional services in his personal capacity , 100% EOU, EPZ, STP, EHTP
and 50 per cent for all other persons resident in India
exporter constituents to extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling
permit exporters to repay packing credit advances whether availed in Rupee or in foreign currency from balances in their EEFC
A.7 Setting Up Offices Abroad and Acquisition of Immovable Property for Overseas Offices
remittances allowed up to 10 per cent for initial and up to 5 per cent for recurring expenses of the average annual sales / income or turnover during last two accounting years ,for normal business operations Provided should not Create any financial liabilities contingent or otherwise for the head office in India , Invest surplus funds abroad without prior RBI approval , and bank account details are reported to RBI
overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each ‘off-site’ contract as also at least 30 per cent of the contract value of each ‘on-site’ contract.
Prior permission of RBI , to acquire immovable property outside India
A.8 Counter-Trade Arrangement
adjustment of value of goods imported into India against value of goods exported , arrangement voluntarily entered , through an Escrow Account opened in India in U.S. dollar , will be allowed by RBI, when applied thru AD, provided invoiced in Intl Prices, no interest on escrow a/c balances,surplus may be invested in term deposit for 3 months only in any year.
A.9 Export of Goods on Lease, Hire, etc
Prior RBI approval required for export of machinery, equipment, etc., on lease, hire, etc , against collection of lease rentals/hire charges and ultimate re-import
A.10 GR Approval for Export
Participants of Trade Fair/Exhibition abroad are now permitted to take/export goods for exhibition and sale ,
Unsold exhibit items may be sold outside the Fair, at discounted values ,
permissible to `gift' unsold goods up to the value of US $ 5000 per exporter, per exhibition
AD may approve GR Form of export items for display or display-cum-sale in trade fairs provided …
exporter shall produce relative Bill of Entry within one month of re-import of unsold items, sale proceeds of the items sold are repatriated to India , method of disposal of all items exported, as well as the repatriation is reported to AD, subject to 100 per cent audit by their internal inspectors/auditors
GR waiver may be granted, for, Export of Goods for re-import after repairs / maintenance / testing / calibration etc, subject to exporter shall produce relative Bill of Entry within one month of re-import of the exported item and if destroyed during testing obtain a suitable certificate issued by the testing agency
A. 11 Project Exports and Service Exports
Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’
Should obtain the approval of the Authorised Dealer /Exim Bank/Working Group at post-award stage before undertaking execution of such contracts.
Memorandum on Project Exports (PEM).
A. 12 Export on Elongated Credit Terms
submit their proposals giving particulars through their banks to RBI
export of books on consignment basis , allowing for realisation of export proceeds up to 360 days from the date of shipment , allowed to abandon the books which remain unsold at the expiry of the period of the sale contract ,and evidence in Account Sales
A. 13 Export of goods by Special Economic Zones (SEZs)
permitted to undertake job work abroad and export goods from that country itself, if charges are suitably loaded in the export price and arrangements for realisation of full export proceeds is done
units in DTAs Permitted to purchase foreign exchange for making payment for goods supplied to them by units in SEZs
A. 14 Forfaiting
B.1 Export Declaration Form
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 (denoting the code number of the port of shipment, the calendar year and a six- digit running serial number )on both the copies after admitting the corresponding shipping bill
Customs will certify the value declared by the exporter , 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 for examination of the goods and certifying the quantity passed for shipment
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 bank named in the GR form
Bank should report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return , of bills handled
B.2 SDF Forms
Electronic Data Interchange (EDI) System at certain Customs , GR form is replaced by a declaration in form SDF
one copy of the shipping bill marked ‘Exchange Control Copy’ in which form SDF has been appended for being submitted to the Authorised Dealer bank within 21 days from the date of export
B. 3. A. PP 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 bank (after ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import with instructions to deliver against payment or acceptance )
B. 3. B. Counter Signature on PP Forms
Banks may countersign PP forms covering parcels addressed direct to the consignees, provided
An irrevocable letter of credit for the full value of the export has been opened in favour of the exporter and has been advised through the Authorised Dealer bank concerned
Or The full value of the shipment has been received in advance
Or satisfactory arrangements made for realisation of the export proceeds on basis of the standing and track record of the exporter
Any alteration in the name and address of consignee on the PP form should also be authenticated by the AD
B.4. Disposal of SOFTEX Forms
Regulation 6 of Export Regulations
random check of the relevant duplicate forms by their internal / concurrent auditors
non-realisation or short realisation allowed , should be within the powers delegated , or with prior approval of RBI
export declaration (duplicate) form may be duly certified , Where a part of the export proceeds are credited to an EEFC
B.5. Terms of Payment - Invoicing - (Software)
Exporters should bill their overseas clients periodically, i.e., at least once a month or on reaching the ‘milestone’ as provided in the contract entered into with the overseas client and the last invoice / bill should be raised not later than 15 days from the date of completion of the contract and can submit a combined SOFTEX form for all the invoices raised
For ‘one-shot operation’, the invoice/bill should be raised within 15 days from the date of transmission
Form SOFTEX in triplicate in respect of export of computer software and audio / video / television software to the designated official concerned of the Government of India at STPI / EPZ /FTZ /SEZ for valuation / certification not later than 30 days from the date of invoice
The invoices raised on overseas clients as above is subject to valuation by Gov Officials and consequent amendment made in the invoice value, if necessary
B.4. Disposal of SOFTEX Forms
Regulation 6 of Export Regulations
random check of the relevant duplicate forms by their internal / concurrent auditors
non-realisation or short realisation allowed , should be within the powers delegated , or with prior approval of RBI
export declaration (duplicate) form may be duly certified , Where a part of the export proceeds are credited to an EEFC
B.6 Shut out Shipments and Short Shipments
If shipment covered by a GR form already filed with Customs is short-shipped, the exporter must give notice of short-shipment to the Customs in the form and manner prescribed.
Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs attaching thereto the unused duplicate copy of GR /Shipping bill
Customs will verify , certify the copy of the notice as correct and forward it to the Reserve Bank , together with unused duplicate copy of the GR form
B. 7 Consolidation of Air Cargo
IF shipped under consolidation, the airline company’s Master Airway Bill will be issued to the Consolidating Cargo Agent
AD may negotiate HAWBs only if the relative letter of credit specifically allows
AD can accept Forwarder’s Cargo Receipts (FCR) issued by (instead of 'IATA' approved agents), in lieu of bills of lading, only if the relative letter of credit specifically allows
relative sale contract with the overseas buyer should also provide that FCR may be accepted in lieu of BL/AWB
B.8 Exports to neighbouring countries by Road, Rail or River:
exports by barges/country craft/road transport, the form should be presented by exporter or his agent at the Customs station at the border through which the vessel or vehicle has to pass before crossing over
exports by rail, Customs staff has been posted at certain designated railway stations for attending to Customs formalities , exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station
B.9 Border Trade with Myanmar
goverened by the Agreement on Border Trade between India and Myanmar
permitted to exchange certain specified locally produced commodities under the barter trade
A.P.(DIR Series) Circular No.17 dated 16th October 2000
B.10 Deep Sea Fishing - Transfer of catch at high seas
Ministry of Food Processing Industries (MOFP) approval is required for ) for transfer of catch at the high seas and Customs' certification on the GR need not be insisted instead certificates duly signed by the Master of the vessel, indicating the composition of the catch, quantity, export value, date of transfer of catch
prescribed period of realization, i.e. 180 days should be reckoned with reference to the date of transfer
Reserve Bank's approval No. and date, in case of charter party agreement where charter hire is permitted to be paid out of the export value of the catch , is rqd
C. 1 Delay in submission of shipping documents by exporters
AD may handle with prior RBI approval , Docs presented after the prescribed period of twenty-one days from date of export , if satisfied about reasons for delay
C. 2 Check-list for Scrutiny of Forms – AD to Ensure..
The number on the duplicate copy of a GR form presented to them is the same as that of the original which is usually recorded on the Bill of Lading/Shipping Bill and the duplicate has been duly verified and authenticated by appropriate Customs authorities
In SDF form, that the Shipping Bill No. should be the same as that appearing on the Bill of Lading
In the case of c.i.f., c.& f. etc. contracts where the freight is sought to be paid at destination, that the deduction made is only to the extent of freight declared on GR/SDF or freight indicated on the Bill of Lading/Airway Bill, whichever is less
Documents per se should not have any discrepancies as to description of goods exported, export value or country of destination .
If marine insurance is by the exporters ,ensure amount paid is recovered through invoice .
Can accept the Bill of Lading/Airway Bill issued on ‘freight prepaid’ basis where the sale contract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included in the invoice and the bill
Export realisable value may be more than what was originally declared to/accepted by the Customs
IF documents are being negotiated by a person other than the exporter who has signed GR/PP/SDF/SOFTEX Form , comply with Regulation 12 of Export Regulations
Sometimes, contracts may provide for payment of penalty for late shipment of goods , final settlement of price may be dependent on the results of quality analysis , As these variations stem from the terms of contract, Authorised Dealer banks may accept them on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts
C. 3 Trade Discount
Bills for exports by sea or air which fall short of the value declared on GR/SDF forms on account of trade discount may be accepted , only if the discount has been declared by the exporter on relative GR/SDF form at the time of shipment and accepted by Customs
C. 4 Advance Payments against Exports
Exporters may receive advance payments (with or without interest) from their overseas buyers
Necessary to ensure that the shipments made against the advance payments are monitored by the AD bank through whom the advance payment is received .
Every shipment must be endorsed on the original FIRC copy
Purchase of foreign exchange from the market for refunding advance payment credited to EEFC account may be allowed
C. 5 Part Drawings
it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc. to be ascertained after arrival for inspection, or analysis of the goods , and can be alllowed if , undrawn balance is maximum of 10 per cent of the full export value , and exporter undertakes on the duplicate of GR/SDF/PP forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation
AD should ensure that the exporter has realised at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on GR/PP/SDF form, within one year of shipment.
C. 6 Consignment Exports
Bank, while forwarding shipping documents to his overseas branch/correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realisation of proceeds of the export
The agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter , and evidence in ‘Account Sales’ supported by bills/receipts in original as applicable
freight and marine insurance must be arranged in India.
AD amy consider proposal for hiring warehouses abroad
C.7 Dispatch of Shipping Documents
banks should normally dispatch shipping documents to their overseas branches/correspondents expeditiously
may dispatch shipping documents direct to the consignees where:
Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for
exporter is a regular customer , standing and track record realization of export proceeds is satisfactory
of goods or software are accompanied with a declaration by the exporter that they are not more than Rs. 25000- in value and not declared on GR/SDF/PP/SOFTEX (SeeA2)
‘Status Holder Exporters’ , SEZ units may dispatch the export documents to the consignees outside India if proceeds are repatriated thru AD mentioned in GR, and GR is submitted to bank within 21 days of export
Where exporters have received 100 per cent advance they may dispatch directly to the consignee
C.8 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel / Trade Representative
banks may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel for exports to certain landlocked countries if the shipment is covered by an irrevocable letter of credit and the documents conform strictly to the terms of the Letter of Credit which, inter alia, provides for such delivery
C. 9 Export Bills Register
banks should maintain Export Bills Register
Details of GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return with which the ENC statement covering the transaction was sent to Reserve Bank, should be available
banks should ensure that all types of export transactions are entered in the Export Bills Register and are given bill numbers on calendar year basis , and recorded in ENC
C.10 Follow-up of Overdue Bills
banks should closely watch realization ,if outstanding, beyond the due date for payment or six months from the date of export, the matter should be promptly, ‘systematically and vigorously’ taken up with the concerned exporter
Any laxity in the follow up of realization of export proceeds may , lead to the invocation of the penal provision under FEMA 1999
Should be reported to the RBI RO stating, the reason for the delay in realizing the proceeds , if still unpaid or seeks extension
`Status Holder' , EOU, EHTP, BTP,STP, permitted , period of 12 months from the date of shipment ,to realize and repatriate .
twelve months for realization is no longer applicable for units located in Special Economic Zones (SEZs).
half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export as at the end of June and December every year
C. 11 Reduction in Invoice Value on Account of Prepayment of Usance Bills
banks may allow ,reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills , to the extent of amount of proportionate interest on the unexpired period of usance
C. 12 Reduction in Value
bank may approve reduction value after bill has been negotiated or sent for collection ,upto 10 per cent of invoice value , if exporter is not in caution list, and proportionate incentives is surrendered and no floor price limitation is applicable
If , the export outstanding do not exceed 5 per cent of the average annual export realisation during the preceding three calendar years , and in business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling
C. 13 Export Claims
Banks may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list, provided proportionate export incentive is surrendered.
C.14 Change of buyer/consignee
After goods have been shipped, allowed to transfer to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 10 per cent and the realisation of export proceeds is not delayed beyond the period of six months
C.15 Self write-off and Extension of Time
All exporters have been allowed to , Write off (including reduction in invoice value) outstanding export dues, With each bank, and Extend the prescribed period of realisation beyond 180 days or further period as applicable, provided , such export bills written-off (including reduction in invoice value) and bills extended for realisation does not exceed 10 per cent proceeds due during the calendar year and export bills are not a subject of investigation by Gov Agencies.
Within a month from the close of the calendar year, exporters should submit a statement , giving details of export proceeds due, realised and not realised to the Authorised Dealer bank concerned .
Dealer bank will be required to verify the statement with his records and review the export performance of the exporter during the calendar year to ascertain that in cases where the 10 per cent limit of self extension, write-off (including reduction in invoice value) and non-realisation has been breached, the exporter has sought necessary approval for write-off, reduction in invoice value or extension of time, as the case may be, for the excess over the 10 per cent limit before the end of the calendar year
C.16 Extension of Time Limit in Other Cases
Exporter should apply Bank in form ETX through his AD with appropriate documentary evidence in respect of cases , where extension of realization period is sought, if invoices are under investigation or the invoice value exceeds US $ 1 mn.
AD can , where the invoice value does not exceed USD 1Mi, grant up to a period of 3 months at a time on their own, if satisfied about the reasons for delay, exporter submits a declaration that he will realise the export proceeds during the extended period , and if beyond one year from the date of export the total export outstanding of the exporter should not be more than 10 per cent of the average of export realisations
If suits are filed abroad against the importer no Inv amt Lmt
Continue to report in XOS, with suitable remarks reg extension
C.17 Shipments Lost in Transit
When shipments from India are lost in transit bank must ensure that insurance claim is made as soon as the loss is known
The duplicate copy of GR/SDF/PP form should be forwarded to Reserve Bank with following particulars: a.Amount for which shipment was insured. b.Name and address of the insurance company. c.Place where the claim is payable
bank must arrange to collect the full amount of claim due on the lost shipment, through the medium of his overseas branch/correspondent and release the duplicate copy of GR/SDF/PP form only after the amount has been collected
Bansk to ensure Claims partially settled directly by shipping companies/airlines under carrier’s liability , if settled abroad are also repatriated
C. 18 Payment of Claims by ECGC
Banks may write off the relative export bills and delete them from the XOS statement , on documentary evidence from the ECGC confirming that the claim in respect of the outstanding bills has been settled by them
The claims settled in rupees by ECGC should not be construed as export realisation in foreign exchange
C19a
banks may forward a statement in form EBW , indicating details of write offs etc., every half year ended 30th June and 31st December within 15 days from the date of completion of the relevant half year
C. 19 A "Write off" of Unrealised Export Bills
Bank, who had handled the relevant shipping documents , can write off of the unrealized portion , if exporter submits evidence that he been un-able to realize the outstanding export dues despite best efforts, within one year, not to exceed 10 per cent of the total export proceeds AND either,
overseas buyer has been declared insolvent and a certificate from the official liquidator is submitted or buyer is not traceable
goods exported have been auctioned or destroyed by authorities
unrealised amount represents the balance due in a case settled through the intervention of Embassy/ Chamber etc
undrawn balance of an export bill (not exceeding 10 % of the invoice value)
cost of resorting to legal action would be too high
difference between the letter of credit value and actual export value or between the provisional and the actual freight charges etc
is not the subject matter of any pending Civil/Criminal suits
Exporter is not caution listed
C. 19 B 'Netting off' of export receivables against import payments - Units in Special Economic Zones (SEZs) –AD may allow,
The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting)
export of goods is documented in GR (O) forms / DTR as the case may be while details of import of goods / services is recorded through A1 / A2 form as the case may be
Both the transactions of sale and purchase in 'R' Returns under FET-ERS are reported separately
C.20 Return of Documents to Exporters
duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to AD, ., should not ordinarily be returned to exporters, except for rectification of errors and resubmission
C.21 Exporters’ Caution List
banks will be advised, by RBI, whenever exporters are cautioned in terms of provisions contained in Regulation 17 of "Export Regulations".
Can approve approve GR/SDF/PP for such exporters on evidence of having received an advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports
D.1 Agency Commission on Exports
Payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter is allowed, subject to ..
commission has been declared on GR/SDF/PP/SOFTEX form and accepted by the Customs authorities/ STP/EPZ or after satisfying the reasons adduced by the exporter for not declaring commission provided a valid agreement for payment of commission exists
And the actual shipment is already done
Comn under counter trade arrangement through Escrow Accounts designated in U.S. Dollar if it is not by deduction from the invoice value deduction from the invoice value and is paid to a party other than escrow a/c holders.
D.2 Refund of Export Proceeds
Allowed if proceeds were originally received, provided such goods are re-imported into India on account of poor quality etc. and evidence of re-import has been submitted
RBI/2006-07/27 Master Circular No/09/2006-07 July 1, 2006
SECTION A: GENERAL
SECTION B – GR/ SDF / PP / SOFTEX PROCEDURE
SECTION C –OBLIGATIONS OF AUTHORISED DEALER BANKS
SECTION D – REMITTANCES CONNECTED WITH EXPORT
A.1 Trade and Foreign Exchange Regulations
Section 7 and section 47 of the Foreign Exchange Management Act 1999 (42 of 1999)
Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
Notification No. GSR 381(E) dated May 3, 2000 and
FEMA Notification 23/RB-2000 dated May 3, 2000
Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA 14/2000-RB dated May 3, 2000.
Notification No. FEMA 47/2001-RB dated December 5, 2001
A.P. (DIR Series) Circular No. 32 dated 21st April 2006
A.2 Exemptions from Declarations
exempted from submission of declaration in the prescribed format for exports of value not exceeding US $ 25,000 eqvt
exporters shall be liable to realise and repatriate export proceeds
Gift of goods exceeding Rupees Five lakhs -RBI Approval rqd
May grant GR Waiver for exporters for export of goods free of cost, for export promotion up to 2 percent of the three years average annual exports , subject to a ceiling of Rs.5 lakhs and Rs.10 lakhs for status holders
Export of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP
A.3 Numbering of Forms
GR, PP and SOFTEX forms will bear specific identification numbers ,
the port code number and shipping bill number should be cited inSDF
A. 4 Manner of Payment
full export value of the goods exported shall be received through an Authorised Dealer
a. Bank draft, pay order, banker’s or personal cheques.
b.Foreign currency notes/foreign currency TCs
c.Payment out of funds held in the FCNR/NRE account
d.International Credit Cards
GR/SDF (duplicate) should be released by the AD banks only on receipt of funds in Nostro
e.Between person resident in India and a person resident in Nepal may be settled in Indian Rupees
f.Precious metals i.e. Gold / Silver / Platinum by the Gem & Jewellery units in SEZs and EOUs in equivalent to value of jewellery exported
A. 5 Guarantees against Exports
obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters
A.6 Accounts in Foreign Currency
general permission for Participants in international exhibition/trade fair for opening a temporary foreign currency account abroad , balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair .
Reserve Bank may consider applications , thru Authorised Dealer bank in India ,in Form EFC from exporters having good track record for opening a foreign currency account , giving details of the bank with which the account will be maintained abroad.
An Indian entity has also been permitted to open, hold and maintain in the name of its office/branch set up outside India, a foreign currency account with a bank outside by making remittance for the purpose of normal business operations
project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India subject to P E M
(II) Diamond Dollar Account
Firms permitted to transact their business through Diamond Dollar Accounts and may be allowed to open not more than five Diamond Dollar Accounts with their banks, with RBI permission, if at least three years in import or export of diamonds and having an average annual turnover of Rs. 5 crores or above .
(III) Exchange Earners’ Foreign Currency (EEFC) Account
A person resident in India may open Exchange Earners’ Foreign Currency (EEFC) Account, with AD, in the form of non-interest bearing current account , and no credit facilities granted against the balance held as security.
Eligible credits are , inward remittance , foreign currency loan raised or investment received from outside , received in foreign exchange by a unit in (DTA) for supplying goods to a unit in SEZ out of its Foreign currency
is 100 Pct for Status Holder Exporter , professional services in his personal capacity , 100% EOU, EPZ, STP, EHTP
and 50 per cent for all other persons resident in India
exporter constituents to extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling
permit exporters to repay packing credit advances whether availed in Rupee or in foreign currency from balances in their EEFC
A.7 Setting Up Offices Abroad and Acquisition of Immovable Property for Overseas Offices
remittances allowed up to 10 per cent for initial and up to 5 per cent for recurring expenses of the average annual sales / income or turnover during last two accounting years ,for normal business operations Provided should not Create any financial liabilities contingent or otherwise for the head office in India , Invest surplus funds abroad without prior RBI approval , and bank account details are reported to RBI
overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each ‘off-site’ contract as also at least 30 per cent of the contract value of each ‘on-site’ contract.
Prior permission of RBI , to acquire immovable property outside India
A.8 Counter-Trade Arrangement
adjustment of value of goods imported into India against value of goods exported , arrangement voluntarily entered , through an Escrow Account opened in India in U.S. dollar , will be allowed by RBI, when applied thru AD, provided invoiced in Intl Prices, no interest on escrow a/c balances,surplus may be invested in term deposit for 3 months only in any year.
A.9 Export of Goods on Lease, Hire, etc
Prior RBI approval required for export of machinery, equipment, etc., on lease, hire, etc , against collection of lease rentals/hire charges and ultimate re-import
A.10 GR Approval for Export
Participants of Trade Fair/Exhibition abroad are now permitted to take/export goods for exhibition and sale ,
Unsold exhibit items may be sold outside the Fair, at discounted values ,
permissible to `gift' unsold goods up to the value of US $ 5000 per exporter, per exhibition
AD may approve GR Form of export items for display or display-cum-sale in trade fairs provided …
exporter shall produce relative Bill of Entry within one month of re-import of unsold items, sale proceeds of the items sold are repatriated to India , method of disposal of all items exported, as well as the repatriation is reported to AD, subject to 100 per cent audit by their internal inspectors/auditors
GR waiver may be granted, for, Export of Goods for re-import after repairs / maintenance / testing / calibration etc, subject to exporter shall produce relative Bill of Entry within one month of re-import of the exported item and if destroyed during testing obtain a suitable certificate issued by the testing agency
A. 11 Project Exports and Service Exports
Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’
Should obtain the approval of the Authorised Dealer /Exim Bank/Working Group at post-award stage before undertaking execution of such contracts.
Memorandum on Project Exports (PEM).
A. 12 Export on Elongated Credit Terms
submit their proposals giving particulars through their banks to RBI
export of books on consignment basis , allowing for realisation of export proceeds up to 360 days from the date of shipment , allowed to abandon the books which remain unsold at the expiry of the period of the sale contract ,and evidence in Account Sales
A. 13 Export of goods by Special Economic Zones (SEZs)
permitted to undertake job work abroad and export goods from that country itself, if charges are suitably loaded in the export price and arrangements for realisation of full export proceeds is done
units in DTAs Permitted to purchase foreign exchange for making payment for goods supplied to them by units in SEZs
A. 14 Forfaiting
B.1 Export Declaration Form
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 (denoting the code number of the port of shipment, the calendar year and a six- digit running serial number )on both the copies after admitting the corresponding shipping bill
Customs will certify the value declared by the exporter , 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 for examination of the goods and certifying the quantity passed for shipment
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 bank named in the GR form
Bank should report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return , of bills handled
B.2 SDF Forms
Electronic Data Interchange (EDI) System at certain Customs , GR form is replaced by a declaration in form SDF
one copy of the shipping bill marked ‘Exchange Control Copy’ in which form SDF has been appended for being submitted to the Authorised Dealer bank within 21 days from the date of export
B. 3. A. PP 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 bank (after ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import with instructions to deliver against payment or acceptance )
B. 3. B. Counter Signature on PP Forms
Banks may countersign PP forms covering parcels addressed direct to the consignees, provided
An irrevocable letter of credit for the full value of the export has been opened in favour of the exporter and has been advised through the Authorised Dealer bank concerned
Or The full value of the shipment has been received in advance
Or satisfactory arrangements made for realisation of the export proceeds on basis of the standing and track record of the exporter
Any alteration in the name and address of consignee on the PP form should also be authenticated by the AD
B.4. Disposal of SOFTEX Forms
Regulation 6 of Export Regulations
random check of the relevant duplicate forms by their internal / concurrent auditors
non-realisation or short realisation allowed , should be within the powers delegated , or with prior approval of RBI
export declaration (duplicate) form may be duly certified , Where a part of the export proceeds are credited to an EEFC
B.5. Terms of Payment - Invoicing - (Software)
Exporters should bill their overseas clients periodically, i.e., at least once a month or on reaching the ‘milestone’ as provided in the contract entered into with the overseas client and the last invoice / bill should be raised not later than 15 days from the date of completion of the contract and can submit a combined SOFTEX form for all the invoices raised
For ‘one-shot operation’, the invoice/bill should be raised within 15 days from the date of transmission
Form SOFTEX in triplicate in respect of export of computer software and audio / video / television software to the designated official concerned of the Government of India at STPI / EPZ /FTZ /SEZ for valuation / certification not later than 30 days from the date of invoice
The invoices raised on overseas clients as above is subject to valuation by Gov Officials and consequent amendment made in the invoice value, if necessary
B.4. Disposal of SOFTEX Forms
Regulation 6 of Export Regulations
random check of the relevant duplicate forms by their internal / concurrent auditors
non-realisation or short realisation allowed , should be within the powers delegated , or with prior approval of RBI
export declaration (duplicate) form may be duly certified , Where a part of the export proceeds are credited to an EEFC
B.6 Shut out Shipments and Short Shipments
If shipment covered by a GR form already filed with Customs is short-shipped, the exporter must give notice of short-shipment to the Customs in the form and manner prescribed.
Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs attaching thereto the unused duplicate copy of GR /Shipping bill
Customs will verify , certify the copy of the notice as correct and forward it to the Reserve Bank , together with unused duplicate copy of the GR form
B. 7 Consolidation of Air Cargo
IF shipped under consolidation, the airline company’s Master Airway Bill will be issued to the Consolidating Cargo Agent
AD may negotiate HAWBs only if the relative letter of credit specifically allows
AD can accept Forwarder’s Cargo Receipts (FCR) issued by (instead of 'IATA' approved agents), in lieu of bills of lading, only if the relative letter of credit specifically allows
relative sale contract with the overseas buyer should also provide that FCR may be accepted in lieu of BL/AWB
B.8 Exports to neighbouring countries by Road, Rail or River:
exports by barges/country craft/road transport, the form should be presented by exporter or his agent at the Customs station at the border through which the vessel or vehicle has to pass before crossing over
exports by rail, Customs staff has been posted at certain designated railway stations for attending to Customs formalities , exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station
B.9 Border Trade with Myanmar
goverened by the Agreement on Border Trade between India and Myanmar
permitted to exchange certain specified locally produced commodities under the barter trade
A.P.(DIR Series) Circular No.17 dated 16th October 2000
B.10 Deep Sea Fishing - Transfer of catch at high seas
Ministry of Food Processing Industries (MOFP) approval is required for ) for transfer of catch at the high seas and Customs' certification on the GR need not be insisted instead certificates duly signed by the Master of the vessel, indicating the composition of the catch, quantity, export value, date of transfer of catch
prescribed period of realization, i.e. 180 days should be reckoned with reference to the date of transfer
Reserve Bank's approval No. and date, in case of charter party agreement where charter hire is permitted to be paid out of the export value of the catch , is rqd
C. 1 Delay in submission of shipping documents by exporters
AD may handle with prior RBI approval , Docs presented after the prescribed period of twenty-one days from date of export , if satisfied about reasons for delay
C. 2 Check-list for Scrutiny of Forms – AD to Ensure..
The number on the duplicate copy of a GR form presented to them is the same as that of the original which is usually recorded on the Bill of Lading/Shipping Bill and the duplicate has been duly verified and authenticated by appropriate Customs authorities
In SDF form, that the Shipping Bill No. should be the same as that appearing on the Bill of Lading
In the case of c.i.f., c.& f. etc. contracts where the freight is sought to be paid at destination, that the deduction made is only to the extent of freight declared on GR/SDF or freight indicated on the Bill of Lading/Airway Bill, whichever is less
Documents per se should not have any discrepancies as to description of goods exported, export value or country of destination .
If marine insurance is by the exporters ,ensure amount paid is recovered through invoice .
Can accept the Bill of Lading/Airway Bill issued on ‘freight prepaid’ basis where the sale contract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included in the invoice and the bill
Export realisable value may be more than what was originally declared to/accepted by the Customs
IF documents are being negotiated by a person other than the exporter who has signed GR/PP/SDF/SOFTEX Form , comply with Regulation 12 of Export Regulations
Sometimes, contracts may provide for payment of penalty for late shipment of goods , final settlement of price may be dependent on the results of quality analysis , As these variations stem from the terms of contract, Authorised Dealer banks may accept them on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts
C. 3 Trade Discount
Bills for exports by sea or air which fall short of the value declared on GR/SDF forms on account of trade discount may be accepted , only if the discount has been declared by the exporter on relative GR/SDF form at the time of shipment and accepted by Customs
C. 4 Advance Payments against Exports
Exporters may receive advance payments (with or without interest) from their overseas buyers
Necessary to ensure that the shipments made against the advance payments are monitored by the AD bank through whom the advance payment is received .
Every shipment must be endorsed on the original FIRC copy
Purchase of foreign exchange from the market for refunding advance payment credited to EEFC account may be allowed
C. 5 Part Drawings
it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc. to be ascertained after arrival for inspection, or analysis of the goods , and can be alllowed if , undrawn balance is maximum of 10 per cent of the full export value , and exporter undertakes on the duplicate of GR/SDF/PP forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation
AD should ensure that the exporter has realised at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on GR/PP/SDF form, within one year of shipment.
C. 6 Consignment Exports
Bank, while forwarding shipping documents to his overseas branch/correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realisation of proceeds of the export
The agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter , and evidence in ‘Account Sales’ supported by bills/receipts in original as applicable
freight and marine insurance must be arranged in India.
AD amy consider proposal for hiring warehouses abroad
C.7 Dispatch of Shipping Documents
banks should normally dispatch shipping documents to their overseas branches/correspondents expeditiously
may dispatch shipping documents direct to the consignees where:
Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for
exporter is a regular customer , standing and track record realization of export proceeds is satisfactory
of goods or software are accompanied with a declaration by the exporter that they are not more than Rs. 25000- in value and not declared on GR/SDF/PP/SOFTEX (SeeA2)
‘Status Holder Exporters’ , SEZ units may dispatch the export documents to the consignees outside India if proceeds are repatriated thru AD mentioned in GR, and GR is submitted to bank within 21 days of export
Where exporters have received 100 per cent advance they may dispatch directly to the consignee
C.8 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel / Trade Representative
banks may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel for exports to certain landlocked countries if the shipment is covered by an irrevocable letter of credit and the documents conform strictly to the terms of the Letter of Credit which, inter alia, provides for such delivery
C. 9 Export Bills Register
banks should maintain Export Bills Register
Details of GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return with which the ENC statement covering the transaction was sent to Reserve Bank, should be available
banks should ensure that all types of export transactions are entered in the Export Bills Register and are given bill numbers on calendar year basis , and recorded in ENC
C.10 Follow-up of Overdue Bills
banks should closely watch realization ,if outstanding, beyond the due date for payment or six months from the date of export, the matter should be promptly, ‘systematically and vigorously’ taken up with the concerned exporter
Any laxity in the follow up of realization of export proceeds may , lead to the invocation of the penal provision under FEMA 1999
Should be reported to the RBI RO stating, the reason for the delay in realizing the proceeds , if still unpaid or seeks extension
`Status Holder' , EOU, EHTP, BTP,STP, permitted , period of 12 months from the date of shipment ,to realize and repatriate .
twelve months for realization is no longer applicable for units located in Special Economic Zones (SEZs).
half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export as at the end of June and December every year
C. 11 Reduction in Invoice Value on Account of Prepayment of Usance Bills
banks may allow ,reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills , to the extent of amount of proportionate interest on the unexpired period of usance
C. 12 Reduction in Value
bank may approve reduction value after bill has been negotiated or sent for collection ,upto 10 per cent of invoice value , if exporter is not in caution list, and proportionate incentives is surrendered and no floor price limitation is applicable
If , the export outstanding do not exceed 5 per cent of the average annual export realisation during the preceding three calendar years , and in business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling
C. 13 Export Claims
Banks may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list, provided proportionate export incentive is surrendered.
C.14 Change of buyer/consignee
After goods have been shipped, allowed to transfer to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 10 per cent and the realisation of export proceeds is not delayed beyond the period of six months
C.15 Self write-off and Extension of Time
All exporters have been allowed to , Write off (including reduction in invoice value) outstanding export dues, With each bank, and Extend the prescribed period of realisation beyond 180 days or further period as applicable, provided , such export bills written-off (including reduction in invoice value) and bills extended for realisation does not exceed 10 per cent proceeds due during the calendar year and export bills are not a subject of investigation by Gov Agencies.
Within a month from the close of the calendar year, exporters should submit a statement , giving details of export proceeds due, realised and not realised to the Authorised Dealer bank concerned .
Dealer bank will be required to verify the statement with his records and review the export performance of the exporter during the calendar year to ascertain that in cases where the 10 per cent limit of self extension, write-off (including reduction in invoice value) and non-realisation has been breached, the exporter has sought necessary approval for write-off, reduction in invoice value or extension of time, as the case may be, for the excess over the 10 per cent limit before the end of the calendar year
C.16 Extension of Time Limit in Other Cases
Exporter should apply Bank in form ETX through his AD with appropriate documentary evidence in respect of cases , where extension of realization period is sought, if invoices are under investigation or the invoice value exceeds US $ 1 mn.
AD can , where the invoice value does not exceed USD 1Mi, grant up to a period of 3 months at a time on their own, if satisfied about the reasons for delay, exporter submits a declaration that he will realise the export proceeds during the extended period , and if beyond one year from the date of export the total export outstanding of the exporter should not be more than 10 per cent of the average of export realisations
If suits are filed abroad against the importer no Inv amt Lmt
Continue to report in XOS, with suitable remarks reg extension
C.17 Shipments Lost in Transit
When shipments from India are lost in transit bank must ensure that insurance claim is made as soon as the loss is known
The duplicate copy of GR/SDF/PP form should be forwarded to Reserve Bank with following particulars: a.Amount for which shipment was insured. b.Name and address of the insurance company. c.Place where the claim is payable
bank must arrange to collect the full amount of claim due on the lost shipment, through the medium of his overseas branch/correspondent and release the duplicate copy of GR/SDF/PP form only after the amount has been collected
Bansk to ensure Claims partially settled directly by shipping companies/airlines under carrier’s liability , if settled abroad are also repatriated
C. 18 Payment of Claims by ECGC
Banks may write off the relative export bills and delete them from the XOS statement , on documentary evidence from the ECGC confirming that the claim in respect of the outstanding bills has been settled by them
The claims settled in rupees by ECGC should not be construed as export realisation in foreign exchange
C19a
banks may forward a statement in form EBW , indicating details of write offs etc., every half year ended 30th June and 31st December within 15 days from the date of completion of the relevant half year
C. 19 A "Write off" of Unrealised Export Bills
Bank, who had handled the relevant shipping documents , can write off of the unrealized portion , if exporter submits evidence that he been un-able to realize the outstanding export dues despite best efforts, within one year, not to exceed 10 per cent of the total export proceeds AND either,
overseas buyer has been declared insolvent and a certificate from the official liquidator is submitted or buyer is not traceable
goods exported have been auctioned or destroyed by authorities
unrealised amount represents the balance due in a case settled through the intervention of Embassy/ Chamber etc
undrawn balance of an export bill (not exceeding 10 % of the invoice value)
cost of resorting to legal action would be too high
difference between the letter of credit value and actual export value or between the provisional and the actual freight charges etc
is not the subject matter of any pending Civil/Criminal suits
Exporter is not caution listed
C. 19 B 'Netting off' of export receivables against import payments - Units in Special Economic Zones (SEZs) –AD may allow,
The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting)
export of goods is documented in GR (O) forms / DTR as the case may be while details of import of goods / services is recorded through A1 / A2 form as the case may be
Both the transactions of sale and purchase in 'R' Returns under FET-ERS are reported separately
C.20 Return of Documents to Exporters
duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to AD, ., should not ordinarily be returned to exporters, except for rectification of errors and resubmission
C.21 Exporters’ Caution List
banks will be advised, by RBI, whenever exporters are cautioned in terms of provisions contained in Regulation 17 of "Export Regulations".
Can approve approve GR/SDF/PP for such exporters on evidence of having received an advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports
D.1 Agency Commission on Exports
Payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter is allowed, subject to ..
commission has been declared on GR/SDF/PP/SOFTEX form and accepted by the Customs authorities/ STP/EPZ or after satisfying the reasons adduced by the exporter for not declaring commission provided a valid agreement for payment of commission exists
And the actual shipment is already done
Comn under counter trade arrangement through Escrow Accounts designated in U.S. Dollar if it is not by deduction from the invoice value deduction from the invoice value and is paid to a party other than escrow a/c holders.
D.2 Refund of Export Proceeds
Allowed if proceeds were originally received, provided such goods are re-imported into India on account of poor quality etc. and evidence of re-import has been submitted
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