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.
Saturday, March 10, 2007
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
Thursday, March 1, 2007
ICC DOCDEX Rules
ICC DOCDEX Rules - Article 1 Dispute Resolution Service
1.1 These Rules concern a service called Documentary Instruments Dispute Resolution Expertise (DOCDEX) which is available in connection with any dispute related to:
- a documentary credit incorporating the ICC Uniform Customs and Practice for Documentary Credits (UCP), and the application of the UCP and/or of the ICC Uniform Rules for Bank-to-Bank Reimbursement under Documentary Credits (URR),
- a collection incorporating the ICC Uniform Rules for Collections (URC), and the application of the URC,
- a demand guarantee incorporating the ICC Uniform Rules for Demand Guarantees (URDG), and the application of the URDG.
Its objective is to provide an independent, impartial and prompt expert decision (DOCDEX Decision) on how the dispute should be resolved on the basis of the terms and conditions of the documentary credit, the collection instruction, or the demand guarantee and the applicable ICC Rules, be it the UCP, the URR, the URC or the URDG (ICC Rules).
Any reference to DOCDEX will be deemed to apply to the latest version of the DOCDEX Rules and the applicable version of the ICC Rules , unless otherwise stipulated in the documentary credit, the collection instruction or the demand guarantee.
1.2 DOCDEX is made available by the International Chamber of Commerce (ICC) through its International Centre for Expertise (Centre) under the auspices of the ICC Commission on Banking Technique and Practice (Banking Commission).
1.3 When a dispute is submitted to the Centre in accordance with these rules, the Centre shall appoint three experts from a list of experts maintained by the Banking Commission. These three experts (Appointed Experts) shall make a decision which, after consultation with the Technical Adviser of the Banking Commission, shall be rendered by the Centre as a DOCDEX Decision in accordance with these Rules. The DOCDEX Decision is not intended to conform with any legal requirements of an arbitration award.
1.4 Unless otherwise agreed, a DOCDEX Decision shall not be binding upon the parties.
1.5 In the DOCDEX procedure the communication with the Centre shall be conducted exclusively in writing, i.e. by communication received in a form that provides a complete record thereof, via teletransmission or other expeditious means
ICC DOCDEX Rules - Article 2: Request
2.1The Initiator shall apply for a DOCDEX Decision by submission of a request (Request). The Initiator may be one of the parties to the dispute applying individually, or more or all parties to the dispute submitting jointly a single Request. The Request, including all documents annexed thereto, shall be supplied to the Centre in Paris, France, in four copies.
2.2A Request shall be concise and contain all necessary information clearly presented, in particular the following:
2.2.1. full name and address of the Initiator, clearly stating such Initiator's function(s) in connection with the documentary credit, the collection, or the demand guarantee and
2.2.2. full name and address of any other party to the dispute (Respondent), clearly stating such Respondent's function(s) in connection with the documentary credit, the collection, or the demand guarantee, where the Request is not submitted jointly by all parties to the dispute, and
2.2.3. a statement of the Initiator formally requesting a DOCDEX Decision in accordance with the ICC DOCDEX Rules, ICC Publication No. 811, and
2.2.4. a summary of the dispute and of the Initiator's claims, clearly identifying all issues related to the documentary credit, the collection, or the demand guarantee and the applicable ICC Rules to be determined, and
2.2.5. copies of the documentary credit, the collection instruction, or the demand guarantee in dispute, all amendments thereto, and all documents deemed necessary to establish the relevant circumstances, and
2.2.6. a statement by the Initiator that a copy of such Request, including all documents annexed thereto, has been sent to each Respondent named in the Request.
2.3 The Request must be accompanied by the payment of the Standard Fee as per the Appendix hereto. No Request shall be processed unless accompanied by the requisite payment.
ICC DOCDEX Rules - Article 3: Answer
3.1.The Respondent may submit an Answer to the Initiator's Request. The Respondent may be one or more of the parties to the dispute named in the Request as Respondent, each submitting an individual Answer or submitting jointly a single Answer. The Answer must be received by the Centre within the period stipulated in the Centre's Acknowledgement of the Request (see Article 5). The Answer, including all documents annexed thereto, shall be supplied to the Centre in Paris, France in four copies.
3.2An Answer shall be concise and contain all necessary information clearly presented, in particular the following:
3.2.1. name and address of the Initiator, and
3.2.2. date of the relevant Request, and
3.2.3. a statement of the Respondent formally requesting a DOCDEX Decision in accordance with the ICC DOCDEX Rules, ICC Publication No. 811, and
3.2.4. a summary of the Respondent's claims, clearly referring to all issues related to the documentary credit, the collection, or the demand guarantee and the applicable ICC Rules to be determined, and
3.2.5. copies of all additional documents deemed necessary to establish the relevant circumstances, and
3.2.6. a statement of the Respondent that a copy of such Answer, including all documents annexed thereto, has been sent in writing to the Initiator and to the other Respondent named in the Request.
3.3 If the Respondent does not provide a statement pursuant to Art. 3.2.3, then the final DOCDEX Decision will not be made available to him.
ICC DOCDEX Rules - Article 4: Supplements
4.1 Request, Answers and Supplements shall be final as received.
4.2 The Centre may ask the Initiator and Respondent by way of an Invitation to submit specific supplementary information, including copies of documents, relevant to the DOCDEX Decision (Supplement).
4.3 Supplements must be received by the Centre in four copies within the period stipulated in the Invitation. The Supplement shall be concise and contain all necessary information clearly presented and include copies of relevant documents. It shall also contain:
4.3.1 date and reference as stated in the Invitation, and
4.3.2 name and address of the issuer of such Supplement, and
4.3.3 a statement of the issuer of such Supplement that a copy of the Supplement, including all documents annexed thereto, has been sent to the Initiator and Respondent.
4.4 Supplements shall only be submitted to the Centre upon and in accordance with an Invitation issued by the Centre.
ICC DOCDEX Rules - Article 5: Acknowledgements and Rejections
5.1 The Centre shall confirm the receipt of Requests, Answers and Supplements to the Initiator and Respondent (Acknowledgement).
5.2 The Centre will stipulate a reasonable period of time within which each Answer or Supplement must be received by the Centre. The stipulated time should not exceed 30 days after the date of the Acknowledgement of the receipt of a Request or 14 days after the date of an Invitation to submit a Supplement.
5.3Any Answer or Supplement received by the Centre after expiry of the period of time specified in the relevant Acknowledgement or Invitation, or any communication not solicited by the Centre, shall be disregarded.
5.4 Under advice to the Initiator and Respondent, the Centre may reject at any time, before or after its Acknowledgement, any Request, Answer or Supplement, in whole or part,
5.4.1 where the Centre or Appointed Experts deem any issue to be determined to be unrelated to the applicable ICC Rules, or
5.4.2 which in other respects, in particular regarding form and/or substance, does not fulfil the requirements of these Rules, or
5.4.3 in respect of which the Standard Fee has not been received by the Centre within 14 days after the date of the Request.
5.5 Periods of time specified in these Rules or in any Acknowledgement or Invitation referring to days shall be deemed to refer to consecutive calendar days and shall start to run on the day following the date of issuance stated in the relevant Acknowledgement or Invitation. If the last day of the relevant period of time is, or any fixed day falls on, a non-business day in Paris, France, then the period of time shall expire at the end of the first following business day in Paris.
ICC DOCDEX Rules - Article 6: Appointment of Experts
6.1 The Banking Commission will maintain internal lists of experts having profound experience and knowledge of the applicable ICC Rules.
6.2 Upon receipt of a Request, the Centre shall appoint three independent experts from the list. Each Appointed Expert shall declare his independence of the parties indicated in the Request. The Centre shall designate one of the three Appointed Experts to act as their Chair.
6.3An Appointed Expert shall at all times keep strictly confidential all information and documents related to any DOCDEX case.
6.4 Where an Appointed Expert deems that he is unable to carry out his functions, he shall immediately give notice of termination to the Centre. Where the Centre deems that an Appointed Expert is unable to carry out his functions, it shall immediately give notice of termination to such Appointed Expert. In either case, such Appointed Expert shall immediately return to the Centre the Request, Answer(s) and Supplement(s) received, including all documents annexed thereto, and the Centre shall inform the other Appointed Experts of such termination.
6.5 The Centre shall, without delay, replace an Appointed Expert whose appointment is prematurely terminated pursuant to Article 6.4 of these Rules and the Centre shall inform the other Appointed Experts accordingly.
ICC DOCDEX Rules - Article 7: Appointed Experts' Procedure
7.1 The Centre shall submit to the Appointed Experts the Request, Answer(s) and Supplement(s) received in connection therewith.
7.2 The Appointed Experts shall render their decision impartially and exclusively on the basis of the Request, Answer (s) and Supplement (s) thereto, and on the documentary credit and the UCP and/or URR, or on the collection and the URC, or on the demand guarantee and the URDG.
7.3 Where it is deemed necessary by the Appointed Experts, their Chair may ask the Centre to invite the Initiator and Respondent, pursuant to Article 4 of these Rules, to provide additional information and/or copies of documents.
7.4 Within 30 days after they have received all information and documents deemed by them to be necessary and appropriate to the issues to be determined, and provided that the Additional fee as mentioned in Article 10.1 is paid, the Appointed Experts shall draft a decision and their Chair shall submit the decision to the Centre.
7.5 Neither the Initiator nor the Respondent shall
- seek an oral hearing in front of the Appointed Experts,
- request ICC to reveal the name of any Appointed Expert,
- seek to have an Appointed Expert or officer of the Banking Commission called as witness, expert or in any similar function to an arbitral tribunal or a court of law hearing the dispute in connection with which such Appointed Expert or officer of the Banking Commission participated by rendering a DOCDEX Decision.
ICC DOCDEX Rules - Article 7: Appointed Experts' Procedure
7.1 The Centre shall submit to the Appointed Experts the Request, Answer(s) and Supplement(s) received in connection therewith.
7.2 The Appointed Experts shall render their decision impartially and exclusively on the basis of the Request, Answer (s) and Supplement (s) thereto, and on the documentary credit and the UCP and/or URR, or on the collection and the URC, or on the demand guarantee and the URDG.
7.3 Where it is deemed necessary by the Appointed Experts, their Chair may ask the Centre to invite the Initiator and Respondent, pursuant to Article 4 of these Rules, to provide additional information and/or copies of documents.
7.4 Within 30 days after they have received all information and documents deemed by them to be necessary and appropriate to the issues to be determined, and provided that the Additional fee as mentioned in Article 10.1 is paid, the Appointed Experts shall draft a decision and their Chair shall submit the decision to the Centre.
7.5 Neither the Initiator nor the Respondent shall
- seek an oral hearing in front of the Appointed Experts,
- request ICC to reveal the name of any Appointed Expert,
- seek to have an Appointed Expert or officer of the Banking Commission called as witness, expert or in any similar function to an arbitral tribunal or a court of law hearing the dispute in connection with which such Appointed Expert or officer of the Banking Commission participated by rendering a DOCDEX Decision.
ICC DOCDEX Rules - Article 8: DOCDEX Decision
8.1 Upon receipt of the decision of the Appointed Experts, the Centre shall consult with the Technical Adviser of the Banking Commission or his nominated delegate, to ascertain that the DOCDEX Decision will be in line with the applicable ICC Rules and their interpretation by the Banking Commission. Amendments suggested by the Technical Adviser (or his delegate) shall be subject to the consent of the majority of the Appointed Experts.
8.2 Subject to Article 10.2 of these Rules, the Centre will issue and make available the DOCDEX Decision without delay to
8.2.1 the Initiator and
8.2.2 the Respondent who has requested, pursuant to Article 3.2.3, a DOCDEX Decision in accord-ance with the ICC Documentary Credit Dispute Expertise Rules
8.2.3 The DOCDEX Decision shall be issued by the Centre in the English language, unless Appointed Experts decide otherwise, and shall contain inter alia the following
8.3.1 names of the Initiator and Respondent, and
8.3.2 summary of the representations relevant to the issues determined, and
8.3.3 determination of the issues and the decisions taken with succinctly stated reasons, therefore, and
8.3.4 date of issuance and signature for and on behalf of the Centre.
8.4 The DOCDEX Decision shall be deemed to made at Paris, France, and on the date of its issuance by the Centre
ICC DOCDEX Rules - Article 9: Deposit and publication of the DOCDEX Decision
9.1 An original of each DOCDEX Decision shall be deposited with the Centre and shall be kept there for 10 years.
9.2 The ICC may publish any DOCDEX Decision, provided always the identities of the parties to the dispute are not disclosed.
ICC DOCDEX Rules - Article 10: Costs of DOCDEX
10.1 The costs of the DOCDEX service shall be the Standard Fee set out in the Appendix. The Standard Fee shall not be recoverable. In exceptional circumstances, an Additional Fee may be payable which shall be fixed by the Centre at its discretion, taking into account the complexity of the issue and subject to the ceiling set out in the Appendix under "Additional Fee". Such Additional Fee shall be invoiced to the Initiator within a reasonable time, at the latest, within 45 days after the date of the Acknowledgement of the Request. The Centre will fix a time limit for the payment of the Additional Fee. The Centre may stay the procedure at any time, and instruct the Appointed Experts to suspend their work on the case, until the Additional Fee is paid by the Initiator. No Additional Fee will be charged where the amount of the letter of credit, the collection, or the demand guarantee in dispute does not exceed the minimum amount stated in the Appendix.
10.2 The DOCDEX Decision shall not be issued until the Centre has received the Additional fee, if invoiced
ICC DOCDEX Rules - Article 11: General
11.1 In all matters not expressly provided for in these Rules, the Centre, experts, Appointed Experts, officers, officials and employees of ICC shall adhere to strict confidentiality and shall act in the spirit of these Rules.
11.2 Appointed Experts, officers, officials and employees of ICC assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any message(s), letter(s) or document(s), or for delay, mutilation or other error(s) arising in the transmission of any telecommunication, or for errors in translation and/or interpretation of technical terms.
11.3 Appointed Experts, officers, officials and employees of ICC assume no liability or responsibility for the discharge or purported discharge of their functions in connection with any DOCDEX Decision, unless the act or omission is shown not to have been in good faith.
1.1 These Rules concern a service called Documentary Instruments Dispute Resolution Expertise (DOCDEX) which is available in connection with any dispute related to:
- a documentary credit incorporating the ICC Uniform Customs and Practice for Documentary Credits (UCP), and the application of the UCP and/or of the ICC Uniform Rules for Bank-to-Bank Reimbursement under Documentary Credits (URR),
- a collection incorporating the ICC Uniform Rules for Collections (URC), and the application of the URC,
- a demand guarantee incorporating the ICC Uniform Rules for Demand Guarantees (URDG), and the application of the URDG.
Its objective is to provide an independent, impartial and prompt expert decision (DOCDEX Decision) on how the dispute should be resolved on the basis of the terms and conditions of the documentary credit, the collection instruction, or the demand guarantee and the applicable ICC Rules, be it the UCP, the URR, the URC or the URDG (ICC Rules).
Any reference to DOCDEX will be deemed to apply to the latest version of the DOCDEX Rules and the applicable version of the ICC Rules , unless otherwise stipulated in the documentary credit, the collection instruction or the demand guarantee.
1.2 DOCDEX is made available by the International Chamber of Commerce (ICC) through its International Centre for Expertise (Centre) under the auspices of the ICC Commission on Banking Technique and Practice (Banking Commission).
1.3 When a dispute is submitted to the Centre in accordance with these rules, the Centre shall appoint three experts from a list of experts maintained by the Banking Commission. These three experts (Appointed Experts) shall make a decision which, after consultation with the Technical Adviser of the Banking Commission, shall be rendered by the Centre as a DOCDEX Decision in accordance with these Rules. The DOCDEX Decision is not intended to conform with any legal requirements of an arbitration award.
1.4 Unless otherwise agreed, a DOCDEX Decision shall not be binding upon the parties.
1.5 In the DOCDEX procedure the communication with the Centre shall be conducted exclusively in writing, i.e. by communication received in a form that provides a complete record thereof, via teletransmission or other expeditious means
ICC DOCDEX Rules - Article 2: Request
2.1The Initiator shall apply for a DOCDEX Decision by submission of a request (Request). The Initiator may be one of the parties to the dispute applying individually, or more or all parties to the dispute submitting jointly a single Request. The Request, including all documents annexed thereto, shall be supplied to the Centre in Paris, France, in four copies.
2.2A Request shall be concise and contain all necessary information clearly presented, in particular the following:
2.2.1. full name and address of the Initiator, clearly stating such Initiator's function(s) in connection with the documentary credit, the collection, or the demand guarantee and
2.2.2. full name and address of any other party to the dispute (Respondent), clearly stating such Respondent's function(s) in connection with the documentary credit, the collection, or the demand guarantee, where the Request is not submitted jointly by all parties to the dispute, and
2.2.3. a statement of the Initiator formally requesting a DOCDEX Decision in accordance with the ICC DOCDEX Rules, ICC Publication No. 811, and
2.2.4. a summary of the dispute and of the Initiator's claims, clearly identifying all issues related to the documentary credit, the collection, or the demand guarantee and the applicable ICC Rules to be determined, and
2.2.5. copies of the documentary credit, the collection instruction, or the demand guarantee in dispute, all amendments thereto, and all documents deemed necessary to establish the relevant circumstances, and
2.2.6. a statement by the Initiator that a copy of such Request, including all documents annexed thereto, has been sent to each Respondent named in the Request.
2.3 The Request must be accompanied by the payment of the Standard Fee as per the Appendix hereto. No Request shall be processed unless accompanied by the requisite payment.
ICC DOCDEX Rules - Article 3: Answer
3.1.The Respondent may submit an Answer to the Initiator's Request. The Respondent may be one or more of the parties to the dispute named in the Request as Respondent, each submitting an individual Answer or submitting jointly a single Answer. The Answer must be received by the Centre within the period stipulated in the Centre's Acknowledgement of the Request (see Article 5). The Answer, including all documents annexed thereto, shall be supplied to the Centre in Paris, France in four copies.
3.2An Answer shall be concise and contain all necessary information clearly presented, in particular the following:
3.2.1. name and address of the Initiator, and
3.2.2. date of the relevant Request, and
3.2.3. a statement of the Respondent formally requesting a DOCDEX Decision in accordance with the ICC DOCDEX Rules, ICC Publication No. 811, and
3.2.4. a summary of the Respondent's claims, clearly referring to all issues related to the documentary credit, the collection, or the demand guarantee and the applicable ICC Rules to be determined, and
3.2.5. copies of all additional documents deemed necessary to establish the relevant circumstances, and
3.2.6. a statement of the Respondent that a copy of such Answer, including all documents annexed thereto, has been sent in writing to the Initiator and to the other Respondent named in the Request.
3.3 If the Respondent does not provide a statement pursuant to Art. 3.2.3, then the final DOCDEX Decision will not be made available to him.
ICC DOCDEX Rules - Article 4: Supplements
4.1 Request, Answers and Supplements shall be final as received.
4.2 The Centre may ask the Initiator and Respondent by way of an Invitation to submit specific supplementary information, including copies of documents, relevant to the DOCDEX Decision (Supplement).
4.3 Supplements must be received by the Centre in four copies within the period stipulated in the Invitation. The Supplement shall be concise and contain all necessary information clearly presented and include copies of relevant documents. It shall also contain:
4.3.1 date and reference as stated in the Invitation, and
4.3.2 name and address of the issuer of such Supplement, and
4.3.3 a statement of the issuer of such Supplement that a copy of the Supplement, including all documents annexed thereto, has been sent to the Initiator and Respondent.
4.4 Supplements shall only be submitted to the Centre upon and in accordance with an Invitation issued by the Centre.
ICC DOCDEX Rules - Article 5: Acknowledgements and Rejections
5.1 The Centre shall confirm the receipt of Requests, Answers and Supplements to the Initiator and Respondent (Acknowledgement).
5.2 The Centre will stipulate a reasonable period of time within which each Answer or Supplement must be received by the Centre. The stipulated time should not exceed 30 days after the date of the Acknowledgement of the receipt of a Request or 14 days after the date of an Invitation to submit a Supplement.
5.3Any Answer or Supplement received by the Centre after expiry of the period of time specified in the relevant Acknowledgement or Invitation, or any communication not solicited by the Centre, shall be disregarded.
5.4 Under advice to the Initiator and Respondent, the Centre may reject at any time, before or after its Acknowledgement, any Request, Answer or Supplement, in whole or part,
5.4.1 where the Centre or Appointed Experts deem any issue to be determined to be unrelated to the applicable ICC Rules, or
5.4.2 which in other respects, in particular regarding form and/or substance, does not fulfil the requirements of these Rules, or
5.4.3 in respect of which the Standard Fee has not been received by the Centre within 14 days after the date of the Request.
5.5 Periods of time specified in these Rules or in any Acknowledgement or Invitation referring to days shall be deemed to refer to consecutive calendar days and shall start to run on the day following the date of issuance stated in the relevant Acknowledgement or Invitation. If the last day of the relevant period of time is, or any fixed day falls on, a non-business day in Paris, France, then the period of time shall expire at the end of the first following business day in Paris.
ICC DOCDEX Rules - Article 6: Appointment of Experts
6.1 The Banking Commission will maintain internal lists of experts having profound experience and knowledge of the applicable ICC Rules.
6.2 Upon receipt of a Request, the Centre shall appoint three independent experts from the list. Each Appointed Expert shall declare his independence of the parties indicated in the Request. The Centre shall designate one of the three Appointed Experts to act as their Chair.
6.3An Appointed Expert shall at all times keep strictly confidential all information and documents related to any DOCDEX case.
6.4 Where an Appointed Expert deems that he is unable to carry out his functions, he shall immediately give notice of termination to the Centre. Where the Centre deems that an Appointed Expert is unable to carry out his functions, it shall immediately give notice of termination to such Appointed Expert. In either case, such Appointed Expert shall immediately return to the Centre the Request, Answer(s) and Supplement(s) received, including all documents annexed thereto, and the Centre shall inform the other Appointed Experts of such termination.
6.5 The Centre shall, without delay, replace an Appointed Expert whose appointment is prematurely terminated pursuant to Article 6.4 of these Rules and the Centre shall inform the other Appointed Experts accordingly.
ICC DOCDEX Rules - Article 7: Appointed Experts' Procedure
7.1 The Centre shall submit to the Appointed Experts the Request, Answer(s) and Supplement(s) received in connection therewith.
7.2 The Appointed Experts shall render their decision impartially and exclusively on the basis of the Request, Answer (s) and Supplement (s) thereto, and on the documentary credit and the UCP and/or URR, or on the collection and the URC, or on the demand guarantee and the URDG.
7.3 Where it is deemed necessary by the Appointed Experts, their Chair may ask the Centre to invite the Initiator and Respondent, pursuant to Article 4 of these Rules, to provide additional information and/or copies of documents.
7.4 Within 30 days after they have received all information and documents deemed by them to be necessary and appropriate to the issues to be determined, and provided that the Additional fee as mentioned in Article 10.1 is paid, the Appointed Experts shall draft a decision and their Chair shall submit the decision to the Centre.
7.5 Neither the Initiator nor the Respondent shall
- seek an oral hearing in front of the Appointed Experts,
- request ICC to reveal the name of any Appointed Expert,
- seek to have an Appointed Expert or officer of the Banking Commission called as witness, expert or in any similar function to an arbitral tribunal or a court of law hearing the dispute in connection with which such Appointed Expert or officer of the Banking Commission participated by rendering a DOCDEX Decision.
ICC DOCDEX Rules - Article 7: Appointed Experts' Procedure
7.1 The Centre shall submit to the Appointed Experts the Request, Answer(s) and Supplement(s) received in connection therewith.
7.2 The Appointed Experts shall render their decision impartially and exclusively on the basis of the Request, Answer (s) and Supplement (s) thereto, and on the documentary credit and the UCP and/or URR, or on the collection and the URC, or on the demand guarantee and the URDG.
7.3 Where it is deemed necessary by the Appointed Experts, their Chair may ask the Centre to invite the Initiator and Respondent, pursuant to Article 4 of these Rules, to provide additional information and/or copies of documents.
7.4 Within 30 days after they have received all information and documents deemed by them to be necessary and appropriate to the issues to be determined, and provided that the Additional fee as mentioned in Article 10.1 is paid, the Appointed Experts shall draft a decision and their Chair shall submit the decision to the Centre.
7.5 Neither the Initiator nor the Respondent shall
- seek an oral hearing in front of the Appointed Experts,
- request ICC to reveal the name of any Appointed Expert,
- seek to have an Appointed Expert or officer of the Banking Commission called as witness, expert or in any similar function to an arbitral tribunal or a court of law hearing the dispute in connection with which such Appointed Expert or officer of the Banking Commission participated by rendering a DOCDEX Decision.
ICC DOCDEX Rules - Article 8: DOCDEX Decision
8.1 Upon receipt of the decision of the Appointed Experts, the Centre shall consult with the Technical Adviser of the Banking Commission or his nominated delegate, to ascertain that the DOCDEX Decision will be in line with the applicable ICC Rules and their interpretation by the Banking Commission. Amendments suggested by the Technical Adviser (or his delegate) shall be subject to the consent of the majority of the Appointed Experts.
8.2 Subject to Article 10.2 of these Rules, the Centre will issue and make available the DOCDEX Decision without delay to
8.2.1 the Initiator and
8.2.2 the Respondent who has requested, pursuant to Article 3.2.3, a DOCDEX Decision in accord-ance with the ICC Documentary Credit Dispute Expertise Rules
8.2.3 The DOCDEX Decision shall be issued by the Centre in the English language, unless Appointed Experts decide otherwise, and shall contain inter alia the following
8.3.1 names of the Initiator and Respondent, and
8.3.2 summary of the representations relevant to the issues determined, and
8.3.3 determination of the issues and the decisions taken with succinctly stated reasons, therefore, and
8.3.4 date of issuance and signature for and on behalf of the Centre.
8.4 The DOCDEX Decision shall be deemed to made at Paris, France, and on the date of its issuance by the Centre
ICC DOCDEX Rules - Article 9: Deposit and publication of the DOCDEX Decision
9.1 An original of each DOCDEX Decision shall be deposited with the Centre and shall be kept there for 10 years.
9.2 The ICC may publish any DOCDEX Decision, provided always the identities of the parties to the dispute are not disclosed.
ICC DOCDEX Rules - Article 10: Costs of DOCDEX
10.1 The costs of the DOCDEX service shall be the Standard Fee set out in the Appendix. The Standard Fee shall not be recoverable. In exceptional circumstances, an Additional Fee may be payable which shall be fixed by the Centre at its discretion, taking into account the complexity of the issue and subject to the ceiling set out in the Appendix under "Additional Fee". Such Additional Fee shall be invoiced to the Initiator within a reasonable time, at the latest, within 45 days after the date of the Acknowledgement of the Request. The Centre will fix a time limit for the payment of the Additional Fee. The Centre may stay the procedure at any time, and instruct the Appointed Experts to suspend their work on the case, until the Additional Fee is paid by the Initiator. No Additional Fee will be charged where the amount of the letter of credit, the collection, or the demand guarantee in dispute does not exceed the minimum amount stated in the Appendix.
10.2 The DOCDEX Decision shall not be issued until the Centre has received the Additional fee, if invoiced
ICC DOCDEX Rules - Article 11: General
11.1 In all matters not expressly provided for in these Rules, the Centre, experts, Appointed Experts, officers, officials and employees of ICC shall adhere to strict confidentiality and shall act in the spirit of these Rules.
11.2 Appointed Experts, officers, officials and employees of ICC assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any message(s), letter(s) or document(s), or for delay, mutilation or other error(s) arising in the transmission of any telecommunication, or for errors in translation and/or interpretation of technical terms.
11.3 Appointed Experts, officers, officials and employees of ICC assume no liability or responsibility for the discharge or purported discharge of their functions in connection with any DOCDEX Decision, unless the act or omission is shown not to have been in good faith.
Thursday, February 15, 2007
eUCP V1.1 Supplement to UCP 600
eUCP - Article e1
Scope of the eUCP
a. The Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation ("eUCP") supplements the Uniform Customs and Practice for Documentary Credits (2007 Revision ICC Publication No. 600,) ("UCP") in order to accommodate presentation of electronic records alone or in combination with paper documents.
b. The eUCP shall apply as a supplement to the UCP where the credit indicates that it is subject to eUCP.
c. This version is Version 1.1. A credit must indicate the applicable version of the eUCP. If it does not do so, it is subject to the version in effect on the date the credit is issued or, if made subject to eUCP by an amendment accepted by the beneficiary, on the date of that amendment.
eUCP - Article e2
Relationship of the eUCP to the UCP
a. A credit subject to the eUCP ("eUCP credit") is also subject to the UCP without express incorporation of the UCP.
b. Where the eUCP applies, its provisions shall prevail to the extent that they would produce a result different from the application of the UCP.
c. If an eUCP credit allows the beneficiary to choose between presentation of paper documents or electronic records and it chooses to present only paper documents, the UCP alone shall apply to that presentation. If only paper documents are permitted under an eUCP credit, the UCP alone shall apply.
eUCP - Article e3
Definitions
a. Where the following terms are used in the UCP, for the purposes of applying the UCP to an electronic record presented under an eUCP credit, the term:
i. appear on their face and the like shall apply to examination of the data content of an electronic record.
ii. document shall include an electronic record.
iii. place for presentation of electronic records means an electronic address.
iv. sign and the like shall include an electronic signature.
v. superimposed, notation or stamped means data content whose supplementary character is apparent in an electronic record.
b. The following terms used in the eUCP shall have the following meanings:
i. electronic record means
- data created, generated, sent, communicated, received or stored by electronic means
- that is capable of being authenticated as to the apparent identity of a sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered, and
- is capable of being examined for compliance with the terms and conditions of the eUCP credit.
ii. electronic signature means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.
iii. format means the data organization in which the electronic record is expressed or to which it refers.
iv. paper document means a document in a traditional paper form.
v. received means the time when an electronic record enters the information system of the applicable recipient in a form capable of being accepted by that system. Any acknowledgement of receipt does not imply acceptance or refusal of the electronic record under an eUCP credit.
eUCP - Article e4
Format
An eUCP credit must specify the formats in which electronic records are to be presented. If the format of the electronic record is not so specified, it may be presented in any format
eUCP - Article e5
Presentation
a. An eUCP credit allowing presentation of:
i. electronic records must state a place for presentation of the electronic records.
ii. Both electronic records and paper documents must also state a place for presentation of the paper documents.
b. Electronic records may be presented separately and need not be presented at the same time.
c. If an eUCP credit allows for presentation of one or more electronic records, the beneficiary is responsible for providing a notice to the bank to which presentation is made signifying when the presentation is complete. The notice of completeness may be given as an electronic record or paper document and must identify the eUCP credit to which it relates. Presentation is deemed not to have been made if the beneficiary's notice is not received.
d.
i. Each presentation of an electronic record and the presentation of paper documents under an eUCP credit must identify the eUCP credit under which it is presented.
ii. A presentation not so identified may be treated as not received.
e. If the bank to which presentation is to be made is open but its system is unable to receive a transmitted electronic record on the stipulated expiry date and/or the last day of the period of time after the date of shipment for presentation, as the case may be, the bank will be deemed to be closed and the date for presentation and/or the expiry date shall be extended to the first following banking day on which such bank is able to receive an electronic record. If the only electronic record remaining to be presented is the notice of completeness, it may be given by telecommunications or by paper document and will be deemed timely, provided that it is sent before the bank is able to receive an electronic record.
f. An electronic record that cannot be authenticated is deemed not to have been presented.
eUCP - Article e6
Examination
a. If an electronic record contains a hyperlink to an external system or a presentation indicates that the electronic record may be examined by reference to an external system, the electronic record at the hyperlink or the referenced system shall be deemed to be the electronic record to be examined. The failure of the indicated system to provide access to the required electronic record at the time of examination shall constitute a discrepancy.
b. The forwarding of electronic records by a nominated bank pursuant to its nomination signifies that it has satisfied itself as to the apparent authenticity of the electronic records.
c. The inability of the issuing bank, or confirming bank, if any, to examine an electronic record in a format required by the eUCP credit or, if no format is required, to examine it in the format presented is not a basis for refusal.
eUCP - Article e7
Notice of Refusal
a.
i. The time period for the examination of documents commences on the banking day following the banking day on which the beneficiary's notice of completeness is received.
ii. If the time for presentation of documents or the notice of completeness is extended, the time for the examination of documents commences on the first following banking day on which such bank is able to receive the notice of completeness.
b. If an issuing bank, the confirming bank, if any, or a nominated bank acting on its nomination, provides a notice of refusal of a presentation which includes electronic records and does not receive instructions from the party to which notice of refusal is given within 30 calendar days from the date the notice of refusal is given for the disposition of the electronic records, the bank shall return any paper documents not previously returned to the presenter but may dispose of the electronic records in any manner deemed appropriate without any responsibility.
eUCP - Article e9
Date of Issuance
Unless an electronic record contains a specific date of issuance, the date on which it appears to have been sent by the issuer is deemed to be the date of issuance. The date of receipt will be deemed to be the date it was sent if no other date is apparent.
eUCP - Article e8
Originals and Copies
Any requirement of the UCP or an eUCP credit for presentation of one or more originals or copies of an electronic record is satisfied by the presentation of one electronic record
eUCP - Article e10
Transport
If an electronic record evidencing transport does not indicate a date of shipment or dispatch, the date of issuance of the electronic record will be deemed to be the date of shipment or dispatch. However, if the electronic record bears a notation that evidences the date of shipment or dispatch, the date of the notation will be deemed to be the date of shipment or dispatch. A notation showing additional data content need not be separately signed or otherwise authenticated.
eUCP - Article e11
Corruption of an Electronic Record After Presentation
a. If an electronic record that has been received by the issuing bank, confirming bank, or another nominated bank appears to have been corrupted, the bank may inform the presenter and may request that the electronic record be re-presented.
b. If the bank requests that an electronic record be re-presented:
i. the time for examination is suspended and resumes when the presenter re-presents the electronic record; and
ii. if the nominated bank is not the confirming bank, it must provide the issuing bank and any confirming bank with notice of the request for re-presentation and inform it of the suspension; but
iii. if the same electronic record is not re-presented within thirty (30) calendar days, the bank may treat the electronic record as not presented, and
iv. any deadlines are not extended.
eUCP - Article e12
Additional Disclaimer of Liability for Presentation of Electronic Records under eUCP
By satisfying itself as to the apparent authenticity of an electronic record, banks assume no liability for the identity of the sender, source of the information or its complete and unaltered character other than that which is apparent in the electronic record received by the use of a commercially acceptable data process for the receipt, authentication and identification of electronic records.
Scope of the eUCP
a. The Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation ("eUCP") supplements the Uniform Customs and Practice for Documentary Credits (2007 Revision ICC Publication No. 600,) ("UCP") in order to accommodate presentation of electronic records alone or in combination with paper documents.
b. The eUCP shall apply as a supplement to the UCP where the credit indicates that it is subject to eUCP.
c. This version is Version 1.1. A credit must indicate the applicable version of the eUCP. If it does not do so, it is subject to the version in effect on the date the credit is issued or, if made subject to eUCP by an amendment accepted by the beneficiary, on the date of that amendment.
eUCP - Article e2
Relationship of the eUCP to the UCP
a. A credit subject to the eUCP ("eUCP credit") is also subject to the UCP without express incorporation of the UCP.
b. Where the eUCP applies, its provisions shall prevail to the extent that they would produce a result different from the application of the UCP.
c. If an eUCP credit allows the beneficiary to choose between presentation of paper documents or electronic records and it chooses to present only paper documents, the UCP alone shall apply to that presentation. If only paper documents are permitted under an eUCP credit, the UCP alone shall apply.
eUCP - Article e3
Definitions
a. Where the following terms are used in the UCP, for the purposes of applying the UCP to an electronic record presented under an eUCP credit, the term:
i. appear on their face and the like shall apply to examination of the data content of an electronic record.
ii. document shall include an electronic record.
iii. place for presentation of electronic records means an electronic address.
iv. sign and the like shall include an electronic signature.
v. superimposed, notation or stamped means data content whose supplementary character is apparent in an electronic record.
b. The following terms used in the eUCP shall have the following meanings:
i. electronic record means
- data created, generated, sent, communicated, received or stored by electronic means
- that is capable of being authenticated as to the apparent identity of a sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered, and
- is capable of being examined for compliance with the terms and conditions of the eUCP credit.
ii. electronic signature means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.
iii. format means the data organization in which the electronic record is expressed or to which it refers.
iv. paper document means a document in a traditional paper form.
v. received means the time when an electronic record enters the information system of the applicable recipient in a form capable of being accepted by that system. Any acknowledgement of receipt does not imply acceptance or refusal of the electronic record under an eUCP credit.
eUCP - Article e4
Format
An eUCP credit must specify the formats in which electronic records are to be presented. If the format of the electronic record is not so specified, it may be presented in any format
eUCP - Article e5
Presentation
a. An eUCP credit allowing presentation of:
i. electronic records must state a place for presentation of the electronic records.
ii. Both electronic records and paper documents must also state a place for presentation of the paper documents.
b. Electronic records may be presented separately and need not be presented at the same time.
c. If an eUCP credit allows for presentation of one or more electronic records, the beneficiary is responsible for providing a notice to the bank to which presentation is made signifying when the presentation is complete. The notice of completeness may be given as an electronic record or paper document and must identify the eUCP credit to which it relates. Presentation is deemed not to have been made if the beneficiary's notice is not received.
d.
i. Each presentation of an electronic record and the presentation of paper documents under an eUCP credit must identify the eUCP credit under which it is presented.
ii. A presentation not so identified may be treated as not received.
e. If the bank to which presentation is to be made is open but its system is unable to receive a transmitted electronic record on the stipulated expiry date and/or the last day of the period of time after the date of shipment for presentation, as the case may be, the bank will be deemed to be closed and the date for presentation and/or the expiry date shall be extended to the first following banking day on which such bank is able to receive an electronic record. If the only electronic record remaining to be presented is the notice of completeness, it may be given by telecommunications or by paper document and will be deemed timely, provided that it is sent before the bank is able to receive an electronic record.
f. An electronic record that cannot be authenticated is deemed not to have been presented.
eUCP - Article e6
Examination
a. If an electronic record contains a hyperlink to an external system or a presentation indicates that the electronic record may be examined by reference to an external system, the electronic record at the hyperlink or the referenced system shall be deemed to be the electronic record to be examined. The failure of the indicated system to provide access to the required electronic record at the time of examination shall constitute a discrepancy.
b. The forwarding of electronic records by a nominated bank pursuant to its nomination signifies that it has satisfied itself as to the apparent authenticity of the electronic records.
c. The inability of the issuing bank, or confirming bank, if any, to examine an electronic record in a format required by the eUCP credit or, if no format is required, to examine it in the format presented is not a basis for refusal.
eUCP - Article e7
Notice of Refusal
a.
i. The time period for the examination of documents commences on the banking day following the banking day on which the beneficiary's notice of completeness is received.
ii. If the time for presentation of documents or the notice of completeness is extended, the time for the examination of documents commences on the first following banking day on which such bank is able to receive the notice of completeness.
b. If an issuing bank, the confirming bank, if any, or a nominated bank acting on its nomination, provides a notice of refusal of a presentation which includes electronic records and does not receive instructions from the party to which notice of refusal is given within 30 calendar days from the date the notice of refusal is given for the disposition of the electronic records, the bank shall return any paper documents not previously returned to the presenter but may dispose of the electronic records in any manner deemed appropriate without any responsibility.
eUCP - Article e9
Date of Issuance
Unless an electronic record contains a specific date of issuance, the date on which it appears to have been sent by the issuer is deemed to be the date of issuance. The date of receipt will be deemed to be the date it was sent if no other date is apparent.
eUCP - Article e8
Originals and Copies
Any requirement of the UCP or an eUCP credit for presentation of one or more originals or copies of an electronic record is satisfied by the presentation of one electronic record
eUCP - Article e10
Transport
If an electronic record evidencing transport does not indicate a date of shipment or dispatch, the date of issuance of the electronic record will be deemed to be the date of shipment or dispatch. However, if the electronic record bears a notation that evidences the date of shipment or dispatch, the date of the notation will be deemed to be the date of shipment or dispatch. A notation showing additional data content need not be separately signed or otherwise authenticated.
eUCP - Article e11
Corruption of an Electronic Record After Presentation
a. If an electronic record that has been received by the issuing bank, confirming bank, or another nominated bank appears to have been corrupted, the bank may inform the presenter and may request that the electronic record be re-presented.
b. If the bank requests that an electronic record be re-presented:
i. the time for examination is suspended and resumes when the presenter re-presents the electronic record; and
ii. if the nominated bank is not the confirming bank, it must provide the issuing bank and any confirming bank with notice of the request for re-presentation and inform it of the suspension; but
iii. if the same electronic record is not re-presented within thirty (30) calendar days, the bank may treat the electronic record as not presented, and
iv. any deadlines are not extended.
eUCP - Article e12
Additional Disclaimer of Liability for Presentation of Electronic Records under eUCP
By satisfying itself as to the apparent authenticity of an electronic record, banks assume no liability for the identity of the sender, source of the information or its complete and unaltered character other than that which is apparent in the electronic record received by the use of a commercially acceptable data process for the receipt, authentication and identification of electronic records.
Thursday, February 8, 2007
Documentary Collections
A Documentary Collection would normally comprise a set of commercial documents relating to the goods being exported, which are sent to the Importer's bank along with a Collection Schedule and usually a Bill of Exchange. A set of documents containing a Bill of Lading would normally allow the holder to take possession of the goods. A Collection takes one of the following forms:
Documents Against Payment: the Collection documents are presented to the Importer and released in exchange for immediate payment (payment 'at sight').
Documents Against Acceptance: this applies with a Tenor Bill of Exchange and describes the situation where the Collection documents are released after the Importer has 'accepted' them. Acceptance is signified by the Importer's signature on the Bill of Exchange or other payment authority enclosed in the Collection. Payment will be made at a fixed or determinable future date
Features & Benefits
Easy to use, simpler than a Letter of Credit
Cheaper than alternative secure trading instruments
Increased certainty of payment when collection is 'at sight'
Improves cashflow control for the Exporter
Option to use 'term' collection payment improves cashflow for the Importer (through potential to negotiate an extended credit period).
Key Stages Documentary Collection Process
1. Importer and Exporter negotiate the sale and discuss the contract
2. Exporter sends goods to Importer
3. Exporter sends Collection Schedule and Documents to their bank, the Remitting Bank
4. Collection Schedule and Documents sent from Remitting Bank to the Importers Bank, the Presenting/Collecting Bank
5. Documents are presented to Importer by Presenting/Collecting Bank for payment if a 'Sight Bill' or acceptance if a 'Term Bill'
6. Importer pays Bill if 'at sight', or accepts the Bill if 'term'
7. Money sent to Remitting bank if 'at sight', notice of acceptance sent if 'term'
8. Remitting Bank sends money to Exporter or holds acceptance Bill for presentation at maturity
Key Stage 1. Importer and Exporter negotiate the sale and discuss the contract
The more information that is determined at this stage, the less likelihood there is of problems occurring and the more efficient the trading process will be.
Discussions should aim to ensure that the contract includes all the details of the transaction. These would typically cover the following, though they will vary according to specific countries, goods etc.
Financial Considerations
Individual Importer credit limits, with 'in house' and credit insurer if applicable. (Use of credit insurance should never be revealed to the Importer) - consideration for Exporter
Payment terms, ie. upon receipt of shipping documents by the Importer's Bank or have credit terms been agreed
Currency of contract/payment
Exchange control regulations
The need for any import licenses
Banking details - Importers details to be provided to Exporter.
Legal Considerations
Terms and conditions of sale/purchase
Agency or distribution arrangements
Retention of title. If the Importer refuses or is unable to pay, does the Exporter still have access and control over the goods - consideration for Exporter
'Protest' re. unaccepted/unpaid bills of exchange - consideration for Exporter
Usefulness of appointing a 'Case of need' - consideration for Exporter
Consignment stock - restrictions on repatriating unused stock - consideration for Exporter
Product liability insurance
Counterfeit supplies - consideration for Importer.
Supply Considerations
Delivery periods on goods
Delays with particular goods
Preference for non-standard quantity packing
Special requirements such as pre-shipment fumigation
Pre-shipment inspection/price comparison requirements.
Shipping Considerations
Methods of transport available; direct or indirect
Frequency of departures
Approximate costs of alternative methods/routes
Type of packing
Correct Incoterm according to contract/transport mode
Optimum delivery points, i.e. transported from where to where
Required documentation, provided by Exporter to Importer
Insurance of goods
Delays for consular work or inspection formalities.
Key Stage 2. Exporter sends goods to Importer
Shipment of the goods takes place via the agreed method, under the terms of the contract.
Key Stage 3. Exporter sends Collection Schedule and Documents to their bank, the Remitting Bank
The Exporter then provides documents to their bank, the Remitting Bank, and asks them to undertake the documentary collection.
Key Stage 4. Collection Schedule and Documents sent from Remitting Bank to the Importers Bank, the Presenting/Collecting Bank
The Remitting Bank is the Exporter's bank, the Presenting Bank is the Importer's Bank.
The Presenting/Collecting Bank is any bank other than the Remitting Bank involved in processing the collection.
Choice of 2 delivery channels
There are two alternative delivery channels: paper-based; e-banking.
Paper-based Exporter completes a paper Collection schedule, encloses the relevant documentation and forwards it to the Exporter's bank for checking and onward remittance to the Importer's bank (the 'Presenting/Collecting Bank').
E-banking Exporter prepares an electronic Collection schedule using an electronic delivery channel and then posts the documents direct to the Importers' bank.
The cost of the collections service will be determined by the choice of delivery channel, with electronically originated applications being the lowest cost option.
Method of Sending
For the two channels of delivery described above, the documents can be sent to the Importer's bank by either of the two methods below. The Exporter decides what method is used. This is indicated on the schedule form:
1. Mail - the standard choice unless otherwise indicated.
2. Courier - useful when documents need to be presented quickly.
Key Stage 5. Documents are presented to Importer by Presenting/Collecting Bank for payment if a 'Sight Bill' or acceptance if a 'Term Bill'
The Presenting/Collecting Bank contacts the Importer to provide details of the schedule and documents sent to them from the Remitting Bank. The documents are held by the Presenting/Collecting Bank and will not be released until the terms given by the Exporter have been met.
It is important to note that the Presenting/Collecting Bank is acting as agent for the Exporter. This contractual agency agreement overrides any relationship the Presenting Bank might have with the Importer. The Presenting Bank must only act in accordance with the instructions contained in the schedule
Key Stage 6. Importer pays Bill if 'at sight', or accepts the Bill if 'term'
Settlement can be by immediate payment if the Bill is 'at sight', or acceptance if the Bill is 'term' ie. where a credit period is given. With term bills, the Importer accepts the Bill of Exchange and in so doing, undertakes to make payment on an agreed future date. It is important to note that payment is not guaranteed by the Importer's bank (Presenting Bank) even when the Importer has accepted a bill. At maturity, the Presenting Bank will contact the Importer and present the accepted bill for payment.
Key Stage 7. Proceeds sent to Remitting Bank if 'at sight', notice of acceptance sent if 'term'
When payment has been received by the Presenting Bank through either 'sight' or 'acceptance', they pay the Remitting Bank by mail or SWIFT (Society for Worldwide Interbank Financial Telecommunications).
Key Stage 8. Remitting Bank sends proceeds to Exporter or holds accepted Bill for presentation at maturity
Payment is made to the Exporter either at sight, or on maturity of a term bill; both less charges due.
If payment is refused
Although there is a contractual arrangement between Importer and Exporter, the Importer cannot be forced to pay by a bank under the Documentary Collection.
If payment is refused when the documents are to be released on payment (ie. at sight)
If the Importer refuses payment, the Presenting/Collecting Bank advises the Remitting Bank and therefore the Exporter, and asks for their further instructions. The Presenting/Collecting Bank to the order of the Remitting Bank holds documents.
The Presenting/Collecting Bank may arrange 'Protest' (or other Legal process) of the Bill of Exchange if the Exporter stipulated this on the schedule.
If acceptance is refused when the documents are to be released on acceptance
If the Importer refuses acceptance, see above.
If accepted and not paid on the due date
The Bill of Exchange may have been accepted, but then payment is refused on the due date. However the documents will have been released to the Importer upon acceptance. The Presenting/Collecting Bank will then advise the Remitting Bank and ask for further instructions.
Avalisation
In order to avoid the above, the Exporter may wish to consider asking that documents be released against the Importer's acceptance of the Bill of Exchange and a guarantee of payment from the Presenting/Collecting Bank. This is called Avalisation.
We recommend that if payment is refused, the two parties try to resolve the matter between them, whether the concerns are contractual or relating to the goods themselves.
We would strongly recommend that anyone who is dealing with documentary collections refers to the Uniform Rules for Collections (URC).
Documents Against Payment: the Collection documents are presented to the Importer and released in exchange for immediate payment (payment 'at sight').
Documents Against Acceptance: this applies with a Tenor Bill of Exchange and describes the situation where the Collection documents are released after the Importer has 'accepted' them. Acceptance is signified by the Importer's signature on the Bill of Exchange or other payment authority enclosed in the Collection. Payment will be made at a fixed or determinable future date
Features & Benefits
Easy to use, simpler than a Letter of Credit
Cheaper than alternative secure trading instruments
Increased certainty of payment when collection is 'at sight'
Improves cashflow control for the Exporter
Option to use 'term' collection payment improves cashflow for the Importer (through potential to negotiate an extended credit period).
Key Stages Documentary Collection Process
1. Importer and Exporter negotiate the sale and discuss the contract
2. Exporter sends goods to Importer
3. Exporter sends Collection Schedule and Documents to their bank, the Remitting Bank
4. Collection Schedule and Documents sent from Remitting Bank to the Importers Bank, the Presenting/Collecting Bank
5. Documents are presented to Importer by Presenting/Collecting Bank for payment if a 'Sight Bill' or acceptance if a 'Term Bill'
6. Importer pays Bill if 'at sight', or accepts the Bill if 'term'
7. Money sent to Remitting bank if 'at sight', notice of acceptance sent if 'term'
8. Remitting Bank sends money to Exporter or holds acceptance Bill for presentation at maturity
Key Stage 1. Importer and Exporter negotiate the sale and discuss the contract
The more information that is determined at this stage, the less likelihood there is of problems occurring and the more efficient the trading process will be.
Discussions should aim to ensure that the contract includes all the details of the transaction. These would typically cover the following, though they will vary according to specific countries, goods etc.
Financial Considerations
Individual Importer credit limits, with 'in house' and credit insurer if applicable. (Use of credit insurance should never be revealed to the Importer) - consideration for Exporter
Payment terms, ie. upon receipt of shipping documents by the Importer's Bank or have credit terms been agreed
Currency of contract/payment
Exchange control regulations
The need for any import licenses
Banking details - Importers details to be provided to Exporter.
Legal Considerations
Terms and conditions of sale/purchase
Agency or distribution arrangements
Retention of title. If the Importer refuses or is unable to pay, does the Exporter still have access and control over the goods - consideration for Exporter
'Protest' re. unaccepted/unpaid bills of exchange - consideration for Exporter
Usefulness of appointing a 'Case of need' - consideration for Exporter
Consignment stock - restrictions on repatriating unused stock - consideration for Exporter
Product liability insurance
Counterfeit supplies - consideration for Importer.
Supply Considerations
Delivery periods on goods
Delays with particular goods
Preference for non-standard quantity packing
Special requirements such as pre-shipment fumigation
Pre-shipment inspection/price comparison requirements.
Shipping Considerations
Methods of transport available; direct or indirect
Frequency of departures
Approximate costs of alternative methods/routes
Type of packing
Correct Incoterm according to contract/transport mode
Optimum delivery points, i.e. transported from where to where
Required documentation, provided by Exporter to Importer
Insurance of goods
Delays for consular work or inspection formalities.
Key Stage 2. Exporter sends goods to Importer
Shipment of the goods takes place via the agreed method, under the terms of the contract.
Key Stage 3. Exporter sends Collection Schedule and Documents to their bank, the Remitting Bank
The Exporter then provides documents to their bank, the Remitting Bank, and asks them to undertake the documentary collection.
Key Stage 4. Collection Schedule and Documents sent from Remitting Bank to the Importers Bank, the Presenting/Collecting Bank
The Remitting Bank is the Exporter's bank, the Presenting Bank is the Importer's Bank.
The Presenting/Collecting Bank is any bank other than the Remitting Bank involved in processing the collection.
Choice of 2 delivery channels
There are two alternative delivery channels: paper-based; e-banking.
Paper-based Exporter completes a paper Collection schedule, encloses the relevant documentation and forwards it to the Exporter's bank for checking and onward remittance to the Importer's bank (the 'Presenting/Collecting Bank').
E-banking Exporter prepares an electronic Collection schedule using an electronic delivery channel and then posts the documents direct to the Importers' bank.
The cost of the collections service will be determined by the choice of delivery channel, with electronically originated applications being the lowest cost option.
Method of Sending
For the two channels of delivery described above, the documents can be sent to the Importer's bank by either of the two methods below. The Exporter decides what method is used. This is indicated on the schedule form:
1. Mail - the standard choice unless otherwise indicated.
2. Courier - useful when documents need to be presented quickly.
Key Stage 5. Documents are presented to Importer by Presenting/Collecting Bank for payment if a 'Sight Bill' or acceptance if a 'Term Bill'
The Presenting/Collecting Bank contacts the Importer to provide details of the schedule and documents sent to them from the Remitting Bank. The documents are held by the Presenting/Collecting Bank and will not be released until the terms given by the Exporter have been met.
It is important to note that the Presenting/Collecting Bank is acting as agent for the Exporter. This contractual agency agreement overrides any relationship the Presenting Bank might have with the Importer. The Presenting Bank must only act in accordance with the instructions contained in the schedule
Key Stage 6. Importer pays Bill if 'at sight', or accepts the Bill if 'term'
Settlement can be by immediate payment if the Bill is 'at sight', or acceptance if the Bill is 'term' ie. where a credit period is given. With term bills, the Importer accepts the Bill of Exchange and in so doing, undertakes to make payment on an agreed future date. It is important to note that payment is not guaranteed by the Importer's bank (Presenting Bank) even when the Importer has accepted a bill. At maturity, the Presenting Bank will contact the Importer and present the accepted bill for payment.
Key Stage 7. Proceeds sent to Remitting Bank if 'at sight', notice of acceptance sent if 'term'
When payment has been received by the Presenting Bank through either 'sight' or 'acceptance', they pay the Remitting Bank by mail or SWIFT (Society for Worldwide Interbank Financial Telecommunications).
Key Stage 8. Remitting Bank sends proceeds to Exporter or holds accepted Bill for presentation at maturity
Payment is made to the Exporter either at sight, or on maturity of a term bill; both less charges due.
If payment is refused
Although there is a contractual arrangement between Importer and Exporter, the Importer cannot be forced to pay by a bank under the Documentary Collection.
If payment is refused when the documents are to be released on payment (ie. at sight)
If the Importer refuses payment, the Presenting/Collecting Bank advises the Remitting Bank and therefore the Exporter, and asks for their further instructions. The Presenting/Collecting Bank to the order of the Remitting Bank holds documents.
The Presenting/Collecting Bank may arrange 'Protest' (or other Legal process) of the Bill of Exchange if the Exporter stipulated this on the schedule.
If acceptance is refused when the documents are to be released on acceptance
If the Importer refuses acceptance, see above.
If accepted and not paid on the due date
The Bill of Exchange may have been accepted, but then payment is refused on the due date. However the documents will have been released to the Importer upon acceptance. The Presenting/Collecting Bank will then advise the Remitting Bank and ask for further instructions.
Avalisation
In order to avoid the above, the Exporter may wish to consider asking that documents be released against the Importer's acceptance of the Bill of Exchange and a guarantee of payment from the Presenting/Collecting Bank. This is called Avalisation.
We recommend that if payment is refused, the two parties try to resolve the matter between them, whether the concerns are contractual or relating to the goods themselves.
We would strongly recommend that anyone who is dealing with documentary collections refers to the Uniform Rules for Collections (URC).
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