In this article, Gautam Kumar Swain pursuing M.A, in Business Law from NUJS, Kolkata discusses export of Goods and Services Regulations.

Introduction

The Reserve Bank of India had formed ‘Foreign Exchange (Export of Goods & Services) Regulations’ 2015 by the integrity of the powers given by Section 7(3) (1) (a) and Section 47(2) of FEMA Act, 1999 and in the ambit of its Notification No. FEMA. 23/2000 – RB, Dated 23/05/2000 as modified from time to time, the latest being w.e.f 12/01/2016. Export trade is controlled by the Directorate General of Foreign Trade and its regional offices working under the Ministry of Commerce and Industry, Department of Commerce, Govt. of India.

Export With Prior Authorization

Regulation 13 specifies that certain exports require prior approval which are as follows: –

1. Export of goods under exclusive deal between the Central Government and Government of a foreign state; or
2. Export under rupee credits provided by the Central Government to Government of a foreign state shall be monitored by the terms and conditions laid out in the several public notices pointed by the Trade Control Authority in India and the information by the Trade Control Authority in India and the information issued from time to time by Reserve Bank of India.
3. An export under the line of credit provided to the bank or a financial institution performing in an offshore state by the Exim Bank for funding exports from India shall be ruled by the terms and conditions thought out by RBI to the approved dealers from time to time.

Declaration of Exports

In the case of trade abroad by Customs manual harbors, every retailer of goods or software in tangible form or through any other manner, either directly or indirectly to any place outside India other than Nepal and Bhutan, shall provide to the defined authority an affirmation in one of the forms EDR or SOFTEX.  The declaration shall be enclosed with such proofs which shall consist of true and correct material exacts including the amount symbolizing,

1. The full export worth of the goods or software; or
2. If the total financial worth is not measurable at the time of shipping, the value which the exporter, having attention to the existing market conditions expects to accept for the sale of the goods or the software in international market;
3. Recognition of export earnings in relation to export of goods/software from the third party should be accordingly asserted;
4. The Importer – Exporter Code number assigned by the Director General of Foreign Trade under Section 7 of the Foreign Trade (Development & Regulation) Act, 1992.

Export with Declaration

Regulation 3(3) explains that in regard to export of services to which any of the Forms specified didn’t apply, the exporter can export such services without providing any declaration. It shall be responsible for appreciating the amount of foreign exchange which becomes due or get accrued on account of such export and to resubmit the same to India in agreement with the rules of the Act and these regulations, as also other rules and regulations specified or provided under the Act.

Exemptions from Declarations

Rule 4 provides the list of cases which are immune from providing disclosure: –

1. For exports of worth not exceeding the US $25000
2. Trade models of goods and advertising material provided free of payment;
3. Individual belongings of travellers, either escorted or unescorted;
4. Ship’s supplies, transhipment baggage and cargo provided under the rules of the Central Government or of such officers as may be named by the Central Government in this interest or of the military, naval or air force authorities in India for military, naval or air force needs;
5. By form of award of goods and properties guided by an affirmation by the exporter that they are within the limit of Rs.5 lakh in worth;
6. Aircraft or airplanes engines and spare parts for restoring and modification abroad subject to their re import into India after change/revamp, inside a duration of six months from the date of export;
7. Goods imported without charge on re-export basis;
8. The mentioned products which are allowed by the Development Commissioner of SEZ, EHTP, STP or FTZ to be exported again, namely:
   1. 1. Imported goods found damaged, for the intention of their substitution by the foreign associates/collaborators;
      2. Goods imported from foreign associates/partners on credit basis;
      3. Goods imported from foreign associates/partners without charge found excess after production function.
9. Substitution of goods exported free of charge in conformance with the rules and regulations of Foreign Trade Policy in use, for the time being;
10. Goods sent outside India for experimentation subject to again being imported into India;
11. Damaged goods sent outside India for modification and revamping and again being imported into India provided the goods are delivered by a certificate from a lawful dealer in India that the shipping is for overhauling and repair and re-import and that the export does not include any dealing in foreign exchange;
12. Exports allowed by RBI, on request made to it, subject to the terms and conditions, if any, as mentioned in the application.

EVIDENCE

Regulation 7

It administers that the Commissioner of Customs or the Postal Authority or the office of Department of Electronics to whom the enunciation form is endorsed may, to content themselves of necessary compliance wants such proofs in support of the affirmation may establish that-

1. The exporter is a person residing in India and has a place of business situated in India;
2. The destination mentioned in the declaration form is the final venue of the destination of goods or articles exported;
3. The value specified in the declaration represents-
   1. 1. The full shipping cost of the goods or software; or
      2. Where the total shipping cost of the articles or software is not confirmed at the time of export, the worth of which the exporter, having regard to the existing market conditions anticipates obtaining from the sale of goods or articles in the international market.   

PROCEDURE

The declaration shall be performed in sets of mentioned numbers as particularized.  Regulation 6 specifies that Declaration in Form E,D, F shall have complied in duplicate to the Commissioner of Customs.  After properly verifying, validating and authenticating the declaration form, the Commissioner of Customs shall advance the authentic declaration form/data to the nearest office of RBI and give the duplicate form to the exporter for being submitted to the approved owner.

The declaration in form SOFTEX in regard to export of computer software and audio/video/television software and other third party equipment software shall be complied in triplicate to the authorized official of Ministry of Information Technology, Government of India at the software Technology Parks of India or the Free Trade Zones or Special Economic Zones in India.  After confirming the three submitted copies of SOFTEX form, the authorized official shall forward the initial copies directly to the nearest office of RBI and return the matching copy to the exporter.  The third copy shall be retained by the authorized official for the record.

Documents to be Submitted to Approved Dealer

The Documents belonging to export shall be submitted to the certified dealer specified in the declaration form, within 21 days from the date of shipment, or from the date of authorization of the SOFTEX form. The certified dealer can accept the documents further the period of 21 days, subject to the orders issued by the RBI from time to time, for reasons beyond the control of the exporter.

The Certified dealer may accept, for bargaining or collection, shipping documents including bills of exchange covering shipments, from his part. Before accepting such documents, the certified dealer shall verify –

1. Whether the financial worth mentioned in the declaration form vary from the value referred to in the documents being negotiated or sent for accumulation; or
2. Whether the value described in the disclosure form is less than the value shown in the documents being negotiated or sent for accumulation, require the part also concerned to sign such declaration and thereupon such part shall be obligated to abide with such demand and such part signing the declaration shall be considered to be the exporter for the need of these regulations to the magnitude of the full worth specified in the documents being negotiated or sent for collection and shall be administered by these regulations accordingly.

Checklist for Scrutiny of Forms to be Ensured by Authorised Dealer

The number on the corresponding copy of a GR form introduced to them is the same as that of the first copy which is usually mentioned on the Bill of Filing/Shipping Bill and the copy has been duly affirmed and validated by suitable Customs Officials.

In Statutory Declaration Form, that the Shipping Bill No. ought to be the same as that appearing on the Bill of Lading.

On account of C.I.F, C&F. and so forth contracts, where the cargo is sought to be paid at destination, that the deduction made, is only to the degree of freight announced on GR/SDF or freight indicated on the Bill of Lading/Airway Bill, whichever is less.

Documents, in essence, should not have any errors as to depiction of products or merchandise exported, value of goods exported or country of destination.

If marine insurance is made by the exporters they had to ensure that amount paid is recovered through invoice or bills raised.

Authorised Dealers can acknowledge the Bill of Lading/Airway Bill issued on ‘cargo prepaid’ basis where the sale contract is on F.O.B(Free on Board)., F.A.S(Free Alongside Ship) etc. premise provided the amount of cargo has been incorporated in the invoice and the bill raised.

Export realisable value might be more than what was initially declared to or acknowledged by the Customs.

In the event of documents being consulted by a person other than the exporter who has signed GR/PP/SDF/SOFTEX Form, he/she will have to abide by the Regulation 12 of Export Regulations.

Sometimes, contracts may accommodate for payment of penalty for late shipment of merchandise, final settlement of price might be subject to the after effects of quality analysis. As these variations came from the terms of agreement, Authorised Dealer banks may acknowledge them on generation of documentary evidence after checking the arithmetical precision of the calculations and on adjusting the terms of fundamental contracts.

Dispatch of Shipping Documents

Banks should ordinarily dispatch shipping records to their abroad branches/correspondents speedily. They might dispatch shipping records direct to the recipients where:

1. Advance payment or an irrevocable letter of credit has been received for the full value of the export, and the necessary sale contract/letter of credit provides for the exporter that the exporter is a regular client, standing and reputation record realization of shipment proceeds is satisfactory.
2. Moreover, products or software traded should be followed with a declaration by the trader that they are not more than Rs. 25000/- in value and are not declared on GR/SDF/PP/SOFTEX.

Special Economic Zone units may expedite the trade documents to the representatives outside India if proceeds are repatriated through Authorised Dealer specified in GR Forms, and GR Form is submitted to the bank within 21 days of trade, where exporters have gotten 100 percent advance for the merchandise or services they may send directly to the recipient.

Guaranteed Remittance Approval for Trade

Members of Trade Fair/Exhibition abroad are now allowed to take/export products for presentation and sale; unsold exhibit things may be sold outside the Fair, at marked down values. Moreover, members are allowed to ‘gift’ unsold merchandise up to the estimation of US $ 5000 for every exporter, per exhibition.

Authorized Dealer may endorse GR Form of trade items for show or show-cum-sale in exhibition fairs provided that:

1. Exporter shall create relative Bill of Entry inside one month of re-import of unsold goods or merchandise, sale proceeds of the goods sold are repatriated to India, procedure of disposal of all items shipped, as well as the repatriation, is accounted for to Authorised Dealer, subject to 100 per cent audit by their internal evaluators/examiners.
2. GR waiver might be granted, for, Export of Goods for re-import after repairs /upkeep /testing /adjustment, etc., subject to exporter shall deliver relative Bill of Entry inside one month of re-import of the exported goods or merchandise and if destroyed amid testing get an appropriate authentication issued by the testing organization.

Personal Particulars Form

Postal Authorities and delegates allow export of goods or articles by post only if the first copy of the form had been endorsed by an Authorised Dealer or bank only after assuring that the package is being addressed to their branch or correspondent bank in the country of import with information to deliver against payment or acceptance.

Counter Signature on Personal Particulars Form

Banks can endorse Personal Particular forms covering packages addressed explicitly to the bearers, if an unchangeable letter of credit for the full value of the goods to be exported has been issued in favour of the exporter and has been instructed through the bank of the authorised Dealer concerned or the full value of the consignment has been received in advance or acceptable plans made for recognition of the export proceeds on basis of the standing and previous record of the exporter. The Authorized Dealer should also attest any change in the name and address of beneficiary on the Personal Particulars form.

Disposal of SOFTEX Forms

Regulation 6 of Export Regulations mentions that arbitrary inspections of the relevant duplicate forms by their internal/simultaneous auditors are required. Non-realization or short realization of forms are allowed, and it should be within the powers delegated, or with prior permission of RBI. Export declaration (duplicate) form needs to be accordingly certified, where a part of the export proceeds is credited to an Exchange Earners Foreign Currency Account.

Terms of Payment-Invoicing

Exporters should bill their international customers rhythmically, i.e., at least once a month or on reaching the target as specified in the contract entered into with the international client. The last itemized bill should be raised within 15 days from the date of accomplishment of the contract.The exporters can submit the combined SOFTEX form for all the bills raised for ‘one-shot operation’. SOFTEX forms should be submitted in triplicate on shipment of computer software and audio/video/television software to the entitled official concerned of the Government of India at STPI/EPZ/FTZ/SEZ for appraisal not more than 30 days from the date of invoice. The bills raised on international clients are subject to evaluation by Government Officials, and consequent change can be made in the bill value, if necessary.

Acknowledgement of Export Value

Regulation 9 specifies that the sum representing the full worth of value of merchandise/software/services traded shall be acknowledged and repatriated to India inside 9 months from the date of trade, gave that where the products are exported to a distribution centre established outside India with the consent of RBI, the full worth shall be paid to the approved merchant as it is acknowledged and in any case inside 15 months.  The RBI, for sufficient reasons, may amplify the time of 9 months to 15 months.

Where the trade has been made by the units in SEZs/SHE/EOUs/EHTPs/STPs/BTS, the full worth of merchandise shall be acknowledged and repatriated to India inside nine months from the date of the trade. RBI may extend the said period for an adequate and sensible cause is shown.

Delay in Receipt of Installment

Regulation 14

It specifies that where in connection to merchandise or software trade of which is required to be proclaimed on the predetermined form and export of services, in regard of which no declaration forms have been made pertinent, the predefined period has lapsed and the payment accordingly has not been made, the RBI may provide to any individual who had sold the products or who is qualified to sell the merchandise or get the deal thereof, such directions as appear to it to be convenient for the purpose of securing –

1. The installment therefore if the  merchandise has been sold; and
2. The deal of goods and payment thereof, if products or software has not been sold or re import thereof into India as the conditions allow, inside such period as the RBI may determine for this sake;

The oversight of the RBI to give directions might not have the impact of vindicating the individual committing the negation from the results thereof.

Payment Methods

The Full export price of the goods or articles shall be received through a certified or an authorized dealer in the form of:

1. Bank Draft, Demand Draft, Pay Order, Banker’s or Personal Cheques,
2. Foreign Currency Notes/ Foreign Currency Traveller’s Cheques,
3. Payment out of cash reserves held in the Foreign Currency Non-Repatriable Account deposits and NRE account,
4. International Credit/Cash Cards,
5. Precious alloys, i.e. Gold/ Silver/ Platinum by the Gem & Jewellery Units in Special Economic Zones and Export Oriented Unit in equal to the value of the jewellery exported.

Advance Payments Against Trades

Regulation 15

It states that where an exporter gets advance payment from a purchaser/outsider named in the affirmation made by the exporter, outside India, the exporter shall be under commitment to guarantee that-

1. The shipment of products or merchandise is made inside one year from the date of receipt of leading payment;
2. The rate of interest, assuming any, payable on the advance payment does not surpass the rate of interest LIBOR + 100 basis points; and
3. The papers covering the shipment are steered through the approved merchant through whom the advance payment is received.

In case of the exporter’s incompetence to make the shipment, partly or completely, inside one year from the date of receipt of advance installment, no settlement towards discount of unutilized share of advance installment or towards installment of interest, shall be made after the expiry of the time of one year without the earlier approval of RBI.

The exporter may get advance payment where the trade agreement itself appropriately accommodates for shipment of merchandise extending further the time of one year from the date of receipt of advance payment.

Payment for the Export

In regard to trade of any merchandise or software for which an affirmation is required to be outfitted under Regulation 3, no individual shall except with the authorization of the Reserve Bank or, subject to the bearings of the Reserve Bank, consent of an approved dealer, do or forgo from doing anything or take or shun from making any move which has the impact of securing –

1. That the installment for the merchandise or software is generally made than in a predetermined way; or
2. That the installment is deferred past the period indicated under these Regulations; or
3. That the proceeds from sale of the products or software traded do not represent the full trade value of the merchandise or software subject to such deductions, assuming any, as may be permitted by the Reserve Bank or, subject to the directions of the Reserve Bank, by an approved merchant;

Given that no proceedings in respect of repudiation of these arrangements shall be initiated unless the predetermined period has expired and payment for the products or software representing the full export value, or the value of conclusions allowed under clause (iii), has not been made in a predefined manner inside the specified period.

Export of services to which no Form indicated in these Regulations apply, the exporter may export such services without outfitting any declaration, the points (i), (ii) & (iii) above shall apply.

Directions by RBI in Specific Cases

Despite everything is followed the exporter shall, before trade, shall agree to the conditions as may be indicated in the order of RBI, namely –

1. That the payment of the merchandise or software is secured by an irrevocable letter of credit or by such other course of action or report as may be mentioned in the order;
2. That any declaration to be furnished to the predetermined authority shall be submitted to the approved merchant for its prior endorsement, which may, having regard to the conditions, be given or withheld or might be offered subject to such circumstances as might be indicated by the RBI by directions issued now and then;
3. That a duplicate copy of the declaration to be outfitted to the predetermined authority shall be submitted to such expert or association as may be demonstrated for ensuring that the value of products specified in the declaration represents the proper worth.

RBI shall give no direction, and no endorsement shall be withheld by the Authorized merchant unless the exporter has been given a reasonable chance to make a representation in that matter.

Consolidation of Air Cargo

If dispatched under combination, the aircraft organization’s Master Airway Bill will be issued to the Consolidating Cargo Agent. Authorized Dealer may arrange House Airway Bills only if the relative letter of credit particularly allows to do so. Authorized Dealers can acknowledge Forwarder’s Cargo Receipts (FCR) issued by (rather than ‘IATA’ affirmed operators), in place of bills of filing, only if the relative letter of credit particularly permits. Relative deal contract with the abroad purchaser. It should also provide that FCR’s might be acknowledged instead of Bill of Lading /Air Waybill.

Shipping to Neighbouring Countries by Road, Rail or Waterways

Exports by freight boats/country craft/street transport, the form should be introduced by the exporter or his operators at the Customs station at the border through which the vessel or vehicle has to pass before crossing over. Shipments by rail, Customs staff, has been posted at predetermined railway stations for taking care of Customs formalities, exporters must make necessary arrangements to introduce GR/SDF forms to the Customs Officer at the Border Land Customs Station.

Shipments Lost in Transit

When shipments from India are lost in transit, banks must guarantee that insurance claim is made as soon as the misfortune is known of.

The duplicate copy of GR/SDF/PP form should be sent to Reserve Bank with following particulars:

1. Amount for which shipment was protected or insured.
2. Name and address of the insurance agency.
3. Place where the claim is payable.

Banks must make necessary arrangements to accumulate the full amount of claim due on the lost shipment, through the medium of his international branch/correspondent and discharge the duplicate copy of GR/SDF/PP form only after the amount has been accumulated. Banks need a guarantee that claims partially settled correctly by shipping organizations/aircraft’s under transporter’s risk, if settled abroad are also repatriated.

Reference

1. www.bcasonline.org/
2. www.taxmanagementindia.com