FEMA SEMINAR ON TRADE (06.02.2019) TRADE TRANSACTIONS- BEYOND DELEGATED AUTHORITY GUIDANCE NOTE RESERVE BANK OF INDIA FOREIGN EXCHANGE DEPARTMENT HENNAITrade Transactions - Beyond Delegated authority Dos and Don'ts ‘The first point of contact for the publiciclients is the AD bank ‘The AD branch to examine the case under relevant provisions of FEMA, 1999. In case of any doubt/queries/clarification required by AD branches, seek guidance from your IBD/controlling office In case of any doubt/queries/clarification required by your IBDicontrolling office, seek guidance from RBI All the trade related cases to Reserve Bank to be routed through your International Banking Division / Controlling Office. Refer the cases to the respective Regional Office of RBI depending on the location of Registered office of the client. Always mention name and designation of the authorized signatory of AD bank, contact number and email id of the officials to be contacted in case of any queries/clarifications Ensure that the letter from the client / overseas entity has the name and designation of the authorized signatory. Don'ts Do not advise public/elients to directly approach Reserve Bank. Do not refer the cases directly to Reserve Bank by AD branches. Do not refer to RBI without proper examination of the case by AD bank, Do not refer to RBI without verifying the documents submitted by client Do not merely refer the case without your comments/Recommendations Do not send letters without name and designation of the authorized signatory of AD bank Do not submit letters from the client / overseas entity without name and designation of their authorized signatory & SS8eRRReferring the case to RBI - Points to Note Information/Documents to be submitted in all the cases (i) Letter of application from the client (ii) IE code of the importer/exporter (ii) Location of the Registered Office of the company (iv) Period from when the importer/exporter is banking with the AD (v) Items exported/imported for the referred transaction (vi) KYC/AML compliance of the client (vii) Track record of the client (vii) Bonafides of the transaction, credentials of parties involved and veracity of submitted documents. (x) Whether the referred bills / transaction /client is under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation/ whether the subject matter of any civil or criminal suit. Ifso, current status of the case to be apprised. (x) Whether the importer/exporter is FEMA compliant for other transaction or is a frequent offender. (xi) Status of outstanding position of EDPMS and IDPMS in the name of the client with all AD banks, reason for pendency and timelines for closure. (xii) The provision of FEMA 1999, under which the case has heen referred to Reserve Bank (ill) If the case is referred for non-compliance of certain conditions out of the stipulated conditions for the referred transaction, AD to confirm whether the company complies with other stipulated conditions (xv) Specific Comments/recommendation in the referred case. («v) Any other information/document relevant to the case. (xvi) Mention the List of enclosures / documents submitted.Transaction specific requirements Extension of time for export realization Form EX to be submitted Soe ee ee es Satisfactory reason to be provided for extension duly supported by correspondence with the overseas buyer. Chartered Accountant Certificate showing the total outstanding of the exporter exceeds USD one million or 10 per cent of the average export realizations during the preceding three financial years, whichever is higher Comments of AD on satisfaction that the exporter has not been able to realize export proceeds for reasons beyond his control Refund of export advance Reasons for not exporting within stipulated timelines and retention of export advance beyond stipulated timelines with supporting documents Letter from the overseas buyer stating that there will not be any interest claim now or in future. Certificate from Chartered Accountant showing the treatment of fund in the books of the company and use of funds over the years Undertaking from client that case does not involve gross violation of section 3(a) of FEMA, 1999, suspicious transactions or use of funds for prohibited / unlawful activities Satisfaction of AD with genuineness of reasons for not exporting within stipulated timelines and retention of export advance beyond stipulated timelines Write off of export bills Copies of purchase order, Invoice, shipping bills and transport documents Documentary evidence in support of the exporter having made all efforts to realize the dues Documents on correspondence with the overseas buyer evidencing the reason for non payment Chartored Accountant's certificate indicating (export realization in the preceding calendar year Gi) amount of write-off already availed of during the year, if any. Gi) relevant EDF to be written off (Bill No., invoice value, commodity exported, and country of expor) (iv) export benefits, if any, availed of by the exporter have been surrendered Documents evidencing surrender of export incentives availed, if any Whether exports were made to countries with externalization problem Satiefaction of AD with genuineness of reasons for write-off Confirmation on compliance with other conditions of write-off as per Master Direction dated January 01, 2016 Whether direct dispatch of documents was done, if so, confirmation on compliance with other conditions of direct despatch, as per Master Direction dated January 01, 2016 3Delayed Import Payment beyond three years * Copies of purchase order, Invoice, Bill of Entry and transport documents — ¢ Information-on the-relation. hetween—the- partios;if-any-~--e:g: group company/ parent company, + Documents on correspondence between the parties evidencing the reasons for delay in payment and overseas supplier agreeing for the deferred payment. + Letter from the overseas supplier stating that there will not be any interest claim now or in future for the delayed payment + Chartered Accountant Certificate showing the amount as outstanding in the books of the company and that amount has not been remitted through any other AD Bank + Details of any other pending case of delayed import payment + Undertaking that referred transaction is not a case of bypass of borrowing guidelines under FEMA 1999 * Undertaking that payment has not been deferred so as to hypass any other provisions of law * Comments of AD on satisfaction with genuineness of reasons given by the importer for delay in payment + Confirmation that the original Bill of Entries (for pre-IDPMS period) is held with the AD bank and found to be in order Bill of Entry (BOE) Waiver * Copy of tool holding/ownership certificate | + Undertaking from the client that the tools/parts will be scrapped after its useful life and will not be imported into India * Satisfactory documentary evidence in case of delay in effecting payment. 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