RESOLUTION OF QUALITY COMPLAINTS AND TRADE DISPUTES IN EXPORTS/IMPORTS

[Mr. M. GOVINDARAJAN]

Chapter 8 of Foreign Trade Policy for the year from 2015 to 2020 deals with the resolution of quality complaints and trade disputes in exports. The objective of this scheme is that exporters need to project a good image of the country abroad to promote exports and further to maintain an enduring relationship with foreign buyers is of utmost importance.  It is to ensure that the complaints or trade disputes, whenever they arise is to be settled amicable at the earliest possible.  The importers may also have grievances in this regard.   For this purpose a mechanism is being laid down to address the complaints and disputes in an amicable way.

Types of complaints

The following are the types of complaints that may be entertained for consideration:

• Complaints from foreign buyers in respect of poor quality of the products supplied by exporters from India;
• Complaints of importers against foreign suppliers in respect of quality of the products supplied; and
• Complaints of unethical commercial dealings categorized as mainly as-

• non supply, partial supply of goods after confirmation of order;
• supplying goods other than the ones as agreed upon;
• non payment;
• non adherence to delivery schedules etc.,

Obligations on the part of importer/exporter

Rule 11 of the Foreign Trade (Regulations) Rules, 1993 requires that on the importation into, or exportation of out, any customs of ports of any goods, whether liable to duty or not, the owner of such goods shall in the Bill of Entry or the Shipping Bill or any other documents prescribed under the Customs Act,  sate the value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of goods, it is to certified that the quality and specification of the goods as enumerated in the documents are in accordance with the terms of the export contract entered into with the buyer or the consignee.  A declaration in this regard is to be given of the truth of such statement at the foot of such bill of entry or shipping bill or any other documents.   If there is any violation of these provisions will attract the exporter liable for penal action.

The Export (Quality Control & Inspection) Act, 1963 provides that certain export commodities requires for compulsory quality control and pre shipment inspection prior to the export.  Violation of this will attract penal action against exporters who do not conform to these standards and/or provisions of the Act as laid down for such products.

Penal provisions

Section 8 of the Foreign Trade (Development and Regulation) Act, 1992 provides that the Director General or Foreign Trade or any other person authorized by him to suspend or cancel the importer Code Number for the reasons as given therein.

Section 9(2) of the said Act empowers the Director General of Foreign Trade or an officer authorized by him to refuse to grant or renew a license, certificate, scrip or any other instrument bestowing financial or fiscal benefit granted under the Act.

Section 9(4) of the Act empowers the DGFT or the officer authorized by him to suspend or cancel any Licence, certificate, scrip or any instrument bestowing financial or fiscal benefit granted under the Act.

Section 11(2) of the said Act provides for imposition of fiscal penalty if a person makes or abets or attempts to make any import or  export in contravention of any provision of the Act, any Rules or Orders made there under or the Foreign Trade Policy.

Mechanism

The new Foreign Trade Policy provides that to deal effectively with the increasing number of complaints and disputes, a ‘Committee on Quality Complaints and Trade Disputes’ (CQCTD) will be constituted in 22 officers of the RA’s of DGFT such as New Delhi, Chandigarh, Panipat, Jaipur, Kanpur, Ludhiana, Varanasi for north zone, Mumbai, Pune, Vadodara, Ahamedabad, Surat, Bhopal for western region, Kolkatta and Cuttack for Eastern zone and Chennai, Bangalore, Hyderabad, Madurai, Coimbatore, Vishakhapatnam and Cochin for Southern zones.  The said Committee may contain the following members:

• Additional DGFT/Joint DGFT/ (H.O.O) –Chairperson;
• Representative of Bureau of India Standard (BIS) - Member;
• Representative of Agricultural and Processed Food Products Export Development Authority - Member ;
• Representative of the Branch Manager of the concerned Bank - Member ;
• Representative of Federation of Indian Exporter Organization / and OR Export Promotion Council - Member ;
• Representative of Export Inspection Agency - Member;
• Nominee of Director of Industries of State Government - Member;
• Nominee of Development Commissioner of MSME - Member;
• Officer as nominated by Chairperson - Member Secretary;
• Any other agency, as co-opted by Chairperson - Member.

The Committee will be responsible to enquire and investigate into all the complaints related to quality and other trade disputes falling under the jurisdiction of respective Regional Authority.  It will take prompt and effective steps to redress and resolve the grievances of the importers, exporters and overseas buyers, preferably within three months of receipt of the complaint.  If required they make take the assistance of the Export Promotion Councils/Federation of Indian Export Organization/Commodity Boards or any other agency considered appropriate for settlement of these disputes.

DGFT would appoint an officer not below the rank of Joint DG, in the Headquarters to function as the ‘Nodal Officer’ for coordinating with various Regional Authorities of DGFT.

Procedure

• An application for investigation of quality complaints and/or other trade disputes may be filed to the concerned Regional Authority in the format given in ANF8 of Appendices & Aayaat Niryat Forms. Complaint has to be duly supported by self-attested photocopies of relevant documents;
• Complainant can also file its complaint online on DGFT’s website .
• The Nodal officer in DGFT, on receipt of complaints from importers abroad, would forward it to the Jurisdictional RA for examination and appropriate action.
• The CQCTD, on receipt of a complaint, from importer abroad, against Indian exporter would call for comments from the firm against whom the complaint has been made. After giving reasonable opportunity of hearing to both sides, CQCTD may arrive at a conclusion to resolve the matter and CQCTD /RA will take action as considered appropriate;
• RA would forward a copy of the complaint received from Indian importer, against foreign exporter to the concerned Foreign Trade (FT) Division in the Department of Commerce (DoC). FT Division in DoC will take up the complaint with the concerned Embassy/High Commission/ Consulate General in India and with concerned Indian Embassy/ High Commission abroad for effective resolution of the complaint;
• The Committee at Regional Authority level can authorize the Export Inspection Agency or any technical authority to assess whether there has been any technical failure of not meeting the standards, manufacturing/design defects, etc., for which complaints have been received.
• Regional Authorities of DGFT will send a consolidated quarterly report in respect of cases received/ referred to it, with details of action taken to the Nodal Officer.

Nature of proceedings

The proceedings are only reconciliatory in nature and the aggrieved party, whether the foreign buyer or the Indian Importer is free to pursue any legal recourse against the erring party.