DRAFT - Systems Alert for Monitoring Realisation of Export Proceeds in EDI - Reg. - Customs - F.NO.609/167/2003-DBK

DRAFT CIRCULAR NO. /2008-CUSTOMS F.NO.609/167/2003-DBK Government of india MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE CUSTOMS New Delhi, the March, 2008 To All Chief Commissioners of Customs All Chief Commissioners of Customs Central Excise All Commissioners of Customs /Customs(Prev) /Customs Central Excise / Central Excise DG, CEIB, New Delhi DGRI / DGCEI / DG (Systems Data Management) / DG (Export Promotion)/ DGI / DG, NACEN Chief Departmental Representative, Customs, Excise Service Tax Appellate Tribunal, New Delhi Sir/Madam, Subject:- Systems Alert for Monitoring Realisation of Export Proceeds in EDI - Reg. I am directed to invite your attention to the above mentioned subject. 2. In terms of the provisions of Section 75 (1) of the Customs Act, 1962 read with sub-rule 16A(1) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 where an amount of drawback has been paid to an exporter but the sale proceeds in respect of such export goods have not been realized within the time allowed under the Foreign Exchange Management Act (FEMA),1999, such drawback is to be recovered. Sub-rule 16A(2) stipulates that if the exporter fails to produce evidence in respect of realization of export proceeds within the period allowed under the FEMA, 1999 or any extension of the said period by the Reserve Bank of India (RBI), the Assistant/Deputy Commissioner of Customs shall issue a notice to the exporter for production of evidence of realization of export proceeds, failing which an order shall be passed to recover the amount of drawback paid to the claimant. 3. Hitherto, the action to recover drawback was being taken on the basis of Export Outstanding Statement (XOS) received from RBI. The XOS is a consolidated half-yearly Statement giving details of all export bills outstanding beyond the period prescribed for realization within 15 days from the close of the half year i.e June / December. However, following the issuance of RBI Circular No. 61 dated 31.1.2004 dispensing with submission of declarations for export of goods of value not exceeding US $ 25,000, it is observed that a large number of the export consignments presently fall outside the purview of monitoring mechanism through XOS in as much as, the shipment details of goods valued upto $ 25000 are no longer reported through this statement. 4. In view of this change, particularly considering that under the statute the drawback payment is ultimately linked to the realization of export proceeds, it has become necessary for the Department to put in place an in- house monitoring mechanism to monitor the realization of such proceeds for exports made under the Drawback Scheme. Extensive consultations were held with field formations and trade industry in this regard, and subsequently, the matter was examined by the Board. For monitoring the realization of export proceeds for drawback purposes, the Board has decided that the exporters will submit a certificate from the authorized dealer (s) providing details of shipment which remain outstanding beyond the prescribed time limit including the extended time, if any, allowed by the authorized dealer/RBI on quarterly basis. However, the status holders and other exporters who are permitted to realize export proceeds within a period of 12 months or more will submit certificates once in six months only. Such certificate shall be furnished by the exporter port-wise. In order to put the exporters on notice at the time of export itself, an endorsement on the exporter's copy of shipping bill would be made specifying the due date for realization of export proceeds. 5. In the light of decisions taken by the Board, the Directorate General of Systems has developed a BRC ( Bank Realization Certificate) Software for ICES, the salient features of which are the following:- (a) The exporters filing Shipping Bills (SBs) under drawback shall furnish an affidavit on a stamp paperto the Assistant Commissioner / Deputy Commissioner (Drawback) providing the details of allAuthorized Dealers (AD), their codes and addresses through whom they intend to realize the export proceeds. Such an affidavit shall be filed at each port of export where the exporter exports his goods. In case there is a new addition of AD, the same is to be intimated to the concerned Custom House at the port of export. (b) The system would generate on all Drawback Shipping Bills the due date for submission of BRCs. (c) The main menu contains a BRC entry module for registration of BRCs/negative statement besides a " Special Category Registration for BRC"module wherein the "Status Holder" exporters and other special category exporters can register their status. Special category exporters are those exporters who are allowed a longer period of time of one year or more to realize export proceeds under FEMA, 1999. (d) The exporter shall submit a certificate from the Authorized Dealers (AD) containing details of the shipments which remain outstanding beyond the prescribed time limit, including the extended time if any, allowed by AD/RBI. A proforma for furnishing such negative statement is enclosed as Annexure-I. Alternatively, the exporters may furnish BRCs. (e) Such certificates shall be furnished by the normal exporters on quarterly basis before the 7 th day of January, April, July and October in respect of exports which have become due for realization in the previous month. For example for the quarter January to March 2008 (during which exports were effected), the statement / BRC would need to be submitted by the 7 th October, 2008. However, the Star Export House and other exporters who are permitted to realize export proceeds within 12 months or more, shall submit such certificates once in six months, i.e., by the 7 th day of January and July in respect of exports which have become due for realization of export proceeds. For example, for the six-monthly period of January- June 2008 (during which exports were effected), the statement/BRC needs to be submitted by the 7 th July, 2009. (f) Such certificates shall be filed by the exporter port-wise for each AD. The relevant date for filing certificates shall be the date of let export order (LEO). (g) The software shall issue alerts against the shipping bills under drawback where the BRC/negative statement has not been furnished by the exporter within the prescribed date. The Assistant Commissioner / Deputy Commissioner (Export) may peruse such alerts either for the entire Customs port or for an individual exporter by entering the IE code of the exporter. (h) The BRC entry module gives three options for entering the details of foreign exchange realization i. If the exporter furnishes the BRCs as a proof of foreign exchange realization, the officer will choose option (1) and enter the specific SB numbers and dates. Such SBs will be deleted by the system from the alert list. ii.If the exporter produces a "negative statement" for a specified period from the AD that no foreign exchange is pending realization for the exporter in the given period, the officer will choose option (2). The system will automatically display the SBs pertaining to the given period on screen and all such shipping bills shall be deleted from the alert list. iii. If the negative statement furnished by the exporter gives the list of SBs for which foreign exchange has not been realized (and by implication foreign exchange has been realized for all other SBs) then, the officer will choose option (3). This will allow the officer to enter the SBs for the given period for which the BRCs are pending. Thereafter, all SBs except such pending SBs will be deleted from the alert list. iv. The BRC entry module also enables the Department to remove the list of SBs from the alert list if drawback is recovered subsequently. In such cases, the officer may choose option (1) and enter the order no, challan no and date and also the no and date of all shipping bills for which the drawback has been realized. Thereafter, all SBs will be deleted from the alerts. 6. Each Custom House shall create a special cell for management of affidavits, amendments thereto, Annexure I certificates, registers etc. The cell shall be responsible for keeping the affidavits and other relevant papers in a proper manner and tracking the remittance of export proceeds. Further,officers will be speciallydesignated by the Commissioner to verify the BRC/negative statement and to make entries in the BRC module. Notices will be issued by Customsto recover drawback paid on export consignments in respect of which export proceeds have not been realized. A provision is being made in the BRC module for entering the details of adjudication orders passed which would facilitate stopping the disbursal of further drawback to the exporter on expiry of the prescribed time period after passing of orders for recovery of drawback. 7. The system will start alerting the Assistant Commissioner/Deputy Commissioner (Exports) for all cases of Drawback Shipping Bills with LEO date falling on or after 1.7.2007if the BRC/negative statement in Annexure I is not submitted by the exporter within the period prescribed. Further, the exporters are required to furnish the BRCs/negative statement in Annexure II in respect of all the Drawback Shipping Bills having LEO dates from 1.1.2004 to 30.6.2007 within a period of two months of implementation of this module. 8. In addition to the alerts issued by the system, the Commissioners shall, by way of audit, exercise special checks in case of first time exporters, exporters who have taken large amounts of drawback suddenly, sensitive destinations, sensitive products etc. so as to ensure that there is no misuse of the drawback facility. They shall also exercise random audit checks in respect of other exporters to ensure that all export proceeds are realised. A proper record of all such audit checks and the period of audit should be maintained. 9. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date. Receipt of the Circular may kindly be acknowledged. Yours faithfully, ( P.K. MOHANTY) JOINT SECRETARY(DBK) TELEFAX:2334 1079 Annexure-I Details of exports for the quarter/Six month period______________ for which export proceeds are pending realization 1. Name of the exporter : 2. IEC No. : 3. Port of export : 4. Whether Star Export House or belong to category of : exporters who are permitted to realize export proceeds beyond six months (A copy of the Status Certificate/Permission may be enclosed) 5. Details of exports pending realization for the quarter : Sl. No. Shipping bill number and date Due date for realization Amount pending realization Remarks like whether exporter has been granted extension or applied for extension or waiver or any other reasons for non-recovery 6. Details of past exports pending realization: Sl. No. Shipping bill number and date Due date for realization Amount pending realization Remarks like whether exporter has been granted extension or applied for extension or waiver or any other reasons for non-recovery Place: Date: Signature and details of Authorised Dealer (AD) Name and address of AD: Code no. Annexure-II Details of exports from 1.4.2004 to 30.6.2007 for which export proceeds are pending realization 1. Name of the exporter : 2. IEC No. : 3. Port of export : 4. Whether Star Export House or belong to category of : exporters who are permitted to realize export proceeds beyond six months (A copy of the Status Certificate/Permission may be enclosed) 5. Details of exports pending realization : Sl. No. Shipping bill number and date Due date for realization Amount pending realization Remarks like whether exporter has been granted extension or applied for extension or waiver or any other reasons for non-recovery Place: Date : Signature and details of Authorised Dealer (AD) Name and address of AD: Code no.