R Balakrishnan Whenever the foreign exchange is acquired and remitted, the proof of import by way of exchange control copy of bill of entry needs to be submitted to the authorised dealer. Non-submission of the proof of imports would invite action against the importer and the Enforcement Directorate can initiate proceedings under the erstwhile Foreign Exchange Regulation Act or under the current Foreign Exchange Management Act. There could be occasions when the importer may not be able to submit the exchange control copy of the bill of entry for one reason or other and the law makes provision in such cases for the submission of alternate proof of import by way of a certification from the chartered accountant accompanied with an affidavit by the importer. However, for the listed companies whose shares are listed on a stock exchange in India, the Foreign Exchange Management Act makes a specific provision under paragraph A.10.2 of the Master Circular. This write-up throws some light upon this specific facility provided to listed companies. 1. In terms of 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 (mainly for import of goods and services into India) mentioned in the declaration made by him to an authorized dealer under section 10(5) of the Act or to use it for any other purpose for which acquisition of exchange is permissible under the said Act or Rules or Regulations framed thereunder. 2. Where foreign exchange acquired has been utilized for import of goods into India, the Authorized Bank (AD) should ensure that the importer furnished an evidence of import to the satisfaction of the authorized dealer as laid down in paragraph A.10 of the Master Circular on import of goods and services. 3. The submission of proof in respect of imports made and brought into India could be one of the following documents: (i) Bill(s) of Entry - Exchange Control copy (ii) Postal Wrapper (iii) Courier Wrapper The document in question should show clearly that the required import for the purpose for which the foreign exchange was acquired and remitted abroad has come to India. 4. The solution is provided by the Foreign Exchange Management Act, 1999 stating that it is possible to submit alternate proof for the import of goods in India in the absence of the above documents. If the importer is unable to submit any of the above referred documents due to some reason or other, the Foreign Exchange Management Act, 1999 provides for the submission of alternate proof of import, which is required to be substantiated by a certificate issued by the chartered accountant confirming the receipt of the material and payment made to the related supplier by following the specified procedure. 5. Though the Foreign Exchange Management Act, 1999 provides that the proof of imports is to be submitted by way of bill of entry - exchange control copy or postal wrapper or courier wrapper and in the absence of the documents listed above, the alternate proof duly supported by the chartered accountants certificate, yet the listed companies are given a specific facility. This facility is given in the paragraph A.10.2 of the Master Circular. (One can refer to the Reserve Bank of India Circular No. RBI/2006-07/26 Master Circular No. /08/2006-07, dated July 1, 2006). 6. Paragraph A.10.2 of the Master Circular states that the authorized dealer may accept: -either exchange control copy of bill of entry for home consumption or -certificate from the chief executive officer or -certificate from the auditor of the company stating that the goods for which remittance was made have actually been imported into India provided: (i)-the amount of foreign exchange remitted is less than USD 1,000,000 (USD one million) or its equivalent, (ii)- the importer is a company listed on a stock exchange in India and whose net worth is not less than Rs. 100 crores as on the date of its last audited balance sheet, or (iii)- the importer is a public sector company or an undertaking of the Government of India or its departments. From the above, it is clear that the Foreign Exchange Management Act, 1999 makes its specific provision for listed companies for the submission of alternate proof for which the following two conditions are to be fulfilled: (a)- the company shares are listed in a stock exchange; and (b)- the net worth of the company to be Rs. 100 crores as per last audited balance sheet. The companies who are fulfilling these two requirements could avail the facility of submitting a certificate from the chief executive officer of the company stating that the goods for which remittance was made have actually been imported into India and the authorized dealer would accept the same as evidence and mark off the transactions in question. (Needless to mention that the amount of foreign exchange remitted is to be less than one million USD) 7. Paragraph A.10.2 of the Master Circular also further states that this facility may also be extended to the following categories : (i)-autonomous bodies (ii)-scientific bodies (iii)-academic institutions Examples of these would be (i) Indian Institute of Science, (ii) Indian Institute of Technology, etc., whose accounts are audited by the Comptroller and Auditor General of India (CAG). The authorized dealer banks may insist on a declaration from the auditor/chief executive officer of such institutions that their accounts are audited by the Comptroller and Auditor General of India and extend the above facility. Conclusion 8.Whenever the foreign exchange is acquired and remitted, the proof of import by way of Exchange Control copy of bill of entry needs to be submitted to the authorized dealer. Non-submission of the proof of imports would invite action against the importer and the Enforcement Directorate can initiate proceedings under the erstwhile Foreign Exchange Regulation Act or under the current Foreign Exchange Management Act. There could be occasions when the importer may not be able to submit the exchange control copy of the bill of entry for one reason or other and the law makes provision in such cases for the submission of alternate proof of import by way of a certification from the chartered accountant accompanied with an affidavit by the importer. However, for the listed companies whose shares are listed on a stock exchange in India, the Foreign Exchange Management Act makes a specific provision for a facility by which a certificate from the chief executive officer of the company could be submitted stating that the goods for which remittance was made have actually been imported into India and the authorized dealer, based on such certificate, would be marking off the transaction. For availing this facility, the listed company net worth should be of Rs. 100 crores as per the last audited balance sheet and this facility is available for an amount of foreign exchange drawn up to an amount of USD one million or its equivalent. This facility may also be extended by the authorized dealer to autonomous bodies including scientific bodies/academic institutions whose accounts are audited by the Comptroller and Auditor General of India (CAG). The authorized dealer may make a declaration that the accounts are audited by the CAG and extend the above facility to these bodies. The listed companies could follow this route and submit a certificate from the chief executive officer of the company, in case, they are unable to provide the proof of imports at times as per the master circular on import of goods and services.
Please Rate this Article 5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
