While releasing this year’s annual supplement to the Foreign Trade Policy, the commerce minister talked about electronic transmission of foreign exchange realisation details on exports by banks on a daily basis under the Electronic Bank Realisation Certificate (e-BRC) initiative. On the same day (June 5, 2012), the Director General of Foreign Trade (DGFT) issued public notice (no. 2) stating that the existing system of physical BRC along with the new system of e-BRC will run concurrently for a period of one month and thereafter, issuance and transmission of e-BRC to DGFT in electronic form would be mandatory. The DGFT’s website dgft.gov.in gave the technical guidelines under the e-BRC icon. Last week, the DGFT issued policy circular (no.1 dated June 18, 2012) clarifying certain matters but exporters, brought up on manual BRC, still have some doubts.
The e-BRC can be issued for physical exports, deemed exports and others (i.e. BRC for export documents supported by VPP, PPR, courier or softex form, etc). No data shall be transmitted if it is not co-related with an existing shipping bill. Therefore, data where advance payment has been received will not be transmitted until it is later co-related with the shipping bill. Banks can upload data on daily basis and must convert BRC issued manually after April 1, 2012, into digital (XML) format and upload on DGFT server by July 31, 2012.
The e-BRC format is quite different from Appendix-22A or Appendix-22B of the Handbook of Procedures, Vol. 1. (HB-1). It does not have fields for freight, insurance, commission or GR form. The DGFT says that the net foreign exchange (NFE) earnings in foreign currency reflected in e-BRC, transmitted by banks would indicate FOB (Free on Board) value, as per valuation made by customs authorities on the shipping bill. While granting Chapter 3 benefits, the Regional Authorities shall consider the NFE earnings and in case of shortfall in foreign exchange realisation with respect to the shipping bill FOB value, pro rata distribution of realised foreign exchange against each export item will be made by the system itself, says the DGFT.
The policy circular no. 1 explains, with examples, as to how this will be done. It also says that banks shall upload the rupees equivalent of the realised foreign exchange, based on the monthly exchange rate notified by Central Board of Excise and Customs (CBEC), Ministry of Finance. In case the realisation is in a denomination other than the notified currency, the rates given by Reserve Bank (RBI) shall be adopted. In case exchange rate is not available from RBI, then banks will do currency conversion as per their present existing practice.
Exporters can view the e-BRC but wonder whether they can take a print of their records. There could be part payments against a single shipment and a single payment covering several shipments. Banks will require inputs from exporters regarding what remittance relates to which shipping bill. Banks cannot correct e-BRC. They have to cancel unused e-BRCs and upload fresh ones. e-BRC requires no mention about GR/SDF forms or any schemes used by exporters. At present, there is no mention of how Customs will use the same e-BRC to monitor payments against drawback disbursements.
Many banks have not yet updated their software and so it may be some time before exporters get more familiar with the new system.
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