FEMA - Export of Goods and Services - 'Write-off' of unrealized bills
AS of now, exporters have limited powers of write-off and AD Category - I banks are permitted to accede to the requests for "write-off" made by the exporters, subject to the conditions, inter alia, that the exporter has to surrender proportionate export incentives, if availed of, in respect of the relative shipments.
It has now been decided to effect the following liberalization in the limits of “write-offs” of unrealized export bills:
1. | Self “write-off” by an exporter (Other than Status Holder Exporter) | 5% of the total export proceeds realized during the previous calendar year. |
2. | Self “write-off” by Status Holder Exporters | 10% of the total export proceeds realized during the previous calendar year. |
3. | “Write-off” by Authorized Dealer bank | 10% of the total export proceeds realized during the previous calendar year. |
The “write-off” will be subject to the following conditions:
(a) The relevant amount has remained outstanding for more than one year;
(b) Satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues;
(c) The case falls under any of the following categories:
(i) The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery of export proceeds has been produced.
(ii) The overseas buyer is not traceable over a reasonably long period of time.
(iii) The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country.
(iv) The unrealized amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization;
(v) The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter;
(vi) The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control;
(vii) Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealized consequent on dishonour of the bills by the overseas buyer and there are no prospects of realization.
(d) The exporter has surrendered proportionate export incentives if any, availed of in respect of the relative shipments. The AD Category - I banks should obtain documents evidencing surrender of export incentives availed of before permitting the relevant bills to be written off.
(e) In case of self write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant's certificate, indicating the export realization in the preceding calendar year and also the amount of write-off already availed of during the year.