Remittance to foreign print media for ads allowed from EEFC account

Rajagopalan answers SME queries related to GST, export and import matters

Subsequent to imposition of 25 per cent duty on steel and aluminum  by the Trump administration, our US buyer has asked us to send a declaration that calls for details like the origin of the steel and aluminium used in making our product, their purchase price, the mill certificate etc. We seek your advice on furnishing these details. 

 

This seems to be a requirement under the US laws and so, I think you should proceed as per the requirements of the Customer. 

 

We want to import certain machinery from the US. We are keen that the US manufacturer uses one of the critical components made by a German manufacturer. Can we ask the German manufacturer to bill to us and ship the components to the US manufacturer? The cost of that component, of course, will not be included in the price that the US manufacturer charges us when sending the machinery to India.   We will be remitting to the US manufacturer for his invoice value only, whereas the imported machine value will include the amount we remit to the German party and we will also pay duty for the full value of the machine.  Can we put through this type of transaction?

 

You will need the Reserve Bank of India (RBI) approval for remitting money to the German manufacturer against which no goods will come from him. You should offer to produce to the bank the bill of entry for import of the machinery assessed to value that is an aggregate of the price charged by the US and the German manufacturers.

 

We want to advertise our products in foreign print media. Can we remit foreign exchange to do so?

 

If you want to purchase foreign exchange for this purpose, it is not permitted without government approval as per S.No.2 of Schedule II of the Foreign Exchange Management (Current Account Transactions) Rules, 2000. However, if you want to make remittances from your Earners’ Foreign Currency (EEFC) account, that is allowed as per Rule 6 of the said Rules.

 

We exported certain to a buyer in the middle-east and invoiced in US$. The buyer received the goods two months back but now says that he will arrange to send the payment through another party. Can we agree to that request?

 

Condition (c) at Para A3 (v) of the RBI Master Direction no.16/2025-16 (as amended) that deals with third party payments for export/import transactions,  says that the exporter should declare the third party remittance in the Export Declaration Form (EDF) and it would be responsibility of the exporter to realise and repatriate the export proceeds from such third party named in the EDF. 

 

You cannot comply with that condition at this stage because the goods have already been exported. 

 

So, you can now approach RBI with facts of the case and seek permission to receive the funds from the third party. 

 

If you are too anxious, you may get the money from the third party first and then ask for regularisation.

 

Business Standard invites readers’ SME queries related to GST, export and import matters. You can write to us at smechat@bsmail.in