Welcome move to ease procedure

The Directorate General of Foreign Trade (DGFT) has issued a circular (no.6 dated October 10) explaining the procedure for electronic Bank Realisation Certification (e-BRC). Banks will not issue a manual BRC for use of DGFT but transmit BRC data electronically to the latter’s server. Even for the period from April 1 onwards, banks will convert the BRC issued manually in the digital (XML) format and upload these on the DGFT server.

BRCs transmitted by banks must reflect the total value of foreign exchange realised and not show any deduction under any head. Exporters have to familiarise themselves with the procedures given in the ‘Read me first’ help link and the FAQ link in the DGFT website and then log in through the ECOM link, follow it for adding the details of commission, insurance and freight and enter the actual values against each BRC. For calculation of some entitlements under Chapter 3 of the Foreign Trade Policy (FTP) and the duty entitlement passbook scheme, commission for an item will be limited to 12.5 per cent of the net realised value of the item. For advance authorisation, duty-free import authorisation and export promotion capital goods schemes, the commission will be excluded for calculating the entitlement.

 

DGFT maintains a repository of shipping bills which would be available for online linkage with any application. When requested by exporters, ‘e-Shipping Bill’ and ‘e-BRC’ data will be captured and linked automatically and in the case of manual shipping bills or BRCs, exporters have to enter the data on the DGFT website. Shipping bills from the repository can be utilised in any applicable scheme. It appears the same e-BRC can be used for two different eligible schemes but not twice for the same scheme.

The new procedure reduces work for banks, exporters and the licensing authorities. Banks need not verify the correctness of freight, insurance, commission, etc, and need not certify the FOB value. Exporters need not prepare the paper BRCs, get these certified and file to the licensing authorities. They need not face many queries from the licensing authorities on technical deficiencies. The certification charges of banks and transaction costs that manual BRCs entail get eliminated.

As usual, when a new procedure is introduced, several doubts and some glitches are expected. The e-BRC scheme is no exception. Some exporters say their banks claim to have uploaded the data but this is not to be seen in the DGFT website. Some say they are unable to add the details of commission, freight and insurance. Some are unable to call the details from the repository. The system will take the lesser of the FOB value indicated in the shipping or the e-BRC, though shipping bill details of freight and insurance are approximations. What exchange rate to adopt for calculating the freight and insurance if the data is available in rupees? What happens when the same shipping bill has to be used for discharge of export obligation against two or more advance licences? What to do when the export obligation is in another currency? Will there be any random verification mechanism to ensure exporters mention the actual and correct freight, insurance, etc?

Hopefully, these glitches and doubts will be resolved soon. The simplified procedure deserves welcome, as it can reduce transaction costs.

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