DGFT
Clarification on Registration of Contracts of Cotton and Cotton Yarn with DGFT
[DGFT Policy Circular No. 51 dated 28th December
2011]
Subject:
Clarification regarding registration of contracts of cotton and cotton yarn
with DGFT.
Through Notification No. 40
(RE-2010)/2009-14 dated 31.03.2011, export of cotton yarn was made
“Free” subject to registration of export contracts with DGFT, for ITC(HS) Code 5205, 5206 & 5207. Procedure for
registration of contracts of cotton yarn was notified through Policy Circular
No. 27 of 01.04.2011. Thereafter, Trade Notice No. 19 dated 30.08.2011
stipulating procedure for imposition of penalty for failure to export cotton
yarn in terms of Policy Circular No. 27 was issued.
2. Notification No. 62 (RE-2010)/2009-14 dated
02.08.2011, removed the cap on export of cotton for the remaining part
of cotton year 2010-11 (October-September) and export of cotton (HS codes-5201
& 5203) was made “Free” subject to registration of export contracts with
DGFT. Procedure for registration of contracts of cotton was notified through
Notification No. 63 of 04.08.2011. This procedure continues for the current
cotton year w.e.f. 01.10.2011 except that the
performance guarantee is no longer required in terms of Notification No. 74
(RE-2010)/2009-14 dated 12.09.2011.
3. Many representations have been received from
RAs and exporters seeking clarification about revalidation, cancellation or
partial modifications of RCs as well as about imposition of penalty in case of
failure to export full quantity of cotton and cotton yarn in terms of
notifications/Policy Circulars referred above. The issues raised have been
examined and accordingly the following clarifications are issued:
|
Sl. No. |
Issues raised |
Clarification |
|
1 |
Can the request for cancellation of RCs issued
for cotton prior to 01.08.2011 under following categories be accepted: (i) Partially utilized (ii) Completely unutilized alongwith
request for RC with another buyer. (iii) Completely unutilized and requested for
surrender/cancellation of RCs. |
Notification No. 63 of 04.08.2011 provided that RCs
issued before 01.08.2011 would lose its validity unless revalidated. In view
of above, requests for cancellation/ surrender of partially
utilized/unutilized RCs issued prior to 01.08.2011 for export of cotton
should be accepted by RAs without invoking any penalty clause. |
|
2 |
Can the request for cancellation of RCs issued
for cotton, cotton yarn and cotton waste under following categories be
accepted: (i) Partially utilized (ii) Completely unutilized alongwith
request for RC with another buyer. (iii) Completely unutilized and requested for
surrender/cancellation of RCs. |
In terms of Notification No. 62 dated 02.08.2011,
the exporters have the option to obtain more than one RCs. Therefore, in case
any exporter wants to surrender some RCs as unutilized/partially utilized, a
penalty of Rs. 10,000/- plus 1% of the FOB value of
shortfall quantity in excess of allowance of -5% should be imposed. |
|
3 |
A variation of -5% in weight against RCs for
cotton yarn has been allowed. Whether the same is applicable for raw cotton
and cotton waste also. |
Yes. The same dispensation will also apply in
case of cotton(HS codes 5201 & 5203). For RCs of
cotton waste (HS code 5202) issued prior to 01.10.2011, the same will be
applicable. |
|
4 |
Can the request for (i) change in buyers
detail be accepted. (ii) change in buyers
name be accepted. |
It is permitted with the condition that export
has to be completed within the validity of RC. |
|
5 |
Can the request for extension of RC validity
period be accepted. |
The validity of RCs shall remain 30 days. But,
one time revalidation for 15 days from the date of expiry of RCs can be
permitted. |
|
6 |
Whether the tolerance limit of -5% in weight for
export of cotton be regularized if the firm pays a penalty of Rs. 10,000/- + 1% of the value of shortfall in excess of
allowance of 5%. |
Yes. |
|
7 |
In case, RC application was made by the firm alongwith copy of FIRC or LC from a particular firm as a
proof of receiving advance payment against the contract. But, when they
submitted the proof of export, it is seen that they have not made the export
to the assigned buyer as per RC. They have requested to clarify whether party
should be insisted to explain why exports were not made to the assigned buyer
from whom payment was received by way of FIRC/LC. |
Many contracts are entered into with the foreign
buyers having addresses in different countries whereas the consignee is of
different countries. If such is the case, as per the contract and LC, then it
should be accepted. But, in cases other than this penal provisions should be
invoked. |
|
8 |
In case of cotton yarn/yarn waste in the event of
surrender of RC within validity or after expiry of validity, RC surrendered
shall be treated as non-fulfillment of quantity and the case is to be
regularized as per Trade Notice No. 19 dated 30.08.2011. |
Such cases should be regularized by way of
imposition of penalty. |
|
9 |
Whether request for amendment of quantity (either
enhancing or reducing) may be accepted. |
The same is permitted with the condition that
export has to be completed within the validity of RC. |
|
10 |
Whether loading of cargo meant for export(by rail/road) at any place in the country within
the validity of RC should be accepted as fulfillment of export. |
No. The goods which have been physically handed
over to the customs at relevant ports and Let Export Order(LEO)
issued within the validity of RC can only be treated as fulfillment of export
against RC. |
4. This issues with the approval of Director
General of Foreign Trade.