Improper Documentation By Wheat Exporters For Registration Certificates: DGFT Tightens The Norms
Due to improper paperwork by wheat exporters seeking registration certificates, the Director General of Foreign Trade (DGFT) has issued a trade alert about the physical verification of Letters of Credit (LCs) by Regional Authorities (RAs) that have already been granted or are in the process of being so. The DGFT (HQ) issued rules to all RAs in a circular dated May 19,2022,...
Due to improper paperwork by wheat exporters seeking registration certificates, the Director General of Foreign Trade (DGFT) has issued a trade alert about the physical verification of Letters of Credit (LCs) by Regional Authorities (RAs) that have already been granted or are in the process of being so.
The DGFT (HQ) issued rules to all RAs in a circular dated May 19,2022, requiring rigorous compliance before issuing Registration Certificates (RCs) to qualifying exporters. Despite the measures and the due care taken by RAs in the process, it has been discovered that certain exporters are requesting RCs from RAs based on incorrect papers, and so further checks must be added to the system.
"In order to plug the loopholes, it has been decided that RAs will do a physical verification of all LCs, whether already approved or under process, and that, if necessary, the help of a professional agency may be taken. While doing physical verification, validation/endorsement by recipient banks may be ensured," the trade notice read.
If the L/C date is on or before May 13,2022, but the swift message/message exchange date between the Indian and foreign banks is after May 13, 2022, RAs may conduct a full investigation (if necessary, through external experts). If it is found to be ante-dated, immediate proceedings must be initiated against the exporter. The instances will be investigated further before being sent to law enforcement organisations such as the Economic Offence Wing (EOW)/Central Bureau of Investigation (CBI). If any banker is found to be involved in situations where ante-dating is proven, the required legal processes will be undertaken.
All RC applications found eligible for approval after physical verification of the LCs by the RAs would be sent to a 2 member committee of Addl. DGFTS constituted in DGFT (Hqrs.) for further checking and approval. After approval of this committee only, the concerned RA would issue a RC to the exporter.
The DGFT has requested the RAs to process all applications with due diligence and in compliance with the instructions.
Trade Notice No. 11/2022-23
May 30, 2022