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REGISTERED No. D(D.)-72

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 74] NEW DELHI, FRIDAY, MARCH 23, 1979/CHAITRA 2,1901

Separate paging it given to this Part in order that it may be filed as a separate compilation

(421)

1342 GI/78-1

LICENCE CAN BE ISSUED IN FAVOUR OF THE INDIAN IMPORTERS.

I. (ji) The licence shall bear the superscription "DM 35 million West German Capital Goods Credit for 1978-79". The licence code for the first and second suffix will be "S/GN". Theae will also be repeated in the CCI&E's letter forwarding the import licence.

I. (iii) NO REMITTANCE OF FOREIGN EXCHANGE WILL BE PERMITTED AGAINST THE IMPORT LICENCE EXCEPT BANK CHARGES WHICH MAY BE REMITTED THROUGH NORMAL BANKING CHANNEL. Payments towards Indian agent's commission, if any, should hi; made in Indian rupees to the agents in India. Such pay- ments however will form part of the licence value and will therefore be charged to the licence.

1. (iv) THE GOODS AND RELATED SERVICES TO BE PROCURED I J N D ER THIS IMPORT LICENCE CAN BE IMPORTED FROM THE FEDERAL REPUBLIC OF GERMANY INCLUDING THE LAND BERLIN OR ANY OTHER COUNTRY. The overseas fjunplior is therefurc, free to procure material, etc. from a third countiy, if found necessary, for the execution of the contract.

1. (v) The minimum value for which an impori. licence can be issued under this Credit is the rupee equivalent ot DM 30,000 (.rupee equivalent being calculated at the rate of exchange notified by the Department of Revenue Cus- toms} which rate of exchange should be indicated in the import licer.ee as per para 2 of the Public Notice No. 7H-lTC(PN)/74 dated 6th June, 1974 issued by the Chief Controller of Imports and Export?).

I. (vi) The import licence will be issued ON C1F BASIS with an initial validity of 24 months or the last dale of shipment as indicated in para 2(xii) below, whichever is less subject however to the condition (hat the import licence will have a minimum validity of 12 months from the dato tf iysue,

MINISTRY OF COMMERCE, CIVIL SUPPLIES AND

COOPERATION

(Department of Commerce)

IMPORT TRADE CONTROL

PUBLIC NOTICE NO. 19-rTC(PN>/79

New Delhi, the 23rd March, 1979

Subject :—Terms und conditions applicable to import licences issued under the West German Capital Goods Credit of DM 35 Million for 1978-79.

F. No. IPC/39/10/76.—The terms and conditions govern- ing the issuance of import licences under the West German Capital Goods Credit of DM 35 Million for 1978-79 as given in Appendix to this Public Notice are notilled for infonnatioii.

K. V. SESHADRI,

Chief Controller of Imports SL Exports

APPENDIX TO DEPTT. OF COMMERCE PUBLIC- NOTICE NO. 19-ITC(PN)/79 DATED 23-3-1979 I. (vii) FIRM ORDERS (meaning thereby Purchase Order by the Indian Licensee on '.he foreign supplier supported by older confirmation from ihe kilter or purchase cumract duly signed by both the Indian "Importer .uid the foreign supplier) must bo finalised WITHIN A PERIOD OF 4 MONTHS FROM THE DATE OF ISSUE OF THE IMPORT LICENCE, (vide para I (Lt) below). Oidexs on Indian Agents of overseas suppliers and/or order confirmation by such Indian- Agents are not acceptable.

Conditions attached to Import licences issued under the

West German Capital Goods Credit of DM 35 Million

for 1978-79.

Section I—General Conditions

I. (i) Where the value of allocation exceeds the rupee equivalent of DM 1 million (the rupee equivalent being determined at the exchange rate notified by the Department of Revenue iCii/.torns) under Sec'ion 15 of the Customs Act, 1962), the prioi' concurrence of the West German authorities (Kroditanstalt fur Wiederaufbau (KfW) to trie allocation is obligatory, and this would be obtained by the Department of Economic Affairs on the basis of the projeci data to be supplied by the Indian importer in the form at Anne.we-I. TILL SUCH CONCUR RRNCE FROM THE WOST GERMAN AUTHOR! 1 IHS IS COMMUNICATED TO THK LICENSING AUTHORITIES CCI&E) BY THE DEPARTMENT OF ECONOMIC AFFAIRS, NO IMPORT 1. (viii) If firm orders, as explained in para I (vii) above, cannot be finalised within the time limit of four months, the licensee should suonuil to the Chief Controller of Imports and Exports (CCl&E,), or other licensing authori- ties, aa the case may be, a proposal seeking an extension in the ordering perioa alor.gwith juutificution and explanation a^ ;o why ordering could not be completed within the initial validity period. Such requests for extension in the ordering period will be considtied on merits by the licensing authorties who may gra..t extension upto a further maximum period of 4 months. If, however, extension ia sought beyond H months from the date of issue of the import licence, such proposals will invariably be referred by the licensing authori ties to the Department of Economic Affairs (EAC-I Section), Ministry of Finance, North Block, New Delhi who will consider such extension on the merits of each case and convey its decision, to the licensing authorities for communication to the licensee. Only on production by the licensee of such letters of the licensing ; uthorities sanctioning extension, will be authorised dealers in foreign exchange and departmental authorities permit the facility of bank guarantee, letters- of authority for the establishment of letter of credit, acceptance of deposits of rupee equivalent, elc.

I. (ix) It will be in the interest of the licensee to ensure that firm order is finalised within the stipulated time limit for ordering. In cases where this cannot be done the licensee should, of his own, approach the licensnim authorities for a suitable extension in the period of ordering. Tn? authorised dealer^ jri foreign exchange/departmental authorities concer- ned will exenisc necewary checks to ensure that the licensee comnlieK with the requirements of placing orders within 4 months.

1 (x) In cases where firm orders have not been placed for'the full value of the licence durinu Ihe initial validity period of the licence, it will bo necessary for the licensee to obtain the permission of the licensing authorities in the manner as explained in para 1 (viii) above before placing orders against such unordered balance value of the licence.

Section 2 : Special points to he kept in view while toiitlu-

dlnu purchase contracts.

2 (i) The contract price should invariably be expressed in the currency of the country in which the foreign supplier is situated. The contract price should be firm and final and no privision for any escalation would be permitted. It any commission is payable to an Indian Agent of the foreign supplier it must be- distinctly shown in the contract as an item, of cost payable in Indian rupees in Tndia and the net amount payable to the foreign supplier in foreign currency should therefore be shown exclusive of such Indian Agents commission. For the purpose of calculating the value in foreign exchange upto which purchase orders can be placed against the import licence, the value of the import licence should be computed at the rate of exchange notiiied by the Department of Revenue (Customs) under Section 15 of the Customs Act, 1962 and indicated in the import licence as per para 2 of the Public Notice No. 78-lTC(PN)/74 dated 6th June, 1974 issued by the Chief Controller of Imports and Exports.

2. (ii) Supply orders should be placed either on CfF or on C&F basis in the case of private sector importers. In the case of public sector importers the orders should be placed only on C&F basis.

2 (iii) It should clearly be understood that the purchase contracts under the import licence should be placed after obtaining comparable bids from overseas suppliers. In this connection it may be noted that the Indian importer is free to import from any country of his choice.

2. (iv) Minimum value of eligible contract—-Provided that the aggregate value of purchase contracts under an import licence is not less than DM 30,000 (in the case of purchases made wholly from the Federal Republic of Germany) or equivalent of DM 30,000 (in the case of purchases made wholly or partly from countries other than the Federal Republic of Germany), it is permissible for the importer to enter into individual purchases contracts for a value of less than DM 30,000 or equivalent of DM 30,000. This is however subject to the condition prescribed in para 2(xiii) below in respect of purchase contracts under an import licence the value of which does not exceed the rupee equi- valent of DM 1 million.

2. (v)(a) The purchase contract under the import licence is required to be specifically approved by the Government Of India and the Kreditanstalt fur Wiederaufbau (KfW) (the West German Bank Development Loan Corporation through which the West German Capital Goods Credit of DM 35 million has been mnde available) and therefore should incoiporatc a specillc clause to this effect in the purchase contract.

(b)_In the case of contracts entered into against an im- port licence who=e value is the rupee equivalent of DM 1 million or less (calculated at the exchange rate notiiied by the Department of Revenue (Customs), the approval of the contracts will not be specifically intimated to the importer. Once the Ministry of Finance, Department of Economic Affairs have forwarded the contract documents to the KfW under intimation to the importer, he may proceed \.m if the contract has been approved by the KfW also unless the KfW raises any objection subsequently in which event the importer will be informed suitably.

fc) In the case of contracts entered into aga:nst an import licence whose value is for an amount exceeding the rupee equivalent of DM I million [calculated at the rate of exchange notified by the Department of Revenue (Cus- toms)], the approval of (he KfW will be first obtained bv the Government of India, Ministry of Finance, Department ot Economic Affairs and specifically communicated to the Indian importer and until then the contracts should be treated as provisional. For this purpose 3 copies of the pur- chase contract along with a certificate (in triplicate) that orders have been placed after obtaining comparable bids fiom foreign suppliers arc required to be sent by the Indian importer to the Ministry of Finance, Department of T.cono- iii,o Affairs (BKC-1 Section) Room No. 69, North Block] within a fortnight from the date of conclusion of the pur- chase contract.

2. (vi) Where contract is placed on GIF b;isis and ac- cordingly the foreign supplier takes out the marine insu- rance, the foreign supplier should arrange to take out insu- rance in a fieery convertible currency and obtain an under- taking from the insurance company concerned that pay- ment if any arising out of insurance claims, would be made directly in DM to KfW (Ac/No. 50409100 with Deutsche Bundesbank, Frankfurt/Main).

2. (vii) Where contract are placed on C&F basis, the Marine insurance should be taken out with an Indian in- surance company and the pieinium should accordingly be paid in Indian Rupees. However, the Indian importer should obtain the following undertaking from tho Indian insurance company and furnish it (in triplicate) to the Department ot Economic Affairs, Ministry of Finance (EbCi Sect.on) alongwith Ihe contract documents :—

"We shall make remittance in foreign currency to the overseas suppliers or any replacement that may be necessitated by IOJS or damage to goods".

2, (vlii) As the conracts are required to be placed either on GIF basis or on C&H basis as per para 2(ii) above, the foreign suppliers should be made responsible to pay the freight charges in foreign currency, even where Indian ships are used. Jn no circumstances the freight charges should be paid in Indian rupees.

2. (ix) Payments to foreign suppliers against the licence will be made by means of a 'Special' letter of credit, as explained in Section III below and no remittance facility will be permitted against the import licence for his purpose.

2. (x) As regards transportation of goods purchased against the import licence, the party responsible for arran- ging shipment of the goods under the purchase contract will be tree to choose the carrici.i. Shipment can be made fiom the country in which suppliers are created or from a third country.

2. (xi) For contracts whose value exceeds DM 1 million in the case oi purchases from the Federal Republic of Germany including Land Berlin or, in the case of pur- chases from other countries, for contracts the DM equiva- lent of whose value exceeds DM 1 million, the importers should obtain performance guarantee for 10% value of the goods from the foreign supplier in regard to the perfor- mance of the goods supplied, and this fact should be incor- porated in the contract itself (in the case of other con- tracts, namely, for contracts whose value is less than the limit indicated above, he Indian importer is free to decide Lht; question whether or not he needs a. performance guaran- tee from the foreign supplier). The form of the performance guarantee can however be settled by the Indian importer with the foreign supplier by mutual consent, It should, however, be ensured by the Indian importer that payments, if any, due to him from the foreign supplier arising from the performance guarantee stipulations should be made direct to Kreditanstalt fur Wedcraufbau (Acct. No. 504,09100 with Deutsche Bundesbank, Frankfurt/Main).

2. (xiij ayments to the foreign suppliers under the im- port licence should be completed by the 31-12-1981. A suitable provision should, therefore, be made in the pur- chase orders/contracts to ensure completion of shipments and payments by 31-12-1981. In case it is anticipated that payments cannot be completed by that date, a request for extension with adequate justification must be made to the Department of Fxonomic Affairs (Controller of Aid Ac- counts & Audit, UCO Bank Building, Parliament Street New Delhi) by 31-10-1981. Such requests will be consi- dered on merits.

2. (xiii) In the case of import licences whose value does not exceed the rupee equivalent of DM 1 million, the purchase contracts are required to be submitted by the

Indian importer to the Department of Economic Affairs in a single lot. Submission of contracts piecemeal will not be entertained. In this connection the minimum value for eligible contracts explained in para 2(iv) above should be kept in view.

Section III—Payment to foreign suppliers—"Special" Letter

of Credit procedure,

3. (i) Request for issue of letter of authority :

Within ii fortnight of conclusion of purchase contracts with foreign lupplieis against an import licence whose value docs not exceed rupee equivalent of DM 1 million (uf the rate of exchange notified by the Department of Revenue (Customs) or within a fortnight from the date of communication of tlu- Government of India [vide P"ra 2(vJ (c) ;ihovel conveying the approval of KfW lo the contracts placed against an import licence whose value exceed the rupee equivalent of DM 1 million (at the rate of exchange notified by the Department of Revenue (Customs), as the case may be, the licensee should submit the following do- cument-, to the Ministry of Finance, Department of Econo- mic Affans REC-I Section, North Block, New Delhi with the request for the issue of Letter of Authority for opening an Irrevocable letter of credit in favour of the foreign supplier concerned.

la) In respect of contracts against import licence whose value- does not exceed the rupee equiva- lent of DM 1 million.

(ij Three copies of the Purchase Order; and Ihree copies of the foreign supplier's confirmation thereto, duly signed by the Importer and Sup- pliers respectively or photo copies thereof. Attested copies or the orders placed on the Indian Agents and confirmed by such agents are not acceptable.

OR

Three copies of the purchase contract duly signed by both the Indian importer and the foreign supplier or photo copies thereof. Attested copies of the orders placed on the Indinn Agents and confirmed by such Agents are not accept- able.

(ii) A request (in triplicate) for issue of Letter of

Authority in the form prescribed in Annixure-N.

(iii) A Bank Guarantee in the prescribed form as in Anncxure-III from nn Indian bank authorised to deal in foreign exchange, (not applicable in the case of Public Sector imports) t

(iv) In the case of C&F contract, three copis of the

undertaking from the Indian insurance company vide para 2(vii) above.

(v) \ certificate in triplicate vide para 2fiii) above that orders have been placed after obtaining compaiahle bids from foreign supplies; and

(iv) A certificate that no further contract* will be placed under licence vide para 2(xiii) abo\ ,\

(b) In respect of contracts against import licence whose value exceeds the rupee equivalent of DM 1 million.

In addition to the contract documents furnished earlier Tin rcspict of which KfWs approval will lime been ob- tained by the Ministiy of Finance, Department of Econo- mic Aflaiis) vide 2(v)(c) above-l, following document¹; should be submitted :—

I'i) A reucst (in duplicate) for the issue of Letter of Authority in the form pi-escribed in Annexure-II.

(ii) A Hank Guarantee in the prescribed form as ii Anne\ure-in from an Indian bank authorised In deal in foreign exchange, (not applicable in the case of Public Sector imports) and

(iii) In the case of C&F contract, three copies of the undertaking from the Indian Insurance Company vide para 2(vii) above.

3. (ii) It is clarified that in the case of public sector

imports, no bank fiuorantee is icquired.

3. (iii) Opening of Letter of Credit

Letter of Credit can be opened on the strength of the Letter of Authority on any one of the following 7 com- mercial banks in West Germany desijmatcd for this pur- pose :—

(i) The Baycrische Vereinsbank, Munich.

(ii) The Commerzbank A. G. Frankfurt.

(iji) The Deutsche Bank A. G. Hamburg.

(iv) The Diesdner Bank A. G., Jimgfernstie, Hamburg,

(iv) Berliner Handles Gasell-schaft Frankfurtor Bank.

(vi) State Bank of India, Frankfurt,

(vii) Vereins-Und-West Bank, Hamburg.

The importers (both in the public sector and private sectors) and their bankers should specifically indicate tho Bank selected by them out of the seven banks mentioned in para 3(iii) above.

3. (iv) Failure to make the request for issue of Letter of Authority within a fortnight (a) from the date of place- ment of firm orders in the case of orders against an import licence whose value is the rupee equivalent of DM I million or less or (b) from the date of communication of approval of contract by the Ministry of Finance, Depart- ment of Economic Affairs in the case of contracts against an Import licence whose value exceeds the rupee equivalent of DM 1 million, as the case may be deemed to be a violation of the Import Control Regulations.

3. (v) Bank Guarantee—amount for which it should be

executed.

The Bank Guarantee, where necessary, should be for an amount representing the rupee equivalent of the amount in foreign exchange for which the Letter of Authority is sought plus 1% of that amount towards incidental and commit- ment charges and in addition interest and other charges as mentioned in Annexurc-V, The prevailing rate of conver- sion shall be at tho exchange rate notified by the Depart- ment of Revenue (Customs) under Section 15 of Customs Act, 1962 and indicate in the import licence as per para 2 of Public Notice No. 78-lTC(PN)/74 dated 6-6-74. This rate ii meant only for puipose of iiniving at the value of h^nk guarantee to be fiirnr-hcd by the importer. For pur- poses of making rupee deposited into Government account towards the foreign exchange cost of imports made under the licence the rupee equivalent will have to be worked out at the composite rate for the D.M. amounts spent by the designated commercial banks in West Germany in ar- ranging payments to the foreign supplier i.e. either in DM if the foreign supplier is .situated in West Germany (in- cluding Land Berlin) or the DM amount for effecting payment in the currency of any other country in which the foreign supplier is located, in terms of the public Notice No. 15-lTC(PN)/72 dated 28-1-1972 and Public Notice No. 108-ITC(PN)/72 dated 21-7-72 and 8-ITC(PN)|76 dated 17-1-76 as amended from time to time. Any change In this regard will be notified as and when ncces-.ary.

3. (vi) Issue of Letter of Authority

Tf the documents specified in para 3(i) above are found to be in order, the Ministry of Finance (Controller of Aid Accounts & Audit) Department of Economic Affairs, UCO Ban?, Building, Parliament Street, New Delhi will fssue a It tier of authority to the designated Commercial Bank in West Germany (as in Annexure-lV) authorising payment uplo the specified amount to the foreign suppliers on the basis of ^ a "special" letter of credit to be opened by the importer's bank in India on Ihe nominated commercial bank in West Gcimany. A copy of such authorisation will be ?ent in Indian Licensee. The original Letter of Authority along- with a copy thereof will be sent to the concerned Indinn bank authorised to open (he Letter of Credit, asking It to

submit the original Letter of Authority to the designated commercial bank in West Germany alongwith Letter of Credit opened by it. (Such a direction will be as in An- nexure-V). A copy of this communication will alao be addressed to the importer.

No bank iti India should provide facilities to the licensee for establishing a Letter of Credit unless a Letter of Autho- rity as explained in this para has been received by such a Bank directly from the Controller of Aid Accounts & Audit, Department of Economic Affairs, Ministry of Finan- ce.

3.—(vii) THE "SPECIAL" LETTER OF CREDIT ON THE DESIGNATED COMMhRCIAl. BANK ]N WEST GERMANY SHOULD BF. OPENED WITHIN THIRTY DAYS FROM THE DATE OF THE TSSUE OF LETTER OF AUTHORITY UNDER INTIMATION TO THE CON- TROLLER OF AID ACCOUNTS & AUDIT, DEPART- MENT OF ECONOMIC AFFAIRS, MINISTRY OF FIN- ANCE, UCO BANK BUILDING, PARLIAMENT STREET, NhW DF.l.HT, OTHERWISE THE T.ET1 i.R OF AUTHO- RITY ALREADY ISSUED WILL BE DEEMED TO BE NO LONGER VALTD.

3.—(viii) The payments to the foreign suppliers will be made by the designated Commercial bank in West Germany on collection of requisite documents and statements. Even where the foreign supplier is situated in a country other than the Federal Republic of Germany (including Land Berlin) the negotiation and payment of documen's would be done by the designated commercial Bank" in West Germany. The designated commercial Bank in West Geimany will obtain reimbursement of Ihe DM amounts fiom the West German authorities. In the case of supplies by countries oLher than the Federal Republic of Germany, the designated commercial bank in West Germany will obtain reimbursement from the West German authorities of the amonts in DM spent by it to make the payments to the overseas suppliers in the currency of the country in which they arc located.

3.--(ix) INCIDENTAL BANK CHARGES.—Incurred by the both for payment in the Federal Republic of Germany as well as for arranging the payment in third country where- ver applicable will be remitted by the concerned bank in India to the designated commercial bank in West Germany through the normal banking channel WITHOUT AFFECTING THE GOVERNMENT OF INDIA'S ACCOUNT.

Section IV—Responsibility for Rupees Deposits Into Gov-

ernment Account.

4.—(.i) The original shipping documents should invaiiably be forwarded by the designated commercial bank in West Germany both in the base of imports from West Germany including Land Berlin and other countries to the concerned bunk in India who should, within 10 days of the receipt ol tht documents, release these negotiable s>et oi documents to the licensee but only after ensuring that the rupee equivalent of DM amount paid to the German supplier of the DM amount spent in arranging the payment to the supplier in third countiy by the designated commercial bank in West Germany plus 1 per cent thereof towards incidental and commitment charges, together with interest charges on the above aggregate amount for the period from the date of payment to the foreign supplier to the date of deposit of the rupee equivalent into Government Account (both days in- clusive) is recovered from the importer and deposited into Government account. Tn terms of Public Notice No. 46- 1TCXPNJ/75 dated the 16th lune, 1976, the interest charges arc to be calculated as under in respect of deposits made into the Government Account on or after 15th June, 1976.

(il where deposits are made within 30 days after from

the date of payment to the supplier.

9 per cent per annum. (ii) where rupee deposi's arc made more than 30 days

nftcr the date of payment to the supplier.

U) fur the first 30 days 0 per cent per annum. (b) lor peiiod in (.-\tCis ut 30 day?,

15 per cent pei annum.

The exchange rate to be adopted or computing the rupee equivalent of ihe foreign currency payments made to the foreign supplier will he the composite rate of exchange as laid down in CCI&E's Public Notice No. 8-ITC(PN)/76 < dated 17-1-76 or as may be notified by the Government from time to time through Public Notices ot the CCI&E or through the Exchange Control Circulais of the Reserve Bank of India IT WILL BE THE RESPONSIBILITY OF THE INDIAN HANK CONCERNED TO ENSURE THAT THE AMOUNTS DUE ARE CORRKC ILY DEPOSITED INTO GOVERN- MENT ACCOUNT BEFORE THE ORIGINAL SHIPPING DOCUMENTS ARE HANDED OVFR TO THE IMPOR- TERS. The licensee should also ensure that the amounts due are correctly deposited into Government Account before taking delivery of the documents from their bankers.

4.—(ii) The deposits envisaged in para 4(i) above may be made in cash either at the Reserve B;mk of India New Delhi or the State Bank of India, Tis Fkizari, Delhi, or if this is not feasible, ihc amounts may be remitted by means of a demand draft drawn on and in favour of the Agent, State Bank of India Tis Hazari, Dclhi-6 for credit to Government account as contemplated in Public Notice No. 233-ITC(PN/ dt!, dated the 24th October, 1968 as amended vide Public Notice No. 74-lTC(PN)/74 dated 31st May, 1974 and Public Notice No. I32-ITC(PN)/71 dated the 5th October, 1971. The Head of Account to be credited is "K-Deposits and Advances—b—Deposits not bearing interest—843—Civil De- posits—Deposits for purchases etc., abroad—Direct Payment Procedure Deposits for cost of supplies and equipment ob- tained under the West German Capital Goods Credit for 1978-79 (DM 35 million Credit)."

4—(jij) Remittance will be made in the Challan form pres- cribed in Public Notice No. 74-lTC(PN)/74 dated the 31st May, 1974.

4.—(iv) One copy of the Challan from the Reserve Bank of India, New Delhi or the State Bank of India, Tis Hazari, Deihi-6 or intimation regarding the submission of Demand Draft to the State Bank of Tndia, Tis Hazari, Delhi-6 should be sent by the Indian Bank, which has issued the guarantee to the C ontroller of Aid Accounts and Audit, Department of Economic Affairs, Ministry of Finance, UCO Bank Building, Parliament Street, New Dclhi-1 along with a forwarding letter giving full details of the Advice Notes received from the con- cerned nominated German bank.

4.—(v) it will be obligatory for the importers to make the requisite rupee deposits through authorised dealers only and also lo get the exchange control copy of the licence en- doiKed by them as required in Public Notice No. 184-ITC (PNl/68, dated the 30th August, 1968. They should alsc fill in the requisite "S" forms as prescribed by the Reserve Bank of India.

4.—(vi) After the imports under a licence are completed and the importers/bankers have deposited into Government account all the amounts due, details of the imports received and of rupee deposits made should be furnished to the Con- troller of Aid Accounts & Audit, Ministry of Finance, De- par'ment of Economic Affairs, UCO Bank Building, New Delhi-l in the proforma prescribed as Annexure-VI to en- able the Ministry of Finance to verify and arrange for release of the bank guarantee furnished by the importers, wherever necessary.

Section V—Alteration in the contract.

Any material alternation in the contracts pertaining to the list ot goods, terms or schedule of payments, value of goods, etc. will require the prior appioval of the Ministry of Finance and the kfW authorities whether it results in earlier pay- ments, or in postponement of payments.

Such alleralion(s) should be promptly intimated by, the imporsor to the Department of Economic Affairs, Ministry of Finance, New Delhi, (EEC-I Section), North Block for ¹ ecuiing >hc approval of the Government of Tndia/KfW in the same manner as explained in para 2 (v) above.

Section VI—Reporting

A quarterly report commencing from the dato of issue of Ihe licence should bo furnished in duplicate as in Annexure- VII to the Ministry of Finance, Department of Economic .Affairs (FF.C-I Section) Room Nj. 69, North Block,

New Delhi showing progress of ordering, delivery of goods, payments to foreign suppliers, etc. and should bo continued till •nil (shipments anil payment'! under the contract have "been completed, Ju the case of allocation exceeding the rupee equivalent of DM t Million [at the exchange rate notified by the Department of Revenue (Customs)] lbe licensee should in addition to the above mentioned quarterly reports, submit a half-yearly report as on 30th Juno and 31st December each year in the prescribed proforma at Annexure-VIII (duplicate) on special event, if any, on the progress of the project and on adherence to the time-schedule for completion of project alongwitb Annual Reports (2 copies) of the Indian importing company for at least three years until completion of the pro- ject.

Section VII—Miscellaneous Provisions

7.—(i) The licensee should apprise the supplier of any

special provisions in the import licence which may affect

the suppliers in carrying out the transactions.

7,—(ii) DISPUTES

It should be understood that the Government of Indin

will not undertake any responsibility for disputes if any

that may arise between the Indian importer and the foreign

supplier.

7.—(iii) COMPLIANCE WITH INSTRUCTIONS

The licensee skill promptly comply with, any directions,

instructions or orders issued by the Government of India

from time to time regarding any and all matters arising from

or pertaining to the import licence and for meeting all obli-

gations under the DM 35 million Capital Goods Agreement

with the KfW authorities.

7.—(iv> BREACH OR VIOLATIONS

Any breach or violation of conditions set forth in the

above clauses will result in appropriate action under the

Imports and Exports (Control) Act.

7.—(v) LIST OF ANNEXURES

Annexure-I —Project data form.

Annexure-IT —Form of Request for issue of Letter of

Authority.

Annexure-IIT —Form of Bank Guarantee,

Annexure-IV —Form of Letter of Authority.

Annexure-V - Letter of Instructions forwarding the Letter of Authority

Annexure-V I —Form of report of rupee doposits-cum-

:vplic;iliiin for release of Bunk Guaran- tee.

Annexiirc-VIl —Foiru for submitting quarterly report.

Annexure-VJJf —Form of Half-yearly Progress Report

(Applicable to cases exceeding rupee), equivalent of DM I million).

ANNEXURE—I

Project Data form

Krcdltanshilt Fur Wfcoeraufbmi

6, Frankfurt/Miiln Federal Republic of Germany

1'nlmenniirtciislrasie 5—9

Application for Foreign Exchange from German

Capital Goods loan

PROJECT DATA

(1) Applicant (Firm)

(a) Registered Office (address incl. State)

(b) I'ublic Sector or private sector undertaking.

(c) Business Line/Branch of Industry,

(d) Partners of Company.

(e) Foreign Collaboration Agreement.

ii2) Type of cvapital poods to be financed.

(3) Choice of capital goods based on—please indicate the procurement procedure followed. Since the Capital Goods loan is available for purchases from any country, an indi- cation should be given whether tender enquiries were made/ floated in various countries nnd the basis on which the selec- tion ol a particular supplier has been made.

(4) Suppliers (name and address).

(5) Short description of the whole project (for which such capital goods are required).

(6) Local and foreign exchange cost of the whole Project, with following break-down of figures.

—Land and building

—Machinery and equipment

—Operating Funds

—Miscellaneous

(7) Local and foreign financial sources for the whole, pro- ject (Quantitative statement concerning means of financing. It should be confirmed, that Rupee-financing is secured and that foreign exchange requirements not covered by this ap- plica'ion are met).

(fil Letter of Intent for Industrial Licence received.

(9) Annual reports with balance sheets and profit and loss accounts for the last two years. Tf available forecast of cash-flow and profitability.

flO) Capacity :

(a) Average utilization of existing capacity during the last two years.

(b) In case of under-utilization, please give main rea-

sons.

(11) Sn'es (last two years).

(12) Market position of the products to he manufactured (if possjb'e figures showing past nnd expected development).

(13) Employment.

la) I'resenl number of employees.

Ib) Additional employment after completion of project.

(14) Source of raw material supplies.

(15) Time-table for the execution of the Project.

ANNEXURE II

REQUEST I OR ISSUE OF TETTER Ol" AUTHORITY

To

The Controller of Aid Account* & Audit,

Ministry of Finance,

Department of Economic Affairs,

UCO Bank Building. Parliament Street, Mew Delhi-1.

Subject :—Tmporl of———from———under West German Capital Goods Credit for 1978-79 (DM 35 Million Cieditj.

Sir,

In connection with the import of •—— — from__ .. _- under the above mentioned West German Capital Goods Credit, we furnish the following particulars to enable you to issue the authority for opening the letter of credit through— —on the Bayerische Vererns- bank, Munich, or Commerzbank A. G., Frankfurt or Deutsche Bank, A.G., Hamburg, or the DresJncr Bank, A,G. Jungfers- ticd Hamburg or the Frankfurter Bank, "Frankfurt/AM Main or State Bank of India, Frankfurt or Vcreins-Und West Bank, Hamburg.

(a) Name and Address of the Importer.

(i) Whether a public or private sector undertaking,

(ii) Category of industry to which it belongs,

(iii) The Stale in which it is located.

(b) Number, date and value of licence, (photostat copy

of the licence should be attached).

(c) Value in foreign currency mid date of the order placed and accepted by the suppliers, indicating payment terms viz., (c.i.f. or C&E) (In no case. Letter of Authority should be applied for f.o.b. value only).

(d) A certificate in duplicate that firm orders (with suppliers order confirmation) have been placed with- in a period of 4 months from the date of import li- cence. If orders have been placed after the stipu- lated period of 4 months, a copy of CCT&E's letter/ Ministry of Finance's letter authorising extension of time or placing firm orders as Ihe case may he, should be attached.

(e)A certificate in triplicate that firm orders have been placed after obtaining comparable bids from over- seas suppliers and that the lowest technically suitable offer has been accepted. In case it is not possible to obtain comparable bids, e.g., proprietary item, full justification therefore should be furnished.

(f) Short description of the goods to be imported.

(g) Net foreign currency amount/payable to Suppliers (to be expressed in the currency of the country in which suppliers is located) for which Letter of Authority is required (excluding Agency commis- sion) .

(h) Amount of agency commission in foreign currency

and Name and Address of Indian Agent.

(i) Tn case the supplied happens to be located in a country other than West Germany, the name of the supplier's bank to whom the amount is to be re- mitted by the designated Commercial Bank in West Germany should be indicated.

(j) Expected date of completion of delivery.

(k) A schedule showing probable dates on which pay-

ments under the contract will fall due.

(1) In the case of import licence upto n value which is equivalent to DM 1 Million, a certificate that all the contracts against the import licence have been placed and that no further conduct will be placed.

The Letter of Credit will be opened through

(Name and address of the Indian schedule hank, authorised to deal in foreign exchange).

and the Bank Guarantee No.— — d a t ed

for Rs. —furnished by the above mentioned bank and which has been fully adjudicated by the Collector of Stamps, in accordance with Section 31 of the Stamps Act 1899 is attached.

Yours faithfully,

(Licensee)

Copy forwarded to - —— —-Bank for

information.

ANNEXURE III

GUARANTEE BOND

President of India,

In consideration of the President of India (hereinafter called the Government) having agreed to arrange for pay- ment in (mention the appropriate amount in foreign currency) for the import of——• by ___-— (hereinafter called the 'importer') against the licence No.—— • —•—dated- issued under the terms and conditions of West German Capital Goods Credit for 1978-79 and in pursuance of. import in favour of the importer against the above mentioned agreement, we Bank, at the request of the importer hereby undertake to arrange to deposit the amount of the disburse- ments made by the—— • — ——— — (Name of the Commercial Bank in West Germany) by the importer converted at the prevailing rate of exchange calculated as per instructions issued by the Government in the matter from time to time plus 1 per cent thereon within 10 days of the receipt of advice of payments, for credit to the Government account, in the manner and against the appro- priate Heads of Account as indicated by Government of India under the said credit together with interest thereon at the rates of 9 per cent per annum for the first 30 days and at 15 per cent per annum for the period in excess thereof reckoned from the date of payment to the foreign supplier to the date of deposit of rupee equivalent for credit into the Government account. The negotiable set of import docu- ments received from the designated commercial Bank in West Germany will be released to the importer only after the rupee deposits contemplated above bnvu been made.

2. We, t h e— — • Bank also undertake to In- demnify and keep indemnified the Government against any default in payment by the Importer of any sum that may be due and payable from time to time by the Importer to the Government at such place and in such manner as the Govern- ment may from time to time direct, such sums not exceeding Rs.-—— or any part thereof, for the time heing due and payable by the importer ; together with interest there upon at the rate of 9 per cent per annum for the first 30 days and at 15 per cent per annum for the period in excess there- of, reckoned from the date of payment to the foreign supp- lier. The decision of the Government as to any default in the said payment by the importer, or on his part and Jn re- gard to the amount payable to the Government by us —- Bank shall be final and binding on us——— •—-Bank.

3. We —Bank further agree that in case of in- crease in the value of imports or decrease in the value of unfulfilled deliveries under the contract as a result of change in the composite rate of exchange, the amount of this guaran- tee bond will be adjusted as on the date when the change takes place, in proportion to this change.

4. We— —Bank further agree that the guarantee here- in contained shall remain in full force and effect during the period that would be taken for the performance of the said Agreement /contract and that it shall continue to be enforce- able till all the dues to the Government under, or by virtue of this guarantee have heen fully paid and its claims satis- fied or discharged.

5. The guarantee herein contained shall not be affected

by any change fn the constitution of the importer or the Bank and the Government shall have the fullest liberty with- out affecting the guarantee to postpone for any time and from

time to time any of the powers exerciseable by it against the importer and the Bank shall not be realised from its liability under this guarantee by any exercise of the Government of the liberty with reference to the matters aforesaid or by reason of time being given to the Importer or any other forebearance, act or omission on the part of the Government or any indulgence by the Government to the importer or by any other matter or things whatsoever which under the law relating to sureties shall, but for this pro- vision, have the effect of so releasing the- • Bank from its such liability.

6. We Bank lastly undertake not to revoke this guarantee during its currency, except with previous—consent of the Government, in writing,

7. Our liability under this guarantee is restricted to Rs. —-——(plus interest and other charges, not expected to exceed 1 per cent of the guarantee amount) and it will remain in force till the day of* (month) — 19 . Unless claims under the guarantee arc made in writing within 6 months of this date and unless a suit or action to enforce these claims is commenced within another six months thereafter i.e. upto — , all Go- vernment rights under this guarantee shall be forfeited and we shall be relieved and discharged from all liability there- under.

D a t e —- ~ day of —

for ——Batik.

Accepted for anil on behalf of the President of India, by Shri (Name and designation)

Signature Signature

*This date shall be arrived .it by adding one month to the date upto which the Letter of Authority is required to be kept valid.

Notes : (1) The value of the stamped paper in which this guarantee is to be executed is to be adjudica- ted by the Collector of Stamps under Section 31 of the Indian Stamps Act.

(2) The value of the Bank Guarantee vide par.is 2 and 7 above shall be arrived at after adding 1 per cent to the net C & F or CTF value of the contract converted into rupees at the Customs exchange rate prevailing on the date of issue of the Tmport Licence.

ANNEXURL IV

LETTER OF AUTHORITY NO.— — -

Government of Tndia

MINISTRY OF FINANCE

(Department of Economic Affairs)

New Delhi, the 197

To

(Name and AdJicss of the German Bank).

Dear Sirs,

Subject :—Procedure for payment*, to overseas suppliers through the Letter of Credit Cover Deposit Account with vou under DM 35 million Capital Goods Credil for 1978-79 (AL- ) from the Federal Republic of Germany.

In accordance with the terms and conditions of the above procedure, agreed upon through letter No- —dated the——— - addressed to your Bank by the Chief Account- ing Officer, High Commission of Indin, Londcn we hereby authorise you to spend such nn amount in DM us may tc found necessary to pay (the amount in foreign currency con- :erned) to (name of the supplier) (applicable in the case af third country suppliers) or to pay an amount of D M— :o_———-—(applicable in the cases of West German supp- lier), as the case may be, under ihe letter of credit to be apened bv —— -for covering the import of — — -against contract entered into by ,

1342GI/78 -3

2. After each payment, the shipping and other documents

(negotiable) may be forwarded direct to—— — and a payment advice alongwith one set of documents (non- negotiable) sent to the undersigned for information.

3. Your banking charges under the above letter of credit

will be settled directly with you by the— — by remittance from India.

4. This authority will remain valid upto- 197 .

Yours faithfully.

(Accounts Officer)

ANNEXURE V

Subject :—Import under West German DM 35 Million Capital Goods Credit for 1978-79 Issue of Letter of Authority for opening Letter of Credit Import Licence No. dated---— .

Dear Sirs,

With reference to letter No. ;——dated the—

from the in which they have re- quested permission for opening letter of credit through your Bank under the West German DM 35 million Capital Goods Credit for 1978-79, I am to enclose the Department of Eco- nomic Affairs Letter of Authority No.-

(with spare copy)

dated the —authorising them to arrange pay- ment upto— —•— -to the foreign supplier. The Letter of Authority should be sent by you to the —— alongwith the letter of credit opened by yon.

2. You are hereby authorised to open the Letter of Credit for an amount not exceeding -within a period of thirty days from the date of this letter, under in- timation to this Department. In terms of para 10 Section VII of the Exchange Control Manufti, yoii are required to ensure that the date of expiry of the Letter of Credit is not later than 45 diivs, after the final datu for shipments stated in Ihe relative import licence or the date indicated in the Letter of Authority whichever is earlier. Before opening the letter of Credit, it may please be ensured that the im- porter is in possession of a valid import licence.

3. You arc requested to arrange to deposit the rupee rqui- valcnt of the amounts in Deutsche Murk spent by (name of the designated commercial Bank in West Germany) to effect payments in D.M. to the suppliers in the Federal Re- public of Germany including Land Berlin or in other foreign currency to the foreign supplier in other countries plus 1 per c.-nl towards incidental and Commitment charges in terms of the Guarantee furnished by you, within 10 days of the receipt of documents from the———— . The rupee equivalents of the amount disbursed to the foreign sup- pliers will have to be calculated by applying the prevailing rate of conversion as instructed in Public Nctt'ce No. 15- lTC(PN)/72 dated 28-1-72 and Public Notice No. 108-lTC (PN)/72 dated 21-7-72 und 8-ITC(PN)/76 dated 17-1-76 until further notice. This rate is subject to revision ii and when the IMF parity rate of exchange undergoes change. In- terest at the rate of lJ per cent per annum for_ the first 30 days and at 15 per cent per annum for the period in excess thereof reckoned from the date of payment to the suppliers and the date on which the rupee equivalents are deposited (both days inclusive) is also required to be deposited into Government account. It will be your responsibility to arrange for the deposit of these amounts before the shipping docu- ments are handed over to the importers.

4. These amounts should be deposited cither with the Res- erve Bank of India, New Delhi or the State Bank of India, Tis Hazari, Delhi of remitted by means of a demand draft obtained by you from any branch of the State Bank of India or its subsidiaries (Drawer) drawn on and made payable to the State Bank of Indin, Tis Hazari Branch, Deihi-6 (Drawee and Payee). In this connection, your attention is also invited to the provisions of the Public Notice No. 233-TTC(PN) /6K dated the 24th October. 1968 as amended by Public Notice No, 74-ITC(PN)/74 dntcd 31-5-74 and No. 132ITC(PN)/7J

dated the 5th October, 1971. The Head of account to be credited is : "K-Deposits and Advances-b-Deposits not beating interest-843-Civil Deposits-Deposits for purchases etc. abroad/ under Direct Payment Procedure Deposits/for cost of supplies and equipment obtained under the West German Capital Goods Credit IX for 1978-79 (DM 35 Million Credit).

5. One copy of the challan in original, in cases where the rupee equivalents are credited in cash at the Reserve Bank of India, New Delhi or the State Bank of India, Delhi should be sent by you to the address given below, alongwith a for- warding letter giving full details of the Advice Notes received from the nominatinR German Bank.

The Controller of Aid Accounts &. Audit,

Ministry of Finarjce,

Department of Economic Affairs,

UCO Bank Building,

Parliament Street, New Delhi.

In cases where the rupee equivalents are remitted by means of demand drafts as laid down in the Public Notice daled tnc 24th October, 1968 mentioned above, intimations thereof should be sent to ihe address given above. Jn all cases, full particulars of the rupee equivalents deposited alongwith the amount of interest paid and the period for which interest has been calculated should be furnished to this Department.

6. A payment clause to the effect that the insurance claim, if any, received from the foreign Insurance Company and/ or claims, if any, arising out of Bank Guarantee relative to performance guarantee should be remitted by the Insurance Company and/or the Bank giving the guarantee in DM dir- ect to Kfw (Account No. 504 : 09100 with Deutsche Bundes- bank, Frankfurt/Main) under advice to the Controller of Aid Accounts & Audit, Ministry of Finance, Department of Economic Affairs, New Delhi may be inserted in the Letter of Credit to be opened by you.

Yours faithfully,

Sd./ Accounts Officer.

Copy forwarded to : M/s.

with a copy of the Letter of Authority No.-———-—for Information, with reference to their letter quoted above.

Accounts Officer

ANfNEXURE VT

PROFORMA

1. Name and full address of the importer/licensee on

whose behalf the Bank Guarantee was furnished.

2. The import licence number and date and value.

3. Number, date nnd amount of the guarantee furnished.

4. Particulars of the Letter of Authority for opening Letter

of Credit obtained from the Ministry of Finance.

(a) Number and date of the Letter of Authority.

(b) Amount of the Letter of Authority (in foreign

currency).

5. Particulars of Imports effected and rupee deposits made.

(a) Name of suppliers.

(b) Amount (in foreign currency) actually paid to the

supplicr(s) mentioned at (a) above.

(c) Date of payment to the supplier by the nominated

Bank in West Germany.

(d) Amount of rupee deposits :—

(i) Rupee equivalent of foreign currency amount paid to the supplier(S)l unit of foreign exchange— Rs. ).

(ii) Interest paid.

(iii) Period for which the interest has been calculated

from

to

(iv) Total deposit made.

(v) Date and place of deposit,

(vi) Number and date of the Treasury Challan ( lo be enclosed). Tf the Treasury Challan has already been sent, reference to the letter number and date with which it was sent may br- quoted.

(vii) If the rupee deposit mentioned in (d) (iv) above was made by means of Demand Draft, the number, date and amount of the draft and particulars of your letter with which it was sent to the Accoun- tant General, Central Revenues, to be indicated.

6. Amount utilised and balance unutilised (in foreign

currency) against each Letter of Authority.

7. A certificate that the balance indicated in 6 above, has not been utilised and no shipment has been made thereof, and the same may be treated as lapsed.

(Authorised signatures)

ANNEXURE VIT

PROFORMA

Address of Company

Category of Industry

Amount of allocation

N " u: of company

Privitc Sector/ Public Sector

Value of L. C,

No. date & Value of import licence (Rs.)

(Rs.)

3

Amount paid against the L.C. (foreign cur-

value of contract (foreign currency)

rency)

5

2

4 1

6

7

8

9

Note : In respect of allocation exceeding the rupee equivalent of DM 1 Million, [If the rate of exchange notified by the Department of Revenue (Customs)], the licence* will be required to submit in addition half-yearly report as in Annexure—VIII on special event, if any on the progress of the project and on adherence to the time-schedule for completion of project alongwith Annual Report (2 copies) for at least three years until completion of the project.

ANNEXURE V1U

PROFORMA FOR SUBMISSION OF HALF-YEARLY REPORTS ON PROGRESS OF PROJKCTS FINANCED UNDER WEST GERMAN CAPITAL GOODS CRLDIT- 30th JUNE

31st DECFMBFR

1. Name of Company and address (Address of Head Office and also address of factory).

2. State in which it is located (if the factory is located in. State other than the Stale in which the H.ad office is located, it should be clearly indicated).

3. Whether a public sector or private sector undertaking.

4. Branch of Industry to which it belongs.

5. Value of allocation under the credit npproved by the Government of India.

6. Brief Description of the project including debCiiption of the Capital Goods items of manufacture.

7. No., date and value of the import licence.

8. Value of supply contract (s) under the licence in D. M.

9. Amount paid to the suppliers as on—— in D.M.

10. If there is a balance in the import licence, whether it is likely to be utilised. If so, how much and how soon it h going to be utilised by further contracting 11. Keeping of time schedule comparison of schedule wilh actual dates, reasons for changing the time schedule.

12. If not, revised time-table with detailed reasons there- for.

13. Progress of the Project

(i) Supply of the goods (teims of delivery)

(ii) Erection (kind and quality)

(iii) CommisvoninK (final acceptance,

trial runs results of operation).

14. Date of completion of the Project.

15. Economic Implication of the Project.

16. Realisation of the Cost and Finance Plan Comparison of plan with actual values.

17. Any special events connected with the implementation of the project.

18. Latest annual report of the Project spoasor (2 copies).

N.B. : Strike out the portions not applicable.

K. V, SESHADRI, Controller of Imports & h\porti

PRINTED BY THE MANAGER, (iOVT. OF INDIA PRESS. RING ROAD, NEW DELHI-110044

AND PUBLISHED BY TUP. CONTROLLER OF PUBLICATIONS, DELHI-110054 1 9 79

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