What changed
Previously, exporters had to surrender proportionate export incentives when their bills were written off. Now, for exports from August 27, 2009, under FTP 2009-14, AD banks need not insist on surrender of incentives (except Duty Drawback) if the write-off is approved on merits and a Foreign Mission certificate is produced.
What it means for you
Banks can process write-off requests more smoothly, reducing compliance burden for exporters. However, Duty Drawback amounts must still be recovered even if ECGC settles or RBI writes off. This aligns FEMA rules with FTP relaxations, but banks must verify conditions carefully.
What you must do
- Update internal write-off policies to reflect that surrender of export incentives (except Duty Drawback) is not required when conditions in Para 2 are met.
- Ensure exporters provide a certificate from the Indian Foreign Mission confirming non-recovery before approving write-off.
- Continue to recover Duty Drawback amounts in all write-off cases, even if ECGC settlement or RBI approval is obtained.
- Communicate this relaxation to your exporter customers and relevant branches.
Who it affects
AD Category-I banks, Exporters availing Export Promotion Schemes under FTP 2009-14, Branches handling export bills and write-offs
Does this circular apply to self-write-off cases?
No, the relaxation does not apply to self-write-off cases; those remain subject to existing rules.
Is Duty Drawback covered under this relaxation?
No, Duty Drawback is governed by Customs Act, 1962, so the drawback amount must still be recovered even if write-off is allowed.
From which date are these relaxed conditions effective?
The relaxation applies to exports made on or after August 27, 2009.