Payment by credit card for imports

This query is : Resolved

Yogin (Querist)
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25 January 2013 Dear Sirs,

Kindly let me know the implications, if payment against import is made by Credit Card.

We import material with payment of Import Duties and use that material in Export Goods. We export finished products with payment of Excise Duties with debit entry in RG23 A Part-II. And then we file Rebate Claim.

Is there any adverse effect on Cenvat Credit or Rebate Claim?

Is there any breach of FEMA Guidelines?

Thanks,

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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25 January 2013 Yes, foreign exchange earnings received through an international credit card for which reimbursement has been made in foreign exchange may be regarded as a remittance through normal banking channel and the same can be credited to the EEFC account.

EEFC account holders are permitted to access the forex market for purchasing foreign exchange only after utilizing fully the available balances in the EEFC accounts . Accordingly ADs are required to obtain a declaration, while selling foreign exchange to their constituents.

What are the permissible debits into this account?

Ans. i) Payment outside India towards a permissible current account transaction [in accordance to the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000] and permissible capital account transaction [in accordance to the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000].

ii) Payment in foreign exchange towards cost of goods purchased from a 100 percent Export Oriented Unit or a Unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park

iii) payment of customs duty in accordance with the provisions of the Foreign Trade Policy of the Central Government for the time being in force.

iv) Trade related loans/advances, extended by an exporter holding such account to his importer customer outside India, subject to compliance with the Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000.

v) Payment in foreign exchange to a person resident in India for supply of goods/services including payments for airfare and hotel expenditure.

more info:-

http://rbidocs.rbi.org.in/rdocs/notification/PDFs/06MR010712F.pdf