06 September 2021
We have one regular export customer who has good amount of business with us. He placed the order and paid 100% advance also but subsequently he cancelled the order and asked for the refunds. However erroneously that advance got adjusted against the old invoices and all the SHBs were closed against this advance. Of course we had some unapplied payments pending at our end which should have been applied against the old invoices but instead of that advance got adjusted. Now when we asked bank to refund the excess amount bank is asking that the BRC is in the used status and hence we need to get the confirmation from the DGFT that we have not claimed any export benefits and since DGFT site is down we are not able to make the BRCs in the available status and bank is refusing to refund.. So our question is whether there is any rule under any of the acts that the advance has to be refunded as is or can bank rectify the application on our request and open the advance again and refund it to the customer. This issue is pending with bank since last 2 months and it is a dead lock and DGFT site is down we are not able to get the BRCs available. We have not taken any MEIS benefit on the same
10 July 2024
In your situation, where the advance payment from your export customer was erroneously adjusted against old invoices instead of being retained separately for refund, and the bank is now requiring the BRC (Bank Realization Certificate) to be in the "available" status to process the refund, here’s a structured approach to resolve the issue:
1. **Document the Error**: Clearly document and communicate to the bank the error that occurred where the advance payment was incorrectly adjusted against old invoices. Provide details of the original intention to keep the advance separate for potential refund.
2. **Request Bank to Rectify**: Request the bank to rectify the application of the advance payment. Explain that the adjustment was done in error and that the advance should be reopened for a refund as per the customer's request.
3. **DGFT Confirmation**: Since the DGFT site is down and you are unable to obtain the BRC in the "available" status, document this issue with the bank. Explain that you are actively trying to rectify the status with DGFT, but due to technical issues beyond your control, you are unable to provide the BRC immediately.
4. **Legal and Regulatory Compliance**: Check if there are any specific provisions under the Foreign Trade Policy (FTP) or other regulations that govern the treatment of advance payments in export transactions. This may involve understanding whether the advance should have been kept separate and how to rectify such errors.
5. **Escalate if Necessary**: If the issue persists despite your efforts to communicate and rectify the situation, consider escalating the matter within the bank to higher authorities or seeking assistance from a legal advisor who specializes in export-related issues.
6. **Alternative Documentation**: Explore if alternative documentation or proofs can be provided to the bank temporarily until the DGFT site is back online and you can obtain the correct BRC status.
7. **Customer Communication**: Keep your export customer informed about the situation and assure them that you are working to resolve the issue and process their refund promptly once the bank requirements are met.
Given the complexities involved in export transactions and regulatory requirements, it’s crucial to maintain clear communication with both the bank and your customer. Seek to rectify the error, provide necessary documentation, and work towards a resolution that satisfies all parties involved.
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