Physical verification of LCs to be done before issuing Registration Certificate to wheat exporters

The DGFT vide Trade Notice No. 11/2022-23 dated May 30, 2022 has decided to do physical verification of the Letter of Credits (“LCs”) by the Regional Authorities (“RAs”), which are already approved or under process, due to improper documentation by the wheat exporters for Registration Certificates.

Reference is invited to Notification No.06/2015-2020 dated May 13, 2022 amending the export policy of Wheat under S.No.59 of Chapter 10 of Schedule – 2 of the ITC (HS) Export Policy from ‘Free’ to Prohibited with immediate effect read with Trade Notices No.06/2022-2023 dated May 14, 2022, No.07/2022-2023 dated May 17, 2022, No.08/2022-2023 dated May 17, 2022, No.09/2022-2023 dated May 23, 2022 and No.10/2022-2023 dated May 24, 2022.

DGFT (Hq.) vide Circular dated May 19, 2022 issued guidelines to all RAs for strict compliance before issuance of Registration Certificates (RCs) to the eligible exporters. In spite of these steps and due diligence exercised by RAs in the process, it has been apprehended that some of the exporters are applying for RCs from the RAs based on improper documents and therefore more checks need to be put in 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 for that if necessary, help of a professional agency may be taken. While doing physical verification, validation/endorsement by Recipient Banks may be ensured.

Further in cases where the L/C date is on or prior to May 13, 2022 but the swift message/message exchange date between the Indian and Foreign bank is after May 13, 2022, RAs may conduct full investigation (if required, through external experts) and if these are found to be ante-dated, immediate proceedings under FT (D&R) Act, 1992 needs to be initiated against the exporter. Such cases will be further examined for referring to enforcement agencies like Economic Offence Wing (EOW)/Central Bureau of Investigation (CBI). In case of complicity of any Banker in cases where ante-dating is established, necessary proceedings as per law will be initiated.

Henceforth 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 RC to the exporter.

RAs are requested to process all such applications with due diligence and in compliance with the instructions.

The Trade Notice can be accessed at - https://content.dgft.gov.in/Website/dgftprod/92b30402-18d6-44aa-854b-f3505d8b86b5/Trade%20Notice%2011%20dated%2030.05.2022.pdf