What are the Salient Features of an Import Licence

The statutory basis for control of imports into India is found in the Foreign Trade (Development and Regulation) Act, 1992 which empowers the Central Government  to prohibit or otherwise control Imports. Deriving powers under this Act, the Central Government has notified the Export and Import Policy, 1992-97. All goods other than those contained in the negative list of imports specified in the Export and Import Policy can be freely imported.

The negative list of imports contains three parts as follows:

(a) Items, import of which is prohibited;

(b) Items, which can be imported only against a licence or as per Public Notice; and

(c) Canalized items, which can be imported only through the specified canalizing agency.

Licences are now required for import of only a few commodities. Licences are issued by the Joint/Deputy/Assistant Director General of Foreign Trade of the region concerned.

Salient Features of an Import  Licence

(i) Issued in duplicate. Licences are issued in two copies: (i) customs purposes  copy, and (ii) exchange control copy. The customs purposes copy is to be presented to the customs authorities along with Bill of Entry for obtaining clearance  of goods imported. The exchange control copy is to be presented to the bank for opening a letter of credit or for making remittance of foreign exchange against imports made under the licence. The bank should deal with the exchange control copy of the licence only.

(ii) Currency areas. A licence may be issued valid for imports from general currency area or from specific currency area. General currency area licences are valid for import from all countries except those from which import is prohibited. Specific currency area licences are valid for import from specified country or countries .

(iii) Period  of validity. The licence will suite the period of validity. Normally, capital goods licences are issued valid for 24 months. In other cases, the licence is valid for a period of 12 months.

The validity of an import licence is decided with reference to the date of actual  shipment/dispatch of goods from the supplying country and not the date of arrival of goods at an Indian port. Therefore, the relevant date would be the date of bill of lading, air consignment note or date stamp of the office of dispatch of post parcel, depending upon the mode of transport. In case of landlocked countries, it would be the date of dispatch by train, road or other recognized mode of transport.

Where the date of expiry of an import licence falls before the last date of a month, the licence will automatically be valid up to the end of the month. Also, in calculating the validity date, the date on which the licence is issued is excluded. Further period of 15 days is allowed for negotiation of bills (under exchange control  regulations).

Illustration. A licence is issued on 12th August 1994 valid for 12 months. The implications are that: (a) the licence expires on 31st August 1995; (b) a letter of credit can be opened under the licence on or before 31st August 1995; (c) if the letter of credit is opened, the latest date which can be stipulated as the last date of shipment is 31st August 1995, and (d) the letter of credit can stipulate (i.e., latest possible) as the last date of negotiation 15th September 1995.

(iv) Port of Registration. Every import licence is valid for import of goods through any of the customs port (including air customs) in India. The importer should get the licence registered with customs authority of the port through which he intends to import.

(v) Actual user condition. Where the licence is issued with ‘actual user’ condition , goods imported under it by the licensee only for the purpose for which they were imported, at the address given in the application for licence.

(vi) Value. The licence shall indicate the value both in rupees and in foreign currency at the exchange rate prevailing on the date of the issue of the licence. No enhancement of rupee value shall be necessary if the imports are covered by the amount of foreign currency indicated in the licence. Customs will allow imports on the basis of the rupee value.

Cash and Deferred Payment Licence

(a) Deferred Payment Licence. A licence which permits payment against imports to be made in installments over a period of time is known as deferred payment licence. Such a licence is normally issued for import of capital goods.

(b) Cash Licence. Normally payment for imports should be made within a period of six months from the date of shipment at the exporter’s country. The licence issued in such a case, being other than a deferred payment licence, is known as a cash licence.

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