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21. Short Shipment.
Where a portion of a consignment is short shipped and the exporter consequently draws a bill or prepares an invoice for a quantity less than that declared on the relative export form, he should produce a notice of short shipment on the prescribed form duly certified by the Customs alongwith the shipping documents. In such cases, Authorised Dealers should negotiate/collect the shipping documents on the basis of short shipment notice. The Authorised Dealer will forward the short shipment notice to the State Bank alongwith triplicate copy of 'E' form while reporting the realisation of full value of the goods shipped. If the exporter fails to produce the short shipment notice alongwith the export documents, the Authorised Dealer may negotiate/ accept the documents for collection but report full particulars of the case to the State Bank. The Authorised Dealer should, however, continue to follow up the case with the exporter for submission of short shipment notice.

22. Shipments Shut-out Entirely.
(i) Where a shipment to be made by a particular vessel is entirely shut-out and reshipped by another vessel, the exporter should apply on the prescribed form in duplicate to the Customs for permission to alter the name of the vessel on the relative export form and the shipping bill.

(ii) Where a shipment is entirely shut-out and is not being reshipped immediately by another vessel, the exporter should give a notice to the Customs in the prescribed form in duplicate. It will be the responsibility of the exporter concerned to produce to the Authorised Dealer who had certified the export form, a copy of the shut-out notice duly certified by the Customs within 21 days from the date of certification of the export form. On receipt of the shut-out notice, the Authorised Dealer should treat the relative export forms as cancelled and forward the shut-out notice to the State Bank.

23. Shipment lost or damaged in Transit.
(i) If shipments from Pakistan are lost in transit for which payment has not already been received, the Authorised Dealers must see that an insurance claim is made immediately the loss is known. The triplicate copy of the relative export form should be endorsed with the narration "Shipment Lost" under the stamp and signature of the Authorised Dealer and sent to the State Bank under a separate covering letter giving the following particulars and bearing running serial number:
(a) Name of the insurance company with which goods were insured.
(b) Amount of insurance and its currency.
(c) Place where claim is payable.

(ii) The Authorised Dealer who had certified the export form should pursue the matter with the shipper and ensure that in each case the exporter has received the insurance claim and produces encashment certificate, in cases where claims are paid in foreign currencies and Rupee payment certificate where settlements are made in Rupees. These certificates should be forwarded by the Authorised Dealer to the State Bank giving reference of relative export forms.

24. Advance Remittances against Exports.
i) In case of remittance received in advance for goods to be exported from Pakistan, Authorised Dealers should obtain a certificate in duplicate from the beneficiary on the Advance Payment Voucher (Appendix V-18) declaring the particulars of the intended export, before disbursing the amount to him. Both copies of the Advance Payment Voucher shall be authenticated by the Authorised Dealer. The original shall be surrendered to State Bank with the relative Schedule A-2, while the duplicate shall be returned to the exporter for production at the time of certification of Form 'E'. The Authorised Dealer which has disbursed the amount, shall ensure that Form 'E' is certified for export in accordance with the declaration made on the Advance Payment Voucher within a period of one year of receipt of advance payment and particulars of Form(s) 'E' viz. date of certification, value for which 'E' Forms certified and progressive un-utilised balance (where more than one Forms 'E' are certified) shall be endorsed on the duplicate copy of the Advance Payment Voucher. The triplicate copy of the 'E' Form will be surrendered to the State Bank under a covering letter alongwith a photocopy of the Advance Payment Voucher and the invoice.

ii) In case of payments received for export of fresh fruits/vegetables, it would be in order for the Authorised Dealers to certify 'E' Forms against Advance Payment received, even if the detailed particulars of the 'Goods', their 'Quality' and 'Invoice Value' have not been filled in, provided the broad description i.e. ‘Fresh Fruits’, ‘Fresh Vegetables’, or ‘Fresh Fruits/Vegetables' is declared in the relevant column. While certifying the 'E' Form, the following remarks would be added by the Authorised Dealers:-

'This form has been certified against the outstanding balance of ___________ (Amount) out of the advance payment of __________ (Amount) received on __________ (Date)’.

There is no objection to the use of one ‘E’ form for export of both fresh fruits and vegetables  if these goods form a single consignment. At the time of shipment, the exporter will fill in the required particulars in all copies of the 'E' Form and submit the duplicate and triplicate copies to the Authorised Dealer alongwith the shipping documents and an invoice. The Authorised Dealer will compare the details of the 'Goods', 'Quantity' and 'Invoice Value' and process the case as indicated in sub-para (i).

25. Exports Against Payments Tendered by Buyer in Person.
In case where payment for goods to be exported is made out of foreign exchange (excluding foreign currency notes) brought from abroad by a purchaser on person, the following procedure will be followed:-
i) The seller (exporter) will arrange the encashment of foreign exchange (excluding foreign currency notes) brought in by the foreign buyer with a bank in Pakistan.
ii) The Authorised Dealer while encashing foreign exchange will obtain an application in the prescribed form (Appendix V-19) from the foreign buyer and get the ‘Advance Payment Voucher’ completed by the seller.
iii) The Rupee proceeds will be credited to the account of the seller, if one is maintained with the encashing bank, or passed on to the bank with whom the seller maintains his account for credit thereto. Thereafter the Authorised Dealer will make  out the prescribed certificate (Appendix V- 20).
iv) While reporting the receipt of foreign exchange as advance payment for export on Schedule A-2, the Authorised Dealer will attach the application and certificate (Appendices V-19 and V-20) with the “Advance Payment Voucher”.

26. Export on D.A./T.R. Basis - Non-Payment by Foreign Buyer.
In case of exports on firm contract on D.A. or T.R. basis, Authorised Dealers, before certifying the export form, should ensure that the foreign buyer is of sound financial standing and enjoys good repute. Doubtful cases should be referred to the State Bank for instructions. Despite aforesaid precaution, if a foreign buyer refuses to accept the goods, the exporter should either make immediate arrangements for shipping the goods back to Pakistan or alternate buyer found with the approval of the State Bank. However, prior approval of the State Bank will not be necessary in cases where the consignment initially refused is taken up finally by the original consignee or an alternate buyer found provided that payment for the consignment is not less than 90% of its original value minus actual demurrage charges, if any. In those cases where the foreign buyers default in making payment after taking delivery of the goods against their acceptance of the bill or T.R., Authorised Dealers shall consider the possibility of initiating legal action against the foreign buyers for recovery of export proceeds in consultation with the State Bank. To this end, Authorised Dealers should make arrangements for obtaining a suitable undertaking from the exporters at the time of certification of the Form 'E' for firm sales on D.A. or T.R. basis so that there is no hitch in initiating legal action in those cases where the foreign buyers have defaulted.

27. Verification of Export Proceeds Realisation Certificate.
Sometimes exporters are required to produce to the Government Departments evidence of exports and the realisation of their proceeds. In such cases proceeds realisation certificates may be issued by the Authorised Dealers in the prescribed form (Appendix V-21) after getting them authenticated by the State Bank. The State Bank will authenticate such certificates on the strength of certification made by the Authorised Dealers. The transaction would be post-facto verified by the State Bank with reference to the relative schedule/statement received from the concerned Authorised Dealer. To facilitate checking and verification of these transactions Authorised Dealers should quote the correct reference and the period of their schedule/statement in column 10 of the proforma at Appendix V-21.

28. Issue of Duplicate Export Proceeds Realisation Certificate.
In case of loss of original export realisation certificate, the State Bank on application would authorise issuance of duplicate thereof on the basis of undertaking given by the Authorised Dealer in the prescribed form (Appendix V-22). The word "Duplicate" will be prominently marked in indelible ink at the top of such certificates.

29. Payment of Freight in Rupees.
(i) Carrier companies will not accept payment of freight in Rupees on cargo shipped on C&F or CIF basis unless the exporter produces to them a certificate from an Authorised Dealer in the form given below:
"CERTIFIED that 'E' form No …………………………in respect of shipment to be made by Messrs (Name of Exporter) ………………………… has been stamped to the effect that the documents in respect of the shipment under this 'E' form shall be negotiated/accepted only if these are drawn on C&F or CIF and not on FOB basis".

(ii) Before issuing the above certificate, Authorised Dealer will invariably endorse the relative 'E' form in the following manner:
"Certified that documents in respect of the shipment under this form shall be negotiated/ accepted only when these are drawn on C&F or CIF and not on FOB basis."
The carrier companies will invariably submit to the Authorised Dealer through whom remittance of surplus freight collection is desired to be made with the freight manifests the aforesaid bank's certificates alongwith the relative bills of lading which should be arranged according to the entries appearing in the freight manifest.

30. Reporting of Overdue Cases.
(i) The State Bank has prescribed the period within which full foreign exchange value of the exports must be realised. Non-realisation or delay in realisation of the export proceeds without the prior permission of the State Bank constitutes an offence and renders the exporters liable to action under the Act.

(ii) To enable the State Bank to review the position of all outstanding export bills, the Head/Principal Offices of Authorised Dealers will furnish to the State Bank every month the following statements:
(a) Statement showing the total figures of all export bills outstanding (including partly unrealised) relating to all their branches, at the end of each month in the prescribed form (Appendix V-15).
(b) Statement in the prescribed form (Appendix V-16) containing particulars of those export bills which have become overdue during the month under report. This statement will be prepared in respect of Authorised Dealer's branches according to the area office of the Exchange Policy Department given in para 4 of Chapter 1 and will be submitted in duplicate for each area separately. The outstanding export bills pertaining to each exporter should be listed in a sequence with exporter-wise totals and the grand total given at the end. However, the statement for the month of June each year should show particulars of all overdue export bills as on 30th June.
(c) Statement in Appendix V-17 showing particulars of those cases which were reported by Authorised Dealers as overdue in the previous statements but the items are deleted from their books during the month under report either due to realisation of the proceeds or under instructions from the State Bank.

The above statements in Appendices V-15, V-16 and V-17 should reach the Exchange Policy Department (Central & Statistics Section), State Bank of Pakistan, Central Directorate, Karachi by the 15th of the month following that to which they relate. It will be the responsibility of the Authorised Dealers to see that the above statements are submitted to the State Bank on due dates and that all cases of exports which become overdue are invariably incorporated in these statements and that there is no omission in this regard. The statements in forms V-16 and V-17 will additionally be submitted on floppy diskettes.

31. Export of Jewellery, Precious or Semi-precious Stones.
Export of gold jewellery/precious and semi-precious stones will be allowed in accordance with the procedure notified by the Government of Pakistan and the instructions issued by the State Bank from time to time.

32. Remittance of Export Commission, Brokerage and Discount.
(i) Authorized Dealers are permitted to allow payment of commission/brokerage/discount due to foreign importers/or agents by exporters in Pakistan at the following rates:

(ii) Authorised Dealers can allow payment of commission etc., upto the above extent without the prior approval of the State Bank as under after satisfying themselves that the payment is in conformity with the relative agreement between the exporter and the buyer/agent abroad:
(a) By deduction from the invoices where payment is to be made to the foreign buyers themselves. In such cases the net amount realised will only be reported as "Purchase".
(b) By instructing the negotiating bank abroad that the amount of commission etc., may be paid by them to the agents direct out of the proceeds of the bill. In such cases the Authorised Dealers should report the full export proceeds of the bill as "Purchase" and the amount of commission should be reported as "Sale".
(c) By remittances from Pakistan, when the full export proceeds are received within ninety days of the receipt of export proceeds. The Authorised Dealers should report the full export proceeds of the bill as "Purchase" and the amount of commission remitted should be reported as "Sale".

Where remittance is not made as provided herein, approval of the State Bank in accordance with the provisions of paragraph 7 of Chapter XIV shall be obtained. It should, however, be noted that in the case of exports under special trading agreements, commission is payable only through the special accounts opened for settlement of related transactions.

(iii) In cases where the exporter is not required to pay commission or where he is required to pay an amount less than the maximum permissible limits for commission, such amounts of commission/differential not exceeding the limits as stated in paras 32(i) and 33 of the FOB value of goods realized and net foreign exchange earnings respectively can be retained in foreign currency account with Authorised Dealers in Pakistan. The funds held in such foreign currency accounts can be used by the exporters for promotional publicity, collection of commercial intelligence, purchase of designs/patterns, market studies, bonafide export claims, shortfall in realization of export proceeds and any other legitimate purpose, without any approval from the State Bank. The foreign currency accounts so opened will be fed exclusively with the maximum allowable/differential for commission from export proceeds/net foreign exchange earnings and no other deposits, whatsoever the nature, will be accepted for credit to such foreign currency accounts. The facility is also available where export proceeds are realized under ACU Arrangement

(iv) ‘Physicians’ Free Sample’ may be supplied alongwith consignments of drugs and medicines being exported by the pharmaceutical companies, upto the extent agreed to between exporters and foreign buyers/agents.

33. Export of Services.
Exporters of services such as Financial Services, Wholesale Distribution and Retail Trade, Transportation, Storage and Communications, Tele-communication Services, Medical Services, Educational Services, Engineering Services, Real Estate Development, Hotel and Tourism/Tourism Related Services, Technical Testing Facilities and Consultancy Services etc. are authorised to retain 35% of their net foreign exchange earnings in foreign currency accounts with Authorised Dealers in Pakistan. The Authorised Dealers should ensure that such funds are utilized only for payment of commission/discount and for meeting other expenses such as promotional publicity, foreign consultant’s fee etc.

33.A. Retention of a part of incremental export earnings.
Those exporters who post at least 10% growth in their net foreign exchange earnings in terms of US dollar over the last year’s export performance may be allowed by the State Bank to retain 50% of their additional export earnings in their foreign currency account maintained with Authorised Dealers in Pakistan. For claiming this facility, the Exporter/Group will work out on aggregate basis in the context of companies/firms having common Directors/Partners/individual company owned by the single owner having substantial equity, and will prepare a Bank-wise statement in the prescribed form (Appendix V-23 A) showing the performance of previous financial year and current financial year. They are also required to submit a consolidated statement in the prescribed form (Appendix V-23 B) to the Exchange Policy Department alongwith the ‘performance’ in original for issuance of formal permission to the exporter to retain 50% of their additional export earnings in their foreign currency account from their future export earnings in the designated bank. This facility will be available in addition to the one available in terms of paragraph 32 (iii) ibid.

34. Private Commodity Exchange Arrangement With Foreign Parties.
(i) It is permissible for private parties in Pakistan to enter into Commodity Exchange Arrangement (CEA) with foreign parties (including undertakings controlled by foreign governments and public sector agencies but excluding foreign governments). The Ministry of Commerce will prescribe, from time to time, a negative list of commodities which cannot be exported under this scheme.

(ii) Applications for conducting transactions through Private Commodity Exchange Arrangement may be submitted to the Exchange Policy Department (Policy Division, Central Directorate, Karachi) through banks authorised to deal in foreign exchange, for approval alongwith copies of Export/Import Registration Certificates, the past performance showing the value of exports made by the applicant in each year during the preceding three financial years duly certified by their bankers, and the recommendation of the bank whether in view of its past dealings, the party may be given permission to conduct business through private Commodity Exchange Arrangement. Exporters having less than three continuous years export performance would not be eligible. A copy of the agreement entered into between the party in Pakistan and the counter-party in the concerned country abroad will also be required to be submitted. In the case of both exports and imports by the party in Pakistan, the normal laws, regulations, rules governing such export/import will continue to be applicable barring the exemptions granted in this paragraph. The approvals will be given by the State Bank in the format appearing at (Appendix V-23 C)

(iii) The party permitted to undertake business transactions under such arrangement will be exempt from the existing requirement of drawing the documents of title to export cargo to the order of an Authorised Dealer in case of export, and it can also receive the import documents from the counter-party direct. Authorised Dealers shall also be required to certify Form “E” in the modified form as indicated in the Appendix V-23 C. The parties will ensure that imports at least equal to the value of exports are made by them within the period prescribed from time to time for repatriation of export proceeds failing which the value of exports should be repatriated in convertible foreign currency within the prescribed period.

(iv) The party will nominate an Authorised Dealer to maintain proforma account in its name for the purpose of accounting the trade transactions. Separate proforma account will be maintained in respect of each Commodity Exchange Arrangement. The concerned Authorised Dealer will be required to submit a monthly statement in duplicate in the prescribed form (Appendix V- 23 D) in respect of each CEA showing:-
a) the value of goods exported, alongwith the copies of invoice and duplicate ‘E’ Forms;
b) the value of goods imported from abroad alongwith copies of the invoices, non-negotiable copies of bills of lading and photocopies of  Exchange Control copy of Customs Bills of Entry evidencing import of the goods into the country;
c) the opening and closing balances.

While forwarding the above statements to the State Bank of Pakistan, the Authorised Dealer will code the items exported/imported.

(v) It is clarified that no forward exchange facility either for export or import transactions shall be admissible. Export under the scheme is not eligible for the purpose of Export Refinance Scheme.

(vi) The withholding tax leviable on the export as per the Notifications issued by the Central Board of Revenue from time to time will be recovered by the Authorised Dealers at the time of passing the entry in the account in respect of exports from Pakistan.

35. Internet Merchant Accounts.
In order to promote Business-to-Consumer (B2C) e-Commerce in Pakistan, banks operating in Pakistan can open and operate Internet Merchant Accounts. In this connection the following parameters are to be observed meticulously:-
(a) Merchants desirous of opening an Internet Merchant Account with a bank in Pakistan can open the same either in local currency or in US$ for the purpose and, in addition to observance of normal procedure for opening an account, will be required to submit a copy of their NTN Certificate to the bank.

(b) Merchants must be engaged in a business permissible under laws of Pakistan.

(c) Merchants must have a registered place of business in Pakistan.

(d) Merchants intending to export goods/services must provide a copy of export registration certificate from the Export Promotion Bureau (EPB).

(e) For the present, merchants desirous to undertake transactions outside Pakistan will be required to submit ‘E’ forms for transactions of value less than US$ 500 each to their bank who shall submit the same in consolidated form on monthly basis to SBP. Each ‘E’ form for the aforesaid accounts should specifically indicate the words “E-Commerce” on the upper left corner.

(f) Banks shall recover charges for Internet Merchant Accounts strictly in accordance with Prudential Regulation X. Any clarification with regard to bank charges on these accounts may be obtained from the Director, Banking Supervision Department, SBP, CD, Karachi.

(g) The banks shall be responsible for reporting business through the Internet Merchant Accounts to the Exchange Policy Department, State Bank of Pakistan on monthly basis as per proforma appearing at Appendix V-24.

(h) The banks shall be responsible for reporting any suspected transactions against the laws of the country, as per Prudential Regulation XII.

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