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CHAPTER
XIII
IMPORTS
1. Scope of Chapter.
This chapter sets out the regulations relating to sale of foreign exchange by the
Authorised Dealers against import of goods into Pakistan from any country.
2. Import Trade Control.
Import of goods into Pakistan is regulated by the Ministry of Commerce,
Government of Pakistan, under the Imports and Exports (Control) Act, 1950 and the
notifications issued thereunder. No import is permissible from Israel or from any
other country, which may be notified by the Ministry of Commerce. Import of goods
originating from any of these countries/ sources is also prohibited. Imports from India
are regulated as notified by the Ministry of Commerce, Government of Pakistan from time to
time.
3. Registration of Importers.
No person can import goods into Pakistan unless he is registered with the Export
Promotion Bureau, under the
Registration (Importers and Exporters) Order, 1993 or exempted
from the provisions of the said Order. Authorised Dealers should, therefore, verify that
the importer is registered or otherwise exempted before any letter of credit is
opened/contract registered or remittance made on his behalf for imports into Pakistan.
Authorised Dealers should ensure that the registration number of the importer is
invariably furnished on Form 'I'. Where the importer has been granted an exemption, a
suitable mention of this fact should be made on Form 'I'.
4. Classification of Imports.
Before establishing any letter of credit/registering contracts, Authorised
Dealers should take all precautions to ensure that the goods to be imported under it are
clearly classifiable under the Import Trade Control Schedules. In all cases of doubt,
reference should be made either by the Authorised Dealer or the importer direct to the
Export Promotion Bureau. Failure to do so may result in confiscation of goods or
imposition of penalty for violating the provisions of the I.T.C. regulations. In all such
cases establishment of letter of credit/registration of contract and/or making of
remittance will also constitute infringement of the Foreign Exchange regulations.
5. Terms of Imports.
The Incoterms introduced by ICC
for imports to provide a set of international rules to avoid uncertainty of
different interpretation of the most commonly used trade terms in foreign trade
may be adopted. However, prior permission of the State Bank shall be obtained
for import of sugar and food grains (cereals) on CFR free out basis
6. Modes of payments for imports.
Payment for imports may be made either through letters of credit, without letters
of credit against documents received for collection on the basis of registration of
contracts, or as clean remittance without opening of letter of credit and without
registration of contract, as described in detail in the subsequent paragraphs.
7. Letters of Credit to be opened only against Firm Contracts.
Authorised Dealers should ensure before opening a letter of credit that in each
case a firm commitment exists. For this purpose, they should ensure that an invoice, order
or indent has been issued by an indentor duly registered as importer under
Registration
(Importers and Exporters) Order, 1993 and it bears registration number of the indentor
concerned. It is also permissible to open a letter of credit on the basis of proforma
invoice/order issued/accepted by the foreign supplier. Authorised Dealers should
also ensure that while opening letters of credit, full description of the goods to be
imported is given in each credit alongwith their prices. In all cases where the amount of
the letter of credit is Rs.1,500,000/- or over, Authorised Dealers should obtain a
confidential report on the exporter from their branches or correspondents abroad or in
their discretion satisfy themselves as to the standing of the shipper by consulting
standard books of reference issued by international credit agencies such as Seyds, Dunn
and Bradstreet. Such reports should be obtained by the Authorised Dealers themselves and
the reports if submitted by the importers should not be accepted. Even in the case of
imports of the value of less than Rs.1,500,000/-, it is important that the Authorised
Dealers satisfy themselves about the bonafides of the transactions before opening letters
of credit.
8. Methods of Payment under Letters of Credit.
(i) Letters of credit may be established providing for payment to beneficiary either in
the country of origin of goods or in the country of shipment of goods.
(ii) Authorised Dealers may also establish letters of credit providing for payment to the
beneficiary in a third country, not being the country of origin of goods or the country of
shipment provided they are satisfied that the payment to the beneficiary in a third
country does not involve extra expenditure. This facility is, however, not admissible for
the import of goods which are directly shipped from the ACU member countries.
(iii) Authorised Dealers may also establish letters of credit providing for shipment of
goods of the origin of more than one country provided the beneficiary remains the same and
the shipment does not involve extra expenditure.
(iv) Letters of credit established as per (i), (ii) and (iii) above should provide for
payment in any of the following manners:
(a) in any foreign currency.
(b) in Rupees for credit to the non-resident bank account of the country of the
beneficiary or of the country of origin/shipment of goods.
(c) Through ACU Clearing Arrangement where letters of credit envisage shipment directly
from ACU member countries.
(v) Opening of letters of credit providing for payment in any other manner requires prior
approval of the State Bank. Such requests giving full facts of the case alongwith their
recommendations should be forwarded by the Authorised Dealers to the State Bank.
(vi) It is not permissible to establish letters of credit providing for alternate
countries of origin of goods unless prior approval of the State Bank is obtained. Letters
of credit providing for goods of ‘European Union’ origin may, however, be
opened.
9. Opening of/extension in letters of credit—time frame/change of
beneficiary and commodity/other amendments.
(i) Authorised Dealers can open letters of credit and extend their validity
for a period allowed by the import policy announced by the Ministry of Commerce subject to
compliance with all the conditions laid down therein.
(ii) If the import policy does not lay down any instruction in this regard, they may
open letters of credit for a period upto 12 months. However, in respect of machinery and
mill-work which are required to be specifically manufactured and the period of manufacture
is more than 12 months, the letter of credit may be opened for a period upto 24 months.
The validity of a letter of credit may be extended by the Authorised Dealers for further
periods not exceeding 12 months at a time on payment of fee, if so prescribed in the
import policy, provided there has been no change in the Import Policy/exchange regulations
in relation to the importability of the goods, the country of origin/shipment, and the
method of payment/and if approached within its validity. An expired letter of credit may
also be similarly revalidated subject to the same conditions.
(iii) Authorised Dealers are also allowed to amend the letters of credit envisaging
change of the beneficiary/goods at the request of the importers provided the importers
approach the Authorised Dealers for the change within the validity of the letter of credit
and import of the goods covered by the letters of credit are still permissible.
(iv) Authorised Dealers should also ensure to make endorsement of L/C opened for items
(other than freely importable items) whose import is subject to certain conditions, in the
original Category Pass Book. In case an importer opens letters of credit with
more than one bank, the Authorised Dealer holding the original category Pass Book will
make out photostat copies thereof, authenticate the same and furnish other concerned
Authorised Dealers with it and will keep record thereof.
(v) Authorised Dealers may also make other amendments in the letters of credit
without reference to the State Bank provided the amendments are not in conflict with the
provisions of this Manual or the Import Trade Control Regulations.
(vi) Letters of credit may provide for negotiation of documents within a period not
exceeding 30 days from the date of shipment.
10. Terms on which Letters of Credits may be opened.
All letters of credit and similar undertakings covering imports must provide for
payment to be made against full set of clean on board (shipped) bills of lading, air
consignment notes, railway receipts, post parcel receipts (or in the case of bulk import
of books from U.K. against "Statement of Dispatches" in lieu of post parcel
receipts) showing dispatch of goods to a place in Pakistan. Sea-way bills should not be
accepted. All letters of credit must specify submission of invoices certifying the country
of origin in addition to any other certificate prescribed in the import policy.
11. Import of Old Ships for Scrapping.
Letters of credit for import of old ships for scrapping may be opened by the
Authorised Dealers in accordance with the normal procedure after scrutiny of the following
documents:
(i) Memorandum of agreement or contract of sale; and
(ii) Confidential reports on buyers and sellers.
Authorised Dealers will satisfy themselves that the ship is free from all encumbrances and
that the seller has a legal title to the ship.
12. Letters of Credit for Shipment by Country Craft, Motor Launch or Truck.
Ordinarily it is not permissible to open letters of credit providing for shipment
by means of country craft, motor launch or truck except by public sector agencies or by
well established and reputable firms in the private sector, provided in the latter case
the Authorised Dealers are satisfied about their financial and business integrity and they
have no doubt that the goods covered by such letters of credit will be received in
Pakistan.
In the case of other importers in the private sector, letters of credit for import of
goods by means of country craft, motor launch or truck may be opened by the Authorised
Dealers subject to the following condition:
(i) The supplier abroad furnishes guarantee of a bank in the country of export for an
equivalent amount to the effect that should the goods be lost or damaged or pilfered in
transit, the above guarantee can be invoked and the amount remitted against the letters of
credit recovered.
(ii) Alternatively, the letter of credit provides that payment will be made to the foreign
suppliers after the goods have been received and cleared by the Customs in Pakistan.
In respect of importers in the private sector who are unable to fulfill the conditions at
(i) and (ii) above, the Authorised Dealers should refer their cases to the State Bank with
full particulars.
13. Remittances in Excess of the Amount of Letter of Credit.
In cases where the value of documents exceeds the amount of the letter of credit
and the foreign correspondent negotiates the documents because of the excess amount being
small or sends them on collection basis, Authorised Dealers may allow remittance of the
excess amount subject to the condition that the amount does not exceed 5 percent of the
amount of credit subject to a maximum of US $500/-. The bill of entry/certified invoice in
respect of the consignment will be required to cover the increased amount.
14. Types of Letters of Credit not permitted.
It is not permissible to open clean, revolving, transferable or packing credits.
Applications for opening such letters of credit should be referred to the State Bank with
full particulars.
15. Prohibition to open Letters of Credit for Import from Certain Countries.
It is not permissible to open letters of credit for imports into Pakistan in
favour of beneficiaries in Israel or of goods originating from that country.
16. Imports on the basis of registration of contracts.
The undernoted procedure will be adopted for making imports of goods not subject
to authorisation from the Export Promotion Bureau/Ministry of Commerce as also not subject
to minimum margin restrictions, if the importer wants to make the import on the basis of
registration of contract without opening letter of credit: -
(i) The importer will submit a copy of the contract/purchase order/proforma invoice/indent
etc. to the Authorised Dealer for registration.
(ii) The Authorised Dealer registering the contract etc. will issue to the importer, a
registration certificate in the format appearing at Appendix V-25.
(iii) In case the documents covering imports are received by the branch of the
Authorised Dealer which had registered the contract/purchase order/indent/proforma
invoice, directly from the bankers of the suppliers abroad, the remittance may be effected
in terms of the instructions laid down in paragraph 23 (i) of this chapter provided the
documents conform to the terms of the relative contract/purchase order/indent or proforma
invoice.
(iv) In case the shipping documents are received by the importers directly, or by the
Authorised Dealer from the overseas supplier instead of the bankers of the suppliers,
remittance should be made in accordance with the instructions contained in para 23 (ii) of
this chapter.
(v) In case of imports from ACU member countries, remittances will be effected through ACU
Clearing Arrangements.
(vi) Forward cover will be available to the importers in accordance with the terms and
conditions laid down in Chapter IV of this Manual.
(vii) Authorised Dealers will incorporate the figures of the contracts registered by them/
remittances made thereagainst in the statements as per appendices V-131, V-132 V-133 and
V-134 (para 15-Chapter XXII).
17. Imports
without letter of credit/registration of the indent/proforma invoice/order.
i) In terms of the Import
Policy, importers are permitted imports without opening of letters of credit
or registering the indents/proforma invoices or orders with the Authorized Dealers,
and effect remittances thereagainst, through demand draft/telegraphic transfer/mail
transfer etc. In cases where remittances are made after receipt of goods in Pakistan,
the importers can approach the Authorized Dealers for remittances on the basis
of invoices and original bills of lading or airway bill. The Authorized Dealers
have general permission to arrange remittances against the prescribed documents
on receipt of goods in Pakistan.In cases where the importers intend to make payment
in advance against such imports, they may apply, through Authorized Dealers,
to Exchange Policy Department, State Bank of Pakistan, for approval on a case
to case basis in advance. Such requests must be based on evidence of bona-fides
of import transaction alongwith a bank guarantee for the amount to be paid in
advance.
Importers will be required to furnish to Authorized Dealers at the time of making a request for remittance, an undertaking to produce invoice and bills of lading/airway bill within a period of four months from the date of advance payment. The Authorized Dealers will pursue the matter with the importers and report those cases to the area offices of Foreign Exchange Operations Department, SBP-Banking Services Corporation, where the requisite documents are not produced within the prescribed time limit.”
(ii) At the request of industrial establishments as
importers, Authorized Dealers may issue foreign currency demand draft for import
of spare parts/machinery, without opening of letter of credit, provided such
imports are made by air or by courier. Authorized Dealers will maintain a record
of such drafts issued by them. They will also obtain Exchange Control copy of
Bill of Entry and evidence to the effect that the import was made by
air/courier. These records will be retained till the next inspection of the
concerned bank branch by the State Bank’s Inspectors
18. Import on Usance Basis.?
Authorised Dealers may open letters of credit or register contracts for imports
into Pakistan providing for payment on usance basis subject to the condition that such
letters of credit/contracts do not stipulate payment of any amount by way of interest
separately. The usance should commence from the date of issue of Bill of Lading/Air Way
Bill etc. or the acceptance of Bill of Exchange by the drawees as the case may be.
The letters of credit opened on usance basis cannot subsequently be converted on sight
basis. Similarly the terms of the contracts covering payments on usance basis registered
by the Authorised Dealers cannot subsequently be changed to sight basis. It is not
permissible to effect payments of usance bills prematurely.
19. Imports by public sector agencies to which special allocation is made by the
Government.
Public Sector agencies like WAPDA, Karachi Electric Supply Corporation Limited,
Pakistan State Oil Co. Ltd., OGDC, etc. which are allocated foreign exchange for their
import requirement or the private parties who are allowed to import on Defence/Railway's
account shall make applications to the area Exchange Policy offices of State Bank of
Pakistan for permission to get the contracts registered with the Authorised Dealer/open
letters of credit, on Appendix V- 26. Authorised Dealers will register contract/open
letter of credit in these cases on the basis of clearance issued by State Bank on Appendix
V- 26.
20. Remittance of bank charges in respect of imports.
Authorised Dealers can make remittance of the following bank charges on account
of imports. The particulars of the charges should be specifically mentioned on the
relevant forms.
(i) L.C. Advising Commission.
(ii) L.C. Amendment Commission.
(iii) L.C. Confirmation Commission.
(iv) Negotiation Commission.
(v) Un-utilized letter of credit Commission.
(vi) Payment Commission.
(vii) Reimbursement Commission.
(viii) Collection Commission.
(ix) Acceptance Commission (Usance Drafts).
(x) Postage and Cable Charges.
Remittances of bank charges other than the items mentioned above in respect of imports
will be subject to the prior approval of the State Bank.
21. Remittance of Proceeds of Dishonored Bills.
In those cases where the original drawee dishonors the bill and the foreign
shipper or his local agent finds another buyer, the Authorised Dealers may make remittance
not exceeding the value of such bills without the prior permission of the State Bank if
there are no restrictions in the import policy issued by Ministry of Commerce.
22. Remittance involving Violation of I.T.C. Regulations.
Authorised Dealers may allow remittance of the value of imports made in
contravention of the import policy if the Federal Government has condoned the
contravention and the Customs have released the goods. Such remittance may be allowed on
submission of the invoice, bill of lading and Exchange Control copy of Customs Bill of
Entry.
23. General Authority for Remittances against Imports.
(i) Authorised Dealers may approve, on behalf of the State Bank,
applications for remittance against imports into Pakistan provided the documents covering
imports, whether under letters of credit or otherwise, are received through them and the
conditions set out in this chapter are complied with. The relative Form 'I' should be
certified accordingly when reporting the sale to the State Bank. In the case of imports by
post, Authorised Dealers may make remittances without the prior approval of the State
Bank, only if the post parcels are addressed directly to them. In cases, where the parcels
are addressed direct to the individuals or care of the Authorised Dealers, applications
should be forwarded to the State Bank for prior approval. Authorised Dealers should
invariably attach a copy of the relative invoice with the original or quadruplicate 'I'
Form, as the case may be, submitted by them to the State Bank with their monthly return of
sale in terms of para 33 of this chapter.
(ii) Where the shipping documents are received by the importers directly, or by the
Authorised Dealer from the overseas supplier instead of the bankers of the suppliers,
remittance should be approved only after the goods have been cleared from the Customs and
the Exchange Control copy of Bill of Entry or Customs certified invoices in the case of
imports by post, relative invoices, Non-negotiable copies of the Bill of Lading/Airway
Bill/Railway Receipt/Truck Receipt etc. and 'I' Form duly completed and signed have been
submitted.
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