FEPD Circular No. 07: Special cash incentive for textile mills

Foreign Exchange Policy Department Bank of Bangladesh Head Office Dhaka. Boishakh 31, 1420 FE Circular No.-07 Date:------------------ May 14, 2013 To: All Approved Dealers of Foreign Exchange Transactions.

Dear Sir,

Regarding the provision of special cash assistance to mills related to the textile industry.

Reference is drawn to FE Circular No. 20, dated November 02, 2011, and FE Circular No. 01, dated January 02, 2013, issued on the subject mentioned above. It is informed that the following instructions shall be followed in addition to the instructions stated in the aforementioned circulars:

2. According to the government decision, mills (Spinning/Woven) of BTMA that imported cotton at high prices through letters of credit established between August 2010 and March 2011, and supplied locally the products/textile products produced by them to garment/textile product exporting establishments between December 31, 2011, shall receive a special cash assistance at the rate of 5% (five percent) on the price of the cotton used in such supplied products. In this regard, the following instructions shall be followed to receive the said assistance:

(a) In considering the average price of cotton imports in the six months prior to the period of August 2010 to March 2011, the applicant must submit a statement in Form-'A' regarding the import of cotton at high prices, which shall be verified by the Approved Dealer Bank branch as high-price import.

(b) The locally supplied textile/textile goods must be used for export.

(c) If customs bond/duty drawback facility is availed for any material used in the production/processing of exported textile products, the said facility will not be applicable. Furthermore, if products produced by BTMA mills are supplied to establishments in EPZs, the said facility will not be applicable in that case either.

(d) Products produced by imported high-price cotton must be supplied to garment/textile product exporting establishments through local letters of credit/back-to-back letters of credit/documentary collection (paid in foreign currency).

3. Deadline for submission of application for special cash assistance:

(a) Spinning/Woven mills of BTMA (Producer-Local Supplier) can apply for special cash assistance by filling Form-'B' kept at the Document Negotiation/Collection Approved Dealer Bank branch within 15 (fifteen) days from the issuance of this circular, for the local supply of products produced by using imported high-price cotton through local letters of credit/back-to-back letters of credit/documentary collection by December 31, 2011.

(b) Documents required for local supply, such as: Delivery Challan, Truck Receipt, Commercial Invoice, Packing List, Customs Challan, etc., must be submitted. Documents required for the import of high-price cotton used in locally supplied products must be submitted.

4. Receipt, examination, and payment decision of application by Approved Dealer Bank Branch:

(a) The Approved Dealer Bank shall initially verify that the documents, certificates, and vouchers mentioned in various sections of the form are attached completely and in full with the application for special cash assistance. Certificates must be submitted in accordance with the attached table (Form-'G') from BTMA with the application for special cash assistance. The relevant bank branch shall verify the authenticity of those certificates/vouchers prepared or processed by the bank branch during document negotiation and the accuracy of the information mentioned therein. The Approved Dealer Bank branch shall inform the applicant establishment in writing within 03 (three) working days of receiving the application regarding any discrepancy/incompleteness observed during initial examination. At the same time, steps shall be taken to collect necessary information/documents from the final export-related bank. The final exporter's bank shall provide the requested information within the minimum time.

(b) In necessary cases, upon receipt of additional explanation/information from the applicant, and after adding information/certificates from the bank branch's own records regarding local supply, supply price receipt, and payment of import dues, the application shall be complete and final. The Approved Dealer shall determine the payable amount. This process shall be completed by following the instructions in the section designated for use by the Approved Dealer Bank in the application sequentially.

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(c) Before providing special cash assistance, each application must be audited by an appointed external auditor Firm. After conducting the audit program, the claim for special cash assistance shall be sent to the Accounts and Budgeting Department of the Head Office of Bangladesh Bank through the Head Office of the relevant bank. In the context of special cash assistance released by Bangladesh Bank, the details of the amount paid in favor of the applicant establishment shall be submitted to the Foreign Exchange Policy Department of the Head Office of Bangladesh Bank, through the Head Office of the relevant bank, in the second week of the following month in accordance with Form-'D'.

(d) In each case, along with the approval of payment of special cash assistance, a seal of the amount of special cash assistance paid and the signature of the authorized officer shall be placed on the Proof of Return Certificate (PRC, Guidelines for Foreign Exchange Transactions, 2009 Appendix-5/23(A)), Delivery Challan, Truck Receipt, Commercial Invoice, Packing List, Customs Challan, etc., in a place easily visible, so that there is no scope for misuse of those documents. The Approved Dealer Bank branch shall take special care (in accordance with the instructions of FE Circular No. 06/98) that a PRC is not issued multiple times against the same supply. For this, the branch shall conveniently record the PRC issuance information with date along with other information of the relevant supply in the register kept at the branch.

(e) All documents related to the decision of payment of special cash assistance shall be preserved at the branch for at least 03 (three) years from the date of payment for examination by the Audit/Government Commercial Audit Department of Bangladesh Bank.

5. Punitive measures for irregular payment of special cash assistance:

(a) If special cash assistance is paid illegally, the paid amount shall be recovered by closing the account of the paying bank kept with Bangladesh Bank.

(b) Appropriate punitive measures shall be taken against the bank officials/employees involved in the irregularity.

All parties are requested to be informed about this matter.

Yours faithfully,

Enclosure: As per list.

(Md. Zakir Hossain Chowdhury) Deputy General Manager Phone: 9530250

Form-'A' (See Section 02(a), FE Circular No. 07/2013) Cotton Import Data for August 2010 to March 2011 | Cotton Import Data for February 2010 to July 2010 | Unit Serial No. | High Price | Import LC No. | Date | Date of Entry into Country | Quantity of Goods | Import Price | Unit Price | Import LC No. | Date | Date of Entry into Country | Quantity of Goods | Import Price | Unit Price | Total High Price | Total 1 | 2 | 3 | 4 | 5 | 6 | 7 = 6/5 | 8 | 9 | 10 | 11 | 12 | 13 = 12/11 | 14 = 7-13 | 15 = 5*14 Total ................................................... Signature, Name, and Designation of the Owner/Authorized Officer of the Applicant Establishment

Form-'B' (See Section 03(a) FE Circular No.- 07/2013) Application for Special Cash Assistance to Mills Related to the Textile Industry

(a) Name and Address of the Applicant Establishment: ---------------------------------- Export Registration Certificate Number: -----------------------------------------------

(b) Details of high-price cotton imports between August 2010 and March 2011: Supplier's Name and Address | Importer's Name, Address, and Import License/Registration Number | Import LC Number and Date | Quantity of Cotton Imported (Metric Ton) | Number and Date of Invoice, Packing List, Bill of Lading, Certificate of Origin related to Import | Number and Date of Bill of Entry | Import Price | Payment Date | Value in Foreign Currency | Value in Local Currency | Average Unit Price (Local Currency) -1- | -2- | -3- | -4- | -5- | -6- | -7- | -8- | -9- | 10=(9/4)

Along with this, certified copies of LCs, Invoices, Packing Lists, Bills of Lading, Certificates of Origin, documents regarding payment of import dues, importer's import license, and Bill of Entry for high-price cotton imports between August 2010 and March 2011 must be submitted. A declaration from the local supplier stating that no customs bond facility was availed for materials used in the production process, no application for duty drawback or other benefits was made, and no such application will be made in the future, must be submitted. Furthermore, when calculating the price of cotton import in local currency, the exchange rate fixed by the importer's bank at the time of payment of the import price shall be considered.

(c) Number, Date, and Value of Local Letter of Credit/Back-to-Back Letter of Credit/Documentary Collection received in foreign currency for local supply ------------------------------------- A readable and certified copy by the bank that established the letter of credit must be submitted.

(d) Information on the use of imported cotton against the supplied products supported by/according to section 'b' above for Local Letter of Credit/Back-to-Back Letter of Credit/Documentary Collection received in foreign currency for local supply: Information on cotton used in previously applied special cash assistance for locally supplied products | Remaining Cotton Quantity | Average Unit Price (Local Currency*) | Total Value (Local Currency) | Application Date | Quantity of Cotton | Value (Local Currency) | Quantity of Cotton | Value (Local Currency) -1- | -2- | 3 = (1 x 2) | -4- | -5- | -6- | -7- | -8- The quantity and value of imported cotton used in locally supplied products during the relevant period must be supported by BTMA's certificate.

• As per column 10 of section 'b' above.

(e) Details of the supplied products produced by using materials supported by/according to sections 'b', 'c', and 'd' above for Local Letter of Credit/Back-to-Back Letter of Credit/Documentary Collection received in foreign currency for local supply: Name and Address of Receiving Establishment | Description of Goods | Quantity | Invoice Value (Foreign Currency) | Date of Supply | Delivery Challan No. | Supply Price Received in Foreign Currency and Date of Receipt -1- | -2- | -3- | -4- | -5- | -6- | -7- Certified and readable copies of Delivery Challan, Truck Receipt, Commercial Invoice, Packing List, Customs Challan, etc., and Proof of Return Certificate (PRC) must be submitted. These details must be certified by the bank receiving Local Letter of Credit/Back-to-Back Letter of Credit/Documentary Collection in foreign currency. Furthermore, a declaration from the local supplier stating that no customs bond facility was availed for materials used in the production process, no application for duty drawback or special cash assistance was made, and no such application will be made in the future, must be submitted.

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(f) Details of final export related to the products produced by using materials supported by/according to sections 'b', 'c', 'd', and 'e' above for Local Letter of Credit/Back-to-Back Letter of Credit/Documentary Collection received in foreign currency for local supply: Name and Address of Final Exporter | LC/Contract No., Date, and Value of Final Export | EXP Form Number | Export Value | Date of Return | Quantity of Returned Export Value -1- | -2- | -3- | -4- | -5- Certified Final Export LC/Contract, EXP Form, Bill of Exporter/Shipping Bill, PRC related to export value return, etc., by the appropriate office (Import-Export Trade Related Main Office) of the Final Exporter's Bank must be attached. In accordance with the instructions mentioned in Section 4(a) of the said circular, the Approved Dealer Bank branch shall take steps to collect such information/documents from the final export-related bank. The Approved Dealer Bank shall verify the information in the table and attached documents for consistency and certify the table information as correct.

(g) Amount applied for special cash assistance: Description of Goods | Quantity | Supply Price Received Against Locally Supplied Products | Price of Cotton Used in Producing Supplied Products (As per Column 3 of Section 'd' above) | Special Cash Assistance Payable (Column 5 - Column 4 of this section) / 100 100 | -1- | -2- | -3- | -4- | -5- The above information must be supported by/according to sections 'b', 'c', 'd', 'e', and 'f'. In necessary cases, a certified copy of the transport freight certificate mentioning local transport freight must be submitted.

I hereby declare that an application for special cash assistance has been made against the supply of products produced by cotton imported at high prices through letters of credit established between August 2010 and March 2011 in our mill. All information/declarations provided in this application are complete and correct. If any wrong/false information/fraud/forgery is discovered later, the entire amount (with applicable interest) of the special cash assistance received shall be recovered from me/us and/or from my/our bank account.

Date: --------------------- ---------------------------------- Signature and Designation of the Owner/Authorized Officer of the Applicant Establishment.

(h) To be filled by the Bank Branch providing special cash assistance: Description of Goods | Quantity | Supply Price Received Against Locally Supplied Products | Price of Cotton Used in Producing Supplied Products (As per Column 3 of Section 'd' above) | Special Cash Assistance Payable (Column 5 - Column 4 of this section) / 100 100 | -1- | -2- | -3- | -4- | -5- I have verified the above information as per sections 'b', 'c', 'd', 'e', and 'f' and confirmed it to be correct. In this regard, the amount of special cash assistance is --------------- Taka (in words: -----------------).

Date of Payment: --------------------

Signature, Name, and Designation of the Bank Officer Authorized to Approve Special Cash Assistance

[Illegible Text Block - Appears to be a stamp or official seal text in Bengali script, not fully transcribable as standard text]

Form-'G' (See Section 04(c), FE Circular No.- 07/2013) Certificate of Cotton Import for Special Cash Assistance

To, The Manager, [Bank Name] Branch, [Address]...

Subject: Certificate of Cotton Import for Special Cash Assistance.

Sir,

This is to certify that [Importer Name], Importer License/Registration No. [Number], has imported cotton at high prices through LC No. [Number] dated [Date] from [Country] on [Date] of entry into the country. The quantity of goods is [Quantity], Import Price is [Price], and Unit Price is [Price].

We certify that the above information is true and correct. We also certify that no customs bond facility was availed for materials used in the production process, no application for duty drawback or other benefits was made, and no such application will be made in the future.

This certificate is issued for the purpose of claiming special cash assistance for cotton imported at high prices through LCs established between August 2010 and March 2011.

Sincerely,

[Authorized Signature] [Name] [Designation] [Date]

Form-'D' (See Section 04(g), FE Circular No.- 07/2013) Special Cash Assistance

Name and Address of Applicant Establishment

Details of Local Supply | Paid Special Cash Assistance (Taka) | Date of Payment

Pending Applications Received at Branch

Description of Goods | Date and Destination of Local Supply | Delivery Challan Number | Total Value Received Against Supply (Foreign Currency) | Net Supply Value (Foreign Currency) | Number | Claimed Amount (Taka) 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 .............

Official Seal

Signature, Name, and Designation of the Bank Officer Authorized to Approve Special Cash Assistance