FEPD Circular No. 16: Export subsidy against export of Active Pharmaceuticals Ingredients (API)

Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka.

Ref. No. FEPD Circular No. 16 Date: ---------------------- 10 June 2018

To All Approved Dealers of Foreign Exchange Transactions.

Dear Sir,

Subject: Provision of subsidy against export of Active Pharmaceutical Ingredients (API).

This is to inform all concerned regarding the subject matter that the Government has decided to provide subsidy against the export of domestically produced Active Pharmaceutical Ingredients (API) to encourage the country's export trade. This facility will be applicable to goods shipped from the 2017-2018 fiscal year. The instructions to be followed by approved dealer banks regarding the payment of subsidy are described in the following paragraphs:

2. Recipient of subsidy and amount payable: A subsidy shall be payable to the manufacturer-exporter at the rate of 20% on the net FOB value against the export of Active Pharmaceutical Ingredients (API) produced in their own factory. The aforementioned facility will not be applicable for exports from establishments located in Special Areas (EPZ, IZ).

3. Extent of local value addition: In the case of export of Active Pharmaceutical Ingredients (API), a minimum of 20% local value addition percentage shall be applicable. The export subsidy and duty drawback/bond facility shall not be applicable together in the aforementioned sector.

4. Deadline for submission of application for export subsidy:
   (a) The aforementioned subsidy shall be provided in accordance with the Customs Rules against the expenses incurred for handling, inspection, processing of exported goods, and domestic and international transportation and freight charges. (b) Exporters may submit application forms in Form-C at the branch of the approved dealer bank against the return of export proceeds after export under export letter of credit/contract documents or through documentary collection. For exports against export letters of credit/contracts with the condition of advance return of export price through TT, the approved dealer bank branch must ensure the authenticity/reliability of the foreign buyer, accuracy of price, and actual export from Bangladesh based on the TT banker's advice and other documents regarding advance price return through TT. The advance price payment through TT must be made directly through banking channels (excluding exchange houses) by the exporter or importer, and the TT banker's advice must mention information related to the import. In all cases, the application for subsidy must be submitted to the respective branch of the approved dealer bank within 180 days from the date of assessment of export price (return of export price) in the respective bank abroad. Additionally, the instructions of FEPD Circular No. 12, dated December 20, 2012, shall be followed regarding the submission of applications for subsidy against exports through different shipments for the same export. However, in cases where the time limit for submitting applications for the aforementioned facility has already expired, applications for the subsidy facility may be submitted within 60 (sixty) days from the date of issuance of this circular. (c) Documents required for export, such as Bill of Lading/Air Waybill issued and endorsed by the carrier as proof of shipment, Commercial Invoice, Packing List, Bill of Exporter (issued and examined by Customs authorities and endorsed by the carrier for export), etc., must be submitted.

5. Receipt, examination, and payment decision of application by approved dealer bank branch:
   (a) The approved dealer bank shall ensure in the primary examination that all documents, certificates, and endorsements mentioned in various paragraphs of the export subsidy application form are complete and attached with the application. A certificate must be submitted along with the subsidy application in accordance with the attached table (Form-B) of the 'Certificate of Local Value Addition for Export of Active Pharmaceutical Ingredients (API)'. The respective bank branch shall also ensure the authenticity of the documents verified by the bank branch and the accuracy of the information mentioned therein. The approved dealer bank branch shall inform the applicant institution in writing within 03 (three) working days of receiving the application regarding any defect/incompleteness found during the primary examination (if any).

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(b) To ensure consistency between the production capacity of the applicant institution and the export mentioned in the application, additional explanations/documents may be required from the applicant. After the application is completed and made complete by attaching documents/information collected from the bank branch's own records or other bank branches regarding export and export price return, the approved dealer shall determine the amount payable. This verification shall be carried out by following the instructions in the designated section of the application form for use by the approved dealer bank branch. (c) Each application must be examined by the appointed external audit firm to ensure the accuracy of the amount payable according to the subsidy application. After conducting the examination, the claim for payment of the export subsidy amount shall be sent to the Accounts and Budgeting Department of the Head Office of Bangladesh Bank in Form-G through the Head Office of the approved dealer bank. The statement of amount paid in favor of the applicant institution regarding the subsidy released by Bangladesh Bank shall be submitted to the Foreign Exchange Policy Department of the Head Office of Bangladesh Bank through the Head Office of the bank in Form-D within the second week of the following month. (d) Along with the approval of subsidy payment in each case, the export price return certificate (Appendix-5/36 of Guidelines for Foreign Exchange Transactions-2018, Volume-1), Bill of Lading/Air Waybill as proof of shipment, Commercial Invoice, Packing List, and Bill of Exporter endorsed by Customs authorities shall be stamped with the amount of subsidy paid at an easily visible location and signed with the seal of the authorized officer to prevent misuse of these documents. The approved dealer bank branch must take special care that a PRS is not issued multiple times for the same facility under the same export. Furthermore, before verifying the application, the approved dealer bank must ensure that the export price of the respective exporter has not remained unreturned in accordance with the instructions of FEPD Circular No. 30, dated August 16, 2017, from the Bangladesh Bank's Online Exporter Monitoring System. (e) All documents related to the decision of subsidy payment must be preserved at the branch for at least 03 (three) years from the date of payment for examination by the Bangladesh Bank's inspection/government commercial audit department. (f) In case of any ambiguity regarding export volume or if information is needed, the respective bank and audit firm shall consult the Export Promotion Bureau, TSCB Building, 1 Kawran Bazar, Dhaka, and the Directorate of Drug Administration, Drug Bhavan, Mohakhali, Dhaka.

6. Punitive measures for illegal payment of subsidy:
   (a) If subsidy is paid illegally, the paid amount shall be recovered by adjusting it against the account of the paying bank kept with Bangladesh Bank.
   (b) Appropriate punitive measures shall be taken against the bank officers/employees involved in the committed violation.
   (c) If any officer of the Exporters Association is involved in the committed violation or assists in the violation by providing false information, appropriate punitive measures shall be taken against the Exporters Association/officer.

7. Payment of amount for subsidy: The amount in favor of the respective bank shall be provided from the funds released against the government budget allocation against the submitted application for subsidy.

All concerned are requested to be informed about the matter.

Yours faithfully,

Attachment: As per description.

(Md. Harun-Ar-Rashid)
Deputy General Manager
Phone: 9530625

(Form-'C' (See paragraph 04(b) of FEPD Circular No. 16/2018) Application for subsidy against export of Active Pharmaceutical Ingredients (API) (a) Name and address of the applicant institution: ---------------------------------- Export Registration Certificate (ERC) Number: ----------------------------------------------- (b) Export Letter of Credit/Contract Number, Date and Value ------------------------------------- (Readable verified copy must be submitted) (c) Source, quantity and value of products used in the production of exported goods:
Name and address of supplier Quantity Value
1 2 3
(Certificate of verification of 'Certificate of Local Value Addition for Export of Active Pharmaceutical Ingredients (API)' regarding description, value and source of exported goods must be submitted.) (d) Imported ancillary materials used in the production of exported goods:
Name and address of supplier Name and quantity of goods LC/Back to Back LC/Documentary Collection Number, Date Value 1 2 3 4 (Readable verified copy of LC in column 3 must be submitted. A declaration by the exporter stating that bond facility for duty has not been availed/utilized for materials used in production verification/duty drawback facility has not been taken and will not be applied for in the future must be submitted.) (e) Details of export shipment:
Description of goods Quantity Name of importer's country Invoice Value (in Foreign Currency) Date of Shipment EXPI Number Export Price Returned and Date of Return (in Foreign Currency) 1 2 3 4 5 6 7 (Readable verified copies of Commercial Invoice, Packing List, Bill of Lading/Air Waybill issued and endorsed by the carrier as proof of shipment, Bill of Exporter (issued and examined by Customs authorities and endorsed by the carrier for export), etc., and the export price return certificate must be submitted.) (f) Amount applied for subsidy:
Amount of Ship Hire in case of return of export price Commission, Insurance etc. payable in Foreign Currency (if any) Net FOB Export Value 1-(2+3) 1 2 3 4 (Readable verified copy of Freight Surcharge Certificate mentioning ship hire, if applicable, must be submitted) Value of products used in production of exported goods Rate of Local Value Addition [(4-6)/4]100 Payable Subsidy 4*20% Domestic Goods Imported Goods 5 6 7 8 (*Subsidy shall be payable if the rate in column 7 is consistent with paragraph 3 of the aforementioned circular.) I hereby declare that an application for subsidy is made against the export of Active Pharmaceutical Ingredients (API) produced in our own factory. All information/declarations provided in this application are complete and correct. If any error/false information/fraud/forgery is discovered later, the entire amount or part thereof of the subsidy 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 institution. (g) To be filled by the subsidy-providing bank branch:
Amount of Ship Hire in case of return of export price Commission, Insurance etc. payable in Foreign Currency (if any) Net FOB Export Value 1-(2+3) 1 2 3 4 (Readable verified copy of Freight Surcharge Certificate mentioning ship hire, if applicable, must be submitted) Value of products used in production of exported goods Rate of Local Value Addition [(4-6)/4]100 Amount of Subsidy Payable (in Taka) Domestic Goods 4 * 20% * (Imported Goods (in Foreign Currency)) (Imported Goods (in Foreign Currency)) 5 6 7 8 (*Subsidy shall be payable if the rate in column 7 is consistent with paragraph 3 of the aforementioned circular.) Amount of Subsidy --------------- Taka (In words: -----------------). Date of Payment: -------------------- ---------------------------------------- Signature, Name and Designation of the Authorized Bank Officer for Subsidy Approval

(In case of return of export price, the OD rate of the respective foreign currency on the date of return of export price) (In Foreign Currency) (In Foreign Currency) (In Foreign Currency)

(See paragraph 05(a), FEPD Circular No. 16/2018) Form - 'B' Certificate of Verification of 'Certificate of Local Value Addition for Export of Active Pharmaceutical Ingredients (API)' Certificate of Verification for Receipt of Export Subsidy against Export of Active Pharmaceutical Ingredients (API)

1. Name, ERC Number and Address of Applicant:
2. Export Letter of Credit/Contract Number: Date: Value:
3. Name and Address of Foreign Buyer:
4. Name and Address of Foreign Buyer's Bank:
5. (a) Invoice Number: Date:
   (b) Quantity of goods mentioned in Invoice: Value:
6. Source of local materials used in the production of exported Active Pharmaceutical Ingredients (API) (Name and address of supplier):
   Quantity: Value:
7. Source of imported ancillary materials used in the production of exported Active Pharmaceutical Ingredients (API) (Name and address of supplier):
   Quantity: Value:
8. Description of Exported Goods: Quantity: Value:
9. Date of Shipment: Destination Port:
10. EXPI Number: Value: Date:
11. Total Returned Export Value (in Foreign Currency): Net FOB Export Value (in Foreign Currency):
12. Certificate Number of Returned Export Value: Date:
    Signature and Date of Exporter
    I hereby certify that the information mentioned in the aforementioned paragraphs regarding the source of materials collected from items 6 and 7 mentioned above for the export of Active Pharmaceutical Ingredients (API) produced in our own factory is correct and reliable. I have also ensured the authenticity/reliability of the order from the foreign buyer/importer. Signature and Date of Exporter It is verified that the above declaration by the exporter is correct. The declared export value in item 8 is found to be reasonable and consistent with the current domestic market price, and the authenticity/reliability of the foreign buyer has been ensured. It is recommended to pay the export subsidy on the returned export value (Net FOB Value). Signature, Date and Seal of Two Authorized Officers of 'Certificate of Local Value Addition for Export of Active Pharmaceutical Ingredients (API)' [If any erasure, cutting or correction is made, this certificate shall be considered void.]

Form-'G'
(See paragraph 5(g), FEPD Circular No. 16/2018) Claim Proposal for Payment of Export Subsidy in the Export Sector of Active Pharmaceutical Ingredients (API) in accordance with FEPD Circular No. 16/2018 .............................................. Bank, Head Office, Dhaka. Name and Address of Applicant Institution Date of Receipt of Application by Branch Amount Applied Amount of Claim Payable Description of Goods Date of Shipment and Destination EXPI Number Total Returned Export Value (Foreign Currency) Net FOB Value (Foreign Currency) Date of Value Return 1 2 3 4 5 6 6 7 8 9 Official Seal, Signature, Date, Name and Designation of Authorized Bank Officer

Form-'D'
(See paragraph 05(g), FEPD Circular No. 16/2018) Statement of Paid Export Subsidy for the Month of......... of the Year......... in the Export Sector of Active Pharmaceutical Ingredients (API) in accordance with FEPD Circular No. 16/2018
Name of Approved Dealer Bank Branch:..............................................................................
Name and Address of Applicant Institution
Paid Subsidy (Taka)
Date of Payment
Pending Applications at Branch
Description of Goods
Date of Shipment and Destination
EXPI Number
Total Returned Export Value (Foreign Currency) Net FOB Value (Foreign Currency) Number Claimed Amount (Taka) 1 2 3 4 5 6 7 8 9 10 -------- ----------------------------- Official Seal, Signature, Name, Designation and Date of Authorized Officer