FEPD Circular No. 39: Export Subsidy Against Export of Cap

Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka. Ref. No. FEPD Circular No. 39 To All Authorized Dealers of Foreign Exchange Transactions.

Dear Sir,

Regarding the provision of subsidy against the export of caps.

Attention is drawn to all concerned regarding the subject matter mentioned above. It is informed that the Government has decided to provide a subsidy against the export of domestically produced caps to encourage the country's export trade. This facility will be applicable for goods shipped in the 2018-2019 fiscal year. The guidelines to be followed by authorized dealer banks regarding the payment of subsidy are described in the following paragraphs:

2. Recipient of Subsidy and Extent of Entitlement: In the case of export of caps produced in own factories, the manufacturer-exporter will be entitled to a subsidy at the rate of 10% on the net FOB value. The aforementioned facility will not be applicable for exports from establishments located in Special Areas (EPZ, EZ).

3. Extent of Local Value Addition: In the case of cap exports, the rate of local value addition must be at least 30%. In the aforementioned sector, export subsidy and duty draw-back/bond facility will not be applicable simultaneously.

4. Deadline for Submission of Application for Export Subsidy: (a) The aforementioned subsidy will be paid according to the DSR Rules against the cost incurred for handling, inspection, processing of exported goods, and domestic and international transportation and freight charges. (b) Exporters can submit applications for export subsidy in Form-C at the authorized dealer bank branch against returned export proceeds from documents prepared after the export under the export letter of credit/contract or through documentary collection. For exports against advance return of export price under export letter of credit/contract linked through TT, the authorized dealer bank branch must ensure the authenticity/reliability of the foreign buyer, accuracy of price, and genuine export from Bangladesh through the TT cancellation remark and other documents. The advance payment of price through TT must be made directly through banking channels (excluding exchange houses) by the exporter or importer, and the TT cancellation remark must mention information related to the import. In all cases, the application for subsidy must be submitted to the concerned authorized dealer bank branch within 180 days from the date of assessment of the export price (return of export price) in the concerned bank's foreign account. However, regarding the submission of applications for subsidy against exports through different shipments for the same export, the instructions of FEPD Circular No. 12, dated December 20, 2012, will be followed. (c) Documents required for export, such as the full set of Bill of Lading/Air Way Bill issued and endorsed by the carrier as proof of shipment, Commercial Invoice, Packing List, Bill of Exporter (issued and examined by Customs and endorsed by the carrier for transport), etc., must be submitted.

5. Receipt, Verification, and Payment Decision of Application by Authorized Dealer Bank Branch: (a) The authorized dealer bank must ensure in the primary verification 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 in accordance with Form-B attached from the Export Promotion Bureau must be submitted with the subsidy application. The concerned bank branch must also ensure the authenticity of the documents processed by the bank branch and the accuracy of the information mentioned therein. If any error/incompleteness is found in the primary verification, the authorized dealer bank branch must inform the applicant institution in writing within 03 (three) working days of receiving the application.

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-2- (b) To ensure compatibility between the production capacity of the applicant institution and the export mentioned in the application, the authorized dealer will determine the payable amount of subsidy after the application form is completed and complete with additional explanations/documents from the applicant and information/certificates collected from the bank branch's own records and other bank branches, if necessary. This process will be completed by following the instructions sequentially in the part of the application form designated for use by the authorized dealer bank branch. (c) Each application must be verified by the appointed external audit firm to ensure the accuracy of the amount payable according to the subsidy application. After conducting the verification, the claim for payment of the export subsidy amount must be sent to the Accounts and Budgeting Department of the Head Office of Bangladesh Bank in Form-D through the Head Office of the authorized dealer bank. The statement of amounts paid in favor of the applicant institution with respect to the subsidy released by Bangladesh Bank must be submitted to the Foreign Exchange Policy Department of the Head Office of Bangladesh Bank through the Head Office of the bank in Form-E 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 Way Bill as proof of shipment, Commercial Invoice, Packing List, and Bill of Exporter endorsed by Customs must be stamped with the amount of subsidy paid in an easily visible place and signed by the authorized officer, so that there is no scope for misuse of those documents. The authorized dealer bank branch must take special care that a PRS is not issued more than once for the same facility under the same export. Additionally, before processing the application, the authorized dealer bank must ensure from the Bangladesh Bank's Online Exporter Monitoring System that the export price of the concerned exporter has not been returned, according to the instructions of FEPD Circular No. 30, dated August 16, 2017. (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 inspection by the audit department of Bangladesh Bank/Government Commercial Audit Department. (f) If any ambiguity arises regarding export or if information is needed, the concerned bank and audit firm will seek advice from the Export Promotion Bureau, TSC Building, 1 Karwan Bazar, Dhaka.

6. Punitive Measures for Illegal Payment of Subsidy: (a) If subsidy is paid illegally, the paid amount will be recovered by deducting it from the account of the paying bank kept with Bangladesh Bank. (b) Appropriate punitive measures will 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 will be taken against the Exporters Association/officer.

7. Process of Payment of Amount for Subsidy: The amount will be provided in favor of the concerned bank against the submitted application for subsidy from the fund released against the government budget allocation.

It is requested to inform all concerned parties about this matter.

Yours faithfully,

Enclosure: As per description.

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

(Form-'C' (See Paragraph 04(b) of FEPD Circular No. 39/2018) Application for Subsidy Against Export of Caps (a) Name and Address of 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 Producing Exported Goods: Name and Address of Supplier Quantity Value Payment Method 1 2 3 4 (Certificate of endorsement from the Export Promotion Bureau regarding the description, value, and source of the exported product must be submitted. Documents required for the payment method must be submitted.) (d) Imported Materials Used in Producing Exported Goods: Name and Address of Supplier Name and Quantity of Product Letter of Credit/Back-to-Back Letter of Credit/Documentary Collection Number, Date Value 1 2 3 4 (A readable verified copy of the Letter of Credit 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 the production process/duty draw-back facility has not been taken and will not be applied for in the future must be submitted.) (e) Details of Export Shipment: Description of Product Quantity Name of Importer's Country Invoice Value (Foreign Currency) Date of Shipment EXPI Number Export Price Returned (Foreign Currency) and Date of Return 1 2 3 4 5 6 7 (Readable verified copies of Commercial Invoice, Packing List, full set of Bill of Lading/Air Way Bill issued and endorsed by the carrier as proof of shipment, Bill of Exporter (issued and examined by Customs and endorsed by the carrier for transport), and export price return certificate must be submitted.) (f) Amount Applied for Subsidy: Amount of Ship Hire (if applicable for returned export price) Commission, Insurance etc. payable in Foreign Currency (if any) Net FOB Export Price 1-(2+3) 1 2 3 4 (A readable verified copy of the Freight Surcharge Certificate mentioning ship hire, if applicable, must be submitted) Value of Products Used in Producing Exported Goods Rate of Local Value Addition [(4-6)/4] x 100 Payable Subsidy 4 x 10% Domestic Products Imported Products 5 6 7 8 (Subsidy will be payable if the rate in column 7 is compatible with paragraph 3 of the aforementioned circular. If imported products are unused or previously imported products are used, the relevant production cost calculation must be mentioned in column 6 above. A production cost calculation must be submitted for this matter.)

I hereby declare that an application for subsidy is made against the export of caps 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 of subsidy taken or part thereof will be recovered from me/us and/or from my/our bank account.

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

(g) To be filled by the Subsidy Providing Bank Branch: Amount of Ship Hire (if applicable for returned export price) Commission, Insurance etc. payable in Foreign Currency (if any) Net FOB Export Price 1-(2+3) 1 2 3 4 Value of Products Used in Producing Exported Goods Rate of Local Value Addition [(4-6)/4] x 100 Amount of Payable Subsidy (in Taka) Domestic Products Imported Products 4 x 10% x 5 6 7 8 (Subsidy will be payable if the rate in column 7 is compatible with paragraph 3 of the aforementioned circular.) Amount of Subsidy --------------- Taka (in words: -----------------). Date of Payment: --------------------

Signature, Name and Designation of Authorized Bank Officer for Subsidy Approval (At the date of export price return, the ODI site purchase price of the concerned Foreign Currency)

(Form - 'B' (See Paragraph 05(a), FEPD Circular No. 39/2018) Endorsement Certificate Issued by Export Promotion Bureau Endorsement Certificate for Receiving Export Subsidy Against Export of Caps

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 Products Mentioned in Invoice: Value:
6. Source of Local Materials Used in Producing Exported Caps (Name and Address of Supplier): Quantity: Value:
7. Source of Imported Materials Used in Producing Exported Caps (Name and Address of Supplier): Quantity: Value:
8. Description of Exported Products: Quantity: Value:
9. Date of Shipment: Destination Port:
10. EXPI Number: Value: Date:
11. Total Returned Export Price (Foreign Currency): Net FOB Export Price (Foreign Currency):
12. Certificate Number of Returned Export Price: Date: Signature and Date of Exporter

Hereby it is declared that the information mentioned in the aforementioned paragraphs is correct and reliable for the purpose of receiving export subsidy against the export of caps produced in our own factory by sourcing materials from the sources mentioned in serial numbers 6 and 7 above. The authenticity/reliability of the purchase order of the foreign buyer/importer has also been ensured. Signature and Date of Exporter

It has been verified that the above declaration of the exporter is correct. The declared export price mentioned in serial number 8 has been found consistent with the actual and prevailing international market price, and the authenticity/reliability of the foreign buyer has also been ensured. It is recommended to pay export subsidy on the returned export price (Net FOB Value). Signatures, Date and Seal of Two Suitable Officers of Export Promotion Bureau [If any erasure, overwriting or correction is made, this endorsement certificate will be considered void.]

Form-'D' (See Paragraph 5(g), FEPD Circular No. 39/2018) Claim Proposal for Amount Payable for Export Subsidy in Cap Export Sector According to FEPD Circular No. 39/2018 .............................................. Bank, Head Office, Dhaka. Name and Address of Applicant Institution for Subsidy Date of Receipt of Application by Branch Amount Applied Amount of Claim Payable Description of Product Date of Shipment and Destination EXPI Number Total Returned Export Price (Foreign Currency) Net FOB Value (Foreign Currency) Date of Price Return 1 2 3 4 5 6 7 8 9 10 Official Seal, Signature, Name and Designation of Authorized Bank Officer

Form-'E' (See Paragraph 05(g), FEPD Circular No. 39/2018) Statement of Paid Amount for Export Subsidy in Cap Export Sector for the Month of......... of the Year......... According to FEPD Circular No. 39/2018 Name of Authorized Dealer Bank Branch:.............................................................................. Name and Address of Applicant Institution for Subsidy Details Related to Export Paid Subsidy (Taka) Date of Payment Pending Applications at Branch Description of Product Date of Shipment and Destination EXPI Number Total Returned Export Price (Foreign Currency) Net FOB Value (Foreign Currency) Number Claimed Amount (Taka) 1 2 3 4 5 6 7 8 9 10

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Official Seal, Signature, Name, Designation and Date of Authorized Officer