FEMA Compounding for Exporters — Late Export Realisation & Write-Off

FEMA 1999 Section 7 (obligation to export and realise proceeds). FEMA 1999 Section 15 (compounding power of RBI/Central Govt, immunity from prosecution under Section 13). Foreign Exchange Management (Export of Goods and Services) Regulations 2015, Regulation 9 (write-off limits and RBI approval). RBI Master Direction on Export of Goods and Services, Para 7 (realisation period: 9/15 months) and Para 11 (extension process). Foreign Exchange (Compounding Proceedings) Rules 2000 — Rules 3 (application), 4 (fee calculation), 5 (immunity). CBIC/DGFT framework for export obligation defaults under Advance Authorisation and EPCG schemes, requiring duty payment under Section 28AA with interest.

Our FEMA Compounding service provides a structured and legally robust pathway for exporters to rectify contraventions related to foreign exchange regulations. This includes applications to the Reserve Bank of India (RBI) under Section 15 of FEMA, 1999, to compound infractions such as the non-realisation of export proceeds within the prescribed time limits, irregular write-offs of export receivables, and defaults in meeting export obligations under schemes like Advance Authorisation (AA) and the Export Promotion Capital Goods (EPCG) scheme. The compounding process, once completed, provides immunity from prosecution and further legal proceedings under Section 13 of FEMA, which imposes penalties up to three times the amount involved.

The core of this service involves meticulous case assessment, compilation of comprehensive documentation, and the drafting of a precise compounding application. We navigate the complexities of the RBI Master Direction on Export of Goods and Services, ensuring compliance with the 9-month realisation period for standard exports and specific provisions for Status Holders. For write-offs, we strictly adhere to Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, which permits AD banks to allow write-offs up to 5% of previous year's realised proceeds, with amounts beyond this requiring direct RBI approval.

Furthermore, we facilitate the regularisation of export obligation defaults by liaising with the Directorate General of Foreign Trade (DGFT) and handling the consequent payment of customs duty with interest under Section 28AA of the Customs Act, as mandated. Our expertise ensures that the compounding fee, calculated as per the Foreign Exchange (Compounding Proceedings) Rules, 2000, is minimised and the entire process is managed efficiently to resolve regulatory non-compliance swiftly.