8.26(a) The procedure of operating Diamond Dollar Accounts Scheme (DDAS) shall be as follows:

(a) All pre and post shipment credit facilities given by the banks in terms of Dollars to diamonds importers / exporters / Private, Public Bondded Warehouses operating under DDAS shall be designated in Dollars and be reflected as borrowings in their DDAS. Export realisation as well as dollar realisation from local sale of rough / polished diamonds shall be credited immediately to such dollar accounts on receipt of the same.

(The above paragraph has been amended vide Public Notice No.40(RE-00)/1997-2002 dated the 1st November,2000)

(b) DDAS eligible firms / companies and Private / Public Bonded Warehouses may be allowed to open a Diamond Dollar Account with their bankers. A maximum of two Diamond Dollar Accounts would be allowed with two separate banks.

(The above paragraph has been amended vide Public Notice No.40(RE-00)/1997-2002 dated the 1st November,2000)

(c) The sources of dollars in Dollar Accounts shall be (i) bank finance;

(ii) export proceeds from shipments of polished/rough diamonds; and

(iii) sale proceeds from local sales of polished / rough diamonds.

(d) An exporter / local seller of cut & polished diamonds operating under DDAS may apply for Replenishment licence to the Regional Licensing Authority (RLA) of DGFT in accordance with the para 8.2 of the Exim Policy and para 8.2 to 8.7 of Handbook (Vol.1). While making this application, the exporter will give an undertaking that the said application will operate under DDAS. Regional Licensing Authority shall calculate its entitlement as per Appendix 30A and issue Replenishment licence. However, Replenishment licence issued under DDAS shall be non transferable and this will be so specifically indicated by the Regional Licensing Authority. Regional Licensing Authority will make an endorsement on these Replenishment licences that payment for import against these licences shall be made from Diamond Dollar Account only.

On receipt of payments against export / local sales, on the basis of self declaration indicating the value addition by the exporter/local seller, the bank will credit the value addition part to Rupee Account and balance to Diamond Dollar Account and issue a certificate. The exporter will produce such certificate(s) from the concerned bank as to the amounts credited to Diamond Dollar Account & Rupee Account to the RLA alongwith the Replenishment licence application. The RLA will issue the Replenishment licence after satisfying itself that all requirements have been met.

In case of rough diamonds, a disclaimer certificate may be given by the buyer of rough diamonds to the seller at seller"s request to enable the latter to apply for a Replenishment Licence.

(The above paragraph has been amended vide Public Notice No.40(RE-00)/1997-2002 dated the 1st November,2000)

While effecting import of rough diamonds, under DDAS, the exporter will make payments from DDA and will clear the consignment from Custom against these Replenishment licences issued under this scheme only. Such payments can be made in advance, whenever permitted, or after clearance of the parcel.

Similarly, the exporter can buy rough diamonds from the local market from DDA holder on payment of dollars from DDA and debit of Replenishment licences issued under this scheme.

(e) In respect of local purchase of cut & polished diamonds, the buyer will pay to the seller the purchase value in dollars alongwith a disclaimer certificate with respect to the licence according to appendix 30A for the local purchases, on the basis of which the seller will apply to the office of the RLA for the Replenishment / Imprest obligation application as per Appendix 30A enclosing therewith the certificate from the bank, giving details of the value and invoice of cut and polished diamonds sold by him locally. There shall not be more than one transaction of a particular sale/purchase before export and the seller / exporter will give a self declaration to this effect. Exporter will make an application to the RLA on monthly basis based on the export realisations received less the disclaimer certificates for licences issued by him, if any, in accordance with Appendix 30A for the local purchase of cut & polished diamonds, the payments for which have been made from the Diamond Dollar Account.

(f) Bulk licences for rough diamonds may be issued as per paragraph 8.10 and 8.11 of Exim Policy and paragraph 8.21 to 8.26 of Handbook (Vol.1). A bulk licence holder, in addition to the present scheme, may also operate under Diamond Dollar Account Scheme, then while making the application, the applicant will specifically give a declaration to this effect to the RLA. RLA while issuing Bulk Licence will make an endorsement on this Bulk licence that payment for import of rough diamonds against this Bulk licence shall be made from Diamond Dollar Account only. This bulk licence holder can sell rough diamonds against production of valid Diamond Imprest Licence / Replenishment licence / Gem Replenishment licence to a buyer, who is operating under Diamond Dollar Account Scheme. Buyer will make payment for purchase of such rough diamonds in dollars from his Diamond Dollar Account . The bulk licencee shall follow the procedure as given in para 8.24 and 8.25 of Handbook (Vol.1). Bulk licencee will be able to import rough diamonds by making payment from his Diamond Dollar Account and will submit Bulk Licence issued under this scheme to Custom Authorities at the time of clearance.

A bulk licence holder operating under DDAS is also permitted to sell to an exporter not operating under DDAS against valid Diamond Imprest Licence / Replenishment licence / Gem Replenishment licence but against payment in Dollar obtained from the bank by debiting exporter"s Exchange Control copy of the licence, and the payment so received shall be credited to the Diamond Dollar Account of the Bulk Licence holder.

g) Diamond Imprest Licence may be issued as per para 8.3 to 8.5 of Exim Policy and para 8.11 to 8.20 of Handbook (Vol.1). In case the applicant wants to operate under Diamond Dollar Account Scheme, he will give a declaration to this effect to Regional Licensing Authority. RLA will issue Diamond Imprest Licence with a specific endorsement that this licence shall be operated under Diamond Dollar Account Scheme. The Licence holder will produce this licence before the concerned bank with whom Diamond Dollar Account has been opened who may permit remittance of dollars for purchase of rough diamonds, equivalent to CIF value of this licence. On receipt of payments against export / local sales, on the basis of self declaration indicating the value addition by exporter / local seller, the bank will credit the value addition part to Rupee Account and balance to Diamond Dollar Account and issue a certificate, the exporter will produce such certificate(s) from the concerned banks as to the amounts credited to Diamond Dollar Account and Rupee Account to the RLA at the time of application for redemption. The RLA will issue the redemption, additional entitlement, if any, after satisfying itself that all requirements have been met.

(h) Customs appraisal shall be applicable to physical imports / exports as at present and shall not apply to domestic sale / purchase of rough / polished diamonds.

(i) The procedure and documents for physical imports and exports shall remain unchanged for DDA holders including the requirement of Diamond Imprest Licence / Rep Licence / Bulk Licence / Gem Rep Licence and replenishment norms, (Appendix 30A) prescribed in the Exim Policy.

Other provisions of this chapter regarding Bulk licence and Diamond Imprest Licence like execution of Bank Guarantee / Legal Undertaking, time period for completion of export obligation, redemption of licence etc will be equally applicable to the licences issued under this scheme.

(j) In case of local sale of rough diamonds the amount of sale on the licence shall be endorsed by the seller duly countersigned by the concerned licensing authorities.

(The above paragraph has been amended vide Public Notice No.40(RE-00)/1997-2002 dated the 1st November,2000)