Current & Future Trends in International Trade

International Trade Transaction Process within developed, developing and transitional economies Trade Facilitation System & Trade Security Single Window Concept From Paper to Digital documents e standards Transaction Cost

Trade Facilitation Improving Documentary Requirements, and procedures on Trade in Goods (EXPORT + Import + Transit) Reforming Customs Procedures Making Trade Procedures as Efficient as possible through: procedures, documentation and information. eliminating all unnecessary elements and duplications in formalities, processes and procedures Alignment of national procedures, operations and documents with international conventions, standards and practices Process of developing internationally standard formats for practices and procedures, documents and information

International Organizations Dealing With Trade Facilitation , International rules and standards IMO ISO UN-CEFACT WCO WTO IMF World Bank OECD UNCTAD ITC

Impediment to Trade Facilitation

excessive data /documentation requirements Red-tapism High release and clearance times Antiquated customs techniques and inefficiencies leading to high logistics costs Absence of co-ordination between customs and other agencies Inadequate transit regimes Corruption Regulatory/administrative barriers in establishing and operating new businesses Port congestion Scarce use of IT Lack of quick legal redress Unattractive tariff regimes

Too Many Players in the Value Chain

ORDER/PREPARE TRANSPORT CUSTOMS PAYMENT Exporter/importer Insurance company Chamber of commerce Export/import agent Licensing authorities Embassies Credit checking company Supplier Other intermediaries

Freight forwarder Transporter/carrier Shipping line Export inspection agency Other intermediaries Custom clearance Health authorities Port management Custom brokers Other intermediaries Bank Financial institutions intermediaries

Too Many Documents

Enquiry Order Despatch advice Collection order Payment order Documentary credit Forwarding instructions Forwarder's invoice Goods receipt Air waybill Road consignment note Rail consignment note Bill of lading

Freight invoice Cargo manifest Export licence Exchange control doc. Phytosanitary certificate Veterinary certificate Certificate of origin Consular invoice Dangerous goods declaration Import licence Customs delivery note TIR carnet

Types of Risks

Commercial risks Political risks Risks arising out of foreign laws Cargo risks Credit risks Exchange fluctuations risks.

Objective To understand International Supply Chain model constituting of trade facilitation & e-business solutions that meet the needs of the potential 45 Parties involved in the execution of National and International Trade Transactions involving Several hundred activities undertaken in some 70 relationships whilst recognising the variety of technical and business capabilities of the parties and contribute resulting in cost savings while transacting International Trade. The International Trade Transaction Process consists of integrated and coordinated flows of information, goods & payments Source: The UN/CEFACT International Supply Chain Reference Model

International Trade Transaction Process

BUY

SHIP

PAY

Prepare For Export

Export

Transport

Prepare For Import

Import

INVOLVES
Commercial Procedures Establish Contract Order Goods Advise On Delivery Request Payment Transport Procedures Establish Transport Contract Collect,Transport and Deliver Goods Provide Waybills, Goods Receipts Status reports etc. Regulatory Procudures Obtain Import/Export Licences etc Provide Customs Declarations Provide Cargo Declaration Apply Trade Security Procedures Clear Goods for Export/Import Financial Procedures Provide Credit Rating Provide Insurance Provide Credit Execute Payment Issue Statements

WTO-Related Articles GATT 1994 Art V Art VIII Freedom of Transit Fees and Formalities connected with importation and exportation Publication and Administration of Trade Regulation.

Art X

Article V: Freedom of Transit

No obstacles or unreasonable charges on transit Freedom of transit most convenient routes Transit; No delays, no restrictions Exempt from custom duties or other charges Administrative expenses (reasonable, cost of services) MFN treatment with respect to ALL: Charges; Regulations; formalities

Article VIII: Fees & Formalities

Limited in amount (cost of services rendered) Not to represent protection to domestic products No import fax for fiscal purposes Import and export formalities should be reduced Document requirements: Less Simplified

Article X: Transparency

Publication and Administration of Trade Regulation Publication ALL Laws, regulation, administrative ruling, and judicial decisions (import + export) Measures imposing a new requirement, restriction, or prohibition on imports, or payment, shall be published before enforcement Uniform, impartial, and reasonable administration of laws, and decisions on Import and Export. Judicial/Arbitral System to review and correct action relating to customs matters.

Other WTO Agreements Rules on Trade Facilitation 1. 2. 3. 4. 5. 6. Custom Valuation Agreement Agreement on Pre-Shipment Inspection Agreement on Import Licensing Procedures Agreement on Rules of Origin Agreement on Technical Barriers to Trade Agreement on Sanitary and Phyto-Sanitary Measures

Trade Security Initiatives

World Customs Organizations Advanced Cargo Information (ACI) US Customs 24 Hour Rule , CTPAT International Maritime Organizations International Ship & Port Facility Security Code (ISPS) The European Commission communication on a Simple & environment for Customs & Trade , AEO RMS Paperless

UNDERSTANDING INTERNATIONAL COSTS

PRODUCT COST TRANSACTION COST LANDED COST TOTAL COST

Transaction Cost

17

Transaction Cost
There are different non-price factors that are not related with physical process of production of goods such as administrative processes, government rules and regulations, infrastructural bottlenecks etc. for which an exporter employs its own resources either in terms of time or in terms of money before the actual shipments of export items. The multiplicity of rules and regulations, rule-bound administrative procedures and practices, inadequate infrastructural facilities and appropriate institutional support adversely affect the export promotion efforts. These non-price factors, often referred to as transaction costs, impede the impetus given to export growth even when other trade policy issues have been addressed by the Government

Transaction Costs Classifications

i. Information costs firms and individuals face costs in the search for information about products, prices, inputs and buyers or sellers.

ii. Negotiating costs

arise from the physical act of the transaction, such as negotiating and writing contracts (costs in terms of managerial expertise,hiring of lawyers, etc), or paying for the services of an intermediary to the transaction such as a broker etc

iii. Monitoring or enforcement costs

arise after an exchange has been negotiated. This may involve monitoring the quality of goods from a supplier or monitoring the behaviour of a supplier or buyer to ensure that all the preagreed terms of the transaction are met

Transaction Costs - Factors Responsible

(a) Complex administrative processes (b) Bureaucratic approach of public agents (c) Procedural delays in clearing imported inputs for exports at the customs (d) Multiplicity of rules and regulations (e) Stringent but inefficient implementation processes (f) Information constraints regarding credit availability and export remittances (g) Infrastructural bottlenecks related to transportation and communication (h) Institutional factors which intensify rent-seeking activities in an economy (i) Political environment as it affects any change in policy stances While factors (a) and (b) are interdependent due to multiplicity of rules and regulations and hence, multiplicity of paperwork results from the administrative processes which are not simple and transparent; factor (c) could be explained in terms of factor (e) which, in turn, is partly attributable to factors (a) and (d) Factors (a), (c), (d) and (e) could be clubbed together as they cause time constraint in export transactions which have also been referred to as procedural delays. Institutional factors and political environment prevailing in the exporting country - enlisted as factors (h) and (i), have a major bearing on all the other factors.

An Export transaction process

(i) Obtaining different export-import codes and registrations

(ii) Obtaining different licenses (iii) Revalidation of export licences (iv) Issuance of Export House/Trading House certificates (v) Obtaining various refunds like duty drawbacks etc (vi) Getting remittances through banks (vii) Custom clearances (viii) Final dispatch of export consignments

Applicable Acts , Manuals Foreign Trade (Development & Regulation) Act 2010 Foreign Trade (Regulations) Rules 1993 Foreign Trade Policy 2009-2014 Foreign Exchange Management Act 1999 Customs Act 1962 Customs Tariff Act 1975 Central Excise Act 1944 Central Excise Tariff Act 1985 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974 Marine Insurance Act 1963 Carriage of goods by Sea Act 1925 Carriage by Air Act 1972 and many other acts and regulations

Websites

World Customs Organisation Govt. of India Directory of sites Ministry of Finance Directorate General of Foreign Trade General Taxation in India (non-govt.) General Taxation (non-govt) Licence, Import/Export policy (non-govt.) General Business Information (non-govt.) Customs Websites of other countries

www.wcoomd.org www.goidirectory.nic.in www.finmin.nic.in www.nic.in/eximpol

www.taxindiaonline.com www.indiantaxsolutions.com www.LicenceIndia.com www.e-indiabiz.com http://www.customs.govt.nz/library/Links +to+Other+Sites/default.htm

Airports Authority of India Central Excise and Service Tax Directorate General of Safeguards Indian Customs and Excise Gateway The Customs, Excise and Service Tax Appellate Tribunal Website Central Excise, Ahmedabad-I Central Excise Bangalore Customs Commissionerate Ahmedabad

www.airportsindia.org.in http://sermon.nic.in http://dgsafeguards.gov.in http://www.icegate.gov.in/ www.cestat.gov.in

www.cenexahmedabad.nic.in http://centralexcisebangalore.kar.nic.in http://ahmedabadcustoms.gov.in

Electronic Data Interchange (EDI) For Trade (eTrade)

CATALYST FOR INTERNATIONAL TRADE AND ECONOMIC GROWTH Understanding EDI and Internet based ecommerce SME leveraging technology for growth in international Trade

Introduction
Introduction of Aligned Documentation System according to UN Lay out Key 1988 Development of Software for Pre-shipment Export Documents 1990 Acceptance of UN etrade Docs National standards for EDI EDIfact 1996 Rolling out of GS1 (Bar coading) -1995

e-governance was initially drawn on June 2000 with a primary emphasis on networking government departments and developing in-house government applications During 2003-2007 government of India approved National e-Governance Plan (NeGP) for implementation with 27 Mission Mode Projects (MMPs).This project would create efficient ,transparent , secure electronic delivery of services by trade regulatory /facilitating agencies,simply procedures and reduce the transaction cost and time ,Introduce UN/CEFACT standards and practices

Objective
To simplify procedures, introduce electronic delivery of services by regulatory and facilitating organisations provide 24x7 access to users increase transparency in procedures reduce transaction cost and time, and introduce international standards and practices in the area of clearance of export/ import of cargo

e-Trade Coverage to increase Export Competitiveness

Airports Airlines Apparel/Textile export Promotion Councils Banks and RBI Customs Container Corporation of India (CONCOR) Directorate General of Foreign Trade (DGFT) Export Promotion Organisations, DG Commercial Intelligence/Statistics and Inland Container Depots/ Container Freight Stations Indian Railways Port Trusts

Services available
Electronic filing and clearance of export import documents e-Payment of custom duties and charges of ports, airports, CONCOR, etc. Filing and processing of licences for DGFT e-Payment of licence fee for DGFT Electronic exchange of documents between community partners such as Customs, ports, airports, DGFT, CONCOR, Banks, etc.

CUSTOMS EDI

Customs rolled out ICES 1.5 at 119 locations RMS is operational by Customs at 96 locations Operationalisation of Customs message exchange with 13 major + 4 private seaports is through PCS , message xchange system in place with airports , Concor , Banks Implementation of design and development of challan management application and testing tp operatinalize ePAO IBA would ensure that all concerned banks start ePayments for Customs duties . Customs reported that a circular has been issued to make the ePayment mandatory for all accredited clients and payments above Rs. 1 lakh at locations wherever ePayment is operational. ePayment is made mandatory from 01.10.2011.

CONCOR

All their EXIM locations have uniform internal automation and connected through a centralised system. CONCOR rolled out the web based user interface system at certain EXIM locations CONCOR is also connected with Indian Railways for online rail receipts generation.(FOIS) The electronic message interface with Customs has been started for 5 messages On the subject of making the system mandatory CONCOR views are that the same should be done for all ICDs/CFSs Container tracking and tracing system is provided

 need for all the ICDs/CFSs to have internal automation to opertionalise the electronic message interface with Customs and other community partners like Ports, Shipping Lines, Exporters/Importers, Agents, Banks, Indian Railways etc. so as to facilitate the mandatory efiling by users

ICD / CFS

Ports , Banks
Web based system for all major ports for document submission with trade partners, payment acceptance Integration of non-major seaports into PCS by IPA RTGS,NEFT implementation by Banks Disbursal of export incentives thru Banks Banks given interface with all trading partners for acceptance of on line payments and issuance of receipts

DGFT

DGFT to opretaionalise the eBRC system Issues on Customs DGFT interface for Ch.3 schemes to be resolved Physical dispensation of paper and digital signature integration in Customs Issuance of all licenses Digital signature integration with institutional partner like CONCOR, IPA, Airports Custodians, Banks

Airports

Ministry of Civil Aviation and AAI is ensuring the web based community partner interface system and bar code integration at major airports. AAI has floated the RFP for the Airports community system (ACS) MoCA/AAI to ensure that custodians at smaller locations to be ready for message exchange with Customs For Tracking and Tracing system ,RFID ,Bar Coding

Challenges
Dispensation of physical submission of documents Coverage to include upcoming/smaller locations etrade to be effective for all transactions like GSP etc

Registration (IEC)

Custom Clearance

Loading og Goods on Aircraft / Vessel

Licensing ( EXIM )

Custodian ( Concor / AAI )

EGM/Mate receipts /Are 1

Bank Guarantee

Excise Clearances

Airway Bill /Bill Of Lading Bank Documents,Expor t Incentive ,Insurance Documents

Sourcing of Raw Material

Warehousing

Export Cycle

Airports Ports ICD

AAI , DIAL CONCOR , CWC

Role of Intermediaries Exporter ,Importer

DGFT EPC ECGC Customs Excise

Banks Insurance Companiy

Airlines, Shipping lines

EXPORTS Regulations for Samples , Spares , Gifts ,Repaired goods , Consignment Export

REGISTRATION OF EXPORTER , IMPORTERS

To export or import in India, IEC Code is mandatory An application for grant of IEC number from Regional Authority of Directorate General Foreign Trade. IEC Code Online Application Form Application Fee Profile of Exporter , Importer

Requirements for IEC Code Number

PAN Number Current Bank Account Bankers Certificate IEC Code Number Application Fee Covering Letter Two copies of Aayaat Niryaat NF form Part 1 & Part 4 to be filled by applicants. Self certified copy of PAN issuing letter or PAN

 Obtain RCMC from the specific Export Promotion Council Registration with Customs Understand applicable export ,Import Schemes along with the HSN Confirmation from EPC , Freight Forwarder etc Apply for Excise registration ( if applicable ) Apply for VAT ,CST ( If applicable ) Understand components of Sales Contract , Delivery Terms (INCOTERMS) EXIM Documentation Export Incentives or Import Duties on the products Exported or Imported Freight Rates Packaging Gudielines

Exports regulations under FEMA, 1999 RBI Master circular for exports and services

Memorandum on Project & Sevices Exports (PEM)

Categories of exports

Cash Exports Deferred Payment Exports Project Exports Software Exports Services Exports

Agencies connected with Exports

Director General of Foreign Trade Formulation of trade policy; allotment of importer-exporter code number

Customs Valuation of goods, physical aspects of exports

Reserve Bank of India & Authorised Dealers - Monitoring receipts of payments & follow up

Institutions involved

RESERVE BANK OF INDIA EXIM BANK ECGC AUTHORISED DEALERS

Working Group Members

EXIM Bank ECGC Reserve Bank of India (ECD & IECD) Authorised Dealer & Exporter invited as special invitees

Declaration of Exports

Mandatory to declare the export of goods & Services outside India (except Nepal & Bhutan) by exporter to the specified authority in the prescribed forms (Regulation 3) - Full value of goods or software - Where value not ascertainable the value expected to be realized given the market conditions Export of services no form prescribed however liable to repatriate the exchange so earned

Exemptions from Declaration

Trade samples, publicity material supplied free, personal effects of travellers (accompanied/unaccompanied) Ships stores, transshipment cargo, Military/Naval/Air Force requirements, Aircraft Engine Spares Goods/Software of value less than US.$.25000/- - declaration from exporter Gifts for value upto Rs.5.00 lakh declaration

Exemptions from Declaration-Contd

Goods imported free of cost on re-export basis Goods exported upto $ 1000 to Myanmar under Barter Trade Agreement Replacement of goods free of charge as per EXIM Policy From EPZ/FTZ after permission of Development Commissioner - Imported goods found defective for replacement - Goods imported from suppliers/collaborators on loan basis - Goods imported from suppliers/collaborators free of cost - found excess after production operations

Payment of Export Value of Goods

Notification No.FEMA 14/2000-RB-Manner of Receipt & Payment Regulations For all ACU Countries except Nepal through ACU Dollar Account In case of export of goods to Nepal, where an importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism. For the rest of the world by debit to the Rupee Account of a bank situated in countries other than the ACU countries or in any permitted currency For export to Myanmar in any freely convertible currency or through ACU mechanism

Receipt of Payment

In the form of bank draft, pay order, foreign currency notes, travellers cheques from buyer during visit to India surrender as per time limit Debit to NRE/FCNR Accounts of the buyer In Rupees from credit card servicing bank against charge slip signed by buyer using a credit card In accordance with directions of RBI for arrangements between Governments/Exim Bank In the form of precious metals equivalent to the value of jewellery exported by Gems & Jewellery units in SEZ Rupee account of Exchange Houses - up to Rs. 2lakhs per transaction

Export Procedure

Declaration in Form GR/SDF to be submitted in duplicate to Customs along with shipping bills SOFTEX Forms in the triplicate to STPI/FTZ/EPZ Customs Number the form certify value of goods & assessable value/if SOFTEX, official of STPI/FTZ/EPZ will certify Return duplicate to exporter original sent to RBI directly GR form resubmitted to Customs along with goods to be shipped Customs certify quantity & return form to exporter

Export Procedure

Exporter submits duplicate GR to AD within 21 days of shipment with invoice, shipping documents etc. AD negotiates/sends for collection report to RBI in form ENC with R-Return GR form endorsed for amounts credited to EEFC account ADs no longer required to submit the duplicate export declaration form & EC copy of shipping bill to RBI after realisation of export proceeds

SOFTEX Form Procedure

Form to be submitted in triplicate to STPI/FTZ/EPZ Designated officials of Ministry of Information Technology, GOI at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs) have been authorised to certify exports declared on SOFTEX forms Designated officials of STPIs/EPZs/SEZs also authorised to certify the Softex Form

SOFTEX Form Procedure

Original Sent Directly to RBI by Certifying Agency Duplicate Retuned to Exporter Triplicate Retained by STPI/FTZ/EPZ Duplicate form to be submitted to AD within 21 days of certification Billing to be done for long term contracts on reaching "milestones" or once a month for others within 15 days of completion and for certification by the authorities in the STP

Despatch of documents

Documents to be despatched as soon as possible to overseas branches/correspondents Documents may be sent directly to consignee where L/C or advance remittance received Can also be done for customers with good track record

Despatch of Documents

Exporters who are Status Holder Exporters can despatch documents directly to consignees, subject to: the export proceeds are repatriated through the authorised dealer named in the GR form The duplicate copy of the GR Form is submitted to the authorised dealer for monitoring purposes by the exporters within 21 days from the date of shipment of export

PP Form Procedure Original PP form to be countersigned by AD AD to countersign when parcel addressed to their branch or correspondent in the country of import Can be sent directly to consignee if export against LC or advance payment has been received or the AD is satisfied based on the track record of the exporter

Direct Despatch of Documents

Authorised Dealers may permit units in Special Economic Zones (SEZs) to despatch export documents direct to the consignees outside India subject to: the export proceeds are repatriated through the Authorised Dealer named in the GR/SDF/PP/SOFTEX Form the duplicate copy of the respective declaration form is submitted to the Authorised Dealer for monitoring purposes by the exporters within 21 days from the date of shipment

Remittances Connected With Exports

Export claims ADs allowed to remit Export proceeds should have been realised & repatriated to India Exporter is not on caution list of RBI Exporter to be advised to surrender proportionate export incentive, if any received by him

Consignment Exports

Documents sent at the risk of the exporter Documents sent to correspondent to be delivered to consignee against trust receipt Repatriations within time limit for exports Agent allowed to deduct expenses incurred with the sale Account sales to be received along with remittance

Consignment Exports

Freight & insurance to be arranged in India Realisation period 15 months for exporters having warehouses abroad with prior RBI approval Exports to East European Countries period upto 12 months allowed by RBI to exporters with good track record

Special Facilities for Units in SEZs

Payment of export may also be received by the gem & jewellery units in SEZs and EOUs in form of precious metals i.e. gold/silver/platinum equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metal is indicated in the relevant GR/SDF/PP forms

What are Project Exports

Export of engineering goods on deferred payment terms Execution of turnkey projects/civil construction contracts abroad Export of services

Transportation-related Concepts and Terminology

A shipping transaction Freight: The transported material Shipper / Consignor / (Freight) Originator: The shipping party. Consignee / Freight Receiver: The receiving patry Carrier: The firm that provides the transportation service Freight bill-of-lading (freight bill): A document serving as a contract between the shipper and the carrier, specifying the obligations of both parties. In particular, it specifies: The Consignee The FOB (free-on-board) point, i.e., the point where the freight changes ownership (origin or destination) The FOB terms-of-sale Who arranges for transport and carrier Who pays for transport (collect, prepaid, prepaid and charged back) FOB point Loss & Damage terms and potential insurance

Information for Obtaining Export Rate 1. 2. 3. 4. 5. 6. 7. What you are shipping Where it is going How much it weights The dimensions The value The type of service (air, ocean, ground) Any special requirements

Mediators and Integrators Freight forwarder: An agency that receives freight from the shipper and then arranges for transportation with one or more carriers for transport to the consignee. Typically, consolidates freight from many shippers to obtain better rates. Also, often provde pickup and delivery services, as well as other shipping services: packaging, temporary storage, customs clearing. Transportation Broker: An agency that obtains negotiated large-volume transportation rates from carriers and resells this capacity to shippers. No additional services are provided, though. NVOCC (Nonvessel-operating common carrier): Owns no vessels, but provides ocean shipping freight-forwarding services. Shippers Association: Not-for-profit association of shippers using collective bargaining and freight consolidation to obtain lower, high-volume transportation rates. Avoids premium charge paid to forwarders. Only non-competitive shippers may associate, due to monopoly restrictions. Integrators: Companies providing door-to-door domestic and international airfreight service. Owns and operate aircraft as well as ground delivery fleet of trucks 3PL: A third-party, or contract, logistics company, used to outsource logistics services. It can also handle: Purchasing, Inventory management/warehousing, transportation and order management

Charging Patterns for Common Carriers Related to shipment size LTL and LCL shipments: minimum total rate for quantities below a minimum threshold, then several weight categories with different rates. Time-volume rates: encourages shippers to send minimum quantities regularly, in an effort by carriers to ensure regular flow of business Related to distance Uniform rates: independent of distance Blanket rates: constant rates for certain intervals of distance rates, bulk cargo).

Role of a freight forwrader

The freight forwarding professional advises clients of the best rates, routings and modes of transporting goods to or from any area in the world. The forwarder is the exporters agent and provides the traffic and documentation services consistent with the exporters needs, arranging for carriage with vessel operators, trucking companies and airlines specializing in the consolidation of container-load shipments. Using the many resources at their disposal, forwarders find the right match of services available so that products are moved by the most timely and costeffective means. Customized services to fit the clients operational needs are forwarders specialty. Forwarders coordinate arrangements for storage, pick-and-pack operations, consolidations or full container movements as well as inland transportation to provide clients with true door-to-door service. From assisting with initial quotations or preparation of proforma invoices, to banking clients documents for collection, the professional ocean and or air freight forwarder is and essential component in the facilitation of international trade.

Ocean Freight Cost

Basis Ocean Freight (Pure freight): Rate tariff published & filed with the FMC Terminal Handling Charges (THC): Ancillary Charges for moving cargoes on the pier, loading or unloading. Separately charged since 1991 Surcharges: Additional charges or add-on costs Currency Adjustment Factor (CAF): When US dollar drops, CAF goes up. Fuel Adjustment Factor (FAF):Bunker charge. When price of bunker c fuel increases, FAF goes up

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Ocean Bill of Lading

Negotiable Bill of Lading: Order Bill of Lading Made out "To order" or To the order of ----." Cargoes are released only on presentation of an original bill of lading duly endorsed by the shipper or consignee named in the bill of lading Non-Negotiable Bill of Lading: Straight B/L Consigned to the importer. Cargoes are released only to the consignee. Endorsement not needed

74

NonNon -Negotiable Sea Waybill

Cargoes are released only to the consignee on the Sea Waybill without surrendering an original Sea Waybill. Often used When consignee, or importer does not need to sell the goods during transit Specially convenient in the case of a very short transit time. Processing shipping documents through exporters bank and importers bank take several days

75

Multimodal Transport Document

Multimodal (Through, Combined or Intermodal) Bill of Lading Covers two or more transportation modes: truck or rail vesseltruck or rail Covers all transportation from the place dispatched, taken in charge or shipped on board to the place of final destination

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How to compute the size of your shipment

In order to compute actual cubic feet, you will need to measure the length, width and height (in inches) of each piece to be shipped. One cubic foot is equal to a single piece with the dimensions of 12" x 12" x 12". To compute cubic feet, first multiply together all the dimensions for the piece being measured. Then divide the total by 1728. This calculation will give you your total amount of cubic feet for the piece. Total the individual pieces "cubed" to determine your total shipment cube. 12" X 12" X 12" = 1728 1728 / 1728 = 1 cubic foot or 12" X 12" X 12" = 1 cubic foot

Helpful hints in computing cubic feet

When taking your dimensions, round up to the next highest inch. Example: 11 " = 12". Total cubic feet should always be rounded up. Example: 10.45 cubic feet = 11 cubic feet. With multiple pieces of the same dimensions, multiply the total number of pieces along with the dimension. For example, 10 pieces at 12 x 12 x12 would be computed as follows: 10 PCs X 12" X 12" X 12" = 17280 / 1728 = 10 cubic feet

Moving Goods by Air

AIRFREIGHT RATES Basic cost of Airfreight Charged per Kilogram (kg) Weight or Volume, whichever is greater, known as Chargeable Wt (dimensional weight) Rates apply for movements from the airport of origin to the airport of destination. Pre-departure and post-arrival expenses are additional to the airfreight cost Other additional expenses

AIRFREIGHT DOCUMENTATION Air Waybills Provides evidence of a contract of carriage between exporter and forwarder/carrier Proof of receipt of goods for shipment Unlike the ocean Bill of Lading, the AWB isnt, when in your possession, a title to the goods

International trade contracts and Incoterms Different countries have different business cultures and even languages. It's a good idea to make sure you have a clear written contract to minimise the risk of misunderstandings. The contract should set out where the goods are being delivered. It should cover who is responsible for every stage of the journey, including customs clearance, and what insurance is required. It should also make it clear who pays for each different cost. To avoid confusion, internationally agreed Incoterms should be used to spell out exactly what delivery terms are being agreed, such as: where the goods will be delivered who arranges transport who is responsible for insuring the goods, and who pays for insurance who handles customs procedures, and who pays any duties and taxes For example, an exporter might agree to deliver goods, at the exporter's expense, to a port in the customer's country. The customer might then take over responsibility, arranging and paying for customs clearance and delivery to their premises. The exporter might also be responsible for arranging insurance for the goods until they reach the port, but pass this cost on to the customer. As well as including delivery details, the contract should cover payment. This should include what currency payment will be made in, how much will be paid, when payment is due and what payment method will be used. See the page in this guide on international trade documentation and payments. Trade in services With no physical delivery of the product, contracts in services cannot use Incoterms. Instead, the key issue tends to be defining exactly what services are being provided and to what standards.

International Commercial Contracts - Incoterms

Incoterms are standard trade terms that set out buyer and seller responsibilities. They aim to avoid misunderstanding and are principally used in agreements about the delivery of goods. Each Incoterm outlines who is responsible for transport, insurance, duties and clearance. Before you use Incoterms, consider the country of the buyer. Some countries stipulate that set Incoterms are used, while others set chosen Incoterms as standard practice. Transport may also affect your choice as some Incoterms can only be used for transport by sea and inland waterways.

Incoterms

The International Chamber of Commerce (ICC) originally published the very first set of Incoterms in 1936. Since that first publication, they have been updated in 1953, 1967, 1980, 1990,2000 and most recently in 2010. Because Incoterms are standard definitions, they are used in contracts to reduce confusion and avoid traders having difficulty understanding the import requirements and shipping practice used in other countries. Using the correct Incoterms clarifies the contracts you have with your suppliers or customers. "Incoterms" is an ICC trademark and only the original texts of Incoterms are to be considered as authoritative for incorporation into contracts. You should use the current version and note this in the contract. These terms should also be used on any paperwork linked to the contract, such as invoices or statements. Failing to state that you are using Incoterms 2010 could result in a dispute.

Delivery terms INCOTERMS 2010 1. E group: EXW (Ex-works)

seller
buyer

transfer of costs and risk

2. F group: FCA (Free carrier), FAS (Free alongside ship), FOB (Free on board)

seller

buyer

transfer of costs and risk

Delivery terms INCOTERMS 2010 3. C group: CFR (Cost and freight), CIF (Cost, insurance, and freight), CPT (Carriage paid to), CIP (Carriage and insurance paid to)
seller buyer

transfer of costs transfer of risk

4. D group: DAT (Delivered at terminal), DAP (Delivered at place), DDP (Delivered duty paid)

seller transfer of costs and risk

buyer

Most Common Incoterms

Term EXW Ex Works Definition Buyer arranges for pick up of goods at the sellers location. Seller is responsible for packing, labeling, and preparing the goods for shipment on a specified date or time Seller is responsible for costs until the buyers named freight carrier takes charge Buyer arranges for the ocean transport. Seller is responsible for packing labeling, preparing the goods for shipment, and delivering the goods to the dock. Risk Cost Include on Quotation N/A

Buyer assumes Buyer pays all all risk transportation costs

FCA Free Carrier

Seller and Buyer

Split

N/A

FAS Free Alongside Ship (over water only)

Seller: until the goods reach the dock. Buyer: from dock to destination

Buyer: all ocean transport costs. Seller is responsible for costs associated with transporting the goods to the dock.

Costs of transporting goods to the dock.

Most Common Incoterms

Term FOB* Free On Board
FOB should also never be used unless you specify what and where such as "FOB ocean vessel at New York City

Definition

Risk

Cost

Include on Quotation

Seller arranges for Buyer: Once ocean transport of the the items are goods, preparing the on board goods for shipment, and loading the goods onto the vessel. The goods ship ocean freight collect. Seller has the same responsibilities as when shipping FOB, but shipping costs are prepaid by the seller, instead of shipping collect. Seller has the same responsibilities as when shipping CFR with addition of including a marine insurance policy Seller: assumes the risk until the shipment reaches the overseas dock.

Seller: Wharfage Costs, until on (charges to load board the goods onto the ship) and freight forwarder fees.

CFR Cost and Freight

Seller: costs of freight fees up to destination.

Add Freight to cost of product.

CIF Cost, Insurance, and Freight

Seller:; until the Seller insurance shipment and freight reaches the forwarder fees. overseas dock.

Insurance, freight and cost of goods

DAT

Delivered at Terminal Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. Terminal includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

DAT

Notes Sellers obligation is fulfilled and risk of loss passes at same time: when the goods are unloaded at the arriving terminal and placed at buyers disposal Can specify a point within the terminal at which time the obligation is complete Seller clears goods for export but not for import No requirement of insurance If the intention is to carry sellers obligation further into buyers country, use DAP or DDP

DAP

Delivered at Place Seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the good to the named place.

DAP

Notes Much like DAT, but with additional obligation by seller into country of delivery Goods are placed at buyers disposal at named location ready for unloading; risk passes at that point Seller clears goods for export but not import (use DDP if intent is to require seller to clear goods for import also). No obligation on seller to purchase insurance

DDP

Delivered Duty Paid Seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

DDP

Notes Like DAP, but including sellers obligation to clear goods for import pay for any necessary licenses Maximum obligation for seller If seller is not well-suited to clear goods for import, DAP should be used No obligation to pay for insurance

KEY ELEMENTS OF EXPORT - IMPORT DOCUMENTATION the documentation sequence for a typical international trade transaction

THE KEY INFORMATION CONTAINED IN EXPORT DOCUMENTS Description of the goods Mode of transportation rail, air, ocean Terms of sale Who pays for what? Origin of the goods Identity of the seller/shipper Identity of the buyer Terms of payment Shipping instructions Evidence of shipment

Foley, James, F. The Global Entrepreneur: Taking Your Business International. Dearborn Financial Publishing. 1999. P. 210.

COMMON EXPORT DOCUMENTS

Pro forma invoice Bill of Lading Certificate of Origin Packing List Commercial Invoice Shippers Export Declaration (SED) Consular Invoice

Inspection Certificate Insurance Certificate Dock/Warehouse receipt Letter of Credit Draft

STEPS IN THE DOCUMENTATION PROCESS Receive the order under accepted terms & consult with a banker or a freight forwarder. Begin organizing information for required export documents and export license applications. Evaluate modes of transportation, requirements for perishable products, and cost of various alternative modes. Prepare goods for shipping (marking/labeling, packing, consolidating/containerizing, insuring) Complete and forward required export documents.

Export Import Documents

 Understanding a Sales Contract ( CISG,UNICITRAL) Pre Shipment , Post Shipment Documents Transportation / Shipping Documents Customs , Excise Documentation ( ARE 1 ) Facilitating Agency Documentation

 Relevance of Documents ( a) Confirmation of shipment and title of goods; (b) Financial Transactions ( Receipt of Payments etc ) (c) Product Identification (d) Correct Harmonized Classification (e) Pre Shipment Post Shipment Finance (f) Export Incentives (g) Origin and destination country Quality Inspection needs (h) Availing Export , Import Licenses , Schemes (g) Transportation Purpose

 Documentation
Standardized Documentation is based on UN layout Key is known Aligned Documentation Systems (ADS) Categorizes Documents as Commercial and Regulatory Documents Commercial Documents These sets of documents are exchanged between the Consignor and the consignee and establishes the title holder of the goods Regulatory Documents - These documents are prescribed by the Government Agencies which regulate the EXIM trade like RBI, Customs , Excise , Export Promotion Agencies etc

 Commercial Documents 1. Commercial Invoice 2. Packing List 3. Certificate of Inspection 4. Insurance Certificate 5. Certificate of Insurance 6. Certificate of Origin 7. Bill of Exchange 8. Shipment Advice

Principle Documents

 Commercial Documents 1. Pro-forma Invoice 2. Shipping Instruction 3. Intimation of Inspection 4. Insurance Declaration 5. Shipping Order 6. Mates Receipt 7. Application for Certificate of Origin

Auxiliary Documents

8. Letter to the Bank for Collection / Negotiation of Documents



Pro forma invoice - basically a price quote. Describes the type and quantity of the goods to be shipped, value of the goods, total cost of the transaction based on the terms of sale, and other specifications. Bill of lading - a contract between the seller and the carrier. The BOL is usually prepared by the carrier of forwarder. It documents the condition of the goods upon the carriers acceptance. It is negotiable when it is consigned to order of meaning the buyer is allowed to take possession of the goods. Certificate of Origin - a statement required by some countries that certifies the origin of the exported goods Packing List - An itemized list describing the contents of each package in a shipment. Used in determining the total weight and volume of a shipment and for verifying the cargo. Commercial Invoice - Basically a bill for the goods from the buyer to the seller



Consular Invoice - A document required by some foreign governments for identifying and controlling imported goods Inspection Certificate - a document required by some foreign governments that certifies that the goods imported conform to the order Insurance Certificate - the document providing proof that the cargo (goods shipped) have been properly insured. (amount and type of insurance) Dock/warehouse receipt - this document transfers accountability from the seller to the carrier. Letter of Credit - a letter from your customers bank to you, in which the importers bank guarantees payment, provided that all the terms stated in the letter are met. Draft - An unconditional order in writing from the drawer to the drawee that directs the drawee to pay a specified amount to a named drawer at a fixed or determinable future date.

Regulatory Documents Primary Regulatory Documents Subsidiary Regulatory Documents

Shipping Bill / Bill Of Export / Bill of Freight Certificate Entry Exchange Control Documents ( SDF/ GR I )( RBI Document ) ARE 1 Excise Document Remittance Application ( Bank Realization Certificate ) Licenses ( Export / Import ) Proof of Landing /Delivery Order Terminal Handling Fee / CWC Receipt Lorry Receipt / Toll Tax Receipts Insurance Premium Payment Certificate

Standardized Documentation based on UN layout Key is known Aligned Documentation Systems (ADS) Implemented in India since September 1991 Contained documents in Master Documents 1 and Master documents 2 All Documents is are approximately standardized in two categories as commercial documents and regulatory documents.

Customs & Excise Tariff

Customs Tariiff Act Two Schedules i.e. Import Tariff and Export Tariif CE Tariff has 20 Sections and contains chapter 1-96 Customs Tariff has one additional Section XXI Customs Tariff has extra column giving Rate of duty for preferential area Second Schedule of Customs Tariff is Export Tariff shows export duties leviable. Second Schedule of Central Excise Tariff shows rates of special excise duty (SED)



Customs Act,1962 provides the basic legal framework for Customs Administration in India. A large number of Rules and Regulations have been framed under this Act to carry out its purposes. Customs duties governing and regulating movement of GOODS, VESSELS/AIRCRAFTS/VEHICLES, PASSENGERS AND THEIR BAGGAGE across national borders India as a member of WCO has adopted international customs conventions and procedures including the Harmonized Classification System and GATT Valuation Rules.

Features Customs Administration

1. Assessment of customs duty leviable and collection of the revenue 2. Facilitating cargo clearance 3. Enforcing the prohibitions and restrictions 4. Dispute Resolution

Various Facilities Under FTP , OTHER KEY ACTORS,EXPORT INCENTIVE AND FACILITIES SECTION 74 Of CUSTOMS ACT 1962 Duty Drawback Scheme ECGC ATA CARNET Excise Procedure ARE 1 SHIPPING OF GOODS FOR REPAIRS EPCG SCHME MAI , MDI SCHEMES EXPORT PROMOTION COUNCILS RCMC CERTIFICATES

EXPORT CLEARANCE PROCEDURES

113

Few definitions Section 2(5) bill of export means a bill of export referred to in Section 50 Section 2(16) entry in relation to goods means an entry made in a bill of entry, shipping bill or bill of export and includes in the case of goods imported or to be exported by post, the entry referred to in section 82 or the entry made under the regulations made under section 84. Section 2(18) export with its grammatical variations and cognate expressions, means taking out of India to a place out of India. Section 2(19) export goods means any goods which are to be taken out of India to a place out of India Section 2(20) exporter, in relation to any goods at any time between their entry for export and the time when they are exported, includes any owner or any person holding himself out to be the ex

114

Section 16 Date for determination of rate of duty and tariff valuation of export goods (1) The rate of duty and tariff valuation, if any, applicable to any export goods, shall be the rate and valuation in force (a) in the case of goods entered for export under section 50, on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51 (b) in the case of any other goods, on the date of payment of duty. (2) The provisions of this section shall not apply to baggage and goods exported by post.

115

Section 41 - Delivery of export manifest or export report - (1) The person- in-charge of a conveyance carrying export goods shall, before departure of the conveyance from a customs station, deliver to the proper officer in the case of a vessel or aircraft, an export manifest, and in the case of a vehicle, an export report, in the prescribed form: (2) The person delivering the export manifest or export report shall at the foot thereof make and subscribe to a declaration as to the truth of its contents. (3) If the proper officer is satisfied that the export manifest or export report is in any way incorrect or incomplete and that there was no fraudulent intention, he may permit such manifest or report to be amended or supplemented.

116

Section 50 - Entry of goods for exportation. (1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form. (2) The exporter of any goods, while presenting a shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration as to the truth of its contents.

117

Requirements for exporter PAN based Business Identification Number (BIN) from the Directorate General of Foreign Trade Register authorised foreign exchange dealer (bank) code and account number in the designated bank For exports under DEEC, DEPB, DFRC etc. registration with the concerned Customs House required

118

Customs Procedure

Customs procedure relating to export of goods fully computerised at most of the ports Procedure can be divided in two parts -- Filing & Processing in the Group -- Examination in the shed

119

Documents Processing Filing of documents through EDI Filing can be done by the CHA himself or through Customs Service Centre Documents Invoice, Packing list, SDF (Self Declaration form) and Annexure submitted to CSC The data in the Annexure is fed into the system Check list generated in the system is handed over to the CHA/Exporter

120



Under ICES 1.5, the computerized processing of shipping bills is handled in respect of the following categories: 1. Duty Free white Shipping Bills 2. Dutiable Shipping Bills (Cess) 3. Drawback Shipping Bills 4. DEEC Shipping Bills 5. EPCG Shipping Bills 6. DEPB Shipping Bills 7. DFIA Shipping Bills 8. 100 %EOU Shipping Bills 9. Jobbing Shipping Bills 10. Other Exim Scheme Shipping Bills 11. NFEI Shipping Bills.

Processing contd.

Check list given to CHA along with documents CHA verifies the entries and returns to CSC Data submitted to system which generates shipping Bill Number Printout of check list with S.B. No. endorsed is given to CHA Shipping Bill processed in the group Assessed by Superintendent and he checks value, Drawback rate, DEPB rate, Licence description, validity etc. Subsequently goes to Assistant Commissioner Special instructions can be given by group to shed staff

122

Arrival of the Goods

CHA approaches Shipping Ling for forwarding note container number Goods brought to port and Cargo Receipt Note (CRN) given by the Port Authority Cargo unloaded in the shed Cargo verified by the custodian and tally sheet generated

123

Examination Area Procedure

Registration of the goods by the Inspector in the shed System marks the papers to the Inspector Inspection or Examination orders given by the System Inspection or Examination done by the Inspector under the supervision of Superintendent Approval of the Assistant / Deputy Commissioner taken, where required otherwise let export order given by Superintendent Cargo stuffed in the container and container sealed with customs seal under Customs supervision Cargo loaded on the ship under Customs supervision or in case of ICD loaded on train for Gateway Port

124

The S/B would be processed by the system on the basis of the declaration made by the exporter. The following kinds of S/B shall require clearance of the Assistant Commissioner/ Deputy Commissioner (AC/DC Exports): It could vary from each custom station i. Duty free S/B for FOB value above Rs. 10 lakh ii. Free Trade Sample S/B for FOB value above Rs. 25,000 iii. Drawback S/B where the drawback exceeds Rs. one lakh The following categories of Shipping Bills re generally processed by the Appraiser/ Supdt. (Export Assessment) first and then by the Asstt/Deputy Commissioner: i. DEEC ii. DEPB iii. DFRC iv. EOU v. EPCG vi. Any other Exim Scheme, if so required

CUSTODIAN The goods imported into India and exported out of India are allowed through designated Sea Ports / Land Custom Stations / Airports. The goods so imported / exported are initially deposited in the custody of Custodian such as Port authorities for goods imported through sea. Custodians for goods imported by air DIAL For places other than points of landing Inland Container Depot (ICD) ICD)-M/s CONCOR at ICD Tughlakabad Container Freight Station (CFS) CFS)-M/s CWC at ICD Patparganj

Role of Custodians

Customs authorize and appoint "custodians" for all imported goods unloaded in a Customs area to remain in their custody till these are cleared Custodian to arranges proper storage and safety and allows delivery to the importers only after they fulfill all the customs formalities, pay up requisite duties and other charges/fees

127

Export Promotion Schemes DUTY EXEMPTION/REMISSION SCHEMES:1) Advance AuthorisationScheme (DEEC/Adv. Licence) 2) Duty Free Replenishment Scheme (upto 4/06) 3) DEPB Scheme 4) Duty Free Import Authorisation(DFIA w.e.f 1.5.06) EXPORT PROMOTION CAPITAL GOODS SCHEME(EPCG) EOU/STP/EHTP/Biotechnology Parks SPECIAL ECONOMIC ZONES (separate Act & Rules framed) FREE TRADE AND WAREHOUSING ZONES DEEMED EXPORTS SPECIAL SCHEMES UNDER EXPORT PROMOTION SERVED FROM INDIA SCHEME ( formerly DFEC) VISHESH KRISHI AND GRAM UDYOG YOJANA FOCUS MARKET SCHEMES (Export to certain specified countries) FOCUS PRODUCT SCHEMES (Export of Specified commodities

Export Documents
Invoice Packing List Licenses used or sought to be used (As per EXIM scheme code) File number in lieu of license where same has been applied for SION Norms DFIA DEPB Schedule Drawback Schedule ARE-1 / Excise document In house testing report for ISO 9001 2000 certified company Purchase order / LC / Indent / Contract Terms of contract i.e. CIF / FOB / C & F PMV details In house testing report for ISO 9001 certified company DEPB Calculation for pharmaceuticals formulations EXIM Scheme code details

Common Documentation Errors

Unit currency incorrect. Consignee and buyer address are incomplete. Advance license / EPCG license has expired. For DEPB shipments unit value should be as per DEPB value cap e.g. value cap in kgs then unit value should be @ kgs. Unit of measurement should be as per of tariff. SION number to be entered wherever required. Supporting manufacturer to be mentioned where required. PMV details to be mentioned. ITC (HSN) details incorrect

Flow Chart of Cargo Clearance System Of INDIA (Export Sea Freight) Shipper/Exporter Or Agent Preparation of Export Documents
--Signed invoice/Packing list --L/C /perform invoice / insurance --SDF form / DEPB declaration -- Annexure
Entry in terms of Section 46 of Customs Act, 1962 Annexure A + C SDF in duplicate

SS Line Booking Receiving Shipping Dos for release container from ICD and delivery from to CFS

Shipping Agency Department Endorsement for Cargo Accept to nominated feeder vessel

Check List

CMC

DEPB Declaration

CFS Port Authority Port charges paid for container Loading Empty Container in ICD and transport to Shipper warehouse

CMC/Shipping Bill Number

Goods of Shipping Line warehouses Concor

Container Stuffing

CMC Printout

Goods Examine

Container Seal

TR 1 / TR II Handover to shipping line

Flow Chart of Cargo Clearance System Of INDIA (Sea Exports ) ICD Patparganj Entry in terms of Section 46 of Customs Act, 1962 Annexure A + C SDF in duplicate DEPB Declaration CMC Check List CMC/Shipping Bill Number Goods of Shipping Line warehouses Concor Goods Examine CMC Printout Container Stuffing / CONSOLIDATOR STUFFING
Container Seal

TR 1 / TR II Handover to shipping line

Flow Chart of Cargo Clearance System Of INDIA ( Air Exports ) Registration & Processing Obtain Carting Order & AWB from the Carrier DIAL Counter and obtain Terminal Charges Pay DIAL charges Enter Export Cargo along with relevant documents Present papers (SB/AWB/Carting Order/TC receipt) to DIAL staff in Truck Park for docking to trucks at designated Truck Dock gate Obtain DIAL endorsement on S/B Obtain Customs number from the respective Customs Group Complete Customs Examination & Obtain DIAL Staff at bonded area gate along with cargo for binning & endorsing location on the TC Receipt/AWB Hand Over documents to Airlines Airline submits Customs approved loading sheet for unitization or bulk loading to DIAL Release of Export Cargo from ETV for the flight

Role Of PSI Agencies

Initially used PSI Agencies for certification of quality & quantity of product Assurance to importers that goods conform to technical specifications & quantities correct Used by state owned and government departments Since mid sixties also used for price verification

Preshipment Inspection (PSI) Government Agencies Pre shipment Inspection Thrird Part Inspection Agencies

Imports

Preparation of Various Types of Bill of Entries Documents Required Types of Bill Of Entries Types of Duties Procedure of Filing Bill of Entry ( EDI ) in custom as well as ICE GATE Documentation , Custom Clearance Procedures Case Study

PROCEDURE FOR IMPORT CARGO

Procedure by Importer - The importer importing the goods has to follow prescribed procedures for import by ship/air/road. (There is separate procedure for goods imported as a baggage or by post.) Bill of Entry - This is a very vital and important document which every importer has to submit under section 46. size of Bill of Entry is 16" 13". However, for computerizations purposes, 15" 12" size is permitted. Bill of Entry should be submitted in quadruplicate original and duplicate for customs, triplicate for the importer and fourth copy is meant for bank for making remittances. Under EDI system, Bill of Entry is actually printed on computer in triplicate only after out of charge order is given. Duplicate copy is given to importer.

TYPES OF BILL OF ENTRY

Bills of Entry should be of one of three types. BILL OF ENTRY FOR HOME CONSUMPTION BILL OF ENTRY FOR WARE HOUSING BILL OF ENTRY FOR EX-BOND CLEARANCE

Bill of Entry for Home Consumption:- is used when the imported goods are to be cleared on payment of full duty. Home consumption means use within India. It is white coloured and hence often called white bill of entry. BILL OF ENTRY FOR WAREHOUSING :- If the imported goods are not required immediately, importer may like to store the goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. This will enable him to defer payment of customs duty till goods are actually required by him. This Bill of Entry is printed on yellow paper and often called Yellow Bill of Entry. It is also called Into Bond Bill of Entry as bond is executed for transfer of goods in warehouse without payment of duty. BILL OF ENTRY FOR EX-BOND CLEARANCE:- The third type is for Ex-Bond clearance. This is used for clearance from the warehouse on payment of duty and is printed on green paper. The goods are classified and value is assessed at the time of clearance from customs port. Thus, value and classification is not required to be determined in this bill of entry. The columns in this bill of entry are similar to other bills of entry. However, declaration by importer is not required as the goods are already assessed

Filing of Bill of Entry:- Normally, Bill of Entry is filed by CHA on behalf of the importer. Customs work at some ports has been computerized. In that case, the Bill of Entry has to be filed electronically, i.e. through Customs EDI system through computerizations of work. Procedure for the same has been prescribed vide Bill of Entry (Electronic Declaration) Regulations, 1995.
Documents to be submitted by Importer:- Documents required by customs authorities are required to be submitted to enable them to (a) check the goods (b) decide value and classification of goods and (c) to ensure that the import is legally permitted. The documents that are essentially required are : (i) Invoice (ii) Packing List (iii) Bill of Lading / Delivery Order (iv) GATT declaration form duly filled in (v) Importers / CHAs declaration duly signed (vi) Import License or attested photocopy when clearance is under license (vii) Letter of Credit / Bank Draft wherever necessary (vii) Insurance memo or insurance policy (viii) Industrial License if required (ix) Certificate of country of origin, if preferential rate is claimed. (x) Technical literature. (xi) Test report in case of chemicals (xii) Advance License / DEPB in original, where applicable.

Assessment of Duty and Clearance The documents submitted by importer are checked and assessed by Customs authorities and then goods are cleared. Section 2(2) defines assessment as follows Assessment includes provisional assessment, reassessment and any order of assessment in which the duty assessed is Nil. Thus, assessment includes Nil assessment.
Noting of Bill of Entry:- Bill of Entry submitted by importer or Customs House Agent is cross-checked with Import Manifest submitted by person in charge of vessel / carrier. It is noted if the description tallies. Noting really means taking on record by customs officer. This date is relevant for determining rate of customs duty. Thoka number (serial number) is given in the import section. Otherwise, it is returned for clarifications. In case of EDI system, noting is done by the system itself which also generates bill of entry number.Bill of Entry is accepted only after proper scrutiny vis-a-vis import manifest and various declarations given in bill of entry and attached documents like invoice, bill of lading etc. If such documents are not attached, the authorities can refuse to accept the Bill of Entry, and hence submission of such incomplete Bill of Entry cannot be taken as date of presentation of Bill of Entry

Documents required for Custom Clearance of Import Consignment 1. Letter form your banker in favour of the Airlines authorising you to collect the Delivery Order. (If the goods are consigned to Bank). 2. Your letter addresses to Airlines, authorising the clearing agent to collect the Delivery Order from them on your behalf 3. Invoice 4. Packing List 5. Delivery Order 6. Air Waybill showing amount of freight 7. Cargo Arrival Notice cum Freight Bill. 8. Insurance certificate showing amount of premium paid for the subject shipment. 9. Custom purpose copy of Import Licence. (In case Import Licence is required) 10. Purchase Order copy. 11. Copy of order acceptance.

12. Copy of letter of credit. 13. Certificate of Origin. 14. Importers Declaration duly signed with stamp - 2 copies. 15. GATT Declaration duly sig ned with stamp- 2 copies. 16. Photostat copy of Catalogue showing items imported. In addition to this or in the absence of catalogue, a technical write -up of the various items explaining each item on the following lines: i. What is the item i.e., whether it is a Capital good or Components or Consumables or spare parts? ii. Material of construction of item, i.e., metallic or plastic or rubber etc.Also clarify whether it is an individual part or a subassembly or an assembly of various parts. iii. Whether it is a totally mechanical part or is a subassembly of mechanical and electrical items. iv. Function of the item in details so that proper classification can be done in custom tariff. v. In the case of spare parts, please highlight the same in the catalogue. vi. In the Technical write-up, of Spare parts, in case there are some parts which have been manufactured solely for that particular machine and cannot be used anywhere else, it should be explained in detail. 17. Your Importer Exporter Code Number (IEC Number) 18. Letter addressed to the Assistant Commissioner Customs, New Delhi, authorising the clearing agent to clear your Imported consignments. 19. Any other specific document which is required for clearance of your specific / specialised cargo for example chemical Analysis Report etc.

Filing of Bill of Entry (BE)

The Bill of Entry along with copies of Airway Bill, Delivery Order and Invoices etc.are filed with the Admission Clerk located at the Ground floor of the Air Cargo Complex where the process of noting is carried out, in case of manual clearance. In case of EDI, import Annexure-I along with invoice,packing list are to be to the Service Centre, situated infront of Import heavy cargo shed. Once the data is fed in the system a check list will be generated and given to Importer/CHA for verification and signature. Then the system will cross verify the detail with the IGM, if found correct/tallied Bill of Entry Number is generated and the same is passed for assessment.

Appraisement
The Bill of Entry is put up to Appraisement Department for processing the same for the First or Second Appraisement In case of Second Appraisement, Duty is assessed and paid before' the Customs Examination

Open Examination order

In case of first appraisement open examination order is obtained.To obtain the Open Examination Order, the Importer/Agent is required to contact the Shed Appraiser who will (mark and make) a remark/noting for calling the packages for Examination. He shall also indicate the name of the Examining Officer on the Bill of Entry and thereafter AAI Location Counter should be approached to get the/location Slip.

Generation of location slip

The location slip is generated at the AAI location counter on the basis of the Customs open examination order on the Bill of Entry and along with other relevant documents like Delivery Order / Sub delivery order, Copies of MAWB/HAWB.

Customs Examination Location : Examination Hall

Packages are forwarded for Customs Examination from the locations, based on the Location Slip generated by AAI. After the Customs Examination, the packages are re-packed/sealed in the presence of Importer/Agent and returned to the AAI for storage into the location.

Out of customs charge

In case of First Appraisement, after completion of the Examination, the remaining Customs formalities will be completed on the first floor. After payment of duty, Office Superintendent in the Treasury Section will give Out of Customs Charge' On completion of the Examination formalities, and also if the goods are in order, the Shed Appraiser will give Out of Customs Charge., in case of goods being cleared under Second Appraisement.

Issuance of Bill-Cum Gate Pass After obtaining Out of Customs Charge by the Importer/Agent is required to contact DIAL Billing Counter for issue of Demurrage Charges-cum-Gate Pass after payment of DIAL charges and Two copies (Green and Red) shall be issued. The green copy should be submitted to the DIAL staff located in the Examination Area and Red Copy should be retained by the Importer/Agent and proceed to the Exit Gate.

Delivery On receipt of the Green copy of the Gate Pass, the DIAL staff shall make arrangements for delivery of the packages and shall direct the Importer/Agent to go to the Delivery Gate for taking delivery of the packages. On verification of the Gate Pass and the packages by Customs Gate Officer and DIAL Staff, the consignments will be released to the Importer/Agent against clear signatures.

Flow Chart of Cargo Clearance System Of INDIA ( AIR import) Received the documents from importer CMC OBTAIN CHECK OF LIST AND BILL OF ENTRY APPRAISMENT OPEN EXAMINATION ORDER GENERATION OF LOCATION SLIP

CUSTOM EXAMINATION
OUT OF CUSTOM CHARGE ISSUANCE OF BILL-CUMGATE PASS DELIVERY OF GOODS

General Import Clearance Information

Clearance Process
No person can import or Export goods without obtaining an Importer-Exporter Code (IEC) Number along with a BIN (Business Identification Number) from the Regional Licensing Authority (Director General of Foreign Trade) The Customs authority will not clear goods unless the Importer/ Exporter has obtained Import Export Code Number or BIN Number. However no registration is necessary for the following entities; - All Ministries/ Departments of the Central Government and agencies wholly or partially owned by them - Diplomatic personnel, Counselor officers in India and the officials of the UNO and its specialized agencies - Persons importing / exporting goods from / to Nepal provided the CIF value of a single consignment does not exceed Indian rupees INR 25000/- Persons importing / exporting goods from / to Myanmar through the Indo-Myanmar border area provided the CIF value of a single consignment does not exceed Indian rupees INR 25000/

India Import Prohibitions

The following goods are subject to prohibition, restriction or surveillance:

PROHIBITS ITEMS
- Certain animals and plants and parts or products falling under CITES (Convention on International Trade in Endangered Species of Wild Flora and Fauna). Wild animals as defined under Wild Life Protection Act 1972 Meat of Wild Animals Pig Fat, Fat of bovine animals, sheep or goat Natural Abrasives - Emery, Natural Publications containing maps showing incorrect boundaries of India

CANALISED (restricted to certain importers) - Rice (through FCI) - Cereals other than seed quality (through FCI) - Petroleum Oil

General Import Restrictions

The following items are not acceptable for carriage to any international destinations unless otherwise indicated. - APO/FPO addresses. - C.O.D. shipments. - Human corpses, human organs or body parts, human and animal embryos, or cremated or disinterred human remains. - Explosives (Class 1.4 explosives are acceptable for carriage to Canada, Germany, Japan, United Arab Emirates and United Kingdom. - Fire arms, weaponry, and their parts (acceptable between the U.S. and Puerto Rico). - Perishable foodstuffs and foods and beverages requiring refrigeration or other environmental control. - Live animals (including insects) except via our Live Animal Desk (1.800.405.9052). - Plants and plant material, including cut flowers (cut flowers are acceptable from the U.S. to selected points in Canada and from Colombia and Ecuador to the U.S.).

- Lottery tickets and gambling devices where prohibited by local, state, provincial or national law. - Money (coins, cash, currency, paper money and negotiable instruments equivalent to cash such as endorsed stocks, bonds and cash letters). - Collectible coins and stamps. - Pornography. - Hazardous waste, including, but not limited to, used hypodermic needles or syringes or other medical waste. - Shipments that may cause damage to, or delay of, equipment, personnel or other shipments. - Shipments that require us to obtain any special license or permit for transportation, importation or exportation. - Shipments whose carriage, importation or exportation is prohibited by any law, statute or regulation. - Shipments with a declared value for customs in excess of that permitted for a specific destination. - Dangerous goods except as permitted under the Dangerous Goods section of these terms and conditions

RESTRICTED ITEMS
- Live Animals - other than defined under Wild Life Act 1972 - Live plants - Meat of Bovine Animals - Bird's eggs, in shell, fresh, preserved or cooked - Guts, Bladder and stomach of animals other than fish - Potatoes, Garlic - Australian Lupin Seeds - Nutmeg, mace and Cardamom - Seeds - Cereals - Inorganic Chemicals - Organic or Inorganic Compounds of (I) Precious Metals, (ii) Rare Earth Metals, (iii) Radioactive Elements of Isotopes CANALISED (restricted to certain importers) - Rice (through FCI) - Cereals other than seed quality (through FCI) - Petroleum Oil

Special Import Provisions

As per the current Import-Export Policy & Procedure, the import of goods is also permissible under the following special schemes designed to encourage export: - Export Promotional Capital Goods Scheme (EPCG) under which capital goods can be imported at a concessional/custom duty rate subject to export obligation. - Duty Exemption/Remission Scheme and Duty Entitlement Pass Book Scheme under which imported raw materials and components etc. required, as imports for export production are made available to the registered exporters in advance free of Custom duty. - Diamond, Gem & Jewelry Export Promotion Scheme and Diamond Dollar Account Scheme for promoting export of Gold silver and jewelry articles etc.

- Special Economic Zones permitted duty free import/procurement from Duties and Tax
for development of SEZ and setting up a factory in the zone, license for SSI items not required etc. General Import Duty Exemptions Concessional Rate of Duty applies for Imports of listed goods from Bangladesh, Republic of Korea and Sri Lanka under Bangkok Agreement. Concessional Rate of Duty applies for Import of listed goods if imported from SAARC (South Asian Association of Regional co-operation) countries, which includes Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. Exemption from customs duties and taxes for listed food grains imported from Myanmar, if imported through land route. Import Duty Exemptions for Export Promotion Under certain schemes the importer is exempted from customs duty if the importer has procured an advance license for the import and the imported material is to be used as raw material for exports. These schemes include Advance license based Imports similar to the Value based DEEC (Duty Exemption Entitlement Certificate), Quantity based DEEC, and other Advance License schemes

Document Requirements The following documents may be required for formal customs clearance into India:. - Manufacturer's Commercial Invoice duly Signed and if possible Bank Attested - Price list of the commodities in shipment - Manual and Catalogue , write ups or Technical Literature for laboratory or Electronic equipment - Import declaration and GATT Declaration sign and stamp by consignee.( Two copies) - Packing List duly signed - Purchase Order - Authority letter from Consignee - If the final destination is other than Mumbai then an N- Form signed and stamped is required - Import Duty/ Warehouse / Octroi/ D.O Charges in advance - Any applicable Special Import License - Certificate of origin. - Copy of IEC/BIN Number required from importer.

Value Rules for Customs Duty and Tax

The ad valorem rates of duties are subjected to the value of a product. This value is generally constituted by the elements of cost, insurance and freight. In addition landing charges are also added to the CIF at 1% of CIF value to arrive at the assessed value of goods. If the breakdown of Cost, Insurance and Freight is not clearly provided on the invoice, customs may load the value of these categories as : - Insurance at 1.125% - Freight at 20%(For Clearance of bona fide samples the duties and taxes applicable, if any are calculated on the FOB value and Freight, Insurance and Landing Fee is not loaded for the calculation of Duties and Taxes).

Import Duties India follows the Harmonized Code System of the World Customs Organization for classification of commodities (up to 10 digits). The following are the Import Duties which are presently levied on import of goods into India--1) Basic Duty OF Customs (BASIC) Section 2 of CTA 1975 maximum 10 % Import Duty, which is specified against each Heading or Sub-heading in the first Schedule to the CTA. This is popularly called Basic Custom Duty. There are different rates of duty for different commodities. This duty is also known as Schedule rate and it can be changed by an Act of parliament. The duty can also be changed by the exemption notification of the department of Revenue. All basic duties are given as per Finance Act, 1999 and are computed on the aggregate of assessable value. 2) Preferential Rate of Duty (PRE) There are also different rates of duty for goods imported from certain countries in terms of bilateral or other agreements with such countries ---which are called preferential rates of duties. The duty may be a percentage of the value of the goods (when it is called ad valorem duty) or at a specific rate.

3) Antidumping
Anti-dumping Duty, Under section 12 of the Custom Act, 1962 Antidumping duties are applied at the rates specified goods imported from specified countries to protect indigenous industry from injury resulting from dumping of goods.

4) Countervailing Duty (CVD)

Additional Customs Duty eqaul to central excise Section 3 of CTA 1975 maximimu 14 %

Additional duty equal to the excise leviable on like goods produced or manufactured in India. This is levied under Section 3 of CTA. This is commonly called "countervailing duty"(CVD). If such duty is on ad valorem basis then the value for this purpose is the total of the assessable value plus custom duty

Additional duty of customs ( SAD ) 4 % Section 3(5) of CTA 1975 Or 1 % on articles of jewellery Not applicable on advance lisc , eou , sez , epc , depb , dfrc, Additional duty of customs rs per litre on petrol and high speed diesel National calamity contigency duty rs 50 per mt on crude oil and on @ rs 1 per imported polyster yarn etc Safeguard duty section 8 ( A) cta 1975 ANTIDUMPING DUTY SECTION 9 ( A ) CTA 1975 Education Cess 2 %+ 1 % its not a levy but fees Project imports section 98.01 cta 1975 5 % minimum 5 crore project cost Bagage 9803 duty 35 % sec 77 passenger declaration section 78 valuation clearance Ritc 8 digit significance

Sections

Glance

B/E Sec 46 , shipping bill Section 50 Dutiable goods sec 12 , exemption under section 25 Valuation of goods section 14 Section 15 determination of rate of duty and tarrif valuation Section 16 for exports Section 17 assesment of duty Section 18 provisional import Section 20 reimportation Section 23 permission of duty on lost goods ,destroyed goods Section 25 power to grant exemption from duty Section 27 claim for refund Section 29 interest on duty ,Section 28 lesst demand for duty

Excise Duties There are several types of excise duties in India which are applied at the time of clearance of such goods. These duties are : - Basic Excise Duty - Special Excise Duty - Additional Duties of Excise - Cess Basic Excise Duty : This duty is specified against each sub-heading in the First Schedule to the Central Excise Tariff Act, 1985. There are however, notifications issued by the Central Government which grant either total or partial exemption from incidence of basic duty. These exemptions are both general and conditional in nature. The effective rate of basic excise duty is thus determinable only after reference to the relevant exemption notification given under the heading "General Exemptions". Special Excise Duty : This duty is leviable only on a few items. The rate of duty and the items on which it is leviable are specified under the Second Schedule to the Central Excise Tariff Act, 1985.

Additional Duties of Excise : There are a number of additional duties leviable under different enactments on various commodities. Under Additional Duties of Excise (Textile and Textile Articles) Act, 1978, duties of excise are chargeable on specified textiles and textile articles. Additional Duties of Excise (Goods of Special Importance) Act, 1957 prescribes additional duties on sugar, tobacco products and textile articles in lieu of sales tax. Cess : Different items are subject to levy of Cess at varying rates under different enactments. Additional Duties Special Additional Duty of Customs (SADD) Special additional duty of 4% SADD will be computed on the aggregate of assessable value of basic duty of customs and additional duty of customs (CVD). The SADD will be charged under Section 3(A) of Customs Tariff Act, 1985.

IEC No: Exempted Categories The following categories of importers or exporters are exempted from obtaining Importer - Exporter Code (IEC) number: 1.Importers covered by clause 3 (1) [except sub-clauses (e) and (l)] and exporters covered by clause 3(2) [except sub-clauses (i) and (k)] of the Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993. 2.Ministries/Departments of the Central or State Government. 3.Persons importing or exporting goods for personal use not connected with trade or manufacture or agriculture. 4.Persons importing/exporting goods from/to Nepal provided the CIF value of a single consignment does not exceed Indian Rs.25,000. 5.Persons importing/exporting goods from/to Myanmar through Indo-Myanmar border areas provided the CIF value of a single consignment does not exceed Indian Rs.25,000. However, the exemption from obtaining Importer-Exporter Code (IEC) number shall not be applicable for the export of Special Chemicals, Organisms, Materials, Equipments and Technologies (SCOMET) as listed in Appendix- 3, Schedule 2 of the ITC(HS) except in the case of exports by category(ii) above. 6.The following permanent IEC numbers shall be used by the categories of importers/ exporters mentioned against them for import/ export purposes.. Note: Commercial Public Sector Undertaking (PSU) who have obtained PAN will however be required to obtain Importer Exporter Code number. The permanent IEC number as mentioned above, shall be used by non-commercial PSUs.

IEC No: Exempted Categories

4.6

The following categories of importers or exporters are exempted from obtaining the Importer - Exporter Code (IEC) number :

(i)

Importers covered by Clause 3(1) [except sub-clauses (e) and (l)] and exporters covered by Clause 3(2) [except sub-clauses (i) and (k)] of the Foreign Trade (Exemption from Application of Rules in certain cases) Order, 1993.

(ii) (iii) (iv)

Ministries/ Departments of the Central or a State Government. Persons importing or exporting goods for their personal use not connected with trade or manufacture or agriculture. Persons importing/exporting goods from/to Nepal provided the CIF value of a single consignment does not exceed Indian Rs.25,000. Persons importing/exporting goods from/to Myanmar through Indo-Myanmar border areas provided the CIF value of a single consignment does not exceed Indian Rs.25,000

(v)

S.No 1 2 3 4 5

Code Number 0100000011 0100000029 0100000037 0100000045 0100000053

0100000061

7 8 9 10

0100000070 0100000088 0100000096 0100000100

11

0100000126

12

0100000134

13

0100000142

14

0100000151

15

0100000169

Categories of Importers/ Exporters All Ministries/Departments of the Central Government and agencies wholly or partially owned by them. All Ministries/Departments of the State Government and agencies wholly or partially owned by them. Diplomatic personnel, Counselor officers in India and the officials of the UNO and its specialised agencies. Indians returning from/going abroad and claiming benefit under the Baggage Rules. Persons/ Institutions/ Hospitals importing or exporting goods for personnel use, not connected with trade or manufacture or agriculture. Persons importing/ exporting goods from/to Nepal provided the CIF value of a single consignment does not exceed Indian Rupees 25000/-. Persons importing/ exporting goods from/to Myanmar through Indo- Myanmar border areas provided the CIF value of a single consignment does not exceed Indian Rupees 25000/-. Ford Foundation Importers importing goods for display or use in fairs/exhibitions or similar events under the provisions of ATA carnet. Director, National Blood Group Reference Laboratory, Bombay or their authorized offices. Individuals/Charitable Institutions/ Registered NGOs importing goods, which have been exempted from Customs duty under the Notification issued by Ministry of Finance for bonafide use by the victims affected by natural calamity. Persons importing / exporting permissible goods as notified from time to time, from/to China through Gunji and Namgaya Shipkila ports, provided the CIF value of a single consignment does not exceed Indian Rs.25,000. In case of Nathula port, the applicable value ceiling will be Rs.100,000. Ordinance factories under the Ordinance Factories Organisation. Deleted (Deleted (Ref. DGFT Public Notice No.36(RE2008)/2004-2009, dated 01-07-2008.) [Old- The Directorate of Purchase and Stores, Department of Atomic Energy,Government of India.] Non-commercial imports and exports by entities who have been authorized by Reserve Bank of India.