Professional Documents
Culture Documents
(I)
Preliminaries For Exports Registration IEC, RCMC, EPC, C.Excise
Registration of Exporters/Importers
All intending importers/ exporters are required to register themselves with the following authorities before commencing business; DGFT( regional authority) for obtaining Importer-Exporter Code Number (IEC Number) Concerned Export Promotion Councils / Federation of Indian Export Organization) for obtaining Registration- cum Membership Certificates (RCMC) Registration with Value added Tax Authorities Registration with Central Excise Authorities
Obtaining PAN Exporters & importers who obtain the IEC number are also required to obtain PAN. An application in form number 49A has to be submitted
Other Registrations
Any exporter who wants to export his goods needs to obtain PAN based Business Identification Number (BIN) from DGFT prior to filing of Shipping Bill for clearance of export goods. The exporter must also register themselves to the authorized foreign exchange dealer code & open a current account in the designated bank for credit of any drawback incentive. All exporters intending to export under export promotion schemes need to get their licenses, DEEC Books etc.
Categories of Exporters
Exporter Means a person, who exports or intends to export and holds an importer-exporter code number, unless otherwise specifically exempted Manufacturer Exporter Manufacturer exporter means a person, who exports goods manufactured by him, or intends to export such goods Merchant Exporter Merchant exporter means a person, engaged in trading activity and exporting or intending to export goods. A status holder means an exporter recognized as Export House, Trading House, PTH etc by DGTD/ Development Commissioner.
Deemed Exports
Deemed Exports refers to those transactions in which goods supplied do not leave the country & payment for such supplies is received either in Indian Rupees or in FFE. Following categories of supplies by main/sub contractors shall be regarded as deemed exports under FTP, provided goods are manufactured in India: Supply of goods under advance authorization/ DFIA Supply of goods to EOUs/ STPs/ EHTPs or BTPs
(III)
Shipping Documents & Terms Used In Shipping
GR Form
GR Form is an exchange control document required by RBI. The exporter through the GR Form has to assure to the RBI that the export proceeds will be realized within 180 days. It is submitted in duplicate, to the customs, at the port of shipment along with the Shipping Bill & the customs certify the value declared by the exporter & also record the assessable value. Customs returns one copy to exporter & retains the original for transmission to RBI The exporter is required to negotiate the shipping documents, through his bankers (authorized dealers), along with the GR Form, within 21 days of the shipment. The authorized dealer reports to the RBI after negotiation of documents & has to retain the documents till the full exports proceeds have been realized, & thereafter send the documents to RBI.
SDF Forms
On account of introduction of EDI system at certain customs offices, where shipping bills are processed electronically, the existing declaration in Form GR, is replaced by declaration in Form SDF ( statutory declaration form) . SDF form is to be submitted in duplicate, annexed to the relative shipping bill to the concerned commissioner of customs. After verifying & authenticating the declaration, the commissioner hands over to the exporter, exchange control copy of the shipping bill & the SDF form annexed thereto. This must be submitted to the authorized dealer, within 21 days from the date of export, along with other shipping documents for negotiation. The manner of disposal of the shipping bill & the SDF form annexed thereto is the same as that of the GR form.
SOFTEX Forms
The exporter should submit declaration in Form SOFTEX in triplicate in respect of export of computer software & audio/ video/ television software to the concerned designated official of GOI at STPI/ EPZ/FTZ/SEZ for valuation/ certification not later than 30 days from the date of invoice. The designated official may also certify the SOFTEX forms of EOUs which are registered with them. In respect of long duration contracts, where the exporter bills the client periodically, the exporter can submit a combined SOFTEX form of all invoices including advance remittance. Disposal of SOFTEX forms is done as per prescribed procedure in Export Of Goods & Services Regulations, 2000. Duplicate copy of SOFTEX along with a copy of the invoice may be retained by authorized dealers.
Mates Receipt
Mates receipt is a receipt issued by the commanding officer of the ship when the cargo is loaded on the ship.This receipt is a prima facie evidence that goods are loaded in the vessel. Mates receipt is first handed over to the Port Trust authorities & on receipt of port dues, the Port Trust authorities, hand the mates receipt to the exporter or his agent.
Bill of Lading
Bill of Lading (B/L) is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee or his order , provided the freight & other charges as mentioned have been duly paid. It is also a document of title to the goods & as such is freely transferable by endorsement & delivery. B/L serves three main purposes : As a document of title to the goods As a receipt from the shipping company As a contract for the transportation of the goods.
Claused B/L Transshipment or through B/L Stale B/L Freight paid B/L
Freight collect B/L B/L issued when freight is not paid at the time of shipment& is to be collected from consignee is a freight collect B/L
Shipping Bill
Shipping Bill is an important document required by the customs authorities for allowing shipment. It is prepared by the exporter & it contains the name of the vessel, name of port of discharge, country of final destination, , exporters name & address, details about packages, number & description of goods, marks & numbers, quantity & details about each case, FOB price, total number of packages with the weight & value and the name & address of the importer.
Other Documents
Other documents as shown in the following pages are also necessary and required to carry out various formalities for shipment & negotiation of documents and for meeting the regulations in the importing country.
Packing List
The exporter prepares the packing list to facilitate the buyer to check the shipment. It contains the detailed description of the goods, packed in each case, their gross & net weights etc. The packing list also contains all basic information about the export order like name & address of the buyer & the exporter, purchase order number & date etc. The packing order is the basic document used in the preparation of further documents like proforma invoice & so on.
Proforma Invoice
The starting point of the export contract is in the form of offer made by the exporter to the foreign customer. The offer made by the customer is in the form of the Proforma Invoice. It is a quotation given as a reply to an enquiry. It normally forms the basis of all trade transactions & enables importer to obtain import license, if required.
Commercial Invoice
Commercial invoice is the basic export document & contains all information required for making other documents. It is prepared by the exporter after the execution of the export order giving details about the goods shipped It should be addressed to the consignee as per the letter of credit. It is the basic evidence of the contract of sale or purchase & therefore must be prepared strictly in accordance to the terms 7 conditions mutually agreed between the buyer & seller. It should contain basic details as in the proforma invoice, the detailed description of goods, as well as the final packing lists and the markings on packages plus details of shipment of goods, name & number of vessel/ voyage. This document is used for various export formalities, incentive claims, negotiation of documents , accounting etc.
Certificate Of Origin
The importers in several countries require a Certificate Of Origin without which clearances to import is refused. The certificate of origin states that the goods exported are originally manufactured in the country whose name is mentioned in the certificate. Certificates of origin are required when:
Goods produced in a particular country are subject to preferential tariff rates in the foreign market at the time of importation The goods produced in a particular country are banned for import in the foreign market.
Consular Invoice
Consular Invoice is a document required mainly by the African & certain other countries like Kenya, Uganda, Tanzania, Mauritius, Australia, New Zealand Nigeria, Ghana etc. The exporter is required to submit 3 copies of the Commercial invoice & related documents for certification to the respective Embassy & one copy is returned to him after certification. Balance copies are sent by the Embassy to the customs department of the importing country for verification upon arrival of goods & calculation of the import duty payable. The consular certified copy is negotiated by the exporter along with other documents.
Customs Invoice
Countries like USA, Canada etc need customs invoice It is generally made out on a special form presented by the customs authorities of the importing country & helps for allowing entry of goods in the importing country at preferential tariff rates. The invoice forms are generally available at the consular office of the importing country and are required to be signed and witnessed after duly filling the same.
III(b)
Terms Used In Shipping (INCO Terms)
INCO Terms
Incoterms are internationally accepted commercial terms, developed in 1936 by the International Chamber of Commerce (ICC), in Paris. Incoterms 2000 define the respective roles of the buyer and seller, in the agreement of transportation and other responsibilities and clarifies, when the ownership of the merchandise takes place. Incoterms are used in union with a sales agreement or other methods of sales transactions and define the responsibilities and obligations of both, the exporter and importer, in Foreign Trade Transactions.
INCO Terms
Incoterms 2000, is mainly concerned with the loading, transport, insurance and delivery transactions. Its main function is the distribution of goods and regulation of transport charges. Another significant role played by Incoterms is to identify and define the place of transfer and the transport risks involved. Incoterms make international trade easier and help traders in different countries to understand one another & are most widely used international contracts
CIF Contract
Cost, insurance & freight means, that, the seller has the same obligations as under the FOB contract, but with the addition, that, he has to organize the marine freight & procure marine insurance, against the buyers risk of loss or damage, to the goods during carriage. The seller contracts the insurance and pays the premium and also pays the ocean freight.
CIF Contract(cont)
The seller has the following additional obligations as compared to FOB Contract :
To arrange for the carriage of the goods to the named port of destination by the usual route in a sea-going vessel & to pay its costs & freights. To obtain cargo insurance as agreed in the contract & to provide the buyer with the insurance policy or other evidence of insurance cover.
The above obligations are excluded from the buyers obligations. Buyer still has the obligations, as indicated in the buyers obligations, in FOB contracts.
(IV)
Export Procedures
IV(a)
Excise Clearance For Exports
Excise Clearance Under Rule 18 & Rule 19 of Central Excise Rules (cont)
(b) (Rule 19 of Central Excise Rules).
The other procedure is to export goods under bond without payment of excise duty. On actual exportation of goods and on presentation of necessary proofs regarding exports, the bond is released. Regular Exporters can have a running bond for this purpose. A merchant exporter has to furnish bond in form B-1 & certificate in CT-1.
IV(b)
Shipment Of Goods (Sea Shipment)
Exports By Air
The exporter must have an IEC (Import Export Code) number issued by DGFT (Director General of Foreign Trade). He has to file a Shipping Bill which has to be assessed by Customs and the goods are also subject to examination by Customs before LEO (Let Export Order) is given. This document can be filed with Customs up to 15 days before the goods are actually exported. Like in case of imports, in exports too, the document for assessment and examination by Customs Shipping Bill, is processed through the EDI.
IV(c)
Marine Insurance For Export Cargo
Introduction
Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination. Cargo insurance is a sub-branch of marine insurance, though Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines); Hull; Marine Casualty; and Marine Liability. In the 19th. century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardized clauses for the use of marine insurance, and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication.
IV(d)
Quality & Preshipment Inspection
Introduction
For sometime now, a number of importers have used the services of independent inspection companies, to certify the quality & quantity of products , they want to import. These inspections, mostly conducted prior to shipment & in the country of exports, assure the importer that the goods conform to the technical specification & quality standards laid down in the contract & that the quantities exported are accurate. Regulations in many countries, require that goods imported by government departments to be inspected & certified for quality & quantity by independent & competent inspection authorities. Over 30 developing countries in the world use the services of preshipment inspection (PSI) agencies to control unfair or improper practices.
Introduction
The basic objectives of PSI are: To carry out physical inspection of the goods to ensure that they conform to the terms of the contract To verify their prices & To ensure that they are classified by the exporter under the correct tariff classification of the importing country. GATT Agreement recognizes PSI by several nations. The purpose is to safeguard national financial interests (prevention of capital flight and commercial fraud as well as customs duty evasion, for instance) and to compensate for inadequacies in administrative infrastructures.
ECGC
Export contracts are open to risks which can generally be categorized into two broad types: POLITICAL RISKS Can be caused by outbreak of war or civil war, in the importers country or coup or an insurrection, which can result in delay or non-receipt of payments. Same problems may arise due to macro-economic or balance of payments problems, in the importers country. COMMERCIAL RISKS These are insolvency or protracted default in payment by the buyers.
ECGC
The Government set up the Export Risks Insurance Corporation (ERIC) in 1957 to provide export credit insurance support to Indian exporters. This was transformed to Export Credit & Guarantee Corporation Ltd. (ECGC) in 1964 & then to Export Credit Guarantee Corporation of India Ltd. In 1983. ECGC is wholly owned by GOI & functions under the Ministry of Commerce. ECGC is managed by a Board of Directors comprising representatives of the Government, RBI, Banking , Insurance & Exporting community. The goal of ECGC is to provide cost effective insurance and trade related services to meet the needs & expectations of the exporting community.
IV(f)
GSP Rules Of Origin
SAPTA
The agreement establishing SAPTA (SAARC preferential Trading Agreement) was signed by 7 SAARC members namely India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka, Maldives in 1993 & came into operation in 1995.
Four rounds of trade negotiations have been completed and more than 3000 tariff lines are under tariff concessions among the SAARC countries.
(v)
Benefits Of Exports (i) Excise Clearance Benefits/Rebate Income Tax Benefit
Conditions & Limitations ( Without payment of CED) The exporter is required to submit a General Bond ( Surety or security) to the Assistant Commissioner of Central Excise or the Maritime Commissioner for a sum equivalent to the duty chargeable on the goods. The excisable goods must be exported within 6 months from the the date on which they were cleared for exports from the factory of manufacturer or his warehouse.
VI
Shipment & Transport Sea, Air, Rail, Road, Pipeline
VII
Role Of Overseas Agents & Remittance Of Commission
Overseas Agents
Selling through overseas agents is a strategic entry option open to exporters. Like all options, it has certain advantages & demerits. Overseas Agents
Selling through an overseas agent is an effective strategy. The agents serve as a source of market intelligence. The agent is in a position to render his advice to exporter or new methods and strategy for pushing up sales of your products. He also provides you support in the matter of transportation, reservation of accommodation, appointment with the government as and when required by you.
(VIII)
Various Export Promotion Schemes
Export Promotion schemes & Incentives Duty Exemption Schemes- Advance license
Advance license (authorization) issued to allow duty free import of inputs, which are physically incorporated in export product (making normal allowance for wastage). Advance license holders are exempted from payment of basic customs duty, additional customs duty, anti dumping duty, education cess & safeguard duty. Consumables such as fuel, oil, energy, catalysts, etc are also allowed under this scheme. Available to a manufacturer exporter / merchant exporter Also available to manufacturer of intermediate products used by the main exporter & for deemed exports.
Export Promotion Schemes & Incentives Duty Exemption & Remission Schemes
Duty Exemption schemes enable duty free import of inputs required for export production. These schemes are : Advance Authorization Duty Free Import Authorization (DFIA) : salient features of Advance Licensing Scheme & DFRC have been clubbed to evolve a new scheme named as DFIA. The new scheme offers the facility to import required inputs before the exports & allows transferability of scrip once the export obligation is fulfilled. This scheme allows duty free import of specified inputs for export production as per standard Input- Output norms. DFIA is allowed under actual user condition till export obligation is fulfilled Minimum of 20% of value addition is required for such authorization.
Export Promotion Schemes & Incentives Duty Exemption & Remission Schemes (cont)
Duty Remission Schemes enables post export replenishment/ remission of duty on inputs used in export product. Duty remission scheme consists of Duty Entitlement Passbook Scheme (DEPB) & Duty Drawback scheme (DBK)
Export Promotion Schemes & Incentives Export Promotion Capital Goods (EPCG) Scheme
EPCG scheme: introduced in 1990 to enable the import of capital goods at concessional rate of duty (3% at present`) subject to an appropriate export obligation accepted by the exporter. The specified export obligation needed to be fulfilled over a specified period in a prescribed manner. The aim of the scheme is to reduce the incidence of high capital costs on export prices to make export competitive in international markets. The import duty slab on capital goods was quite high when this scheme was introduced. However, the import duties have been reduced in the succeeding years
Export Promotion Schemes & Incentives Export Promotion Capital Goods (EPCG) Scheme (cont)
The export obligation is required to be fulfilled by the export of goods manufactured or produced by the use of the capital goods imported under the scheme. Capital goods including spares, jigs, fixtures, dies & moulds can also be imported. The export obligation of the user of this scheme is linked to the amount of custom duty saved (presently 8 times) There are no restrictions on the quantum of domestic sales in case of imports under EPCG.
(IX)
SEZ, EHTP,STP & EOUs
EOU Scheme
The Export Oriented Unit (EOU) Scheme, which had been introduced in the early 1980s remains in the forefront of countrys export production schemes. The scheme has witnessed many changes over the last twenty-six years in the context of ever changing economic realities. However, the basic premise remains the same. This premise is that the exporters are treated as a special class and given the required tariff, non-tariff and policy support to facilitate their export efforts. Thus, today the EOU Scheme has emerged as a dynamic policy initiative facilitating the exporting community in the task of increased exports
EOU Scheme
There is a separate Export Promotion Council for EOU & SEZ units. 100% EOUs fall into 3 categories (a) EOUs established anywhere in India and exporting 100% products except certain fixed percentage of sales in the Domestic Tariff Area (DTA) as may be permissible under the Policy. (b) Units in Free Trade Zones or Special Economic Zones (SEZs) and exporting 100% of their products. (c) EOUs set up in Software Technology Parks (STPs) and Electronic Hardware Technology Parks (EHTPs) of India, Bio-technology Parks (BTP), for development of Software & Electronic Hardware & Bio-technology respectively.
Import Procedure
Can import capital goods, R.M. SAME AS EOUs consumables, packing material,etc without payment of customs duty. Similarly, these can be procured indigenously without payment of CED Second hand capital goods can also be imported. They have to achieve positive NFE.( Net foreign Exchange Earnings) SAME AS EOUs
Minimum Min investment in plant & machinery & There is no such limit for SEZs. Investment building is Rs.100L before stating prodn.
Green channel
Customs Clearance
Export Of Generally all final prodn to be Final Prod. exported except rejects up to prescribed limit.
SEZs
In case of SEZs, suppliers do not have to pay CST.
Supplies made by Indian suppliers Supplies to SEZs are are deemed exports & suppliers exports and all export are entitled to benefits of deemed benefits are available. exports General infrastructure available to SEZ infrastructure is EOU units are not as good as those normally much better. available to SEZs.