EXPORT PROCEDURE, DOCUMENTS REQUIRED & IEC

SUBMITTED BY : Akash Jain Abhinav Meghlan Joydeep Das

EXPORT PROCEUDRE Step 1: Selecting the Right Name Words like international or overseas in the name of the firm convey the message that the firm is engaged in export/import. Step 2: Registration The registration of the organization is another important step. The firm has to be registered under the country‟s prevalent law Step 3: Opening a bank account The firm needs to open an account with a bank dealing in foreign exchange. It makes sense to open an account with a branch which directly undertakes export-import documents and converts foreign exchange. Step 4: Quoting the permanent account number The permanent account number (PAN) needs to be quoted to apply for the importer – exporter code (IEC) number and to claim tax exemptions and deduction under IT Act. Step 5: Registering with Sales tax office The exporter need not pay sales tax while making purchases for export. To avail this benefit, the firm has to be registered with Sales tax office. The exporter needs to give to the seller Form – H, along with a copy of the import letter of credit or the export order.

Step 6: Obtaining the IEC Number The IEC number is the most important registration required by an exporter/importer. No export or import for the commercial purposes shall be made by any person without an IEC number. An IEC number can be obtained through an application to the relevant authority, e.g. The Director General of Foreign Trade (DGFT) in India. A specimen copy of the applicant can apply for the IEC number to the licensing authority – the regional office of the DGFT – in the prescribed format. The application should be accompanied by relevant documents, which are as follows:  Application form (in duplicate)  Company profile (in duplicate)  True copy of income tax PAN A/c number  True copy of sales tax certificate, if any  Government fees  Bank certificate as per format  Full address of branches in India and abroad, if any  Three passport size photographs duly signed on the reverse  Declarations in duplicate

Step 7: Registration with Export promotion councils Governments in many countries have set up Export Promotion Councils (EPCs) to provide information and to facilitate exports. The basic objective of EPCs is to promote and develop the exports of the country. Each council is responsible for the promotion of a particular group of products, projects, and services. The EPCs keep abreast of the trends and opportunities in international markets for goods and services and assist members in taking advantage of such opportunities in order to expand and diversify exports. Functions  To provide commercially useful information and assistance to members in developing and increasing their exports.  To offer professional advice to members in areas such as technology up-gradation, quality and design improvement, standards and specifications, product development, innovation,etc.  To organize overseas delegations of its members in order to explore global market opportunities.  To organize participation in trade fairs, exhibitions and buyer-seller meets  To promote interaction between the exporting community and the government both at the centre and state levels.

Step 8: Registration with the Export Credit Guarantee Corporation Exporters should register with the Export Credit Guarantee Corporation (ECGC) to secure payment against political and commercial risks. Step 9: Central Excise Goods are subject to exemption from excise duty on the final product meant for export. Where Exemption is not availed, the excise duty paid is refunded after actual export. Secondly, the refund of excise duty is made on inputs used in the manufacture of goods meant for export. Forms ARE-I have to be used in India for this excise clearance. Step 10: Registration with Chambers of commerce, productivity councils, etc. It is desirable for a firm to become a member of the local chamber of commerce of commerce, productivity councils, or trade promotion organization recognized by the Ministry of commerce. This is helpful in many ways, including obtaining a certificate of Origin. Step 11: Registration for Business Identification Number It is important to obtain a PAN, based on the Business Identification Number (BIN), from the DGFT registration office prior to filling for customs clearance of export goods.

Step 12: Export Licence, if required Many items are free for export, without any licence, if they do not fall in the negative list. The negative list can consist of items that are:  Prohibited (i.e., cannot be exported);  Restricted (through licence);or  Canalized (a licence can be obtained for a short period through a canalizing agency of the government). Any exporter has to procure a licence, if his item is not listed under the freely exportable items by the government.

DOCUMENTS REQUIRED FOR EXPORT
1) PERFORMA INVOICE- it is a provisional and preliminary invoice for an anticipated shipment which might or might not take place. It is sent to the potential importer. It helps him in placing the order and in obtaining import licence. 2) INDENT-it means the order place by the importer. It contains the detailed particulars about description, quantity, quality, price etc of the goods to be exported. An indent may be close or open. A close indent contains detailed instruction about packing, marking shipping, and insurance of goods. An open indent leaves these details to the judgement of the exporter.

3) LETTER OF CREDIT- it is a written undertaking by the importer‟s bank to the exporter or his bank. It guarantees payment to the exporter upto a prescribed amount , within a prescribed time period and against prescribed documents. It assures payment to the exporter and correct document to the importer. Letter of credit can be of the following types (a) With or without Recourse – with recourse mean the exporter can take legal steps if payment is not received with in specific period. Where letter of credit does not contain recourse clause , legal means are not available to the exporter.

(b) Revocable and irrevocable- revocable means oversees buyer can cancel or amend it without prior notice to the exporter. In case of irrevocable no change can be made without the exporter‟s permission. (c) Confirmed and Unconfirmed- in case of confirmed a bank confirms availability of funds for payment. No such confirmation is given in an unconfirmed letter of credit (d) Revolving Letter Of Credit- in this the original amount revolve as soon as the bill is paid. It is used when regular and continuous payments are required to be made to the exporter.

4) PACKING LIST – an exporter prepares the accurate packing list showing contents of every package. This list contains a description of goods. Such a list enable a importer to carry out a check of the shipment. 5) MARINE INSURANCE- it is a certificate where in the insurance company undertakes to identify the exporter against the damage or loss of goods during transit on the sea to the specified extent. It s a support to the title of the goods and should correspond with the bill of lading.

6) Bill of Lading- It is prepared by the exporter on the printed forms supplied by the shipping company. It contains the date of shipment, port of shipment, name of the ship, name of the consignor, amount of freight paid etc. Bill of lading is a very important document. It serves as a – a) Receipt/acknowledgement of the cargo delivered for the transportation, b) Contract of affrightment between the shipper and the carrier specifying their respective obligations, c) Document of title to goods mentioned therein, and d) A collateral for obtaining advances by the seller/buyer. 7) Commercial Invoice- It is a basic document containing full details of the shipment. The exporter should strictly follow the importer‟s requirements in regard to invoicing. Commercial invoices generally contain the following details: a) Name and address of the shipper, b) Invoice number and date, c) Name and address of the importer, d) Importer‟s indent number, e) Name and sailing date of the ship, f) Terms of payment, g) Description of shipment, unit price and total value, h) Insurance reference, i) Shipping marks, j) Bill of lading number, and k) Number and date of letter of credit.

8) Bill of Exchange- It is written order by the exporter to the importer requiring the latter to pay on demand or at a fixed date the sum of money specified therein. If it is payable on demand it is called a sight draft and otherwise a term draft, the documents on payments or acceptance of the bill it is called documentary bill of exchange which is more popular.

9) Certificate of Origin- Some countries grant preferential treatment to goods imported from specified notions and prohibit imports from other countries. Certificate of Origin is the evidence. It is signed by the Chamber of Commerce or export promotion council in the exporting country.

10) Consular Invoice- It is a certificate granted by the consulate of the importing country situated in the exporting country. It contains a declaration as to the true value of the goods shipped. This is required by the customs authorities in the importing country for calculating ad valorem duty on

Definition of IEC Code IEC Code is unique 10 digit code issued by DGFT – Director General of Foreign Trade, Ministry of Commerce, and Government of India to Indian Companies. Full form of IEC Code Full from of IEC Code is: “Importer Exporter Code”. To import or export in India, IEC Code is mandatory. No person or entity shall make any Import or Export without IEC Code Number. IEC Code No Notification Directorate General of Foreign Trade (DGFT) issued a Policy Circular No.15 (RE-2006)/2004-2009 Date: 27th July, 2006) for New System for issuance of Importer-Exporter Code Number. Eligibility, Legal Provisions and Conditions for IEC Code Number Eligibility condition and Legal Provisions are given for IEC Code Number Application in Foreign Trade (Regulation) Rules, 1993 Ministry of Commerce, and Notification No. GSR 791 (E), dated 30-12-1993

Application for Grant of IEC Number An application for grant of IEC number shall be made by the Registered/Head Office of the applicant and apply to the nearest Regional Authority of Directorate General Foreign Trade, the Registered office in case of company and Head office in case of others, falls in the „Aayaat and shall be accompanied by documents prescribed therein. In case of STPI/ EHTP/ BTP units, the Regional Offices of the DGFT having jurisdiction over the district in which the Registered/ Head Office of the STPI unit is located shall issue or amend the IECs. Only one IEC would be issued against a single PAN number. Any proprietor can have only one IEC number and in case there are more than one IECs allotted to a proprietor, the same may be surrendered to the Regional Office for cancellation. IEC Code Online Application Form The application can be download Form in PDF or Word. This is called "Aayaat Niryaat Form - ANF2A". Along with IEC Code Number Application Form it is necessary to submit Appendix-18B Attested by Applicant's Banker in his letter head with two passport size photo). List of Regional Authorities of DGFT and the Corresponding Office of Reserve Bank of India, Exchange Control Department You can find the list of Foreign Exchange Control Department of the RBI as given in Appendix-18D.

Validity of IEC Code No An IEC number allotted to an applicant shall be valid for all its branches/divisions/units/factories as indicated in the format of IEC given in Appendix- 18B.

Duplicate Copy of IEC Number Where an IEC Number is lost or misplaced, the issuing authority may consider requests for grant of a duplicate copy of IEC number, if accompanied by an affidavit.

Surrender of IEC Number If an IEC holder does not wish to operate the allotted IEC number, he may surrender the same by informing the issuing authority. On receipt of such intimation, the issuing authority shall immediately cancel the same and electronically transmit it to DGFT for onward transmission to the Customs and Regional Authorities.