“FUNCTIONAL PROCEDURE OF CUSTOM CLEARANCE”

A PROJECT REPORT SUBMITTED BY SULABH MAHETA (08084) AMIN PATTANI (08100) BATCH – 2008-2010 TO DIRECTOR (PGDM) In partial fulfillment of the requirements of Tolani Institute of Management Studies, Adipur For the award of the degree of Post Graduate Diploma in Management

TOLANI INSTITUTE OF MANAGEMENT STUDIES ADIPUR – 370205 JULY - 2009
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ACKNOWLEDGEMENT
We are very thankful to Tolani Institute of Management Studies who give us such opportunity to work out for project on foreign trade. We also express our gratitude to Mr. Apurva Maheta for his precious help during the entire course. We are very thankful to all employees of Shakti Forwarders Pvt. Ltd., Gandhidham for supporting and providing us the necessary knowledge that would help in our future quests. During our training period, we have not only learnt the standard Custom Clearance procedure but also learned about other aspects of for running the shipping departments smoothly. The various department of the organization work in close co-ordination with each other in order to achieve a common end. We would also like to thanks Mr. Suresh Maheta, Mr. Rajesh Naiyer, Mr. Paresh chaturvedi, Mr.Dharmesh, Mr. Manoj for their guidance which help us to complete our project. Once again we heartly thankful to Shakti Forwarders Pvt. Ltd who help us in making a project of procedure of custom clearance for import and export and gives us an opportunity to learn under kind guidance and learning environment.

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PREFACE
We know that training is for the development and enhancement of the knowledge in particular fields. It can never be possible to make a mark in today’s competitive era only with theoretical knowledge when industries are developing at global level, practical knowledge of administration and management of business is very important. Hence, practical study is of great importance to PGDM student. With a view to expand the boundaries of thinking, we have undergone 2rd SEM TRAINING at Shakti Forwarders Pvt. Ltd. we have made a deliberate to collect the required information and fulfill training objective.

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EXECUTIVE SUMMRY
As a partial fulfillment of PGDM all students are required to undergo training for 2 months. With respect to that this we have prepared this project report on “Functional Procedure of Custom Clearance” undertaken at Shakti Forwarders Pvt. Ltd., Gandhidham. We have selected this topic to know about the custom process. This report also tells about present scenario of Indian shipping and also tells about development in shipping in Gujarat. Another objective is to know Documentation process done by CHA (Clearing House Agent) to clear the goods from CUSTOM. Our secondary objective is to know the relation between CHA and importer as well as exporter. The report also describes that why shipping line invest their amount to purchase ship and type of ship for transportation of goods. This report also tells that as that how to calculate the DUTY on import-export goods. We also describe that which Documents are useful for CHA, IMPORTER and EXPORTER.

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OBJECTIVE OF THE STUDY
    To know the present scenario in Indian shipping line. To know the relation between the CHA and exporter as well as importer. To know the documentation process done by the CHA. To know the future of Indian shipping.

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2 Import 4.2 Industry 1. Methodology 3. Introduction 1. 2 3 4 5 7 8 9 9 10 27 29 30 30 46 54 55 56 56 6 . Data Collection and Explanation 3.3.CONTENTS Description Acknowledgement Preface Executive Summary Objective of the Study List of tables List of figures Abstract 1. Company 2. Conclusion Appendices Bibliography Page No. Recommendations 5.1 Export 3.1 Project 1.

13 13 13 7 . 1 2 3 Table Title Performance of Major Ports Growth of state GDP Largest Port by State Page No.LIST OF TABLES Sr No.

11 23 24 8 .LIST OF FIGURES Sr No. 1 2 3 Table Title Ports of Gujarat Break Up of Commodities Handled at Major Ports Forecast for Container Port Capacity Page No.

More and more multinationals are registering their entry into the Indian market. there is increasing requirement of reliable and dependable integrated logistics solutions providers who can provide comprehensive.1. professional and dependable logistics support to the industry. In this regard there are several logistic companies and custom house agents providing their services on the behalf of the exporters and importers to facilitate the trade between them. is a leading name for custom clearance. With the opening up of the Indian economy. the international trade has been increased significantly as there are less restriction on exports and imports. 9 . Export is the most important aspect of earning foreign exchange. Shakti Forwarders Pvt. This results in substantial amount of growth in both exports and imports. which also includes the most important aspect of custom clearance. In the development of any country’s economy. INTRODUCTION 1.1 Project: In view of the rapidly and constantly changing business environment globally and fast evolving trade and commerce scenario in India vis-à-vis global market. The procedure of both the exports and imports are time consuming and complicated. Over the years they have operated smoothly with their wide spectrum of personalized services. exports play a crucial role. The imported products are now in well reach of Indian customers. Ltd. A country should have to be equipped with natural resources. The living standard has been improved. These custom house agents and logistics companies take over the responsibility of sending the goods from the exporter’s premises to the importer premises. keeping the same in mind and with the vision to provide quality and professional comprehensive logistics solutions to the international & domestic trade. so that it can sell these resources into the international market.

2 Industry: Indian shipping scenario: India has 12 major ports and 185 minor/intermediate ports. is carried out through maritime transport along its 7617 km long coast line. 2005. The subject of shipping. Indian shipping has remained a deferred subject till independence.7 years as compared to the international average of 17 years . India has the largest merchant shipping fleet among the developing countries and its merchant shipping fleet ranks 18th in the world. India is also among the few countries that offer fair and free competition to all shipping companies for obtaining cargo. The shipping corporation of India (SCI). India has a total of 686 ships comprising 8. it has been shifted to the ministry of transport and shipping. till 1949 and subsequently. in the beginning. the country’s largest carrier. In 1947.01 Million Gross Tonnage (GT) and 13. owns and manages 82 ships with 2. the necessity for a centralized administrative organization has been felt. 10 . There is no cargo reservation policy in India. in terms of fleet size. the directorate general of shipping with its headquarters at Bombay has been established with the objectives of promotion and development of Indian shipping industry. aggregate of exports and imports. Accordingly in September 1949.54 million GT and accounts for 40 percent of national tonnage. Another silver lining is the average age of the India’s merchant shipping fleet is only 12. aiming at the total development of the industry. Only after independence. the government of India has announced the national policy on shipping. the development of shipping has attracted the state policy. Accordingly in September necessity for a centralized administrative organization has been felt.but. sadly.28 Million Dead Weight Tonnage (DWT). India’s share. has been dealt with by the ministry of commerce. In order to accelerate the developmental efforts. As on April 1. Over 90 percent by volume and 70 percent by value of India’s overseas trade.45% of the world’s cargo carrying capacity. in 1951. constitutes only 1.1.

Gujarat. The prominence of Gujarat is by virtue of having nearly 1600 kms long coastline. which accounts for 1/3rd of the coastline of India and being the nearest maritime outlet to Middle East. of which Kandla is a major port. there are 41 ports. In 1991. situated on the western coast of India. 11 are intermediate ports and 29 are minor ports under the control of Gujarat maritime board. of coastline of Gujarat. is a principal maritime state endowed with favorable strategic port locations. Africa and Europe. government of India initiated various economic. Gujarat state is one of those frontline states that can take up the policy of liberalization and privatization announced by the government of India through the process of globalization. Out of remaining 40 ports. through the policy of liberalization to enhance industrial and trading activities.Introduction to Gujarat port: Ports of Gujarat Along the 1600 kms. trade and industrial reforms. 11 . The rationalization of import duties and stress on export promotion has seen imports increasing by 24% and exports by 25%.

Export of salt and import of coal are other major potential cargo apart from the existing items of import and export. The large business houses want to import industrial raw-materials and want access to the international market through sea routes. The logic of locating these industries is rather clear.000 crores are planned at Varga. also offers tremendous potential for marine fisheries and subsequent processing and exports. From the below data we can find that Kandla port is handling more cargo than all over India.16. Investments of over Rs. which is definitely more viable and feasible as against the surface transport or air transport.000 crores are taking place at Hazira. Over and above this.Gujarat itself is experiencing a phenomenal interest in investments both from megaindustrial sectors within the country and also from top multi-national abroad. the massive spurt in industrialization also opens up scope for import of industrial raw materials and export of finished goods to the global market through ports. As indicated earlier.20. Gujarat ports are handling more cargo then other states and by the year by year cargo handling is increasing. viz. 12 . one can perceive a particular trend which is manifesting itself . Investments to the tune of $30 billion are already in the pipeline.15. any development in the hinterland state has a direct impact on Gujarat ports.investments are converging in and around potential port sites. Rs. In all over India. The vast coastline of Gujarat.000 crores are planned in areas near Pipavav and near Jamnagar port locations. From an analysis of the present investments and those that are flowing in. Rs.

ports are playing major role for growth of state GDP (Gross Domestic Product) below are the figure for the year 2006-2007 13 .In Gujarat.

The cost of using the service (freight) can be quoted from a fixed tariff. etc like which are carried in complete shiploads. but merely trades in all parts of the world in search of cargo. primarily bulk shipments.” Basically the shipping companies provide services in two ways 1. grain. that is oil company. It is a chartered ship prepared to carry anything anywhere. timber. fertilizers. They operate on a regular scheduled service. They sail on scheduled dates/times whether they are full or not. Liner Ships:Liner ship operates on a fixed route between two ports or two series of ports. Container ships in deep sea trades and roe ship in the short sea trades feature prominently in this field. sugar. ores. Tramp tankers are specialized vessels. 2. TRAMP SHIPS LINER SHIPS Tramp Ships:Tramp ship or general trader.Shipping Company: “Shipping Company is companies which invest his capital in purchase of ships and provide transport service through the sea to its customers is known as shipping company. etc to suit their own individual/market needs. motor manufacturer. They may be under charter or be operated by an industrial company. Different Types of Ships:- 14 . Its cargoes include coal. does not operate on a fixed sailing schedule.

3. 2.off Ships:- 15 .1. 6. Container ships Roll-on/roll-off ships Break-bulk ships Crude carries Dry-bulk carriers Gas carriers Container Ship:-   Container ship is also known as a ‘BOX SHIP’ Container ships cater to only containerized cargo and generally have cranes on board. Roll – on / Roll . 4. 5. They can store up to 4 tiers of containers below the main deck and up to 3 tiers above deck.

The hull opening is either on the side of the ship or on its stern (rear).This ship have an advantage in that specialized lifting equipment is not required. They are essentially floating garages. such as railroad cars. or cargo that could be wheeled into a ship.  Break-Bulk Ships: 16 . Roll-on/Roll-of ships therefore have a portion of their hull that opens up and acts as a ramp on which the vehicles are driven before being parked on the many decks of the ship and secured with chains. even for the heaviest of loads. It takes long time to load such vehicles over the rail it is preferable to load them by rolling them onto the ship. such as automobiles or trucks. since the cargo rolls under its own power or pulled by a tractor. Roll-on/roll-of ships were created to accommodate cargo that was self propelled.

The main problem with a break-bulk ship stems from its labor-intensive loading and unloading because each unit of cargo handles separately. Due to increasing role of RORO (Roll-on/Roll-off) ships. in bags. Break-bulk cargo ships are multipurpose ships that can transport shipments of unusual sizes. break-bulk ships share of international trade is decreasing. The advantage of break-bulk ships is that they can call at just about any port to pick up different kinds of cargo loads. container ships. or in crates. unitized on pallets.    Crude Carriers:- 17 . giving them a flexibility that container ships do not yet have.

 Crude carriers are the bulk ships dedicated to the transport of petroleum products. such as gasoline or diesel fuel.  VLCCs and ULCCs are such large ships that they can call on only a few ports in the world. Dry-Bulk Carriers: 18 . can reach 35 meters(115 feet) they need very deep ports for berthing. when loaded. since their draft. whether unrefined or refined.  The crude carriers are also known as VLCC (Very Large Crude Carriers) and ULCC (Ultra Large Crude Carriers).

 Dry bulk ships carry agricultural products.  Dry-bulk ships have several holds in their hull. as well as coal. scrap iron. and other bulk commodities.  Dry-bulk ships are generally small enough to fit through the PANAMA CANAL. ores. in which non-unitized cargo is placed. Dry-bulk carriers operate on the same basis as oil tankers in that they are chartered for a whole voyage. Gas Carriers: 19 . dry chemicals. such as cereals.

only part of which are visible above their main deck. Another important bulk trade is the transportation of Liquefied Natural Gas (LNG) and of Liquefied Petroleum Gas (LPG). owner of a huge trucking 20 . Malcolm McLean. These types of carriers have a very distinctive shape.  The LNG and LPG trades tend to be slightly different than the average bulk transport. a few decades back. as they are used in a particular trade for long periods of time. These ships hold several spheres of compressed gasses. on long-term contracts-called time charter parties and therefore nearly have a sailing schedule. not unlike liner ships. Containerization: ‘Containerization’. the term very familiar to present day shipping industry is a completely unknown concept.

More than 90% of world merchandise trade is carried by sea and over 50% of that volume is containerized. in consequence. who has first conceived the idea of containerization by transporting containers though ‘ideal-x’ in 1956 and initiated a revolution in the history of shipping industry. cargo has to be loaded first into the truck and later truck is to driven to the port. Shipping has always provided the most cost-effective means of transportation over long distances and containerization has played a crucial role in world maritime transport. For completing the exercise. In today’s era of globalization. Almost anything can be stored in a container. ships are detained in the port for about ten days for the entire process of unloading and loading. international trade has evolved to the level where almost no nation can be self-sufficient and global trade has fostered an interdependency and interconnectivity between countries. This process has greatly facilitated in two. but they are particularly useful for 21 . What is meant by containerization? Containerization is the practice of carrying goods in containers of uniform shape and size for shipping. Before containerization. This has been a cumbersome process and. With the arrival of containerization. after unloading the containers and loading them again into the ship. at their own place. unload the goods at the port and them into the ship at the port. and containers are brought to the container yard (inland container depot) for shipment. Shipping is truly the lynchpin of global economy and international trade. consumed a lot of time. The process of containerization has decongested the ports that are heavily crowded.company in USA. shippers have started stuffing into containers.

Exporters need to go to the seaport for export of goods. early. The use of containers has.66% to total cargo by 2010-11. and now carry around 90% of all manufactured goods by sea. it increased to 16% in 2005-06 and is estimated to further increase to 22. India’s containerization has over 70% of total exported cargo.7% by 2010-11.the transport of manufactured goods. 22 . The transporters in developed countries have started making use of containerization. containers have revolutionized sea-borne trade. giving the necessary boost to improve the required infrastructure to containerization. It is a method of distribution of goods using containers. for encouraging export industry. Since 1950s. and around 40% imported cargo. The Government of India has pursued a policy of developing a number of Inland Container Depots and Container Freight Stations to facilitate modal interchange and distribution of cargo and most importantly to avoid awkward customs procedures from the waterfront. The robust growth of India’s manufacturing industry has pushed up India’s containerization. The use of containers has. indeed. Different countries are giving logistic support. Now. facilitated carriage of goods. facilitated carriage of goods using containers. developing countries too are taking a greater advantage in using containers for transportation of goods. Containerization at major ports of India contributed about 11% of total cargo handled at those ports in 2000-01. indeed. Instead the goods sent to inland container depot/ container freight station for sending to the destination. developing countries have started making use of containerization. early now. Containerization is to contribute about 22.

The projected global container demand and container port capacity illustrates that there will be a huge difference between container port demand and capacity in the next four to five years. which is ready for big stride. This is one of the major challenges for global container trade.5% per annum. Globalization has spurted merchandise trade. while container port capacity is growing at an average 4. Extra capacity should be built to meet the growing demand. There will be requirement for additional port capacity to be built if the current trend and port utilization level is maintained by 2010.2% per annum.Challenges Container port demand and capacity imbalance: In view of the buoyant global merchandise trade scenario. 23 . During the last four years. container port demand has been growing rapidly. world container traffic has been growing at over 9.

Types of containers-: There are different types of containers. Liquid cargo containers-: These are ideal for bulk liquids. The popular types are: 1.Africa’s exports of perishable products. General purpose containers-: There are the most common type of containers and are the ones with which most people are familiar. they are fitted with electrical equipment for supply of necessary electricity. Based on length of the container. 4. designed to carry specific commodities. fruit concentrates. Dry bulk containers-: These are built especially for the carriage of dry powders and granular substances in bulk. the container is generally known as a 20 ft container or 40 ft container. 3. and are designed to carry cargoes at temperatures reading down to deep frozen. 2. These containers are ideal where height of the cargo is in excess of height of the standard general purpose containers. Open top/open sided containers-: These are built for heavy and awkward pieces of cargo. can fit into these containers. in practice. vegetable oils. Bulk liquid bags. 5. For refrigeration. such as wine. Both liquid and solid substances can be loaded in these containers. Hazardous or dangerous cargo can not be loaded into general-purpose containers. 6. detergents and various other non-hazardous chemicals. Each general-purpose container is fully closed and has width doors at one end for access. Reefer containers (refrigerated) -: These play an important role in South . Hanger containers-: 24 .

They are used for the shipment of garments on hangers. 25 .

TYPE OF CONTAINER USED IN SHIPMENT HIGHCUBE BULKERS REEFERS FLAT RACKS DRY CONTAINER TANKS ROOLTRALERS OPEN TOPS 26 .

landing and container charges. fumigation. The services rendered by the custom house agent are not merely limited to the clearing of the import and export consignment. dock fees. the transportation of the export goods to the customs station or the import goods from the custom station to the importers premises. repairing and examination charges. The CHA also renders the service of loading/unloading of import or export goods from/at the premises of the exporter/importer. carrying out of various statutory and other formalities such as payment of expenses on account of de-stuffing/ pelletisation terminal handling. survey /amendment fees. weighment. The CHA is ordinarily reimbursed by the importer/ exporter for whom the above services are rendered. measurement of the export goods. statutory labour etc this expenses paid on behalf of importer and exporter. 1962. temporarily under regulation 8(1) and permanently under regulation 10. drawback/ DEEC processing. the packing. temporarily or otherwise. 27 . A person is permitted to operate as a customs house agent.Custom House Agent: “Custom House Agent” means a person licensed. 1984. under the regulations made under sub-section (2) of section 146 of the Customs Act. of the Customs House Agents Licensing Regulations.

Major items handled by Shakti Forwarders are as follows: Exports: sanitary ware. formerly known as Shakti Enterprise was established in 1992. soya. fabrics.COMPANY PROFILE:Shakti forwarders Pvt. Ltd. engineering goods. delhi and vapi. groundnuts. capital goods. rice. textiles etc. 28 . dry fruits. auto parts etc. kandla. chemicals. rubber products. soap raw material. stainless steel utensils. dates. Shakti Forwarders has established its basis at four different places across india. readymade garments. for import and export. We have offices located at mumbai. A leading custom house agent. Imports: non ferrous and ferrous metal scrap. At Gandhidham Branch the estimate of 400 containers per month in 2009. sesame seeds. consumer goods.

SECTOR 27. RESEARCH METHODOLOGY: 29 . Chembur. KISHORE B. Mumbai . VAPI – 396195 DELHI OFFICE (NOIDA): SHAKTI FORWARDERS PVT.1. LTD.400071 VAPI OFFICE: SHAKTI FORWARDERS PVT.370201 Branches: Mumbai Plot no-47/A. No. Near Police Chowki. 1ST FLOOR.Management Team: Sr. BHAGAT MR. NOIDA – 201301 2. MAULIK K. 1 2 3 4 5 Director's Name MR. ATTA. BHAGAT MRS. SHAILESH B BHAGAT Designation DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR Head office of Shakti Forwarders Pvt. G. PRANAV BHAGAT MR. Sindhi Gymkhana. LTD. GUNJAN GARDENS. TEJAL MAULIK BHAGAT MR.: Gandhidham “Om Guru Shakti” Sector no. Ltd. 12.C.D. DHARAM MARKET.I. Gujarat (kutchh) . Plot no -48/8. Little Malabar hill. A/218. Opp.

30 . Secondary data:Secondary data is collected through some good articles of shipping times and some sites from internet.Research as a term stand for “systematic investigation towards increasing the sum of knowledge” Research Methodology is the methods involved in gathering meaningful data. The data which has been collected from various sources can be categorized into two fields mainly:- Primary data:Primary data collected through personal interview with the employee of the Shakti Forwarders pvt. Ltd and we have initiated our research going through the whole step wise processes of its routine activities.

3. DATA COLLECTION AND EXPLANATION 31 .

approval from Apparel Export Promotion Council (AEPC) is required. Once the name is approved. if the firm is planning to export readymade garments to any country. registration of firm in that name with AEPC is to be made within a period of three months. The setting up of an export firm is completed in two stages. However. For claiming those exemptions and 32 . The firm may require pre and post shipment finance for its business. 5) Obtaining Permanent Account Number-: export income is subject to a number of exemptions and deductions under the income tax act. the firm would become registered exporter. 3) Registration of Organization-: The form of organization can be sole partnership. authorized by reserve bank of India to deal in foreign exchange. partnership firm under Indian partnership act. 1932 or join stock company registered under the companies act. The entrepreneur has to apply to AEPC in the prescribed application form for the clearance of the name. 1956. After the registration is done.1 EXPORT Export preliminaries: In order to enter into export business. They are: A) Establishing a business firm-: There are various formalities and registrations to be made with different authorities before an exporter can enter into export business and accept an export order.3. 2) Approval to name of firm-: There is no need to obtain prior approval of regional licensing authority of DGFT (Directorate General of Foreign Trade) for the proposed name of business firm. It is desirable that the name of the firms indicates that the business relates to export/import. 4) Opening of Bank Account-: The firm or company has to open a bank account with branch of a commercial bank. certain preliminary steps have to be taken by every business organization. 1) Selection of name of the firm-: An entrepreneur can choose any name for the firm he wants to start.

it is necessary for every exporter to obtain permanent account number from the income tax authority. This code number is made compulsory now. two copies of passport size of the applicant. IEC number entitles to import or export any item of non-prohibited goods. The licensing authority shall allot the IEC number in prescribed format. having territorial jurisdiction over the firm. But for availing the benefit. Registration Cum Membership Certificate (RCMC) -: it is obligatory for every exporter to register with appropriate Export Promotion Council (EPC) and obtain registration cum membership certificate. demand draft from a bank for rs. along with the following documents: profile of the exporter/importer. Any person applying for import or export license or any other benefit under the current exim policy is required to obtain registration cum membership certificate (RCMC). IEC number is a pre-condition for exports from and imports into India. 2. There is no expiry date for iec number. The registered /head office of the applicant shall make an application for grant of IEC number to the regional office of DGFT (known as Regional Licensing Authority). Registration with Export Credit and Guarantee Corporation (ECGC)-: the exporter should also register with export credit and guarantee corporation of India (ECGC) in order to secure export payments against political and commercial 33 . 6) Registration with Sales Tax Authorities-: exporter need not pay sales tax while making purchases meant for export. certificate from the banker of the applicant. The benefits provided in the current EXIM policy are available only to those having valid RCMC with the receipt of the certificate the exporter will be known as “Registered Exporter” 3. B) Obtaining the importer-exporter code number -: This is required for completing other registrations.Exporter Code Number (IEC)-: No export or import transaction can be made without obtaining an importer-exporter code number. Importer .1000 as fees.deductions. declaration on applicant’s letterhead that there is no association of the applicant’s firm with caution listed firms. firm has to register with sales tax authorities and secure sales tax number. This number is invariably used in all documents particularly in bill of entry in case of imports and shipping bill in case of exports. 1.

export or import of which is restricted through license. These items include wild life. Purpose of bin is to bring a common identification number to all persons dealing with various regulatory agencies such as custom department. wood and wood products in the form of logs. The negative list consist of goods the import or export of which is prohibited. productivity council or any other trade promotion organization recognized by the ministry of commerce or industry. Restricted items -: these are the items. restricted or canalized. the items of export agreed upon should not be fall in the negative/ banned list. 5. It also helps to get financial assistance from commercial banks and other financial organization. exotic birds. Exporter’s incentives & drawback: Incentives & facilities: 34 . Prohibited items-: these items can not be exported or imported. central excise etc. Registration for business identification number (BIN)-: the exporters have to obtain pan based Business Identification Number (BIN) from DGFT (Director General Foreign Trade) prior to filling for custom clearance of export goods. if they do not fall in the negative list. So it is necessary for the exporter to check the nature of the item before he enters into the contract or even makes efforts to secure the export order. pulp and charcoal. Export Licensing -: many items of goods are free for exports without obtaining any license. which is vital for exporter to certain countries. 6. timber. Registration with other authorities -: it is desirable for the exporters to become members of local chamber of commerce.risks. Canalized items -: goods which are canalized can be imported or exported through the canalizing agency. Local membership helps the exporters in different ways. specified in the negative list. 4. including in obtaining certificate of origin. They can be imported or exported only in accordance with the regulations governing in this behalf. Needless to add.

Duty entitlement passbook scheme (DEPB) :. which are physically incorporated in the export product.. the exporter is required to guarantee exports of certain minimum value.DFRC is issued to a merchant exporter or manufacturer exporter for the duty free import of inputs such as raw materials.Advance license -: inputs required for manufacturing export products can be imported without payment of custom duty under advance license. including packing materials to be used for export production. consumables. i. components. intermediates. parts.e. an exporter may apply for credit as a specified percentage of fob value of exports. An advance license is issued under duty exemption scheme to allow import of inputs. Duty free replenishment certificate (DFRC):. Export promotion capital goods scheme (EPCG) :.under the DEPB scheme.EPCG scheme was introduced by the EXIM policy of 1992-97 in order to enable manufacturer exporter to import machinery and other capital goods for export production at confessional or no customs duties at all. the license issued for this purpose is called “advance licenses”. which is in multiple of tit1e value of capital goods imported. Such license is given subject of the fulfillment of time bound export obligation. intermediates. The credit shall be available against such export products and at such rates as may be specified by the director general of foreign trade (DGFT) by way of public notice issued in this behalf. components. This facility is subject to export obligation. Since the raw materials can be imported before exports of final product. packaging materials. for import of raw materials. etc. spare parts. EXPORT PROCEDURE 35 . made in freely convertible currency.

The different steps involved in export department are as follows: Step 1: Exporter sends the following document to Shakti Forwarder: 36 .

the bank is either paid by the buyer or takes title to the goods themselves and proceeds to transfer funds to the seller. Upon receipt of documentation. the price. Types of letter of credit Clean letter of credit: negotiated against a clean draft without any documents Documentary letter of credit: documents specified in the letter of credit must accompany the draft Revocable letter of credit: can be cancelled or revoked any time without the consent or notice to the beneficiary Irrevocable letter of credit: cannot be amended. Letter of credit: Assures exporter his payment promise to pay a seller (beneficiary) upon receipt of goods by a buyer if certain conditions outlined in the letter have been met. and a time limit for completion of the transaction. provided that the conditions in letter of credit are met. The original credit backs the secondary credit and facilitates the purchase of goods from a local supplier by the original beneficiary of L/C 37 . revoked or modified by the issuing bank without the express consent of all parties concerned Thus the issuing bank has definite undertaking to honor drafts drawn under that credit. the documentation required. It is a method of payment for goods in the buyer establishes which his credit with a local bank. Confirmed letter of credit: Issuing bank sends letter of credit to the bank located in beneficiary’s country with a request to add confirmation to the credit Confirmation involves legal undertaking on the part of the confirming bank that it will duly honor payment or acceptance on presentation of documents Back to back letter of credit:  SECONDARY CREDIT: In favour of a domestic supplier. clearly describing the goods to be purchased.

Annexure – C. legal. and net weights of the packages. Invoice: One of the common to both international and domestic transactions is the bill (invoice) that the exporter sends to the importer. Annexure – D and SDF ( Statutory Declaration Form ) along with the invoice. Step 4: Custom calculate the duty (CESS) on the value of the goods. The list may be requested by an importer or may be required by an importing country to facilitate the clearance of goods through customs. Using the Treasury Challan the duty can be paid. Step5: 38 . However. Red clause letter of credit: Allows exporter to withdraw a predetermined amount so that he is able to pay his suppliers and purchase relevant letter of credit Packing list: A list which shows number and kinds of packages being shipped. and marks and numbers on the packages. Step 2: On the basis of invoice. Cargo can enter the port premises. The custom prepares the shipping bill in four copies on the basis of these annexure. totals of gross. Step 3: Send these annexure to the custom house. the content of an international invoice is more complex and should be prepared slightly differently for a foreign customer than for a domestic one. Shakti Forwarder preparing Annexure – A.

after loading the cargo the chief officer issues the mate receipt. on the basis of which captain of the vessel issues the bill of lading. In case of charter. Step 8: Besides all the CHA sends the phytosanitary certificates/pre inspection certificate to the exporter so that with all documents he can submit this to the bank. Step 7: In the case of break bulk. The container agent hand over the duplicate shipping bill to the vessel agent who is here uses it for the purpose of filling EGM (Export General Manifest).C give some container no. (But in case of the break bulk cargo. randomly for examination and that container must be de-stuff by CHA.Custom examined the cargo by using the sample. so that loading can be allowed in the vessel). (Customs examined the cargo only after the duty is paid) in case of more than one container in one B/L than A. after processing and shipment of the goods following documents are sent back by the CHA to exporter. 39 . The container agent gives the wharf age form paid is given to the container agent grants the loading permission. Step 6: The duplicate shipping bill and wharf age duly paid is given to the container agent. the CHA itself submits the wharf age paid form to the port authority.

It can be well explained as a document issued by a common carrier to a shipper that serves as: A receipt for the goods delivered to the carrier for shipment. Packing List (Details of Material). Order: It is a negotiable bill of lading. Various details are entered in the software such as Vessel Name & Number." If we ask to the logistics companies than a Bill Of Lading is a product for them. enabling him to endorse the bill to a third party. This document is generally not negotiable unless consigned "to order. Full set of bill of lading: For pre carriage is through ship the bill prepared for export is called bill of lading & if the shipment is by air then the bill prepared is called airway bill. software (Visual Samudra) is used. 40 . It is issued by the logistics service providers. etc. Notify Address. They do the whole business on the Bill of Lading. A bill of lading is a very important document. No. There are two types: A bill drawn to the order of a foreign consignee. Increase in Bill of Lading shows increase in company’s turnover. To get B/L. Shipper. A Document of Title to the goods described therein. Consignee. The purpose of the latter bill is to protect the shipper against the buyer's obtaining the merchandise before he has paid or accepted the relative draft. Container No. Quantity. On Board: A bill of lading acknowledging that the relative goods have been received on board a specified vessel. A bill of lading drawn to the order of the shipper and endorsed by him either "in blank" or to a named consignee. A definition of the contract of carriage of the goods. Bill of Lading. Bill of Lading. of Packages.

The details are entered in the Software (Visual Samudra) also each B/L is given a manual entry if not computerized. such as the container number. In B/L there are two types. Receipt for shipment: If the shipper wants a receipt the shipper can get the receipt when the container is ready to load on a vessel. The container is stuffed and the required information is received from the port office. HBL is also sent to shipper for approval. than HBL is provided. HBL – House Bill of Lading HBL – House Bill of lading is made when the information is received for the port office. and the Vessel name and No. If the shipper wants a bill before the loading of vessel on board. And a shipping bill is generated in the customs clearance on the basis of the invoice and packing list. It is only given after the container is loaded on to the vessel for sail. Now if the freight charges are paid by the exporter then bill of lading is stamped as freight prepaid & if the freight charges are to be paid by importer then bill of lading is stamped as freight to pay. It is given to the shipper it contains all the details of everything.  Copy of Mate Receipt: 41 .Master Bill of lading is the final copy of Bill. The Bill is used to charge the fees from the shipper. Than the details are entered in the software and the final print of the B/L is taken.The invoice is given to the company by the shipper. MBL – Master Bill of Lading MBL.

In return. Following three types of shipping bill with custom authorities 42 . in duplicate. declaration is made in GR form. condition of cargo at the time of receipt. the details are sent via Ice gate link to the customs database. berth. which ever is earlier. is used in place of GR form. Further. the customs allocate a shipping bill number and print a shipping bill in the port office which is to be collected from the port office. SDF form. The details as such received are feed in to software called Visual Impex. If the clearance is computerized. When cargo is stuffed. If customs clearance for the shipment is made manually. Bill of lading is issued by the shipping company only after the mate’s receipt is submitted by the exporter  Self Declaration Form or G R Form: Under customs act. the procedure goes for carting and loading the cargo into the vessel.Issued by commanding officer of the ship that cargo has been loaded to the ship name of the vessel. Than. And a shipping the invoice and packing list. and description of packages. Mate receipt is handed over to the port authorities so that port dues are cleared by the exporter. every exporter is required to declare export value of shipment ad give an undertaking that export proceeds would be realized within a period of six months from the date of shipment or due date. in duplicate.  Copy of shipping bill (triplicate and quadruplicate). in our port office or at factory. The details are given to the corporate office documentation department via fax. inside the container. Bill is generated in the customs clearance on the basis of The invoice is given to the company by the shipper. date of shipment.

which attract export duty may or may not be entitled to duty drawback. Self Declaration Form Or Gr Form Acceptance of contract. but when the drawback claim is paid to a bank.Dutiable shipping bill: it is used in case of goods. Packing list. and agencies. Drawback shipping bill: it is used in case when refund of duties is allowed on the goods exported generally it is printed on green paper.  Certificate of origin. Letter of credit. Free shipping bill: it is used in case of goods which neither attract any export duty nor entitled for duty drawback. then it is printed on yellow paper. 1) To the custom authority:- 43 . Lists of documents required to be submitted by the exporter to various authorities. A document provided by the exporter’s chamber of commerce that attests that the goods originated from the country in which exporter is located. It is printed on yellow paper. It is printed on simple white paper. organizations. Quality Control Certificate. Documents submitted by CHA to the customs:       Invoice.

         Commercial invoice GR Form ( Original and Duplicate ) Shippers Declaration Form Copy of the Export Contract /L/c/Export Order Inspection certificate AR-4 Form Export License Export license Weighment Certificate Shipping bill 2) To the port authorities:  Port Trust Copy of the Shipping Bill Wharf age application. 3) To the bank           Letter of credit Commercial invoice Bill of lading Insurance Policy/Certificate Bill of exchange GR Form (duplicate copy) Bank certificate Export Inspection Certificate Certificate of Origin Shipment advice 4) To the RBI:- 44 .

Short shipment: In case of short shipment customs sends the short shipment notice Annexure ‘C’ to the RBI (Reserve Bank of India) along with G R form. Short shipment notice is in five copies:     Original – Customs Second copy – Agent Third copy – Exporter One copy – Wharf age refund One copy is for CESS 45 .    Copy of the invoice Sales Contract Bill of lading Inspection / Analysis Report 5) To the EXIM Bank:      Export contract Letter of Contract Balance sheet of the exporter Statement of profit and loss in the transaction covered by the export contract Statement regarding the projections of the credit requirement.

Treasure Challan:This is document is used at the time of payment of the duty to the customs. Triplicate and Quadruplicate copies are sent to the CHA. It is in four copies:    Original Duplicate Triplicate Quadruplicate Customs keeps the original and duplicate copies. 46 . It shows the amount to be paid to the customs authority.

2IMPORT Import Procedure 47 .3.

S)  The CHA shows the bill of lading to the shipping agent in order to get the NOC (Non Objection Certificate in Kandla Port only).The import procedure is quite different the export procedure.  CHA then presents the bill of entry to the customs for noting and then customs gives the import department the serial no. 48 .S.  No objection certificate has been issued by the shipping line to make sure that they have no objection to open the containers for the examination of goods.  CHA pays wharf age to the port authority and the original copy of wharf age goes to the treasury of port trust. that comes on all copies of bill of entry. The bank issues the bill of lading only when the importer cleared all the payments due to the bank. It starts with  The importer asks for the three original bills of lading from the bank.  The importer then sends the following documents CHA :- a) Bill of lading b) Invoice c) Packing list d) Certificate of origin e) Pre shipment inspection certificate f) Insurance certificate g) Sales contract h) Bond copy (if H.

Port trust copies:49 . which is known as bill of entry. Bill of entry is in three copies:Original copy:This is called the customs copy. For custom clearance purpose. Duplicate copy:It is submitted in port either in container section or in break bulk section along with wharf age. Prior to this. Quadruplicate copy:This copy is submitted to the bank. packing list prepares the bill of entry. NOC. passed out of custom charges. The bill of entry is a proof that the goods have been imported.  Cargo is inspected in front of the customs. the CHA on the basis of invoice. In first check procedure it contains the examination report on the back of it.  Customs assessed the duty to ensure that the duty evaluated by the CHA is correct. It shows charges have been paid to customs and contain on the back. Customs give the examination order on the back of original bill of entry in case of first check procedure. Delivery order. Customs give the examination report at the back of the bill of entry. the importer has to submit to the customs authority a form. Triplicate copy:This copy is for central excise for availing certain benefits.

50 . It plays an important role both for the exporter and importer. Types of bill of Entry:I. III.Out of 5th. Bill of for ex-bond clearance for home consumption:This type of bill of entry is used for clearing the goods from custom bonded warehouse against warehouse bill of entry on the payment of custom duties. one copy is given to the port authority. The other two copies are kept by the CHA for his record. and 7th copies. Another important document that is used in import is bill of lading. 6th. Bill of entry for home consumption Bill of entry for warehousing Bill of entry for Ex-bond clearance for home consumption Bill of entry for home consumption:This type of bill of entry is used when importer wants to take the delivery of goods on payment of custom duty. Calculation of duty in import: The duty has been calculated on the basis of assessable value. II. Bill of entry for warehousing:This type of bill of entry is used when importer wants to warehousing the goods in custom bonded warehouse.

VAL. There are six kinds of duties. Additional Custom Duty Let us consider that basic custom duty on the ALL ALUMINIUM SCARP is 0%. CVD 8%. Additional custom duty be Y and CVD be Z (12. Custom sec & higher education cess 7. which have to be paid at the time of custom clearance in case of imports those are: 1. Duty calculation is done by CHA as per the given rate of duty for a particular product.+Z+ CESS on CVD 2%+ SEC. CVD 3.&HIGHER EDU.& HIGHER EDU.CESS 2+1% CESS on CVD = 2% of Z SEC. and additional duty is 4%. If insurance is not there then 1.Assessable value in rupees = CIF (Cost Insurance Freight) value + landing charges (1% of CIF value and H. Additional cess on CVD 4.CESS ON CVD 1%+ CUS. Basic Custom Duty 2. Secondary and higher cess on CVD 5. EDU. (High Seas Sale) CIF+2%+1) If the case is of FOB (Free on Board) then freight and insurance is to be added.826688%) X = 0% of assessable value Z = Assessable value *8%(CVD) Y = Assessable value + 4% of ASS. Say basic custom duty in rupees be X.S. CESS 6.125% of the C & F (Cost and Freight) value is taken as insurance charges.CESS ON CVD = 1% OF Z Total duty amount (in rupees) = X+Y+Z 51 .S.

CESS on Total duty = 2% of Z +EDU.  Packing list 52 . VIII. IV.Bond warehousing bond Wharf age Bill of entry Packing list NOC (No Objection Certificate) Delivery order Treasury challan Gate pass DOCUMENTS WHICH ARE TO BE USED IN IMPORT AND EXPORT CUSTOM CLEARANCE. IX.  Letter of Credit A Letter of credit is a document containing guarantee of a bank to honor drafts drawn on it by an exporter.CESS ON CVD+S&H EDU. VII. Bill of lading Invoice Certificate of origin 59. provided that the beneficiary fulfills the stipulated conditions.CESS ON CVD+S&H EDU. III. under certain conditions and up to certain amounts. VI.CESS ON CVD Documents to be used in import: I. EDU.CESS ON CVD 1% of Z +EDU. V. XI. II.CUS. X.

It is an acknowledgement that the goods have been received on board the ship  Shipping bill It is issued by the custom authority.  Mate receipt Mate receipt is issued by the mate (assistant to the captain of the ship) after the cargo is loaded into the ship. It is prepared by EDI system or manually system. After the shipping bill is stamped by custom.  Certificate of Origin A document provided by the exporter’s chamber of commerce that attests that the goods originated from the country in which exporter is located.  Bill of lading A generic term used to describe a document issued by the carrier to the shipper.  Invoice It is a document which shows the total amount of the goods and the description of goods. then only the goods are allowed to be enter to the deck.Its is a detailed document provided by the exporter that spells out how many containers there are in the shipment and which merchandise is contained in each container.  Phyto-sanitary certificate 53 . Shipping is the main document of the basic of which the custom permission is given.

A document provided by an independent inspection company. Bill of lading / Airway bill number and date. 54 . The certificate contains the name of the vessel. length.  Bill of entry The bill entry is a document. When it is charged on weight basis. on which clearance of imported goods can be made.  Forms AR-4/AR-4A These forms are meant for applying for the removal of excisable goods for export by sea/post. quantity.  Certificate of Measurement Freight can be charged either on the basis of weight or measurement. prepared by the importer or his clearing agent in the prescribed form under bill of entry regulation. Form AR-4 is used for applying for excise inspection at the factory and form AR-4A is used when goods are to be exported under a claim for rebate of excise duty or under bond. name of the vessel with date of sailing of the vessel.  Shipping advice A shipping advice is used to inform the overseas customer about the shipment of goods. The exporter only advises his importer about the invoice number.  Manifest A document internal to the shipping company (the carrier) that lists all cargo onboard the transportation vehicle. 1971. breadth. the weight declared by the overseas supplier is accepted. the port of destination description of goods. that attests that the goods confirm to the agriculture standard of the importing country. depth etc of the packages. or the Agriculture Department of the exporting country’s government. There is no particular form of shipping advice.

 Certificate of insurance A document providing by the insurance company of the exporter that the goods are insured during their international voyage. 55 .

56 . so the employee must be try to make their work on time and quick. Some of the complicated procedure in custom clearance so if we get the support of all employees it must be easy. SUGGESTIONS The custom clearance for import and export cargo is such a long procedure so it takes time to clear.4. If custom clearance done through online then it should be more simple.

because of their effective implementation of quality management system and customer centric approach. Despite of the stiff competition Shakti Forwarfers pvt. With the increasing inflows of multinationals. which result in stiff competition between the organizations. CONCLUSION The Indian business environment is changing with the rapid growth in infrastructure and technology. 57 . Ltd known as the leading custom clearance agent. trade has been increased.5.

APPENDIX 58 .

cbec.com http://www.gov.jpg Articles: Daily Shipping News EXIM 59 .pdf http://www.projectsmonitor.in www.com/NewsImages/photo%207/Transport%20Table.BIBLIOGRAPHY Websites: www.org/port_pog.com/pdfs/CONTAINERISATION%20-%20India%20and %20Global%20Scenario.cygnusindia.gmbports.htm http://www.kandlaport.

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