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Import Procurement

The purpose of the document is to give the overview of Import cycle with India
specific functionality to handle the Countervailing duty (CVD) on imports and other
customs Duties, which are levied in place of excise duty. Unlike other forms of
customs duties, such as basic customs duty or special customs duty, you can credit
CVD paid on imports to your CENVAT account.

Why Import?
Raw material
Resale etc...

Basic Steps for Import:

1. Choose the Vendor

2. Negotiation for price and incoterms
3. Terms and condition in Letter of Credit
4. Choose Freight forwarder
5. Custome house Agent (CHA)
6. Transporter

Letter Of Credit:

What is letter of credit

Letter of Credit is the Buyers Bankers promise to the Bank of the Seller /
Exporter that the bank will honor the Invoice presented by the Exporter on due
date and make payment.

Executing a Letter of Credit

A seller only gets paid after performing specific actions that the buyer and
seller agree to.
For example, the seller may have to deliver merchandise to a shipyard in order
to satisfy requirements for the letter of credit. Once the merchandise is
delivered, the seller receives documentation proving that he made delivery.
The letter of credit now must be paid even if something happens to the
merchandise. If a crane falls on the merchandise or the ship sinks, it's not the
seller's problem.

To pay on a letter of credit, banks simply review documents proving that a

seller performed his required actions. They do not worry about the quality of
goods or other items that may be important to the buyer and seller.

Pre requisite:

Material Master
Vendor Master
CIN Master Data
o Chapter IDs
o Material ID and chapter ID combination
o CENVAT Determination
o Vendor Excise Details
o Excise Tax Rates

Vendor Master (XK01)

Create the Vendor with order currency for example USD, EUR. Schema
group needs to be given so system will pick Import pricing procedure.
CIN Master Data

1. Chaper Id

2. Material and ChapterId combination

3. Cenvat Determination

4. Vendor Excise Detail

Import Procurement Cycle

Flow chart and Cycle

Import Procurement

Import Process Steps

Create Purchase Order

LIV of Custom

Capture Excise Invoice

Goods receipt

Post Excise Invoice

LIV of Goods and Delivery Cost

Create Purchase Order

Create Purchase order with Import document type which is Z document type as
it is not available in Standard.

Order Currency is picked from Vendor master

Tax code must be V0 or zero tax code.
Duties levy on imported materials.
o JCDB : Basic Custom
o JCV1 : CVD
o JECV : Ecess on CVD
o J1CV :SHE Cess on CVD
o Ecess on Custom
o Hsecc on Custom
o JADC : Additional Duty
Apart from excise some charges are also included in PO like..

o Frieght (by Sea or Air)

o Insurance
o Landing charges
o Loading Charges
o Stamp Duty
Pricing Procedure

Highlighted condition types are the Delivery cost

Highlighted condition types are Custom duty and CVD
Purchase order:
Custom Duty and CVD

Condition types of Custom and CVD:

JCDB Basic Custom is calculated on Material Price - Inventorised

JCV1 CVD is calculated on Basic Price+Custom -Get set off
JECV E CESS is calculated on CVD -Get set off
J1CV SHE CESS is calculated on CVD -Get set off
ZTES E CESS is calculated on Total CVD+ Basic Custom -Inventorised
ZTSH SHE CESS is calculated on Total CVD+ Basic Custom -Inventorised

JADC Additional Duty is calculated on Import Cost+ Total Duty - Get set off depends
on Material

As per the government rule, Custom duty is always inventorised and we can not get
set off. We can get set off on CVD, Ecess on CVD, Shess on CVD and Additional duty.

How system get to know that which condition type is modavatable.

For that We need to maintain the Excise default.
SPRO > Logistics - General > Tax on Goods Movements > India > Basic Settings >
Determination of Excise Duty > Maintain Excise Defaults

Now we have to assign the vendor to the condition type of Custom duty, CVD and
additional duty which we are going to pay to the government.

Click on Details
Maintain the Custom office as a vendor as shown in screenshot.
LIV of Customs (MIRO)

First we need to do LIV of Customs (Here you enter all the Import duties as per Bill of
Entry) and following A/c entry get generated.
Indian Custom Office Credit
IN Basic customs Debit
IN CVD Debit
IN-Ecess on CVD-% Debit
SHE Cess on CVD Debit
Total Ecess % Debit
Total SHE Cess Debit
Additional Duty Debit
Goods Receipt (MIGO)

At the time of GR, system ask for Commercial Invoice No.

Need to give the MIRO number and year while GR.

System will pick CVD values from commercial Invoice automatically.

Without Reference of commercial Invoice number.

If do GR without reference of MIRO, system will pick whole excise amount from
Accounting entry of MIGO

As shown in screen shot: Custom duty includes basic custom duty, Ecess on Custom
and Hecess on Custom. These duties are get loaded on material. Delivery cost
includes Frieght (by Sea or Air) will also be get loaded on material.

In this case Excise invoice is captured at the time of MIGO.

Post Excise Invoice J1IEX

Accounting Entry of Excise Invoice

MIRO for Goods
Do MIRO for goods. Accounting Entry will be as follows:
MIRO of Delivery Cost
For example : CHA charges