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Import Procurement

Purpose:
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?
• Machinery
• Raw material
• Availability
• 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 Buyer’s Banker’s 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. Vendor Excise Detail . Cenvat Determination 4.

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 .

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 . 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.

.  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: .

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 . Shess on CVD and Additional duty. Custom Duty and CVD Condition types of Custom and CVD: JCDB Basic Custom is calculated on Material Price .Get set off depends on Material As per the government rule. Custom duty is always inventorised and we can not get set off. . How system get to know that which condition type is modavatable. We can get set off on CVD. Ecess on CVD. 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. .

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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 .

Need to give the MIRO number and year while GR. System will pick CVD values from commercial Invoice automatically. .  Goods Receipt (MIGO) At the time of GR. system ask for Commercial Invoice No.

. system will pick whole excise amount from PO.Without Reference of commercial Invoice number. If do GR without reference of MIRO.

In this case Excise invoice is captured at the time of MIGO. 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. Post Excise Invoice J1IEX Accounting Entry of Excise Invoice . Delivery cost includes Frieght (by Sea or Air) will also be get loaded on material.

Accounting Entry will be as follows: . MIRO for Goods Do MIRO for goods.

 MIRO of Delivery Cost For example : CHA charges .