Transfer Pricing Refers to the pricing of goods or services among subsidiaries within a corporation. Generally adopted by MNCs.

-Subsidiaries of a MNC trade among themselves Or With the parent firm 1) If selling price is low Profit is made by buying subsidiary 2) If selling price is high Profit is made by parent company MNCs are accused of removing funds from a particular country by charging more for intracorporate inputs. Lower transfer prices are means to finance a foreign affiliate or to evade tax Lower transfer prices have the effect of showing poor returns for manufacturing division. Conflict of Interest Mutual Antipathy & Stalemate Result

A Problem of serious magnitude in case of joint ventures Arms Length Cost Plus Grey Market Sell in UAE $ 1.00 Sell in S.Arabia $ 2.00 UAE sells to S.Arabia at $1.50 Packing Credit/Pre Shipment Finance -Working capital finance provided to exporter by commercial bank prior to export of goods. Eligibility: Confirmed Export Order And/or L/C

Can be given to a manufacturer who uses an export house to export. If export house states that it does not wish to avail of packing credit Amount up to full value- CIF + Duty Drawback Period-up to 90 days Rate of interest-Special Rate Diff Reimbursed by RBI A Formal Loan Agreement is reqd Repayment Through Export proceed only Post Shipment Finance Purpose: To meet working capital requirements after the actual shipments of goods. Bridge gap between the date of shipment and actual receipt of shipment from the overseas project. Eligibility: Extended to the exporter who has the documents in his name attested by the customers. D/A 90 Acceptance L/C documents DBK D/A Document Ceiling- Value of Invoice Period: 90 days + 90 days Interest Rate: Concessional Repayment-Thru Proceeds

Export Procedure

Stage I Preliminary Stage I Preliminary Stage -

Stage II Stage III Pre Shipment Stage Shipment Stage

Stage IV Post Shipment Stage

Getting Ready to export-Appoint C& F agent Organize Define Responsibilities

Registration with various authorities -Income Tax PAN NO -Director General of foreign trade (DGFT)-Obtain Importer Exporter Code No (IEC) A must to import and Export. - RCMC with EPC Registration cum membership certificate with export promotion council -Registration with FIEO-Federation of Indian Exporters organization Sales Tax Chamber of Commerce - Appointment of agents/distributors if and if deemed necessary. II Pre Shipment stage -Quotations -Negotiations - Pro forma Invoice to enable the importer open letter of credit - Receipt of letter of credit -Seek amendments if necessary, immediately-do not wait -Obtain pre-shipment Finance i.e. packing credit -Prepare/Procure/Manufacture goods for export -Packing and Marking Prepare packing list Marking as per customers requirement Country of origin Net weight, Gross weight Port of entry/Destination

Dubai

AB C

Lt d Case No

L/C No

Offer cargo for inspection EIA Export Inspection agent SGS, Griffin, Lloyd Any agency/Person nominated by the customer

Clearance by central excise Export goods are exempted from central excise. Excise is charged on goods manufactured for consumption in India However, excise clearance has to be obtained for removal of goods for export (i) (ii) Export under Rebate Export under Bond Instructions to C&F agent Documents to be given Commercial invoice (2 Copies) GR form (original & duplicate) AR form (original & duplicate) Packing List Letter of credit/Export contract/Export order These are submitted to customers along with shipping bill. The C&F agent prepares the shipping bill This is the main document reqd by the customers for granting permission for shipment of goods. Only after the shipping bill is stamped by the customs, the cargo is allowed to be carted to the docks Customs Copy Drawback Copy Export Promotion Copy Port trust Copy Exporters Copy Five Kinds Free Shipment Dutiable Shipping Drawback shipping Shipping Bill for shipment Ex. Bond Coastal Shipping Bill

Free Shipping Bill: for goods which neither attract any export duty nor are entitled to duty drawback. Dutiable shipping Bill: for goods which attract export duty. May or may not be entitled to drawback. Drawback Shipping Bill: for goods which are entitled to drawback Shipping Bill for shipment Ex. Bond: Used for unexported goods for re export and kept in bond Coastal shipping Bill: for shipment of goods from one port to another by sea in India. This is not an export document. The C&F agent presents the shipping bill & documents to custom appraiser at custom house. If everything is in order duplicate copy of shipping bill is endorsed. All documents are returned to C&F agent except Original of GRGuaranteed Remittance Undertaking to Rbi that the dues will be brought into India within 180 days Original Copy of shipping Bill One copy of commercial Invoice Once shipping bill is endorsed by customs the C&F agent obtains a carrying order from port trust to cort the goods inside the docks. Once the goods are in the dock, he approaches the custom examiner who may physically inspect the goods. The custom examiner then gives LET EXPORT ORDER The duplicate copy of shipping bill which is endorsed by custom examiner is handed over to the customs preventive officer-CPO who endorses it with LET SHIP ORDER Goods are then loaded on board the ship, for which the MATES receipt is issued by the MATE of the ship. The Mates receipt is sent to the PORT TRUST OFFICE. The C&F agent approaches the CPO and gets the certification of Shipment of goods on AR forms and other documents. The Mates receipt is handed over to shipping company to obtain the Bill of Lading 3 Negotiable copies of B/L 10 to 12 non negotiable copies or as many as required Negotiable copies are title to the goods.

IV Post Shipment Stage C&F agent hands over docs to exporter. Comm. Invoice attested by customs. Shipping Bill(Export Promotion Copy) Order/Contract/L-C B/L GR form duplicate(attested by customs) Form AR-4 Arrange for insurance Exporter issues shipment advice to customer Presentations of docs to banks for negotiations within 21 days of the Bill of lading Bank Certificate Realization of export proceeds Post shipment finance if necessary Follow up for new order ECGC cover