72248338 Import ExportDocumentation

EXPORT DOCUMENTS TO BE SUBMITTED FROM EXPORTER TO IMPORTER

(MENTIONED IN CONTRACT)

Provisional Payment – Depending on provisional commercial invoice amount will be paid

at sight against documents item 1 to 7 which must be presented within 14 days after bills

of lading date.

1. Signed provisional commercial invoice in 3 originals, 3 copies for % mentioned

in contract for e.g. 98 PCT or 100 PCT goods value, indicating the Contract

No., L/C number, value of goods shipped, B/L number, B/L date, B/L Quantity

and vessel name.

2. Full set of original “clean on board” bills of lading made out to order, blank

endorsed, marked “Freight Payable as Per Charter Party” notifying “To order”.

3. Certificate of Quality issued by Agent hired by Export Company. in 1(ONE)

Original and 5 copies showing actual result of the test of chemical composition

and all other tests called for in this LC and made out “To whom it may

concern”.

4. Certificate of Weight issued by Agent hired by Export Company in 1 (ONE)

Original and 5 copies certifying the actual surveyed weight of cargo shipped at

load port and made out “To whom it may concern”.

5. Certificate of Origin to be issued by any Chamber of Commerce in India and

detailing loaded quantity, commodity carrying vessel in 1 (ONE) original and 2

copies and showing consignee “To Order”.

6. Beneficiary’s transmitted copy of fax advising shipment to Applicant within 2

working days by fax after completion of loading at loading port including

contract number, name of vessel, and name of commodity, approximate invoice

value, gross weight at loading port, bill of lading no. and date and ETA at the

discharge port.

7. Beneficiary’s certificate certifying that full set of non-negotiable documents (1-

6) have been faxed to applicant within 5 banking days from shipment date.

(B) The Balance between the Final Commercial Invoice Amount and Provisional

Commercial Invoice Amount will be paid at sight against documents item 8 to 10 which

must be presented within the validity of the LC.

8. Final invoice in 1(One) original and 2(Two) copies based on inspection

certificate issued by CIQ.

9. Inspection Certificate of Quality issued by CIQ in China in 1(one) copy ( fax

copy/scanned copy by E mail is acceptable )

10. Inspection Certificate of Weight issued by CIQ in China in 1(one) copy ( fax

copy/ scanned copy by E Mail is acceptable )

11. Certificate of Quality and Certificate of Weight issued by Agent hired by

Export Company at loading port in one photocopy each can be submitted as

substitute if above mentioned documents (9+10) in copy are not received by the

beneficiary within 70 days from the date of completion of discharge. In such

case, a declaration must be submitted by the beneficiary declaring that they

have not received the CIQ certificate(s) within 70 days from the date of

completion of discharge.

LOW CHART OF THE DOCUMENTS TO BE SUBMITTED

IMPORTER

EXPORTER

CERTIFICATEOF

INSPECTION

INVOICE PACKING

LIST

GR

FORM

ARE1

FORM

MARINE

INSURANCE

POLICY

EXPORTER

COMMERCI PACKIN DUPLICA NEGOTIAB ORIGI CERTIFICATE BILL OF

CUSTOMS

ATTESTED

INVOICE

SHIPPING

BILLS

FULL SET

OF ON

BOARD

BILL OF

LADING

COPY OF

L/C

DUPLICATE

COPY ARE

1 FORM

DUPLICATE

COPY GR

FORM

PURCHASES ORDER / L/C

AL INVOICE G LIST TE COPY

GR FORM

LE COPIES

OF B/L

NAL

L/C

OF ORIGIN EXCHANG

E

NEGOTIATING BANK

L/C AMOUNT SHIPPING DOCUMENT

EXPORTER IMPORTER

FLOW CHART EXPLAINED

i) After the exporter prepared following documents: ----

INVOICE

CERTIFICATE OF INSPECTION

ARE1 FORM & GR FORM EXSICE DEPARTMENT

MARINE INSURANCE POLICY

COPY OF PURCHASE ORDER / L/C

ii. Above those documentation sends to CHA by exporter.

iii. Based on these documents CHA agent completes the octroi formalities, obtain port permit

and prepare shipping bill which is a customs documents.

iv. Custom department check the export cargo on the basis of information provided on the

shipping bill. If satisfy then cargo allow to loaded on the board of ship.

v. The shipping line gives mate receipts to CHA agents after the payment of ocean freights

and port due obtains the bill of lading (B/L) from shipping line .B/L is a proof of dispatch

of cargo and also a negotiable document.

vi. After that, CHA agent send various documents back to exporter which is—

Customs attested invoice

Copy of shipping bill

Full set of non board bill of lading.

Copy of purchase order or L/C

Copies of ARE1 Form

SDF form

vii. After that the exporter submitted above these documents for negotiation to the bank which

include :----

Commercial invoice

Packing list

SDF form

Original copy of purchases order

Certificate of origin

Bill of exchange

Shipment advice

After that, bank scrutinizes these documents and if found correct make payment to exporter

against documentations.

How to Import -Introduction How to Start Import

[As governed by the Foreign Trade (Development & Regulation) Act, 1992]

With the globalisation of Indian economy and consequent upon comfortable balance of payment

position Government of India has liberalised the Import Policy and practically all Controls on

imports have been lifted.Imports may be made freely except to the extent they are regulated by

the provisions of Import Policy or by any other law for the time being in force.

Pricinpal Law & Import Export Policy

Principal Law

Imports in to India are governed by Foreign Trade (Development & Regulation) Act 1992.

Under this Act, imports of all goods is Free except for the items regulated by the policy or any

other law for the time being in force.In exercise of the powers conferred by the Foreign Trade

(Development & Regulation) Act 1992 the Government has issued the following Rules & Order:

Foreign Trade(Regulation)Rules, 1993, which inter alia, provide for grant of special licence,

application for grant of licence, fee, conditions for licences, refusal of licence, amendment of

licence, suspension of a licence, cancellation of licence, declaration as to the value and quality of

imported goods, declaration as to the Importer- Exporter Code number, utilisation of imported

goods, provisions regarding making, signing of any declaration/statement or documents, power

to enter the premises and inspect, search and seizure of goods, documents, things and

conveyance, settlement, confiscation and redemption and confiscation of conveyance.

Foreign Trade (Exemption from Application of Rules in Certain Cases) Order 1993

Notifications under Foreign Trade (Development & Regulation) Act 1992.

Import Export Policy

The present import policy and procedures in respect of various commodities/category of

importers, are, inter alia, contained in the following publications issued by the Ministry of

Commerce and revised from time to time:

Import - Export Policy, 1997-2002 as modified upto 31.03.1999

Handbook of Import - Export Procedures(Volume 1), 1997-2002 as modified upto 31.03.2000.

Handbook of Import - Export Procedures: (Volume 2) Duty Exemption Scheme:

Input - Output and Value Addition Norms, 1997-2002.

ITC(HS) Classification of Import and Export Items.

Notifications and Circulars

The Import - Export Policy and Procedure books issued by the Government are

amended/clarified/ explained by the Ministry of Commerce from time to time. The types of

Notifications/Clarifications/Instructions issued by the Ministry for this purpose are:

Public Notices.

Notifications

Policy Circulars

Select the commodity/Product you wish to import :

Be aware of the import potential and the commercial viability of the commodity/product.

Check whether the items of your interest fall in the Restricted list of ITC(HS) Classifications of

Exports & Imports items.

Prohibited items are not permitted to be imported at all. List of Prohibited items of import are

detailed below:

Tallow, Fat or Oils rendered, unrendered or otherwise of any animal origin, animal rennet and

wild animals including their parts and products and ivory any part and products, including ivory.

For import of items appearing in Restricted list you need secure import licence. Third category of

items comes under the Canalised list of items. Import of items included in Canalised list are

permitted to be imported through Canalising Agencies.

Thus items not appearing in Prohibited list, Restricted list and or in Canalised list can be

imported Freely without any import licence. A large number of Consumer goods are freely

importable without licence.

Registration with Regional Licencing Authority and obtaining IEC Code

Registration with Regional Licensing Authority:

Registration with Regional Licensing Authority is a pre-requisite for import of goods. The

Customs will not allow clearance of goods unless:

The importer has obtained IE Code Number from Regional Licensing Authority. However, no

such registration is necessary for persons importing goods from/ to Nepal provided Value of a

single Consignment does not exceed Rs. 25000/=

Obtaining IEC Code Number

An application for grant of IEC Code Number should be made in the prescribed proforma given

at Appendix 3.I. The application duly signed by the applicant should be supported by the

following documents:

Bank Receipt (in duplicate)/demand draft for payment of the fee of Rs.1000/- Certificate from

the Banker of the applicant firm as per Annexure1 to the form. Two copies of passport size

photographs of the applicant duly attested by the banker of the applicant.

A copy of Permanent Account Number issued by Income Tax Authorities, if PAN has not been

allotted, a copy of the letter of legal authority may be furnished. If there is any non-resident

interest in the firm and NRI investment is to be made with repatriable benefits, full particulars

thereof along with a photocopy of RBI's approval. If there is NRI investment without repatriation

benefit, a simple declaration indicating whether it is held with the general/specific permission of

the RBI on the letter head of the firm should be furnished. In case of specific approval, a copy

may also be furnished.

Declaration by the applicant that the proprietors/partners/directors of the applicant

firm/company, as the case may be, are not associated as proprietor/partners/directors with any

other firm/company the IEC No. is allotted with a condition that be can export only with the

prior approval of the RBI.

Profile of the exporter/importer in a given format at Appendix 3.II.

The Registered Office or HO or Branch Office (duly authorized by the HO in this behalf) should

apply for allotment of IEC No. However, only one IEC no. is allotted to a company and the same

is valid for all its branches/offices/units. The applilcation for grant of IEC No. should be made to

the Regional Licensing Authority concerned as specified in Appendix 3.III.

The application fee shall be deposited by way of deposit in an authorized branch of Central Bank

of India indicating the head of Account 1453 Foreign Trade and Export Promotion Minor Head

102. Import Licence Application Fee.

The IEC No. is likely to be granted within 3 days of the receipt of the complete application and

requisite documents.

How to fill up IEC application:

Application form should be made in the prescribed form in duplicate along with the

above enclosures, mentioned against serial 1 to 8 of above paragraph, also in duplicate.

The form should be neatly typed/handwritten in bold capital letters only.

Each copy of the application form should be signed in ink by the authorised person.

Items of information relevant to applicant should only be filled and remaining items may

be marked not applicable.

Modification of particulars of the applicant should also be furnished on this form by

filling the relevant items.

However, in case an IE Code holder no longer wishes to operate under the allotted code number,

the matter should be brought under the notice of the Regional Licensing Authority to make the

Code number inoperative.

Import Policy:

For items not mentioned as Prohibited, Restricted or Canalised List for import in ITC(HS)

Classification of Export and Import items; import of such items are freely permitted. There is no

need to obtain any license or permission for importing such goods. The ITC(HS) Classification

of Export and Import items contains 99 chapters and in each chapter there are column heading

covering Exim Code, items description, policy and nature or restriction. The information related

to import policy for any item can be obtained from our site under Customs Duty Calculator

Schedule.

Procedure to be followed for grant of import license:

An application for grant of an import licence or CCP for import of the items mentioned as

restricted for import in ITC(HS) Classification of Export and Import items may be made to the

regional licensing authority concerned.

Licence Application Fees

Fees for Licence Application:

Every application for import licence or CCP should be accompanied by 2 copies of a bank

receipt from the Central Bank of India or a Bank Draft from any Bank indicating the deposit in

accordance with the prescribed scale of fees.

Rs. 200 where the value of goods specified does not exceed Rs. 50,000.

Rs. 2 per thousand or part thereof subject to a minimum of Rs. 200 and a maximum of Rs.1 lakh

50 thousand, where the value of goods exceeds Rs. 50,000.

Rs. 200 where Application is filed be SSI units where the CIF value of goods specified in the

application does exceed Rs. 2 lakh.

Rs. 200 where application is fro grant of duplicate licence.

The application fee shall be deposited either:

By way of deposit in an authorized branch of Central Bank of India indicating the Head of

Accounts 1453 Foreign Trade and Export Promotion - Minor Head 102, Import Licence

Application Fee. The Bank receipt must show the name of the department viz. "Director General

of Foreign Trade". The bank receipt should be drawn in favour of Pay & Accounts Officer

concerned. Such fees can also be deposited with Indian Missions abroad.

Or, Crossed DD on a scheduled bank for the requisite amount should be made in favour of the

concerned licensing authority.

Validity of Licence

Besides import licence for import of restricted items there are other variety of licences and such

licences have different period of validity.

Export Promotion Capital Goods Licence validity 24 months

Customs Clearance Permit " 12 months

DEPB " 12 months

Advance License/Special Imprest Licence

For Project/Turnkey Project "18 months or co-terminus with the contracted duration of the

Project

For the cases where the license expires before the last day of the month, the license shall be

deemed to be valid until the last day of that month.

Revalidation of License: License revalidation can be done on merits but not beyond 12 months

by the concerned licensing authority for a period of six months at a time reckoned from the date

of expiry of the validity period.

Last date for filling applications: the last date for receipt of applications for grant of licenses is

28th February of the licensing year unless otherwise specified.

Conditions of Licence

Licensing conditionalities: The license for import is taken into consideration provided:

the goods covered by the license shall not be disposed of except in accordance with the

provisions of the EXIM Policy, 1997-2002 or in the manner specified by the licensing

authority in the license;

the applicant for a license shall execute a bond for complying with the terms and

conditions of the license.

It shall be deemed to be a condition of every license for import that -

no person shall transfer or acquire by transfer any license issued by the licensing authority except

in accordance with the provisions of the Policy;

the goods for the import of which a license is granted shall be the property of the licensee at the

time of import of which a license is granted shall be the property of the licensee at the time of

import and up to the time of clearance through the Customs;

the goods for the import of which a licensee is granted shall be new goods, unless otherwise

stated in the license;

the goods covered by the license for import shall not be exported without the written permission

of the DGFT;

Disposal period for import application: Provided the application is complete in all respects

along with prescribed documents, the applicant-importer can expect the disposal in:

IEC No. - 3 working days

Duty free license where input-output norms are notified - 5 working days

Duty free license where input-output norms are notified but cases are to be placed before ALC -

15 working days

Duty free license where input-output norms are not notified, EPCG licenses/export

licenses/export

licenses/specific import licenses - 15 working days

Revalidation of license and extension of export obligation period by RLA - 5 working days

Acceptance of Bank Guarantee/Legal undertaking - 3 working days

Redemption of Bank Guarantee/Legal undertaking/Endorsement of Transferability - 10 working

days

Issuance/renewal of Export House/Trading House/Star Trading House/Super Star Trading House

- 15 working days

Amendment of any category of license - 5 working days SIL - 7 working days

Fixation of Standard input-output norms - 45 working days

DEPB - 5 working days

All licenses falling under Chapter 8 - 5 working days

Miscellaneous - 15 working days

Fixation of deemed exports drawback rate - 45 working days

N.B. This apart, a " Counter Assistance" service is provided in all the offices of the DGFT for

speedy disposal of applications. A foreign trade development officer (FTDO), in charge of the

counter in each office. On submission of the application at the counter the applicant will be

handed over a token and advised to return the same day when he will be informed whether his

application has been found complete and admitted for further processing by the office or if there

are any deficiency or lacunae. If deficiency is noticed the same is sent back to the applicant.

Counter Assistance may also be availed of, for amendments of minor nature/enquiries.

Applications in such cases will be received in the licensing offices at the counter.

Importer's own Identity Card: An application for issuance of an Identity Card may be made in

the prescribed form. In case of loss of an Identity Card, a duplicate card is issued.

Imports under Special Scheme for Exporters

The Govt. of India has framed the certain schemes to promote exports.

Export Promotion Capital Goods Schemes:

Capital goods including jigs, fixtures, dies and moulds may be imnported at a concessional rate

of customs duty as per table given below. Subject to an export obligation to be fulfilled over a

period of time. In addition spares up to 20 per cent of the cost insurance and freight (CIF) value

of the capital goods may also be imported under the scheme.

Under this scheme Customs duty is 5% if the export obligation is 5 times the CIF value of the

capital goods or 4 times the CIF value of capital goods on NEF basis. The period of fulfillment

of the export obligation is 8 years reckoned from the date of issuance of licence.

Period from the date of issue of licence Proportion of total export obligation

Block of 1st and 2nd year nil

Block of 3rd and 4th year 15%

Block of 5th and 6th year 35%

Block of 7th and 8th year 50%

The licence holder under EPCG scheme shall fulfill the export obligation over the specified

period in the following proportions:

An application for grant of license under this scheme should be made to the licensing authority

concerned in the form given in Appendix 10 A of the Handbook of Procedures, 1997-2002 along

with documents prescribed therein. Before clearance of goods through customs, the importer has

to execute a bond supported by a bank guarantee with the Customs Authority in the prescribed

manner. The license holder will also have to submit progress report of the export/supplies made

and services provided, duly certified by a Charted Accountant/Cost and Works Accountant to the

Licensing Authority. The report should be submitted in the prescribed form 10C of the

Handbook of Procedures, 1997-2002. For Customs duty exemption exemption in respect of

imports under EPCG scheme, the Ministry of Finance has issued Notification No. 28/97-Cus. &

29/97-Cus., both dated 1st April, 1997.

Duty Exemption Scheme:

According to the EXIM Policy 1997-2000, duty free import of inputs is permitted under the

following schemes:

Advance License - granted to merchant exporter or manufacturer exporter for the import of

inputs required for the manufacture of goods without payment of basic customs duty. However,

such inputs shall be subject to the payment of additional customs duty equal to the excise duty at

the time of import. Reference: Notification No. 30/97-Customs both dated 1.4.97.

Annual Advance License - Manufacturer exporter with export performance of Rs. 1 crore in the

preceding year and registered with excise authorities, except for products which are not excisable

for which no such registration is required, shall be entitled for Annual Advance License. Export

House, Trading House, Star Trading Houses and Super Star Trading Houses Holding the

certificate as merchant exporter where they agree to the endorsement of the name(s) of the

supporting manufacturer on the relevant annual advance license shall also be entitled for the

annual advance license.

This license and/or material imported thereunder shall not be transferable even after completion

of export obligation. Such annual advance license shall be issued with positive value addition

without stipulation of minimum value addition. The entitlement under this scheme shall be up to

125% of the average FOB value of export in the preceding licensing year. Imports against this is

exempted from payment of Additional customs duty, Special Additional Duty, Anti Dumping

Duty, Safeguard duty, if any, in addition to Basic customs duty and surcharge thereon.

Advance Intermediate License: This license is granted to a manufacturer exporter for the import

of inputs required in the manufacture of goods to be supplied to the ultimate exporter holding an

Advance License/Special Imprest License.

Special Imprest License: This license is granted for the duty free import of inputs required in the

manufacture of goods to be supplied to the ultimate exporter holding an Advance

License/Special Imprest License. Such Special Imprest License is granted for the Duty Free

import of inputs required in the manufacture of goods to be supplied to the EoUs/units in

EPZs/STP/EHTP, holders of license under the EPCG scheme, projects financed by

multilateral/bilateral agencies/funds as notified by the Dept. of Economic Affairs, MoF,

Fertilizer Plants if the supply is made under the procedure of International Competitive Bidding,

supply of goods to refineries and proejcts/purposes for which MpF permits import of such goods

on zero customs duty.

Advance Release Order:

A duty free license holder except Advance Intermediate License Holder intending to source the

inputs from indigenous sources/canalising agencies/EOUs/EPZ/EHTP/STP units in lieu of direct

imports has the option to source them against Advance Release Order denominated in foreign

exchange/Indian rupees. In such cases, the license is invalidated for direct import and permission

in the form of ARO is issued which will entitle the supplier to the benefits of deemed exports.

Back to back inland letter of credit: This is an alternative to ARO. For this the duty free license

holder intending to avail such facility may approach a bank for opening an inland L/C in favour

of an indigenous supplier. Before this the bank will ensure that necessary bank guarantee or

Letter of Undertaking has been executed by the license holder and endorsement to this effect has

been made on the License. The indigenous supplier may supply the goods on the strength of L.C.

opened in his favour . For the purpose of claiming Deemed Export benefits, an indigenous

supplier shall produce the copy of the L/C together with a photocopy of the Duty Free License,

duly endorsed by the bank concerned and the said documents shall for all purposes be deemed to

be an ARO.

Duty Entitlement Pass Book scheme: It aims at neutralising the incidence of customs duty and

surcharge thereon on the import content of the export product. This neutralisation is provided by

way of grant of duty credit on the deemed import content in the export product as per Standard

input output norms and considering the value addition achieved. This scheme is allowed to be

operated on pre and post export basis by a manufacturer exporter and merchant exporter. The

scheme allows exporter to claim credit of customs duty at a specified percentage of the f.o.b.

value of the exports made in freely convertible currency. DGFT issues public notice featuring

eligible products along with the credit rates under this scheme. Although items outside the

restricted list can be exported without Customs duty, DEPB holder may pay additional customs

duty in cash, if any. (vide MoF Customs Notification No. 34/97 - Cus. Dated 7.4.1997 and

Circular No. 10/97-Cus. Dt.17.4.1997). Third party exports are also permissible for grant of

credit under this scheme and DEPB is valid for 12 months from the date of issue.

Special Import License(SIL): issued to Export/Trading/Star Trading/Super Star Trading houses;

Manufacturers/processors with the quality certification from ISO,HACCP,WHO-GMP or SSI

CMM level 2 and above certification; EOUs/EPZs ; Deemed exporters; exporters of telecom and

electronic equipments; small scale exporters(certified); service providers and other exporters.

This provision has been withdrawn from 31.03.2000. No SIL licenses will be issued for exports

made after 31.03.2000.

Diamond, Gem & Jewellery Export Promotion Scheme: Exporters of gem and jewellery are

eligible to import their inputs by obtaining Rep. License and diamond imprest license from the

licensing authority. Exporters of gold/silver/platinum jewellery and articles thereof may import

their essential inputs e.g. precious metals and stones in accordance with the procedure specified

in this regard.

100% EOU/EPZ/FTZ Scheme -This means an industrial unit offering its entire production,

excluding rejects and items otherwise specifically permitted to be supplied to the domestic tariff

area(DTA), for exports. Such units may be set up under the EOU/EPZ scheme. While EOUs can

be set up anywhere in India subject to certain locational conditions, units in EPZ/FTZ can be set

up in specific areas separated from the DTA by physical barriers.

Hints/Suggestion for finalisation of import order/contract:

Proper selection of the Commodity will depend up on Various Commercial and legal

Considerations including the regulations Contained in the Current Import Export Policy,

Procedure, while selecting the product, particularly for Commercial purposes one should know

the export regulations in the exporting Countries.

Selecting the Overseas Supplier

Imports can be made from any country of the world except Fiji and Iraq. The information

regarding overseas supplier can generally be obtained from the following sources:

Trade Directories and Yellow Pages, like Singapore yellow pages, Japan yellow pages, USA

yellow pages etc. available from leading booksellers in India including. Consulate Generals and

Trade Representatives of various countries in India and abroad.

Friends and relatives in foreign countries. International Trade Fairs and Exhibitions for which

you may contact:

International Trade Promotion Organisation(ITPO),

Pragati Maidan, New Delhi.

Chamber of Commerce.

Directorate of Industries, etc.

Indenting Agents of Foreign Suppliers.

The advertisement in foreign papers may also be useful.

Similar informations are also available in our Import-Export database.

Capability and Creditworthiness of Overseas Supplier

Successful completion of an import transaction will mainly depend upon the capability of the

overseas supplier to fulfil his contract.The credit worthiness of the overseas supplier, his capacity

to fulfil that contract, etc. should, therefore, be properly verified beforeentering into a contract

with him. Confidential reports about the supplier may be obtained through the banks and Indian

embassies abroad. Reputed overseas suppliers normally have their Indenting Agents with offices

in India and contract can also be finalised through them for smoother operations. The importer

can also take the assistance of Credit Information Agencies for specific commercial information

on overseas suppliers. They may also contact Trade Information Centres of the country

concerned.

Correct address of these agencies can be obtained from the overseas countries trade

representatives posted in India.

Role of Overseas Suppliers' Agents in India

Some overseas suppliers have appointed their agents in India. These agents procure orders from

the Indian parties and arrange for the supply of goods from their principal abroad. It is advisable

to import through such agents as they can be readily contacted in case of any difficulty with

regard to quality of goods, payment and documentation, etc.

Finalising the Terms of Import

This is an important subject and should be handled with extreme care and caution. It is advisable

that before finalising the terms of Import Order, you should call for the samples or catalogue and

other relevant literatures and the specification of the items to be imported. Import of samples of

goods is exempt from import duties under 'Geneva' Convention of 7th November, 1952. Samples

are subject to re-export and other conditions as specified in the Geneva Convention. Besides,

vide Customs Notification No. 154/94 dated 13.07.1994, commercial samples brought into India

as personal baggage by bona fide commercial travellers and businessmen or imported into Into

India by post or by air are exempt from the customs duty. Similarly, vide Notification No.

154/94 dated 13.07.1994, prototype of engineering goods when imported into India as samples

for executing or for use in connection with-export orders are exempt from customs duty.

Likewise, the Central Government has exempted bona fide commercial samples and prototype of

engineering goods when imported into India by post or by air or by courier service by

manufacturers of export goods.

Once you are satisfied with the samples and the creditworthiness of the overseas supplier, you

can proceed to finalise the term of the contract to be entered into. For this purpose, the Import

Contract should be carefully and comprehensively drafted incorporating therein precise terms, all

relevant conditions of the trade deal. There should not be any ambiguity regarding the exact

specifications of the goods and terms of the purchase including import price, mode of payment,

type of packaging, port of shipment, delivery schedule, etc. The different aspects of an import

contract are enumerated as under some of which may be relevant and other may not be:

Product, Standards and specifications.

Quantity.

Inspection.

Total value of the Contract.

Terms of Delivery.

Taxes, Duties and Charges payable at Exporting Country and payable in India on importation.

Period of Delivery/Shipment.

Packing, Labelling and Marking.

Terms of Payment-Amount, Mode & Currency.

Discounts and Commissions.

Licenses and Permits.

Insurance.

Documentary Requirements.

Guarantee.

Force Majeure or Excuse for Non-performance of Contract.

Remedies.

Arbitration.

Mode of Pricing and INCO TERMS

While finalising the terms of import contract, the Importer, should, inter alia, be fully conversant

with the mode of pricing and the manner of payment for the imports. As regards mode of pricing,

the overseas supplier normally quote the terms prevailing in international trade.

The importer for his benefits should know the meaning of the technical terminology. To avoid

ambiguity in interpretation of such terms, International Chamber of Commerce, Paris, Has give

detailed definition of a few standard terms popularly known as 'INCO TERMS'. These terms

have almost universal acceptance and are explained below:

Ex-work

'Ex-work' means that the seller's responsibility is to make the goods available to the buyer at

works or factory. The full cost and risk involved in bringing the goods from this place to the

desired destination will be borne by the buyer. This terms thus represents the minimum

obligation for the seller. It is mostly used for sale of plantation commodities such as tea, coffee

and cocoa.

Free on Rail (FOR)/Free on Truck (FOT)

These terms are used when the goods are to be carried by rail, but they are also used for road

transport. The seller's obligations are fulfilled when the goods are delivered to the carrier.

Free Alongside Ship (FAS)

Once the goods have been placed alongside the ship, the seller's obligations are fulfilled and the

buyer notified. The buyer has to contract with the sea carrier for the carriage of the goods to the

destination and pay the freight. The buyer has to bear all costs and risks of loss or damage to the

goods hereafter.

Free on Board(FOB)

The sellers's responsibility ends the moment the contracted goods are placed on board the ship,

free of cost to the buyer at a port of shipment named in the sales contract. 'On board' means that a

Received for Shipment' Bill of Lading is not sufficient. Such B/L if issued must be converted

into 'Shipped on Board B/L' by using the stamp 'Shiped on Board' and must bear signature of the

carrier or his authorised representative together with date on which the goods were 'boarded'.

Cost and Freight (C & F)

The seller must on his own risk and not as an agent of the buyer, contract for the carriage of the

goods to the port of destination named in the sale contract and pay the freight. This being a

shipment contract, the point of delivery is fixed to the ship's rail and the risk of loss or of damage

to the goods is transferred from the seller to the buyer at that very point. As will be seen though

the seller bears the cost of carriage to the named destination, the risk is already transferred to the

buyer at the port of shipment itself.

Cost Insurance Freight (CIF)

The term is basically the same as C & F but with the addition that the seller has to obtain

insurance at his cost against the risks of loss or damage to the goods during the carriage.

Payment against imports

Payment under better of Credit is a universally accepted mode of payment. A Letter of Credit is a

Signed instrument and an undertaking by the banker of the buyer to pay the seller a certain sum

of money on presentation of documents evidencing Shipment of Specified goods subject to

Compliance with the stipulated terms and Conditions.

Letter of Credit vs Bank Gaurantee

A letter of credit differs from a bank guarantee. An issuing or confirming bank's obligation is

independent of, and unqualified by, the contract of sale under the transaction. A commercial

credit is neither a performance bond, nor it is a guarantee of the quantity or quality of the goods

shipped.

Letters of Credit are Separate Transactions

A contract for sale of goods between the seller and the buyer incorporates mode of settlement.

Letters of credit by their nature are separate from the sale contract, and banks are not concerned

or bound by such sale contracts even if the credits bear reference to them.

The credits stipulate documents which have to be tendered for payment and it, therefore, follows

that in credits parties deal with documents and not with goods, services or performances to which

the documents relate.

It is, therefore, in the interest of all the parties concerned that the conditions and terms of credit

are complete and precise and barefit of excessive details.

Payment under a letter of credit does not depend on the performance obligation on the part of the

exporter except those which the credit imposes. Banks accept documents under letters of credit

for what those document purport to be on their face. Contract between the buyer and the seller is

obligatory between themselves. The seller(beneficiary) cannot take advantage of any contractual

terms in between the buyer and the opening bank and between the opening bank and the

advising/confirming bank.

Uniform Customs and Practice for Documentary Credit

In the course of time, a number of practices, expressions and terms have evolved between banks

dealing with documentary credits. To ensure uniformity of interpretation in international trade,

the International Chambers of Commerce in Paris has worked out the "Uniform Customs and

Practice for Documentary Credit". These have been revised and brought up to date several times

in the past. The latest in the line of revisions is the UCP 500 (w.e.f. January 1, 1994) which

updates and consolidates the previous UCP 400. They are now applied by the banks in nearly all

countries including India.

Parties to a Letter of Credit:

Following persons are generally parties, to a letter of Credit:

Benificiary : The exporter of goods in whose favour the L/C has been established.

Customer/importer : The person we intends to import the goods and instructs bank to established

Letter of Credit.

Issuing Bank: The Banker in the importers Country who opened the L/C. Correspondent Bank or

Advising Bank: The banker in the exporters country, who is authorised by the issuing bank to

advise the beneficiary of the Credit and to effect such payment or to accept and pay such bills of

exchange or to negotiate against Stipulated documents and on Compliance of Stipulated terms

and condition specified by the importer on the exporter.

Confirming Bank: The banker in the exporters(beneficiary) country, who at the desire of the

beneficiary adds confirmation to the letter of Credit so that beneficiary can get payment without

recourse from the Confirming bank. The Confirming bank may be correspondent bank itself or

some other bank.

Precautions to be taken at the time of establishing Letter of Credit

Letter of credit offers almost complete protection to the seller but the buyer is put to many

disadvantages and has to make payments against documents only. Before agreeing to open a

letter of credit in favour of the seller, the opener must be satisfied with the creditworthiness and

general reputation of the seller. Entire success of an L/C transaction depends on proper conduct

of the seller.

Confidential report on the seller must be obtained at the time of first transaction with him.

Letter of credit also does not offer any protection for the quality/quantity of goods supplied

under the L/C. It would, therefore be necessary to know the nature of goods and specify

submission of quality reports/inspection reports from an independent agency to ensure receipt of

goods of proper quality. This is particularly important in case of import of chemicals and such

other goods. The opener has to submit an L/C application to the opening bank. The instructions

contained in the L/C application is the mandate for the issuing bank and letter of credit will be

issued in accordance with this application. It is, therefore, necessary that complete and precise

information must be given in the L/C application form specifying therein the description, unit

rate and quantity of the goods covered under L/C and details of documents required in absolute

clear and unambiguous terms. The reference to underlying sale contract must be avoided as far as

possible. The L/C application must nevertheless contain all the required/information based on

which L/C could be opened by the bank.

After the L/C has been issued by the bank, a copy thereof must be obtained immediately. The

L/C must be scrutinized to ensure that it has been properly issued and is in conformity with L/C

application. Discrepancy, if any, must be brought to the notice of opening bank immediately.

Import contact may be concluded either in terms of INR or in foreign currency. Where the

contracts are in INR, the related documents are also prepared in INR and no conversion is

involved. However, where the bill is drawn in foreign currency, the payment is made in Indian

rupees equivalent to the foreign currency. The equivalent rupee value is arrived at by applying

suitable exchange rate. These rates are applied by banks to standardise the foreign exchange-

rupee conversion process.

When the price of foreign currency is quoted in terms of home or local currency it is called direct

quotation basis. This has been in application since 02.08.1993. However, there is a difference

between inter-bank exchange rates and merchant rates.

Merchant rates are the exchange rates applied by the bankers for transaction with their customers

for various purposes, including imports and exports. These rates are calculated by the banks as

per the guidelines issued by the Foreign Exchange Dealers Association of India (FEDAI). Inter-

bank rates are the rate for transactions amongst the authorised dealers in foreign exchange and

depend on the market conditions.

Since exchange rates are volatile, documents delivered by the bank at the time of a favourable

exchange rate will enable the Indian purchaser to pay less of Indian rupees. Forex rates are

always quoted as two way price i.e. at a rate at which the bank is willing to sell foreign

currency(buying rate) and at a rate at which the bank is willing to buy foreign currency(selling

rate). There is always some difference in buying and selling rates. However, the maximum

spread available to bank is restricted in terms of celling imposed by RBI. All exchange rates by

authorised dealers are quoted in terms of their capacity as buyer or seller.

TT Selling Rate

This rate is applied for all clean remittances outside India. For selling foreign currency to its

customer by the bank such as for issuance of bank drafts, mail/telegraphic transfer etc.

TT Buying Rate

This rate is applied for purchase of foreign currency by banks when the banks in India have

already obtained the cover in India. Thus all foreign inward remittances which are made payable

in India are converted by applying this rate. A mail transfer issued by a bank in Dubai for US $

10,000 drawn on any commercial bank having branch at the overseas destination will be

converted into rupees at TT buying rate.

Reading Rates-The rates announced by the banks every day morning are card rates.

Reputed importers can always bargain with the bank for improvement in the card rates for

reducing their rupee liability on conversion of foreign currency into Indian rupees. Also a

distinction is made between spot rates and forward rates. Spot rates are applicable on the day of

transaction, whereas forward rates are fixed in advance for a transaction that will mature at a

specified date or during a specified period in future imports.

Hedging against Forex risk:

Exchange risk arising on account of adverse movement of the exchange rates, can be avoided by

the following methods:

By requesting the supplier to invoice the goods in Indian rupees (possible only when the

seller agrees to it)

By entering into a forward exchange contract.

This involves booking of forward exchange contract with the bank of the importer.

For booking forward contract the importer should approach his bank with which an L/C has been

opened. The bank will book a forward contract only against genuine trade transaction. The bank

will verify suitable documents to ensure the authenticity and the amount of permitted currency of

the underlying transaction. The amount, date and number of the forward contract will be marked

on such documents under the stamp and signature of the bank to ensure that more than one

forward contract is not booked in respect of the same underlying transaction. A transaction may

be covered either in parts or in whole. The period and extent to which an exposure is to be

covered is left to the choice of the customer. Ordinarily, the maturity of the forward contract

matches with that of the underlying transaction. If the documents of import are not received

within the agreed period of the contract, the contract needs to be cancelled(an fresh contract

booked if desired) for which the bank will levycancellation charges as per FEDAI rules. In case

the documents are received before the stipulated date and the importer wants early delivery, the

bank will again levy charges for early delivery, as per FEDAI rules.

The importers should be careful in chosing the period of forward contract. Otherwise early

delivery or cancellation of forward contract would lead to unnecessary charges. The RBI allows

substitution of an import order on specific request, provided the bank is satisfied with the

circumstance leading to the non-performance of the contract.

Where the documents are under a contract(Non-L/C case), the seller will submit the complete set

of documents to his bankers with the request to either purchase/discount the documents to his

banker with the request to either purchase/discount the documents or same on collection basis to

the importer. In the former case the seller's bank finances the sellers whereas in the latter case, no

financial facility is extended to the overseas seller. The seller's banker may advance some money

against documents sent on collection basis while, treating the documents as collateral security.

When the documents are under L/C, the documents are prepared strictly in conformity with the

letter of credit.

After preparing the documents the overseas seller will tender the documents to his banker for

negotiation. The bank, after receiving the documents, will examine them to ensure that they are

strictly drawn as per the terms of the credit. Following this the overseas banker will send the

documents to the importer's banker in India. The impoter's bank will advise the importer to

collect the shipping documents either against payment or acceptance as per the terms of the

contract.

In case the documents are drawn under L/C, the issuing banker(of the overseas supplier) will

examine the documents and if found in order it will hand over the same to the importer after

debiting his account with amount involved or against acceptance as per the terms of the credit.

If the documents are not in line with the terms of the credit, the overseas banker can either refuse

to negotiate further and ask the seller to send them on collection basis only; or it can contact the

importer's bank(in the buyer's country) for authorisation; or it can also make payment under the

reserve against seller's indemnity.

Import Policy:







Schedule.




regional licencing authority concerned.

Scrutiny of documents

This is a very important function and this should be done with great care. After receiving the

document from the overseas supplier's bank the importer's bank will scrutinise them to verify the

extent of correctness as per the terms of the L/C. For discrepancies in the documents following

principles are adopted:

If discrepancies are such which violates any of exchange control or import control regulations,

the documents should straightaway be rejected.

If the discrepancies are of trivial nature not affecting the character of the transactions the

documents may be accepted on merits.

If the documents are rejected, immediate notice to that effect should be given to the bank to

safeguard the importer's interests.The documents prescribed by the beneficiary are carefully

scrutinised by the issuing banker. The importer should also scrutinise the documents to ensure

that:

They were presented when the credit was in force and had not expired.

The amendments and special instructions have been taken care of

The amount of bill does not exceed the value of L/C

All documents required in the L/C have been made available

Documents carry required endorsements

The documents do not contain discrepancies which violate any exchange control/import control

regulations

The invoice is duly signed, tallies with amount of draft, Exact quantities are shown and is drawn

in appropriate currency of the origin of goods

Bill of leading is presented in full set of negotiable copies and is on board bill of lading and duly

signed In case the goods are imported on cash against documents(CAD), documents against

payment(D/P) or documents against acceptance(D/A) basis, the importer needs to take delivery

of documents from the banker before completion of the customs formalities. This process,

known as retirement of documents, needs the importer to apply to authorised dealer/banker who

is in possession of documents. This can be done by tendering the funds equivalent to the value of

documents and the bank charges exchange control copy of import license, where applicable,

Form A-1 duly completed for remittance of foreign exchange.

The documents are released to the importers against payment in case of DP bills and against

acceptance in case of DA bills. The payment in either case is accepted only from the bank

account of importer. If the bank is out of funds the interest is charged to the importer's account.

For any overdue period a penal interest will be charged.

Checklist for Document (received under L/C) scrutiny:

General-check whether all documents in full sets as per L/C terms have been received

Documents had been presented before the expiry date

All the documents are dated subsequent to the date of issue of the L/C

Cancellation/overwriting in all documents are authenticated

Bills of Exchange-check whether

Drawn on the person indicated in the L/C and duly signed up by the beneficiary of the credit

Drawing is within L/C amount and in the same currency as per the L/C

The amounts in words and figures are the same and identical with the amount stated in the

invoice

Superscription, regarding drawing under L/C has been made and the Bill must have been issued

stamped.

Invoice- check whether invoice:

Is made out in the name of the person who had opened the L/C

Quantity, unit price and value are quoted as per L/C

Whether unit price and value are quoted as per L/C

The description of the merchandise corresponds to the description in the L/C

The arithmetical calculations are correct

Import license/OGL/Contract No./Order No./Indent No. mentioned as per L/C

No charge other than stipulated in L/C in included

Additional copy for Exchange Control purposes is submitted

The date and no. of the License/OGL indicated

Bill of lading is submitted within 21days from the date of shipment, if no specific time is

between the date of issue and expiry of L/C

The date of shipment is between the date of issue and expiry of L/C

Full quantity of goods is shipped, if part shipment is not allowed

Full set is submitted

Freight is shown as prepaid/payable at destination, as per L/C

Bill of lading shows 'on board shipment'

Parties are notified as per L/C terms

Carrying vessel's name has been mentioned in Bill of Lading

The beneficiary's name is shown as consignor, unless L/C terms permits third party bill of lading

The consignee's name is as per L/C

The B/L is manually signed

The description of goods is consistent with L/C

The ports of loading/destination are mentioned as per L/C

Marks, numbers, quantity and weight agree with the invoice

The carrying vessel belongs to any particular line as per L/C

Adequately stamped

Properly endorsed

If AWB, whether flight number and date of departure mentioned

If freight has been added separately in invoice and no separate freight certificate of shipping

company is submitted. B/L shows freight amount.

Scrutiny for Insurance documents-check whether the policy is taken out in the name of the

shipper

Certificate/policy is according to Letter of Credit terms

Risk commences w.e.f. date of B/L

Amount of insurance as per L/C terms

Whether drawn in the same currency as the L/C

Description of goods agree with B/L

Risks as per L/C are covered

The place where claims are payable is as per L/C terms

Adequately stamped

Details such as name of carrying vessel, ports of loading/destination, marks, agree with the B/L

Certificate of analysis, weighment,etc.

The certificates are issued by the authority stipulated in L/C

Name of the shipper is properly shown

The samples drawn relate to the goods actually shipped

Date of sample verification is within the date of shipment

Certificate of origin

It is issued by the authority stipulated in the L/C

The description of goods agrees with that in the invoice

Checking other documents

All other documents stipulated in the L/C are verified

They are issued by the authorities specified in the L/C

They contain the details as required by the L/C

For matter relating to Documentary Collections and Commercial terms, the importers are likely

to be conversant with the brochures issued by the International Chamber of Commerce(ICC),

Paris.

Following are the brochures:

Uniform Customs and Practice for Documentary Collection and Commercial Terms

Uniform Rules of Collections (ICC522)

Uniform Rules for a Combined Transport Document (ICC298)

INCO Terms 1990

RBI regulations for Making Payments by importers

Import Policy:







Schedule.





Mode of payment

Payments in retirement of bills drawn under L/C as well as bills received from abroad for

collection against imports into India, must be received by authorised dealers, irrespective of

amount, by debit to the account of the importer with themselves or by means of a crossed cheque

drawn by him on his other bankers. Payment against bills should not be accepted in cash. This

rule also applies to private imports where the amount involved is Rs. 20,000 or more.

Payment for import bills-Where the import bills are drawn in Indian Ruppes (INR), an equivalent

amount(plus bank charges) is debited to the account of the importer by the authorised dealer and

the amount remitted to the foreign seller. In case the bills are drawn in foreign currencies, the

INR equivalent is arrived at by applying the appropriate foreign exchange rate.

Fixing of Re. Equivalent-In order to bring uniformity in the handling of import bills under L/C

authorised dealers have been directed by the RBI of follow the following procedure:

Sight import bills received under L/C and conforming to credit terms, may be held in foreign

currency for a maximum period of 10days from the date of receipt of documents by the Bank.

In case of non-payment by the drawee within 10days, the importer's liability on the foreign

currency bill shall be crystallised by converting the foreign currency amount in to rupee at the

B.C. Selling rate prevailing on the 10day or the forward exchange contract rate where applicable.

Authorised dealers shall keep a proper record of the date of receipt of documents.

In case the 10th day is holiday or a Saturday, the importer's liability in rupees shall crystallise in

the next following working day.

Authorised dealer shall carry swap costs from the customer.

Authorised dealer shall charge interest at the rate as prescribed by RBI for advances to non-

priority sectors from time to time on rupees advances made against the import bills pending

retirement by the customer. Such interest shall be recovered from the date of negotiation or the

date of crystallisation of the rupee liability and thereafter penal interest shall be recovered.

When the rupee liability on an import bill is crystallised at the Forward Exchange Contract Rate

and it results in early/late delivery, the charges as per FEDAI rule 9 shall be levied.

Authorised dealers shall charge commission/handling charges at the rate of 0.15% on the bill

amount at the time of converting foreign currency into INR irrespective of the fact whether the

bill is retired within 10 days or later.

Time limit for import remittance:

The remittance against imports should be completed not later than 6 months from the date of

shipment. Accordingly, deferred payment arrangements involving payments beyond 6months are

not permissible without approval of RBI/Gol.

However, no objection to importers withholding a small part of the cost of the goods not

exceeding 15 percent towards guarantee of performance etc. Authorised dealers may make

remittances of amounts so withheld provided the earlier remittance had been made through them.

No interest payment should be allowed to be remitted on these withheld amounts.

Sometimes, settlement of import dues may be delayed due to disputes, financial difficulties,

Authorised dealers are permitted by the RBI to make remittances in such cases even if the period

of 6 months expires, provided-

Authorised dealer is satisfied about the bona fides of the circumstances leading to the delay in

payment.

No payment of interest is involved for the additional period.

In case, where the overseas supplier insists on payment of interest, it may be allowed in

accordance with the provisions contained in para 7A.12 up to a maximum period of 60 days

beyond 180days from the date of shipment provided the import bill is paid within that period.

Remittances against import of books may be allowed without restrictions as to time-limit,

providedno interest payment is involved nor has the importer forgone any part of the

discount/rebate normally allowed to importers towards compensation for delay in settlement of

dues.

Interest remittance on import bills-interest accrued on usance bills under 'normal interest clause'

or of overdue interest paid on sight bills for a period. not exceeding 6 months from the date of

shipment in respect of imports without prior approval of RBI. In case of pre-payment of usance

import bills, remittances may be made only after reducing the proportionate interest for the

unexpired portion of usance at the rate at which the interest has been claimed or the 'prime' rate

(or its equivalent) of the country in the currency of which the goods are invoiced, whichever is

higher. Where interest is not separately claimed remittances may be allowed after deducting the

proportionate interest for the unexpired portion of usance at the prevalling 'prime'.

However, interest under normal interest clause would mean interest at the prime rate (or its

equivalent) of the country in the currency of which the goods are invoiced.

Impoter's documents-The importer should comply with certain obligations: submission of

Exchange Control Copy of Bill of Entry for Home Consumption/Postal Wrappers to the

authorised dealer. This will act as evidence that the goods for which the payment was made, have

actually been imported into India.

Authorised dealers should ensure that in all cases, including cases of advance remittances

permitted (Vide para 7A, 10, these are submitted by their importer customers and are verified. In

respect of imports made on D/A basis, since goods would normally be cleared before the due

date of payment, authorised dealers should insist on production of documentary evidence of

import i.e. Exchange Control Copy of Bill of Entry for Home Consumption/ postal wrappers at

the time of effecting remittance of import bill. Authorised dealers should also advise this

requirement to their importer customers in writing while delivering the documents against

acceptance.

Postal Imports

Remittances against bills received for collection in respect of imports by post parcel may be

made by authorised dealers, provided the goods imported are such as are normally despatched by

post-parcel. In these cases the relative parcel receipts must be produced as evidence of dispatch

through the post and on undertaking to submit importers should furnish post parcel wrappers

within three months from the date of remittance.

If the parcel has already been received in India, the parcel wrapper should be produced in

support of the remittance application. Where goods to be imported are not of a kind normally

imported by post parcel or where authorised dealer is not satisfied about the bona fides of the

applications the case should be referred to RBI for prior approval with full particulars together

with relative parcel receipts/or wrappers.

Customs Clearance of imported goods

Customs Authorities and the Clearing agents play the key role in the import of goods. All goods

imported into India have to pass through the procedure of Customs clearance as they cross Indian

border. The goods are examined, appraised, assessed, evaluated and then allowed to be taken out

of charge of the Customs for use by the importer. The entire process of customs clearance is

complex and to carry out this procedure smoothly, the help of accredited customs clearing agents

has to be taken.

The importers need to present a Bill of Entry on receipt of the advise of the arrival ofthe vessel.

The B/E is noted in Import Department, with corresponding endorsementmade against the

consignment entry in the IGM along with the date. The B/E will then be presented in the

Appraising Department with all the relevant documents like invoice, Bill of Lading, Import

license and catalogue literature. The appraising procedure may be of two types.

The First Check Procedure-Applicable only when appraisers/assessing group finds it difficult to

complete the assessment on the basis of the documents made available.

The Scrutinising Appraiser in the group gives the examination order. The goods are then

examined in the docks and the B/E rerutned to the Scrutinising Appraiser for completion and

license debit. In this case the Customs 'out of charge' is given by the Accounts Department soon

after the recovery of duty.

The Second Check Procedure-Under this 80 to 90 percent of the consignments are cleared.

If the documents are adequate for determining the classification, value, ITC license, the form is

completed by the Appraiser and then countersigned by The Assistant Collector. It is then

forwarded to the License Department for licensing debit and audit. Then it is returned to the

importers for payment of duty in the Accounts/Cash department. After recovery of duty the

original B/E is retained in the Accounts Department and the duplicate and other copies are

returned to the importer for getting the goods examined in the docks.

In the docks, the Shed Appraiser/Examiner shall examine the goods and if in order, shall give the

out of charge for taking delivery from the custodian of the goods viz. Port Trust, after payment

of Port Trust charges.

Irrespective of the procedure, examination of cargo for assessment purpose is chiefly the

function of the Appraising Department having special staff of examiners in the docks/Air cargo

shed. The records of the examination and weighment should be declared, attested and dated at

the time of the examination. If the examination spreads over more than one day, the result on

each day's progress should be disclosed.

These apart some of the Customs house in India have introduced the simplified computer

procedure for speedy clearance of consignment through B/E.

Custom Authorities

The customs administration vests in CBEC for implementing the provisions of the Customs

Act.1962. There are two main wings of Customs House. In the 'Appraisement' wing the job of

collection of revenue is assigned, while the 'Preventive' one aims at prevention of smuggling.

The Customs authority functions under the Ministry of Finance (MoF) with the Central Board of

Excise & Customs at the apex. The board is headed by a Chairman and assisted by Members.

The Member (Customs) looks after the following matters:

Customs Law and its interpretation and application, policy and broad procedures(Other than

those concerning anti-smuggling)

Enforcement of Import Export prohibitions

Foreign Travel and Cases on imports and exports

Baggage concessions and rules;

Customs Valuations;

Tariff Classification and Tariff advices;Customs procedures, Customs House

Agents Regulations;

Warehousing, inland Bonded Warehouses;

FTZs, EPZs, 100% EOUs etc.

Matters relating to Drawback;

Customs Co-operations Council, GATT and ESCAP and international talks and agreements,

organisations concerning customs;

All other works on Customs not specified elsewhere;

Supervision and control over Customs Commissionerate of Mumbai, Calcutta, Chennai, Kandla,

Bangalore, Cochin, Delhi , Visakhapatnam, Goa and Tuticorin and Customs Divisions of other

Central Excise Commissioners, Assistant Commissionerates regarding Customs work handled by

them.

Chemical laboratories and

Directorate of Drawback

The Ministry of Finance (MoF) issues Customs Notifications to levy duty on the imported goods.

The Changes are made each year on the Day of the Fiscal Budget. Customs clearance of the

imported goods is done by the customs Authorities functioning under the overall charge of MoF.

The hierarchy of the Authorities:

Central Board of Excise & Customs (CBEC) in the MoF

Under which operates:Customs Commissionerates of Mumbai, Calcutta, Chennai, Kandla,

Bangalore, Cochin, Delhi, Vizag, Goa and Tuticorin.

Directorate of Drawback

Field Level:Principal Commissioners Customs ,Commissioners,Addl. Commissioners ,Dy.

Commissioners,Asst. Commissioners,Port of clearance.

Classification of Customs tariff

The basic legislation is the Indian Customs Act, 1962 read with Customs Tariff Act, 1975.

Section 12 of the Customs Act,'62 empowers levy of duties on goods imported into or exported

from India.

However, the rates at which the different import export duties shall be leviable have been

respectively specified in the First and Second Schedule to the Customs Tariff Act, 1975-called

the import Tariff and Export Tariff respectively.

With effect from Feb. 28, 1986, the new tariff import schedule based on international convention

of Harmonised Commodity and Coding system, commonly known as Harmonised Coding

System came into being. The basic features of the Import Tariff

Nomenclature are outlined below:

The headings, the Section and Chapter Notes and the interpretive Rules, Customs duties are

levied in three ways-Specific rate-at the rate prescribed per unit of item i.e. weight or number of

length; Ad-valorem duty-levied on the value of the item; Specific and advalorem-levied in both

ways.

Types & Levy of Customs duties:-

Basic duty: all goods imported into India are chargeable to duty as prescribed in the 1st Schedule

of Customs Tariff Act. This Schedule is amended from time to time of Customs Tariff Act. This

duty can be levied either as a percentage of value of goods or at a specified rate.

Surcharge: It is levied at the rate of 10% of the basic rate on all commodities except crude oil

and petroleum products, GATT-bound items, gold and silver. Additional Duty: Also known as

countervailing duty, is levied on the cost of imported goods and is equal to excise duty levied on

like goods when manufactured in India. The objective is to ensure that the protection provided by

the import duty to domestic industry is not eroded.

Special Additional Duty: It is levied at the rate of 4%. Anti-dumping Duty: This is levied on

specified goods imported from specified countries to protect indigenous industry from injury

resulting from USA, Korea and so on.

Customs Duty Assessment: The assessment of goods to duty is done on the basis Whether the

goods covered by the B/E are such as are regularly imported, or are required to be tested by the

customs house laboratory for fulfilment of license conditions, or The appeaiser desires to see the

representative sample before completing the bill of entry for the purpose of verification of the

value/description, etc. or The required document is not forthcoming.

Customs Duty Rates: When the import invoice is in any currency other than Indian rupees,

customs fix the exchange rate for conversion into the Indian rupees at a predetermined rate

which is published in customs houses on a daily basis.

Imports from specified countries enjoy preferential duty. This is generally the result of special

status accepted under bilateral trade agreements or otherwise. However, the incidence of customs

duties on various goods imported are obtained as follows:

Total duty payable=(Landed cost including CIF of the item concerned + Basic customs duty

under the Customs Tariff Act + Surcharge thereon + Additional duty + Special Additional duty

as per Finance Act).

Getting Import License checked-The appraising official checks the license for their description,

value, validity period, importers name, etc. It is for the importer to establish that the goods

satisfied the description in the license unless he is able to establish the fact he would not be

entitled to lawful import thereof. If the appraising official is satisfied that the license is in order,

he will send the license with B/E to license section for registration and audit. The department

maintains a register for every license accepted and debited showing the last balance on the

license.

The importer is likely to know the term of license, the type of goods and whether they can be

lawfully imported as per the terms of the license. In case there is any error on the part of the

appraising authority then possession of even a valid license will not confer any right upon the

importers to import such goods again on the basis of similar licenses.

Bill of Entry-This is a document on the strength of which clearance of imported goods can be

effected. Its form has been standardised by the Central Board of Excise and Customs. All goods

discharrged from a vessel, from foreign or coastal Ports, are cleared on this prescribed forms

presented under the B/E Regulations, 1971.

It should be presented for 'noting' in the import dept. of the customs house after theimport

General Manifest which gives a detailed description item wise of the goods brought by the

concerned vessel is filed by the steamer Agent.

Import Policy:







Schedule.





Warehousing of Imported goods

An importer may not like to clear or may have certain problems in clearing the imported goods

immediately on payment of duty for home consumption. In that case the importer can deposit the

goods in a Public or Private Bonded Warehouse, provided he is satisfied with the arrangement.

Thus, the importer can avail the facility of deferring payment of duty on imported goods pending

their actual clearance. Towards this the importer should file a set of yellow coloured B/E known

as warehousing B/E.

Self-Assessment Scheme: Applicable to goods without any ITC license/CCP or any restrictions

thereof. The objective is to enable importers effecting repetitive imports of some commodities to

assess their own B/E and determine their duty liability and pay the duty accordingly. Any

importer, including Govt. bodies and PSUs, with proven identity and track record can avail of

this.

This process does away with the procedure of processing, and the time consumed by the

appraising and licensing sections.

When the duty is paid, the goods would be cleared in the docks, provided the goods are partly

examined and payment of duty verified.

Green Channel : This fast-track facility has been introduced to simplify and expedite the process

of cargo clearance. Instead of going in for a hundred per cent examination only a part of the

cargo is checked. Bulk importers, Govt. Depts. & PSUs, consignment of a single product of well

known brand name and importers with identified and unblemished track record are allowed to

avail this facility.

Export of services

A new Chapter has been added in the revised EXIM Policy 1997-2002, March 1999 Ed.,

recognising the importance of export of services and the potential in the sector. Apart from

extending all possible facilities applicable to merchandise exports, the threshold limit for

recognition as Service Export House etc. has been pegged at 1/3rd of the level prescribed for

merchandise exports.

The salient provisions of EXIM Policy relating to services exports are given below :

"Services" include all the 161 tradeable services covered under the General Agreement on Trade

in Services where payments for such services is received in free foreign exchange.

Facilities for service providers:

The service providers shall be eligible for the facility of EPCG Scheme as described in Chapter 6

of EXIM Policy. The provisions of paragraph 6.5(vii) shall also extend to the service providers

availing licences under this scheme.

The service providers shall also be eligible for the facility of EOU/EPZ/ EHTP/STP scheme.

Service providers are also permitted to import drawings, designs, integrated circuits and layout

designs, software in diskettes and CDs related to their line of services as a part of passenger

baggage without a licence.

Facility of import of restricted items by service providers:

Service providers shall be entitled to import restricted items up to 10% of the foreign exchange

earned by them during the preceding licensing year for import of essential goods related to their

line of business, including office and other equipment required for their own professional use.

Import through Courier

As laid down by the current Exim Policy, import of goods through courier is permitted in

accordance with the Courier Imports & Exports (Clearance) Regulations, 1998.

If the CIF value of the consignment imported does not exceed Rs.100000, the relative Bill of

Entry is required to be filed by the registered courier service.

If the CIF value is Rs.100000 or more, importers are to file separate B/E as in the case of other

imports.

In case of remittances for imports through courier services, authorised dealers should ensure

submission of Exchange Control Copy of Bill of Entry for home consumption in the case of

imports valued at Rs. 100000 or more.

This is not regarded as baggage for the purpose of assessment of duty and clearance therof. The

practice of charging a uniform duty on articles imported through courier has been discontinued.

Imports by courier are now classified on merits in the respective customs Tariff headings. The

new system of assessment and clearance of goods imported by courier is now governed under the

Courier Imports & Exports (Clearance) Regulations 1998.

Imports without Forex remittances:

Imports not involving foreign exchange remittance is allowed as given below( vide Para 5.41 of

the Handbook of Procedures):

Import of items by United Nations Organisation and Specialised Agencies and its officials

without payment of Customs duty.

Import of Medical Equipment by Indian Doctors and Professionals is allowed under the Baggage

Rules, 1994.

Goods as Baggage by Foreign Mountaineering Expedition Teams and Painting and other Display

Articles, except consumables, are allowed. Foodstuffs and Medicines by Charitable organisations

are also allowed.

Import of food parcels, except alcohol and tobacco, subject to a limit of Rs. 100 000 per annum

is allowed for personal consumption of foreign citizens.

Import of free gifts and relief supplies by certain organisations/institutions e.g. Indian Red Cross

Society, National Defense Fund is allowed.

Also import of equipments, raw-films etc. by foreign publicists like Radio, Press, Films,

Television teams are allowed.

Import of exhibits including construction and decorative materials required for the temporary

stands of the foreign exhibitors at the exhibitions, fair or similar show or display for a period of 6

months on re-export basis is allowed provided these fairs are sponsored/approved by the Govt. of

India in the Ministry of Commerce/India Trade Promotion Organisation and is being held in

public interest.

Import for personal use

Importers under this category do not need any IEC number. Import of goods by any person as

passenger baggage is permitted to the extent admissible under the Baggage Rules 1994.

However, quinine of more than 500 tablets or = pounds powder or 100 ampules is not

permissible.

Also, for any tourist, articles of high value whose re-export is obligatory under the Baggage

Rules shall be re-exported on his leaving India. Otherwise, those goods shall be deemed to be

regarded as prohibited goods under the Customs Act, 1962.

Any type of goods for which the c.i.f. value shall not exceed Rs. 2000 can also be imported

through Post or otherwise for personal use, provided they are not:

Vegetable seeds exceeding 1 pound in weight, bees, tea, books and periodicals, alcoholic

beverages, consumer electronic items (save hearing aids and life saving equipments and items for

which import is canalised under EXIM Policy.

Nevertheless, the customs duty, as applicable, shall have to be paid. As regards the procedure for

personal imports is concerned the same may involve sending of advance remittance if required

by the overseas supplier, opening of letter of credit, retirement of documents and remittance of

foreign exchange, customs clearance of the goods and payment of customs duty.

Import of Samples

Bona fide technical and trade samples of items, even those in the restricted in

ITC(HS)Classifications of Export and Import items is allowed without a license for a value

notmore than Rs. 1 lakh(CIF) in one consignment save vegetable seeds, bees and new drugs by

any importer. Tea samples not above Rs.2000 (CIF) in one consignment is allowed without a

license by any person connected with Tea industry.

Prototype import

This may be allowed on payment of duty without a license to an actual user, industri;al ecgaged

in the production of or hgaving industrial license/LoI or research, as the case may be, provided

the number of items imported does not exceed 10 in number in a year.

Import of Computer/Computer Software

Computers including personal computers, Keyboards or monitor valued upto Rs. 1.50 lac and Rs.

7000/- respectively can be imported freely without any licence. Computer Software can also be

imported freely without licence despite the fact computer software is regarded as Consumer

Goods.

Passenger Baggage

Under the Rules various kinds of articles can be imported upto certain value limit depending

upon the duration of stay of the passenger abroad and on the basis of Resident and Non-Resident

Status of the passenger.

Passenger Baggage Rules and import duty structure for baggage as applicable for such imports

under the Baggage Rules has been given seperately