Foreign procedures
Transcript of Foreign procedures
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Export House, Trading House, Star Trading House and Super Star
Trading House
The government gave more concentration to the development of specialized
agencies for the promotion of nontraditional items like gems & Jewellery &
Industrial products such as bull dozers, loaders, buses, bicycles, cables,conductors etc., This was mainly because of the high competition in the
International Market and unless a positive step is taken to start export
houses, concentrating exclusively on exports, it would be impossible to
succeed against international giants.
The exports were divided into select products (Nontraditional items like
engineering goods, leather products etc.) and non-select products
(traditional items).
For qualifying as an export house the exports in the select list of productsshould not be less than Rs.3 crores and in the non-select list of products
should not be less than Rs.7 crores.
Such export houses has to show a minimum average annual growth rate at
the rate of 20% in the preceding three years.
The main facilities provided to export houses were:
1. Additional licenses to the exporters
2. Transfer of such licenses.
The concept of trading houses in India was brought into being by the
Government in 1981 82, though the government evolved the criteria for
recognition of export houses in 1960.
The main purpose of establishing the export house is:
1. To help in increasing the exports of the country by developing new
products for new markets.
2. To increase the international trade by encouraging exporters to
develop in their fields.
The Export House gained momentum as exports increased and therebyimprovement in trade. Therefore, the government brought in the concept of
Star Trading House in addition to Export House and Trading House.
The government later brought in Super Star Trading House because of the
growth in the economy after 1991, due to liberalization and also due to
phenomenal increase in exports.
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The criteria for recognition as Export House, Trading House, Star Trading
House and Super Star Trading House will be either on the basis of the FOB
value of their exports of goods and services during the three licensing years
or Net Foreign Exchange value of exports during the preceding year.
Export House, Trading House, Star Trading House and Super Star
Trading House
(In Rupees)
For 2010 2011 Period
Category
Avg FOB
Value of
exports made
during the
three
preceding
licensing
years
FOB value of
exports made
during the
preceding
licensing year
Avg Net
ForeignExchange
value of
exports made
during the
three
licensing
years
Net ForeignExchange
value of
exports made
during the
preceding
licensing year
Export House 36 Crores 48 Crores 35 Crores 40 Crores
Trading
House135 Crores 200 Crores 120 Crores 140 Crores
Star Trading
House620 Crores 920 Crores 560 Crores 780 Crores
Super Star
Trading
House
1950 Crores 2780 Crores 1600 Crores 2300 Crores
Special preference is given for the export of commodities like:
1. Products manufactured by Small Scale / Tiny / Cottage Units
2. Fruits and vegetables, floriculture and horticulture products
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Duty Drawback
For a product exported from India, the manufacturer would have paid duties
as under:
1. Import duties on raw materials and components imported and
2. Excise duty on the items manufactured in India
The customs and central excise duty drawback rules, 1971 provide for refund
of such duties to the exporter on the export being completed.
Duty drawback is allowed only for the items whose raw materials and
components have been used on which the duty has been paid.
There are two types of rates of drawback.
1. All Industry rate and
2. Brand rate
All Industry rate is applied to all exporters. Brand rate is applicable only to
particular manufacturers.
For claiming the drawback, the exporter should file with the customs; thetriplicate copy of the shipping bill within 60 days after the customs officer at
the port has given Let export order.
Duty Exemption scheme
This scheme enables the exporter to import materials without payment of
customs duty. It comprises two sub schemes:
1. Duty free licenses and
2. Duty Entitlement Pass Book Scheme
Duty Free License
It includes Advance license, advance intermediate license and special
imprest license.
1. Advance license It is granted to a manufacturer exporter or a
merchant exporter for the import of inputs required for the
manufacture of goods.
2. Advance intermediate license It is granted to the manufacturer
exporter for import of inputs required for manufacture of goods for
deemed exports.
3. Special imprest license It is granted to the manufacturer exporterfor import of inputs required for manufacture of goods for deemed
exports.
The export obligation of the above licenses shall be fulfilled within a period of
18 months from the date of issuance of the license.
Duty Entitlement Pass Book Scheme
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Under this scheme, the exporter shall be entitled for duty free credits. He
can make use of this to import any freely importable item.
The credit can be transferred to another person but the transfer will be valid,
within the same port of registration.
Under this scheme, the exporter will be issued a pass book. But now, the
exporter will be issued with scrip alone.
The pass book scheme will apply only for the export of products where SION
(Standard Input Output Norms) which have been published.
The DEPB scheme will be for the post shipment benefit. In order to avail the
benefit of DEPB, the exporters on export of their goods, have to present the
shipping bill, as a proof of export along with the application form duly filled
up to the DGFT. The DGFT will scrutinize the application and if correct, will
grant the DEPB license to the exporter.
The exporter on receipt of the DEPB license can import without payment of
customs duty and counterveiling duty. The government gives the benefit of5% average of FOB values of exports. This would enable the exporter to
import the required inputs duty free.
The DEPB license value will be known to the exporters so that the exporters
at the time of exports can do their costs accordingly.
The DEPB license can be sold in the open market. It covers both
manufacturer exporter as well as Merchant exporter.
The scheme is very easy to operate and the exporter has to come to the
licensing authority only once for getting the credit under DEPB.
The objective of DEPB scheme is to neutralize the incidence of customs duty
on the import content of the export product.
An exporter may apply for credit as a specified percentage of FOB value of
exports made in freely convertible currency. The credit shall be available
against such export products and at such rates as may be specified by the
DGFT for import of raw materials, intermediaries, components, parts, packing
materials etc.
The holder of DEPB shall have the option to pay additional customs duty if
any in cash as well.
The credit under DEPB may be utilized for payment of customs duty on any
item which is freely importable except capital goods.
Procedure for grant of DEPB credit
1. An application for grant of credit under DEPB may be made to the
licensing authority concerned in the prescribed form (Appendix 2.11) in
duplicate along with the following documents:
1. Bank receipt / Demand Draft evidencing payment of application fee.
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2. Copy of DEPB shipping bills
3. Bank certificate of exports
The application may be made by the registered office or head office or
branch office of the exporter to the concerned licensing authority.
Under Electronic data interchange scheme the exporter can file his
application on the DGFT website at http://www.nic-in/eximpol. Applications
received electronically shall be cleared within 24 hours as against 3 working
days for manually filed applications.
Under the EDI scheme, the duly filed applications on DGFT website are
downloaded by the concerned licensing authority and processed in
accordance with the prevalent rules and regulations, deficiency, if any, will
be communicated online to the applicant.
The applicant will have to visit the concerned office to hand over the hard
copy of the application along with the requisite documents including the
application fee.The license shall be issued on receipt of the hard copies of the documents
after scrutiny.
Time period
The application for obtaining the credit should be filed within a period of six
months from the date of exports.
Single port of registration
The DEPB shall be issued with single port of registration which will be the
port from where the exports have been effected.
Verification by customs
The licensing authority shall ensure that while issuing the DEPB, the shipping
bill no(s) and date (s), FOB value in Indian rupees as per shipping bill(s) and
description of export are endorsed on the DEPB. Before allowing the imports
against DEPB, the customs shall verify that the details of the exports as
given on the DEPB are as per their records.
Issue of DEPB licenseThe FOB value in free foreign exchange shall be converted into Indian rupees
as per the exchange rate for exports, notified by Ministry of Finance as
applicable on the date of order of Let export order by customs.
Free transferability of DEPB / Items imported
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The DEPB and / or the items imported against it are freely transferable. The
transfer of DEPB shall however be for import at the port specified in the
DEPB which shall be the port from where exports have been made. Imports
from a port other than the port of export shall be allowed under TRA* facility
as per the terms and conditions of notification issued by Department of
Revenue (* Telegraphic Release Advice)
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Customs clearance of imported goods and payment of customs duty
1. All goods imported into India have to pass through the procedure of
customs clearance after they cross the Indian border.
2. The goods are examined, appraised, assessed, evaluated and then
allowed to be taken out of customs charge for use by the importer.3. The customs clearance is done with the help of customs clearing
agents.
4. These agents are licensed by the Commissioner of Customs and they
are capable of handling the documents / goods.
Procedure
1. On receiving the advice of the vessel, the importers are required to
present a Bill of entry either for Home consumption or for warehousing
the goods.
2. Bill of entry is noted in the Import department with endorsement made
in the Import General Manifest.
3. The date of noting is important because the rate for duty applicable to
the goods imported would be that as in force on the date of noting
except in the case of warehoused goods, where the rate applicable
would be that in force on the date of physical clearance (calculation of
freight amount)
4. The Bill of entry shall be presented in the appraising department with
all the relevant documents like Invoice, Bill of Lading / Airway Bill,
Import license, if necessary catalogue literature wherever necessary.
5. If the documents are found to be true, the Assistant Commissionercounter signs it.
6. It is forwarded to the License department and then returned to the
importers (CHA) for the payment of duty in the Accounts department.
7. After recovery of duty, the original Bill of entry is given back to the
Accounts department and the duplicate copy is returned to the
importers for getting the goods examined in the docks.
8. In the docks, shed examiner shall examine the goods and if in order
shall give permission to take delivery from the custodian of the goods
(Port trust authorities) after payment of the port trust charges.
9. The goods are then examined in the docks and the Bill of Entry
returned to the Scrutinizing Appraiser.
10.The Accounts department gives out of charge after recovering the
customs duty and the original bill of entry will be returned to the
importer / agent.
IE Code No
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Customs authorities do not allow import of goods into India to the persons
who are not in possession of a code number allotted for this purpose by
the import trade control authorities.
Port of clearance
Import clearance can be permitted in any ports, Air customs and
container freight stations (Dry ports) established in interiors.
Port trusts
Imported goods unloaded in a customs area are required to be in the
custody of a person port trusts appointed by the commissioner of
customs
Customs administration
The central board of excise and customs controls the customs
administration. There are two main wings of Customs House.
Appraisement is assigned the job of collection of revenue and preventive
for prevention of smuggling. Commissioner of customs is theadministrative head assisted by Additional and deputy commissioner.
Indian Customs Tariff classification
The basic legislation concerning levy of customs duties is the India
Customs Act, 1962. Section 12 of the Customs Act, 1962 governs for levy
of customs duties of customs on goods imported into India.
Procedure regarding Warehousing of Imported goods
1. One set of bill of entry known as Bill of Entry for warehouse or In to
Bond Bill of Entry is prepared.
2. It is similar to the normal Bill of Entry but contains additional columns
indicating:
- Particulars of time by which the goods are allowed to the warehouse
by the Assistant Collector.
- Another column indicates the particulars of time by which goods are
allowed to be removed.
3. After the above process the Bill of entry have to pass the import noting
department*. The import noting department collects the complete list
of goods etc.,
4. After the IND*, the bill should be sent to the appraising department. Anassessment will be made by the appraisal department before
warehousing.
5. The role of the appraisal department is to re-assess. Re-assessment
should be made relating to
- Acceptability of valuation
- Exchange rate
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- Permissibility of imports
6. After the assessment is completed, the appraising department debits
the import licenses and prepares the warehouse receipts.
7. The warehouse receipt will be counter checked by the Assistant
Commissioner.
8. Now the Bill of Entry is audited by the Internal Audit Department and
sent to the Import Bond department.
9. The Import Bond department after scrutinizing the Bond is duly
accepted by Assistant Commissioner of Bonds.
10. After all these process, the original copy is kept in the Import
Bond department while others are handed over to the importers of his
clearing agents
11. The goods are then thoroughly examined by Dock Appraising
Staff.
12. The goods are warehoused or stored by the Dock Appraiserunder the escorts of Preventive officer.
Procedure for removal of goods from the Warehouse (Ex Bond B/E
for Home Consumption)
1. While removing the goods from the warehouse, the importer or the
clearing agent should submit the Ex Bond Bill of Entry in triplicate to
the Import Bond Department.
2. The Ex Bond will be registered by the Import Bond Department and
submitted to the Appraising department.
3. The Appraising department re assesses and classifies it.
4. The assessed Bill of Entry is thereafter handed over to the Importers
for payment of Import duty and taking delivery of goods.
Types of Customs duty
The union government prescribes the nature and extent of customs duties to
be levied on goods imported into India. They are:
1. Customs Duty All goods imported into India are chargeable to duty
as prescribed in the Customs Tariff Act. This schedule is amended from
time to time.2. Counter Veiling Duty It is equal to excise levied on like goods when
manufactured in India. The basic principle for such duty is that when
an individual product is subjected to an excise duty, it is seen that
protection is given to the domestic industry.
3. Non Modvatable Duty This duty tariff is not refundable.
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Valuation of goods
When the goods attract specific rate of duty there is no problem but when
duty is ad-valorem. Valuation for customs purpose is done as per the
principles laid down in custom valuation. (Determination and Prices of
Imported Goods) Rules, 1988.
Assessment of Customs duty
The assessment of goods is done on the basis whether:
- The goods mentioned in the Bill of Entry are regularly imported
- They are tested by the Customs House Laboratory and should be
correct
- The appraiser to see samples for the purpose of value / description
of goods
The shed appraiser examines the goods and on receipt of the report by the
appraiser. The appraiser completes the Bill of Entry. Then the importer paysthe duty and takes delivery of the goods from the docks.
Bill of Entry
The document on the strength of which the clearance of goods can be
effected is known as Bill of Entry.
Types of Bill of Entry
All the goods unloaded from a vessel, which have arrived from foreign ports,
are cleared on Bills of Entry in the prescribed forms presented under the Bill
of Entry Regulations 1971.
a. Goods entered for Home Consumption (direct from port to
manufacturer or Importers premises) Bill of Entry for Home
Consumption
b. Goods entered for Warehousing (From the port to the
warehouse for storage) Bill of Entry for Warehouse or Into
Bond Bill of Entry
c. Goods cleared from the Warehouse (From the warehouse to
the manufacturer or Importers premises) Ex Bond Bill of
Entry for Home Consumption
When to present Bill of Entry
B/E should be presented for noting in the Import department with
endorsement made in the Import General Manifest which gives detailed
description about the item wise goods brought by the concerned vessel. A
facility has been afforded to the Customs House Agents to lodge B/E 30 days
in advance of the arrival of the vessel. This concession has been given to
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facilitate the CHAs to keep the documents ready so that immediately on
arrival of the vessel and landing of the cargo. The same could be cleared on
examination and payment of duty thereon without any loss of time.
Salient features of a Bill of Entry
1. Origin and vessel particulars the importer or his clearing agent
has to give relevant particulars of the origin of the consignments and
the vessel. E.g. port of shipment, country of origin, vessel named and
Bill of lading No and date
2. Particulars of the goods The basic information has to be indicated
by the importer which includes (i) Item (ii) Description of the goods (iii)
Quantity (iv) Packages (No)
3. Value The importer has to give the break-up of invoice, value,
freight, insurance, exchange rate, loading and local agency
commission, landing charges etc.,4. Taxes leviable the bill of entry has separate columns indicating
customs duty rate, counter veiling duty rate and non modvatable duty
rate.
5. Codes For certain statistical purposes, certain code numbers have to
be indicated by the importer while filing the Bills of Entry which include
customs house agent code, importer code, unit code, currency code,
etc.
6. Declaration of importers / clearing agents certain declarations
have to be furnished by the importer / clearing agent. These
declarations include declaration about correctness of the contents of
the goods, correctness of the price / value. The declaration are
furnished by them and signed by them on the reverse of the Bill of
Entry.
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Importance of warehousing in Export Management
A warehouse may be defined as a location of temporary storage facility and
from where they are dispatched with the main objective of maintaining the
flow of goods throughout the system. These goods may be raw materials or
finished goods.
The distribution center is an integral part of the physical distribution system.
The center is a warehouse that provides a merchandise assessment to meet
customer requirements.
Products are stored in the distribution center (warehouse) to fulfill the
customer requirements to adjust seasonal production, to demand and to
take advantages of quality purchases.
The emphasis however is on maintaining a supply to meet customer
requirements rather than emphasizing long term storage.
The warehouse frequently serves more than a storage and bulk point. It alsoserves as a control center to assure that customers orders receive prompt
attention that adequate but not excessive inventories are available.
Warehouse is a portal point where goods, consumables, accessories etc. are
stored further transit and to supplement various other provisions.
Warehouses are operated under Indian Customs Act 1956 and 1957.
Warehousing operations
1. Receiving goods: A warehouse accepts the goods that are to be stored.
2. Identifying goods: A record has to be made of the number of each item
received. It may be necessary to identify the item by an item code tag;
a code of the carrier or container, etc. Checking will also be done.
3. Sorting goods: The incoming goods are sorted out for appropriate
storage area in the warehouse.
4. Holding goods: The goods are kept in storage under proper protection
until needed from the warehouse.
5. Retrieving goods: Items ordered by customers are taken out from
storage and grouped in a manner useful for the next step.
6. Marshaling (Checking goods): The items are brought together and
checked for completeness of the goods.7. Dispatching goods: The goods are dispatched through the right
transport vehicle.
Functions of a warehouse are:
1. Storage
2. Risk bearing (custodian of goods)
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3. Financing
4. Services for better marketing
5. Situational advantages
Types of Warehouse:
1. Public Warehouse
2. Private Warehouse
3. Bonded Warehouse
4. Cold storage (Refrigerated Warehouse)
5. Agricultural Warehouse
6. Buffer storage Warehouse
7. Export and Import Warehouse
1. Public Warehouse It is owned and operated by professional
warehouse personnel and furnish not only space and break bulkfacilities but also a wide variety of services related to physical
distribution. The user of a public warehouse pays only for the space
that is used plus the fees for services that are requested. Public
warehouse will receive goods store it, assemble and deliver products
as they are needed by customers. Public warehouse also aid the
producer by issuing warehouse receipts that are to be used as
collateral for bank loans. Thus the public warehouse provides the
shipper with the flexibility to provide rapid service to customers, for
storing goods, tariff systems, and licensing laws. They are owned by
government/ports/central warehousing corporation.
The advantages of public warehouse are:
a. It is generally less expensive and more efficient.
b. They are strategically located and immediately available.
c. The user pays only for the space and services he uses.
2. Private Warehouse A warehouse may be privately owned and
operated by a company making its own goods is called Private
warehouse. The advantages of private warehouse is :
1. It offers better control over the movement and storage of goodsfrom time to time.
2. If there is sufficient volume of goods to be warehoused, the cost or
private warehousing compares favorably with that of public
warehousing.
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3. Bonded Warehouse They are located near ports. They enable
the unloading of commodities from a ship safely into a place until
the owner of the goods take delivery of them. Such warehouses are
also necessary for outward transportation. An important service
rendered by them is the provision of indirect finance. An importer
normally has to take over the goods after paying customs duty to
the port authorities and dues to the shipping company. An
agreement is entered into with the warehouses to take delivery of
goods proportionately by paying these dues in installments. The
goods deposited with the warehouses are said to be Into Bond
4. Cold storage warehouse Cold storage facilities are provided for
perishables against payment of a storage charge from the space
utilized by different parties. In a cold storage, it is essential that the
temperature is regulated and temperature variation is controlled to
the degree particularly necessary for certain sensitive items.
5. Agricultural warehouse These warehouses are meant for
storing agricultural produce grown in a certain area. These
warehouses receive agricultural commodities either directly from
the farmers of through their commission agents. They store the
commodities as long as required. They make it possible for the
owners of the commodities to obtain better prices.
6. Buffer Storage warehouse These warehouses are built at
strategic locations with adequate transport and communication
facilities. They store food grains, fertilizers etc., by or for the
government for easy checking and supply to various far off or
nearby consuming areas.
7. Export and Import warehouse These warehouses are located
near ports from where international trade is undertaken. They
provide transit, storage facilities for goods awaiting onward
movement. Facilities for break bulk packaging, inspection, marking
are available these warehouses. Import warehouses also provide
customs bonding facilities.
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Care should be taken while warehousing the goods
1. Ensure the credit worthiness of the exporter / importer.
2. Check the quantity, description of the goods.
3. Check the documents.
4. Verify the title and owner of the goods.5. Quantitative checking of goods while arriving from the port.
6. Customs duty to be paid for the goods imported at the time of
clearing from the warehouse.