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ACKNOWLEDGEMENT
We are very thankful to Tolani Institute of Management Studies who give us such
opportunity to work out for project on foreign trade. We also express our gratitude to
Mr. Apurva Maheta for his precious help during the entire course.
We are very thankful to all employees of Shakti Forwarders Pvt. Ltd., Gandhidham
for supporting and providing us the necessary knowledge that would help in our
future quests. During our training period, we have not only learnt the standard Custom
Clearance procedure but also learned about other aspects of for running the shipping
departments smoothly.
The various department of the organization work in close co-ordination with each
other in order to achieve a common end.
We would also like to thanks Mr. Suresh Maheta, Mr. Rajesh Naiyer, Mr. Paresh
chaturvedi, Mr.Dharmesh, Mr. Manoj for their guidance which help us to complete
our project. Once again we heartly thankful to Shakti Forwarders Pvt. Ltd who help us
in making a project of procedure of custom clearance for import and export and gives
us an opportunity to learn under kind guidance and learning environment.
PREFACE
We know that training is for the development and enhancement of the knowledge in
particular fields. It can never be possible to make a mark in todays competitive era
only with theoretical knowledge when industries are developing at global level,
practical knowledge of administration and management of business is very important.
Hence, practical study is of great importance to PGDM student.
With a view to expand the boundaries of thinking, we have undergone 2 rd SEM
TRAINING at Shakti Forwarders Pvt. Ltd. we have made a deliberate to collect the
required information and fulfill training objective.
EXECUTIVE SUMMRY
As a partial fulfillment of PGDM all students are required to undergo training for 2
months. With respect to that this we have prepared this project report on Functional
Procedure of Custom Clearance undertaken at Shakti Forwarders Pvt. Ltd.,
Gandhidham.
We have selected this topic to know about the custom process. This report also tells
about present scenario of Indian shipping and also tells about development in shipping
in Gujarat. Another objective is to know Documentation process done by CHA
(Clearing House Agent) to clear the goods from CUSTOM.
Our secondary objective is to know the relation between CHA and importer as well as
exporter. The report also describes that why shipping line invest their amount to
purchase ship and type of ship for transportation of goods.
This report also tells that as that how to calculate the DUTY on import-export goods.
We also describe that which Documents are useful for CHA, IMPORTER and
EXPORTER.
To know the relation between the CHA and exporter as well as importer.
CONTENTS
Description
Acknowledgement
Preface
Executive Summary
Objective of the Study
List of tables
List of figures
Abstract
1. Introduction
1.1 Project
1.2 Industry
1.3. Company
2. Methodology
3. Data Collection and Explanation
3.1 Export
3.2 Import
4. Recommendations
5. Conclusion
Appendices
Bibliography
Page No.
2
3
4
5
7
8
9
9
10
27
29
30
30
46
54
55
56
56
LIST OF TABLES
Sr No.
1
2
3
Table Title
Performance of Major Ports
Growth of state GDP
Largest Port by State
Page No.
13
13
13
LIST OF FIGURES
Sr No.
1
2
3
Table Title
Ports of Gujarat
Break Up of Commodities Handled at Major Ports
Forecast for Container Port Capacity
Page No.
11
23
24
1. INTRODUCTION
1.1 Project:
In view of the rapidly and constantly changing business environment globally and fast
evolving trade and commerce scenario in India vis--vis global market, there is
increasing requirement of reliable and dependable integrated logistics solutions
providers who can provide comprehensive, professional and dependable logistics
support to the industry, keeping the same in mind and with the vision to provide
quality and professional comprehensive logistics solutions to the international &
domestic trade.
In the development of any countrys economy, exports play a crucial role. Export is
the most important aspect of earning foreign exchange. A country should have to be
equipped with natural resources, so that it can sell these resources into the
international market.
With the opening up of the Indian economy, the international trade has been increased
significantly as there are less restriction on exports and imports.
More and more multinationals are registering their entry into the Indian market. The
imported products are now in well reach of Indian customers. The living standard has
been improved. This results in substantial amount of growth in both exports and
imports.
The procedure of both the exports and imports are time consuming and complicated.
In this regard there are several logistic companies and custom house agents providing
their services on the behalf of the exporters and importers to facilitate the trade
between them. These custom house agents and logistics companies take over the
responsibility of sending the goods from the exporters premises to the importer
premises, which also includes the most important aspect of custom clearance.
Shakti Forwarders Pvt. Ltd. is a leading name for custom clearance. Over the years
they have operated smoothly with their wide spectrum of personalized services.
Along the 1600 kms. of coastline of Gujarat, there are 41 ports, of which Kandla is a
major port. Out of remaining 40 ports, 11 are intermediate ports and 29 are minor
ports under the control of Gujarat maritime board.
Gujarat, situated on the western coast of India, is a principal maritime state endowed
with favorable strategic port locations. The prominence of Gujarat is by virtue of
having nearly 1600 kms long coastline, which accounts for 1/3rd of the coastline of
India and being the nearest maritime outlet to Middle East, Africa and Europe.
In 1991, government of India initiated various economic, trade and industrial reforms,
through the policy of liberalization to enhance industrial and trading activities. The
rationalization of import duties and stress on export promotion has seen imports
increasing by 24% and exports by 25%. Gujarat state is one of those frontline states
that can take up the policy of liberalization and privatization announced by the
government of India through the process of globalization.
TOLANI INSTITUTE OF MANAGEMENT STUDIES
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In Gujarat, ports are playing major role for growth of state GDP (Gross Domestic
Product) below are the figure for the year 2006-2007
Shipping Company:
TOLANI INSTITUTE OF MANAGEMENT STUDIES
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TRAMP SHIPS
2.
LINER SHIPS
Tramp Ships:Tramp ship or general trader, does not operate on a fixed sailing schedule, but merely
trades in all parts of the world in search of cargo, primarily bulk shipments. It is a
chartered ship prepared to carry anything anywhere. Its cargoes include coal, grain,
timber, sugar, ores, fertilizers, etc like which are carried in complete shiploads.
Tramp tankers are specialized vessels. They may be under charter or be operated by
an industrial company, that is oil company, motor manufacturer, etc to suit their own
individual/market needs.
Liner Ships:Liner ship operates on a fixed route between two ports or two series of ports. They
operate on a regular scheduled service. They sail on scheduled dates/times whether
they are full or not. The cost of using the service (freight) can be quoted from a fixed
tariff.
Container ships in deep sea trades and roe ship in the short sea trades feature
prominently in this field.
Container ships
2.
Roll-on/roll-off ships
3.
Break-bulk ships
4.
Crude carries
5.
Dry-bulk carriers
6.
Gas carriers
Container Ship:-
Container ships cater to only containerized cargo and generally have cranes on
board. They can store up to 4 tiers of containers below the main deck and up to 3
tiers above deck.
Roll-on/Roll-of ships therefore have a portion of their hull that opens up and
acts as a ramp on which the vehicles are driven before being parked on the many
decks of the ship and secured with chains. The hull opening is either on the side of
the ship or on its stern (rear).This ship have an advantage in that specialized lifting
equipment is not required, even for the heaviest of loads, since the cargo rolls
under its own power or pulled by a tractor.
Break-Bulk Ships:
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Break-bulk cargo ships are multipurpose ships that can transport shipments of
unusual sizes, unitized on pallets, in bags, or in crates.
The advantage of break-bulk ships is that they can call at just about any port to
pick up different kinds of cargo loads, giving them a flexibility that container ships
do not yet have.
The main problem with a break-bulk ship stems from its labor-intensive
loading and unloading because each unit of cargo handles separately.
Crude carriers are the bulk ships dedicated to the transport of petroleum products,
whether unrefined or refined, such as gasoline or diesel fuel.
The crude carriers are also known as VLCC (Very Large Crude Carriers) and
ULCC (Ultra Large Crude Carriers).
VLCCs and ULCCs are such large ships that they can call on only a few ports in
the world; since their draft, when loaded, can reach 35 meters(115 feet) they need
very deep ports for berthing.
Dry-Bulk Carriers:
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Dry-bulk carriers operate on the same basis as oil tankers in that they are chartered
for a whole voyage.
Dry-bulk ships have several holds in their hull, in which non-unitized cargo is
placed.
Dry bulk ships carry agricultural products, such as cereals, as well as coal, ores,
scrap iron, dry chemicals, and other bulk commodities.
Dry-bulk ships are generally small enough to fit through the PANAMA CANAL.
Gas Carriers:
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Containerization:
Types of containers-:
There are different types of containers. The popular types are:
1. General purpose containers-:
There are the most common type of containers and are the ones with which most
people are familiar. Each general-purpose container is fully closed and has width
doors at one end for access. Both liquid and solid substances can be loaded in these
containers. Based on length of the container, the container is generally known as a 20
ft container or 40 ft container, in practice. Hazardous or dangerous cargo can not be
loaded into general-purpose containers.
COMPANY PROFILE:Shakti forwarders Pvt. Ltd. formerly known as Shakti Enterprise was established in
1992. A leading custom house agent, for import and export, Shakti Forwarders has
established its basis at four different places across india. We have offices located at
mumbai, kandla, delhi and vapi.
Management Team:
Sr. No.
1
2
3
4
5
Director's Name
MR. KISHORE B. BHAGAT
MR. PRANAV BHAGAT
MR. MAULIK K. BHAGAT
MRS. TEJAL MAULIK BHAGAT
MR. SHAILESH B BHAGAT
Designation
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR
DIRECTOR
Branches:
Mumbai
Plot no-47/A, Little Malabar hill,
Opp. Sindhi Gymkhana, Near Police Chowki, Chembur, Mumbai - 400071
VAPI OFFICE:
SHAKTI FORWARDERS PVT. LTD.
A/218, GUNJAN GARDENS, G.I.D.C. VAPI 396195
DELHI OFFICE (NOIDA):
SHAKTI FORWARDERS PVT. LTD.
12, 1ST FLOOR, DHARAM MARKET,
ATTA, SECTOR 27, NOIDA 201301
2. RESEARCH METHODOLOGY:
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Primary data:Primary data collected through personal interview with the employee of the Shakti
Forwarders pvt. Ltd and we have initiated our research going through the whole step
wise processes of its routine activities.
Secondary data:Secondary data is collected through some good articles of shipping times and some
sites from internet.
3. DATA COLLECTION
AND
EXPLANATION
3.1 EXPORT
Export preliminaries:
In order to enter into export business, certain preliminary steps have to be taken by
every business organization. The setting up of an export firm is completed in two
stages. They are:
A)
There are various formalities and registrations to be made with different authorities
before an exporter can enter into export business and accept an export order.
1)
Selection of name of the firm-: An entrepreneur can choose any name for the
firm he wants to start. It is desirable that the name of the firms indicates that the
business relates to export/import.
2)
3)
4)
Opening of Bank Account-: The firm or company has to open a bank account
with branch of a commercial bank, authorized by reserve bank of India to deal in
foreign exchange. The firm may require pre and post shipment finance for its
business.
6)
Registration with Sales Tax Authorities-: exporter need not pay sales tax while
making purchases meant for export. But for availing the benefit, firm has to
register with sales tax authorities and secure sales tax number.
B)
2.
Registration
with
Export
Credit
and
Guarantee
Corporation (ECGC)-: the exporter should also register with export credit and
guarantee corporation of India (ECGC) in order to secure export payments against
political and commercial risks. It also helps to get financial assistance from
commercial banks and other financial organization.
4.
5.
6.
EXPORT PROCEDURE
Step 1:
Exporter sends the following document to Shakti Forwarder:
Packing list: A list which shows number and kinds of packages being shipped, totals
of gross, legal, and net weights of the packages, and marks and numbers on the
packages. The list may be requested by an importer or may be required by an
importing country to facilitate the clearance of goods through customs.
Invoice: One of the common to both international and domestic transactions is the bill
(invoice) that the exporter sends to the importer. However, the content of an
international invoice is more complex and should be prepared slightly differently for a
foreign customer than for a domestic one.
Step 2:
On the basis of invoice, Shakti Forwarder preparing Annexure A, Annexure C,
Annexure D and SDF ( Statutory Declaration Form ) along with the invoice.
Step 3:
Send these annexure to the custom house. The custom prepares the shipping bill in
four copies on the basis of these annexure.
Step 4:
Custom calculate the duty (CESS) on the value of the goods.
Using the Treasury Challan the duty can be paid. Cargo can enter the port premises.
TOLANI INSTITUTE OF MANAGEMENT STUDIES
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Step5:
Custom examined the cargo by using the sample. (Customs examined the cargo only
after the duty is paid) in case of more than one container in one B/L than A.C give
some container no. randomly for examination and that container must be de-stuff by
CHA.
Step 6:
The duplicate shipping bill and wharf age duly paid is given to the container agent.
The container agent hand over the duplicate shipping bill to the vessel agent who is
here uses it for the purpose of filling EGM (Export General Manifest).
The container agent gives the wharf age form paid is given to the container agent
grants the loading permission. (But in case of the break bulk cargo, the CHA itself
submits the wharf age paid form to the port authority, so that loading can be allowed
in the vessel).
Step 7:
In the case of break bulk, after loading the cargo the chief officer issues the mate
receipt, on the basis of which captain of the vessel issues the bill of lading.
Step 8:
Besides all the CHA sends the phytosanitary certificates/pre inspection certificate to
the exporter so that with all documents he can submit this to the bank.
In case of charter, after processing and shipment of the goods following documents
are sent back by the CHA to exporter.
This document is generally not negotiable unless consigned "to order." If we ask to
the logistics companies than a Bill Of Lading is a product for them. They do the
whole business on the Bill of Lading. Increase in Bill of Lading shows increase in
companys turnover.
Bill of Lading, On Board:
A bill of lading acknowledging that the relative goods have been received on board a
specified vessel.
Bill of Lading, Order:
It is a negotiable bill of lading. There are two types:
A bill drawn to the order of a foreign consignee, enabling him to endorse the bill to a
third party.
A bill of lading drawn to the order of the shipper and endorsed by him either "in
blank" or to a named consignee. The purpose of the latter bill is to protect the shipper
Issued by commanding officer of the ship that cargo has been loaded to the ship name
of the vessel, date of shipment, condition of cargo at the time of receipt, berth, and
description of packages.
Mate receipt is handed over to the port authorities so that port dues are cleared by the
exporter. Bill of lading is issued by the shipping company only after the mates receipt
is submitted by the exporter
Under customs act, every exporter is required to declare export value of shipment ad
give an undertaking that export proceeds would be realized within a period of six
months from the date of shipment or due date, which ever is earlier. If customs
clearance for the shipment is made manually, declaration is made in GR form, in
duplicate. If the clearance is computerized, SDF form, in duplicate, is used in place of
GR form.
Bill is generated in the customs clearance on the basis of The invoice is given to the
company by the shipper. And a shipping the invoice and packing list. When cargo is
stuffed, inside the container, in our port office or at factory. The details are given to
the corporate office documentation department via fax. The details as such received
are feed in to software called Visual Impex. Than, the details are sent via Ice gate link
to the customs database. In return, the customs allocate a shipping bill number and
print a shipping bill in the port office which is to be collected from the port office.
Further, the procedure goes for carting and loading the cargo into the vessel.
Certificate of origin.
A document provided by the exporters chamber of commerce that attests that the
goods originated from the country in which exporter is located.
Invoice.
Packing list.
Self Declaration Form Or Gr Form
Acceptance of contract.
Letter of credit.
Quality Control Certificate.
Inspection certificate
Export license
Weighment Certificate
Shipping bill
2) To the port authorities:
Port Trust Copy of the Shipping Bill
Letter of credit
Commercial invoice
Bill of lading
Insurance Policy/Certificate
Bill of exchange
Bank certificate
Certificate of Origin
Shipment advice
4) To the RBI:
Copy of the invoice
Sales Contract
Bill of lading
Export contract
Letter of Contract
Statement of profit and loss in the transaction covered by the export contract
Short shipment:
Original Customs
Second copy Agent
Third copy Exporter
One copy Wharf age refund
One copy is for CESS
Treasure Challan:This is document is used at the time of payment of the duty to the customs. It shows
the amount to be paid to the customs authority.
It is in four copies:
Original
Duplicate
Triplicate
Quadruplicate
Customs keeps the original and duplicate copies. Triplicate and Quadruplicate copies
are sent to the CHA.
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3.2IMPORT
Import Procedure
Bill of lading
Invoice
Packing list
Certificate of origin
Pre shipment inspection certificate
Insurance certificate
Sales contract
Bond copy (if H.S.S)
The CHA shows the bill of lading to the shipping agent in order to get the NOC
(Non Objection Certificate in Kandla Port only).
No objection certificate has been issued by the shipping line to make sure that they
have no objection to open the containers for the examination of goods.
CHA then presents the bill of entry to the customs for noting and then customs
gives the import department the serial no. that comes on all copies of bill of entry.
CHA pays wharf age to the port authority and the original copy of wharf age goes
to the treasury of port trust.
Customs give the examination order on the back of original bill of entry in case of
first check procedure.
Cargo is inspected in front of the customs. Customs give the examination report at
the back of the bill of entry.
Customs assessed the duty to ensure that the duty evaluated by the CHA is correct.
Prior to this, the CHA on the basis of invoice, packing list prepares the bill of entry.
The bill of entry is a proof that the goods have been imported.
For custom clearance purpose, the importer has to submit to the customs authority a
form, which is known as bill of entry.
Bill of entry is in three copies:Original copy:This is called the customs copy. In first check procedure it contains the examination
report on the back of it.
Duplicate copy:It is submitted in port either in container section or in break bulk section along with
wharf age, NOC, Delivery order. It shows charges have been paid to customs and
contain on the back, passed out of custom charges.
Triplicate copy:This copy is for central excise for availing certain benefits.
Quadruplicate copy:This copy is submitted to the bank.
Port trust copies:Out of 5th, 6th, and 7th copies, one copy is given to the port authority. The other two
copies are kept by the CHA for his record.
There are six kinds of duties, which have to be paid at the time of custom clearance in
case of imports those are:
1.
2.
3.
4.
5.
Bill of lading
Invoice
Certificate of origin
59- Bond warehousing bond
Wharf age
Bill of entry
Packing list
NOC (No Objection Certificate)
Delivery order
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Treasury challan
Gate pass
Invoice
It is a document which shows the total amount of the goods and the description of
goods.
Bill of lading
A generic term used to describe a document issued by the carrier to the shipper.
Mate receipt
4. SUGGESTIONS
The custom clearance for import and export cargo is such a long procedure so it takes
time to clear, so the employee must be try to make their work on time and quick.
Some of the complicated procedure in custom clearance so if we get the support of all
employees it must be easy.
If custom clearance done through online then it should be more simple.
5. CONCLUSION
The Indian business environment is changing with the rapid growth in infrastructure
and technology. With the increasing inflows of multinationals, trade has been
increased, which result in stiff competition between the organizations.
Despite of the stiff competition Shakti Forwarfers pvt. Ltd known as the leading
custom clearance agent, because of their effective implementation of quality
management system and customer centric approach.
APPENDIX
BIBLIOGRAPHY
Websites:
www.cbec.gov.in
www.kandlaport.com
http://www.cygnusindia.com/pdfs/CONTAINERISATION%20-%20India%20and
%20Global%20Scenario.pdf
http://www.gmbports.org/port_pog.htm
http://www.projectsmonitor.com/NewsImages/photo%207/Transport%20Table.jpg
Articles:
Daily Shipping News
EXIM