Assignment

Of
Export Import Procedure and
Documentation

Topic:

Relevant details related to export/import

activities with an example of a product.

Submitted to Submitted by

Mrs. Supriya Gupta N. S. Parthsarthi

Faculty Roll no. M2009049
Sec- A

AIT School of Management, Greater Noida

 EXPORT AND IMPORT OF A PRODUCT

Export- To send or transport goods abroad out of a customs territory;

to sever them from the mass of things belonging to one country with
the intention of uniting them to the mass of things belonging to a
foreign country. The term export is derived from the conceptual
meaning as to ship the goods and services out of the port of a country.
The seller of such goods and services is referred to as an "exporter"
who is based in the country of export whereas the overseas based
buyer is referred to as an "importer". In International Trade, "exports"
refers to selling goods and services produced in home country to other
markets. An export is to send or transport (a commodity, for example)
abroad, especially for trade or sale.

Import- Commodities (goods or services) bought from a foreign

country. Import means to bring or carry from an outside source,
especially to bring (goods or materials) from a foreign country for
trade or sale, to bring in (merchandize, commodities, workers etc.)
from a foreign country for use, sell, processing, re-export or services.

Export Import Trade: Introduction to Regulatory

Framework

Introduction
Creation of appropriate institutional framework and supportive
environment facilitates the growth of external trade. In a developing
country like India, the real barometer of sustained economic
development is the growth index of exports. Sustained growth in
exports can only be accelerated by conducive framework. The primary
objective and emphasis of the framework is towards accelerated
development with the required regulation to support the framework
structure. The role of regulation is to protect the interests of
consumers, obtain conditions of competition and foster the institutional
framework. The present regulatory framework in India is highly
supportive. The attitude of the government, a very important aspect
for faster pace, is poised in that direction to make the framework
achieve the sustained growth, removing the bottlenecks, hindering the
path of progress and development.
Trade Policy
Trade policy is one of the many economic instruments for achieving
economic growth. The basic twin objectives of the trade policy have
been to promote exports and restrict imports to the level of foreign
exchange available in the country. The inherent problems of the
country have been non-availability/acute shortage of crucial inputs like
industrial raw materials, supporting relevant technology and required
capital goods. The problems can be removed by imports. But,
continuous imports are neither possible nor desirable. The gap
between exports and imports is financed through borrowing and
foreign aid. However, imports must be financed by exports, in the long
run. The basic objective of the trade policy revolves round the
instruments and techniques of export promotion and import
management.

Foreign Trade
Foreign trade is recognized as the most significant determinants of
economic development of a country, all over the world. For providing,
regulating and creating necessary environment for its orderly growth,
several Acts have been put in place. The foreign trade of a country
consists of inward and outward movement of goods and services,
which results into outflow and inflow of foreign exchange. The foreign
trade of India is governed by the Foreign Trade (Development &
Regulation) Act, 1992 and the rules and orders issued there under.
Payments for import and export transactions are governed by Foreign
Exchange Management Act, 1999. Customs Act, 1962 governs the
physical movement of goods and services through various modes of
transportation. To make India a quality producer and exporter of
goods and services, apart from projecting such image, an important
Act—Exports (Quality control & inspection) Act, 1963 has been in
vogue.

Developmental pace of foreign trade is dependent on the Export-

Import Policy adopted by the country too. Even the Exim Policy 2002
2007 lays its stress to simplify procedures, sharply, to further reduce
transaction costs.

Today’s international trade is not only highly competitive but also

dynamic. Necessary responsive framework to make exports compete
globally, is essential. In order to harness these gains from trade, the
transaction costs, in turn dependent on the framework support,
involved need to be low for trading within the country and for
international trade. International trade is a vital part of development
strategy and it can be an effective instrument of economic growth,
employment generation and poverty alleviation. Market conditions
change, almost daily, requiring quick response and more importantly,
anticipation of the future requirements is the need of the hour. To gear
with the changing requirements, it is essential that the framework has
to remain in pace and change in anticipation, accordingly, and then
only international trade can pick up the speed envisaged.

Simplification in Documentation (Developments in

August, 2005)

DGFT Related Documentation at a Single Place:

Importers and exporters have to fill multiple application forms at
various stages of their business activity to meet procedural
requirements of different Departments/Ministries under different Acts.
The objective of Government has been to simplify procedures and
reduce documentation requirements so as to reduce the transaction
costs of the exporters and thereby increase their competitiveness in
international markets. With this in mind, a Committee to look into
procedural simplification and reduction of transaction costs has been
set up under the Chairmanship of Director General of Foreign Trade.

As a first step towards this exercise, the DGFT has devised a single
common application form called ‘Aayaat Niryaat Form’. This 50-page
set of forms, as against the 120-page set currently in existence,
provides availability of information on DGFT related Documentation at
a single place. It has a web interface for on-line filing by exporters and
retrieval of documents by the licensing authorities. This is a major leap
towards paperless trading, in the series of initiatives in the direction of
moving towards reduced paper transactions through procedural
simplifications. A single common application form called “Aayaat Niryat
Form” is being introduced, reducing the documentation requirements
by more than 60%.

Reduction of Documents to Five for Customs Purposes

Government has decided to do away with a number of declarations
that exporters, presently, have to file under various promotion
schemes, including duty drawback and duty entitlement pass book.

The decision has been taken by the finance ministry in line with the
recommendations of the sub-committee headed by the Chief
Commissioner of Customs, Delhi. The panel has been formed to study
the problems faced by traders under the present exports
documentation procedure, following complaints from industry about
cumbersome requirements that have often resulted in unnecessary
delay and additional transaction costs.

The sub-committee has comprised representatives from the Customs

department, the Directorate General of Foreign Trade, the Reserve
Bank of India, Fieo and the Delhi Exporters Association. After a
scrutiny of requirements under the electronic data interface (EDI)
system, the sub-committee has concluded that there are just five
documents required for customs purposes. These include commercial
invoice, packing list, self declaration form, ARE-1 (application for
removal of excisable goods for export) and the declarations pertaining
to various export promotion schemes.

While the identified documents can not be dispensed with, the sub
committee has stated that a number of documents being filed by
exporters for various export promotion schemes have outlived their
utility and do not serve any useful purpose. It has recommended that
such declarations should be done away with. The revenue department,
after going through the sub-committee’s recommendations, has also
decided not to ask for any declaration on the duty drawback scheme
and the duty-free replenishment certificate scheme. The department
has agreed to issue a suitable draft notice and standing order for
guiding industry and staff, in this context.
 Import Procedure

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.

Principal 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.

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.

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.

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.

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.

Generally following types of Letter of Credit are in operation.

Revocable or Irrevocable Letters of Credit

Confirmed Credit
Transferable Credit
With or without Recourse Credit
Revolving Letter of Credit
Transit Credit
Back to Back Credit
The Sight Credit
The Credit available against Time Draft (Usance Credit)
The Deferred payment Credit.

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 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.

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.

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.

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:

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 licencing
authority concerned.

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

Export Procedure

How To Export:

Golden Rule: In order to be successful in exporting one must fully

research its markets. No one should ever try to tackle every market at
once. Many enthusiastic persons bitten by the export bug, fail because
they bite off more than they can chew. Overseas design and product
requirements must be carefully considered.

Sell Experience: If a person cannot easily export his goods, may be

he can sell his experience. Alternatively, he can concentrate on
supplying goods and materials to exporters' who already have
established an export trade. He can concentrate on making what are
termed 'own brand' products, much demanded by buyers in overseas
markets which have the manufacturing know-how or facilities.

Selling in Export: In today's competitive world, everyone has to be

sold. The customer always has a choice of suppliers. Selling is an
honorable profession, and you have to be an expert salesman.

On-Time Deliveries: Late deliveries are not always an exporters

fault. Dock strikes, go-slows, etc. occur almost everywhere in the
world. If one enters into export for the first time, he must ensure of
fast and efficient delivery of the promised consignment.

Communication: Communication internal and external must be

comprehensive and immediate. Good communication is vital in export.
When you are in doubt, pick up the phone or email for immediate
clarification.

Testing Product: The risk of failure in export markets can be

minimized by intelligent use of research. Before committing to a large-
scale operation overseas, try out on a small scale. Use the a sample
test, and any mistakes can then be corrected without much harm
having been done. While the test campaign may appear to cost more
initially, remember that some of the cost will be repaid by sales, so
that test marketing often turns out to be cheaper.

Approach: If possible some indication of the attitudes towards the

product should be established, like any sales operation. Even if the
product is successful, to obtain reactions from the customer.

Preliminaries for Starting Export Business

• Setting up an appropriate business organization.

• Choosing appropriate mode of operations
• Naming the Business
• Selecting the company
• Making effective business correspondence
• Selecting the markets
• Selecting prospective buyers
• Selecting channels of distribution
• Negotiating with prospective buyers
• Processing an export order
• Entering into export contract
• Export pricing and costing
• Understanding risks in international trade

Registration:

• Registration with Reserve Bank Of India: No longer required.

Prior to 1.1.1997 it was compulsory for every exporter to obtain
an exporters' code number from the Reserve Bank of India
before engaging in export. This has since been dispensed with
and registration with the licensing authorities is sufficient before
commencing export or import.
• Registration with Regional Licensing: Authorities (obtaining IEC
Code Number) The Customs Authorities will not allow you to
import or export goods into or from India unless you hold a valid
IEC number. For obtaining IEC number you should apply to
Regional Licensing Authority (list given in Appendix 2) in
duplicate in the prescribed form given in Appendix 1. Before
applying for IEC number it is necessary to open a bank account
in the name of your company / firm with any commercial bank
authorised to deal in foreign exchange. The duly signed
application form should be supported by the following
documents:

Bank Receipt (in duplicates)/Demand Draft for payment of the

fee of Rs. 1,000/-.

Certificate from the Banker of the applicant firm as per Annexure

1 to the form given in Appendix 1 of this Book.

Two copies of Passport size photographs of the applicant duly

attested by the banker to the applicants.

A copy of Permanent Account Number issued by Income Tax

Authorities. If PAN has not been allotted, a copy of application of
PAN submitted to Income Tax Authorities.

In case the application is signed by an authorised signatory, 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 repatriation benefits, 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 which
has been caution-listed by the RBI. Where the applicant is so
associated with a caution-listed firm/company the IEC No. is
allotted with a condition that he can export only with the prior
approval of the RBI.

Exporter's Profile as per form attached to Appendix 1 of this

book (See Appendix 1A of this Book). The Regional Licensing
Authority concerned will on merits grant an IEC number to the
applicant. The number should normally be given within 3 days
provided the application is complete in all respects and is
accompanied by the prescribed documents. An IEC number
allotted to an applicant shall be valid for all its branches/divisions
as indicated on the IEC number.
Register With Export Promotion Council:

In order to enable you to obtain benefits/concession under the export-

import policy, you are required to register yourself with an appropriate
export promotion agency by obtaining registration-cum- membership
certificate.

For this purpose you should apply in the prescribed form, given at
Appendix 3 of this Book to the Export Promotion Council relating to
your main line of business.

For list of Registering Agencies, please refer to Appendix 4 of this

Book. However, if the export is such that it is not covered by any EPC,
RCMC in respect thereof may be obtained from the Regional Licensing
Authority concerned.

An application for registration should be accompanied by a self

certified copy of the Importer-Exporter code number issued by the
Regional Licensing Authority concerned and bank certificate in support
of the applicant's financial soundness. In case an exporter desires to
get registration as a manufacturer exporter, he should furnish
evidence to that effect. In the case of a manufacturer exporter the
licensing authority may seek copy of registration with SSI/any other
sponsoring authority in addition to the application in the prescribed
form for the Import Export Code Number.

If the application for registration is granted, the EPC or FIEO shall

issue the RCMC indicating the status of the applicant as merchant
exporter or manufacturer exporter. The RCMC shall be valid for five
years ending 31st March of the licensing year. The certificate shall be
deemed to be valid from 1st April of the licensing year in which it was
issued.

Registration With Sales Tax Authorities: Goods which are to be shipped

out of the country for export are eligible for exemption from both Sales
Tax and Central Sales Tax. For this purpose, you should get yourself
registered with the Sales Tax Authority of your state after following the
procedure prescribed under the Sales Tax Act applicable to your State.

Despatching Samples:
As the overseas buyers generally insist for the samples before placing
confirmed orders, it is essential that the samples are attractive,
informative and have retention and reminder value. Besides, the
exporter should know the Government policy and procedures for
export of samples from India. He should also be aware about the
cheapest modes of sending samples.

In this connection, it is advised that the postal channel is

comparatively cheaper than sending samples by air. While sending
samples through postal channel due regard should be given to weight
and dimension of the post parcels as postal authorities have prescribed
maximum weight and dimension for the post parcels handled by them.
Where it is not possible to send the samples by post parcels, the same
may be sent by air. So far as the Government policy regarding export
of samples is concerned, distinction has been made between export of
commercial samples and gift parcels. In terms of Para 11.4 of the
Import Export Policy as modified upto 31.3.1999, goods including
edible items of value not exceeding Rs.1,00,000 in a licensing year
may be exported as a gift. Items mentioned as restricted for exports in
the ITC (HS) Classifications of Export & Import Items shall not be
exported as a gift without a license except in the case of edible items.
Export of bonafide trade and technical samples having indelible
marking as "sample not for sale" is allowed freely without any limit.
However, in such cases where indelible marking is not available, the
samples may be allowed for a value not exceeding US $ 10,000, per
consignment. In addition the exporter has the option to avail the
facility of free samples upto US $ 5,000 or 1% of the preceding year's
exports, whichever is higher. An application for export of gifts/samples
in excess of the limits specified above may be made to the DGFT.

Special provisions have been made for export of garment samples.

Garment samples are allowed to be exported only by exporters who
are registered with the Apparel Export Promotion Council (AEPC) or
the Wool and Woolen Export Promotion Council for woolen Knitwears.
Export of samples to be sent by post parcel or air freight are further
divided into 3 categories, namely : 1.Samples of value upto Rs.10,000,
2.Samples of value less than Rs. 25,000, 3.Samples of value more
than Rs. 25,000.Where the value of the articles is less than Rs.
10,000, the exporter should file a simple declaration that the sample
does not involve foreign exchange and its value is less than Rs.
10,000.Where the value of samples is more than Rs. 10,000 but less
than Rs. 25,000 you should obtain a value certificate from the
authorised dealer in foreign exchange (i.e. your bank). For this
purpose, you should submit a commercial invoice certifying thereon
that the parcel does not involve foreign exchange and the aggregate
value of the samples exported by you does not exceed Rs. 25,000 in
the current calendar year.If the value of samples exceeds Rs. 25,000
you should obtain Gr/PP waiver from the Reserve Bank of India.

Export of trade samples is allowed by sea/air (as distinguished from

sea/airmail) without any value restriction, provided the customs
authorities are satisfied about the bona fide of the goods that they do
not fall in the export control restrictions. However, customs authorities
may ask for suitable documentary evidence in this regard viz.
correspondence etc. with the overseas buyer. Trade samples against
which the foreign buyer agrees to make payment can be exported in
the same manner in which normal exports are effected. Samples can
also be carried personally by you while traveling abroad provided these
are otherwise permissible or cleared for export as explained earlier.

However, in case of precious jewelry/stone items, you should declare

the same to the customs authorities while leaving the country and
obtain necessary endorsement on export certificate issued by the
Jewelry Appraiser of the Customs.

Appointing Agents:

Selling through an overseas agent is an effective strategy. These

agents serve as a source of market intelligence. Regularly sending the
latest trends on the current fashion, taste and price in the market.
Being a man on the spot, the agent is in a position to render his advice
to exporter or new methods and strategy for pushing up sales of your
products. He also provides you support in the matter of transportation,
reservation of accommodation, appointment with the government as
and when required by you. In some countries it is compulsory under
their law to sell through local agents only. It is, therefore, essential
that you should carefully select your overseas agent.

Acquire Export License:

Exports free unless regulated: The current Export Licensing Policy

of the Government of India is contained in the new Import Export
Policy and Procedures, 1997-2002 as amended upto 31.3.1999. The
Policy and Procedures are amended from time to time and for latest
position kindly refer to. However, for the sake of information of the
prospective exporters, it may be stated that all goods may be exported
without any restriction except to the extent such exports are regulated
by the ITC (HS) Classifications of Export and Import items or any
other provisions of this policy or any other law for the time being in
force. The Director General of Foreign Trade may, however, specify
through a Public Notice such terms and conditions according to which
any goods, not included in the ITC (HS) Classifications of Export and
Import items may be exported without a license. Such terms and
conditions may include Minimum Export Price (MEP), registration with
specified authorities, quantitative ceilings and compliance with other
laws, rules, regulations.

Application for an Export License: An application for grant of

export license in respect of items mentioned in Schedule 2 of ITC (HS)
Classifications of Export and Import items may be made in the form
given in Appendix-18A or 18B or 18C, as the case may be, to the
Director General of Foreign Trade and shall be accompanied by the
documents prescribed therein. The Export Licensing Committee under
the Chairmanship of Export Commissioner shall consider such
applications on merits for issue of export licenses special High Powered
Licensing Committee under the Chairmanship of Director General of
Foreign Trade shall consider applications for export of dual purpose
chemicals and for special materials, equipment and technologies, as
specified in Schedule 2 Appendix 5 and Schedule 2 Appendix 6
respectively of the book p 7 3 titled ITC(HS) Classifications of Export
and Import items on the basis of guidelines issued in this regard from
time to time.

Export of Canalised Items: An application for export of canalised

items mentioned in ITC (HS) Classifications of Export and Import items
may be made to the Director General of Foreign Trade.

Trade Fairs/Exhibitions: Any Indian wishing to organise any Trade

Fair/Exhibition in India or abroad, would be required to obtain a
certificate from an officer of the rank not below that of an Under
Secretary to the Government of India, in the Ministry of Commerce, or
an Officer of India Trade Promotion Organisation, duly authorised by
its chairman in this behalf, to the effect that such exhibition, fair or as
the case may be, similar show or display, has been approved or
sponsored by the Government of India in the Ministry of Commerce or
the India Trade Promotion Organisation and the same is being held in
public interest.

Gifts/Spares/Replacement Goods: For export of gifts,

indigenous/imported spares and replacement goods in excess of the
prescribed ceiling/period, an application may be made to the Director
General of Foreign Trade.

Export through Courier Service: Import/Exports through a

registered courier service is permitted as per the Notification issued by
the Department of Revenue. However, importability/exportability of
such items shall be regulated in accordance with the policy.

Acquire Export Credit Insurance:

Export credit insurance protects you from the consequences of the

payment risks, both political and commercial. It enables you to expand
your overseas business without fear of loss. Further, it creates a
favorable climate for you under which you can hope to get timely and
liberal credit facilities from the banks at home.

You can obtain Export Credit Insurance from the Export Credit and
Guarantee Corporation of India Limited. In order to provide you Export
Credit Insurance, the following covers are issued by the ECGC :

Standard policies to protect you against the risk of not p 7 3 receiving

payment while trading with overseas buyers on short-term credit.

Specific policies designed to protect you against the risk of not

receiving payment in respect of:

• exports on deferred payment terms

• services rendered to foreign parties
• construction work, including turnkey projects undertaken abroad

Arranging Finance:

Financial assistance to the exporters are generally provided by

Commercial Banks, before shipment as well as after shipment of the
said goods. The assistance provided before shipment of goods is
known as per-shipment finance and that provided after the shipment
of goods is known as post-shipment finance.Pre-shipment finance is
given for working capital for purchase of raw-material, processing,
packing, transportation, ware-housing etc. of the goods meant for
export. Post-shipment finance is provided for bridging the gap between
the shipment of goods and realization of export proceeds. The later is
done by the Banks by purchasing or negotiating the export documents
or by extending advance against export bills accepted on collection
basis. While doing so, the Banks adjust the pre-shipment advance, if
any, already granted to the exporter.

Understand Foreign Exchange Rates & Protect Against their

Adverse Movement:

Procuring/Manufacturing Goods for Export & their Inspection

by Government Authorities:

Labeling, Packaging, Packing and Marking Goods:

 Activities Related with Export/Import of Tea

It is said that the tea was discovered accidently by Emperor

ShenNungback in 2700BC. After a large meal, one day he was
relaxing in the garden with a cup of boiling water. At the time some
leaves from a nearby tea tree fell into the cup. Unnoticed he consumed
the drink. He enjoyed the taste of the tea and the pain relief of the
drink was so much. Like this the cup of tea was invented.
Tea belongs to the family Theaceae. It is the oldest non alcoholic
caffeine containing beverage in the world. The Chinese were the first
to use tea as medicinal drink, later a beverage and have been doing so
for the past 3000 year.
Export
 Tea exports do need to be exported after passing inspection, the
relevant information and details of the program can consult
foreign trade companies.
 The Tea Board Of India’s Export Promotion work is mostly
carried out through its foreign offices located in London, Dubai
and Moscow.

 Market development activities include market surveys, market

analysis and tracking of consumer behaviour. This also includes
making all relevant information available to exporters/importers
and through an information dissemination plan.

 Board’s various promotional schemes under the Market

Promotion Scheme are aimed at increasing India’s market share
in the foreign market and maintaining it on a sustained basis as
well as to encourage exporters to try out newer markets.

 Maintaining liaison work with the tea trade, attending to trade

enquiries, shipping and warehousing difficulties, keeping the tea
trade informed of developments related to exports, as well as,
dissemination of market and trade information.

 Organizing the Board’s participation in Trade Fairs and

Exhibitions not covered by the Overseas Offices.

 Arranging the visit of the Board’s representatives, tea

delegations to foreign countries to participate in International
Meetings, Fair/Exhibition and Buyer-Seller Meets.

 Organizing the visits to India of tea delegation/buyers from

abroad including arranging their meetings with tea trade, visit to
tea areas etc..

 Sustaining a Domestic generic campaign through various media-

electronic, press, radio and below the line activities to create a
young and happening image of India Tea.

 Darjeeling Certification Trade Mark Protection Process.

 The idea was conceived by global consultants Accenture, who

had suggested us the system of a systematic export rating.
Currently, the process is being put in place and the board has
already kicked off the first phase, which involves asking
exporters to voluntarily submit their credentials.

 The rising trend of the tea export and production, increasing

prices of tea at different auctions in throughout the country are
also spelling towards the profitability time for this sector. The
total tea plantation area in India for the cultivation of tea is
estimated to be around 521.500 hectares.
 The system will also capture basic information about the
exporter including the company's profile, technology, its volume
and value of exports to various countries. Customer satisfaction
will be based on the exporter’s ability to supply tea and
adherence to quality commitments.

 Tea Exporters not only consists of tea manufacturers who

export directly but also of tea traders and brokers. General food
trading firms who deal with tea on a regular basis are also
assigned to the two categories. Tea Wholesalers may comprise
of tea wholesalers,distributors,packers,and blenders,many of
which also sell by retail.
Import
 The tea trade organization that wait and important importer
come to couplet system nation and country of southeast Asia
area China, undertake deliberate with respect to foreground of
world tea commerce, show factory of our country modern tea
and tea garden base, the development of the long history that
makes a foreign trader personal experience culture of our
country tea and industry progresses, build cooperative platform
for the enterprise hard, enlarge exit of our country tea, tea of
compose our country exports new page.
 The importation of tea accessories generally follows the normal c
ustoms procedures. However, importing tea triggers a number of
regulation simposed by a gencies out side of Customs. For exam
ple, the actual manufacturer or packer of the tea overseas must
be registered with the FDA, prior to the tea being imported.

 The person importing the tea must give the FDA pre-import
notice that the tea is being imported. Under the Lacey Act, the
importer must make pre-import declarations and keep records
concerning the source of any paper and other wood-
based products such as tea bags and packaging that are
separately imported into the United States.

 Apart from Customs inspections of the contents of tea

shipments, Customs
officials will inspect shipments to ensure that they comply with t
he FDA's labeling requirements.

 Despite an increase in the price of imported teas, India's tea

import bill dropped due to reduction in volumes, an analysis of
the information available with the Tea Board and importers
reveals.

 In the first three quarters of calendar 2010, the latest period for
which official data is available, India paid on an average Rs
88.45 a kg to import teas against Rs 85 in 2009. But the volume
imported dropped to 14.68 million kg from 17.88 million kg. That
means, more volume could not be imported because of increased
prices.

 The import bill declined to Rs 129.82 crore from Rs 151.97 crore,

a fall of 14.58 per cent. In dollar terms, the price of imported
teas averaged $1.92 a kg against $1.74 in 2009. The overall
import bill declined to $28.23 million from $31.03 million.
  In financial year terms, the volume imported in the first half of
the current fiscal dropped to 9.65 million kg from 13.07 million
kg last year. But the price increased to Rs 94.54 a kg from Rs
85.74. That means, 3.42 million kg less was imported as the
asking price rose by Rs 8.80 a kg. Consequently, the overall
import bill dropped by Rs 20.84 crore to Rs 91.22 crore.

Conclusion:

Tea exports showed a positive trend during the nine-month period

ended September ’02. While exports of tea from the country stood at
134.5m kg between January and September ’01, it was 137.1m kg in
the same period this year, according to data compiled by the Tea
Board. However, production of tea on an all India basis has declined by
1.8m kg during the period January to September. While production at
the northern gardens during September was up by 0.8m kg, the
southern tea estates registered a fall of 2.6m kg in the same month.
Sources in Indian Tea Association said the fall in production was due to
erratic climatic conditions, adding that the target level of 822m kg
during the year was still attainable. India's tea exports dropped from
224m kg in 1980 to 180m kg in ’01 and, if the present trend
continues, could taper off to below 170m kg by the yeaar ’06. The Tea
Board and the industry had, therefore, worked out a medium-term
export initiative called ‘Vijay’ to raise exports to around 270m kg
through a strategy of market diversification involving an appropriate
shift from CTC to Orthodox teas, an upgradation of quality and a focus
on improving productivity to scale down the cost of production and
make Indian teas more price-competitive.