Foreign procedures

7/29/2019 Foreign procedures

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Export House, Trading House, Star Trading House and Super Star

Trading House

The government gave more concentration to the development of specialized

agencies for the promotion of nontraditional items like gems & Jewellery &

Industrial products such as bull dozers, loaders, buses, bicycles, cables,conductors etc., This was mainly because of the high competition in the

International Market and unless a positive step is taken to start export

houses, concentrating exclusively on exports, it would be impossible to

succeed against international giants.

The exports were divided into select products (Nontraditional items like

engineering goods, leather products etc.) and non-select products

(traditional items).

For qualifying as an export house the exports in the select list of productsshould not be less than Rs.3 crores and in the non-select list of products

should not be less than Rs.7 crores.

Such export houses has to show a minimum average annual growth rate at

the rate of 20% in the preceding three years.

The main facilities provided to export houses were:

1. Additional licenses to the exporters

2. Transfer of such licenses.

The concept of trading houses in India was brought into being by the

Government in 1981 82, though the government evolved the criteria for

recognition of export houses in 1960.

The main purpose of establishing the export house is:

1. To help in increasing the exports of the country by developing new

products for new markets.

2. To increase the international trade by encouraging exporters to

develop in their fields.

The Export House gained momentum as exports increased and therebyimprovement in trade. Therefore, the government brought in the concept of

Star Trading House in addition to Export House and Trading House.

The government later brought in Super Star Trading House because of the

growth in the economy after 1991, due to liberalization and also due to

phenomenal increase in exports.


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The criteria for recognition as Export House, Trading House, Star Trading

House and Super Star Trading House will be either on the basis of the FOB

value of their exports of goods and services during the three licensing years

or Net Foreign Exchange value of exports during the preceding year.

Export House, Trading House, Star Trading House and Super Star

Trading House

(In Rupees)

For 2010 2011 Period

Category

Avg FOB

Value of

exports made

during the

three

preceding

licensing

years

FOB value of

exports made

during the

preceding

licensing year

Avg Net

ForeignExchange

value of

exports made

during the

three

licensing

years

Net ForeignExchange

value of

exports made

during the

preceding

licensing year

Export House 36 Crores 48 Crores 35 Crores 40 Crores

Trading

House135 Crores 200 Crores 120 Crores 140 Crores

Star Trading

House620 Crores 920 Crores 560 Crores 780 Crores

Super Star

Trading

House

1950 Crores 2780 Crores 1600 Crores 2300 Crores

Special preference is given for the export of commodities like:

1. Products manufactured by Small Scale / Tiny / Cottage Units

2. Fruits and vegetables, floriculture and horticulture products


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Duty Drawback

For a product exported from India, the manufacturer would have paid duties

as under:

1. Import duties on raw materials and components imported and

2. Excise duty on the items manufactured in India

The customs and central excise duty drawback rules, 1971 provide for refund

of such duties to the exporter on the export being completed.

Duty drawback is allowed only for the items whose raw materials and

components have been used on which the duty has been paid.

There are two types of rates of drawback.

1. All Industry rate and

2. Brand rate

All Industry rate is applied to all exporters. Brand rate is applicable only to

particular manufacturers.

For claiming the drawback, the exporter should file with the customs; thetriplicate copy of the shipping bill within 60 days after the customs officer at

the port has given Let export order.

Duty Exemption scheme

This scheme enables the exporter to import materials without payment of

customs duty. It comprises two sub schemes:

1. Duty free licenses and

2. Duty Entitlement Pass Book Scheme

Duty Free License

It includes Advance license, advance intermediate license and special

imprest license.

1. Advance license It is granted to a manufacturer exporter or a

merchant exporter for the import of inputs required for the

manufacture of goods.

2. Advance intermediate license It is granted to the manufacturer

exporter for import of inputs required for manufacture of goods for

deemed exports.

3. Special imprest license It is granted to the manufacturer exporterfor import of inputs required for manufacture of goods for deemed

exports.

The export obligation of the above licenses shall be fulfilled within a period of

18 months from the date of issuance of the license.

Duty Entitlement Pass Book Scheme


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Under this scheme, the exporter shall be entitled for duty free credits. He

can make use of this to import any freely importable item.

The credit can be transferred to another person but the transfer will be valid,

within the same port of registration.

Under this scheme, the exporter will be issued a pass book. But now, the

exporter will be issued with scrip alone.

The pass book scheme will apply only for the export of products where SION

(Standard Input Output Norms) which have been published.

The DEPB scheme will be for the post shipment benefit. In order to avail the

benefit of DEPB, the exporters on export of their goods, have to present the

shipping bill, as a proof of export along with the application form duly filled

up to the DGFT. The DGFT will scrutinize the application and if correct, will

grant the DEPB license to the exporter.

The exporter on receipt of the DEPB license can import without payment of

customs duty and counterveiling duty. The government gives the benefit of5% average of FOB values of exports. This would enable the exporter to

import the required inputs duty free.

The DEPB license value will be known to the exporters so that the exporters

at the time of exports can do their costs accordingly.

The DEPB license can be sold in the open market. It covers both

manufacturer exporter as well as Merchant exporter.

The scheme is very easy to operate and the exporter has to come to the

licensing authority only once for getting the credit under DEPB.

The objective of DEPB scheme is to neutralize the incidence of customs duty

on the import content of the export product.

An exporter may apply for credit as a specified percentage of FOB value of

exports made in freely convertible currency. The credit shall be available

against such export products and at such rates as may be specified by the

DGFT for import of raw materials, intermediaries, components, parts, packing

materials etc.

The holder of DEPB shall have the option to pay additional customs duty if

any in cash as well.

The credit under DEPB may be utilized for payment of customs duty on any

item which is freely importable except capital goods.

Procedure for grant of DEPB credit

1. An application for grant of credit under DEPB may be made to the

licensing authority concerned in the prescribed form (Appendix 2.11) in

duplicate along with the following documents:

1. Bank receipt / Demand Draft evidencing payment of application fee.


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2. Copy of DEPB shipping bills

3. Bank certificate of exports

The application may be made by the registered office or head office or

branch office of the exporter to the concerned licensing authority.

Under Electronic data interchange scheme the exporter can file his

application on the DGFT website at http://www.nic-in/eximpol. Applications

received electronically shall be cleared within 24 hours as against 3 working

days for manually filed applications.

Under the EDI scheme, the duly filed applications on DGFT website are

downloaded by the concerned licensing authority and processed in

accordance with the prevalent rules and regulations, deficiency, if any, will

be communicated online to the applicant.

The applicant will have to visit the concerned office to hand over the hard

copy of the application along with the requisite documents including the

application fee.The license shall be issued on receipt of the hard copies of the documents

after scrutiny.

Time period

The application for obtaining the credit should be filed within a period of six

months from the date of exports.

Single port of registration

The DEPB shall be issued with single port of registration which will be the

port from where the exports have been effected.

Verification by customs

The licensing authority shall ensure that while issuing the DEPB, the shipping

bill no(s) and date (s), FOB value in Indian rupees as per shipping bill(s) and

description of export are endorsed on the DEPB. Before allowing the imports

against DEPB, the customs shall verify that the details of the exports as

given on the DEPB are as per their records.

Issue of DEPB licenseThe FOB value in free foreign exchange shall be converted into Indian rupees

as per the exchange rate for exports, notified by Ministry of Finance as

applicable on the date of order of Let export order by customs.

Free transferability of DEPB / Items imported


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The DEPB and / or the items imported against it are freely transferable. The

transfer of DEPB shall however be for import at the port specified in the

DEPB which shall be the port from where exports have been made. Imports

from a port other than the port of export shall be allowed under TRA* facility

as per the terms and conditions of notification issued by Department of

Revenue (* Telegraphic Release Advice)


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Customs clearance of imported goods and payment of customs duty

1. All goods imported into India have to pass through the procedure of

customs clearance after they cross the Indian border.

2. The goods are examined, appraised, assessed, evaluated and then

allowed to be taken out of customs charge for use by the importer.3. The customs clearance is done with the help of customs clearing

agents.

4. These agents are licensed by the Commissioner of Customs and they

are capable of handling the documents / goods.

Procedure

1. On receiving the advice of the vessel, the importers are required to

present a Bill of entry either for Home consumption or for warehousing

the goods.

2. Bill of entry is noted in the Import department with endorsement made

in the Import General Manifest.

3. The date of noting is important because the rate for duty applicable to

the goods imported would be that as in force on the date of noting

except in the case of warehoused goods, where the rate applicable

would be that in force on the date of physical clearance (calculation of

freight amount)

4. The Bill of entry shall be presented in the appraising department with

all the relevant documents like Invoice, Bill of Lading / Airway Bill,

Import license, if necessary catalogue literature wherever necessary.

5. If the documents are found to be true, the Assistant Commissionercounter signs it.

6. It is forwarded to the License department and then returned to the

importers (CHA) for the payment of duty in the Accounts department.

7. After recovery of duty, the original Bill of entry is given back to the

Accounts department and the duplicate copy is returned to the

importers for getting the goods examined in the docks.

8. In the docks, shed examiner shall examine the goods and if in order

shall give permission to take delivery from the custodian of the goods

(Port trust authorities) after payment of the port trust charges.

9. The goods are then examined in the docks and the Bill of Entry

returned to the Scrutinizing Appraiser.

10.The Accounts department gives out of charge after recovering the

customs duty and the original bill of entry will be returned to the

importer / agent.

IE Code No


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Customs authorities do not allow import of goods into India to the persons

who are not in possession of a code number allotted for this purpose by

the import trade control authorities.

Port of clearance

Import clearance can be permitted in any ports, Air customs and

container freight stations (Dry ports) established in interiors.

Port trusts

Imported goods unloaded in a customs area are required to be in the

custody of a person port trusts appointed by the commissioner of

customs

Customs administration

The central board of excise and customs controls the customs

administration. There are two main wings of Customs House.

Appraisement is assigned the job of collection of revenue and preventive

for prevention of smuggling. Commissioner of customs is theadministrative head assisted by Additional and deputy commissioner.

Indian Customs Tariff classification

The basic legislation concerning levy of customs duties is the India

Customs Act, 1962. Section 12 of the Customs Act, 1962 governs for levy

of customs duties of customs on goods imported into India.

Procedure regarding Warehousing of Imported goods

1. One set of bill of entry known as Bill of Entry for warehouse or In to

Bond Bill of Entry is prepared.

2. It is similar to the normal Bill of Entry but contains additional columns

indicating:

- Particulars of time by which the goods are allowed to the warehouse

by the Assistant Collector.

- Another column indicates the particulars of time by which goods are

allowed to be removed.

3. After the above process the Bill of entry have to pass the import noting

department*. The import noting department collects the complete list

of goods etc.,

4. After the IND*, the bill should be sent to the appraising department. Anassessment will be made by the appraisal department before

warehousing.

5. The role of the appraisal department is to re-assess. Re-assessment

should be made relating to

- Acceptability of valuation

- Exchange rate


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- Permissibility of imports

6. After the assessment is completed, the appraising department debits

the import licenses and prepares the warehouse receipts.

7. The warehouse receipt will be counter checked by the Assistant

Commissioner.

8. Now the Bill of Entry is audited by the Internal Audit Department and

sent to the Import Bond department.

9. The Import Bond department after scrutinizing the Bond is duly

accepted by Assistant Commissioner of Bonds.

10. After all these process, the original copy is kept in the Import

Bond department while others are handed over to the importers of his

clearing agents

11. The goods are then thoroughly examined by Dock Appraising

Staff.

12. The goods are warehoused or stored by the Dock Appraiserunder the escorts of Preventive officer.

Procedure for removal of goods from the Warehouse (Ex Bond B/E

for Home Consumption)

1. While removing the goods from the warehouse, the importer or the

clearing agent should submit the Ex Bond Bill of Entry in triplicate to

the Import Bond Department.

2. The Ex Bond will be registered by the Import Bond Department and

submitted to the Appraising department.

3. The Appraising department re assesses and classifies it.

4. The assessed Bill of Entry is thereafter handed over to the Importers

for payment of Import duty and taking delivery of goods.

Types of Customs duty

The union government prescribes the nature and extent of customs duties to

be levied on goods imported into India. They are:

1. Customs Duty All goods imported into India are chargeable to duty

as prescribed in the Customs Tariff Act. This schedule is amended from

time to time.2. Counter Veiling Duty It is equal to excise levied on like goods when

manufactured in India. The basic principle for such duty is that when

an individual product is subjected to an excise duty, it is seen that

protection is given to the domestic industry.

3. Non Modvatable Duty This duty tariff is not refundable.


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Valuation of goods

When the goods attract specific rate of duty there is no problem but when

duty is ad-valorem. Valuation for customs purpose is done as per the

principles laid down in custom valuation. (Determination and Prices of

Imported Goods) Rules, 1988.

Assessment of Customs duty

The assessment of goods is done on the basis whether:

- The goods mentioned in the Bill of Entry are regularly imported

- They are tested by the Customs House Laboratory and should be

correct

- The appraiser to see samples for the purpose of value / description

of goods

The shed appraiser examines the goods and on receipt of the report by the

appraiser. The appraiser completes the Bill of Entry. Then the importer paysthe duty and takes delivery of the goods from the docks.

Bill of Entry

The document on the strength of which the clearance of goods can be

effected is known as Bill of Entry.

Types of Bill of Entry

All the goods unloaded from a vessel, which have arrived from foreign ports,

are cleared on Bills of Entry in the prescribed forms presented under the Bill

of Entry Regulations 1971.

a. Goods entered for Home Consumption (direct from port to

manufacturer or Importers premises) Bill of Entry for Home

Consumption

b. Goods entered for Warehousing (From the port to the

warehouse for storage) Bill of Entry for Warehouse or Into

Bond Bill of Entry

c. Goods cleared from the Warehouse (From the warehouse to

the manufacturer or Importers premises) Ex Bond Bill of

Entry for Home Consumption

When to present Bill of Entry

B/E should be presented for noting in the Import department with

endorsement made in the Import General Manifest which gives detailed

description about the item wise goods brought by the concerned vessel. A

facility has been afforded to the Customs House Agents to lodge B/E 30 days

in advance of the arrival of the vessel. This concession has been given to


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facilitate the CHAs to keep the documents ready so that immediately on

arrival of the vessel and landing of the cargo. The same could be cleared on

examination and payment of duty thereon without any loss of time.

Salient features of a Bill of Entry

1. Origin and vessel particulars the importer or his clearing agent

has to give relevant particulars of the origin of the consignments and

the vessel. E.g. port of shipment, country of origin, vessel named and

Bill of lading No and date

2. Particulars of the goods The basic information has to be indicated

by the importer which includes (i) Item (ii) Description of the goods (iii)

Quantity (iv) Packages (No)

3. Value The importer has to give the break-up of invoice, value,

freight, insurance, exchange rate, loading and local agency

commission, landing charges etc.,4. Taxes leviable the bill of entry has separate columns indicating

customs duty rate, counter veiling duty rate and non modvatable duty

rate.

5. Codes For certain statistical purposes, certain code numbers have to

be indicated by the importer while filing the Bills of Entry which include

customs house agent code, importer code, unit code, currency code,

etc.

6. Declaration of importers / clearing agents certain declarations

have to be furnished by the importer / clearing agent. These

declarations include declaration about correctness of the contents of

the goods, correctness of the price / value. The declaration are

furnished by them and signed by them on the reverse of the Bill of

Entry.


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Importance of warehousing in Export Management

A warehouse may be defined as a location of temporary storage facility and

from where they are dispatched with the main objective of maintaining the

flow of goods throughout the system. These goods may be raw materials or

finished goods.

The distribution center is an integral part of the physical distribution system.

The center is a warehouse that provides a merchandise assessment to meet

customer requirements.

Products are stored in the distribution center (warehouse) to fulfill the

customer requirements to adjust seasonal production, to demand and to

take advantages of quality purchases.

The emphasis however is on maintaining a supply to meet customer

requirements rather than emphasizing long term storage.

The warehouse frequently serves more than a storage and bulk point. It alsoserves as a control center to assure that customers orders receive prompt

attention that adequate but not excessive inventories are available.

Warehouse is a portal point where goods, consumables, accessories etc. are

stored further transit and to supplement various other provisions.

Warehouses are operated under Indian Customs Act 1956 and 1957.

Warehousing operations

1. Receiving goods: A warehouse accepts the goods that are to be stored.

2. Identifying goods: A record has to be made of the number of each item

received. It may be necessary to identify the item by an item code tag;

a code of the carrier or container, etc. Checking will also be done.

3. Sorting goods: The incoming goods are sorted out for appropriate

storage area in the warehouse.

4. Holding goods: The goods are kept in storage under proper protection

until needed from the warehouse.

5. Retrieving goods: Items ordered by customers are taken out from

storage and grouped in a manner useful for the next step.

6. Marshaling (Checking goods): The items are brought together and

checked for completeness of the goods.7. Dispatching goods: The goods are dispatched through the right

transport vehicle.

Functions of a warehouse are:

1. Storage

2. Risk bearing (custodian of goods)


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3. Financing

4. Services for better marketing

5. Situational advantages

Types of Warehouse:

1. Public Warehouse

2. Private Warehouse

3. Bonded Warehouse

4. Cold storage (Refrigerated Warehouse)

5. Agricultural Warehouse

6. Buffer storage Warehouse

7. Export and Import Warehouse

1. Public Warehouse It is owned and operated by professional

warehouse personnel and furnish not only space and break bulkfacilities but also a wide variety of services related to physical

distribution. The user of a public warehouse pays only for the space

that is used plus the fees for services that are requested. Public

warehouse will receive goods store it, assemble and deliver products

as they are needed by customers. Public warehouse also aid the

producer by issuing warehouse receipts that are to be used as

collateral for bank loans. Thus the public warehouse provides the

shipper with the flexibility to provide rapid service to customers, for

storing goods, tariff systems, and licensing laws. They are owned by

government/ports/central warehousing corporation.

The advantages of public warehouse are:

a. It is generally less expensive and more efficient.

b. They are strategically located and immediately available.

c. The user pays only for the space and services he uses.

2. Private Warehouse A warehouse may be privately owned and

operated by a company making its own goods is called Private

warehouse. The advantages of private warehouse is :

1. It offers better control over the movement and storage of goodsfrom time to time.

2. If there is sufficient volume of goods to be warehoused, the cost or

private warehousing compares favorably with that of public

warehousing.


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3. Bonded Warehouse They are located near ports. They enable

the unloading of commodities from a ship safely into a place until

the owner of the goods take delivery of them. Such warehouses are

also necessary for outward transportation. An important service

rendered by them is the provision of indirect finance. An importer

normally has to take over the goods after paying customs duty to

the port authorities and dues to the shipping company. An

agreement is entered into with the warehouses to take delivery of

goods proportionately by paying these dues in installments. The

goods deposited with the warehouses are said to be Into Bond

4. Cold storage warehouse Cold storage facilities are provided for

perishables against payment of a storage charge from the space

utilized by different parties. In a cold storage, it is essential that the

temperature is regulated and temperature variation is controlled to

the degree particularly necessary for certain sensitive items.

5. Agricultural warehouse These warehouses are meant for

storing agricultural produce grown in a certain area. These

warehouses receive agricultural commodities either directly from

the farmers of through their commission agents. They store the

commodities as long as required. They make it possible for the

owners of the commodities to obtain better prices.

6. Buffer Storage warehouse These warehouses are built at

strategic locations with adequate transport and communication

facilities. They store food grains, fertilizers etc., by or for the

government for easy checking and supply to various far off or

nearby consuming areas.

7. Export and Import warehouse These warehouses are located

near ports from where international trade is undertaken. They

provide transit, storage facilities for goods awaiting onward

movement. Facilities for break bulk packaging, inspection, marking

are available these warehouses. Import warehouses also provide

customs bonding facilities.


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Care should be taken while warehousing the goods

1. Ensure the credit worthiness of the exporter / importer.

2. Check the quantity, description of the goods.

3. Check the documents.

4. Verify the title and owner of the goods.5. Quantitative checking of goods while arriving from the port.

6. Customs duty to be paid for the goods imported at the time of

clearing from the warehouse.

Documents

Foreign procedures