Import Documentation

8/3/2019 Import Documentation

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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 onimports have been lifted.Imports may be made freely except to the extent they are regulated bythe provisions of Import Policy or by any other law for the time being in force.

Pricinpal Law & Import Export Policy

Principal Law

Imports in to India are governed by Foreign Trade (Development & Regulation) Act 1992.Under this Act, imports of all goods is Free except for the items regulated by the policy or anyother 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 oflicence, suspension of a licence, cancellation of licence, declaration as to the value and quality ofimported goods, declaration as to the Importer- Exporter Code number, utilisation of importedgoods, provisions regarding making, signing of any declaration/statement or documents, powerto enter the premises and inspect, search and seizure of goods, documents, things andconveyance, 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 ofimporters, are, inter alia, contained in the following publications issued by the Ministry ofCommerce and revised from time to time:

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


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The Import - Export Policy and Procedure books issued by the Government areamended/clarified/ explained by the Ministry of Commerce from time to time. The types ofNotifications/Clarifications/Instructions issued by the Ministry for this purpose are:

Public Notices.

NotificationsPolicy 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 ofExports & 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 andwild 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 ofitems comes under the Canalised list of items. Import of items included in Canalised list arepermitted to be imported through Canalising Agencies.

Thus items not appearing in Prohibited list, Restricted list and or in Canalised list can beimported Freely without any import licence. A large number of Consumer goods are freely

importable without licence.

Registration with Regional Licencing Authority and obtaining IEC CodeRegistration with Regional Licensing Authority:

Registration with Regional Licensing Authority is a pre-requisite for import of goods. TheCustoms will not allow clearance of goods unless:

The importer has obtained IE Code Number from Regional Licensing Authority. However, nosuch registration is necessary for persons importing goods from/ to Nepal provided Value of asingle 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 givenat Appendix 3.I. The application duly signed by the applicant should be supported by thefollowing documents:


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Bank Receipt (in duplicate)/demand draft for payment of the fee of Rs.1000/- Certificate fromthe Banker of the applicant firm as per Annexure1 to the form. Two copies of passport sizephotographs 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-residentinterest in the firm and NRI investment is to be made with repatriable benefits, full particularsthereof along with a photocopy of RBI's approval. If there is NRI investment without repatriationbenefit, a simple declaration indicating whether it is held with the general/specific permission ofthe RBI on the letter head of the firm should be furnished. In case of specific approval, a copymay also be furnished.

Declaration by the applicant that the proprietors/partners/directors of the applicantfirm/company, as the case may be, are not associated as proprietor/partners/directors with anyother firm/company the IEC No. is allotted with a condition that be can export only with theprior 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) shouldapply for allotment of IEC No. However, only one IEC no. is allotted to a company and the sameis valid for all its branches/offices/units. The applilcation for grant of IEC No. should be made tothe 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 Bankof India indicating the head of Account 1453 Foreign Trade and Export Promotion Minor Head102. Import Licence Application Fee.

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

How to fill up IEC application:

Application form should be made in the prescribed form in duplicate along with theabove enclosures, mentioned against serial 1 to 8 of above paragraph, also in duplicate.

The form should be neatly typed/handwritten in bold capital letters only. Each copy of the application form should be signed in ink by the authorised person. Items of information relevant to applicant should only be filled and remaining items may

be marked not applicable. Modification of particulars of the applicant should also be furnished on this form by

filling the relevant items.

However, in case an IE Code holder no longer wishes to operate under the allotted code number,the matter should be brought under the notice of the Regional Licensing Authority to make theCode number inoperative.


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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 noneed 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 headingcovering Exim Code, items description, policy and nature or restriction. The information relatedto import policy for any item can be obtained from our site under Customs Duty CalculatorSchedule.

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 asrestricted for import in ITC(HS) Classification of Export and Import items may be made to theregional licensing authority concerned.

Licence Application FeesFees for Licence Application:

Every application for import licence or CCP should be accompanied by 2 copies of a bankreceipt from the Central Bank of India or a Bank Draft from any Bank indicating the deposit inaccordance 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 lakh50 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 theapplication does exceed Rs. 2 lakh.Rs. 200 where application is fro grant of duplicate licence.

The application fee shall be deposited either:

By way of deposit in an authorized branch of Central Bank of India indicating the Head ofAccounts 1453 Foreign Trade and Export Promotion - Minor Head 102, Import LicenceApplication Fee. The Bank receipt must show the name of the department viz. "Director Generalof Foreign Trade". The bank receipt should be drawn in favour of Pay & Accounts Officerconcerned. Such fees can also be deposited with Indian Missions abroad.

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

Validity of Licence

Besides import licence for import of restricted items there are other variety of licences and suchlicences have different period of validity.

Export Promotion Capital Goods Licence validity 24 months


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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 theProject

For the cases where the license expires before the last day of the month, the license shall bedeemed to be valid until the last day of that month.

Revalidation of License: License revalidation can be done on merits but not beyond 12 monthsby the concerned licensing authority for a period of six months at a time reckoned from the dateof expiry of the validity period.

Last date for filling applications: the last date for receipt of applications for grant of licenses is28th 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 theprovisions of the EXIM Policy, 1997-2002 or in the manner specified by the licensingauthority in the license;

the applicant for a license shall execute a bond for complying with the terms andconditions 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 exceptin 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 thetime of import of which a license is granted shall be the property of the licensee at the time ofimport 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 permissionof the DGFT;

Disposal period for import application: Provided the application is complete in all respectsalong with prescribed documents, the applicant-importer can expect the disposal in:


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IEC No. - 3 working daysDuty free license where input-output norms are notified - 5 working daysDuty free license where input-output norms are notified but cases are to be placed before ALC-15 working daysDuty free license where input-output norms are not notified, EPCG licenses/export

licenses/export

licenses/specific import licenses - 15 working daysRevalidation of license and extension of export obligation period by RLA - 5 working daysAcceptance of Bank Guarantee/Legal undertaking - 3 working daysRedemption of Bank Guarantee/Legal undertaking/Endorsement of Transferability - 10 workingdays

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 daysFixation of Standard input-output norms - 45 working days

DEPB - 5 working daysAll licenses falling under Chapter 8 - 5 working daysMiscellaneous - 15 working daysFixation of deemed exports drawback rate - 45 working daysN.B. This apart, a " Counter Assistance" service is provided in all the offices of the DGFT forspeedy disposal of applications. A foreign trade development officer (FTDO), in charge of thecounter in each office. On submission of the application at the counter the applicant will behanded 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 thereare 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 inthe prescribed form. In case of loss of an Identity Card, a duplicate card is issued.

Imports under Special Scheme for ExportersThe 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 rateof customs duty as per table given below. Subject to an export obligation to be fulfilled over aperiod of time. In addition spares up to 20 per cent of the cost insurance and freight (CIF) valueof the capital goods may also be imported under the scheme.


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Under this scheme Customs duty is 5% if the export obligation is 5 times the CIF value of thecapital goods or 4 times the CIF value of capital goods on NEF basis. The period of fulfillmentof 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 specifiedperiod in the following proportions:

An application for grant of license under this scheme should be made to the licensing authorityconcerned in the form given in Appendix 10 A of the Handbook of Procedures, 1997-2002 alongwith documents prescribed therein. Before clearance of goods through customs, the importer hasto execute a bond supported by a bank guarantee with the Customs Authority in the prescribedmanner. The license holder will also have to submit progress report of the export/supplies madeand services provided, duly certified by a Charted Accountant/Cost and Works Accountant to theLicensing Authority. The report should be submitted in the prescribed form 10C of theHandbook of Procedures, 1997-2002. For Customs duty exemption exemption in respect ofimports 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 thefollowing schemes:

Advance License - granted to merchant exporter or manufacturer exporter for the import ofinputs 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 atthe 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 thepreceding year and registered with excise authorities, except for products which are not excisablefor which no such registration is required, shall be entitled for Annual Advance License. ExportHouse, Trading House, Star Trading Houses and Super Star Trading Houses Holding thecertificate as merchant exporter where they agree to the endorsement of the name(s) of thesupporting manufacturer on the relevant annual advance license shall also be entitled for theannual advance license.


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This license and/or material imported thereunder shall not be transferable even after completionof export obligation. Such annual advance license shall be issued with positive value additionwithout stipulation of minimum value addition. The entitlement under this scheme shall be up to125% of the average FOB value of export in the preceding licensing year. Imports against this isexempted 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 importof inputs required in the manufacture of goods to be supplied to the ultimate exporter holding anAdvance License/Special Imprest License.

Special Imprest License: This license is granted for the duty free import of inputs required in themanufacture of goods to be supplied to the ultimate exporter holding an AdvanceLicense/Special Imprest License. Such Special Imprest License is granted for the Duty Freeimport of inputs required in the manufacture of goods to be supplied to the EoUs/units inEPZs/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 goodson zero customs duty.

Advance Release Order:

A duty free license holder except Advance Intermediate License Holder intending to source theinputs from indigenous sources/canalising agencies/EOUs/EPZ/EHTP/STP units in lieu of directimports has the option to source them against Advance Release Order denominated in foreignexchange/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 licenseholder intending to avail such facility may approach a bank for opening an inland L/C in favourof an indigenous supplier. Before this the bank will ensure that necessary bank guarantee orLetter of Undertaking has been executed by the license holder and endorsement to this effect hasbeen 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 indigenoussupplier 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 tobe an ARO.

Duty Entitlement Pass Book scheme: It aims at neutralising the incidence of customs duty andsurcharge thereon on the import content of the export product. This neutralisation is provided byway of grant of duty credit on the deemed import content in the export product as per Standardinput output norms and considering the value addition achieved. This scheme is allowed to beoperated on pre and post export basis by a manufacturer exporter and merchant exporter. Thescheme 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


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eligible products along with the credit rates under this scheme. Although items outside therestricted list can be exported without Customs duty, DEPB holder may pay additional customsduty in cash, if any. (vide MoF Customs Notification No. 34/97 - Cus. Dated 7.4.1997 andCircular No. 10/97-Cus. Dt.17.4.1997). Third party exports are also permissible for grant ofcredit 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 SSICMM level 2 and above certification; EOUs/EPZs ; Deemed exporters; exporters of telecom andelectronic 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 exportsmade after 31.03.2000.

Diamond, Gem & Jewellery Export Promotion Scheme: Exporters of gem and jewellery areeligible to import their inputs by obtaining Rep. License and diamond imprest license from thelicensing 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 specifiedin 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 tariffarea(DTA), for exports. Such units may be set up under the EOU/EPZ scheme. While EOUs canbe set up anywhere in India subject to certain locational conditions, units in EPZ/FTZ can be setup 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 legalConsiderations including the regulations Contained in the Current Import Export Policy,Procedure, while selecting the product, particularly for Commercial purposes one should knowthe 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 informationregarding overseas supplier can generally be obtained from the following sources:

Trade Directories and Yellow Pages, like Singapore yellow pages, Japan yellow pages, USAyellow 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 whichyou may contact:

International Trade Promotion Organisation(ITPO),Pragati Maidan, New Delhi.Chamber of Commerce.


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Directorate of Industries, etc.Indenting Agents of Foreign Suppliers.

The advertisement in foreign papers may also be useful.

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

Capability and Creditworthiness of Overseas Supplier

Successful completion of an import transaction will mainly depend upon the capability of theoverseas supplier to fulfil his contract.The credit worthiness of the overseas supplier, his capacityto fulfil that contract, etc. should, therefore, be properly verified beforeentering into a contractwith him. Confidential reports about the supplier may be obtained through the banks and Indianembassies abroad. Reputed overseas suppliers normally have their Indenting Agents with officesin India and contract can also be finalised through them for smoother operations. The importercan also take the assistance of Credit Information Agencies for specific commercial information

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

Correct address of these agencies can be obtained from the overseas countries traderepresentatives posted in India.

Role of Overseas Suppliers' Agents in India

Some overseas suppliers have appointed their agents in India. These agents procure orders fromthe Indian parties and arrange for the supply of goods from their principal abroad. It is advisableto import through such agents as they can be readily contacted in case of any difficulty with

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

Finalising the Terms of Import

This is an important subject and should be handled with extreme care and caution. It is advisablethat before finalising the terms of Import Order, you should call for the samples or catalogue andother relevant literatures and the specification of the items to be imported. Import of samples ofgoods is exempt from import duties under 'Geneva' Convention of 7th November, 1952. Samplesare 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 Indiaas personal baggage by bona fide commercial travellers and businessmen or imported into IntoIndia 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 samplesfor 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 ofengineering goods when imported into India by post or by air or by courier service bymanufacturers of export goods.

Once you are satisfied with the samples and the creditworthiness of the overseas supplier, youcan proceed to finalise the term of the contract to be entered into. For this purpose, the Import


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Contract should be carefully and comprehensively drafted incorporating therein precise terms, allrelevant conditions of the trade deal. There should not be any ambiguity regarding the exactspecifications 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 importcontract are enumerated as under some of which may be relevant and other may not be:

Product, Standards and specifications.Quantity.Inspection.Total value of the Contract.Terms of Delivery.Taxes, Duties and Charges payable at Exporting Country and payable in India on importation.Period of Delivery/Shipment.Packing, Labelling and Marking.Terms of Payment-Amount, Mode & Currency.Discounts and Commissions.

Licenses and Permits.Insurance.Documentary Requirements.Guarantee.Force Majeure or Excuse for Non-performance of Contract.Remedies.Arbitration.

Mode of Pricing and INCO TERMS

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

with the mode of pricing and the manner of payment for the imports. As regards mode of pricing,the overseas supplier normally quote the terms prevailing in international trade.

The importer for his benefits should know the meaning of the technical terminology. To avoidambiguity in interpretation of such terms, International Chamber of Commerce, Paris, Has givedetailed definition of a few standard terms popularly known as 'INCO TERMS'. These termshave almost universal acceptance and are explained below:

Ex-work

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

works or factory. The full cost and risk involved in bringing the goods from this place to thedesired destination will be borne by the buyer. This terms thus represents the minimumobligation for the seller. It is mostly used for sale of plantation commodities such as tea, coffeeand cocoa.

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


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These terms are used when the goods are to be carried by rail, but they are also used for roadtransport. The seller's obligations are fulfilled when the goods are delivered to the carrier.

Free Alongside Ship (FAS)

Once the goods have been placed alongside the ship, the seller's obligations are fulfilled and thebuyer notified. The buyer has to contract with the sea carrier for the carriage of the goods to thedestination and pay the freight. The buyer has to bear all costs and risks of loss or damage to thegoods hereafter.

Free on Board(FOB)

The sellers's responsibility ends the moment the contracted goods are placed on board the ship,free of cost to the buyer at a port of shipment named in the sales contract. 'On board' means that aReceived for Shipment' Bill of Lading is not sufficient. Such B/L if issued must be convertedinto 'Shipped on Board B/L' by using the stamp 'Shiped on Board' and must bear signature of the

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

Cost and Freight (C & F)

The seller must on his own risk and not as an agent of the buyer, contract for the carriage of thegoods to the port of destination named in the sale contract and pay the freight. This being ashipment contract, the point of delivery is fixed to the ship's rail and the risk of loss or of damageto the goods is transferred from the seller to the buyer at that very point. As will be seen thoughthe seller bears the cost of carriage to the named destination, the risk is already transferred to thebuyer at the port of shipment itself.

Cost Insurance Freight (CIF)

The term is basically the same as C & F but with the addition that the seller has to obtaininsurance at his cost against the risks of loss or damage to the goods during the carriage.

Payment against imports

Payment under better of Credit is a universally accepted mode of payment. A Letter of Credit is aSigned instrument and an undertaking by the banker of the buyer to pay the seller a certain sumof money on presentation of documents evidencing Shipment of Specified goods subject toCompliance with the stipulated terms and Conditions.

Letter of Credit vs Bank GauranteeA letter of credit differs from a bank guarantee. An issuing or confirming bank's obligation isindependent 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 thegoods shipped.

Letters of Credit are Separate Transactions


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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 concernedor 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 whichthe documents relate.

It is, therefore, in the interest of all the parties concerned that the conditions and terms of creditare 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 theexporter except those which the credit imposes. Banks accept documents under letters of creditfor what those document purport to be on their face. Contract between the buyer and the seller isobligatory between themselves. The seller(beneficiary) cannot take advantage of any contractualterms 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 banksdealing with documentary credits. To ensure uniformity of interpretation in international trade,the International Chambers of Commerce in Paris has worked out the "Uniform Customs andPractice for Documentary Credit". These have been revised and brought up to date several timesin the past. The latest in the line of revisions is the UCP 500 (w.e.f. January 1, 1994) whichupdates and consolidates the previous UCP 400. They are now applied by the banks in nearly allcountries 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 establishedLetter of Credit.

Issuing Bank: The Banker in the importers Country who opened the L/C. Correspondent Bank orAdvising 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 ofexchange or to negotiate against Stipulated documents and on Compliance of Stipulated termsand condition specified by the importer on the exporter.

Confirming Bank: The banker in the exporters(beneficiary) country, who at the desire of thebeneficiary adds confirmation to the letter of Credit so that beneficiary can get payment withoutrecourse from the Confirming bank. The Confirming bank may be correspondent bank itself orsome other bank.


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When the price of foreign currency is quoted in terms of home or local currency it is called directquotation basis. This has been in application since 02.08.1993. However, there is a differencebetween inter-bank exchange rates and merchant rates.

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

for various purposes, including imports and exports. These rates are calculated by the banks asper the guidelines issued by the Foreign Exchange Dealers Association of India (FEDAI). Inter-bank rates are the rate for transactions amongst the authorised dealers in foreign exchange anddepend on the market conditions.

Since exchange rates are volatile, documents delivered by the bank at the time of a favourableexchange rate will enable the Indian purchaser to pay less of Indian rupees. Forex rates arealways quoted as two way price i.e. at a rate at which the bank is willing to sell foreigncurrency(buying rate) and at a rate at which the bank is willing to buy foreign currency(sellingrate). There is always some difference in buying and selling rates. However, the maximumspread available to bank is restricted in terms of celling imposed by RBI. All exchange rates by

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

TT Selling Rate

This rate is applied for all clean remittances outside India. For selling foreign currency to itscustomer by the bank such as for issuance of bank drafts, mail/telegraphic transfer etc.

TT Buying Rate

This rate is applied for purchase of foreign currency by banks when the banks in India havealready obtained the cover in India. Thus all foreign inward remittances which are made payable

in India are converted by applying this rate. A mail transfer issued by a bank in Dubai for US $10,000 drawn on any commercial bank having branch at the overseas destination will beconverted into rupees at TT buying rate.

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

Reputed importers can always bargain with the bank for improvement in the card rates forreducing their rupee liability on conversion of foreign currency into Indian rupees. Also adistinction is made between spot rates and forward rates. Spot rates are applicable on the day oftransaction, whereas forward rates are fixed in advance for a transaction that will mature at aspecified date or during a specified period in future imports.

Hedging against Forex risk:

Exchange risk arising on account of adverse movement of the exchange rates, can be avoided bythe following methods:

By requesting the supplier to invoice the goods in Indian rupees (possible only when theseller agrees to it)


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By entering into a forward exchange contract.

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

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

opened. The bank will book a forward contract only against genuine trade transaction. The bankwill verify suitable documents to ensure the authenticity and the amount of permitted currency ofthe underlying transaction. The amount, date and number of the forward contract will be markedon such documents under the stamp and signature of the bank to ensure that more than oneforward contract is not booked in respect of the same underlying transaction. A transaction maybe covered either in parts or in whole. The period and extent to which an exposure is to becovered is left to the choice of the customer. Ordinarily, the maturity of the forward contractmatches with that of the underlying transaction. If the documents of import are not receivedwithin the agreed period of the contract, the contract needs to be cancelled(an fresh contractbooked if desired) for which the bank will levycancellation charges as per FEDAI rules. In casethe documents are received before the stipulated date and the importer wants early delivery, the

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

The importers should be careful in chosing the period of forward contract. Otherwise earlydelivery or cancellation of forward contract would lead to unnecessary charges. The RBI allowssubstitution of an import order on specific request, provided the bank is satisfied with thecircumstance leading to the non-performance of the contract.

Where the documents are under a contract(Non-L/C case), the seller will submit the complete setof documents to his bankers with the request to either purchase/discount the documents to hisbanker with the request to either purchase/discount the documents or same on collection basis tothe importer. In the former case the seller's bank finances the sellers whereas in the latter case, no

financial facility is extended to the overseas seller. The seller's banker may advance some moneyagainst documents sent on collection basis while, treating the documents as collateral security.

When the documents are under L/C, the documents are prepared strictly in conformity with theletter of credit.

After preparing the documents the overseas seller will tender the documents to his banker fornegotiation. The bank, after receiving the documents, will examine them to ensure that they arestrictly drawn as per the terms of the credit. Following this the overseas banker will send thedocuments to the importer's banker in India. The impoter's bank will advise the importer tocollect the shipping documents either against payment or acceptance as per the terms of the

contract.

In case the documents are drawn under L/C, the issuing banker(of the overseas supplier) willexamine the documents and if found in order it will hand over the same to the importer afterdebiting his account with amount involved or against acceptance as per the terms of the credit.

If the documents are not in line with the terms of the credit, the overseas banker can either refuseto negotiate further and ask the seller to send them on collection basis only; or it can contact the


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

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 noneed to obtain any license or permission for importing such goods. The ITC(HS) Classificationof Export and Import items contains 99 chapters and in each chapter there are column headingcovering Exim Code, items description, policy and nature or restriction. The information relatedto import policy for any item can be obtained from our site under Customs Duty CalculatorSchedule.


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 theregional licencing authority concerned.

Scrutiny of documentsThis 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 thedocuments 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 thedocuments may be accepted on merits.

If the documents are rejected, immediate notice to that effect should be given to the bank tosafeguard the importer's interests.The documents prescribed by the beneficiary are carefullyscrutinised by the issuing banker. The importer should also scrutinise the documents to ensurethat:

They were presented when the credit was in force and had not expired.The amendments and special instructions have been taken care ofThe amount of bill does not exceed the value of L/C

All documents required in the L/C have been made availableDocuments carry required endorsements

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

The invoice is duly signed, tallies with amount of draft, Exact quantities are shown and is drawnin appropriate currency of the origin of goods


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Bill of leading is presented in full set of negotiable copies and is on board bill of lading and dulysigned In case the goods are imported on cash against documents(CAD), documents againstpayment(D/P) or documents against acceptance(D/A) basis, the importer needs to take deliveryof 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 ofdocuments 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 againstacceptance in case of DA bills. The payment in either case is accepted only from the bankaccount 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 receivedDocuments had been presented before the expiry dateAll the documents are dated subsequent to the date of issue of the L/CCancellation/overwriting in all documents are authenticatedBills of Exchange-check whetherDrawn on the person indicated in the L/C and duly signed up by the beneficiary of the creditDrawing is within L/C amount and in the same currency as per the L/CThe amounts in words and figures are the same and identical with the amount stated in theinvoice

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/CQuantity, unit price and value are quoted as per L/CWhether unit price and value are quoted as per L/CThe description of the merchandise corresponds to the description in the L/CThe arithmetical calculations are correctImport license/OGL/Contract No./Order No./Indent No. mentioned as per L/CNo charge other than stipulated in L/C in includedAdditional copy for Exchange Control purposes is submittedThe date and no. of the License/OGL indicated

Bill of lading is submitted within 21days from the date of shipment, if no specific time isbetween the date of issue and expiry of L/C

The date of shipment is between the date of issue and expiry of L/CFull quantity of goods is shipped, if part shipment is not allowedFull set is submitted


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Freight is shown as prepaid/payable at destination, as per L/CBill of lading shows 'on board shipment'Parties are notified as per L/C termsCarrying vessel's name has been mentioned in Bill of LadingThe 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/CThe B/L is manually signed

The description of goods is consistent with L/CThe ports of loading/destination are mentioned as per L/CMarks, numbers, quantity and weight agree with the invoiceThe carrying vessel belongs to any particular line as per L/CAdequately stampedProperly endorsedIf AWB, whether flight number and date of departure mentionedIf 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 theshipper

Certificate/policy is according to Letter of Credit termsRisk commences w.e.f. date of B/LAmount of insurance as per L/C termsWhether drawn in the same currency as the L/CDescription of goods agree with B/LRisks as per L/C are covered

The place where claims are payable is as per L/C termsAdequately stampedDetails such as name of carrying vessel, ports of loading/destination, marks, agree with the B/LCertificate of analysis, weighment,etc.The certificates are issued by the authority stipulated in L/CName of the shipper is properly shownThe samples drawn relate to the goods actually shippedDate of sample verification is within the date of shipment

Certificate of origin

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


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For matter relating to Documentary Collections and Commercial terms, the importers are likelyto be conversant with the brochures issued by the International Chamber of Commerce(ICC),Paris.

Following are the brochures:

Uniform Customs and Practice for Documentary Collection and Commercial TermsUniform Rules of Collections (ICC522)Uniform Rules for a Combined Transport Document (ICC298)INCO Terms 1990RBI regulations for Making Payments by importers

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 noneed to obtain any license or permission for importing such goods. The ITC(HS) Classificationof 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 relatedto import policy for any item can be obtained from our site under Customs Duty CalculatorSchedule.


An application for grant of an import licence or CCP for import of the items mentioned asrestricted for import in ITC(HS) Classification of Export and Import items may be made to theregional licencing authority concerned.

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 ofamount, by debit to the account of the importer with themselves or by means of a crossed chequedrawn by him on his other bankers. Payment against bills should not be accepted in cash. Thisrule 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 equivalentamount(plus bank charges) is debited to the account of the importer by the authorised dealer andthe amount remitted to the foreign seller. In case the bills are drawn in foreign currencies, theINR 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 foreigncurrency 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 foreigncurrency bill shall be crystallised by converting the foreign currency amount in to rupee at the


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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 inthe 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 pendingretirement by the customer. Such interest shall be recovered from the date of negotiation or thedate 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 Rateand 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 billamount at the time of converting foreign currency into INR irrespective of the fact whether thebill 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 ofshipment. Accordingly, deferred payment arrangements involving payments beyond 6months arenot 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 makeremittances 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 periodof 6 months expires, provided-

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

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


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

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 usanceimport bills, remittances may be made only after reducing the proportionate interest for theunexpired 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 ishigher. Where interest is not separately claimed remittances may be allowed after deducting theproportionate 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 itsequivalent) 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 theauthorised dealer. This will act as evidence that the goods for which the payment was made, haveactually been imported into India.

Authorised dealers should ensure that in all cases, including cases of advance remittancespermitted (Vide para 7A, 10, these are submitted by their importer customers and are verified. Inrespect of imports made on D/A basis, since goods would normally be cleared before the duedate of payment, authorised dealers should insist on production of documentary evidence ofimport i.e. Exchange Control Copy of Bill of Entry for Home Consumption/ postal wrappers atthe time of effecting remittance of import bill. Authorised dealers should also advise thisrequirement 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 bemade by authorised dealers, provided the goods imported are such as are normally despatched bypost-parcel. In these cases the relative parcel receipts must be produced as evidence of dispatchthrough the post and on undertaking to submit importers should furnish post parcel wrapperswithin 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 normallyimported by post parcel or where authorised dealer is not satisfied about the bona fides of theapplications the case should be referred to RBI for prior approval with full particulars togetherwith 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 goodsimported into India have to pass through the procedure of Customs clearance as they cross Indian


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border. The goods are examined, appraised, assessed, evaluated and then allowed to be taken outof charge of the Customs for use by the importer. The entire process of customs clearance iscomplex and to carry out this procedure smoothly, the help of accredited customs clearing agentshas 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 theconsignment entry in the IGM along with the date. The B/E will then be presented in theAppraising Department with all the relevant documents like invoice, Bill of Lading, Importlicense and catalogue literature. The appraising procedure may be of two types.

The First Check Procedure-Applicable only when appraisers/assessing group finds it difficult tocomplete the assessment on the basis of the documents made available.

The Scrutinising Appraiser in the group gives the examination order. The goods are thenexamined 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 soonafter 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 iscompleted by the Appraiser and then countersigned by The Assistant Collector. It is thenforwarded to the License Department for licensing debit and audit. Then it is returned to theimporters for payment of duty in the Accounts/Cash department. After recovery of duty theoriginal B/E is retained in the Accounts Department and the duplicate and other copies arereturned 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 theout of charge for taking delivery from the custodian of the goods viz. Port Trust, after paymentof Port Trust charges.

Irrespective of the procedure, examination of cargo for assessment purpose is chiefly thefunction of the Appraising Department having special staff of examiners in the docks/Air cargoshed. The records of the examination and weighment should be declared, attested and dated atthe time of the examination. If the examination spreads over more than one day, the result oneach day's progress should be disclosed.

These apart some of the Customs house in India have introduced the simplified computerprocedure for speedy clearance of consignment through B/E.

Custom Authorities

The customs administration vests in CBEC for implementing the provisions of the CustomsAct.1962. There are two main wings of Customs House. In the 'Appraisement' wing the job ofcollection of revenue is assigned, while the 'Preventive' one aims at prevention of smuggling.


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The Customs authority functions under the Ministry of Finance (MoF) with the Central Board ofExcise & Customs at the apex. The board is headed by a Chairman and assisted by Members.The Member (Customs) looks after the following matters:

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

those concerning anti-smuggling)Enforcement of Import Export prohibitionsForeign Travel and Cases on imports and exportsBaggage concessions and rules;Customs Valuations;Tariff Classification and Tariff advices;Customs procedures, Customs HouseAgents Regulations;Warehousing, inland Bonded Warehouses;FTZs, EPZs, 100% EOUs etc.Matters relating to Drawback;Customs Co-operations Council, GATT and ESCAP and international talks and agreements,

organisations concerning customs;All other works on Customs not specified elsewhere;Supervision and control over Customs Commissionerate of Mumbai, Calcutta, Chennai, Kandla,Bangalore, Cochin, Delhi , Visakhapatnam, Goa and Tuticorin and Customs Divisions of otherCentral Excise Commissioners, Assistant Commissionerates regarding Customs work handled bythem.Chemical laboratories andDirectorate of Drawback

The Ministry of Finance (MoF) issues Customs Notifications to levy duty on the imported goods.The Changes are made each year on the Day of the Fiscal Budget. Customs clearance of the

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

Central Board of Excise & Customs (CBEC) in the MoFUnder which operates:Customs Commissionerates of Mumbai, Calcutta, Chennai, Kandla,Bangalore, Cochin, Delhi, Vizag, Goa and Tuticorin.

Directorate of DrawbackField Level:Principal Commissioners Customs ,Commissioners,Addl. Commissioners ,Dy.Commissioners,Asst. Commissioners,Port of clearance.

Classification of Customs tariffThe 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 beenrespectively specified in the First and Second Schedule to the Customs Tariff Act, 1975-calledthe import Tariff and Export Tariff respectively.


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With effect from Feb. 28, 1986, the new tariff import schedule based on international conventionof Harmonised Commodity and Coding system, commonly known as Harmonised CodingSystem 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 arelevied in three ways-Specific rate-at the rate prescribed per unit of item i.e. weight or number oflength; Ad-valorem duty-levied on the value of the item; Specific and advalorem-levied in bothways.

Types & Levy of Customs duties:-

Basic duty: all goods imported into India are chargeable to duty as prescribed in the 1st Scheduleof Customs Tariff Act. This Schedule is amended from time to time of Customs Tariff Act. Thisduty 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 oiland petroleum products, GATT-bound items, gold and silver. Additional Duty: Also known ascountervailing duty, is levied on the cost of imported goods and is equal to excise duty levied onlike goods when manufactured in India. The objective is to ensure that the protection provided bythe 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 onspecified goods imported from specified countries to protect indigenous industry from injuryresulting 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 thecustoms house laboratory for fulfilment of license conditions, or The appeaiser desires to see therepresentative sample before completing the bill of entry for the purpose of verification of thevalue/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 ratewhich is published in customs houses on a daily basis.

Imports from specified countries enjoy preferential duty. This is generally the result of specialstatus 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 dutyunder the Customs Tariff Act + Surcharge thereon + Additional duty + Special Additional dutyas 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


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satisfied the description in the license unless he is able to establish the fact he would not beentitled 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 departmentmaintains a register for every license accepted and debited showing the last balance on thelicense.

The importer is likely to know the term of license, the type of goods and whether they can belawfully imported as per the terms of the license. In case there is any error on the part of theappraising authority then possession of even a valid license will not confer any right upon theimporters 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 beeffected. Its form has been standardised by the Central Board of Excise and Customs. All goodsdischarrged from a vessel, from foreign or coastal Ports, are cleared on this prescribed formspresented under the B/E Regulations, 1971.

It should be presented for 'noting' in the import dept. of the customs house after theimportGeneral Manifest which gives a detailed description item wise of the goods brought by theconcerned 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 noneed to obtain any license or permission for importing such goods. The ITC(HS) Classificationof Export and Import items contains 99 chapters and in each chapter there are column headingcovering 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 CalculatorSchedule.


An application for grant of an import licence or CCP for import of the items mentioned asrestricted for import in ITC(HS) Classification of Export and Import items may be made to theregional licencing authority concerned.

Warehousing of Imported goods

An importer may not like to clear or may have certain problems in clearing the imported goodsimmediately 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 pendingtheir actual clearance. Towards this the importer should file a set of yellow coloured B/E knownas warehousing B/E.

Self-Assessment Scheme: Applicable to goods without any ITC license/CCP or any restrictionsthereof. The objective is to enable importers effecting repetitive imports of some commodities toassess their own B/E and determine their duty liability and pay the duty accordingly. Any


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

This process does away with the procedure of processing, and the time consumed by theappraising and licensing sections.

When the duty is paid, the goods would be cleared in the docks, provided the goods are partlyexamined and payment of duty verified.

Green Channel : This fast-track facility has been introduced to simplify and expedite the processof cargo clearance. Instead of going in for a hundred per cent examination only a part of thecargo is checked. Bulk importers, Govt. Depts. & PSUs, consignment of a single product of wellknown brand name and importers with identified and unblemished track record are allowed toavail 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 fromextending all possible facilities applicable to merchandise exports, the threshold limit forrecognition as Service Export House etc. has been pegged at 1/3rd of the level prescribed formerchandise 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 Tradein 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 6of EXIM Policy. The provisions of paragraph 6.5(vii) shall also extend to the service providersavailing 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 layoutdesigns, software in diskettes and CDs related to their line of services as a part of passengerbaggage 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 exchangeearned by them during the preceding licensing year for import of essential goods related to theirline of business, including office and other equipment required for their own professional use.


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Import through Courier

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

In case of remittances for imports through courier services, authorised dealers should ensuresubmission of Exchange Control Copy of Bill of Entry for home consumption in the case ofimports valued at Rs. 100000 or more.

This is not regarded as baggage for the purpose of assessment of duty and clearance therof. Thepractice 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. Thenew system of assessment and clearance of goods imported by courier is now governed under theCourier Imports & Exports (Clearance) Regulations 1998.

Imports without Forex remittances:

Imports not involving foreign exchange remittance is allowed as given below( vide Para 5.41 ofthe Handbook of Procedures):

Import of items by United Nations Organisation and Specialised Agencies and its officialswithout payment of Customs duty.

Import of Medical Equipment by Indian Doctors and Professionals is allowed under the BaggageRules, 1994.

Goods as Baggage by Foreign Mountaineering Expedition Teams and Painting and other DisplayArticles, except consumables, are allowed. Foodstuffs and Medicines by Charitable organisationsare also allowed.

Import of food parcels, except alcohol and tobacco, subject to a limit of Rs. 100 000 per annumis allowed for personal consumption of foreign citizens.

Import of free gifts and relief supplies by certain organisations/institutions e.g. Indian Red CrossSociety, 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 temporarystands of the foreign exhibitors at the exhibitions, fair or similar show or display for a period of 6


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months on re-export basis is allowed provided these fairs are sponsored/approved by the Govt. ofIndia in the Ministry of Commerce/India Trade Promotion Organisation and is being held inpublic interest.

Import for personal use

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

Also, for any tourist, articles of high value whose re-export is obligatory under the BaggageRules shall be re-exported on his leaving India. Otherwise, those goods shall be deemed to beregarded 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 importedthrough Post or otherwise for personal use, provided they are not:

Vegetable seeds exceeding 1 pound in weight, bees, tea, books and periodicals, alcoholicbeverages, consumer electronic items (save hearing aids and life saving equipments and items forwhich import is canalised under EXIM Policy.

Nevertheless, the customs duty, as applicable, shall have to be paid. As regards the procedure forpersonal imports is concerned the same may involve sending of advance remittance if requiredby the overseas supplier, opening of letter of credit, retirement of documents and remittance offoreign 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 inITC(HS)Classifications of Export and Import items is allowed without a license for a valuenotmore than Rs. 1 lakh(CIF) in one consignment save vegetable seeds, bees and new drugs byany importer. Tea samples not above Rs.2000 (CIF) in one consignment is allowed without alicense 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 ecgagedin the production of or hgaving industrial license/LoI or research, as the case may be, providedthe number of items imported does not exceed 10 in number in a year.

Import of Computer/Computer SoftwareComputers 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 beimported freely without licence despite the fact computer software is regarded as ConsumerGoods.

Passenger Baggage

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


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

Passenger Baggage Rules and import duty structure for baggage as applicable for such importsunder the Baggage Rules has been given seperately