Wednesday, September 30, 2009

PROCESSING OF IMPORT ORDER

Processing of import order BY KUSUM AND KHYATI

IMPORT ORDER –Import order is an open interface that consists of interface tables and set of API’s. By using import order we can new, updated or changed sales order from other applications.
v ORDER IMPORT CAN DO FOLLOWING THINGS FOR US:
1. Validation
2. Defaulting
3. Processing constraints checks
4. Apply & releasing or order holds
5. Scheduling of shipments
with Order management checks all the data during the import process to ensure its validity with order management so is prepared for anything horrible. Valid transactions then converted into order lines,reservations,price adjustments and sales credit in OM base tables.
v FOLLOWING ARE PREREQUISITEES FOR ORDER IMPORT:
1. Set up order management.
2. Customer should be created along with BILL TO & SHIP TO.
3. Pricing should be defined for all those item which are part of upload.
4. Item should be assigned to inventory organisation.
5. Define order import source.
6. Payment term should be setup.
7. Currency shoud be setup if order currency is different from SOB currency then conversion rate and conversion type should be defined.

PROCESS OF IMPORT ORDER

IMPORT PROCESSERS –
Procedures have to be followed by ‘PERSON-IN-CHARGE’ of conveyance’ as well as the importer.
Who is 'Person in Charge' - As per section 2(31), 'person in charge' means (a) In case of vessel - its master (b) In case of aircraft - its commander or pilot-in-charge (c) In case of train - its conductor or guard and (d) In case of vehicle or other conveyance - its driver or other person in charge.
The significance of this definition is –
1.He is responsible for submitting Import Manifest and Export Manifest.
2.He has to ensure that conveyance does not leave without written order of Customs authoritie.
3.He has to ensure that goods are unloaded after written order, at proper place. Loading also has to be only after permission.


4.He can be penalised for (a) Giving false declaration and statement (b) shortages or non-accounting of goods in conveyance.
GENERAL PROVISION - Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcel or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this Chapter are applicable for imports by sea, air or land, but not as baggage or postal despatch.

v Computerisation of custom work - Work of customs at Delhi airport has been computerised. Work at Mumbai port is also computerised. Whenever the work is computerised, documents like IGM and Bill of Entry have to be filed electronically. Procedure in computerised environment has been specified in CC, New Delhi PN 22/98 dated 8.5.1998. Guidelines for preparing data file for Bill of Entry and shipping bills for Mumbai Customs House has been prescribed vide PN 108/99 dated 30-9-1999 and PN 10/2001 dated 30.1.2001.
v Entry – ‘Entry’ in relation to goods means an entry made in a Bill of Entry, Shipping Bill or Bill of Export. It includes (a) label or declaration accompanying the goods which contains description, quantity and value of the goods, in case of postal articles u/s 82 (b) Entry to be made in case of goods to be exported (c) Entry in respect of goods imported which are not accompanied by label or declaration made as per provisions of section 84. [section 2(16)].
v Amendment of document - Importer, exporter or 'Person In charge' have to submit various documents to customs authorities like Bill of Entry, Import Manifest, Export Manifest etc. Some times, it may become necessary to amend the document due to various reasons like change in classification, clerical mistake in document, change in unloading / loading plan of vessel etc. In such case, permission to amend these documents have to be obtained from customs authorities. [section 149]. Such permission can be given if there are no fraudulent intentions.
In case of bill of entry, shipping bill or bill of export, it can be amended after clearance only on the basis of documentary evidence which was in existence at the time the goods were cleared, warehoused or exported, and not on basis of any subsequent document. [section 149].
v Customs Station - Imported goods are permitted to be unloaded only at specified places. Similarly, goods can be exported only from specified area. In view of this, definitions of ‘Customs Station’ is important.
Customs area means all area of Customs Station and includes any area where imported goods or export goods are ordinarily kept pending clearance by Customs authorities. Thus, ‘Customs Area’ could include some area even outside the ‘Customs Station’. Customs Station means (a) customs port (b) inland container depot (c) customs airport and (d) land customs station.
Section 7 of Customs Act empowers CBEC (Board) to appoint * Customs ports * Customs airports * Places for inland container depots * Coastal ports. These are appointed by issuing a notification. Section 8 authorises Commissioner of Customs to approve proper places in any customs port, customs airport or costal port for unloading and loading of goods or for any class of goods and specify the limits of customs area. Thus, the place (city / town / village etc.) is approved by CBEC, while exact location within that city / town / village is approved by Commissioner of Customs.

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Import manifest is required to be submitted before arrival of aircraft or vessel - Section 30(1) of Customs Act provides that Import Manifest should be filed before arrival of ship or aircraft. Normally, the Agents submit the Import Manifest before arrival, so that maximum possible formalities are completed before vessel or aircraft arrives. This also enables importers to file ‘Bill of Entry’ in advance.
v Grant of Entry Inwards by Customs Officer - Unloading of cargo can start only after Customs Officer grant ‘Entry Inwards’. Such entry inwards can be granted only when berthing accommodation is granted to a vessel. If there is heavy congestion at port, shipping berth may not be available and in such case, ‘Entry Inwards’ cannot be granted. This date is highly relevant for determining rate of customs duty applicable.
v Carrier responsible for shortages during unloading - If the goods are short landed, the carrier is liable to pay penalty upto twice the amount of duty payable on such short landed goods. It has been held that tally sheet prepared by Port Trust authorities on unloading of goods is a statutory document and should be accepted in preference to steamer survey.
v Procedure by Importer - The importer importing the goods has to follow prescribed procedures for import by ship/air/road. (There is separate procedure for goods imported as a baggage or by post.)

BILL OF ENTRY - This is a very vital and important document which every importer has to submit under section 46. The Bill of Entry should be in prescribed form. The standard size of Bill of Entry is 16" × 13". However, for computerisation purposes, 15" × 12" size is permitted. (Mumbai Customs Public Notice No. 142/93 dated 3-11-93).
Bill of Entry should be submitted in quadruplicate – original and duplicate for customs, triplicate for the importer and fourth copy is meant for bank for making
Under EDI system, Bill of Entry is actually printed on computer in triplicate only after ‘out of charge’ order is given. Duplicate copy is given to importer.
TYPES OF BILL OF ENTRY- Bills of Entry should be of one of three types. Out of these, two types are for clearance from customs while third is for clearance from warehouse.
v Bill of entry for home consumption - This form, called ‘Bill of Entry for Home Consumption’, is used when the imported goods are to be cleared on payment of full duty. Home consumption means use within India. It is white coloured and hence often called ‘white bill of entry’.
v Bill of entry for warehousing -If the imported goods are not required immediately, importer may like to store the goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. This will enable him to defer payment of customs duty till goods are actually required by him. This Bill of Entry is printed on yellow paper and often called ‘Yellow Bill of Entry’. It is also called ‘Into Bond Bill of Entry’ as bond is executed for transfer of goods in warehouse without payment of duty.
v Bill of entry for ex-bond clearance -The third type is for Ex-Bond clearance. This is used for clearance from the warehouse on payment of duty and is printed on green paper. The goods are classified and value is assessed at the time of clearance from customs port. Thus, value and classification is not required to be determined in this bill of entry. The columns in this bill of entry are similar to other bills of entry. However, declaration by importer is not required as the goods are already assessed.
Rate of duty for clearance from warehouse - It may be noted that rate of duty applicable is as prevalent on date of removal from warehouse. Thus, if rate has changed after goods are cleared from customs port, customs duty as assessed on yellow bill of entry and as paid on green bill of entry will not be same.
v Mention of BIN on Bill of Entry – A BIN (Business Identification Number) is allotted to each importer and exporter w.e.f. 1.4.2001. It is a 15 digit code based on PAN of Income Tax (PAN is a 10 digit code). [Earlier an EC (Import Export code) number issued by DGFT was required to be mentioned on Bill of Entry].
v Filing of Bill of Entry - Normally, Bill of Entry is filed by CHA on behalf of the importer. Customs work at some ports has been computerised. In that case, the Bill of Entry has to be filed electronically, i.e. through Customs EDI system through computerisation of work. Procedure for the same has been prescribed vide Bill of Entry (Electronic Declaration) Regulations, 1995.
DOCUMENTS TO BE SUBMITTED BY IMPORTER - Documents required by customs authorities are required to be submitted to enable them to (a) check the goods (b) decide value and classification of goods and (c) to ensure that the import is legally permitted. The documents that are essentially required are : (i) Invoice (ii) Packing List (iii) Bill of Lading / Delivery Order (iv) GATT declaration form duly filled in (v) Importers / CHAs declaration duly signed (vi) Import Licence or attested photocopy when clearance is under licence (vii) Letter of Credit / Bank Draft wherever necessary (vii) Insurance memo or insurance policy (viii) Industrial License if required (ix) Certificate of country of origin, if preferential rate is claimed. (x) Technical literature. (xi) Test report in case of chemicals (xii) Advance License / DEPB in original, where applicable (xiii) Split up of value of spares, components and machinery (xiv) No commission declaration. – A declaration in prescribed form about correctness of information should be submitted.
The Noting is now done electronically in large ports, while it is done manually in small ports. Thoka Number (Serial Number) is given while noting the Bill of Entry.
1.ASSESSMENT OF DUTY & CLEARANCE-The documents submitted by importer are checked and assessed by Customs authorities and then goods are cleared. Section 2(2) defines ‘assessment’ as follows – ‘Assessment’ includes provisional assessment, reassessment and any order of assessment in which the duty assessed is Nil. Thus, ‘assessment’ includes ‘Nil’ assessment.
v Noting of Bill of Entry Bill of Entry submitted by importer or Customs House Agent is cross-checked with ‘Import Manifest’ submitted by person in charge of vessel / carrier. It is noted if the description tallies. ‘Noting’ really means taking on record by customs officer. This date is relevant for determining rate of customs duty. Thoka number (serial number) is given in the import section. Otherwise, it is returned for clarifications. In case of EDI system, noting is done by the system itself which also generates bill of entry number.
Date of presentation of bill of entry is highly relevant and the rate of duty as applicable on this date will be considered for calculating the duty payable. Bill of Entry is accepted only after proper scrutiny vis-a vis import manifest and various declarations given in bill of entry and attached documents like invoice, bill of lading etc. If such documents are not attached, the authorities can refuse to accept the Bill of Entry, and hence submission of such incomplete Bill of Entry cannot be taken as date of presentation of Bill of Entry.
v Prior Entry of Bill of Entry - After the goods are unloaded, these have to be cleared within stipulated time - usually three working days. If these are not so removed, demurrage is charged by port trust/airport authorities, which is very high. Hence, importer wants to complete as many formalities as possible before ship arrives. Proviso to Section 46(3) of Customs Act allows importer to present bill of entry upto 30 days before expected date of arrival of vessel. In such case, duty will be payable at the rate applicable on the date on which ‘Entry Inward’ is granted to vessel and not the date of presentation of Bill of Entry, but rate of exchange will be as prevalent on date of submission of bill of entry.
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2.ASSESMENT OF CUSTOM DUTY-Section 17 provides that assessment of goods will be made after Bill of Entry is filed. Date stamp of receipt is put on the ‘Bill of Entry’ and then it is sent to appraising department either manually or electronically.
There are various Appraising groups. Each group is under anAssistant/Deputy Commissioner.
v Appraising the goods - Appraiser has to (a) correctly classify the goods (b) decide the Value for purpose of Customs duty (c) find out rate of duty applicable as per any exemption notification and (d) verify that goods are not imported in violation of any law.
v Valuation of goods - As per rule 10 of Customs Valuation Rules, the importer has to file declaration about full 'value' of goods. If the assessing officer has doubts about the truth and accuracy of 'value' as declared, he can ask importer to submit further information, details and documents. If the doubt persists, the assessing officer can reject the value declared by importer. [rule 10A(1)]. If the importer requests, the assessing officer has to give reasons for doubting the value declared by importer. [rule 10A(2)]. If the value declared by importer is rejected, the assessing officer can value imported goods on other basis e.g. value of identical goods, value of similar goods etc. as provided in Customs Valuation Rules.
v Examination of goods - Examiners carry out physical examination and quantitative checking like weighing, measuring etc. Selected packages are opened and examined on sample basis in ‘Customs Examination Yard’. Examination report is prepared by the examiner.
Payment of Customs Duty - After assessment of duty, necessary duty is paid. Regular importers and Custom House Agents keep current account with Customs department. The duty can be debited to such current account, or it can be paid in cash/DD through TR-6 challan in designated banks.
After payment of duty, if goods were already examined, delivery of goods can be taken from custodians (port trust) after paying their dues. If goods were not examined before assessment, these have to be submitted for examination in import shed to the examining staff. After shed appraiser gives ‘out of charge’ order, delivery of goods can be taken from custodian
FIRST & SECOND SYSTEM OF ASSESSMENT - There are two systems of assessment. Section 17(2) provides for assessment after examination of goods and section 17(4) provides for assessment on basis of documents, followed by inspection and testing of goods.
v “First appraisement system” or 'first check procedure' - is followed if the appraiser is not able to make assessment on the basis of documents submitted and deems that inspection is necessary. Goods are examined first and then these are assessed. This method is followed only if assessment is not possible on basis of documents. - - The importer himself may also request 'first check procedure', if he cannot give all required details regarding description / value of goods. He has to make request for first check examination at the time of filing of Bill of Entry or at data entry stage in case of EDI. He has to give reason for seeking first appraisement. The examination order is recorded on Bill of Entry and then returned to importer. It is then presented to import shed for examination. The shed appraiser / Dock examiner examines the goods as per examination order and records his findings.
v “Second Appraisement System” or 'second check procedure' - which is normally followed, assessment is done on basis of documents and then goods are examined. Such examination is not mandatory. It is done on selective basis on the basis of ‘risk assessment’ or specific intelligence report. Section 17(4) of Customs Act specifically provides that if initially assessment is done on basis of documents, re-assessment can be done after examination or testing of goods or otherwise, if it is found subsequent to examination or testing or otherwise, that any statement made on Bill of Entry or any information supplied is not true in respect of matter relevant to assessment of duty.
First appraisement is generally carried out in following cases - * If complete documents are not submitted * Goods are to be tested for correct classification * Goods are re-imported * Goods are damaged or deteriorated and abatement is claimed * Goods are abandoned and remission of duty is applied for * When goods are provisionally assessed * When importer himself requests for examination of goods before payment of duty.
Examination of Goods - Examiners carry out physical examination and quantitative checking like weighing, measuring etc. Selected packages are opened and examined on sample basis in ‘Customs Examination Yard’. Examination report is prepared by the examiner.
3.PROVISIONAL ASSESSMENT - Section 18 of Customs Act, 1962 provide that provisional assessment can be done in following cases (a) when Customs Officer is satisfied that importer or exporter is unable to produce document or furnish information required for assessment (b) it is deemed necessary to carry out chemical or other tests of goods (c) when importer/exporter has produced all documents, but Customs Officer still deems it necessary to make further enquiry. In such cases, assessment is done on provisional basis. The importer/exporter has to furnish guarantee/security as required by Customs Officer for payment of difference if any. Goods can be cleared after payment of duty provisionally assessed and after providing the security. After final assessment, difference is paid by importer or refunded to him as the case may be. If the imported goods were warehoused after provisional assessment, the Customs Officer may require importer to execute a bond for twice the difference in duty, if duty finally assessed is higher [section 18(2)(a)]. The bond is called as 'P D Bond' (Provisional Duty Bond). The bond is with security or surety. Bank guarantee can also be given as a security.
v Checking of duty drawback / license documents - Documents in respect of Duty Entitlement Pass Book (DEPB), advance license, duty drawback etc. will be checked.
v Execution of bond and payment of duty - Once the duty is assessed, the bill of entry is returned to importer. The Bill of Entry should be presented to comptist for calculation and pinpointing of the duty. If bond has to be executed, it will be taken in bond section.
v Payment of duty - If goods are to be removed to a warehouse, duty payment is not required. The goods can be taken to a warehouse under bond, without payment of duty. However, if goods are to be removed for home consumption, payment of customs duty is required. CHA or the importer can take it for payment of customs duty. Large importers and CHA have P.D. accounts with customs. Duty can be paid either in cash or through P.D. account. P. D. account means provisional duty account. This is a current account, similar to PLA in central excise. The importer or CHA pays lumpsum amount in the account and gets credit on the amount paid. He can pay customs duty by debiting the amount in P.D. (Provisional Duty) account. If the importer does not have an account, he can pay duty by cash using TR-6 challan. Of course, payment through PD account is very convenient and quick.
v The duty should be paid within five working days (i.e. within five days excluding holidays) after the ‘Bill of Entry’ is returned to the importer for payment of duty. [section 47(2)]. (Till 11-5-2002, the period allowed was only 2 days).
v Interest for late payment - If duty is not paid within 5 working days as aforesaid, interest is payable. Such interest can be between 10% to 36% as may be notified by Central Government. [Section 47(2) of Customs Act, 1962.]. - - Interest rate is 15% w.e.f. 13-5-2002. [Notification No. 28/2002-Cus(NT) dated 13-5-2002] Earlier, interest rate was 24% p.a, w.e.f. 1-3-2000, as per notification No. 34/2000-Cus(NT)].
v Disposal if goods are not cleared within 30 days - As per section 48 of Customs Act, goods must be cleared within 30 days after unloading. Customs Officer can grant extension. Otherwise, goods can be sold after giving notice to importer. However, animals, perishable goods and hazardous goods can be sold any time - even before 30 days. Arms & ammunition can be sold only with permission of Central Government.
v Out of Customs Charge Order - After goods is examined, it is verified that import is not prohibited and after customs duty is paid, Customs Officer will issue ‘Out of Customs Charge’ order under section 47. Goods can be cleared from customs area only on receipt of such order. This is an ‘adjudicating order’ within the meaning of Customs Act, even if it is passed by Appraiser and not by Assistant Commissioner.
v Demurrage if goods not cleared - Heavy demurrage is payable if goods are not cleared from port within three days.





Bibliobraphy

v WWW.Google.com
v WWW.Scribd.com
v PPT Given by Prasanna Srinivasan.
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Sunday, September 20, 2009

METHODS OF PAYMENT

Methods of Payment in International Trade BY SHRUTI


Methods of Payment in International Trade
To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown in figure 1.1, there are four primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for both you and your customer.
Figure 1.1. Payment Risk Diagram

Key Points
• To succeed in today’s global marketplace and win sales against International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer).
• For exporters, any sale is a gift until payment is received.
• Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer.
• For importers, any payment is a donation until the goods are received.
• Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

Cash-in-Advance
With cash-in-advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, because it creates cash-flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. Cash in Advance/Prepayment occurs when a buyer sends payment in the agreed currency and through agreed method to a seller before the product is manufactured and/or shipped. Upon receipt of payment this seller then ships the goods and all the necessary shipping and commercial documents directly to the buyer.
Time of Payment
*Prior to manufacturing and/or shipping, through the agreed upon method (cash, wire transfer, check, credit card, etc.).
Goods Available to Buyer
*After payment is received.
Risks to Seller
*Product is manufactured and never paid for.
Risks to Buyer
*Seller does not ship per the order (quantity, product, quality, shipping method).*Seller does not ship when requested.
When Appropriate to Quote or Use

*When there is no established relationship between the buyer and seller.*Product is a special order and can only be sold to this specific buyer since it contains company logo, etc.*Seller is confident that importing country will impose regulations deferring or blocking transfer of payment.*Seller does not have sufficient liquidity or access to outside financing to extend deferred payment terms.
Financing
*Buyer must have cash or financing available.

Letters of Credit
Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects the buyer because no payment obligation arises until the goods have been shipped or delivered as promised. A letter of credit is a bank instrument that can be used to even the risk between a buyer and a seller since a buyer is guaranteed to receive payment if when he/she has complied with the exact requirements of this buyer. A letter of credit offers a seller numerous advantages but only if that seller complies exactly with its terms and conditions of the transaction. In addition to providing reduced risk for both a seller and a buyer, there are many variables that can be used with a letter of credit to reduce the political and commercial risks that may accompany the transaction as well as provide extended terms to a buyer through the letter of credit instrument.
The terminology that is used when working with letters of credit is very specific and should be understood.
Involved Parties:
Applicant = Buyer/ Importer
Beneficiary = Seller/Exporter
Opening Bank = Importer’s Bank >> Issues L/C
Advising Bank= Exporter’s Bank >> Advises L/C
Confirming Bank = Advising Bank or 3rd Party Bank >> Confirms L/C
Paying Bank = Any Bank as Specified in L/C >> Pays the Draft
Activities and Terms:
Advice – review and approval of L/C
Amendment – change to L/C
Confirmed – the commercial, political and economic risk of the transaction absorbed by the confirming bank
Discrepancy – mistake in the documentation
Documentation – documents required within L/C
Draft – negotiable order to pay
Sight Draft – payment assured upon shipment and presentation of documents in compliance with its terms
Time Draft – bank assurance of payment at the maturity of the banker’s acceptance with option of obtaining immediate funds by discounting the BA (30, 60, 90 days at sight or acceptance)
Irrevocable – cannot be changed without approval from beneficiary or advising bank
Issuance – opening of L/C
Negotiation – review of documents
Revocable – can be changed without approval of beneficiary or advising bank
Types of L/Cs:
Back-to-Back – credit and terms of a transaction rollover to a new transaction upon completion, which eliminates the need to apply or issue a new L/C for identical shipments
Confirmed – credit risk taken by bank and agreement to pay (fee charged)
Straight – payable only at paying bank
Negotiation – payable at negotiating bank
Sight – payable at acceptance of documents
Standby – used by the beneficiary for payment should the applicant not pay the exporter directly
Transferable – part or all of the proceeds from the L/C may be transferred to another party, used by sales brokers or agents to disguise buyers and sellers
Usance – time draft based on invoice, bill of lading, or documents, up to 180 days

Time of Payment
•As agreed between the buyer and seller and stipulated in the L/C, at sight of documents or acceptance of time draft.
Goods Available to Buyer
•Upon release of documentation and payment or acceptance of time draft.
Risks to Seller
•Delays in availability of foreign exchange and transferring of funds from buyer’s country if the L/C is not confirmed.•Payment blocked due to political events in buyer’s country if the L/C is not confirmed.
Risks to Buyer
•Seller creates documents to comply with L/C but does not ship actual product.•Seller does not ship.•Buyer ties up commercial lines of credit to secure L/C.
When Appropriate to Quote or Use
A seller should consider a number of factors:•corporate credit policy and ability to absorb risk•credit standing of the buyer•political environment in the importing country•type of merchandise to be shipped and value of the shipment•availability of foreign exchange•buyer and seller are establishing a new relationship•when buyer and/or seller’s governments require use of banks to control flow of currencies and products•products and/or services comply with quality steps during production and documentation is presented for payment•used less frequently in international transactions because of the high bank fees and time-consuming process
Financing
•Often a bank will favorably consider a request for an increase in a credit line to finance production of the goods. This is done with the knowledge that letters of credit have been opened and advised to an exporter for an export order. The bank may further require that the beneficiary assign its interest in the letter of credit to them.












FORMAT OF LC





FROM :( NAME & ADDRESS OF OPENING BANK )

TO :( NAME & ADDRESS OF ADVISING BANK )
(FOR Haldia Shipments ) STATE BANK OF INDIA OVERSEAS BRANCH KOLKATA SWIFT CODE
SBININBB106
(FOR Vizag Shipments ) STATE BANK OF INDIA OVERSEAS BRANCH VIZAG SWIFT CODE
SBININBB123
40A TYPE OF L/C :IRREVOCABLE
20 L/C Number :
31C DATE OF ISSUE :
31D DT. & PLACE OF EXPIRY : __________________________________IN INDIA
50 NAME & ADDRESS OF THE:
APPLICANT
51 NAME & ADDRESS OF THE: Steel Authority of India Limited,
BENEFICIARY Central Marketing Organisation,
40 J.N.Road, Calcutta-700001, India
32B AMOUNT OF CREDIT IN :
US DOLLARS /EURO/ANY
OTHER FREELY
EXCHANGEABLE CURRENCY
(IN FIGURES & WORDS)
39A PERCENTAGE CREDIT : AS PER CONTRACT
AMOUNT TOLERANCE
41A CREDIT AVAILABLE WITH: STATE BANK OF INDIA, KOLKATA/VIZAG
CREDIT AVAILABLE BY : PAYMENT
42C USANCE OF THE DRAFTS : AT SIGHT
42A DRAFTS TO BE DRAWN ON:
43P PARTIAL SHIPMENT : AS PER CONTRACT
43T TRANSHIPMENT : AS PER CONTRACT
44A SHIPMENT FROM :
44B SHIPMENT TO :
44C LATEST SHIPMENT DATE :
45A DESCRIPTION OF GOODS :
a) Description of Materials
b) Size ( in mm) (except for Pig Iron) and Quantity (in MT)
c) Specification
d) Tolerance (except for Pig Iron)
e) Quantity
f) Quantity Tolerance
g) Price per MT (in USD/Euro/any other freely exchangeable currency)
46A DOCUMENTS REQUIRED :
1. Beneficiary’s Commercial Invoice - one original plus two signed copies covering materials shipped.
Invoices will be raised on the basis of (THEORETICAL/ ACTUAL/ DRAFT SURVEY) WEIGHT.
2. Full set 3/3 original on board ocean or charter party Bills of Lading (CONGEN) issued to the order of
the Shipper and blank endorsed marked “Stowed under deck” further more marked “freight prepaid/freight payable as per
charter party/ freight to pay” evidencing shipment from __________ Port, India to ________ Port in ________ . Bills of
Lading (CONGEN) with remarks “Materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty
edges” and/or “unprotected cargo” and/or “said to be” and/or “said to weigh” and/or “stored in open area prior to loading”
are acceptable.
3. Works Test Certificate in duplicate issued by the Steel Plant (s) of the beneficiary and confirming that
the materials are as per contracted specification.
4. Pre- shipment Inspection certificate issued by M/s ., (herein after referred to as )
certifying the following:
(a) The materials were inspected prior to loading at the load port and that the markings were as per General Terms
and Conditions for Export(FOB) between beneficiary and the opener.
(b) Quantity loaded on board the vessel.
(c) The materials were loaded on board the vessel without apparent damage and were found to be in good order
and condition. That the loading was done under their supervision , and were properly lashed and secured (except for pig
iron) inside the hatches / holds of the vessel.
Remarks such as “materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty edges”
and/or “stored in open area prior to loading” and/or “unprotected cargo” appearing on Pre-shipment inspection certificate
are acceptable.
5. Beneficiary’s packing list (except for pig iron) indicating details of the materials shipped - 3 copies.
6. Certificate of origin.
7. Copy of Telex/e-mail or Fax from Steel Authority of India Limited, ________ / CALCUTTA/ NEW
DELHI addressed to the opener’s FAX No. __________ within FIVE working days after the on board Bill of Lading
(CONGEN) date advising the name of the vessel, Bill of Lading (CONGEN, materials an) number and date d quantity,
destination ports in __________ (Country).
47A ADDITIONAL CONDITIONS :
1. Ocean freight is payable by the openers over and above the value of this Letter of Credit.
2. Marine Insurance to be covered by the opener.
3. In the event of (a) the failure of the opener to nominate a suitable vessel within 21 days, including lay days , from
the date of beneficiary’s Notice of Readiness of cargo (herein after referred to as NOR) OR (b) the vessel nominated by the
opener and accepted by the beneficiary failing to arrive at __________ port within 21 days including lay days from the date
of NOR for reasons other than Force Majeure as defined under Clause 10 of the said contract OR (c) the vessel (nominated
by the opener and accepted by the beneficiary) being found unsuitable after its arrival at _______ Port as certified by
independent marine surveyors, this credit is payable at sight at your counters in Kolkata/Vizag against presentation of
beneficiary’s draft drawn on ourselves for 100 per cent value of invoice accompanied by the following documents:
a) Beneficiary's commercial invoice in duplicate.
b) Copy of Beneficiary’s Notice of Readiness,
c) One copy of Works Test Certificate issued by the Steel Plant (s) of the beneficiary.
d) Certificate issued by M/S ..............., certifying that the materials were inspected at the storage yard of the
beneficiary at ______ Port and that the markings are as per requirement of the said contract and that the materials are in
good condition and further that the materials and quantity as per the Commercial Invoice are ready for shipment.
Remarks such as “materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty edges’ and/or
‘stored in open area prior to loading’ and/or ‘unprotected cargo’ appearing in the Pre-Shipment Inspection Certificate are
acceptable.
e) Beneficiary’s declaration that suitable vessel has not been nominated by the opener within 21 days including lay
days from the date of NOR OR that the vessel nominated by the opener and accepted by the beneficiary failed to arrive at
________ Port within the agreed lay days for reasons other than Force Majeure as defined in Clause No. 10 of the said
contract OR that the vessel (nominated by the opener and accepted by the beneficiary) being found unsuitable after its
arrival as certified by the independent Marine Surveyors (copy of certificate of Marine Surveyors to be presented in such an
event) as the case may be.
f) Beneficiary’s declaration that (i) the materials as mentioned in the commercial invoice will be held in custody by
the beneficiary at the risk and responsibility of the opener at the storage yard of the beneficiary at Haldia/Vizag Port. (ii)
The materials will be covered by tarpaulin at the cost of the opener. (iii) The Materials shall be held by the beneficiary free
of ground rent for a period of 30 days from the date of payment (against documents negotiated under this clause) and for
storage extending beyond 30 days from the date of payment the ground rent calculated at the rate of USD 1.00 per metric
tonne for 15 days or part thereof upto 30 days shall be paid by the opener to the beneficiary and for the period beyond this
till the date of acceptance of vessels’s NOR, when the vessel finally calls at the loadport, the cost of holding the materials
shall be paid by the opener to the beneficiary at the rate of US $ 1 per metric tonne for every week(s) (7 days) or part
thereof. (iv) Upon nomination of suitable vessel within reasonable time by the opener for taking delivery of the materials for
which payment has been realized by the beneficiary as aforesaid and subject to such vessel arriving at Haldia/Vizag Port
within the agreed lay days, the beneficiary shall at his cost deliver FOB (Stowed) as per terms of the said contract the
materials for which payment has been realized by the beneficiary as aforesaid.
4. Any amendment to the letter of credit without the prior written consent of the beneficiary shall not be taken cognizance of
under this letter of credit.
71B CHARGES :
All Bank charges incurred outside India shall be borne and paid for by the opener.
All Bank charges incurred in India shall be borne and paid for by the beneficiary.
48 PERIOD FOR PRESENTATION :
Within 21 days from the date of B/L.
49 CONFIRMATION INSTRUCTIONS:
Paying Bank may add their confirmation to this Letter of Credit at the request and expense of the beneficiary and
such confirmation shall also apply to any amendment (s) to this credit.
78 REIMBURSEMENT INSTRUCTIONS:
Upon presentation of documents complying in all respects to Letter of Credit terms, the negotiating bank is
authorised to claim on us by tested telex certifying that all terms and conditions have been complied with and that the
relative documents have been forwarded to us by Registered Airmail/ Courier. We undertake to remit within two working
days after receipt by us of your tested telex/swift claim in US Dollars/Euro/any other freely exchangeable currency in
accordance with your instructions. This Letter of Credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision) International Chamber of Commerce Brochure No. 500. This telex/swift may be treated as the
operative instrument.
All apparent spelling mistakes/mistakes in LC documents, which do not alter
meaning/specification/description/Quantity/value of goods are acceptable and will not count as a discrepancy

Documentary Collections
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporter’s bank), which sends documents to a collecting bank (importer’s bank), along with instructions for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The draft gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment. Drafts are generally less expensive than LCs. Using a documentary collection process requires that a seller ship the product and create a negotiable document, usually a draft or bill of exchange. The draft and shipping documents are then processed either through a buyer’s bank (the collecting bank) or through the seller and buyer’s banks. Upon arrival at the buyer’s bank, the buyer is notified to make payment; then the documents are released and used to clear the shipment through customs upon arrival.
The primary advantage of documentary collections is that a seller who extends credit terms to a buyer under a D/A collection obtains an enforceable debt instrument in the form of a trade acceptance. The seller’s rights to payment are protected under the negotiable instruments law of that buyer’s country. In the event this buyer defaults or delays payment at maturity, the possession of the trade acceptance may put the seller in a stronger position before the court than if he/she had sold under open account, in which evidence of indebtedness is provided by the unpaid commercial invoice alone. In addition, a bank presenting a collection on behalf of a seller may obtain prompt payment from a buyer who might be inclined to delay payment if the seller were invoicing under open account.
A documentary collection is best used for ocean shipments where original bills of lading are required. An original bill of lading is a document of title which enables a buyer to gain possession of the goods. When all the originals of a bill of lading are sent to the collecting bank, it is in the interest of the buyer to effect payment in order to obtain title to the goods.
Documentary collections may be more competitive than letter of credit terms because they are less costly and do not require the buyer to tie up his/her local bank credit lines.
There are a variety of terms associated with documentary collections that should be understood:
Buyer = Importer
Seller = Exporter
Remitting Bank = Exporter’s Bank >> receives payment
Collecting Bank = Importer’s Bank >> transmits funds from buyer to seller
Bill of Exchange/Draft – document issued by exporter and used for remittance of funds
Time/Usance Bill of Exchange – tenured at 30, 60, 90, 120 or 180 days, etc.
There are four types of processes available to buyers and sellers:1. D/P – Documents against Payment2. D/A – Documents against Acceptance3. Clean Collection4. Cash Against Documents
D/P – Documents against Payment
The export documents and the bill of exchange provided to a collecting bank are only made available to an importer when payment is made. The collecting bank then transfers the funds to the seller through the remitting bank.
D/A – Documents against Acceptance
The export documents and a time/usance bill of exchange are sent to a remitting bank. The documents are then sent to a collecting bank with instructions to release the documents against a buyer’s acceptance of the bill of exchange.
Clean Collection
The exporter creates a bill of exchange, which is sent without any export documents to a buyer for collection through the remitting bank to the collecting bank. There is less security for an exporter since the documents are sent directly to the importer.
Cash Against Documents
This process lacks the security and legal protection of a documentary collection since the exports documents are sent through a remitting bank to a collection bank without a bill of exchange. It is, however, still a collection through the banking system.
Time of Payment
*Either at sight of documents or acceptance as agreed to by the parties (30, 60, 90 days after acceptance).
Goods Available to Buyer
*Upon arrival of goods after payment or acceptance of draft has been made.
Risks to Seller*Buyer defaults on payment obligation.*Delays in availability of foreign exchange and transferring of funds from buyer’s country.*Payment blocked due to political events in buyer’s country. Risks to Buyer*Seller does not ship per the order (quantity, product, quality, shipping method).*Seller does not ship when requested, either early or late.
When Appropriate to Quote or Use
*Seller and buyer have done some business together and are transitioning away from a prepayment policy.*Seller has some trust that buyer will accept shipment and pay at agreed time.*Seller is confident that importing country will not impose regulations deferring or blocking transfer of payment.*Seller has sufficient liquidity or access to outside financing to extend deferred payment terms.
Financing
*Seller finances buyer through deferred payment terms. *Seller can use trade acceptances, which are negotiable instruments, to obtain financing.*Leverage /or financing comes from domestic/global business.

Open Account
An open account transaction is a sale where the goods are shipped and delivered before payment is due, which is usually in 30 to 90 days. Obviously, this option is the most advantageous option to the importer in terms of cash flow and cost, but it is consequently the highest risk option for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. However, the exporter can offer competitive open account terms while substantially mitigating the risk of non-payment by using of one or more of the appropriate trade finance techniques, such as export credit insurance. Open account occurs when a seller ships the goods and all the necessary shipping and commercial documents directly to a buyer who agrees to pay a seller’s invoice at a future date.
Time of Payment
•As agreed between a buyer and seller, net 15, 30, 60 day terms, etc., from date of invoice or bill of lading date.
Goods Available to Buyer
•Before payment (depending on how the products are shipped and the length of payment option).
Risks to Seller
•Buyer defaults on payment obligation.•Delays in availability of foreign exchange and transferring of funds from buyer’s country occur.•Payment is blocked due to political events in buyer’s country.
Risks to Buyer
•Seller does not ship per the order (product, quantity, quality, and/or shipping method).•Seller does not ship when requested, either early or late.
When Appropriate to Quote or Use
•Seller has absolute trust that buyer will accept shipment and pay at agreed time.•Seller is confident that importing country will not impose regulations deferring or blocking transfer of payment.•Seller has sufficient liquidity or access to outside financing to extend deferred payment terms.•Used more regularly in international transactions to avoid high banking fees.
Financing
•Seller finances buyer through deferred payment terms.•Seller may be able to obtain bank financing through pledge of receivables.•Selling receivables on a non-recourse basis to a bank.•Leverage and/or financing from domestic/global business.



UCP 600 LEAFLET FORMAT: UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS




ICC Uniform Customs and Practice for Documentary Credits UCP 600 Leaflet Format ICC Publication No. 600L, 2006 Edition UCP 600 Leaflet Format $ 389.95 The leaflet contains the full text of the UCP 600 (including the 12 articles of the eUCP, governing presentation of documents in electronic or part-electronic form) in a handy format: - ICC Publication No. 600L - 8 page, fold-out Leaflet, size 21 x 29.7 cm - Sold in sets of 25 Leaflets UCP 600 came into effect on 1 July 2007. It contains significant changes you will need to know, including: A reduction in the number of articles from 49 to 39; * New articles on "Definitions" and "Interpretations" to provide more clarity and precision in the rules; * The replacement of the phrase "reasonable time" for acceptance or refusal of documents by a firm period of five banking days; * New provisions which allow for the discounting of deferred payment credits; * A definitive description of negotiation as purchase of drafts of documents. The new UCP 600 also contains within the text the 12 Articles of the eUCP, ICC's supplement to the UCP governing presentation of documents in electronic or part-electronic form. Used by letter of credit practitioners worldwide, the Uniform Customs and Practice for Documentary Credits (UCP) are the most successful private rules for trade ever developed. Bankers, traders, lawyers, transporters, academics and all who deal with letter of credit transactions worldwide, will refer to UCP 600 on a daily basis.








What is the UCP 600?

The UCP 600 (“Uniform Customs & Practice forDocumentary Credits”) is the official publication
Issued by the ICC (International Chamber of Commerce).
The UCP provisions have determined the rules of engagement between the various parties to a LC(Letter of Credit) and in particular between the banks
involved in a transaction in some capacity.The current version of the UCP - UCP 500 - has been in force since1993 and is now to be replaced with the revision
titled “UCP 600”
The UCP 600 has taken over 3 years to develop and deliver a more proactive business oriented set of rules for those involved in international trade.


When does UCP 600 come into effect?
The UCP 600 comes into effect from 1st July 2007.All banks are expected to issue new LCs under the UCP 600 guidelines from that date. Existing LCs
covered by earlier versions of UCP will continue until their maturity.




MUST HAVE” KNOWLEDGE ABOUT UCP 600

The revision, which came into effect on July 1, 2007, incorporates a number of changes from the UCP 500. These changes include:

* A reduction in the number of articles from 49 to 39
* New articles on “Definitions” and “Interpretations” providing more clarity and precision in the rules
* A definitive description of negotiation as “purchase” of drafts of documents
* The replacement of the phrase “reasonable time” for acceptance or refusal of documents by a maximum period of five banking days
* New provisions allow for the discounting of deferred payment credits
* Banks can now accept an insurance document that contains reference to any exclusion clause

Everyone involved with a Letter of Credit needs to be knowledgeable about the way these “rules” apply to their transaction. These rules affect all parties involved in transactions covered by documentary credits including:

* Banks and other institutions that issue, confirm, or otherwise process them
* Buyers (applicants) who cause them to be issued
* Sellers (beneficiaries) who look to them for payment
* Service providers such as forwarders, carriers, customs brokers who provide or use the documents that the credits stipulate












NEW UCP 600: Changes & Opportunities”

INTRODUCTION
Documentary Letter of Credit is the main method of payment in international trade transaction. This payment method is considered easy, safe and protects the interest of involved parties. Approximately 14% of world trade payments roughly equivalent to US1 Trillion per year is settled by using Letter of Credit.

COMPLIANCE MANAGEMENT
As per survey of various organizations, more than 70% of documents presented under L/Cwere rejected on first presentation on flimsy discrepancies. While handling letter of credittransaction parties involved has to understand compliance management of commercial & financial documents. Presentation of flawless documents is essential to good export L/C management where banks decide the compliance and payments.


LETTER OF CREDIT & PAYMENT ISSUES
Letter of Credit is considered to be safe instrument for payment settlement in internationaltrade transactions. In certain cases due to efforts of finding motivated discrepancies L/C system failsto produce desired results of protecting interest of involved parties. Documents under L/C arerejected not for late shipment or on the basis of solid reasons but using certain minor defects or misinterpretation of the condition to serve their bad motives. Such approach result in rejecting of the payment or delays causing increase in cost of export transaction. Some of the banks have prescribed charges for discrepancy found in each document to add further cost to L/C transaction.
Disputed cases due to misinterpretation, misunderstanding and misapplication of practices are increasing all over the world.

NEED FOR CHANGE OF RULES
To address these issues and other relating concern, a consulting group at ICC wasconstituted to review latest developments in banks, transport, insurance, international trade environment etc. The objective of UCP is to create a set rules that would establish uniformity in practicesfollowed by involved parties in the handling L/C. UCP represents the work of a private internationalorganization ICC which insists on self regulations. UCP remains the most successful set of private rules for international trade ever developed.

ROLE OF ICC
A significant function of ICC is the preparation & promotion of its uniform rules ofpractices so to ensure same interpretation all over the world. ICC rules of practice are designed by banks merchants and not by local and political considerations. The rules accordingly represent the need, customs & practices of international business. Revision incorporates the change in practices and new problems/issues of the commercial parties. Primary objective is to encourage the flow ofinternational trade. The aim was to create a set of contractual rules that would establish uniformity in practice so that there would be less need to misinterpretation.






Uniform Customs and Practice for Documentary Credits


The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. The UCP is utilised by bankers and commercial parties in more than 175 countries in trade finance. Some 11-15% of international trade utilises letters of credit, totalling over a trillion dollars (US) each year.

Historically, the commercial parties, particularly banks, have developed the techniques and methods for handling letters of credit in international trade finance. This practice has been standardized by the ICC (International Chamber of Commerce) by publishing the UCP in 1933 and subsequently updating it throughout the years. The ICC has developed and moulded the UCP by regular revisions, the current version being the UCP600. The result is the most successful international attempt at unifying rules ever, as the UCP has substantially universal effect. The latest revision was approved by the Banking Commission of the ICC at its meeting in Paris on 25 October 2006. This latest version, called the UCP600, formally commenced on 1 July 2007.

ICC and the UCP

A significant function of the ICC is the preparation and promotion of its uniform rules of practice. The ICC’s aim is to provide a codification of international practice occasionally selecting the best practice after ample debate and consideration. The ICC rules of practice are designed by bankers and merchants and not by legislatures with political and local considerations. The rules accordingly demonstrate the needs, customs and practices of business. Because the rules are incorporated voluntarily into contracts, the rules are flexible while providing a stable base for international review, including judicial scrutiny. International revision is thus facilitated permitting the incorporation of the changing practices of the commercial parties. ICC, which was established in 1919, had as its primary objective facilitating the flow of international trade at a time when nationalism and protectionism threatened the easing of world trade. It was in that spirit that the UCP were first introduced – to alleviate the confusion caused by individual countries’ promoting their own national rules on letter of credit practice. The aim was to create a set of contractual rules that would establish uniformity in practice, so that there would be less need to cope with often conflicting national regulations. The universal acceptance of the UCP by practitioners in countries with widely divergent economic and judicial systems is a testament to the rules’ success.



UCP600

The latest revision of UCP is the sixth revision of the rules since they were first promulgated in 1933. It is the fruit of more than three years of work by the ICC's Commission on Banking Technique and Practice.

The UCP remain the most successful set of private rules for trade ever developed. A range of individuals and groups contributed to the current revision including: the UCP Drafting Group, which waded through more than 5000 individual comments before arriving at this final text; the UCP Consulting Group, consisting of members from more than 25 countries, which served as the advisory body; the more than 400 members of the ICC Commission on Banking Technique and Practice who made pertinent suggestions for changes in the text; and 130 ICC National Committees worldwide which took an active role in consolidating comments from their members.

During the revision process, notice was taken of the considerable work that had been completed in creating the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 645. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit. It is the expectation of the Drafting Group and the Banking Commission that the application of the principles contained in the ISBP, including subsequent revisions thereof, will continue during the time UCP 600 is in force. At the time UCP 600 is implemented, there will be an updated version of the ISBP to bring its contents in line with the substance and style of the new rules.





Reference : Nabhi publication
Usha Kiran Rai (Prentice Hall)
M.I Mahajan
INTERNET

By :- Shruti

Saturday, September 19, 2009

Dress Notice

All must come in formals from next class ,whichever day going .
so wear the tie too . And is rules are not followed they the following penalty .
- Reduction of half marks per day in case of formals

Friday, September 18, 2009

COPYRIGHTS

This is been informed to all the students that they are responsible for the copyrights of the data which they publish on this blog . So all have to take care of the copyrights of the data too while sending me . I will or the Tejinder Sir does not holds any resposibility in case of copyrights voilation for posting the material .

Wednesday, September 16, 2009

SOURCES OF SECONDRY DATA

Sources of data (secondary)– by megha and shivani 16 sept 2009
www.indianseaports.com
Introduction- Covers the activities of the 15 Indian sea ports. The domain www.indianseaports .com is owned by Seven Hills Technology &Solutions Ltd, here in referred to as Seven Hills, a company incorporated under the provisions of the companies act 1956 and having its corporate office at Plot no.107, Road no.72, Jubilee Hills Phase-III, Hyderabad - 500033 Andhra Pradesh, INDIA.
Type of information provided-
The ports in India are divided into major ports (11), medium ports (19), minor ports (15), and private ports (4).
This website provides information only to the members, about the Indian ports, like the average number of vessels coming to that port, the routes and it also provides a shipping directory of all the shipment companies which come to India or leave from India.
It also provides a facility for tracking the containers shipped and about the distances between various ports in India and around the world. It provides a detailed account of shore facilities and port restrictions of the various ports and lastly it provides the facility of various maps.







www.indiacatalog.com
Introduction- A web directory where you can find information on any kind of business organization or service provider in India and the related global sites.
Type of information- Several directories are formed under various heads like:
Automobiles, agriculture and forestry, aviation industry, business services, chemicals, computers, IT/ITES, educational, electronics, tourism, immigration, real estate, intelligence, etc.
Directory is also categorized under the city names.
Each head is then further classified like the head business services is be further categorized as:
Banks, financial institutions, courier and shipping services, financial consultants, insurance, health care, investment banks, legal services/law firms, office supplies, trade fair organizations, mutual funds, hospitals, job placement agencies, matrimony, phone cards to India, chambers of commerce, stock exchanges, stock brokers, venture capital firms, ports, foreign banks, money transfer, packers and movers, financial advisors, customer retail, personal services, baby care, etc.
Again under each of these heads the total numbers of recognized agencies are listed and their web addresses are also added for further inquiry.
For each services information on their foreign competitors is also available.






www.sec.gov
Introduction- SEC stands for US Securities and Exchange Commission. The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. SEC is a federal agency established by the securities exchange act of 1934. The SEC’s headquarters are in Washington, D.C., and it has 11 regional offices located throughout the country.
Type of information-
SEC issues various publications for the interest of the investors around the globe.
Its publications include:
American Depositary Receipts
Arbitration
Auditing
Bankruptcy
Banks and Banking
Bonds
Brokers and Brokerages- Online, Electronic Accounts
Certificates of Deposit
Corporations — Directors and Officers
EDGAR (SEC's online database of company reports)
Financial Statements
Fraud - Identity Theft
Futures
Hedge Funds
Insider Trading
Insurance - equity-indexed annuities, life, variable annuities
Investment Advisers, Advisors
Investment Clubs
Investment Companies
Investments - calculators, planning, foreign (non-U.S.), Internet, prepaid tuition, college savings plan, products, choices, research, education, retirement income
Investors –accredited investors, complaints, investigations, foreign (non-U.S.), privacy rights, protections, seniors
Mutual Funds
Options
Promissory Notes
Securities Investor Protection Corp.
Small Business
Stock - Certificates, Dividends, Exchanges, Indexes, Prices
Tender Offers
Trading Securities - day trading, electronic trading, margin, purchase agreements, laws, rules and regulations
US Securities and Exchange Commission - divisions and offices guides, handbooks, research tools.

4. www.ecr.ca
ECR-Efficient Consumer Service
It is an industry cost reducing initiative of North American councils and industries. Its main sponsors are : Electronic Commerce Council of Canada(ECCC) , Canadian Council of Grocery Distributors(CCGD) , ETC.


TYPE OF INFORMATION: Companies throughout the grocery industry are working together to find ways to eliminate inefficient practices that are not value added to the consumers , so they research about this industry and consumers.

PUBLICATIONS: Partners in Customer Service (1997)
1998 EDI Business Process Survey Results
Transportation-A critical link in the grocery industry supply chain (1995)








5. www.economywatch.com/asian-developmentbank

ADB: ASIAN DEVELOPMENT BANK
Bank established for the help of its member countries having head office at Asian Development Bank P.O. Box 789, Manila, Philippines.
sdbs.adb.org

TYPE OF INFORMATION:
Its Statistical Database System stores macroeconomic and social data of its developing member countries.

It has annual data on national accounts, prices, and govt.
Finance, trade, BOP, money and banking, external debt, population and social indicators.

6. www.aimoindia.com

AIMO: ALL INDIA MANUFACTURES ORGANISATION
Established for the help of govt and member countries in making polices and representing in other countries. Its head office is at D7 , Ambattur Industrial Estate , Chennai – 600 058 , India.
Regd. Office: Round table House , 2nd floor , 80/69 Nengam bakkam, high road , Chennai.

TYPE OF INFORMATION: Mainly it provides information on trade shows , trade fairs organizers and exhibitions.
It publishes journals , reports , etc time to time for the help of its members.

7. www.icar.org.in

ICRA: INDIAN COUNCIL OF AGRICULTURAL RESEARCH
It is a govt. organization which conducts and promotes research and training in the field of agriculture and allied sciences.
Head Quarter: New Delhi

TYPE OF INFORMATION: It provides information on agricultural products and irrigation facilities. It provides information on seeds and facilitate research in new generation of seeds.

8. www.bnai.com

BNA INTERNATIONAL:
This is a certified company founded in 1929 and was incorporated as employee – owned company in United States.

TYPE OF INFORMATION:
It gives accurate news and detailed analysis of world wide legal developments. It provides information and suggestions especially on:
INTERNATIONAL TAX, IP, COMMUNICATION AND TECHNOLOGY,
BUSINESS AND FINANCE

LATEST REPORT: ‘GROWING MARKET IN EAST AND SOUTH ASIA’

9. www.thunderbird.edu
www.wiley.com
THUNDERBIRD INTERNATIONAL BUSINESS REVIEW:
This is a JOURNAL which is published by Willey in cooperation with THUNDERBIRD SCHOOL OF GLOBAL BUSINESS MANAGEMENT . It is a peer – reviewed journal that is published six times in a year.
TYPE OF INFORMATION: Its aim is to advance and disseminate research in the field of international business.
This journal covers various aspects and challenges of global business i.e. Human management, marketing , economic, social , political etc.
LATEST PUBLICATION: “AFRICA IS OPEN FOR BUSINESS”
On July 1 2009

10. www.ifad.com
IFAD: INTERNATIONAL FUND FOR AGRICULTURE DEVELOPMENT:
It is a agency of United Nations established in 1977 for the development of agriculture and rural areas.
Head Office: Via Poalo di Dano,
142 Rome, Italy


TYPE OF INFORMATION: It collects information on agriculture and rural areas. It publish its reports on this areas periodically .
PUBLICATIONS: Rural Poverty Report
Advocacy and Public Information

11. www.oecd.com
OECD: ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT:
It is a organization of 30 countries for economic development.
Head Office: OECD
2, rue Andre Pascal
F- 75 775 Paris Cedex 16
France
TYPE OF INFORMATION: It is best known for its outlooks , country surveys , and statistics and you will find that publications cover a wide variety of topics, all dedicated to help govt. and citizens on the challenges of a globalised world.

LATEST PUBLICATION: OECD Economic Survey of Iceland
18 – Aug - 2009

12. UNIVERSITY OF HELSINKI
CITY LIBRARY’S ANNUAL REPORT – 17- Aug – 2009
Report about cruise liners at Baltic Sea and Helsinki
DATA ANALYSIS MINES INFORMATION - JOURNAL
HUB – Helsinki University Bulletin
13. WHO: WORLD METEOROLOGICAL ORGANISATION
Bulletin, Journals, etc on services for transportation
PUBLICATION: Meteorological services to aviation

14. ARC ADVISORY GROUP:
It is a company which do periodic MARKET ANALYSIS
And publish its report time to time
PUBLICATION: Flowmeters – Coriolis – 17- Aug – 2009
Type: Sensors and field devices

Automation Expenditures for Minning and Metal Industry - 6- Jan-2009

Tuesday, September 15, 2009

Topic covered

  1. What to export
  2. Where to export
  3. When to export
  4. Why to export
  5. How to export

(a)FT Policy

(b)Methods of payments

Notice

ASSIGNMENT NOTICE
This is informed to all MIB final student that all have to
submit their assigement according to schedule.
Lat date 17sept2009
If not submitted then starting reduction of marks
Half mark per day after due date
CLASS NOTICE
This is intimated to all the mib 3rd students that sir is going to anounce date of test this week any day , so all must come in the documentation and logistics class daily .
date : 30 sept. onwards
Presentation on 6th october
-Megha will present on the Discrepencies finding in Export-import
-Shushil will present on the ICD
ABOUT THE TOPICS
Everybody who is left now , must take their topic for assignment another five marks will reduce directly from their internal .

DAILY CLASS REPORT


FREIGHT RATE IN DIFFERENT COUNTRY by Manish

From Kandla To Jebal Ali(Dubai) : 20' USD236 & 40' USD356
From Kandla to Port Luice : 20' USD1256

From Mumbai to Jebal Ali : 20' USD156 & 40' USD206
From Mumbai to Port Luice : 20' USD1156
FROM : -OASIS SHIPPING & LOGISTICS PVT. LTD.Laxminarayan Chamber.Ground Floor, plot no.140. sector-1/A. GANDHIDHAM. Kutch (GUJARAT)TELE no.02836 232729/30 FAX no.02836 228554Cell # +91 98985 14347

short presntation of SGS by sheetal
four types of document :-
1. commercial document
2. regulatory document
3. transport document
4. document required by the importer
1,commercial document included L/C , invoice, paking list
2.regulatory document included shipping bill, export-import licence, GSP, certificate of origin, duty drawback
3. transport document included bill of lading, airway bill, lorry receipt, railway receiptinvoices are 4 types:-
1. commercial invoice
2. custom invoice
3. legalised invoice
4. counsler invoice types of bill of lading:-
1. clean bill of lading
2. claused bill of lading
3. straight bill of lading
4. multimodel bill of lading
MARINE INSURANCE:- three types of marine insurance are
1. institute classification caluse (a),(b), (c) two types of insurance:-
1. consignmen twise
2. open cover

Excise clearance:- by Reena
it is preliminary the revenue clearance.there is two types of goods
1. excisable goods
2. nonexcisable goods how this particular clearance is achived:-
1. pay excise duty
2.proof of export
3.claim the exemption problemin this:-
time is major problem
another method is
export under bond:-
prepare bank guarantee towards the tax authorities.the important invoice of excise clearance is ARE-1 PROOF OF EXPORT:- stamped by the the custom inspector in the port of loading
2.VAT:- (value added tax) when you export the goods than you have to submmited the FORM-H exemption:-
OCTORI:- FILL FORM -N PRESHIPPMENT INSPECTION AND QUALITY CONTROL:-
QUALITY IS A SYSTEM ,
QUALITY IS ARESULT

INCO Terms: BY CHINKI ON 15 SEPT
The INCOTERMS (International Commercial Terms) is a universally recognized set of definition of international trade terms, such as FOB, CFR & CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller.
Modes of payment in exports (payment terms):
The commonly used methods of payment are:
1. Advance payment.
2. Documents against cash.
3. Documents against acceptance.
4. Letter of credit.
5. Consignment sales.
Advance payment:
Of all the method of payment, advance payment is the method in which seller has minimum risk. The exporter’s financial strength increases if the buyer is ready to pay in advance. The buyer runs a risk of non-delivery or delayed delivery, will pay in advance only to an established exporter or to a regular client.
Documents against cash:
In this method the buyer’s bank and shipping company are also involved. When seller dispatches the goods through the shipping line, the shipping company issues a bill of lading (B/L); bill of lading is an undertaking by the shipping company to transport the material to the destination and hand it over to the consignee against original documents. Then the seller sends the original documents to the buyer’s bank with the request to transmit the documents to the buyer on full payment. By producing the original B/L the consignee can take the delivery of goods from the shipping company.
Documents against acceptance:
The only difference between this and the previous method is that the seller gets the advantage of credit period. The seller can get the documents from the bank against a written declaration of making the payment till a certain date instead of paying cash at sight.
Letter of credit (L/C):
L/C is an undertaking by the buyer’s bank to make the payment to the beneficiary upon compliance of certain terms and conditions.

UCP 600 BY MANISH
ARTICLE CONTENTS
Article 1 Application of UCP
Article 2 Definitions
Article 3 Interpretations
Article 4 Credits v. Contracts
Article 5 Documents v. Goods, Services or Performance
Article6 Availability, Expiry Date and Place for Presentation
Article 7 Issuing Bank Undertaking Article 8 Confirming Bank Undertaking
Article 9 Advising of Credits and Amendments
Article 10 Amendments 10
Article 11 Teletransmitted and Pre-Advised Credits and Amendments
Article12 Nomination
Article 13 Bank-to-Bank Reimbursement Arrangements
Article 14 Standard for Examination of Documents
Article 15 Complying Presentation
Article 16 Discrepant Documents, Waiver and Notice
Article 17 Original Documents and Copies
Article 18 Commercial Invoice
Article 19 Transport Document Covering at Least Two Different Modes of Transport
Article 20 Bill of Lading Article21 Non-Negotiable Sea Waybill
Article 22 Charter Party Bill of Lading
Article 23 Air Transport Document
Article 24 Road, Rail or Inland Waterway Transport Documents
Article 25 Courier Receipt, Post Receipt or Certificate of Posting
Article 26 "On Deck", "Shipper's Load and Count", “Said by Shipper to Contain” and Charges Additional to Freight
Article 27 Clean Transport Document
Article 28 Insurance Document and Coverage
Article 29 Extension of Expiry Date or Last Day for Presentation
Article 30 Tolerance in Credit Amount, Quantity and Unit Prices
Article 31 Partial Drawings or Shipments
Article 32 Instalment Drawings or Shipments
Article 33 Hours of Presentation
Article 34 Disclaimer on Effectiveness of Documents
Article 35 Disclaimer on Transmission and Translation
Article 36 Force Majeure
Article 37 Disclaimer for Acts of an Instructed Party
Article 38 Transferable Credits
Article 39 Assignment of Proceeds


Export contract: BY MEGHA NAYYAR ON 30 SEPT
A contract is any agreement that has legal binding on the parties involved. There are certain, peculiar characteristics of international trade contract which are not present in those for sales of goods in the domestic market. For example, they may agree to adopt the Law of either country, buyer’s or seller’s and any other specifications.
In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important conditions of the trade deal.
The different aspects covered under an export contract are as under:
Names and addresses of the buyer and the seller
Name and address of the consignee
Product, Standards and Specifications
Price (with INCO terms)
Quantity
Inspection
Total Value of Contract
Terms of Delivery
Taxes, Duties and Charges
Period of Shipment
Credit period
Tolerance
Packing, Labeling and Marking
Terms of Payment-- Amount/Mode & Currency
Licenses and Permits
Insurance
Documentary Requirements
Arbitration clause
Proforma invoice:
Proforma invoice is another option that can be used by regular trading parties instead of the contract. Proforma invoice is a non-negotiable document issued by the seller. Proforma invoice in itself does not carry any commercial meaning but it is the basis for all other commercial documents.
Opening of L/C:
After the various terms and conditions are finalized among the two trading parties, the buyer next applies for opening up of an L/C. Once the L/C is issued the next step for the seller is to process the order.
Processing of export order:
The steps involved in processing of an export order are:
· Sourcing: Sourcing is getting the right quality material at right place at right time. It can be internal as well as external. For a merchant exporter sourcing is external while in the case of a manufacturer exporter sourcing is internal. In case of internal sourcing a manufacturer exporter has to finalize the last date of dispatch of material from the factory, for this purpose he has to use backward calculation method from the last date of shipment.
· Dispatch from the factory: After the product is produced it is ready shipment. An exporter has the facility to stuff the cargo in the factory premises only. For that purpose the CHA applies to the customs dept for a container to be sent in the factory for stuffing.
While stuffing of cargo the following steps are covered. Firstly the container and the product is checked by the excise officer and the quality inspector. Then after the goods are loaded in to the container, the container is locked and sealed by the one time excise seal.
PRESENTATION OF L/C BY SANGEETA ON 29 SEPT
packing list
commercial invoice
shipping certificate
insurance certificate
TOPICS COVERED ON 6th OCTUBER
Sharing of training knowledge by way of presentation by:
Ø SUSHIL (30)
Ø MEGHA (04)
ICD (Inland Container Deport) BY SUSHIL
MEANING
ICD is short term for Inland Container depot. This is related to deals in India specifically. The ICD is usually a place where there is no sea port & located in different locations in the country as designated by Indian Customs.Most of them are well connected by rail & serve the importers/exporters who are located away from the seaports.It is a way of decongesting the main ports where containers are kept for customs clearance & inspection.
FUNCTIONs OF ICDs/CFSs
The primary functions of ICD/CFS may be summed up as under:
a. Receipt and dispatch/delivery of cargo.
b. Stuffing and stripping of containers.
c. Transit operations by rail/road to and from serving ports.
d. Customs clearance.
e. Consolidation and desegregation of LCL cargo.
f. Temporary storage of cargo and containers.
g. Reworking of containers.
h. Maintenance and repair of container units.

THE OPERATIONS OF THE ICDS/CFSS REVOLVE AROUND THE FOLLOWING CENTRES OF ACTIVITY:-
1. Rail Siding (in case of a rail based terminal): The place where container trains are received, dispatched and handled in a terminal. Similarly, the containers are loaded on and unloaded from rail wagons at the siding through overhead cranes and / or other lifting equipments.
2. Container Yard : Container yard occupies the largest area in the ICD.CFS. It is stacking area were the export containers are aggregated prior to dispatch to port, import containers are stored till Customs clearance and where empties await onward movement. Likewise, some stacking areas are earmarked for keeping special containers such as refrigerated, hazardous, overweight/over-length, etc.
3. Warehouse: A covered space/shed where export cargo is received and import cargo stored/delivered; containers are stuffed/stripped or reworked; LCL exports are consolidated and import LCLs are unpacked; and cargo is physically examined by Customs. Export and import consignments are generally handled either at separate areas in a warehouse or in different nominated warehouses/sheds.
4. Gate Complex: The gate complex regulates the entry and exist of road vehicles carrying cargo and containers through the terminal. It is place where documentation, security and container inspection procedures are undertaken.

BENEFITS OF ICDs/CFSs
The benefits as envisaged from an ICD/CFS are as follows :-
The main benefits from ICDs/CFSs
1. Concentration points for long distance cargoes and its unitisation.
2. Service as a transit facility.
3. Customs clearance facility available near the centres of production and consumption
4. Reduced level of demurrage and pilferage.
5. No Customs required at gateway ports.
6. Issuance of through bill of lading by shipping lines, hereby resuming full liability of shipments.
7. Reduced overall level of empty container movement.
8. Competitive transport cost.
9. Reduced inventory cost.
10. Increased trade flows.


DISCREPANCIES IN L/C BY MEGHA
The dictionary meaning of discrepancy is a difference between conflicting facts or claims or opinions and L/C that (1) does not comply with the terms and conditions under which it was established, (2) is without a required item of information, or (3) the information provided is inconsistent with the associated documents. The issuing bank of a discrepancy L/C is not obliged to pay its beneficiary and (if it is a confirmed L/C) nor is the confirming bank. Such L/Cs are normally referred back to the buyer or importer (the 'account party') for instructions.
TYPES OF DISCREPANCIES
1. Bill of exchange
In bills of exchange mainly following types of discrepancy may occur:
· L/C reference no. may not match( mainly copy paste problem)
· Tenure may not match
· Swift code may not match
2. Invoice
As far as invoice is concerned following should be considered
· No.s to be marked as original
· No.s to be marked as copy
· Merchandise and description of goods
3. Insurance
· Insurance should be done in the currency of L/C only
· Date should be on or before
· The date of L/C
· Insurance policy should not be covered with insurance certificate
· Insurance amount is always 10% more than the actual amount
4. Transport
5. Bill of lading
· B/L should be clean
· Port of destination should not differ















Sunday, September 13, 2009

EXPORT INCENTIVE

Export Incentives
The Government of India has framed several schemes to promote exports and to obtain foreign exchange. These schemes grants incentive and other benefits. The few important export incentives, from the point of view of indirect taxes are briefed below:Free trade area
Free trade area is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them. It can be considered the second stage of economic integration. Countries choose this kind of economic integration form if their economical structures are complementary. If they are competitive, they will choose customs union.[citation needed]
Description
Unlike a customs union, members of a free trade area do not have a common external tariff (same policies with respect to non-members), meaning different quotas and customs. To avoid evasion (through re-exportation) the countries use the system of certification of origin most commonly called rules of origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Goods that don't cover these minimum requirements are not entitled for the special treatment envisioned in the free trade area provisions.
Cumulation is the relationship between different FTAs regarding the rules of origin — sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs. A free trade area is a result of a free trade agreement (a form of trade pact) between two or more countries. Free trade areas and agreements (FTAs) are cascadable to some degree — if some countries sign agreement to form free trade area and choose to negotiate together (either as a trade bloc or as a forum of individual members of their FTA) another free trade agreement with some external country (or countries) — then the new FTA will consist of the old FTA plus the new country (or countries).
Within an industrialized country there are usually few if any significant barriers to the easy exchange of goods and services between parts of that country. For example, there are usually no trade tariffs or import quotas; there are usually no delays as goods pass from one part of the country to another (other than those that distance imposes); there are usually no differences of taxation and regulation. Between countries, on the other hand, many of these barriers to the easy exchange of goods often do occur. It is commonplace for there to be import duties of one kind or another (as goods enter a country) and the levels of sales tax and regulation often vary by country.
The aim of a free trade area is to so reduce barriers to easy exchange that trade can grow as a result of specialisation, division of labour, and most importantly via (the theory and practice of) comparative advantage. The theory of comparative advantage argues that in an unrestricted marketplace (in equilibrium) each source of production will tend to specialize in that activity where it has comparative (rather than absolute) advantage. The theory argues that the net result will be an increase in income and ultimately wealth and well-being for everyone in the free trade area. However the theory refers only to aggregate wealth and says nothing about the distribution of wealth. In fact there may be significant losers, in particular among the recently protected industries with a comparative disadvantage. The proponent of free trade can, however, retort that the gains of the gainers exceed the losses of the losers.
Qualifying for a free trade agreement
To determine eligibility for a free trade agreement (FTA), importers must obtain product information from the all suppliers within the supply chain. An automated solution should be in place for an importer to solicit his/her suppliers. Once supplier documentation is received the importer must determine the eligibility of the product based on the many rules of origin surrounding the products Harmonized Schedule Number. Each free trade agreement will qualify an importer's products in different ways, however the basis of the qualification surrounds the idea that the finished product must have a minimum percentage of local/regional content.
Under the North American Free Trade Agreement (NAFTA), qualifying rules include De Minimis, Regional Value Content, and Tariff Shift.
De Minimis states that the finished good must be less than or equal to 7% of the transaction value of the product
Regional Value Content is a calculated percentage of the value of the product that represents its North American content
Tariff Shift is a substantial transformation that takes place in a NAFTA country
A finished good must qualify under one of these rules to be eligible for free trade under NAFTA. This is just one example of a qualification for a free trade agreement. If a certificate of origin is present from a supplier demonstrating that the good originated in a country under the associated free trade agreement, no further calculations are needed.
When qualifying products for an FTA, the use of an automated system allows importers to stay up-to-date on international compliance regulations, as well as solicit suppliers via the web instead of manually. A functional solution should also perform the required calculations for the associated FTA during the Bill of Material (BOM) analysis, ensuring correct eligibility.
ADVANCE LICENCE

Advance Licence
4.1.3
An Advance Licence is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed in the course of their use to obtain the export product, may also be allowed under the scheme.
Duty free import of mandatory spares upto 10% of the CIF value of the licence which are required to be exported/ supplied with the resultant product may also be allowed under Advance Licence.

Advance Licences are issued on the basis of the inputs and export items given under SION. However, they can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of Handbook.

Duty free import of mandatory spares upto 10% of the CIF value of the licence which are required to be exported/ supplied with the resultant product may also be allowed under Advance Licence.
Advance Licence can be issued for:-


a)
Physical exports:- Advance Licence may be issued for physical exports including exports to SEZ to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for import of inputs required for the export product.


b)
Intermediate supplies:- Advance Licence may be issued for intermediate supply to a manufacturer-exporter for the import of inputs required in the manufacture of goods to be supplied to the ultimate exporter/deemed exporter holding another Advance Licence


c)
Deemed exports:- Advance Licence can be issued for deemed export to the main contractor for import of inputs required in the manufacture of goods to be supplied to the categories mentioned in paragraph 8.2 (b), (c), (d) (e) (f),(g) (i) and (j) of the Policy.


In addition, in respect of supply of goods to specified projects mentioned in paragraph 8.2 (d) (e) (f), (g) and (j) of the Policy, an Advance Licence for deemed export can also be availed by the sub-contractor of the main contractor to such project provided the name of the sub contractor(s) appears in the main contract.
Such licence for deemed export can also be issued for supplies made to United Nations Organisations or under the Aid Programme of the United Nations or other multilateral agencies and paid for in foreign exchange.


4.1.4
Advance Licence is issued for duty free import of inputs, as defined in paragraph 4.1.1 subject to actual user condition. Such licences (other than Advance Licence for deemed exports) are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty, if any.
Advance Licence for deemed export shall be exempted from basic customs duty ,additional customs duty and education cess only. However in case of supplies to EOU/SEZ/ EHTP/STP/ BTP under such licences, anti-dumping duty and safeguard duty shall also be exempted.

4.1.5
Advance Licence and/or materials imported there under shall not be transferable even after completion of export obligation.

4.1.6
Advance Licences (including Advance Licence for deemed exports and intermediate supply) shall be issued with a positive value addition.

However, for exports for which payments are not received in freely convertible currency, the same shall be subject to value addition as specified in Appendix-32 of Handbook (Vol.1).

4.1.7
Advance Licence shall be issued in accordance with the Policy and procedure in force on the date of issue of licence and shall be subject to the fulfilment of a time bound export obligation as may be specified.

4.1.8
The facility of Advance Licence shall also be available where some or all of the inputs are supplied free of cost to the exporter.

In such cases, for calculation of value addition, the notional value of free of cost inputs along with value of other duty-free inputs shall be taken into consideration. However, if all the inputs are supplied free of cost, it shall be covered under paragraph 4.2.7 of the Policy.
Export Obligation
4.1.9
The period for fulfilment of the export obligation under Advance Licence shall be as prescribed in the Handbook (Vol.1). Supplies to SEZ would also be counted for fulfillment of export obligation under the Advance Licence for physical exports.
Advance Licence for Annual Requirement
4.1.10
Advance Licence can also be issued on the basis of annual requirement for physical exports, intermediate supplies or deemed exports.

One to Five Star Export House shall be entitled for the Advance Licence for annual requirement.

However, if the status holders are holding the certificate as merchant exporter, they are also entitled to the Advance Licence for Annual Requirement provided they agree to the endorsement of the name(s) of the supporting manufacturer(s) on the relevant licence.


The entitlement under this scheme shall be upto 200% of the FOB value of export in the preceding licensing year. Such licence shall have positive value addition.



Advance Release Orders
4.1.11
An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC intending to source the inputs from indigenous sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP/BTP units in lieu of direct import has the option to source them against Advance Release Orders denominated in foreign exchange/ Indian rupees.

The transferee of a DFRC shall also be eligible for ARO facility. However, supplies may be obtained against the licence from EOU/ EHTP/ BTP/STP/SEZ units, without conversion into ARO.
Back-to-Back Inland Letter of Credit
4.1.12
An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC may, instead of applying for an Advance Release Order, avail of the facility of Back-to-Back Inland Letter of Credit in accordance with the procedure specified in Handbook (Vol.1).
Prohibited Items
4.1.13
Prohibited items of imports mentioned in ITC(HS) shall not be imported under the licence issued under the scheme.



Admissibility of Drawback
4.1.14
In the case of an Advance Licence, the drawback shall be available in respect of any of the duty paid materials, whether imported or indigenous, used in the goods exported, as per the drawback rate fixed by Ministry of Finance (Directorate of Drawback). The Drawback shall however be restricted to the duty paid materials as mentioned in the licence.
DEPB (Duty Entitlement Pass Book )
It is an export incentive scheme of Indian Government provided toExporters in India
Duty Entitlement Pass Book Scheme in short DEPB is an export incentive scheme. Notified on 1/4/1997, the DEPB Scheme consisted of (a) Post-export DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book Scheme at a pre-determined credit on the FOB value. The DEPB rates is allows import of any items except the items which are otherwise restricted for imports. Items such as Gold Nibs, Gold Pen, Gold watches etc. though covered under the generic description of writing instruments, components of writing instruments and watches are thus not eligible for benefit under the DEPB scheme.
The DEPB Rates are applied on the basis of FOB value or value cap whichever is lower. For example, if the FOB value is Rs.700/- per piece, and the value cap is Rs.500/- per piece, the DEPB rate shall be applied on Rs.500/-. The DEPB rate and the value cap shall be applicable as existing on the date of exports as defined in paragraph 15.15 of Handbook (Vol.1).
DEPB Scheme is issued only on post-export basis and pre/export DEPB Scheme has been discontinued. The provisions of DEPB Scheme are mentioned in Para 4.3 and 4.3.1 to 4.3.5 of the Foreign Trade Policy or Exim Policy. One significant change in the new DEPB Scheme is that in terms of Para 4.3.5 of the Exim Policy even excise duty paid in cash on inputs used in the manufacture of export product shall be eligible for brand rate of duty drawback as per rules framed by Department of Revenue which was not mentioned in the earlier DEPB Scheme.
Benefits of DEPB Rates
The benefit of DEPB schemes is available on the export products having extraneous material up to 5% by weight. In such cases, extraneous material up to 5% shall be ignored and the DEPB rate as notified for that export product is be allowed.
Review of DEPB Rates
The Government of India review the DEPB rates after getting the appropriate a export import data on FOB value of exports and CIF value of inputs used in the export product, as per SION. Such data and information is usually obtained from the concerned Export Promotion Councils.

Implementation of the DEPB Rates
Some additional facilities as listed below have been provided for better implementation of the DEPB Rates
DEPB rates rationalized to account for the changes in Customs duties.
Caps fixed on certain items but there would be no verification of Present Market Value (PMV) on such items.
A number of ports have been added for availing facilities under the Duty Exemption Scheme, including DEPB.
The threshold limit of Rs. 200 million for fixing new DEPB rates removed.
Provisional DEPB Rate
The main objective behind the provisional DEPB rates is to encourage diversification and to promote export of new products. However, provisional DEPB rates would be valid for a limited period of time during which exporter would furnish data on export and import for regular fixation of rates.
Maintenance of Record
It is necessary for Custom House at ports to maintain a separate record of details of exports made under DEPB Schemes.
Port of Registration
The exports/imports made from the specified ports given shall be entitled for DEPB.
Sea Ports: Mumbai, Kolkata, Cochin, Dahej, Kakinada, Kandla, Mangalore, Marmagoa, Mundra, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam, Surat (Magdalla), Nagapattinam, Okha , Dharamtar and Jamnagar.
Airports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.
ICDs : Agra, Ahmedabad, Bangalore, Bhiwadi, Coimbatore, Daulatabad, (Wanjarwadi and Maliwada), Delhi, Dighi (Pune), Faridabad, Guntur, Hyderabad, Jaipur, Jallandhar, Jodhpur, Kanpur, Kota, Ludhiana, Madurai and the land Customs station at Ranaghat Mallanpur, Moradabad, Meerut Nagpur, Nasik, Gauhati (Amingaon), Pimpri (Pune), Pitampur (Indore), Rudrapur (Nainital), Salem Singanalur, Surat, Tirupur, Udaipur, Vadodara, Varanasi, Waluj, Bhilwara, Pondicherry ,Garhi-Harsaru, Bhatinda, Dappar, Chheharata (Amritsar), Karur, Miraj and Rewari.
LCS: Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and Mahadipur.
The exports made to the following Special Economic Zones (SEZ) are also entitled to DEPB.
SEZ : Santacruz , Kandla, Kochi, Vishakhapatnam, Chennai, FALTA, Surat, NOIDA
Credit under DEPB and Present Market Value
In respect of products where rate of credit entitlement under DEPB Scheme comes to 10% or more, amount of credit against each such export product shall not exceed 50% of Present Market Value (PMV) of export product. During export, exporter shall declare on shipping bill that benefit under DEPB Scheme would not exceed 50% of PMV of export product.
However PMV declaration shall not be applicable for products for which value cap exists irrespective of DEPB rate of product.
Utilization of DEPB credit
Credit given under DEPB Schemes is utilized for payment of indian customs duty including capital goods, which are free to import.
Re-export of goods imported under DEPB Scheme
In case of return of any exported goods, which has been found defective or unfit for use may be again exported according to the exim guidelines as mentioned by the Department of Revenue.
In such cases 98% of the credit amount debited against DEPB for the export of such goods is generated by the concerned Commissioner of Customs in the form of a Certificate, containing the amount generated and the details of the original DEPB. On the basis of certificate, a fresh DEPB is issued by the concerned DGFT Regional Authority. It is important to note that the issued DEPB have the same port of registration and shall be valid for a period equivalent to the balance period available on the date of import of such defective/unfit goods.


Export Promotion Capital Goods Scheme

EPCG Scheme
5.1
The scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of licence. Capital goods would be allowed at 0% duty for exports of agricultural products and their value added variants.
However, in respect of EPCG licences with a duty saved of Rs.100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.
In case CVD is paid in cash on imports under EPCG, the incidence of CVD would not be taken for computation of net duty saved provided the same is not Cenvated .
The capital goods shall include spares (including refurbished/ reconditioned spares) , tools, jigs, fixtures, dies and moulds. EPCG licence may also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the licence holder.
Second hand capital goods without any restriction on age may also be imported under the EPCG scheme.
Spares (including refurbished/ reconditioned spares), tools, refractories, catalyst and consumable for the existing and new plant and machinery may also be imported under the EPCG scheme .

However, import of motor cars, sports utility vehicles/ all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators whose total foreign exchange earning in current and preceding three licencing years is Rs 1.5 crores. However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc cannot be imported under the EPCG Scheme.



5.1A
Spares (including refurbished/ reconditioned spares), tools, spare refractories, catalyst & consumable for the existing plant and machinery may also be imported under the EPCG Scheme subject to an export obligation equivalent to 8 times of duty saved to be fulfilled over a period of 8 years reckoned from the date of issuance of licence.



EPCG for Projects
5.1B
An EPCG licence can also be issued for import of capital goods for supply to projects notified by the Central Board of Excise and Customs under S.No 441 of Customs Exemption Notification No 21/2002 dated 01.03.2002 wherein the basic customs duty on imports is 10% with a CVD of 16%.

The export obligation for such EPCG licences would be eight times the duty saved. The duty saved would be the difference between the effective duty under the aforesaid Customs Notification and the concessional duty under the EPCG Scheme.

Eligibility
5.2
The scheme covers manufacturer exporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers.
Conditions for import of Capital Goods
5.3
Import of capital goods shall be subject to Actual User condition till the export obligation is completed.
Export obligation
5.4
The following conditions shall apply to the fulfillment of the export obligation:-


(i)
The export obligation shall be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme.
The export obligation may also be fulfilled by the export of same goods, for which EPCG licence has been obtained, manufactured or produced in different manufacturing units of the licence holder/specified supporting manufacturer (s).
When Capital Goods are imported for pre/ post- production or license is taken for import of spares, the license holder shall fulfill the export obligation by export of products manufactured from the plant / project to which the pre/ post- production capital goods/ spares are related.
The import of capital goods for creating storage and distribution facilities for products manufactured or services rendered by the EPCG licence holder would be permitted under the EPCG Scheme.
The export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products except for categories mentioned in Handbook (Vol.1).
Alternatively, export obligation may also be fulfilled by exports of other good(s) manufactured or service(s) provided by the same firm/company or group company/ managed hotel which has the EPCG licence.
However, in such cases, the additional export obligation imposed under EPCG scheme shall be over and above the average exports achieved by the unit/company/group company/ managed hotel in preceding three years for both the original and the substitute product(s) /service (s) even in cases where the average is exempt for the substitute product (s)/ service (s) as given in para 5.7.6 of the Handbook (Vol 1).
The incremental exports to be fulfilled by the licence holder for fulfilling the remaining export obligation can include any combination of exports of the original product/ service and the substitute product (s)/ service (s). The exporter of goods can opt to get the export obligation refixed for the export of services and vice versa.



The licencee can also opt for the re-fixation of the balance export obligation based on 8 times of the duty saved amount for the CIF value in proportion to the balance Export obligation under the scheme. The guidelines for the re-fixation of export obligation is given in para 5.19 of the Handbook (Vol 1).



The aforesaid facilities shall only be available to manufacturer exporters/ service provider on all the licences where export obligation period including extended export obligation period is valid on the date of application . In this regard, exports made only on or after submission of application for alternate item and/ or re-fixation of the export obligation based on duty saved amount will be taken into account for fulfillment of export obligation.



(ii)
The export obligation under the scheme shall be, in addition to any other export obligation undertaken by the importer, except the export obligation for the same product under Advance Licence, DFRC, DEPB or Drawback scheme.


(iii)
The export obligation can also be fulfilled by the supply of ITA-1 items to the DTA provided the realization is in free foreign exchange.


(iv)
Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of Policy shall also be counted towards fulfilment of export obligation alongwith the usual benefits available under paragraph 8.3 of the Policy.
Royalty payments received in freely convertible currency and foreign exchange received for R& D services shall also be counted for discharge under the EPCG scheme. Payment received in rupee terms for the port handling services, in terms of Chapter 9 of the Foreign Trade Policy shall also be counted for export obligation discharge under the Scheme.





Provision for BIFR units
5.5.1
Any firm/company registered with BIFR or any firm/ company acquiring a unit, which is under BIFR shall be allowed EO extension as per the rehabilitation package prepared by the operating agency subject to subsequent approval of BIFR.
However, in cases where the rehabilitation package does not specify the EO extension period, a time period upto 12 years reckoned from the date of issue of licence would be permitted on merits of the case for fulfillment of export obligation.
Similarly, small-scale SSI units shall also be entitled for similar facility as per the rehabilitation scheme of the concerned State government. However, in cases where the State rehabilitation scheme does not specify the export obligation extension period, a time period upto 12 years reckoned from the date of issue of licence would be permitted on merits of the case for fulfillment of export obligation
EPCG for agro units
5.5.2
In the case of EPCG licences issued to agro units in the agri export zones, a period of 12 years reckoned from the date of issue of the licence would be permitted for the fulfillment of export obligation.
The agro units in the agri export zones would also have the facility of moving the capital good (s) imported under the EPCG within the agri export zone.
An LUT/ Bond in lieu of BG may be given for EPCG licence granted to units in the Agri Export Zones provided the EPCG licence is taken for export of the primary agricultural product (s) notified in Appendix 15 or their value added variants.

Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier
5.6
A person holding an EPCG licence may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG licence holders shall be eligible for deemed export benefit under paragraph 8.3 of the Policy.
Benefits to Domestic Supplier
5.7
In the event of a firm contract between the EPCG licence holder and domestic manufacturer for such sourcing, the domestic manufacturer may apply for the issuance of Advance Licence for deemed exports for the import of inputs including components required for the manufacturer of said capital goods.


The domestic manufacturer may also replenish the inputs including components after supply of capital goods to the EPCG licence holders.
Fixation of Export Obligation
5.7A
In case of direct imports, the export obligation relating to the EPCG licence shall be reckoned with reference to the duty saved value on the CIF value of capital goods (including spares, jigs, fixtures, dies and moulds) actually imported. In case of domestic sourcing, the export obligation relating to EPCG shall be reckoned with reference to the notional Customs duties saved on the FOR of capital goods (including spares, jigs, fixtures, dies and moulds).

5.8
Service provider in Agri export zone shall have the facility to move or shift the capital goods within the zone provided he maintains accurate record of such movements. However, such equipments shall not be sold or leased by the licence holder.
Maintenance of Average exports under EPCG
5.9
As per the provisions of para 5.4(i) , the EPCG licence holder would have to maintain the average level of exports equivalent to the average of the exports in the preceding three licencing years for the same and similar products except for exempted categories given in Handbook (Vol 1) during the entire period of export obligation.
Notwithstanding the above, the licence holder shall maintain at least 75% of the average exports in any particular year (s) provided the same is offset by excess exports to fulfil the average in other year (s).
Technological Upgradation of existing EPCG machinery
5.10
EPCG licence holders can opt for Technological Upgradation of the existing capital good imported under the EPCG licence.
The conditions governing the Technological Upgradation of the existing capital good are as under:


(i)
The minimum time period for applying for Technological Upgradation of the existing capital good imported under EPCG is 5 years from the date of issuance of the licence.


(ii)
The minimum exports made under the old capital good must be 40% of the total export obligation imposed on the first EPCG licence


(iii)
The export obligation would be refixed such that the total export obligation mandated for both the capital goods would be the sum total of 6 times the duty saved on both the capital goods.


(iv)
The procedure governing the replacement of capital good is given in para 5.20 of the Handbook (Vol1).
Promotional Measures

Assistance to States for Infrastructure Development of Exports (ASIDE)
3.1
The State Governments shall be encouraged to participate in promoting exports from their respective States. For this purpose, Department of Commerce has formulated a scheme called ASIDE.
Suitable provision has been made in the Annual Plan of the Department of Commerce for allocation of funds to the states on the twin criteria of gross exports and the rate of growth of exports.
The States shall utilise this amount for developing infrastructure such as roads connecting production centres with the ports, setting up of Inland Container Depots and Container Freight Stations, creation of new State level export promotion industrial parks/zones, augmenting common facilities in the existing zones, equity participation in infrastructure projects, development of minor ports and jetties, assistance in setting up of common effluent treatment facilities, stabilizing power supply and any other activity as may be notified by Department of Commerce from time to time.
Market Access Initiative (MAI)
3.2
The Market Access Initiative (MAI) scheme is intended to provide financial assistance for medium term export promotion efforts with a sharp focus on a country and product.

The financial assistance is available for Export Promotion Councils, Industry and Trade associations , Agencies of State Governments , Indian Commercial Missions abroad and other eligible entities as may be notified from time to time,.

A whole range of activities can be funded under the MAI scheme. These include market studies, setting up of showroom/ warehouse, sales promotion campaigns, international departmental stores, publicity campaigns, participation in international trade fairs, , brand promotion, registration charges for pharmaceuticals and testing charges for engineering products etc. Each of these export promotion activities can receive financial assistance from the Government ranging from 25% to 100% of the total cost depending upon the activity and the implementing agency, as indicated in the detailed guidelines. The full text of the guidelines can be seen at http://commerce.nic.in/ .



Marketing Development Assistance (MDA)













Meeting Legal expenses for Trade related matters
3.2.1














3.2.1.1
The Marketing Development Assistance (MDA) Scheme is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis every year.

As per the revised MDA guidelines with effect from 1st April,2004 assistance under MDA is available for exporters with annual export turnover upto Rs 5 crores.

These include participation in Trade Fairs and Buyer Seller meets abroad or in India, export promotion seminars, etc

Further, assistance for participation in Trade Fairs abroad and travel grant is available to such exporters if they travel to countries in one of the four Focus Areas, such as , Latin America, Africa, CIS Region, ASEAN countries, Australia and New Zealand.
For participation in trade fairs, etc, in other areas financial assistance without travel grant is available.

Financial assistance would be provided to deserving exporters on the recommendation of Export Promotion Councils for meeting the cost of legal expenses relating to trade related matters.



Towns of Export Excellence
3.3
A number of towns in specific geographical locations have emerged as dynamic industrial clusters contributing handsomely to India's exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets.


Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns of Exports Excellence on the basis of potential for growth in exports. However for the Towns of Export Excellence in the Handloom, Handicraft, Agriculture and Fisheries sector, the threshold limit would be Rs 250 crores.


Common service providers in these areas shall be entitled for the facility of the EPCG scheme.

The recognised associations of units will be able to access the funds under the Market Access Initiative scheme for creating focused technological services.

Further such areas will receive priority for assistance for rectifying identified critical infrastructure gaps from the ASIDE scheme.
The notified towns of export excellence are listed in Appendix 41.

Brand Promotion and Quality
3.4.1
The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products. The Central Government will extend support and assistance to Trade and Industry to launch a nationwide programme on quality awareness and to promote the concept of total quality management.
Test Houses
3.4.2
The Central Government will assist in the modernisation and upgradation of test houses and laboratories in order to bring them at par with international standards.
Quality Complaints/ Disputes
3.4.3
The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the Regional Offices of the Directorate General of Foreign Trade shall investigate quality complaints received from foreign buyers. The guidelines for settlement of quality complaints, in particular, and such other complaints, in general, is given in Appendix- 37 of Handbook (Vol.1).
Trade disputes affecting trade relations
3.4.4
If it comes to the notice of the Director General of Foreign Trade or he has reason to believe that an export or import has been made in a manner that



(i)
is gravely prejudicial to the trade relations of India with any foreign country; or


(ii)
Is gravely prejudicial to the interest of other persons engaged in exports or imports;


(iii)
has brought disrepute to the country;



The Director General Foreign Trade may take action against the exporter or importer concerned in accordance with the provisions of the Act, the Rules and Orders made thereunder and this Policy.

STAR EXPORT HOUSES
Star Export House
3.5.1
Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri Export Zone (AEZ's), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio Technology Parks (BTPs) shall be eligible for applying for status as Star Export Houses.

Status Category
3.5.2
The applicant shall be categorized depending on his total FOB/FOR export performance during the current plus the previous three years.:

Category

Performance (in rupees)
One Star Export House
15 crore
Two Star Export House
100 crore
Three Star Export House
500 crore
Four Star Export House
1500 crore
Five Star Export House
5000 crore







Note
1.
Units in Small Scale Industry/Tiny Sector/Cottage Sector, Units registered with KVICs/KVIBs, Units located in North Eastern States, Sikkim and J&K, Units exporting handloom/ handicrafts/hand knotted or silk carpets, exporters exporting to countries in Latin America/CIS/sub-Saharan Africa as listed in Appendix-17C, units having ISO 9000 (series)/ ISO 14000 (series) /WHOGMP/HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-28A, exports of services and exports of agro products shall be entitled for double weightage of exports made for grant of Star Export House status.

2.
Exports made on re-export basis shall not be counted for the purpose of recognition.

3.
Exports made by a subsidiary of a limited company shall be counted towards export performance of the limited company for the purpose of recognition only if the limited company has a majority share holding in the subsidiary company.

Privileges
3.5.2.1
A Star Export House shall be eligible for the following facilities:


i)
Licence/certificate/permissions and Customs clearances for both imports and exports on self-declaration basis.


ii)
Fixation of Input-Output norms on priority within 60 days;


iii)
Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels;


iv)
100% retention of foreign exchange in EEFC account;


v)
Enhancement in normal repatriation period from 180 days to 360 days.


vi)
Entitlement for consideration under the Target Plus Scheme


vii)
Exemption from furnishing of Bank Guarantee in Schemes under this Policy.


Validity Period
3.5.3
All status certificates issued or renewed on or after 01.09.2004 shall be valid from 1st April of the licensing year during which the application for the grant of such recognition is made upto 31st March, 2009, unless otherwise specified. On the expiry of such certificate, application for renewal of status certificate shall be required to be made within a period as prescribed in the Handbook (Vol.1). During the said period, the star export house shall be eligible to claim the usual facilities and benefits.


Services exports




Export Promotion Council for Services
3.6.1




3.6.2
Services include all the 161 tradable services covered under the General Agreement on Trade in Services where payment for such services is received in free foreign exchange. A list of services is given in Appendix-36 of Handbook (Vol.1). All provisions of this Policy shall apply mutatis mutandi to export of services as they apply to goods, unless otherwise specified.
Service exporters are required to register themselves with the Federation of Indian Exporters Organisation. However, software exporters shall register themselves with Electronic and Software Export Promotion Council.


In order to give proper direction, guidance and encouragement to the Services Sector, an exclusive Export Promotion Council for Services shall be set up.

The Services Export Promotion Council shall:


(i)
Map opportunities for key services in key markets and develop strategic market access programmes for each component of the matrix.


(ii)
Co-ordinate with sectoral players in undertaking intensive brand building and marketing programmes in target markets.


(iii)
Make necessary interventions with regard to policies, procedures and bilateral/ multilateral issues, in co-ordination with recognised nodal bodies of the services industry.
Common Facility
Centres
3.6.3
Government shall promote the establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena.

SERVED FROM INDIA SCHEME
Objective
3.6.4.1
The objective is to accelerate the growth in export of services so as to create a powerful and unique 'Served From India' brand, instantly recognized and respected the world over.
Eligibility
3.6.4.2
All Service providers who have a total foreign exchange earning of at least Rs.10 lakhs in the preceding or current financial year shall be eligible to qualify for a duty credit entitlement.

For individuals who are service providers, the total foreign exchange earned criteria would be Rs.5 lakhs in the preceding financial year.
Entitlement


Hotels & Restaurants
3.6.4.3


3.6.4.4
All Service providers (other than hotels and restaurants) shall be entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the preceding financial year.

Hotels of one-star and above (including managed hotels and heritage hotels) approved by the Department of Tourism, and other Service providers in the tourism sector registered with the Department of Tourism, shall be entitled to duty credit equivalent to 5% of the foreign exchange earned by them in the preceding financial year.

Stand-alone restaurants will be entitled to duty credit equivalent to 20% of the foreign exchange earned by them in the preceding financial year.

Note: In the case of one and two star hotels and stand-alone restaurants, the foreign exchanged earned through International Credit Cards and sources as may be notified only shall be taken into account for the purposes of computation of duty credit entitlement under the scheme.
Imports allowed
3.6.4.5
Duty credit entitlement may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables, provided it is part of their main line of business.

In the case of hotels and stand-alone restaurants, the duty credit entitlement may also be used for the import of food items and alcoholic beverages.
Non Transferability
3.6.4.6
The entitlement and the goods imported shall be non-transferable.
Healthcare & Education
3.6.4.7
In order to enable Healthcare and Educational Institutions to have world-class state-of-the-art infrastructure, service providers in these sectors shall, as for other service sectors, be entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the previous financial year.


(i)
The foreign exchange turnover for Healthcare Institutions would include amounts earned through medical treatment, surgery, testing, consultancy and health care provided by the institution.


(ii)
The foreign exchange turnover for Educational Institutions would include amounts earned through the courses and consultancy provided by the institution.


(iii)
In either case, it will not include foreign exchange remittances through any other source including equity participation, donations etc.


(iv)
The capital goods and the consumer goods imported under the duty free entitlement shall have a nexus with the activities of the healthcare or educational institutions concerned.



Special provisions
3.6.4.8
Government reserves the right in public interest to specify from time to time the category or type of service exports which shall not be eligible for calculation of either eligibility or of entitlement.

Similarly, Government may from time to time also notify the goods which shall not be allowed for import under the duty free entitlement certificate issued under the scheme.

TARGET PLUS SCHEME
Objective
3.7.1
The objective of the scheme is to accelerate growth in exports by rewarding Star Export Houses who have achieved a quantum growth in exports. High performing Star Export Houses shall be entitled for a duty credit based on incremental exports substantially higher than the general annual export target fixed (Since the target fixed for 2004-05 is 16 %, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year.).
Eligibility Criteria
3.7.2
All Star Export Houses (including Status Holders as defined in para 3.7.2.1 of Exim Policy 2002-07) which have achieved a minimum export turnover in free foreign exchange of Rs 10 crores in the previous licencing year are eligible for consideration under the Target Plus Scheme .
Entitlement
3.7.3
The entitlement under this scheme would be contingent on the percentage incremental growth in FOB value of exports in the current licencing year over the previous licencing year, as under:



Percentage incremental growth
Duty Credit Entitlement (as a % of the incremental growth)


20% and above but below 25%
5%


25% or above but below 100%
10%


100% and above
15% (of 100%)


Note:
(1)
Incremental growth beyond 100% will not qualify for computation of duty credit entitlement.


(2)
For the purpose of this scheme, the export performance shall not be transferred to or transferred from any other exporter. In the case of third party exports, the name of the supporting manufacturer/ manufacturer exporter shall be declared.


(3)
Exporters shall have the option to apply for benefit either under the Target Plus Scheme or under the Vishesh Krishi Upaj Yojana, but not both in respect of the same exported product/s. Provided that in calculating the entitlement under Para 3.7.3 the total eligible exports shall be taken into account for computing the percentage incremental growth but the duty credit entitlement shall be arrived at on the eligible exports reduced by the amount on which the benefit is claimed under para 3.8.2.


(4)
All exports including exports under free shipping bill verified and authenticated by Customs and Gems& Jewellery shipping bills but excluding exports specified under para 3.7.5, shall be eligible for benefits under the Target Plus Scheme.



Applicant Companies
3.7.4
Companies which are Star Export Houses as well as part of a Group company shall have an option to either apply as an individual company or as a Group based on the growth in the Group's turnover as a whole. (For the purpose of this scheme the definition of Group Company' as given in Chapter 9 will be applicable. Furthermore , only such companies of the Group as are Star Export Houses will be considered).
If a Group company chooses to apply based on the export of one or more of its individual Star Export House companies, the entitlement would be calculated considering the export performance of the applicant company during the previous licencing year and current licencing year. It shall be necessary that the adjusted export performance of all the Star Export House companies of the Group during the current licencing year does not fall below the combined performance of all Star Export House companies of the Group in the previous licencing year.

In case the Group chooses to apply based on the overall growth in Group's turnover (i.e the turnover of all the Star Export House companies) , any one of the Star Export House companies of the Group may file an application on behalf of all the Star Export House companies of the Group.




3.7.5

The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the scheme:



(a)
Export of imported goods covered under Para 2.35 of the Foreign Trade Policy or exports made through transshipment.



(b)
Export turnover of units operating under SEZ/EOU/EHTP/STPI/ BTP Schemes or products manufactured by them and exported through DTA units



(c)
Deemed exports (even when payments are received in Free Foreign Exchange and payment is made from EEFC account).



(d)
Service exports



(e)
Rough, uncut and semi polished diamonds and other precious stones



(f)
Gold, silver, platinum and other precious metals in any form, including plain jewellery thereof. However exports of studded jewellery and any item as may be notified from time to time will be counted for the entitlement under the scheme.



(g)
Export performance made by one exporter on behalf of another exporter
Imports allowed
3.7.6
The Duty Credit may be used for import of any inputs, capital goods including spares, office equipment, professional equipment and office furniture provided the same is freely importable under ITC (HS), for their own use or that of supporting manufacturers as declared in Appendix 17 D.
Agricultural products listed in Chapter 1 to 24 of ITC (HS) except as may be notified from time to time, shall not be permissible for imports under this scheme.
Cenvat/ Drawback
3.7.7
Additional customs duty/excise duty paid in cash or through debit under Target Plus shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue.
Special Provision
3.7.8
Government reserves the right in public interest, to specify from time to time the category of exports and export products, which shall not be eligible for calculation of incremental growth/ entitlement.

Similarly, Government may from time to time also notify the list of goods, which shall not be allowed for import under the duty credit entitlement certificate issued under the scheme.

VISHESH KRISHI UPAJ YOJANA
(SPECIAL AGRICULTURAL PRODUCE SCHEME)
Objective
3.8.1
The objective of the scheme is to promote export of fruits, vegetables, flowers, minor forest produce, and their value added products, by incentivising exporters of such products.
Entitlement
3.8.2
Exporters of such products shall be entitled for duty credit scrip equivalent to 5% of the FOB value of exports for each licencing year commencing from 1st April, 2004 . The scrip and the items imported against it would be freely transferable.
Imports allowed
3.8.3
The Duty Credit may be used for import of inputs or goods including capital goods, as may be notified, provided the same is freely importable under ITC(HS).
Imports from a port other than the port of export shall be allowed under TRA facility as per the terms and conditions of the notification issued by Department of Revenue.
Cenvat/ Drawback
3.8.4
Additional customs duty/excise duty paid in cash or through debit under Vishesh Krishi Upaj Yojana shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue.
Special Provision
3.8.5
Government reserves the right in public interest, to specify from time to time the export products which shall not be eligible for calculation of entitlement.


Duty Drawback Drawback Claim FormIn case of drawback parcels, the exporters need to file prescribed application Form (in quadruplicate). Its format is at Annexure 26.Form AR4This Form is to be filled in quadruplicate in case of goods to be exported by post under excise rebate. The duplicate copy of these duly processed Forms should be affixed with sufficient postage stamps at the rate of Rs. 0.20 per packet, before presentation to Post Office. (Also see ‘declarations’ in Chapter 6.)Customs Declaration FormThe CDF is used for export by post, and available in post offices.Booking at the Post OfficesParcels of trade goods including those against which customs duty drawback claim is being made, may be presented to any post office in India for dispatch to any permissible destination abroad. However, all parcels must be addressed to the branch or correspondent of the exporter’s bank in the country concerned, unless the goods are covered by a Letter of Credit (L/C) or where advance payment has been received or specially permitted by the RBI. The parcel should be made up according to given specifications and properly addressed and weigh to the specified limits as detailed in the book ‘Export – What, Where, How’ by Paras Ram. These parcels are routed through the main post offices of exchange located at Bombay, Calcutta, Delhi, Jaipur and Madras or through the sub-offices of exchange at Ahmedabad, Bangalore and Cochin, etc.Declare on the outer packing carrying the address of the consignee, in bold letters the words: “Drawback Export”.DocumentsThe drawback parcels should be accompanied with the following documents: -(i) Drawback Claim Form (in quadruplicate) as at Annexure 26.(ii) PP Form (in duplicate) duly countersigned by the exporter’s bank or RBI. In case of jewellery items, it should be countersigned by the customs as well.(iii) Export licence, Quota certificate, if applicable.(iv) AR4 Form, in duplicate, duly processed by the Central Excise Authorities.(v) Invoice (two copies)(vi) Customs declaration form (triplicate). One copy of this form should be pasted on the parcel.(vii) A self-addressed envelope (with sufficient) postage stamps affixed on it to cover charges of registration and transmission back to the sender (exporter). Every care should be taken to attach the envelope carefully in order to avoid its loss in transit.The following additional documents should also be sent along with parcel.(i) Commercial invoice for canalised items must be got endorsed by the Canalising Agency concerned.(ii) Packing list in case there is more than one parcel in one consignment.(iii) Quality control and pre-shipment inspection certificate, if required.(iv) Any other document prescribed for the export/claim of drawback for/against the concerned product.Processing at Post OfficeThe booking clerk at the Post Office will receive the parcel and issue necessary receipt. The number and date of parcel will be entered in the concerned forms. He will also return the 4th copy of the Drawback Claim Form to the exporter.All parcels will, then, be passed on to the Foreign Post Office concerned for customs clearance before the final dispatch to overseas destinations.Customs ExaminationDate of Receipt. The date of receipt of the aforesaid Drawback Claim form by the Customs from the Post Offices, shall be the date of filing of drawback claim for the purpose of interest payable on delayed payment of drawback, under section 75A of the Customs Act. An intimation of the same shall be given by the Customs to the exporter.Deficiency Memo. In case the Drawback Claim Form is not complete in all respects, a Deficiency Memo will be issued within 15 days of the receipt from Post Offices. When the exporter complies with the requirements specified in the deficiency memo within 30 days of its return, he shall be issued an acknowledgment by the Customs. The date of such acknowledgment shall be deemed to be the date of filing of claim for the purpose of time permitted for payment of drawback and interest thereon, if any.If the claim contents including the fulfillment of requirements in the Deficiency Memo issued, if any, are correct as declared, the same will be certified in Form ‘D’. The Customs will also attest the original PP Form and one copy of the invoice. Thereafter, the parcels will be returned to the Foreign Post Office with recommendation for allowing their dispatch out of India. The supdt., FPO will thereafter certify the actual dispatch in Drawback Claim Form, return a copy of the form to the exporter and two copies to the Drawback Section in the Customs and Central Excise Department for necessary action regarding payment of drawback.The original PP Form duly attested will be forwarded by the Customs directly to the Reserve Bank of India. The invoice (one copy) duly authenticated will be returned by the Customs to the postal department for onward delivery to the concerned exporter.Payment of DrawbackThe export should simultaneously follow the drill explained at stage 2 in Chapter 2 for opening a bank account and drawback ledger account etc so that the cheque for drawback amount could be sent here.The exporter may also collect the cheque personally.But contact the concerned Custom House attached to the Foreign Post Offices for further details as the procedure may slightly differ depending upon local conditions.


Deemed ExportsThe Indian suppliers are entitled for the following benefits in respect of deemed exports:
Refund of excise duty paid on final products
Duty drawback
Imports under DEEC scheme
Special import licenses based on value of deemed exports
The following categories are treated as deemed exports for seller if the goods are manufactured in India:
Supply of goods against duty free licences under DEEC scheme
Supply of goods to a 100 % EOU or a unit in a free trade zone or a unit in a software technology park or a unit in a hardware technology park
Supply of goods to holders of licence under the EPCG scheme
Supply of goods to projects financed by multilateral or bilateral agencies or funds notified by the Finance Ministry under international competitive bidding or under limited tender systems in accordance with the procedures of those agencies or funds where legal agreements provide for tender evaluation without including customs duty
Supply of capital goods and spares upto 10% of the FOR value to fertilizer plants under international competitive bidding
Supply of goods to any project or purpose in respect of which the Ministry of Finance permits by notification the import of goods at zero customs duty along with benefits of deemed exports to domestic supplies
Supply of goods to power, oil and gas sectors in respect of which the Ministry of Finance permits by notification benefits of deemed exports to domestic supplies