5. 5
Prerequisites
You have an excise bond from the government and have entered it in the
system.
You have received a sales order from a customer located abroad. In the R/3
System, you have already created the delivery and the outgoing excise
invoice. In the excise invoice, you have set the Excise Invoice type to Export
Under Bond / No Bond (Rebate) / LUT (Letter of Under Taking).
Bond: The basic procedure for removal of goods without payment of duty
under Rule19. Export organization executes a Bond as a manufacturer and
also on behalf of merchant Exporter. (Rule 19 Applicable to Export under
Bond/ LUT)
No Bond (Rebate): The rebate of Excise Duty paid on exported goods is
granted under Rule 18. (Rule 18 Applicable to Export under Rebate)
LUT (Letter of undertaking): Export organization can also furnish a Letter
of Under Taking (LUT) in Form UT-1 .In such a case, need not execute a
Bond. The LUT once given is valid for 12 calendar months which is
renewable.
8. 8
Process Steps
5. When the excise clerk receives the ARE-1, he / she updates the ARE-1 in the R/3
System.
He fills out the various certification dates in the ARE-1 (for example, the date when
the ARE-1 arrived back at your company).
If the customs officer noted a shortfall in the quantity of goods, the excise clerk
enters the shortfall as well. Since he whereabouts of the missing goods cannot be
accounted for, they no longer qualify for exemption from excise duty.
Your company is therefore liable for the excise duty on the shortfall, plus interest,
backdated to the date when you removed the goods from your premises. The clerk
specifies which excise registers to pay the excise duty from.
6. The clerk sends the ARE-1 in the sealed envelope to the excise department. The
excise officer cross-checks this copy of the ARE-1 with his own copy. When he is
satisfied that everything is correct, he/she sends the excise clerk a final
confirmation.
7. When the excise clerk receives the confirmation, he closes the ARE-1.
The process is now complete.
9. 9
Design Approach & Implementation steps
Microsoft Word
Document
ARE1 Implementation Steps :( Configuration)
1. Making Settings for ARE-1 Procedure
2. Maintaining Number Range for ARE-1, PLA PART II, Excise Bond/LUT
3. Defining Processing Modes per Transaction
4. Defining Reference Documents per Transaction
5. Maintaining Output Type
6. Specify printers
7. Maintain postal addresses (both Range & Excise)
8. Define customs offices. (Port of Export in ARE 1 Form)
9. Specify Excise accounts per Excise transaction
10. Specify GL accounts per Excise transaction
Refer below attachment for ARE1 design approach,
Microsoft Word
Document
Refer below attachment for ARE1 Implementation Steps in detail,
12. 12
Creation of Bond / LUT
INTERNAL BOND NUMBER IS GENARATED (THIS IS USED WHILE CREATION OF ARE1
UPDATEING BOND DETAILS IN BOND TAB) IT IS CREATED BASED ON THE NUMBER
RANGES MAINTAINED.
S NO. BOND DETAILS DESCRIPTION
1 PLANT MPK / MMN / KPM / MCC
2 BOND TYPES RUNNING BOND / LETTER OF UNDERTAKING / FIXED BOND.
AUDCO USES PRESENT RUNNING BOND AND LETTER OF
UNDERTAKING ONLY
3 BOND NO OFFICIAL BOND NUMBER AS PER EXCISE DEPARTMENT.
4 BOND VALUE THE AMOUNT AGREED WITH INDIAS CENTRAL BOARD OF
EXCISE AND CUSTOMS
5 TYPE OF DISPATCH SPECIFY HOW MANY TYPE OF DIPATCHES COVERS UNDER THIS
BOND (MULTIPLE / SINGLE TYPE OF DIPATCH)
6 EXCUTION DATE SPECIFY ON WHICH DATE EXCISE DEPARTMENT ISSUED EXCISE
BOND
7 DATE OF EXPIRY SPECIFY ON WHICH DATE THE EXCISE BOND EXPIRS
8 SURETY SPECIFIES WHETHER THE BOND COVERS ANY SURETY OR NOT
9 INTERNAL BOND NO.
13. 13
Excise Invoice Creation
Create Excise Invoice (J1IIN) :
While creation of Excise invoice for Exports give the following inputs:
– Input is Delivery note number or Proforma invoice number.
– Select Excise and Series Group for relevant plant.
– Enter Pre-print Excise invoice number
– Select utilization tab for calculating Excise Duty
– Select any one of the following Mode of Export type is Bond / No Bond / LOU.
Enter Delivery
note number
and press enter
15. 15
Excise Invoice Creation
Select Excise and Series groups, Enter Preprint Excise Invoice number, and select
utilization tab.
D) After entering
all details select
Utilization button
B) Select Excise
and series groups
plant wise
C) Enter
Preprint Excise
invoice number
A) Enter Excise
Group
16. 16
Excise Invoice Creation
Select any one of the Mode of Export Bond / No Bond / LOU
And save ( ) the document. It generates Excise invoice official number.
17. 17
Create and Post ARE 1
Create and Post ARE 1 (J1IEX)
Select Create ARE 1 Mode for Outgoing Excise invoice.
Enter Excise invoice internal number, Year
Enter Excise
Invoice Internal
Number and year
Excise invoice details updated.
Creation of ARE 1 is more than one Excise invoice, give another Excise
invoice internal number and year once again up to a maximum of 7 Excise
invoices allowed in one creation, and Post ARE 1 (The ratio is 7: 1)
Enter ARE 1 Dispatched date and Time in Certification details tab
Enter ARE 1
Dispatched
date & time
18. 18
Create and Post ARE 1
Enter Internal
Bond No. and
Year
Press Enter
It Displays Official Bond no., Bond Type, Bond Value, Bond Current Balance and
Reservation amount. (See below)
Mode of Export under Bond / UT-1 Details tab enter internal Bond
number and year.
Internal Bond No. : It generates in SAP while creation of Bond in J1IBN01 (26)
Official Bond No. : It was given by central Excise Department(16)
19. 19
Create and Post ARE 1
Note:
1. Save means document is created but not posted and official ARE 1 no. is not
generated, only internal ARE 1 number is generated . Changes possible before posting
the document.
2. Post means document generated with official ARE 1 number. Changes should not
possible after posting the document.
Select this button
for Save Document
Select this button
for Post Document
And Save or Post document.
20. 20
Processing modes
S.No. ARE 1 Status Fixed Value in SAP Stage
1 In Process SPACE Internal ARE 1 number is
generated
2 Posted P Official ARE 1 number is
generated
3 Canceled B Internal ARE 1 number is
cancelled
4 Arrived at Customs W Official ARE 1 number
arrived at Customs
5 Sent to Excise Department E Official ARE 1 number Sent
to Excise Department
6 Arrived Back from Customs L Official ARE 1 number
rejected by customs
7 Closed X Official ARE 1 number
confirmed by Customs /
Excise
The following are the possible processing modes available in ARE 1,
23. 23
Mode of Export
S.No. Export Types Description
1 Self Sealing / Self Removal Exporting goods without Container
2 Individual Sealing to Plant Exporting goods through other Plant with out Container
3 Individual Sealing to Port Exporting goods through Direct Export Port with out
Container.
4 Container Exporting goods with Container.
5 Container Co-Load Exporting goods with Container by stuffing other plant
goods
1
24. 24
S.No. Mode of Export Mode of Transport
1 Self Sealing / Self Removal Air / Sea
2 Individual Sealing through Plant Sea / Air
3 Individual Sealing Through Port Air / Sea
4 Container Sea
5 Container with Co-load Sea
Export Details
2
Range Serial Number : Given by Government of exporting country
Port of Export : Place from where a shipment destined for a foreign importer leaves
the exporting country (AUDCO Port of Exports - Chennai, Mumbai, Cochin, Tuticorin)
Note: Here Port means both Airport & Sea port are considered
Mode of Export Vs Mode of Transport
25. 25
Export Benefits / Obligations
Duty Entitlement Passbook Scheme (DEPB): 3
DEPB stands for Duty Entitlement Pass Book. It is a scheme which is offered by the
Indian government to encourage exports from the country.
DEPB scheme is to neutralize the incidence of basic and special customs duty on
import content of export product. The DEPB Scheme was notified on 1/4/1997
Duty draw back under customs and Central Excise:
Drawback means the rebate of duty chargeable on any imported materials or
excisable materials used in manufacture or processing of goods which are
manufactured in India and exported.
Export means taking out of India. Supply of stores for use in vessel or aircraft
proceeding to foreign port is also covered, since it is treated as ‘export’ as per
section 89 of Customs Act.
Under Free Shipping Bill:
Free shipping bills (shipping bills not filed under any export promotion scheme) are
subject to ‘NIL’ examination norms.
26. 26
Export Promotion Capital Goods (EPCG) Scheme: 7 & 8
EPCG scheme allows import of capital goods for preproduction, production and post
production (including CKD/SKD thereof as well as computer software systems)
EPCG Scheme is available to the trade at zero Customs duty and Concessional 3%
Customs duty subject to an export obligation equivalent to 6 and 8 times of duty
saved on capital goods imported under EPCG scheme, to be fulfilled in 6 and 8
years, respectively .
Advance Authorization Scheme: (Advance License Scheme)
An Advance Authorization is an authorization / License which is issued to allow duty
free import of inputs required for export production, which are physically
incorporated in export product (making normal allowance for wastage).
An Advance Authorizations are exempted from payment of basic customs duty,
additional customs duty, education cess, anti dumping duty and safeguard duty, if
any.
Export Benefits / Obligations
27. 27
Product Details
Product Group : 4
Defines which product family Finished product belongs . This can be provided by Government of
exporting country. For Engineering industries Product group is 61
Product Serial Number:
Every product of product group can have serial number, provided by Government of exporting
country.
For example:
PRODUCT
GROUP
CODE NO:
DEPB SL.NO HS CODE MAIN DESCRIPTION
61 531 82041220 WRENCHES(VALVE HANDLES)
61 433 84818030 INDUSTRIAL VALVES ( CAST or FORGED BODY)
Note: HS Code abbreviates Harmonic Synchronous code provided by Govt. of Exporting country, In
Audco the same has been used as chapter ID for material.
Product Description:
Defines name of the Product to be exported by exporting country
Refer below attachment for Product group Vs HS Code Vs Product Description of Audco,
Microsoft Excel
Worksheet
28. 28
Container Details
Container details: 5
Container refer to - Packaging and Labeling used to transport products like valves.
Some shipping Containers are as follows,
Crate
Wooden box
Intermodal Containers like Ship Container or Cargo Container …Etc.
Container should have container number , Number of cases/Packages & Seal number.
Delivery note can be populated dynamically into ARE1 additional details – Screen1 from
Excise invoices entered. Then user have to select the deliveries belongs to each container.
Each container holds all package details (i.e., Crate / Case numbers), Which is
automatically picked from delivery note.
As per Audco business, one ARE1 may have maximum 7 containers. If number of
containers are exceeds for one delivery they have to create another ARE1.
29. 29
Co-Load Details
While preparing ARE 1 Form Co-load will appear in the ARE 1 Form based on the requirement. 6
Co-load Sending & Receiving:
The consignment sealed in one factory, will be shifted into the Container of another factory, from
where the Container is removed for shipment.
Stuffing: Storing finished goods in the Container for shipment.
Plant has Co-load of another plant stuffed in the Container and that had to be mentioned in the
plant ARE 1 (The ARE 1 no. plant details will be captured at the time of creation of shipping plant
ARE 1)
Note: Co-load is not applicable for Domestic Sales as there is no container involve.
As showed in ARE 1 – Additional details – Screen2, Provided simply F4 for loading Other plant ARE1.
Once ARE1 is Co-Loaded, then that ARE1 should not appear in F4. Means not possible to load in
another ARE1.
If user tried to load already Co-Loaded ARE1 into another ARE1 manually, then system strictly
disallow.
Audco business restricted 5 Co-Loads per ARE1.
31. ARE1 Reports
Reports provided by SAP standard are as follows,
J1IARE_AGE - Aging Analysis for ARE Documents
J1IBONSUM - Bond Summary Report
(Note: List of ARE1 details under bond can also be viewed by using where used list)
One custom report – ZFI211 (ARE1 Register List) is developed for the following external &
internal purposes,
To submit monthly export details to excise and customs department.
To update export records by finance
To prepares excise return by finance
The output of report as follows,
Microsoft Excel
Worksheet
32. 32
Business Rules for ARE1
The following are the business rules implemented during ARE1 implemented, to overcome process
violation,
Microsoft Excel
Worksheet
S.No. Business Rule
1
During Creation of Excise invoice for Exports must select any one of the following Export
Type (Bond / No Bond / Letter of Undertaking).
2
One Pre-Printed Excise Invoice must be referenced to one Excise Invoice only during
creation of Excise Invoice.
3 Export type Excise Invoices should be used for Creation of ARE 1.
4 More than 7 Excise invoices are not allowed in Creation / Change of one ARE 1.
5 Multiple chapter ID’s are not allowed in one ARE 1
6 Final Invoice should allow to create after creation of ARE 1 .....Etc
For complete business rules of ARE1 process, Please refer below attachment
33. 33
Benefits derived from the Innovation
Benefits derived from the Innovation:
The pre-printed forms used under FoxPro are retained in the new system thereby saving cost
and ensuring utilization of the same hardware.
Considerable amount of time saving – The time taken to prepare an ARE1 is reduced from 15
minutes to 2 minutes.
Accurate data – As all the data are captured from sales order the accuracy is ensured where as
in FoxPro due to complete manual intervention there always existed a possibility for human
error.
Duplication of data entry fully eliminated – Data storing, retrieving and comparison in SAP
eliminates duplication of data which is not in earlier FoxPro system
System generated reports to suit our requirement which was not maintained in excel earlier.
Neat and presentable format of ARE1 to Excise and Customs.
The export related data can be viewed by all users of the information. In the earlier system
the preparer was only able to view.
System dependant where as FoxPro was person dependant & hence error proof.
The above features contributed considerable saving in man-hour in all plants
