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import export full report

  1. 1. 1 2013 Submitted By: Tejas Prajapati Submitted To: Prof. Devang Patel INDUSTRY PERCEPTION & UNDERSTANDING of LOGISTIC INDUSTRY
  2. 2. 2 ACKNOWLEDGEMENT I would like to express my gratitude to all those who gave me the possibility to complete this report. I want to thank the Company (Logistic Integrators) Mr. Ajay Kavadia for giving me platform to commence this report in the first instance. For providing induction, types of trainings and Administration for their stimulating support. I am deeply indebted to my company guide Mr. Ajay Kavadia whose help, stimulating suggestions and encouragement helped me for writing this report. I want to thank, my senior and colleagues from different Departments for all their help, support, interest and valuable hints. Especially I am obliged to Mr. Ajay Kavadia and Mr. Minesh Oza for his great support and help. They were always there with me for the entire training and gave their best to train me in the best possible way.
  3. 3. 3 CONTENTS Description Page A Executive Summary………………………………………………………… 1 Port and Shipping Industry 1.1 Key Points 1.2 Indian Shipping/ Logistic Industry 1.3 Forwarding Industry 2 Logistic Integrators : Overview 2.1 Logo 2.2 Values 3 Logistic Integrators India Pvt ltd 3.1 Objective 3.2 Vision 3.3 Mission 3.4 Company Profile 3.5 Advantages 3.5.0 Location 3.6 Product and Service 3.6.0 Air Export 3.3.1 Air Import 3.3.2 Sea Export 3.3.3 Sea Import 3.7 Future Plans 3.8 Promotions of Product and Service 3.8.0 Advertisement 3.8.1 Word of mouth 3.8.2 Recommendations 3.10 S.W.O.T Analysis 3.10.0 Strengths 3.10.1 Weakness 3.10.2 Opportunities 3.10.3 Threats Chapter 1 4 Project: Export – Import procedure & Documentation. 4.1 Custodians 4.1.0 Duties of Custodians 4.2 Import 4.2.0 Flow of Custom compliance for Import 4.2.1 Import Procedure 4.2.2 Legal Dimensions of Import procedure 4.2.3 Warehousing of Imported goods 4.2.4 Certificate of Inspection 4.2.5 Freight Declaration 4.3 Export 4.3.0 Export General Manifest 4.3.1 Shipping Bill 4.3.1.0 Types of Shipping bill 4.3.1.1 Contents of Shipping bill 4.3.2 Commercial invoice
  4. 4. 4 4.3.2.0 Contents of Commercial Invoice 4.3.2.1 Significance 4.3.3 Bill of lading 4.3.3.0 Significance of Bill of Lading to Exporter 4.3.3.1 Significance of Bill of Lading for Importer 4.3.3.2 Contents of Bill of Lading 4.3.3.3 Packing List 4.3.4 Certificate of Origin 4.3.4.0 Certificate of Sampling & Analysis 4.3.4.1 Contents of Certificate of Sampling & Analysis 4.3.5 Certificate of Weight 4.3.5.0 Contents 4.3.6 Letter of Credit 4.3.6.0 Parties to Letter of Credit 4.3.6.1 Terms & Conditions in Letter of Credit 4.3.6.2 Types of Letter of Credit 4.3.6.3 Advantage of Letter of Credit 4.3.6.4 Procedure of Open Letter of Credit 4.3.7 Indian Custom EDI system 4.3.7.0 Advantage of Indian Custom EDI system 4.3.8 Procedure for Pre-shipment Inspection 4.3.9 Incoterms 2010 & Export Price Quotation 4.3.9.0 FOB v/s CIF Quotation 4.3.10 Export house and trading house 4.3.10.0 Privileges of export and trading house 4.3.10.1 Star export house 4.3.10.2 Star trading house 4.3.10.3 Super star trading house 4.3.11 Containers 4.3.11.0 Types of container 4.3.12 Container freights station (CFS) Chapter 2 5 Project: Study of Singapore Country 5.1 Introduction 5.1.0 Geography 5.1.1 Demography 5.1.2 Traditional & Cultural 5.1.3 Ethical Business Practices 5.2 Port of Singapore 5.2.0 Domestic Air port 5.2.1 International Air port 5.2.2 Sea port of Singapore 5.3 Major Import / Export Commodities in Singapore 5.4 India and Singapore Bilateral Trade & Investment 5.5 Trends in trades 5.6 India – Singapore Trades 2000/01 to 2011-12 5.6.0 Imports 5.6.1 Exports 5.7 FTA – PTA –Guideline 5.8 Centre Secretary 5.9 Deemed Export 5.10 Export Promotion Capital Goods Schemes
  5. 5. 5 5.11 Duty Drawback 5.11.0 Procedure for Claiming Duty Drawback Chapter 3 6 Project: Study 6.1 Ashima Dyecot Ltd. 6.1.0 Profile 6.1.1 Findings 6.2 Aarvee Denims & Export Ltd. 6.2.0 Profile 6.2.1 Findings 6.3 VishakhaPolyfab Pvt. Ltd. 6.3.0 Profile 6.3.1 Findings 6.4 Syntron Industries 6.4.0 Profile 6.4.1 Findings 6.5 Encore Natural Polymers Pvt. Ltd. 6.5.0 Profile 6.5.1 Findings 6.6 Rushil Décor Ltd 6.6.0 Profile 6.6.1 Findings 7 Chapter 4 Project: ICD inland container depot - Ahmedabad 7.1 Methodology used 7.2 Export Transport Logistic Cost 7.3 Containerized Shipment 7.4 Movement of Containerized Shipment 7.5 Customs Clearing Charges 7.6 ICD & CFS 7.6.0 Services offered by ICD/CFS 7.6.1 Advantage 7.6.2 Terminal Handling Charges 8 Learning from Sip 9 Experiential Learning 10
  6. 6. 6 Executive Summary In this report I have put in best of the information about my company “Logistic integrators” on a common platform, analyze their working and performance, and highlight the companies profile together with its customers and competitors. Also I have put my learning‟s day to day obtained from the project given to me. 1. Shipping and port Ports connect us to the world. Goods we touch every day travel to and from one of hundreds of deep draft ports that accommodate ocean-going vessels. They are located in coastal areas, as well as on the Great Lakes and on inland river systems. Ports are busy, dynamic transportation hubs that are constantly adapting to meet the demands of global trade. Ports are the nexus of business transactions for imported and exported goods. We depend on ports to increase international trade, to strengthen local and national economies, to provide higher paying jobs, and to increase our standards of living. Trade creates new opportunities for citizens in every country. By virtue of their location, ports also serve as environmental stewards of our coastlines. Ports spend millions of dollars each year to minimize the impacts of port operations and development of their surrounding communities and natural resources.
  7. 7. 7 Ports play another critical role in our communities as well. They serve as local economic engines, generating jobs and opportunities that allow businesses to flourish Shipping is a global industry and its prospects are closely tied to the level of economic activity in the world. A higher level of economic growth would generally lead to higher demand for industrial raw materials, which in turn will boost imports and exports. The shipping market is cyclical in nature and freight rates generally tend to be volatile. Freight rates and earnings of the shipping companies are primarily a function of demand and supply in the markets. While demand drivers are a function of trade growth and geographical balance of trade (which determines the length of haul required), the supply drivers are a function of new ship building orders as well as scrapping of existing tonnage. The global shipping industry can be broadly classified into wet bulk (like crude and petroleum products), dry bulk (like iron ore and coal) and liners. Under liners, it has containers, MPP and Ro-Ros types of vessels. There are various benchmarks that determine freight rates for these segments. The prominent amongst them are Baltic Freight Index, Baltic Handyman Index (for dry bulk segment) and World Scale (for tankers). 1.1 Key Point  Supply  Determined by the addition to shipping capacity  Demand  Closely related to growth in world trade  Barriers to entry  Highly capital intensive and adequate cash flows required for funding working capital requirements. Moreover, expertise and technical know-how are critical factors.  Bargaining power of suppliers  Diminishing with gradual increase in fleet supply and intense global competition  Bargaining power of customers  High bargaining power as competition is high in the industry.  Competition  Competition is price based. However, companies with younger fleet command a premium 1.2 Indian Shipping/ Logistic Industry Shipping and logistics companies need to move increasing numbers of packages worldwide, by trucking, air transport, ships, or trains while maintaining visibility into what is happening to every single package. Even if there is a system outage. And while some delays are inevitable, you still want to manage that occurrence with your clients to maintain customer satisfaction Indian ship building industry current value is put at $15 billion equally split between commercial and naval vessels .The sector employs 100,000 workers across 26 modernly equipped yards .seven of which are government owned. Mumbai, Gujarat, Kolkata and Kochi are the main hubs where the bulks of output are manufactured .The government is providing significant incentives to international investors to attract major ship builders from Korea and Japan to invest in new yards in the country. Even the Indian government had significantly made an investment of $ 5 billion to develop additional capacity to Indian ship building sector Logistic is unique it never stop! Logistic is happening around the glove, 24 hours every day, even says a week during 52 weeks every year, few areas of business operations involve the complexity or span the geography typical of logistics.
  8. 8. 8 Logistic involve the integrations of information, transportation, inventory, warehouse, material handling and packing. All of these areas of work provide a variety of stimulation jobs. Because of the logistic strategic importance of logistic performance an increase number of successful logistic. Individual firms logistic expenditure typically range from 5% to 35% of sales depending on the type of business geography area of operation and the weight value ratio of product and material. Prior to 1950, logistic was on functional basis. After1960, transformed on information technology basis. The technology and economic necessity combined in 1950 to spark the change in logistic practices that continues today. 1.3 Forwarding Industry A freight forwarder is a person or company that organizes shipments for individuals to get goods from the manufacturer or producer to a market, customer or final point of distribution. It is not unusual for a single shipment to move on multiple carrier types. 'International freight forwarders" typically handle international shipments. International freight forwarders have additional expertise in preparing and processing customs and other documentation and performing activities pertaining to international shipments. Major services are freight forwarding and customs brokering. Unlike fully integrated carriers that own truck, rail, air, or ocean assets and transport cargo, freight forwarders arrange the transportation of goods without owning any transportation equipment or handling the cargo. Customs brokers add another layer of expertise by facilitating the clearing of goods through international customs barriers. Most companies specialize in either freight forwarding or customs brokering, though companies and individuals can provide both. 2. Logistic Integrators: Overview
  9. 9. 9 Logistic Integrators brings in a century worth of knowledge in logistics, experience and expertise. The team is highly professional and assertive to ideas that offer innovative and result oriented solutions. Logistic Integrators is a company that is focused on integrating a whole logistic and supply chain with a clock work precision. It is a challenge to bridge the two polarities of "Personal Approach" and "System Approach". With this aspect in mind we steer towards bringing an excellent service to the door step of our clients. 2.1 Logo RED: • Aggressive: The people work very aggressively. • Earth: The logistic integrators are also working on the road DARK BLUE: • Trust: Every people has to trust of each one so trust is build strong relation between both parties. • Deep thinking: Once the every people thinking very deep and innovation new things. • Focus on work: Every people focus on task when the task is not complete. • Ocean: logistic integrators are working also on the sea. SKY BLUE: • No limit of thoughts: Every people have a no limit for thoughts and share between entire people. • No limit of works: Every people have a not limit for work. • Sky: logistic integrators are working also air. 2.2 Values Trust: Trust and Transparency to establish a long term bond with our customer and client. Care: Utmost care and attention to every detail, from building relationship to providing amazing service. Growth: Constant growth by continually challenging ourselves to outperform at every step. Creativity: Creativity in thought and action by thinking unconventionally, without limits or restrictions.
  10. 10. 10 Celebrations: Celebration or deriving the utmost enjoyment and personal satisfaction by exceeding the needs of our clients. 3 Logistic integrators Pvt Ltd 3.1 Objective The vision objective of Logistic Integrators is “innovating solutions”. The process necessarily involves an exploration, discovery, breaking mind sets and looking beyond the obvious. Thinking should be limitless, without boundaries, infinite......no boundaries!! At Logistic Integrators, every solution undergoes the process of exploration. Hence at Logistic Integrators, it is all “no boundaries” Geography, Distance, Network, Coverage...no boundaries!! It is that state of meditative mind where one observes boundary-less-ness, everything is within hence infinite!! 3.2 Vision. To constantly looks for “innovating solutions” beyond boundaries to serve our customers worldwide. 3.3 Mission To provide thebest platform for all your logistic needs by integrating the entire logistic and supply chain with a system driven but personal approach. 3.4 company profile Location: Ahmedabad Name: Logistic Integrators Authority: Freight Forwarding Address: 706/707, Ashram Road, Shaker (V) Ahmedabad Gujarat 380007. Phone: +91-3022-6699 Email: corporate@logisticintegrators.com Web Site: www.logisticsintegrators.com Type: Forwarding Size: Medium Logistic Integrators- A young dynamic and vibrant company manned by professionals who between them have more than a century‟s worth of experience in logistics. Specialization in integration the entire logistic and supply chain with immaculate precision, logistic integrators aims to go beyond boundary to facilities commerce and create a world with no boundaries.
  11. 11. 11 With the company‟s pan India presence, group companies in selected global market and exclusive network partners in more than 70 countries worldwide, staffed by personnel who are constantly upgrading their skills and keeping abreast with the trends in global standard of service & technology logistic integrators strives to provide creative & out-of the box solution to maximize customers satisfaction with optimum recourse utilization. At logistic integrators we believe that this approach is the foundation of our loyal customer base build up over the years. We are proud to be one of the few selected companies who use web based customized enterprise resource planning software to operate their business. This unique software seamlessly integrates all business activates and function from client acquisition to account settlement and also provide visibility throughout the entire process on a real time basis. This enhances the efficiency & client satisfaction thus accelerating business growth. 3.5 Advantage 3.5.0 Location Logistic Integrators is located at 706, Sakar V B Ahmedabad of Gujarat. Because of that place logistic area. Major benefit was that Ahmedabad hub for a logistic industry. The larger industry having of chemicals, textiles, and engineering goods more. Gujarat, one of India‟s most industrialized, investor friendly and commercially successful states. 3.6 Product & Services 3.6.0 Air Export: The fast-paced and ever changing environment of international airfreight demands a completely integrated and seamless system. Benefits  Quote with confidence with complete buy and sell rates on.  Speed transactions with existing Carrier EDI.  Flow data through the entire process eliminating repetitive key.  Build air waybill schedules for the month with gateway operation.  Facilitate billing procedures with extensive rating.  Split master and house bills to quickly manage missed flights and late. 3.6.1 Air Import: - A good or service brought into one country from another by air. 3.6.2 Sea Export:- Sea export module is the integration of multiple information systems starting from shipper to the consignee that includes rate and quote management 3.6.3 Sea Import:- The Cargo Net Sea import module is designed for major sea importers to achieve greater efficiency in the longer run. 3.7 Future plan  Setting up two warehousing and distribution centers with states of the art facilities.  Building competency and capability to handle automobile logistics.  Expanding reach and operational capabilities of the project division.  Increase plan India reach to 15 strategic markets.  Setting up pharmaceutical hubs across the country.
  12. 12. 12  Resident representation in global markets. 3.8 Promotions of Product & Service. Following are the different types of promotion tools for ports in order to communicate to various target groups, inform them and influence their perception towards the port. Advertising Direct mailing. Personal Selling. Representatives. Domestic networking Organisation Conferences Speaker at a Conference Other tools 3.8.0 Word of mouth Logistic integrators triggered when a customer experiences something far beyond what was expected. Slightly exceeding their expectations just won't do it. You've got to go above and beyond the call of duty if you want your customers to talk about you. 3.8.1 Recommendations The high point of the two day maritime conference of Bombay Chamber of Commerce & Industry (BCC&I ) is the release of its recommendations for integration of logistics industry. 3.9 S.W.O.T Analysis of Logistic Integrators STRENGTHS WEAKNESS. THREATS. OPPURTUNITIES. SWOT ANALYSIS
  13. 13. 13 3.9.0 Strengths  360 degrees service  Worldwide network – major 65 countries  More than 100 years of top management employee experience  Offices located at strategic locations  Membership from national association of freight forwarders, international federation of freight forwarder association, logistic international network  Strong global relations 3.9.1 Weaknesses  Very young company (3 year old)  Reach and availability of operational services  No Ownership of containers  No ownership of slots on vessels 3.9.2 Opportunities  Large number of un tabbed market in India  Expanding reach an operational capabilities of different verticals into different sectors and project divisions  Increasing reach in global market  Strategic relations with different associates globally 3.9.3 Threats  Highly competitive market  Fluctuation of foreign currency  Fluctuations of demand and supply v/s. infrastructure requirement in India
  14. 14. 14 Chapter 1 4 Project: Export – Import procedure & Documentation. 4.1 Custodians The person having custody of any imported goods in a customs area, whether under the provisions of sub- section (1) or under any law for the time being in force, (a) shall keep a record of such goods and send a copy thereof to the proper officer. (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilferred after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried. 4.1.0 Duties of Custodians Should not handle/permit discharge of imported goods and loading of export good without proper order of customs. Keep goods in custody till there are cleared for home consumption or warehousing or transshipment. Arrange proper storage and safety Allow “no” dealing in goods like say opening, re-packing, sampling etc. without prior permission of customs. Maintaining proper records To follow rules and regulations directed by customs.
  15. 15. 15 4.2 Import 4.2.0 Flow of Custom Compliance for Import 4.2.1 Import Procedures Procedures have to be followed by „person-in-charge of conveyance‟ as well as the importer. WHO IS 'PERSON IN CHARGE' - „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 (d) In case of vehicle or other conveyance - its driver or other person in charge. Import General Manifest Bill of Entry Verifying IGM details & EDI Check-List for Bill of Entry Acquiring BE Number Appraisal of BE Details Auditing BE Information Assessment by Asstt./Deputy Commissioner of Customs Copy of BE & TR-6 Challan & Examination Order Duty Payment in Bank Goods Registered Examination of Goods Examination Report
  16. 16. 16 The significance of this definition is He is responsible for submitting Import Manifest and Export Manifest He is responsible to ensure that the conveyance comes through approved route and lands at approved place only. He has to ensure that goods are unloaded after written order, at proper place. Loading also has to be only after permission. He has to ensure that conveyance does not leave without written order of Customs authorities. He can be penalized for (a) Giving false declaration and statement (b) Shortages or non-accounting of goods in conveyance. He has to ensure that goods are unloaded after written order, at proper place. Loading also has to be only after permission. He has to ensure that conveyance does not leave without written order of Customs authorities. He can be penalized for (a) Giving false declaration and statement (b) Shortages or non-accounting of goods in conveyance Procedure to be followed by the Carrier -The 'person in charge of conveyance' (carrier of goods) has to follow prescribed procedure. Arrival at customs port provides that person-in-charge of a vessel entering India shall call or land at customs port. It can land at other place only if compelled by accident, stress of weather or other unavoidable cause. In such case, he should report to nearest police station or Customs Officer. While arriving by land route, the vehicle should come by approved route to „land customs station‟ only. 4.2.2 Legal Dimension of import procedure.  Finalization of the terms of Contract: The import contract should be carefully and comprehensively drafted incorporating therein precise terms as well as relevant conditions of the trade deal. There should not be any ambiguity regarding the exact specifications of the goods terms of the purchase including import price, mode of payment type of packing, port of shipment, delivery schedule, etc.  Mode of pricing and INCO terms: while finalization terms of import contract, the importers should, inter-alia, be fully conversant with the mode of pricing and the manner of payment for the imports. International chamber of commerce, Paris has given detailed of a few standard terms popularly known as INCOTERMS.  Mode of Settlement of payment: International transaction depending upon the creditworthiness of the import or export, demand for the commodity in the international market, exchange control regulation prevailing in the importer or exporter countries.  Advance payment  Payment or acceptance against documentary collection  Payment under letter of credit.
  17. 17. 17  Obtaining IEC Number: In India it is obligatory for every importer and exporter to register them with director general of foreign trade. The application form for obtain IEC number should be accompanied by a fees of Rs 250 and two copies of passport size photo of the applicant duly attested by the banker of the applicant and relevant document.  Obtaining import license: if the item to be imported falls in the prohibited list, then such item cannot be imported at all. List then the necessary clearance must be obtained from appropriate licensing authority.  Obtaining Foreign Exchange: importer is required to make an application to the reserve bank of India for getting sanction for making overseas payments. The exchange control department scrutinizes the applications and if satisfied sanction necessary foreign exchange for the import transaction.  Arranging finance for import: Banks normally do not extend any fund based assistance to importers. However they enable industrial units and others to the have access to imported inputs and machinery by establishing letter of credit in favor of the overseas supplies.  Obtaining import Letter of credit limit: this requires advance financial planning so as to retire import bills under letter of credit on time. Any delay in retirement of bills not only strains the relations of the importer with his bank but also result in additional costs by way of extra commission, penal interest, demurrage charge, etc.  Dispatching letter of credit: if the terms of payment agreed between the import and the overseas supplies are a letter of credit then the importer should obtain the letter of credit from his bank and forward it to the overseas supplies well within the time agreed for the same. The import must see to it that of the letter of credit has been prepared in the conformity of the import contract entered between them. 4.2.3 Warehousing of imported goods. Where in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act Warehousing stations: the warehouses are to be appointed/licensed at particular places only which have been so declared by central board of excise and customs. The board has delegates its power for declaring places to be warehousing stations to the chief commissioners of customs. In respect of 100% EOUs the powers to declare places to be warehousing station have been delegated to the commissioners of customs. 4.2.4 Certificate of inspection Certificate of inspection is a document certifying that the concerned merchandise was in good condition immediately prior to its shipment. The certificate of inspection is an inspection report or report of finding and is required by some importers countries. The export used such a report in the inspection of goods purchase from a manufacturing. The export manufacture uses such a report in the inspection of its own production. Certificate of inspection is required the import may stipulate in the letter of credit to use a specific independent surveyor. In the case of a foreign government required pre-shipment inspection, which is stipulate in the LC, the report of finding can be in the form of a security label attachment with the invoice. The labels bear the number and date of the corresponding report of finding issued by the foreign government engaged surveyor. 4.2.5 Freight Declaration
  18. 18. 18 Freight declaration is requirement to be obtain form the overseas supplies, in both the cases, when the import agrees to pay the freight or the overseas supplies pays the freight. 4.3 Export 4.3.0 Export general manifest  The Export General Manifest is a complete list of all items the conveyance carries on board, including those to be transshipped and those to be carried to the subsequent ports of call.  Thereby, entity in charge of conveyance (shipping agent) of carrying exported goods should hand over, within 24 hours of arrival of conveyance, an export general manifest to the customs.  When cargo is exported by seaair route, the declaration is termed as Export General Manifest (IGM).  The EGM is submitted by shipping linesagent to officer of customs, called Inspector of EGM. 4.3.1 Shipping bill  Shipping bill is a main and important customs document, required by customs authorities for granting permission for shipment of goods.  The cargo can be moved inside dock area only after shipping bill is duly signed, stamped and certified by customs. 4.3.1.0 Types of shipping bill  Shipping Bill of exports without any export incentive (OGL- Open General License)  Shipping Bill of export for dutiable goods  Shipping Bill of exports with DEPB Claim  Shipping Bill of exports with Duty Drawback Scheme  Shipping Bill of exports under DEEC/EPCG/DFIA Scheme  Shipping Bill of Ex-bond exportation. 4.3.1.1 Contents of shipping bill  CHA Details  Exporter‟s Details (Exporter License No.) (i.e. IEC & BIN with name & address)  Importer‟s details (Name & Address) (Consignee)  Port of loading  Port of discharge  Goods description – Quantity, Quality, Country of Origin etc  Value of goods  H S N Code of goods  Applicability of export duty (if any)  Permissibility of export incentive in terms of DEPB/Duty Drawback etc.  Details of effective customs notifications for duty calculation  Ocean Freight, Insurance, Commission, Discount.  Applicable Exchange Rate 4.3.2 Commercial invoice
  19. 19. 19  Commercial Invoice is prepared by exporter after execution of export order giving details about the goods to be shipped. It is actually seller‟s bill of merchandise as it contains all the information required for the preparation of other documents.  It is essential that the invoice is prepared in the name of buyer or consignee mentioned in the Purchase Order / Letter of Credit. It is a prima facie evidence of the contract of sale or purchase and therefore, must be prepared strictly in accordance with contract of sale. 4.3.2.0 Contents of Commercial Invoice  Exporter details  Consignee details  Vessel details  Load port  Discharge port  Invoice no. and date  Country of origin  Country of final destination  Terms of delivery and payment  Packing description  Signature of exporter with date 4.3.2.1 Significance It‟s used in various export formalities such as quality and pre-shipment inspection, excise and customs procedures, etc. 4.3.3 Bill of Lading  Bill of lading is a document issued by shipping companyagent acknowledging receipt of goods on board the vessel & undertaking to deliver goods in like order & condition as received to consignee, provided the freight and other charges specified in bill of lading are duly paid.  It‟s also a document of title of goods and is free transferable by endorsement and delivery. 4.3.3.0 Significance of bill lading to export  Acknowledgment indicating that goods mentioned in document have been received on board for purpose of shipment.  Exporter can claim damages from shipping company if goods are lost damaged after issue of clean bill of lading 4.3.3.1 Significance of bill lading to Import  It acts as a document of title to goods which is transferable by endorsement & delivery.  Bill of lading sent by exporter to importer OR importer‟s bank (as the terms agreed between both parties) enables him to take delivery of goods. 4.3.3.2 Contents of bill of lading
  20. 20. 20  Name & logo of shipping line  Shipper‟s details  Consignee details  Name of vessel and vessel no.  Load port  Discharge port  Goods marking Container No.  Packing List  Goods description (quantity)  Goods weight  Amount of freight payable to charter party  Shipping bill no. (Date & Place)  Signature and initials of Chief Master/agents, ensuring the goods are loaded in apparent good order. 4.3.3.3 Packing list The exporter prepares packing list to facilitate the buyer check the shipment. It contains detailed description of goods packed in each case and gross weight. 4.3.4 Certificate of origin  The certificate of origin states that goods exported are originally manufactured in country whose name is mentioned in certificate.  It helps buyer in adhering to import regulations of the country.  On the basis of declaration made by exporter, local Chamber of Commerce or Export Inspection Agent regulated by ministry of commerce and industry duly after verification of facts. 4.3.4.0 Certificate of sample & Analysis  This document ensures that cargo loaded by exporter is of right quality and specifications as per mentioned by exporter in commercial invoice.  This inspection can be done by any independent or buyer-nominated inspection agency prior to loading. 4.3.4.1 Contents of certificate of sampling & analysis  Exporter details  Consignee details  Vessel details  Load port  Discharge port  Goods description  Samples  Type of tests  Analysis results in terms of percentage and acceptable norms  Letter of credit number  Signed and certified by inspection agency. 4.3.5 Certificate of Weight
  21. 21. 21 This document certifies that following cargo is in such particular quantity, after loading on vessel. 4.3.5.0 Contents  Vessel details  Shipper details  Consignee details  Load port  Discharge port  Cargo description  Weighing method 4.3.6 Letter of credit Letter of credit is a document issued by the importer‟s bank in favor of exporter giving him authority to draw bills up to a particular amount (as per contract price) covering specified shipment of goods and assuring him of payment against the delivery of shipping documents. 4.3.6.0 Parties to letter of credit  Applicant or Opener  The buyer or importer opens the letter of credit through his bank in favour of exporter.  Beneficiary  Beneficiary is the exporter of goods in whose favour the letter of credit is opened by importer through his bank.  Issuing bank  Importer‟s bank issues letter of credit in favour of exporter on request of importer.  Advising bank  The branch of issuing bank situated in exporter‟s country.  Confirming bank  It is the bank situated in exporter‟s country which guarantees credit on request of issuing bank. Generally, advising bank and confirming bank are the same.  Negotiating bank (It is bank situated in exporter‟s country through which documents are negotiated by exporters, i.e. exporter‟s bank.) 4.3.6.1 Terms & Conditions in letter of credit  Received from (Issuing bank)  Advising bank  Form of documentary credit (IrrevocableRevocable)  Letter of Credit number  Date and Place of Expiry  Applicant details  Beneficiary details  Amount  Transshipment provision  Load port  Discharge port  Latest shipment date  Goods description 4.3.6.2 Types of letter of credit
  22. 22. 22  Revocable and irrevocable letter of credit: Revocable letter of credit can be withdrawn, cancelled or modified by the issuing bank at any time without the prior consent of the beneficiary. However, the issuing bank has to give a notice to the exporter after revoking the letter of credit. Since revocable letter of credit is very risky, exporter do not accept such letter of credit. Irrevocable letter of credit cannot be without, cancelled or modified without the prior consent of the beneficiary or the other parties involved in the transaction such as confirming bank. Exporter, normally, prefer an irrecoverable letter of credit .  With recourse or without recourse letter of credit: The revocable and irrevocable letter of credit can be further classified into „with recourse and „without recourse; letter of credit. In the case of „with recourse‟ letter of credit the export is held liable to the negotiating bank. In the case of „without recourse‟ letter of credit the negotiating bank has no recourse to the exporter, but only to the issuing bank or to the confirming bank in the event of the dishonor of the letter of credit.  Confirmed and Unconfirmed letter of credit: in the case of confirmed letter of credit an exporter has an additional guaranteed from a local bank, in additional to the one given by the issuing bank. Thus, the confirmed letter of credit carries guarantee from two banks. Unconfirmed letter of credit is one, which is not supplemented by additional guarantee from a bank in exporter‟s country.  Transferable and Non-transferable letter of credit: A transferable letter of credit can be transferred to one or more parties either fully or partly. However the issuing bank must be informed about the such transfer. A non- transferable letter of credit cannot be transferred to a third party. Usually all letter of credits are non- transferable, unless and until so state in them.  Fixed and revolving letter of credit: A fixed letter of credit is issued for a fixed amount and for a fixed period time. In case, an exporter has a right to draw bills of a specified amount within a stipulated time period. A revolving letter of credit is not subject to exhaustion. It is renewed automatically for the same amount and the same period once it is utilized such letter of credit is useful when two parties have frequent dealings between them for a fixed amount.  Clean and restricted letter of credit: When the issuing bank does not put any condition regarding the negotiation of export documents, the letter of credit is referred to as a clean letter a credit. When the issuing bank puts a condition regarding the negotiation of export document through a specific bank the letter of credit is referred to as a restricted letter of credit.  Red clause and green clause letter of credit: A red clause letter of credit is one which authorised the exporter to obtain pre-shipment finance from his bank. such finance is guaranteed by the issuing bank and is generally printed or typed or typed in red ink. A green clause letter of credit in addition to permitting pre-shipment finance, provides the storage facilities to the exporter at the port of shipment such facilities are extended by the issuing bank and is generally printed or types in green ink.  Back to back letter of credit: Back to back letter of credit is one which can be opened in favor of the local suppliers for the supply of raw materials requirement for undertaking export
  23. 23. 23 production or for the supply of goods required for export purpose on credit basis. It is a kind of pre-shipment finance procured by the exporter for the processing of export order.  Documentary Letter of credit: Generally all letter of credit are documentary letter of credit. In case of documentary letter of credit the payment is released by the issuing bank against the submission of full set of documents.  Bill of lading.  Shipping bill.  Commercial invoice.  Packing list  Certificate of origin  Certificate of pre shipment quality inspection.  Marine insurance policy  GSP/CWP certificate 4.3.6.3 Advantage of Letter of credit Advantage letter of credit to Exporter:  Prevents blockage of finance: The letter of credit received from the importer can be discounted with the confirming bank and money can be realized immediately. This prevents blockage of funds. At the same time after fulfilling the required formalities the exporter gets immediate payment.  Prevent bad debts: In the case of letter of credit the payment is guarantee by the issuing bank therefore the risk of bad debts is less. A confirmed letter of credit is more secured due to double guarantee from the issuing bank and the confirming bank.  Fulfillment of import regulations: The letter of credit is issued by the issuing bank after the import regulations and exchange control regulations in his country. Thus after getting the letter the letter of credit unnecessary delays caused by import regulations can be avoided.  Importer‟s obligation: The importer may be refused to accepted goods in the case of other methods of payment. But in the case of the letter of credit the importer cannot do so because it is obligatory for him to accepted goods and makes payment once he gets the documents negotiations in his favor.  Help to procure per-shipment finance: In India an exporter van obtain pre-shipment finance from commercial banks on the strength of a letter of credit issued by the importer‟s bank in his favor. Advantage letter of credit to Importer:  Better terms of trade: In the case of letter of credit payment is assured the import is in a better position to negotiation the terms of the trade with foreign suppliers which is otherwise is not possible.  Delivery in time: A letter of credit is honored only after the exporter dispatches the shipping documents to the importer. Thus a letter of letter assumes timely delivery of good to the importer.  Overdraft facility: The importer may also get a letter of credit issued on favor of the exporter on the basis of overdraft facility extended to him by the issuing bank thus the importer gets possession of goods without making payment.  Guaranteed shipment: Shipment of goods cannot be delayed once a letter of credit is issued. Hence the importer is assured of the delivery of goods in time.  No advance payment: The importer is not required to make any advance payment to the exporter once a letter of credit is issued.
  24. 24. 24 4.3.6.4 Procedure for opening letter of credit:  Importer request: If the method of payment agreed between the importer and exporter is through letter of credit then the importer requests his bank to open a letter of credit in favor of exporter.  Issue of letter of credit: The issuing bank issues letter of credit in favor of the exporter and sends it to its branch located in exporter‟s country.  Receipt of letter of credit: The exporter takes the possession of the letter of credit from the advising bank. he should check the relevant details in it and in case there is any discrepancy the same should be brought to the notice of the advising bank.  Shipment of goods: The exporter fulfills the shipping and customs procedure and collects the required documents from various authorities for negotiation.  Negotiation of documents: The exporter submits the required document to the negotiating bank which scrutinizes them and makes payment to the negotiation.  Re-imbursement of payment: The negotiating bank gets the payment reimbursed from the issuing bank.  Document to importer: The issuing bank hands over the document to the importer and the amount is debited to his account. 4.3.7 Indian Custom EDI system The customs computerization project is the outcomes of a system study conducted by the national informatics centre (NIC). On the basis of this study a pilot project was launches in the years 1994-95 at Delhi customs house which included Electronic data interchange (EDI) as a key element for connecting all the players involved in international trade with the customs house electronically. Objectives  Computerization of customs related functions such as import/export general manifest control, ex-bond clearance of warehouse against export promotional schemes. Importer's Request Issue of letter of credit Reciept of letter of credit Shipment of goods Negotiation of documnets Re-imbursement of payment Document to importer
  25. 25. 25  Respond more quickly to the needs of the trade and reduce interaction of the trade with government agencies.  Provide retrieval of information from other custom locations to have uniformity in assessment and valuation.  Provide management information system for policy making a pond its effective revenue and pendency monitoring.  Provide quick and correct information in import/export statistics to directors general of commercial intelligence and statistics. 4.3.7.0 Advantages of Indian customs EDI system:  Speed: EDI system is fully automated, quick and paperless. These facilities improve customs clearance and inspection procedures. Notifications of releases are speeded up as a result of the electronic releases being generates automatically.  Time and cost saving: computerization of customs procedures results in time and cost saving due to reduce needs to prepared handle store and deliver customs documentation.  Certainty and fairness: improvement in communication access to information and transparency of customs processes and appeals increase the level of certainty and fairness. Importers know the amount of duties and taxes owing as a result of the clear and consistent rules.  Beneficial to customs house brokers: Customs brokers have an opportunity to focus their service from dealing with form and complexity to using their expertise and knowledge to bring a new range of service in expanding and evolving new market.  More opportunity for exporters: Exporters across the world have benefited from similar facilities and thus increasing market access opportunity while reducing costs and complexity. The time and energy so save can be better utilized for exploring and developing new market and products.  Beneficial to carries: Carriers benefit from faster service lower cost and ability to use their equipment to its utmost capacity rather than having it delayed at customs. Electronic clearance provide quicker cargo release resulting is more efficient deliveries.  Round the clock facility: Fully automated process with little or no intervention by either party provides a virtual on line scenario. Declaration can be accepted round the clock automatically resulting in maximum efficiency and higher productivity. 4.3.8 Procedure for Pre-shipment inspection Those exporters who are approved under self certification and IPQC have to submit their applications in a prescribed intimation for inspection.  Application to EIA: The exporters has to apply in the prescribed intimation for inspection form to EIA at least 7 days before the expected date of shipment along with:  Copy of export contract  Copy of letter of credit.  Details of packing specifications  Commercial invoice giving evidence of FOB value of export consignment  Crossed cheque DD/ in favor of EIA towards inspection  Deputation of inspection: After getting the intimation for inspection the EIA deputes an inspector to conduct the pre shipment inspection at the exporters factory or warehouse.  Inspection and testing: The inspection conducts inspection randomly and prepares the report to be submitted to EIA the exporter is required to arrange facility required for the inspection. Where such facilities are not available inspection may be carries out at private independent laboratories.  Packing and sealing goods: If the inspection is satisfaction with the quality of goods he issues order for packing in his presence after packing the consignment is marked and sealed with the official seal of the export inspection agency(EIA)
  26. 26. 26  Submission of the report to EIA and issue of inspection certificate: The report prepared by the inspection is submitted to the deputy directors of EIA .if the report is favorable the deputy directors of EIA issue an inspection certificate in triplicate.  the original copy is required to be submitted to the customs  the duplicate copy is dispatching to the importer  the triplicate copy to be retained by the exporter for his record.  Issue of rejection note: If the report submitted by the inspection is not favorable the deputy director of EIA issues a rejection note  Appeal against rejection note: The exporter can file an appeal against the rejection note within 10days from the date of the receipt of such note. On receiving the appeal the EIA convenes a meeting of the appellate panel. the decision of the appellate panel is final and is binding on both parties the exporter and the export inspection agency. 4.3.9 Incoterms 2010 &Export price Quotation International commercial terms. Thirteen terms of sale accepted worldwide in assignment of costs and responsibilities between the buyer and the seller. Proposed, updated, and copyrighted by the International Chamber Of Commerce (ICC), they serve as global standards for uniform interpretation of common contract clauses in international trade.
  27. 27. 27 Validity of Incoterms Incoterms apply only if incorporated in the contract of sale or if they are, for example, mentioned in the offer, the sales conditions, the purchase order, the confirmation of an order or if they are stipulated by the parties in separate agreement. Parties wishing to use Incoterms 2000 should clearly specify that their contract is governed by Incoterms 2000. Incoterms do not apply directly to questions relating to the transfer of ownership, property rights of the goods, breaches of contract and its consequences, exclusions of liabilities in certain circumstances, limitation period and conditions of payment. These should be clarified in the sales contract. When do Incoterms Apply? Validity of Incoterms apply only if incorporated in the contract of sale or if they are specified in the solicitation document, mentioned in the offer, the sales conditions, the purchase order, the confirmation of an order or if they are stipulated by the parties in separate agreement. Parties wishing to use Incoterms 2000 should clearly specify that their solicitation document and the contract are governed by Incoterms 2000. The full text of Incoterms can be purchased from www.iccbooks.com. Note: The “ICC Guide to Incoterms 2000” is recommended reading and it explains how Incoterms 2000 can work for you in daily practice and provides practical answers to important and recurring questions. The Structure of Incoterms Incoterms 2000 are governed by the International Chamber of Commerce (ICC) in Paris and are grouped into four different categories. In Groups E and F the seller‟s obligations are minimal and the buyer must do most of the work and assume maximum risk. As we move to Group C the supplier‟s obligations become more extensive, however the buyer still assumes risks. As we move to group D the supplier makes most arrangements and assumes maximum risk, whereas the buyer must pay for and arrange import customs clearance and un-loading from the forwarder‟s vehicle at the final destination. Group Description E The seller only makes the goods available to the buyer at the seller‟s premises. F The seller delivers the goods to a carrier or place appointed by the buyer. C The seller has to contract at his costs for carriage (and insurance for CIF and CIP).
  28. 28. 28 D The seller must assume most costs, obligations and risks needed to bring the goods to the place of destination (Except import customs clearance and un-loading at the final destination). Transfer of Risks Incoterms not only describe seller‟s and the buyer‟s obligations and specify the point when the responsibilities for the transportation costs shift from the seller to the buyer; it also determines the point when the risks associated with transportation transfer from the seller to the buyer. EXW When the goods are at the disposal of the buyer FCA When the goods have been delivered to the carrier at the named place FAS When the goods have been placed alongside the ship FOB When the goods pass the ship‟s rail, at the port of export (origin) CFR When the goods pass the ship‟s rail, at the port of export (origin) CIF When the goods pass the ship‟s rail, at the port of export (origin) CIP When the goods have been delivered to the main carrier, at the port of export (origin) CPT When the goods have been delivered to the main carrier, at the port of export (origin) DAF When the goods have been delivered to the carrier DES When the goods are placed at the disposal of the buyer on board the ship DEQ When the goods are placed at the disposal of the buyer on the quay DDU When the goods are placed at the disposal of the buyer DDP When the goods are placed at the disposal of the buyer Transport Mode and their Appropriate Incoterms Certain Incoterms are multi-modal and others can be used only when the goods are intended to carried by sea or inland water transport. Since CFR and CIF can only be used when the goods are intended for carriage by sea or inland waterway transport CPT and CIP respectively must be used when whenever the goods are not
  29. 29. 29 handed over for marine transport or when the goods are containerized (even the container is delivered to a seaport). A common mistake is selecting the Incoterms which is not appropriate for the agreed mode of transport. The terms must be used for the correct mode of transport if they are to offer any protection to the buyer or the seller Ex Works (EXW) Title and risk pass to buyer including payment of all transportation and insurance costs from the seller‟s premises, and the seller assumes minimum risk. This is used for any mode of transportation. The seller has fulfilled obligations when the goods are placed at the disposal of the buyer. Loading at the supplier‟s premises and export formalities are at the cost and risk of the buyer. However, if the seller is required to assume the cost and risk of loading, the sentence “loaded upon the departing vehicle at the cost and risk of the seller” must be added after EXW in the purchase order. This term should not be used if the buyer cannot carry out the export formalities, either directly or indirectly, and in such cases the FCA term should be used. Seller must: • Place the goods “at the disposal of the buyer” at the named place of delivery, at the agreed date or within the period agreed; • Must give the buyer sufficient notice and advise buyer of the availability of the goods; • Provide suitable packing (unless otherwise stipulated in contract); and • Help buyer to procure documents obtainable in the country and which may be required by the Buyer must: • Take delivery as soon as goods are placed at the buyer‟s disposal at the agreed time and location; • Clear the goods for export; • Bear all risk and cost of goods from the moment they are placed at the buyer‟s disposal; • Bear cost and expense of obtaining documents required for buyer‟s own use; and • Load the goods onto the on-forwarding vehicle at the buyer‟s own cost and risk. Free on Board (FOB) Named Port of Shipment “Free on Board” means that the seller delivers when the goods pass the ship‟s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver across the ship‟s rail, the FCA term should be used. It is recommended that contracts do not quote only “FOB”, which is not clear and can lead to many interpretations, but should specify the port of shipment. For example, it is even preferable to request FOB UK port rather than FOB London, as it leaves the opportunity to ship from another port if there is a convenient vessel at the same cost, or FOB North Continental port, rather than FOB Hamburg or FOB Rotterdam, for the same reason. This depends on the terms of offers received and can only be specified on contracts with the seller‟s agreement. Seller must: • Prepare and pack the goods as required;
  30. 30. 30 • Deliver the goods on board the vessel designated by the contract; • Bear all costs and all risks of the goods until they have effectively passed ship‟s rail; • Bear costs of counting, measuring, and weighing; • Provide when required, at the buyer‟s expense, consular certified invoices, certificates of origin and help buyer to obtain other documents obtainable in the country and which the buyer may need; and • Provide the buyer at the seller‟s expense with the usual document of proof of delivery. Buyer must: • At own expense, reserve space on board a vessel and give all the required instructions to the Seller enabling it to deliver in time for shipment (NOTE: this registration and calling forward are normally carried out by the buyer‟s forwarding agent.); • Bear all expenses and risks of the goods from the time they have effectively passed ships rail; • Bear the cost of obtaining documents required for the export of the goods; • Pay demurrage incurred at the port of shipment unless the detention is attributable to the Seller Bear any costs incurred if the vessel designated by the buyer or buyer‟s agent is unable to take the goods; • Bear the cost of B/L and any documents the buyer may have asked the seller to provide; and • Pay the cost of inspection, if required Free Carrier (FCA) This term has been designed to meet the requirements of modern transport, particularly such “multimodal” transport as container or “roll on-roll off” (RO/RO) traffic by trailers and ferries. It is based on the same main principles as FOB except that the seller fulfils his obligations when the goods are delivered into the custody of the carrier at the named point (and not loaded onto any means of transport used for the main voyage). “Free Carrier” means that the seller fulfills the obligation to deliver at the point when the goods are handed over and cleared for export into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into their charge. When, according to commercial practice, the seller‟s assistance is required in making the contract with the carrier (such as in rail or air transport) the seller may act at the buyer‟s risk and expense. This term may be used for any mode of transport, including multimodal transport. “Carrier” means any company who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by rail, road, sea, air, inland waterway or by a combination of such modes. If the buyer instructs the seller to deliver the cargo to a person, e.g. a freight forwarder who is not a “carrier”, the seller is deemed to have fulfilled his obligation to deliver the goods when they are in the custody of that company. “Transport terminal” means a railway terminal, a freight station, a container terminal or yard, a multi-purpose cargo terminal or any similar receiving point. “Container” includes any equipment used to unitize cargo, e.g. all types of containers and/or flats, whether ISO accepted or not, trailers swap bodies and RO/RO equipment, and applies to all modes of transport. In order to clarify the seller‟s obligations as regards delivery, we are quoting below the full text of the Incoterms 2000: Delivery to the carrier is completed: 1. In the case of rail transport when the goods constitute a wagon load (or a container load carried by rail) the seller has to load the wagon or container in the appropriate manner. Delivery is completed when the loaded wagon or container is taken over by the railway or by another person acting on its behalf.
  31. 31. 31 2. In the case of road transport when loading takes place at the seller‟s premises, delivery is completed when the goods have been loaded on the vehicle provided by the buyer. When the goods are delivered to a carrier‟s premises, delivery is completed when they have been handed over to the road carrier or to another person acting on this behalf. 3. In the case of transport by inland waterway when loading takes place at the seller‟s premises, delivery is completed when the goods have been loaded on the carrying vessel provided by the buyer. When the goods are delivered to the carrier‟s premises, delivery is completed when they have been handed over to the inland waterway carrier or to another person acting on this behalf. 4. In the case of sea transport when the goods constitute a full container load (FCL), delivery is completed when the loaded container is taken over by the sea carrier. Do not use FOB for containerized shipments, instead use FCA. When the container has been carried to an operator of a transport terminal acting on behalf of the carrier, the goods shall be deemed to have been taken over when the container has entered into the premises of that terminal. 5. In the case of air transport, delivery is completed when the goods have been handed over to the air carrier or to another company acting on its behalf. 6. In the case of multimodal transport, delivery is completed when the goods have been handed over as specified in 1.-5., as the case may be. Cost and Freight (CFR) Port of Destination Seller must: • Contract and pay for the carriage of the goods to the port of destination on a sea-going vessel, by the usual route unless otherwise stipulated in the contract of sale; • Obtain and pay for a clean B/L (a through B/L) for the goods; • Prepare and pack the goods as required; • Bear the cost of checking, counting, weighing, measuring; • Bear the cost of obtaining documents required for the export of the goods, and the cost of demurrage if any at the port of shipment; • Bear all risks of the goods until they have passed ship‟s rail at the port of shipment; • Provide, at buyer‟s expense, consular/certified invoices and/or certificates of origin and assist in obtaining other documents upon request of the seller to procure; • Notify the buyer without delay of the shipment; and • Unless otherwise agreed, at seller‟s own expense provide the buyer without delay with the usual transport document for the agreed port of destination. Buyer must: • Bear all risks of the goods from the time they have passed the ship‟s rail at the port of shipment; • Bear costs incurred in obtaining documents such as consular/certified invoices, etc. (not the cost of B/L);
  32. 32. 32 • Accept, as proof of payment of freight, B/L stamped “freight paid” or “freight prepaid”, and arrange payment on receipt of documents in accordance with terms of contract, even before actual arrival of goods at destinations; • Bear the cost of unloading, lighter age, dock charges at destination, as well as all further expenses such as customs clearance, duties and taxes, etc.; • Except freight and bear extra expenses that may be incurred during the course of the carriage by sea (by reason of emergencies, back freight, etc.); and • Bear cost of inspection when inspection is required. Cost, Insurance and Freight (CIF) The respective duties of seller and buyer are the same as for CFR contracts, with the addition of the insurance coverage. The additional obligations are the following: Seller must: • Contract at own expense with an insurance company, a transferable insurance coverage for the risks, duration and journey specified in the contract of sale or accepted purchase order (NOTE: it is advisable that buyer includes in the solicitation document and in the contract, a provision for additional coverage at seller‟s expense, i.e. Institute Cargo Clauses • Provide the insurance policy or certificate together with B/L and other documents, for the buyer to receive them in time for collection of the goods upon arrival. NOTE: the seller buys insurance on behalf of the buyer. Buyer must: • Bear supplementary expenses of insurance against risks requested that the seller cover, and which were not included in the contract of sale; and • Do their work in connection with an insurance claim. Freight Carriage Paid (CPT) Named Point of Destination The CPT term requires the seller to clear the goods for export. This term may be used for any mode of transport including multimodal transport (i.e. including containers, roll-on/roll-off traffic by trailers and ferries). CPT can be used for any mode of transport, including containerized shipments delivered to a seaport. “CPT Cape Town” means that the seller pays the freight for the carriage of the goods to the named destination, in this case Cape Town. The risk of loss or damage to the goods is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier and not at ship‟s rail. Risk passes from the seller to the buyer at so-called FCA point. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by rail, sea, road, air, inland waterway or by a combination of such modes. Freight Carriage and Insurance Paid (CIP) Named Point of Destination “Carriage and insurance paid to …” means that the seller has the same obligations as under CPT but with the addition that the seller has to procure cargo insurance against the buyer‟s risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The buyer should note that under CIP term the seller is only required to obtain insurance on minimum coverage. It is advisable that buyer includes in the solicitation document and in the contract, a provision for additional coverage at seller‟s expense, (i.e. Institute Cargo Clauses A). The CIP term requires the seller to clear the goods for export. This term may be used for any mode of transport including multimodal transport.
  33. 33. 33 Delivered Duty Unpaid (DDU) Named Place of Destination The seller clears the goods for export and is responsible for making the goods available (usually in the buyer‟s country) at the named point and place and on the date or period specified in the sales contract but not unloaded from any arriving means of transport. DDU can be used on all means of transport. The buyer bears the cost and risk of carrying out import customs formalities, including the payment of formalities, customs duties, taxes and other charges (unless otherwise specified in the contract). The seller‟s business risk is high compared to the C terms above, because the seller bears the risk of loss during transit and may not invoice the buyer until delivery at the final destination has taken place. However, the risk may pass even before the goods have reached the agreed delivery point, for example, when the goods are detained at a customs station because of the buyer‟s failure to fulfill the obligation to clear the goods for import (thus the buyer may bear the cost of any loss and demurrage charges during this time). Overall, the buyer‟s risks are minimized, but at a cost which is factored into the offered DDU price. Because of the risks involved the supplier may, depending on the destination and other commercial considerations, be reluctant to offer DDU delivery. 4.3.9.0 FOB v/s CIF Quotation FOB Price Quotation CIF Price Quotation (a) Meaning FOB means free on board. Under this quotation the export undertakes to pay all expenditure till the loading goods on the board of the ship including documentation charge. CIF means coast insurance and freight. Under this quotation an export undertaker to pay all the expenditure till the goods reach the port of destination including insurance of goods. (b) Exporter‟s Obligation The exporter is under fewer obligations since his responsibilities ends as soon as he delivers the goods on boards the ship. The exporter is under more obligation as he is required to arrange for marine transportation in addition to payment of freight and insurance. © Import‟s Obligation The importer is under more obligation as he is required to arrange for marine transportation in addition to payment of freight and insurance. The importer is under fewer obligation sine he received the delivery of goods at the port of destination. (D) Usage FOB quotation is used more frequently in the international market as it conforms to the international norms CIF quotation is not very popular because it unnecessarily increases the burden of the exporter. (E) Value FOB price is much lower than CIF price since it does not include freight and insurance. CIF price is much higher than FOB price since it includes cost of freight & insurance in addition to FOB price. (F) Arrangement of shipping space. The importer books required space in the ship as the responsibility of exporter ends as he delivers goods on board the ship. The exporter books the required space in the ship as he is responsible for the delivery of goods at the port of destination. (G) Risk The exporter bears all the risk till loading of goods and thereafter the risk passes to the importer. The exporter bears all the risk till the port of destination and thereafter the risk passes to the importer. (H) Calculation of export incentive Generally export incentives are calculated as a percentage of the FOB value of goods exported. CIF price is required to be converted into FOB price for the calculation of incentives. 4.3.10 Export house and trading house 4.3.10.0 Privileges of export and trading house.
  34. 34. 34 Authorization and customs clearance for both import and export on self declaration basis. Fixation of input out norms on priority within 60day. Exemption from compulsory negotiation of document through banks remittance/receipts however would be received through banking channels. 100% retention of foreign exchange in EEFC account. Exemption from furnishing of bank guarantee in schemes under the foreign trade policy. Star export house and above shall be permitted to establish export warehouse as per department of revenue guideline. A decision on conferring of accredited client statue shall be communication by customs within 30days from receipt of application with customs. Statue holder of specified sectors shall be eligible for status holder incentive scrip. 4.3.11 Star export house Export House is defined as a registered exporter holding a valid Export House Certificate issued by the Director General of Foreign Trade in India. The objective of the scheme is to recognize established exporters as Export House, Trading House, Star Trading House and Super Star Trading House with a view to building marketing infrastructure and expertise required for export promotion. Such Houses should operate as highly professional and dynamic institutions and act as important instruments of export growth. (1) 15 crores (2) 22 crores (3) 12 crores (4) 18 crores 4.3.12 Star trading house A business that specializes in facilitating transactions between a home country and foreign countries. A trading house is an exporter, importer and also a trader that purchases and sells products for other businesses. Trading houses provide a service for businesses that want international trade experts to receive or deliver goods or services. (1) 375 crores (2) 560 crores (3) 312 crores (4) 450 crores
  35. 35. 35 4.3.13 Super star trading house The criterion used for recognition of an exporter in one of these categories is the average FOB value or Net Foreign Exchange (NFE) earned through physical exports during the three preceding years or during the preceding year whichever is opted for by the exporters. However, recognition as a Super Star Trading House requires exports in a minimum of at least three product groups. In addition to physical exports, other specified exports and services for which payment is received in free foreign exchange also qualify for the purpose of the eligibility criteria. Special weight ages are given to certain categories of exports in calculating the NFE earned and assessing the export performance of a company in deciding its classification (1) 1125 crores (2) 16 80 crores (3) 937 crores (4) 1350 crores 4.3.14 Container 4.3.14.0 Types of container Dry storage container: The most commonly used shipping containers; they come in various dimensions standardized by ISO. They are used for shipping of dry materials and come in size of 20ft, 40 ft and 10ft. Flat rack container: With collapsible sides, these are like simple storage shipping containers where the sides can be folded so as to make a flat rack for shipping of wide variety of goods. Open top container: With a convertible top that can be completely removed to make an open top so that materials of any height can be shipped easily. Tunnel container: Container storage units provided with doors on both ends of the container, they are extremely helpful in quick loading and unloading of materials.
  36. 36. 36 Open side storage container: These storage units are provided with doors that can change into completely open sides providing a much wider room for loading of materials. Double doors container: They are kind of storage units that are provided with double doors, making a wider room for loading and unloading of materials. Construction materials include steel, iron etc in standardized sizes of 20ft and 40ft. Refrigerated ISO containers: These are temperature regulated shipping containers that always have a carefully controlled low temperature. They are exclusively used for shipment of perishable substances like fruits and vegetables over long distances. Insulated or thermal containers: These are the shipping storage containers that come with a regulated temperature control allowing them to maintain a higher temperature. The choice of material is so done to allow them long life without being damaged by constant exposure to high temperature. They are most suitable for long distance transportation of products. Tanks: Container storage units used mostly for transportation of liquid materials, they are used by a huge proportion of entire shipping industry. They are mostly made of strong steel or other anti corrosive materials providing them with long life and protection to the materials. . Cargo storage roll container: A foldable container, this is one of the specialized container units made for purpose of transporting sets or stacks of materials. They are made of thick and strong wire mesh along with rollers that allows their easy movement. Availability in a range of colored wire meshes make these shipping container units a little more cheerful.
  37. 37. 37 4.3.14 Container freights station (CFS) The facility has the most advanced amenities for stuffing and de-stuffing of containers, bonded warehousing, in house customs clearance and banking, computerized operations and a host of other most modern facilities and services. A station where goods are not specifically received or dispatched, but simply transferred on their way to their destination between the railway and another means of transport, such as ships or lorries, may be referred to as transshipment station. next to a passenger station (either on the far side of the platforms as seen from the station building or immediately alongside it), separately from the associated passenger station on one of the railway lines leading from it, as an independent facility not connected with any particular passenger station. Where individual goods wagons are dispatched to specific goods stations, they are usually delivered to special shunting stations or marshalling yards where they are sorted and then collected. Sometimes there are combined shunting and goods stations. Chapter 2 5 Project: Study of Singapore Country 5.1 Introduction 5.1.0 Geography: Singapore is a small, heavily urbanized, island city-state in Southeast Asia, located at the southern tip of the Malayan Peninsula between Malaysia and Indonesia. Singapore has a total land area of 714.3 km². The Singapore area comprises mainland and other islands. The mainland of Singapore measures 49 kilometers from East to West and 25 kilometers from North to South with 193 km of coastline. These figures are based on 2.515m High Water Mark cadastral survey boundaries. 5.1.1 Demography: Singapore including, population, density, ethnicity, education level, health of the populace, economic status, religious affiliations and other aspects of the population. In 2012, the island's population stood at 5.31 million. Singapore is a multiracial and multicultural country with a majority population of Chinese (74.2% of the resident population), with substantial Malay (13.2%) and Indian minorities (9.2%).
  38. 38. 38 Singapore‟s economic freedom score is 88, making its economy the 2nd freest in the 2013 Index. Its score is 0.5 point higher than last year, with advancement in financial freedom outweighing small deteriorations in five other economic freedoms. Singapore is ranked 2nd out of 41 countries in the Asia– Pacific region. Singapore‟s openness to global trade and investment has facilitated the emergence of a more competitive financial sector and continues to provide real stimulus and ensure economic dynamism. Competitive tax rates and a transparent regulatory environment encourage vibrant commercial activity, and the private sector is a continuing source of economic resilience and competitiveness. However, state ownership and involvement in key sectors remain substantial. A government statutory entity, the Central Provident Fund, administers public housing, health care, and various other programs, and public debt is equal to a year‟s production for the entire economy. The Gross Domestic Product (GDP) in Singapore expanded 0.20 percent in the first quarter of 2013 over the same quarter of the previous year. GDP Annual Growth Rate in Singapore is reported by the Statistics Singapore. Historically, from 1976 until 2013, Singapore GDP Annual Growth Rate averaged 6.9 Percent reaching an all time high of 19.8 Percent in June of 2010 and a record low of -8.9 Percent in March of 2009. In Singapore, services are the biggest sector of the economy and account for 72 percent of GDP. Within services the most important segments are: wholesale and retail trade (18 percent of total GDP); business services (16 percent); finance and insurance (13 percent), transport and storage (10 percent) and information and communications (5 percent). Industry contributes the remaining 28 percent total output. Manufacturing (21 percent) and construction (5 percent) are the most important industry segments. This page includes a chart with historical data for Singapore GDP Annual Growth Rate 5.1.2 Traditional & Culture: The culture of Singapore is best described as a melting pot of mainly Chinese, Indian, British, and Malay cultures, a reflection of its immigrant history. Singapore was a part of British Malaya for many centuries. It was ruled by the Sultanate of Johor. In 1819, the British came to the Island and set up a port and colony. During British rule, the port of Singapore flourished and attracted many migrants. Singapore became part of the Malaysian Federation in 1962 for two years, and in 1965 it became an independent nation and a republic, which it remains today. Singapore has a diverse populace of nearly 5 million people. Which is made up of Chinese, Malays, Indians, Caucasians and Eurasians (plus other mixed groups) and Asians of different origins, which is in line with the nation's history as a crossroads for various ethnic and racial groups. In addition, 42% of Singapore's populace is foreigners, which makes it the country with the sixth highest proportion of foreigners worldwide. Most speak English and another language, most commonly Mandarin Chinese, Malay, Tamil or Singapore Colloquial English (Singlish). 5.1.3 Ethical business practices of Singapore Business and Human Values are often seen as two separate worlds. It is believed that those who are focusing on human values may not be competitive. Perhaps the world
  39. 39. 39 of business and the world of human values are no longer two separate worlds. Emphasizing human values may no longer be less competitive. Even with increased competition in business, there are very compelling reasons why ethics should not be compromised, and why ethics could in fact be a prerequisite to sustainable profitability. 5.2 Ports of Singapore. 5.2.0 Domestic Air port 1) Changi Airport Changi Airport (SIN) is an airport in the city/town of Singapore in the country of Singapore which is located in the continent/region of Asia. Cities, towns and places near Changi Airport include Kampong Ayer Gemuruh, Bena Park and Kampong Wing Loong. The closest major cities include Singapore, Johor Bahru and Kuantan. 2) PayaLebar Airport PayaLebar Airport (QPG) is an airport in the city/town of Singapore in the country of Singapore which is located in the continent/region of Asia. Cities, towns and places near PayaLebar Airport include Punggol Estate, Fish Farming Estate and Hai Sing Park. 3) Seletar Airport Seletar Airport (XSP) is an airport in the city/town of Singapore in the country of Singapore which is located in the continent/region of Asia. Cities, towns and places near Seletar Airport include Bukit Sembawang Estate, Yan Kit Village and Yan Kit. 5.2.1 International Air port 1) Changi Airport Changi Airport (SIN) is an airport in the city/town of Singapore in the country of Singapore which is located in the continent/region of Asia. Cities, towns and places near Changi Airport include Kampong Ayer Gemuruh, Bena Park and Kampong Wing Loong.
  40. 40. 40 5.2.2 Sea ports in Singapore The Port of Singapore emerges top in two categories at 26th Asian Freight and Supply Chain Awards (AFSCA) and more specifically it has been awarded as the „Best Seaport in Asia‟ and the „Best Green Service Provider- Seaport‟. Singapore emerged as the top contender in the „Best Seaport in Asia‟ category for an unprecedented 24th time, from a list of distinguished nominees including Busan, Dalian, Hong Kong, Kaohsiung, Klang, Laem Chabang, Manila, Ningbo, Shenzhen, Tanjung Pelepas, Tianjin and Yangshan. The nominees were judged on a range of criteria, including:  cost competitiveness,  container shipping-friendly fee regime,  provision of suitable container shipping-related infrastructure,  timely and adequate investment in new infrastructure to meet future demand and the facilitation of ancillary services,  Logistics and freight forwarding facilities. The Port of Singapore also received the „Best Green Service Provider-Seaport‟ award for the second time, in recognition of her efforts to promote environmentally-friendly shipping. Other nominees in the category were Brisbane, Hamburg, Long Beach, Los Angeles, Rotterdam, Tacoma and Vancouver. To promote clean and green shipping in Singapore, MPA launched the S$100 million Maritime Singapore Green Initiative in April 2011. A comprehensive initiative comprising three programmes- Green Ship Programme, Green Port Programme and Green Technology Programme, the Maritime Singapore Green Initiative seeks to reduce the environmental impact of shipping and related activities. The Port of Singapore continued to perform well in 2011 with container and cargo throughput reaching record figures of 29.9 million Twenty-Foot Equivalent Units and 530.5 million tonnes respectively. Annual vessel arrival tonnage also crossed the two billion gross tons (GT) mark to reach 2.12 billion GT for the first time in 2011, while bunker sales reached a new record of 43.2 million tonnes. 5.3 Major Importing /exporting commodities in Singapore. Singapore is the 14th largest exporter and the 15th largest importer in the world. Historically, international trade has strongly influenced the economy. Singapore has the highest trade to GDP ratio in the world at 407.9 percent. Due to its geostrategic location and developed port facilities, a large volume of Singapore's merchandise exports involve enter port trade – with 47 percent of exports consisting of re-exports. Total value of exports: US$351.2 billion Primary exports - commodities: machinery and equipment (including electronics), consumer goods, pharmaceuticals and other chemicals, mineral fuels.
  41. 41. 41 Primary exports partners: Hong Kong (11.6 percent of total exports), Malaysia (11.5 percent), US (11.2 percent), Indonesia (9.7 percent), China (9.7 percent), Japan (4.6 percent) Total value of imports: US$310.4 billion Primary imports - commodities: machinery and equipment, mineral fuels, chemicals, foodstuffs, consumer goods Primary imports partners: US (14.7 of total imports), Malaysia (11.6 percent), China (10.5 percent), Japan (7.6 percent), Indonesia (5.8 percent), South Korea (5.7 percent) 5.4 India and Singapore Bilateral Trade & Investment Singapore is India's largest trade and investment partner in ASEAN and accounted for 30.14% of our overall trade with that group of nations in 2010-11. Our economic and commercial ties have expanded significantly in recent years, particularly after the conclusion of the Comprehensive Economic Cooperation Agreement (CECA) in 2005. The India-Singapore CECA has four key components: a free trade agreement (FTA) in goods; an arrangement for boosting trade in services, including financial services; a package to promote investment flows and provide mutual investment protection; and a new agreement for avoiding double taxation. It also includes Mutual Recognition Agreements on quality certification of goods and services, liberalized visa rules for professionals, and undertakings to cooperate on several sectors like Customs, dispute settlement, intellectual property rights, education and e-commerce. 5.5 Trends in Trade Five years after India and Singapore entered into the CECA, Singapore has emerged as the second largest foreign investor in India. Singapore, which was eighth largest investor in India prior to the CECA, has climbed up the ladder to second position behind Mauritius. Even India's investment in Singapore has gone up eight-fold following which Indian business community has become the largest foreign business community in Singapore. An analysis of trade statistics indicates rapid growth in trade between India and Singapore over the last decade. India's exports to Singapore during 2005-06 were US$ 5.4 billion and imports were pegged at USD 3.4 billion. Exports have by 2011-12 increased to USD 16.9 billion and imports to USD 8.6 billion. India was Singapore's 13th largest trade partner in 2005. In 2008 it became the 10th largest trading partner and has improved to be 9th largest in 2012. Singapore accounts for 37.8% of India's total exports to the ASEAN in 2010- 11, and about 4% of India's overall exports. Singapore also accounts for 23.3% of India's total imports from the ASEAN in 2010-11, and about 2% of India's overall imports. In Exports from India fish and crustaceans, molluscs and other aquatic invertebrates, organic chemicals, pharmaceutical products, man-made filaments, apparel, iron & steel; copper; optical, photographic cinematographic measuring, checking precision, medical or surgical inst. and apparatus; aircraft and parts; ships, boats and floating structures; boilers, machinery and mechanical appliances; parts thereof etc. form the important items.
  42. 42. 42 Among Indian imports from Singapore- cocoa and cocoa preparations, mineral fuels, pharmaceutical products, tanning or dyeing extracts, perfumery, cosmetic or toilet preparations, plastics, paper and paperboard, manmade filaments, natural or cultured pearls, iron & steel; copper; optical, photographic cinematographic measuring, checking precision, medical or surgical inst. and apparatus, aircraft and parts; ships, boats and floating structures; boilers, machinery and mechanical appliances, electrical machinery etc. form the important items. Exports to Singapore Values in US$ Million Country 2011-2012 %Share 2012-2013 (Apr- Dec) %Share SINGAPORE 16,857.71 5.5097 10,504,.39 4.8624 India‟ total export 305,963.92 216,032.30 Imports from Singapore Values in US$ Million Country 2011-2012 %Share 2012-2013 (Apr- Dec) %Share SINGAPORE 8,600.29 1.7576 5,727.64 1.5775 India‟ total import 489,319.49 363,081.40 5.6 India– Singapore Trades 2000-01 to 2011-12 5.6.0 Exports India – Singapore Trade 2000-01 to 2011-12 [Figures in USD Million] Year Export to Singapore India's Total Export Growth of Exports to Singapore (% over preceding year) Growth of overall exports (% over preceding year) 2000-01 877.11 44,560.29 30.39 21.01 2001-02 972.31 43,826.72 10.85 -1.65 2002-03 1421.58 52,719.43 20.29 20.29 2003-04 2124.83 63,842.55 21.10 21.10
  43. 43. 43 2004-05 4000.61 83,535.94 88.28 30.85 2005-06 5425.29 103,090.53 35.61 23.41 2006-07 6053.84 126,414.05 11.59 22.62 2007-08 7379.2 163,132.18 21.89 29.05 2008-09 8444.93 185,295.36 14.44 13.59 2009-10 7592.17 178,751.43 -10.1 -3.53 2010-11 9825.44 251,136.19 29.42 40.49 2011-12 1657.71 305,963.92 71.57 21.83 5.6.1 Imports India – Singapore Trade 2000-01 to 2011-12 [Figures in USD Million] Year Imports from Singapore India's Total Imports Growth of Imports from Singapore (% over preceding year) Growth of overall Imports (% over preceding year) 2000-01 1463.91 50,536.45 26.17 1.61 2001-02 1304.09 51,413.28 -10.92 1.74 2002-03 1434.81 61,412.14 10.02 19.45 2003-04 2085.37 78,149.11 45.34 27.25 2004-05 2651.4 111,517.43 27.14 42.70 2005-06 3353.77 149,165.73 26.49 33.76
  44. 44. 44 2006-07 5484.32 185,735.24 63.53 24.52 2007-08 8122.63 251,654.01 48.11 35.49 2008-09 7654.57 303.696.31 -5.76 20.68 2009-10 6454.57 288,372.88 -15.68 -5.05 2010-11 7139.31 369,769.13 10.61 28.23 2011-12 8600.29 489,319.49 20.46 32.33 Overall Trade Trends between India and Singapore (Values in US$ Million) CategoryY ear 2007- 2008 2008- 2009 2009- 2010 2010- 2011 2011- 2012 Export 7379.2 0 8444.9 3 7592.1 7 9825.4 4 16857. 71 %Growth 14.44 -10.10 29.42 71.57 India‟s total export 163132 .18 185295 .36 17875. 43 251136 .19 305963 .92 %Growth 13.59 -3.53 40.49 21.83 %Share 4.52 4.56 4.25 3.91 5.51 Import 8122.6 3 7654.8 6 6454.5 7 7139.3 1 8600.2 9 %Growth -5.76 -15.68 10.61 20.46 India‟s total import 251654 .01 30369. 31 288372 .88 369769 .13 489319 .49 %Growth 20.68 -5.05 28.23 32.33 %Share 3.23 2.52 2.24 1.93 1.76 Total trade 15501. 83 16099. 79 14046. 74 16964. 75 25458 %Growth 3.86 -12.75 20.77 50.06 India‟s total trade 414786 .19 488991 .67 467124 .31 620905 .32 795283 .41 %Growth 17.89 -4.47 32.92 28.08 %Share 3.74 3.29 3.01 2.73 3.20 Trade 790.07 1137.6 2686.1 8257.4
  45. 45. 45 balance 0 3 1 India‟s trade balance - 88521. 83 - 118400 .95 - 109621 .45 - 118632 .94 - 183355 .57 5.7 FTA & PTA guidelines For the benefiting from FTA or PTA Following reference points needs to be considered Text of free trade Agreement. BTN Classification of the items in Questions. General exemption notification in the customs tariff. Determination and Certificate of country of origin rules. 5.8 Centre Secretary International Enterprises Singapore 801,Keshava buiding, Bandra – Kurla complex, Bandra (EAST) Mumbai – 400051 India Web www.iesingapore.org.sg 5.9 Deemed Export Deemed Exports” refers to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Benefits to Deemed Export Deemed export shall be eligible for any/all of following benefits in respect of manufacturing and supply of goods qualifying as deemed export subject to terms and conditions as in handbook of procedure. Advance authorised for annual requirement or duty free authorization (DFIA) Deemed export drawback. Exemption from terminal excise duty only where supplies are made against international completive bidding (ICB). 5.10 Export Promotion Capital Goods Schemes Export promotional capital goods schemes was first introduce by the export-import policy of 1992-97 in order to enable the manufacture exporters to importers machinery and other capitals goods for export production at concessional or no customs duty at all. Zero duty EPCG scheme. Zero duty EPCG scheme allows Import of capital goods for pre-production, production and post production at zero customs duty subject to an export obligation equivalent to 6 times of duty saved on
  46. 46. 46 capital goods imported under EPCG scheme to be fulfilled in 6 years reckoned from authorization issue date. The scheme will be available for exporters of engineering and electronic product basic chemicals and pharmaceuticals, apparels and textiles plastic handicraft chemicals and allied product and leather products subject to exclusion as provided in handbook. Of procedure. Concessional 3%duty EPCG scheme. Concessional 3%duty EPCG scheme allows import of capital goods for pre-production, production and post production at 3% customs duty subject to an export obligations equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled in 8 years reckoned from authorization issue date. In case of agro units and units in cottage or tiny sectors imported of capital goods at 3% customs duty shall be allowed subject to fulfillment of export obligations equivalent to 6 time of duty saved on capital goods imported in 12 years f From authorization date. How-ever in respect of EPCG authorization with duty saved amount of rs 100 corer or more export obligation shall be fulfillment in 12 years. Eligible capital goods:  Capital goods shall include spared tools jigs fixtures dyes and moulds.  Second hand capital goods without any restriction on age may also be imported under EPCG scheme.  Import of motorcars sports utility vehicles all purpose shall be allowed only to hotels travel agent tour operate or tour transport operators and companies owing golf resort subject to the conditions laid down in handbook of procedure. For zero duty EPCG scheme. Period from the date of issue of authorization Minimum export obligation to be fulfillment. Block of 1st to 4th year 50% Block of 5th to 6th year 50% For concessional 3% duty EPCG scheme. Period from the date of issue of authorization Minimum export obligation to be fulfillment. Block of 1st to 6th year 50% Block of 7th to 8th year 50% In respect of authorization on which the value of duty saved is Rs 100 corer or more the export obligation hall be fulfilled over a period of 12 year. Period from the date of issue of authorization Minimum export obligation to be fulfillment. Block of 1st to 10th year 50%
  47. 47. 47 Block of 11th to 12th year 50% However the export obligation of a particular block of year may be set off by the excess export made in the preceding block year. Where export obligation of any particular block of year is not fulfilled in terms of the above proportion such authorization holder shall within 3 months from the expiry of the block of year. 5.11 Duty Drawback Duty drawback is composed of the customs duty and central excise duty paid on raw material components and consumables utilized in the manufacture of goods mean for export. Duty drawback is allows:  The customs act,1962;  The central excise and salt act,1995;  Customs and central excise duty drawback rules,1995. Eligible for DBK  Raw material and other inputs used in the process of manufacturing goods for export purpose.  Materials used in manufacturing of raw materials to be used in manufacturing good for exports purpose.  Material used for packing manufacturing goods.  Irrecoverable wastage in the production process.  Manufacturing goods ready for marketing abroad. DBK is not application in the following cases;  Amount of DBK is less than 1% of FOB value of goods exports.  Amount of DBK is less than Rs 50.  If the goods exported are damaged in transit.  If the goods are manufacturing and export in discharge of export obligation under advance license scheme.  Imported raw material input are not eligible for DBK.  Raw material or input used are not subject to excise.  Goods exported to Burma Nepal or Bhutan.  Goods are manufacturing in 100% export oriented units or free trade zones or export processing zones. 5.11.0 Procedure for claiming DBK.
  48. 48. 48  Claiming advance DBK: The amount of DBK is released after the execution of an export order. Thus in order to avoid blockage of finance the government on request allows a provisional rate of DBK which is 75% of the claimed.  Execution of a bond: An exporter has to execute a bond in fovour of the customs authorities for the amount fixed by the directorate but not exceeding the full amount claimed as a DBK. Such bond is a safeguard for the government in case of excess payment or non sectioning of DBK.  Submission of green shipping bill: A triplicate copy of shipping bill automatically becomes an application for the claim of DBK. An exporter should prepared and filed DBK shipping bill also known as green shipping bill I order to claim DBK.  Copy of exporter contract or letter of credit as the case may be;  Copy of packing list  Copy of ARE-1 form where application  Insurance certificate where necessary  Copy of communication regarding rate of DBK where the exporter is granted a special brand rate.  Issue of refund cheque: On receiving the triplicate copy of the shipping bill from the exporter together with the bill of lading the DBK department verifies the particular and issues the cheque to the exporter bank after adjusting the initial advance under intimation to the exporter. Chapter 3 6 Project: Study Research on Logistic management of different industry A. Task Assigned for the project I. To get the information about their production. II. To get the information about products which they import – export. Submission of green shipping bill Executio n of a bond Claiming advance DBK
  49. 49. 49 III. To get the volume of their import – export (daily/monthly/annually) IV. To get the information about their present freight forwarder. V. To get the information about their present problem of logistic. VI. To get the information about how they analyze the market of their product and how the market their products. VII. To get their opinion about present logistic industry. VIII. To get to know that, what are the impact of currency fluctuation on their business. B. Methodology used. I. Personal Interaction with respective persons of the company. II. Secondary search. C. Respective persons. Sr. No. Name of the company Industry Interaction with 1 Ashima Dycoat Ltd. Textile Mr. Urjit Naik 2 Aarvee Denims Export Ltd. Mr. Shashi Sinha 3 Vishakha Ployfab Ltd. Polymer Mr.Pramod Prajapati 4 Syntron Industries Industrial Chemicals Mr. Rushay Trivedi 5 Encore Natural Polymers Ltd. Mr. H K Magar 6 Rushil Décor Ltd. Decorative Parts Mr. Sameer 6.1 ASHIMA DYCOT LTD. – AHMEDABAD. 6.1.0 Profile Industry : Textile Products : Manufacture Textiles & Fabrics Employees : More than 1000 Address : excellence Complex, Khokhara Mohamedabad, Ahmedabad – 380021 Ph. 079-67777000
  50. 50. 50 Ashima Dyecot Ltd. is an enterprise born in 1982, with a moderate capital base of US$ 20,000. The present form is seen today, as the foremost cotton textile manufacturer with over US$ 100 million turnover and spread over 40 acres of land. This is the result of a vision, and commitment of its founder Mr. Chintan Parikh. Today, Group Ashima has become one of the major success stories in the Indian textiles arena. In the last 18 years, Ashima has spread its wings across five continents to emerge as one of India's foremost cotton textiles manufacturers. 6.1.1 Findings Turnover : INR 650 to 700 crores per annum. Total Production : Approx. 3,000,000 meters. Exports 65% of the total production. Exports products into U.S.A., Europe, Turkey, Bangladesh, Far East countries etc. More than 100 containers monthly are exported Using 20” and 40” containers for exports. Factory side stuffing of shipments. Exports 95% by sea voyage and other 5% by air voyage. Mostly use incoterms : CIF, FOB etc. Direct contacts with shipping lines for booking the containers. Domestic brands : Jack & Jones, Madura, Polo etc. International brands : GAP, Louis Philippe, Van Heusen etc. Payment Terms : Letter of Credit only. Participation in trade fairs for international marketing. Competitors :Arvind Mills, Aarvee Denims etc. Distinct in market by quality products from the competitors. 6.2 AARVEE DENIMS & EXPORT LTD. – AHMEDABAD. 6.2.0 Profile Industry : Textile Products : Manufacture Fabrics& Garments. Employees : More than 1000 Address : 188/2, Ranipur Village, Opp. CNI Church, Narol, Ahmedabad – 382 405. Ph. 079-30417000

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