A PROJECT REPORT

ON
EXPORT-IMPORT DOCUMENTATION
Work Carried out for

OM EXPORTS, PUDUCHERRY

Submitted by

JEBIN JAMES
(Reg. No:17382024)

In the partial fulfilment of the requirements for the award of the degree of
Master of Business Administration (International Business)
under the guidance of

Dr. YARLAGADDA SRINIVASULU

Associate Professor

DEPARTMENT OF INTERNATIONAL BUSINESS

SCHOOL OF MANAGEMENT
PONDICHERRY UNIVERSITY
KALAPET, PUDUCHERRY-605014
MAY - JUNE 2018
 DEPARTMENT OF INTERNATIONAL BUSINESS
SCHOOLOF MANAGEMENT
PONDICHERRY UNIVERSITY

CERTIFICATE

This is to certify that Mr. JEBIN JAMES (Reg. No. 17382024) is a

bonafide student of the Department of International Business, Pondicherry

University. The project report entitled “EXPORT-IMPORT

DOCUMENTATION” is done by him in partial fulfilment of the requirements for

the award of the Masters of Business Administration (International Business).

Dr. Yarlagadda Srinivasulu Dr. Bhushan. D .Sudhakar

Project Guide Head of the Department
 DECLARATION

I, JEBIN JAMES, the student Department of International Business,

Pondicherry University, hereby declare that this project report entitled “EXPORT-

IMPORT DOCUMENTATION” is an authentic and original work done by me under

the supervision and guidance of Dr. Y Srinivasulu (Department of International

Business) in partial fulfilment of the requirements for the award of Masters of Business

Administration (International Business).

I also declare that this report has not been submitted by me fully or partially for

the award of any other Degree or Diploma or any other recognition earlier.

Place: Puducherry JEBIN JAMES

Date: Reg. No: 17382024
 ACKNOWLEDGEMENT

I extend my deep gratitude to Dr. Bhushan D Sudhakar, HOD Department

of International Business, for giving me an opportunity and needed facilities to fulfil this

project work.

I proudly utilize this privilege to express my heart-felt thanks and sincere

gratitude to my inspiring guide Dr. Y Srinivasulu, Associate Professor, Department of

International Business for his kind supervision, valuable guidance and constant

encouragement bringing out this report in time.

Besides I would like to extend my sincere gratitude to all faculty members of

Department of International Business for their inspiration, guidance and suggestions.

It is with great respect, I express my sincere gratitude to the managers and staff

of “OM EXPORTS, PUDUCHERRY” for spending their valuable time to co-operate

with my project work. I am also thankful to my beloved parents and friends for their sincere

assistance and encouragement during the project work.

Place: Puducherry JEBIN JAMES

Date: Reg. No: 17382024

 CONTENTS

CHAPTER TITLE PAGE NO.

CHAPTER 1 Introduction 2

Objectives of The Study 5

Scope of The Study 5
Limitations of The Study 5

CHAPTER 2 Company Profile 7

CHAPTER 3 Export Documentation And Procedure 10
Documents For Exporting Pets 15

Export Procedure 17
Custom Clearance of Export 20
Export Finance 21
CHAPTER 4 Import Documentation And Procedure 28

Import of Pets Into India 30

Documents Required For Importing Pets 30
Import Procedure 31

Export-Import Procedures Under GST 39

CHAPTER 5 Observations 45
Conclusion 46
Bibliography 47

Export And Import Documents 48

 CHAPTER 1
INTRODUCTION

1
 INTRODUCTION

Exports are the goods and services produced in one country and purchased by citizens of
another country. It doesn't matter what the good or service is. It doesn't matter how it is sent. It can
be shipped, sent by email, or carried in personal luggage on a plane. If it is produced domestically
and sold to someone from a foreign country, it is an export. Most countries want to increase their
exports. Their companies want to sell more. If they've sold all they can to their own country's
population, then they want to sell overseas as well. The more they export, the greater their competitive
advantage. That's because they gain expertise in producing the goods and services. They also gain
knowledge about how to sell to foreign markets. Governments encourage exports. That's because it
increases jobs, brings in higher wages and raises the standard of living for residents. They become
happier and more likely to support their national leaders. Exports also increase the foreign exchange
reserves held in the nation's central bank. That's because foreigners pay for exports either in their own
currency or the U.S. dollar. A country with large reserves can use it to manage their own currency's
value. They have enough foreign currency to flood the market with their own currency. That lowers
the cost of their exports in other countries. Countries also use currency reserves to manage liquidity.
That means they can better control inflation, or too much money chasing too few goods. To control
inflation, they use the foreign currency to purchase their own currency. That lowers the supply,
making the local currency worth more
An import is a good brought into a jurisdiction, especially across a national border, from an
external source. The party bringing in the good is called an importer. An import in the receiving
country is an export from the sending country. Importation and exportation are the defining financial
transactions of international trade. In international trade, the importation and exportation of goods are
limited by import quotas and mandates from the customs authority. The importing and exporting
jurisdictions may impose a tariff (tax) on the goods. In addition, the importation and exportation of
goods are subject to trade agreements between the importing and exporting jurisdictions.
Basically there are two classes of exports.

Physical Exports: If the goods physically go out of the country or services are rendered outside the
country then it is called as physical export.

Deemed Exports: if the goods were not going out of the country physically it can be termed as
deemed exports. This will be subject to certain conditions as prescribed by the DGFT. Under Deemed
Exports, the goods may be supplied to the manufacturer exporter who ultimately export a finished

2
product of which this supply forms a part and ultimately go out of the country. E.g. Supply of fabrics
to the garment exporter who exports the garments made out of the said fabric The government may
announce from time to time the types of supplies that may be considered as deemed export. The
Foreign Trade Policy gives the list of supplies considered under the Deemed Export Category. The
policies and procedures are different for Physical Exports and Deemed Exports as also the benefits
available. In a nutshell, Deemed Exports do not enjoy all the benefits that are available under Physical
Export. The Foreign Trade defines exports as taking out of India any goods by land, sea, air. Although
the act does not term them as “Physical Exports”, we have to put phrase to distinguish it from
“Deemed Exports” which is sales in India but considered as exports for limited purpose.

Exporters can be basically classified into two groups

Manufacturer Exporter: As the exporter has the facility to manufacturer the product he intends to
export and hence he exports the products manufactured by him.

Merchant Exporter: An exporter who does not have the facility to manufacture an item. But, he
procures the same from other manufacturers or from the market and exports the same.

An exporter can be both a manufacturer exporter as well as a merchant exporter, he can export product
manufactured by him or he can export items bought from the market. Once it is decided to export, it
is mandatory on your part to follow certain procedures, rules and regulations as prescribed by various
regulatory authorities such as DGFT, RBI, and Customs. These procedures, rules and regulations are
laid down in the EXIM Policy 2015-20, Exchange Control Manual, Customs Act etc. Accordingly
Export documents are required to be prepared keeping in view of the requirement of the foreign
buyers and our regulatory authorities.

The Indian telecom industry has been one of the best performing industry groups in the recent years.
In order to facilitate the sector several reforms have been introduced in the sector during the past
decade. The National Telecom Policy of 1994 and the New Telecom Policy of 1999 (NTP-99) has
been the driving force of the development and liberalization in this sector. Since its inception,
Department of Telecommunication (DoT) is formulating developmental policies for driving the
growth of the telecom sector.

3
Import Policy

The Indian Trade Classification (ITC)-Harmonized System (HS) classifies goods into three
categories:

1. Restricted

2. Canalized

3. Prohibited

Goods not specified in the above mentioned categories can be freely imported without any
restriction, if the importer has obtained a valid IEC. There is no need to obtain any import license or
permission to import such goods. Most of the goods can be freely imported in India. Restricted items
can be imported only after obtaining an import license from the relevant regional licensing authority.
The goods covered by the license shall be disposed of in the manner specified by the license authority,
which should be clearly indicated in the license itself. The list of restricted goods is provided in ITC
(HS). An import license is valid for 24 months for capital goods, and 18 months for all other goods.
Canalized goods are items which may only be imported using specific procedures or methods of
transport. The list of canalized goods can be found in the ITC (HS). Goods in this category can be
imported only through canalizing agencies. The main canalized items are currently petroleum
products, bulk agricultural products, such as grains and vegetable oils, and some pharmaceutical
products. Prohibited goods are the goods listed in ITC (HS) which are strictly prohibited on all import
channels in India. These include wild animals, tallow fat and oils of animal origin, animal rennet, and
unprocessed ivory.

Just like imports, goods can be exported freely if they are not mentioned in the classification
of ITC (HS). Below follows the classification of goods for export Restricted, Prohibited, State
Trading Enterprise.

4
OBJECTIVES OF THE STUDY

• To understand the general Import and Export documentation procedures of the country by

studying overall import and export procedures of Pets (Dogs)

• To understand general Export documentation procedures of the country

• To understand general Import documentation procedures of the country

SCOPE OF THE STUDY

• The study is conducted with in the organizational levels of Pets exporting and importing

• Study includes of different export and import documentation procedures in India

DATA COLLECTION MEATHOD

PRIMARY SOURCES:

The primary data was collected by interaction with the executives of OM Exports

SECONDARY SOURCES:

The secondary data was collected by various means such as:-

• Company Records

• Magazines

• Websites

LIMITATIONS OF THE STUDY

• Only uses airways for transporting export cargo

• The study confines to export and import trade practices and documentation procedures of
India only.

• The project is based on theoretical guidelines and as per situations prevalent at the time of
practical training. Hence, it may not be apply to different situations.

5
 CHAPTER 2
COMPANY PROFILE

6
 COMPANY PROFILE

Year Established: 2012

Annual Sales: ₹8.5 Lakh

Total Employees: 2

Primary Line of Business: Cosmetics, Apparels, Pets

Management Directory:

Saravanan S, MD of OM Export

Business Profile:
OM Export is reliable and trustworthy export company in Puducherry. It is situated in India’s
growing Union Territory of Puducherry. Company is established in order to upliftment of rural
products by purchasing directly from that farmer so this way over all progress of rural people by
giving them appropriate price. And also export and import of cosmetics, apparels, animals (pets), and
Herbal and Ayurvedic products.

Since its founding in Pondicherry in 2012, OM Exports Company, has become the leading
supplier of cosmetics, apparels, animals (pets), and ayurvedic products in Europe and America,
especially in France, Germany, UK and USA. Also they export products to Nepal and Bhutan.

Their business policy is that they purchase agriculture products directly from farmers so they
have no any requirement of intermediate so they give products to their customer over all at low cost
with good quality. They follow the international norms so they can able to give their customer to
quality products with easy availability.

Their company is situated in Pondicherry, which has strategically located the South India’s
biggest port of Chennai. In Tamil Nadu and Pondicherry having many ports available so their strategic
location is more useful to export any products without any delay.

They take care of their entire business partner because they believe to make relation with them
life time.

7
Key Processes:
Advanced technology and processing have improved the export service of OM Exports. They
fully depending on Digital portals in the overall procedures of Export and Imports. They mainly
sourcing apparels from Tirupur and Pondicherry. Agricultural products from various parts of Tamil
Nadu and Kerala. Ayurvedic products from Kottakkal Arya Vaidya Shala and Vaidyaratnam P. S.
Varier's Arya Vaidya Shala from the state of Kerala. They importing Pets (Dogs) from France and
UK as per the requirement of their clients.

They also runs an e-commerce business in the name of Siddha Naturals which is established
in 2010 in the field of trading of Ayurvedic, Herbal, and Organic products.

8
 CHAPTER 3
EXPORT DOCUMENTATION AND
PROCEDURE

9
 EXPORT DOCUMENTATION AND PROCEDURE

The major documents used by the company to run the business are:

1. CERTIFICATE OF INCORPORATION
2. DIGITAL SIGNATURE
3. MOA
4. AOA
5. PAN CARD
6. IMPORT/EXPORT CERTIFICATE

1. CERTIFICATE OF INCORPORATION

A certificate of incorporation is a legal document relating to the formation of a company or

corporation. It is a license to form a corporation issued by state government or, in some jurisdictions,

by non-governmental entity. Its precise meaning depends upon the legal system in which it is used.

2. DIGITAL SIGNATURE

A digital signature (not to be confused with a digital certificate) is a mathematical technique used

to validate the authenticity and integrity of a message, software or digital document.

3. MOA

A Memorandum of Association (MOA) is a legal document prepared in the formation and

registration process of a limited liability company to define its relationship with shareholders.

4. AOA

The Articles of Association is a document that contains the purpose of the company as well

as the duties and responsibilities of its members defined and recorded clearly. It is an important

document which needs to be filed with the Registrar of Companies.

10
5. PAN CARD

Permanent Account Number (PAN) is a code that acts as an identification for Indian nationals,
especially those who pay Income Tax. It is a unique, 10-character alpha-numeric identifier, issued to
all judicial entities identifiable under the Indian Income Tax Act, 1961.

6. IMPORT/EXPORT CERTIFICATE (IE Code)

Import Export (IE) Code is a registration required for persons importing or exporting goods
and services from India. IE Code is issued by the Directorate General of Foreign Trade (DGFT),
Ministry of Commerce and Industries, Government of India. IE Codes when issued can be used by
the entity throughout its existence and doesn't require any renewal or filing. Therefore, it is
recommended for most organizations to obtain IE Code, irrespective of if they need it at the moment.

Export documentation is a tedious but necessary process that all exporters must pay close
attention to, as documentation requirements vary considerably by country, commodity, and situation.
Below are some factors to consider when determining which documents are needed for a particular
shipment.

• Country of origin and destination, as well as transhipment.

• Mode of transportation — truck, rail, ocean, air, pipeline

• Commodity — agriculture, livestock, safety/security, end-use, intangible- software, service

• Size — value, volume, weight, dimensions

Parties to the transaction — shipper, consignee, agents, brokers, banks

Based on these factors, many of the following documents may be required for an international
shipment. These documents can be prepared by the exporter and then processed or forwarded by a
Freight Forwarder.

11
Basic documents of export

• Invoices— Commercial, Pro-forma, Consular

• Packaging Lists— Dock, or Warehouse, Receipt
• Bills of Lading (B/L) — Ocean B/L, or Motor/Truck or Air Bill, or Way Bill
• Electronic Export Information (formerly the Shipper’s Export Declaration, or SED) is not
an actual document but still a very important part of the export process
• Certificates of Origin (C/O), sometimes country-specific — NAFTA C/O, Israel C/O
• Declaration of Dangerous Goods (DGD) — Hazmat, placards
• Certificates — Insurance, Free Sale, Inspection, Phytosanitary, Authentication (Apostille)
• Miscellaneous: Letters of Credit, ATA Carnet, Duty Drawback

Proforma Invoice

Proforma Invoice, as the name suggests, is a proforma of the invoice. It is prepared by an

exporter and sent to the importer for necessary acceptance. It suggests to a buyer what the actual
invoice would look like and is sent to him when he is ready to purchase the goods.

Packing List

This statement gives the packing details of goods in a prescribed format. It is a very useful
document for customs at the time of examination and for warehouse keeper of the buyer to maintain
a record of inventory and to effect delivery.

Commercial Invoice

An invoice is very important as it contains the names of the exporter, importer, and the
consignee, and the description of goods. It has to be signed by the exporter. Other documents are
prepared by deriving information from the invoice. It is required to be presented before different
authorities for different purposes.

Certificate of Origin

This certificate issued by the local Chamber of Commerce indicates that the goods, which are
being exported, are actually manufactured in a specific country mentioned therein. It is sent by the
exporter to the importer and is useful for the clearance of the goods from the customs authority of the
importing country.

12
Generalized System of Preference Certificate of Origin

It indicates that the goods being exported have originated/ manufactured in a particular
country and is mainly useful for taking advantage of a preferential duty concession, if available. It is
issued by government-authorized agencies like The Directorate General of Foreign Trade and its
regional offices, Development Commissioners, Export Promotion Councils etc.

Shipping Bill/Bill of Entry

It is a requisite for seeking the permission of customs to export goods .It contains a description
of export goods by sea/air. It contains a description of export goods, number and kind of packages,
shipping marks, and number numbers, value of goods, the name of the vessel, the country of
destination, etc. On the other hand, importers have to submit copies of document called Bill of Entry
for customs clearance. Later, a copy has to be given to the bank for verification.

ARE-1 Form

This form is an application for the removal of excisable goods from the factory premises for
export purposes. ARE-1 form has multiple copies which are distributed to different authorities,
including Customs, Range office of Excise, Refund office of Excise, etc.

Exchange Declaration Form (GR/SDF Form)

The RBI has prescribed has prescribed a GR form (SDF), a PP form, and SOFTEX forms to declare
the export transactions. The GR form contains:

A. Name and address of the exporter and description of goods.

B. Name and address of the authorized dealer through whom proceeds of the exports have been or
will be realized.
C. Details of commission and discount due to foreign agent or buyer.
D. The full export value, giving break up of FOB, Freight, Insurance, Discount, and Commission,
etc.

Bills of Exchange

It is an instrument in writing, containing an order, signed by the maker, directing a certain

person to pay a certain sum of money only to the order of a person to the bearer of the instrument. It
is commonly known as a draft.

13
Inspection Certificate

It is required by some importers and countries in order to get the specifications of the goods
shipped attested. The attestation is usually performed by a government agency or by independent
testing organizations.

Bill of Lading

This document is issued by the shipping company acknowledging the receipt of the goods
mentioned in the bill, for shipment on board of the vessel. The B/L is the legal document to be referred
in case of any dispute over the shipment. It contains:

• The shipping company’s name and address

• The consignee’s name and address
• The port of loading and port of discharge Shipping marks and particulars
• Number of packages and the goods Gross weight and net weight
• Freight details and name of the vessel
• Signature of the shipping company’s agent

Airway Bill
This receipt issued by an airlines company or its agent for carriage of goods is a contract
between the owner of the goods and the carrier. It should indicate freight pre-paid or freight to collect.
The first three digits of the Airway Bill Number represent the code, which identifies the carrier.

Insurance Certificate

This document, obtained from the freight forwarder, is used to assure the consignee that
insurance will cover the loss or damage to the cargo during transit (marine/air insurance).

Consular Invoice
This invoice is needed to be submitted for certification to the embassy of the country
concerned. Its main purpose is to enable the importer’s country to collect accurate and authenticated
information about the value, volume, quantity, source etc. of the import for assessing import duties
and for statistical purposes. It helps the importer to get goods cleared through customs without any
undue delay.

14
INCOTERMS

Incoterms are trade terms published by the International Chamber of Commerce (ICC) that
are commonly used in both international and domestic trade contracts. Incoterms, which is short for
"international commercial terms," are used to make international trade easier by helping traders who
are in different countries to understand one another. There are 11 incoterms are there in international
trade.

DOCUMENTS FOR EXPORTING PETS

1. Owner Verification

Name & Address of the owner of pet with 24 hrs telephone number in India as well as destination
country.

2. Photographs

Three photographs of pet in standing position.

3. Passport of Owner/Authorization letter

Copy of passport & ticket of the owner of pet. Or Authorization letter if owner is not approaching
directly.

4. Pet Passport

A pet passport is a document that officially records information related to a specific animal, as part
of that procedure. The effect is to drastically speed up and simplify travel with and transport of
animals between member countries, compared to previous procedures, if the regulations are followed.

Documents required for Pet Passport

1. Pet Details

Details of pet such as name, age, colour, breed, sex & size of pet in which pet will travel.

2. Pet Microchip Proof

Pet must be microchipped with an ISO 11784/11785 pet microchip that is 15 digit and non-encrypted.

3. Vaccinations Certificate
15
 Pet must be vaccinated for rabies between 30 days and 12 months prior to export. The 3 year
rabies vaccination is not widely recognized. Dogs must be vaccinated against Distemper, Hepatitis,
Parvovirus, Leptospirosis and Parainfluenza for dogs and FVRCP including Feline Enteritis and
Feline Pan Leukopenia for cats. Dogs must show no signs of any clinical sign of any disease including
rabies, canine distemper, parvo virus infection, leptospirosis, Infectious Canine Hepatitis, Scabies
and Leishmaniasis.

5. Health Certificate

Within 7 days of export, dogs and cats will need a health certificate from their vet as well as
an Animal Health Certificate from the Animal Quarantine and Certification Service as well as all
documentation required for their destination country.

6. Blood Titer Test Certificate

A titer test is a laboratory blood test. It checks for the presence of certain antibodies in the
blood stream. Testing involves drawing blood from a patient and check it in a lab for presence of
bacteria or disease. It is often used to see if someone is immune to a certain virus or needs vaccination.

7. NOC

No Objection Certificate, popularly abbreviated as NOC, is a type of legal certificate issued

by any agency, organization, institute or, in certain cases, an individual. It does not object to the
covenants of the certificate. So a NOC for Export from animal quarantine before 7 days of traveling
is required.

8. CITES

If the pet is not a dog, cat or ferret, and especially if it is a turtle or parrot, we should verify
that it is not protected under the Convention on International Trade in Endangered Species of Wild
Fauna and Flora (CITES). We will need to apply for additional permits if this is the case. Over 180
countries participate and enforce CITES regulations.

16
 EXPORT PROCEDURE

The Central Government announces rules, policies, procedures and incentives for exports
from time to time. The procedure of export of goods is guided by these rules and regulations of the
Government of India. But an export transaction has to pass through the following stages:

Step 1

In the case of first time exporters –importers, they need to apply to the Director General of
Foreign Trade (DGFT) regional office for getting Importer-Exporter Code (IEC) Number.

Step 2

The exporter has to register with the concerned export promotion council in order to obtain
various permissible benefits given by the government, they need to get registered with sales tax office,
and even Export Credit Guarantee Corporation.

Step 3

The exporter can now go in for procuring orders, by sending a sample, if required. The
importer sends a purchase order once both exporter and importer have agreed upon the terms and
conditions of the contract like pricing, documents, freight charges, currency etc.

Step 4

With export order in hand, the exporter starts manufacturing goods or buying them from other
manufacturers.

Step 5

The exporter makes arrangements for quality control and obtains a certificate confirming the
quality of the goods from inspector of quality control.

Step 6

Exportable are then dispatched to ports/airports for transit.

Step 7

The export firm has to apply to an insurance company for marine/air insurance cover. (The
exporter asks the importer to take marine/air insurance under cost and freight, free on board etc.,
terms of contract)

17
Step 8

The exporter contacts the clearing and forwarding agent (C&F) for storing the goods in
warehouses. A document called Shipping Bill, required for allowing shipment by Customs Authority
is presented by the forwarding agent.

Step 9

Once the goods are loaded into the ship, a receipt called ‘Mate’s Receipt is issued by the
captain to the ship superintendent of the port.

Step 10

The superintendent calculates port charges and handover to the exporter/C&F agent

Step 11

After making the port payments, the C&F agent or exporter gets the Bills of Lading or Airway
Bill from the official agent of the shipping company or the airline.

Step 12

The exporter applies to the relevant Chamber of Commerce for obtaining Certificate of Origin,
stating that the goods originated from India.

Step 13

The exporter sends a set of documents to the importers, stating the date of shipment, name of
vessel, etc.

Step 14

Within 21 days after shipment the exporter must present all the documents at his bank which
scrutinizes these documents against the original letter of credit /purchase order.

Step 15

The exporter’s bank sends these documents to the importer’s bank which should make the
payment on or before the due date.

18
Figure 3.1: Export Procedure

19
 CUSTOM CLEARANCE OF EXPORT

Step 1

The exporter/CHA fills the declaration in prescribed format through the custom service centre.
The exporter verifies the data as per the checklist generated by the system after which a shipping bill
number is generated by the system endorsed on the printed checklist and this is given back to the
exporter/CHA.

In case of dutiable items, exporter pays the duty along with TR-6 challan generated by the system

Step 2

The goods are allowed to enter the dock on the strength of the checklist endorsed with the
shipping bill number. The exporter then submits this along with documents as follows to the custom
officer who verifies the documents against the received goods.

• Original invoice
• Packing list
• GR forms
• ARE forms, etc.

Step 3

The goods are then presented to the shed appraiser (export) for physical examination which
is carried out by the customs examiner.

Step 4

After the physical examination is over the LET EXPORT ORDER is given by the Shed Appraiser.

The shipping bill is generated in three copies. One copy for customs, the second copy for
exporter and third copy is generated after the submission of Export General Manifest(EGM).it is
mandatory to submit the shipping bill wise EGM to the custom within the seven days of sailing of
ship.

Step 5

The Exporter / CHA submits exporter’s copy of shipping bill duly signed by the dock
appraiser to the preventive officer for allowing the cargo to be loaded on board the ship. In case of
any discrepancy or mis declaration, the export of the consignment is not allowed and suitable action
is taken against the exporter under the CUSTOM ACT 1962.

20
 EXPORT FINANCE

Financial assistance to the exporters is generally provided by Commercial Banks, before

shipment as well as after shipment of the said goods. The assistance provided before shipment of
goods is known as pre-shipment finance or packing credit and that provided after the shipment of
goods is known as post-shipment finance. Pre- shipment finance is given for working capital for
purchase of raw- material, processing, packing, transportation, ware-housing etc. of the goods meant
for export. Post- shipment finance is provided for bridging the gap between the shipment of goods
and realization of export proceeds. The later is done by the Banks by purchasing or negotiating the
export documents or by extending advance against export bills accepted on collection basis. While
doing so, the Banks adjust the pre-shipment advance, if any, already granted to the exporter. S&S
Power Switching ear Limited Prefers largely Post shipment credit and so I learnt the procedure and
mechanism of it. Explanation for post and pre – shipment finances are given below,

Financing at two stages – initially, to process the order and then to bridge the gap between the time
you ship the goods to the time you actually receive the payment. Export financing has been designed
to take care of these needs.

Export finance can be broadly classified into two categories, depending upon the stage of
‘export activity’ at which the finance is availed. The two types of export financing are:

• Pre-Shipment and
• Post-Shipment Finance.

I. Post Shipment Finance

Post-shipment finance is the finance provided against shipping documents. It is also provided
against duty drawback claims. It is provided in the following forms:

Purchase of Export Documents drawn under Export Order

Purchase or discount facilities in respect of export bills drawn under confirmed export order
are generally granted to the customers who are enjoying Bill Purchase/Discounting limits from the
Bank. As in case of purchase or discounting of export documents drawn under export order, the
security offered under L/C by way of substitution of credit-worthiness of the buyer by the issuing
bank is not available, the bank financing is totally dependent upon the credit worthiness of the buyer,
i.e. the importer, as well as that of the exporter or the beneficiary. The documents dawn on DP basis
are parted with through foreign correspondent only when payment is received while in case of DA
21
bills documents (including that of title to the goods) are passed on to the overseas importer against
the acceptance of the draft to make payment on maturity. DA bills are thus unsecured. The bank
financing against export bills is open to the risk of non-payment. Banks, in order to enhance security,
generally opt for ECGC policies and guarantees which are issued in favour of the exporter/banks to
protect their interest on percentage basis in case of non-payment or delayed payment which is not on
account of mischief, mistake or negligence on the part of exporter. Within the total limit of policy
issued to the customer, drawee-wise limits are generally fixed for individual customers. At the time
of purchasing the bill bank has to ascertain that this drawee limit is not exceeded so as to make the
bank ineligible for claim in case of non-payment.

Advances against Export Bills Sent on Collection

It may sometimes be possible to avail advance against export bills sent on collection. In such
cases the export bills are sent by the bank on collection basis as against their purchase/discounting by
the bank. Advance against such bills is granted by way of a 'separate loan' usually termed as 'post-
shipment loan'. This facility is, in fact, another form of post-shipment advance and is sanctioned by
the bank on the same terms and conditions as applicable to the facility of Negotiation, Purchase, and
Discount of export bills. A margin of 10 to 25% is, however, stipulated in such cases.

Advance against Goods Sent on Consignment Basis

When the goods are exported on consignment basis at the risk of the exporter for sale and
eventual remittance of sale proceeds to him by the agent/consignee, bank may finance against such
transaction subject to the customer enjoying specific limit to that effect. However, the bank should
ensure while forwarding shipping documents to its overseas branch/correspondent to instruct the
latter to deliver the document only against Trust Receipt/Undertaking to deliver the sale proceeds by
specified date, which should be within the prescribed date even if according to the practice in certain
trades a bill for part of the estimated value is drawn in advance against the exports.

Advance against Undrawn Balance

In certain lines of export it is the trade practice that bills are not to be drawn for the full invoice
value of the goods but to leave small part undrawn for payment after adjustment due to difference in
rates, weight, quality etc. to be ascertained after approval and inspection of the goods. Banks do
finance against the undrawn balance if undrawn balance is in conformity with the normal level of
balance left undrawn in the particular line of export subject to a maximum of 10% of the value of

22
export and an undertaking is obtained from the exporter that he will, within 6 months from due date
of payment or the date of shipment of the goods, whichever is earlier surrender balance proceeds of
the shipment. Against the specific prior approval from Reserve Bank of India the percentage of
undrawn balance can be enhanced by the exporter and the finance can be made available accordingly
at higher rate. Since the actual amount to be realized out of the undrawn balance, may be less than
the undrawn balance, it is necessary to keep a margin on such advance.

Advance against Retention Money

Banks also grant advances against retention money, which is payable within one year from
the date of shipment, at a concessional rate of interest up to 90 days. If such advances extend beyond
one year, they are treated as deferred payment advances which are also eligible for concessional rate
of interest.

Advances against Claims of Duty Drawback

Duty Drawback is permitted against exports of different categories of goods under the
'Customs and Central Excise Duty Drawback Rules, 1995'. Drawback in relation to goods
manufactured in India and exported means a rebate of duties chargeable on any imported materials
or excisable materials used in manufacture of such goods in India or rebate on excise duty chargeable
under Central Excises Act, 1944 on certain specified goods. The Duty Drawback Scheme is
administered by Directorate of Duty Drawback in the Ministry of Finance. The claims of duty
drawback are settled by Custom House at the rates determined and notified by the Directorate. As per
the present procedure, no separate claim of duty drawback is to be filed by the exporter. A copy of
the shipping bill presented by the exporter at the time of making shipment of goods serves the purpose
of claim of duty drawback as well. This claim is provisionally accepted by the customs at the time of
shipment and the shipping bill is duly verified. The claim is settled by customs office later. As a
further incentive to exporters, Customs Houses at Delhi, Mumbai, Calcutta, Chennai, Chandigarh,
and Hyderabad have evolved a simplified procedure under which claims of duty drawback are settled
immediately after shipment and no funds of exporter are blocked.

However, where settlement is not possible under the simplified procedure exporters may obtain
advances against claims of duty drawback as provisionally certified by customs.

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Rates of Interest

The rate of interest depends on the nature of the Bills, i.e., whether it is a demand bill or

durance bill. Like pre-shipment, post-shipment finance is also available at concessional rate of

interest. Present Rates of interest are as under:

Demand Bills for transit period Not exceeding (as specified by FEDAI) 10% p.a. Usance Bills

(for total period comprising Usance period of ex-port bills, transit period as specified by FEDAI and

grace period, wherever applicable:

a. Up to 90 days 10% p.a.

b. Beyond 90 days and up to six months 12% p.a. from the date of shipment.

c. Beyond six months from the 20% date of Shipment (Minimum)

Against duty drawback etc., receivable- Not receivable from Government covered by adding

10%ECGC guarantees (up to 90 days) p.a. , Against undrawn balance (up to 90 days) and Against

retention money payable within one year from the date of shipment (upto90 days).

Normal Transit Period

Foreign Exchange Dealers Association of India (FEDAI) has fixed transit period for export

bills drawn on different countries in the world. The concept of this transit period is that an export bill

should normally be realized within that period. The transit period so fixed by FEDAI is known as

'Normal Transit Period' and mainly depends on geographical location of a particular country.

Direct and Indirect Bill

If the currency of the bill is the same as the currency of the country on which it is drawn, it is

termed as direct bill, e.g. an export bill in US $ drawn on a place in U.S.A. However, if the currency

of the bill in which it is drawn is different than the currency of the country on which it is drawn, it is

termed as indirect bill, e.g. an export bill in US $ drawn on a place in Japan. The normal transit period

fixed for indirect bill is on higher side as compared to transit period fixed for direct bills.

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Notional Due Date

To determine the due date of an export bill we have to consider the following 3 components:

1. Normal transit period as fixed by FEDAI

2. Usance period of the bill
3. Grace period if applicable in the country on which the bill is drawn.

Grace period is applicable only in the case of nuance bills. The notional due date of an export
bill may thus be calculated after adding all the above 3 components. The concessional rate of interest
is chargeable up to the notional due date subject to a maximum of 90 days.

II. Pre-Shipment Finance

An application for pre-shipment advance should be made by exporter to his banker along with
the following documents:

Confirmed export order/contract or L/C etc. in original. Where it is not available, an

undertaking to the effect that the same will be produced to the bank within a reasonable time for
verification and endorsement should be given. An undertaking that the advance will be utilized for
the specific purpose of procuring/manufacturing/shipping etc., of the goods meant for export only, as
stated in the relative confirmed export order or the L/C. If you are a sub-supplier and want to supply
the goods to the Export/Trading/Star Trading House or Merchant Exporter, an undertaking from the
Merchant Exporter or Export/Trading/Star Trading House stating that they have not/will not avail
themselves of packing credit facility against the same transaction for the same purpose till the original
packing credit is liquidated. Copies of Income Tax/Wealth Tax assessment Order.

For the last 2-3 years in the case of sole proprietary and partnership firm. Copy of Exporter's
Code Number (CNX). Copy of a valid RCMC (Registration-cum-Membership Certificate) held by
you and/or the Export/Trading/Star Trading House Certificate. Appropriate policy/guarantee of the
ECGC. Any other document required by the Bank. For encouraging exports, R.B.I. has instructed the
banks to grant pre-shipment advance at a concessional rate of interest. The present rate of interest is
10% p.a. for pre- shipment advance up to an initial period of 180 days. Pre-shipment advance for a
further period of 90 days is given at the concessional rate of 13% p.a. Banks are free to determine the
interest rate for advances beyond 270 days and up to 360 days.

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III. EXIM Bank Finance

Besides commercial banks, export finance is also made available by the EXIM bank. The
EXIM bank provides financial assistance to promote Indian exports through direct financial
assistance, overseas investment finance, term finance for export production and export development,
pre-shipment credit, lines of credit, re-lending facility, export bills re-discounting, refinance to
commercial banks, finance for computer software exports, finance for export marketing and bulk
import finance to commercial banks. The EXIM Bank also extends non-funded facility to Indian
exports in the form of guarantees. The diversified lending programmed of the EXIM Bank now covers
various stages of exports, i.e. from the development export markets to expansion of production
capacity for exports, production for export and post shipment financing. The EXIM Bank's focus is
on export of manufactured goods, project exports, exports of technology, services and export of
computer software.

IV. SIDBI Finance

The Small Industries Development Bank of India (established under Small Industries
Development Bank of India Act, 1989 (39 of 1989)) is offering the International Finance schemes
whose main objective is to enable small-scale industries to raise finance at internationally competitive
rates to fulfil their export commitments. The financial assistance is being offered in USD and Euro
currencies. Assistance in Rupees is also considered, independent of foreign currency limits. An
additional benefit that an exporter can avail of relates to the Exchange Earners Foreign Currency
Account’ (EEFC). This is a facility by which an exporter can maintain an account, with an Indian
bank, expressed in foreign currency and titled EEFC account. Amounts that can be credited to this
account cannot exceed 50% of inward remittances from the export transactions All these measures
were taken by Government of India and Reserve Bank of India to promote exports and especially
SSIs.

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 CHAPTER 4
IMPORT DOCUMENTATION AND
PROCEDURE

27
 IMPORT DOCUMENTATION AND PROCEDURE

IMPORT DOCUMENTS

1. Bill Of Entry

An account of goods entered at a customs house, of imports and exports, detailing the
merchant, quantity of goods, their type, and place of origin or destination. It is issued by the customs
presenting the total assigned value and the corresponding duty charged on the cargo.

2. Pro Forma Invoice

An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer
of the kinds and quantities of goods to be sent, their value, and importation specification (weight, size
and similar characteristics). It is prepared by the exporter.

3. Commercial Invoice

It is a formal note for payment issued by the exporter to the importer for goods sold under a
sales contract. It should give details of the goods sold, payment terms and trade terms. It is also used
for the customer clearance of goods and sometimes for foreign exchange purpose by the importer. It
is prepared by the exporter.

4. Packing List

The packing list is the consolidate statement in a particular format, detailing how the goods
have been packed. It is informative and itemizes the material in each individual package such as box,
cartons, etc. it is very useful documents for customs at the time of examination and for the ware
housekeeper of the buyer to maintain a record of inventory and to effect delivery.

5. Certificate Of Origin

This certificate indicates that the goods which are being exported are actually manufactured
in a specific country mentioned therein. This certificate is send by the exporter to the importer.

6. Quality Certificate

The quality certificate is provided by the Exporter to the Importer. This certificate is issued
by the (government) quality officer of the Exporter which verifies the quality of the material exported.

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7. Shipping Bill

The shipping bill is the requisite for the seeking the permission of customs to export goods by
sea .It contain :-

• The details of goods.

• Number and kind of packages.
• Shipping mark and number.
• Value of goods.
• The name of the vessel.
• The country of destination.
• The port of loading.
• The exchange rates, etc.

8. Airway Bill

The airway bill is a contract between the owner of the goods and the carrier or its agent. The
receipt issued by an airlines company or its agent for the carriage of goods is called airway bill.

The first three digit of the airway bill number normally represent the code, which identifies the carrier.
For ex:

• 125 – British Airway

• 074- Klm Royal Dutch Airline
• 176- Emirates Airline

9. Lorry Receipt

The lorry receipt is generally issued when the transportation of goods is carried by road and
basically for the short distance. It also contains all the details such as name of the importer, exporter,
details of the goods etc.

10. Insurance Policy/Certificate

An insurance policy is an insurance document evidencing insurance has been taken out on the
goods shipped, and it gives full details of the insurance coverage. An insurance certificate certifies
that the shipment has been insured under a given open policy and is to cover loss of or damage to the
cargo while in transit. It is prepared by insurance broker.

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 IMPORT OF PETS INTO INDIA

Classification of Pets

For import purposes, no other animals other than cats and dogs are considered as pets. Other
animals and species including birds, reptiles, mammals, etc can only be imported through air cargo,
provided the importer holds a DGFT license including import export code. Animals that are proposed
to be imported into India should also not have been classified as endangered by the Government.

Pets Allowed into India

Import of pets (dog and cat only) up to two numbers per passenger are allowed at one time
subject to production of required health certificate from country of origin and examination of the said
pets by the concerned quarantine officer in India. In case a person needs to import more than two pets
at a time, then he/she must obtain am import sanitary permit issued by the Department of Animal
Husbandry and dairying and/or have an import license issued by the DGFT (Director General of
Foreign Trade).

Further, in April, 2013, the Government of India modified the policy of import of two pets by
passengers. Accordingly, it has been decided to allow import of two pet animals as baggage only to
persons transferring their residence to India after two years of continuous stay abroad in terms of
Baggage Rules 1998 subject to production of the required health certificate from the country of origin
and examination of said pets by the concerned Quarantine Officer at this end.

DOCUMENTS REQUIRED FOR IMPORTING PETS

1. Copy of valid DGFT Licence/Sanitary Import Permit (SIP)

The Ministry of Agriculture issued a notification on 7 July 2001, which requires animal

products importers to produce a sanitary permit at the customs gate before entry into the country.

2. Bill of entry with Custom reference

An account of Pets entered at a customhouse, of imports and exports, detailing the Pets, their

type, and place of origin or destination. It is issued by the customs presenting the total assigned value

and the corresponding duty charged on the cargo.

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3. Health Certificate
Official health certificate from the country of origin fulfilling all import health guidelines of
India as per the Notification/supplied protocol with license or SIP/AQCS requirement as the case may
be. The description of Livestock product shall be mentioned in health certificate/certified officially.
4. Laboratory Reports
5. Ownership Certificate
The name and address of owner in the official health certificate must match with the
Licence/SIP to establish ownership.
6. Airway Bill
Copy of airway bill/journey details of animal.
7. Authorization letter
Authorization letter if owner is not approaching directly.
8. Animal Quarantine Certificate
It is to protect residents and pets from potentially serious health problems associated with the
introduction and spread of rabies. All dogs and cats, regardless of age (puppies and kittens included)
or purpose, must comply with India’s dog and cat import requirements.

IMPORT PROCEDURE

Import trade refers to the purchase of goods from a foreign country. The procedure for import
trade differs from country to country depending upon the import policy, statutory requirements and
customs policies of different countries. In almost all countries of the world import trade is controlled
by the government. The objectives of these controls are proper use of foreign exchange restrictions,
protection of indigenous industries etc. The imports of goods have to follow a procedure. This
procedure involves a number of steps.

The steps taken in import procedure are discussed as follows:

I. Trade Enquiry:

The first stage in an import transaction, like any other transaction of purchase and sale relates
to making trade enquiries. An enquiry is a written request from the intending buyer or his agent for
information regarding the price and the terms on which the exporter will be able to supply goods.

31
 The importer should mention in the enquiry all the details such as the goods required, their
description, catalogue number or grade, size, weight and the quantity required. Similarly, the time
and method of delivery, method of packing, terms and conditions in regard to payment should also
be indicated.

In reply to this enquiry, the importer will receive a quotation from the exporter. The quotation
contains the details as to the goods available, their quality etc., the price at which the goods will be
supplied and the terms and conditions of the sale.

II. Procurement of Import License and Quota:

The import trade in India is controlled under the Imports and Exports (Control) Act, 1947. A
person or a firm cannot import goods into India without a valid import license. An import license may
be either general license or specific license. Under a general license goods can be imported from any
country, whereas a specific or individual license authorizes to import only from specific countries.

The Government of India declares its import policy in the Import Trade Control Policy Book
called the Red Book. Every importer must first find out whether he can import the goods he wants or
not, and how much of a certain class of goods he can import during the period covered by the relevant
Red Book.

a. Established importer,
b. Actual users, and
c. Registered exporters, i.e., those import under any of the export promotion schemes.

In order to obtain an import license, the intending importer has to make an application in the
prescribed form to the licensing authority. If the person imported goods of the class in which he is
interested now during the basic period prescribed for such class, he is treated as an established
importer.

An established importer can make an application to secure a Quota Certificate. The certificate
specifies the quantity and value of goods which the importer can import. For this, he furnishes details
of the goods imported in any one year in basic period prescribed for the goods together with
documentary evidence for the same, including a certificate from a chartered accountant in the
prescribed form certifying the c.i.f. value of the goods imported in the selected year.

32
 The c.i.f. value includes the invoice price of the goods and the freight and insurance paid for
the goods in transit. The quota certificate entitles the established importer to import up to the value
indicated therein (called Quota) which is calculated on the basis of past imports. If the importer is an
actual user, that is, he wants to import goods for his own use in industrial manufacturing process he
has to obtain license through the prescribed sponsoring authority.

The sponsoring authority certifies his requirements and recommends the grant of license. In
case of small industries having a capital of less than Rs. 5 lakhs, they have to apply for licenses
through the Director of Industries of the state where the industry is located or some other authority
expressly prescribed by the Government.

Registered exporter importing against exports made under a scheme of export promotion and
others have to obtain license from the Chief Controller of Exports and Imports. The Government
issues from time to time a list of commodities and products which can be imported by obtaining a
general permission only. This is called as O.G.L. or Open General License list.

III. Obtaining Foreign Exchange:

After obtaining the license (or quota, in case of an established importer), the importer has to
make arrangement for obtaining necessary foreign exchange since the importer has to make payment
for the imports in the currency of the exporting country.

The foreign exchange reserves in many countries are controlled by the Government and are
released through its central bank. In India, the Exchange Control Department of the Reserve Bank of
India deals with the foreign exchange. For this the importer has to submit an application in the
prescribed form along-with the import license to any exchange bank as per the provisions of Exchange
Control Act.

The exchange bank endorses and forwards the applications to the Exchange Control
Department of the Reserve Bank of India. The Reserve Bank of India sanctions the release of foreign
exchange after scrutinizing the application on the basis of exchange policy of the Government of
India in force at the time of application.

The importer gets the necessary foreign exchange from the exchange bank concerned. It is to
be noted that whereas import license is issued for a particular period, exchange is released only for a
specific transaction. With liberalization of economy, most of the restrictions have been removed as
rupee has become convertible on current account.

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IV. Placing the Indent or Order

After the initial formalities are over and the importer has obtained the licence quota and the
necessary amount of foreign exchange, the next step in the import of goods is that of placing the
order. This order is known as Indent. An indent is an order placed by an importer with an exporter
for the supply of certain goods.

It contains the instructions from the importer as to the quantity and quality of goods required,
method of forwarding them, nature of packing, mode of settling payment and the price etc. An indent
is usually prepared in duplicate or triplicate. The indent may be of several types like open indent,
closed indent and Confirmatory indent. In open indent, all the necessary particulars of goods, price,
etc. are not mentioned in the indent, the exporter has the discretion to complete the formalities, at his
own end. On the other hand, if full particulars of goods, the price, the brand, packing, shipping,
insurance etc. are mentioned clearly, it is called a closed indent. A confirmatory indent is one where
an order is placed subject to the confirmation by the importer’s agent.

V. Dispatching a Letter of Credit:

Generally, foreign traders are not acquainted to each other and so the exporter before shipping
the goods wants to be sure about the creditworthiness of the importer. The exporter wants to be sure
that there is no risk of non-payment. Usually, for this purpose he asks the importers to send a letter
of credit to him.

A letter of credit, popularly known as ‘L/C or ‘L.C is an undertaking by its issuer (usually
importer’s bank) that the bills of exchange drawn by the foreign dealer, on the importer will be
honoured on presentation up to a specified amount.

VI. Obtaining Necessary Documents:

After dispatching a letter of credit, the importer has not to do much. On receipt of the letter of
credit, the exporter arranges for the shipment of goods and sends Advice Note to the importer
immediately after the shipment of goods. An Advice Note is a document sent to a purchaser of goods
to inform him that goods have been dispatched. It may also indicate the probable date on which the
ship is expected to reach the port of destination.

34
 The exporter then draws a bill of exchange on the importer for the invoice value of goods.
The shipping documents such as the bill of lading, invoice, insurance policy, certificate of origin,
consumer invoice etc., are also attached to the bill of exchange. Such bill of exchange with all these
attached documents is called Documentary Bill. Documentary bill of exchange is forwarded to the
importer through a foreign exchange bank which has a branch or an agent in the importer’s country
for collecting the payment of the bill.

There are two types of documentary bills:

1. D/P, D.P. (or Documents against payment) bills.

2. D/A, D.A. (or Document against acceptance) bills.

If the bill of exchange is a D/P bill, then the documents of title of goods are delivered to the
drawee (i.e., importer) only on the payment of the bill in full. D/P bill may be sight bill or insurance
bill. In case of sight bill, the payment has to be made immediately on the presentation of the bill. But
usually a grace period of 24 hours is granted. insurance bill is to be paid within a particular period
after sight. If the bill is a D/A bill, then the documents of title of goods are released to the drawee on
his acceptance of the bill and it is retained by the banker till the date of maturity. Usually 30 to 90
days are provided for the payment of the bill.

VII. Customs Formalities and Clearing of Goods:

After receiving the documents of title of the goods, the importer’s only concern is to take
delivery of the goods, when the ship arrives at the port and to bring them to his own place of business.
The importer has to comply with many formalities for taking delivery of goods. Unless the following
mentioned formalities are complied with, the goods lie in the custody of the Custom House.

(a) To obtain endorsement for delivery or delivery order:

When the ship carrying the goods arrives at the port, the importer, first of all, has to obtain
the endorsement on the back of the bill of lading by the shipping company. Sometimes the shipping
company, instead of endorsing the bill in his favour, issues a delivery order to him. This endorsement
of delivery order will entitle the importer to take the delivery of the goods.

The shipping company makes this endorsement or issues the delivery order only after the
payment of freight. If the exporter has not paid the freight, i.e., when the bill, of lading is marked
freight forward, the importer has to pay the freight in order to get green signal for the delivery of
goods.

35
(b) To pay Dock dues and obtain Port Trust Dues Receipts:

The importer has to submit two copies of a form known as ‘Application to import’ duly filled
in to the ‘Lading and Shipping Dues Office’. This office levies a charge on all imported goods for
services rendered by the dock authorities in connection with lading of goods. After paying the
necessary charges, the importer receive back one copy of the application to import as a receipt ‘Port
Trust Dues Receipt’.

(c) Bill of Entry:

The importer will then fill in form called Bill of Entry. This is a form supplied by the custom
office and is to be filled in triplicate. The bill of entry contains the particulars regarding the name and
address of the importer, the name of the ship, packages number, marks, quantity, value, description
of goods, the name of the country wherefrom goods have been imported and custom duty payable.

The bill of entry forms are of three types and are printed in three colours-Black, Blue and
Violet. A black form is used for non-dutiable or free goods, the blue form is used for goods to be sold
within the country and the violet form is used for re-exportable goods, i.e., goods meant for re-export.
The importer has to submit three forms of bill of entry along-with Port Trust Dues Receipt to the
customs office.

(d) Bill of Sight:

If the importer is not is a position to supply the detailed particulars of goods because of
insufficiency of information supplied to him by the exporter, he has to prepare a statement called a
bill of sight. The bill of sight contains only the information possessed by the importer along-with a
remark that he is not in a position to give complete information about the goods. The bill of sight
enables him to open the package and examine the goods in the presence of custom officer so as to
complete the bill of entry.

(e) To pay Customs or Import Duty: There are three types of imported goods:

1. Non dutiable or free goods,

2. Goods which are to be sold within the country or which are for home consumption, and
3. Re-exportable goods i.e. goods meant for re-export. If the goods are duty free, no import duty
is to be paid at the custom office.

36
 Custom authorities will permit the delivery of such goods after usual examination of the goods.
But if the goods are liable for duty, the importer has to pay custom or import duty which may be
based on weight or measurement of goods, called Specific Duty or on the value of imported goods
Ad-valorem Duty.

There are three types of import duties. On some goods quite low duties are levied and they are
called revenue duties. On some others, quite high duties are charged to give protection to home
industries against foreign competition. While goods imported from certain nations are given
preferential treatment for the levy of import duties and in their case full protective duties are not
charged.

(f) Bonded and Duty paid Warehouses:

The port trust and custom authorities maintain two types of warehouses-Bonded and Duty
paid. These warehouses are situated near the dock and are very useful to importers who do not have
godown of their own to store the imported goods or who, for business reasons, do not wish to carry
them to their own god owns.

The goods on which the duty has already been paid by the importer can be kept in the duty
paid warehouses for which a receipt called ‘warehouse receipt’ is issued to him. This receipt is a
document of title and is transferable. The bonded warehouses are meant for goods on which duty has
been paid by the importer. If the importer cannot pay the duty, he may keep the goods in Bonded
warehouses for which he is issued a receipt, called ‘Dock Warrant’. Dock Warrant, also like
warehouses receipt, is a document of title and is transferable.

The bonded warehouses are used by the importer when:

1. He has no godown of his own.

2. He cannot pay the duty immediately.
3. He wants to re-export the goods and thereby does not want to pay the duty. (iv) He wants to pay
the duty in instalments.

A nominal rent is charged for the use of these warehouses. One special advantage of these
warehouses is that the importer can sell the goods and transfer the title of goods merely by endorsing
warehouse receipt or dock-warrant. This will save the importer from the trouble and expenses of
carrying the goods from the warehouses to his godown.

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(g) Appointment of clearing Agents:

By now we understand that the importer has to fulfil many legal formalities before he can take
delivery of goods. The importer may take the delivery of the goods himself at the port. But it involves
much of time, expenses and difficulty. Thus, to save himself from the botheration of complying with
all the complicated formalities, the importer may appoint clearing agents for taking the delivery of
the goods for him. Clearing agents are the specialized persons engaged in the work of performing
various formalities required for taking the delivery of goods on behalf of others. They charge some
remuneration on performing these valuable services.

VIII. Making the Payment:

The mode and time of making payment is determined according to the terms and conditions
as agreed to earlier between the importer and the exporter. In case of a D/P bill the documents of title
are released to the importer only on the payment of the bill in full. If the bill is a D/A bill, the
documents of title of the goods are released to the importer on his acceptance of the bill. The bill is
retained by the banker till the date of maturity. Usually, 30 to 90 days are allowed to the importer for
making the payment of such bills.

IX. Closing the Transactions:

The last step in the import trade procedure is closing the transaction. If the goods are to the
satisfaction of the importer, the transaction is closed. But if he is not satisfied with the quality of
goods or if there is any shortage, he will write to the exporter and settle the matter. In case the goods
have been damaged in transit, he will claim compensation from the insurance company. The insurance
company will pay him the compensation under an advice to the exporter.

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 EXPORT-IMPORT PROCEDURES UNDER GST

The current Indirect tax regime in India is complex as there are multiplicity of taxes, elaborate
compliance obligations and tax cascading. The Information Technology/Information Technology
Enabled Services sector has been fraught with disputes due to ambiguity in provisions as well as
multiple taxations.

Under the proposed GST regime all the key Indirect tax legislations would be subsumed and
hence it is expected that it would result in a simpler tax regime especially for the Information
Technology / Information Technology Enabled Services.

GST is a destination based tax on consumption of goods or services. It is also the policy of
the Government of India to export the goods and/or services not the taxes out of India. Thus, exports
will become cheaper making Indian products or services will be more competitive in the international
markets.

This module would cover in-depth impact of GST on export and import of goods and services under
GST.

Definition of India in GST

Section 2 (56) of CGST Act, 2017 defines “India“, which means the territory of India as referred to
in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters,
continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial
Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of
1976), and the air space above its territory and territorial waters.

Meaning of Export & Import of Goods

Section 2 (5) defines of IGST Act, 2017 defines – “Export of Goods”, with its grammatical variations
and cognate expressions, means taking out of India to a place outside India.

Section 2 (10) defines of IGST Act, 2017 defines – “import of goods” with its grammatical variations
and cognate expressions, means bringing goods into India from a place outside India.

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Meaning of Import of Services

“Import of Services” as defined under Section 2 (11) of IGST Act, 2017 means the supply of any
service, when –

1. The supplier of service is located outside India;

2. The recipient of service is located in India; and

3. The place of supply of service is in India

Meaning of Export of Services

“Export of Services” as defined under Section 2 (6) of IGST Act, 2017 means the supply of any
service, when –

1. The supplier of service is located in India;

2. The recipient of service is located outside India; 3. The place of supply of service is outside India;

4. The payment for such service has been received by the supplier of service in convertible foreign
exchange; and

5. The supplier of service and the recipient of service are not merely establishments of a distinct
person in accordance with Explanation 1 in section 8;

6. Explanation 1. For the purposes of this Act, where a person has,

• An establishment in India and any other establishment outside India;

• An establishment in a State or Union territory and any other establishment outside that State;
or
• An establishment in a State or Union territory and any other establishment being a business
vertical registered within that State or Union territory then such establishments shall be treated
as establishments of distinct persons.

Treatment of Exports under GST

As per the provisions of IGST law, export of goods and/or services are to be treated as “zero rated
supplies” and a registered taxable person exporting goods or services shall be eligible to claim refund
under one of the following two options:

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• Export under bond or letter of undertaking without payment of Integrated Tax and claim refund of
unutilized input tax credit.
• Export on payment of Integrated Tax and claim refund of the tax so paid on goods and services
exported. The aforesaid refunds will be subject to rules, safeguards and procedures as may be
prescribed.

Export of services at ZERO rated

Exports are being zero rated, and therefore input taxes paid would be allowed as refund.
However, to determine whether the services qualify as export, it would be important to analyse the
conditions prescribed for “export of service”.

The definition of “export of service” is similar to the present law, and therefore no new
conditions are prescribed. However, place of supply rules would need to be evaluated on a case-to-
case basis to determine the tax applicability on such services.

The default rule for place of supply for export of service shall be the location of the service
recipient, where the address on record of the recipient exists with the exporter. Hence, it will be
critical for exporters to ensure that the address of service recipient on record can be established before
the authorities on request.

The typical IT/ ITES services that may fall under the default rule include software
development, BPO operations, software consultancy, etc. Apart from these, certain services like
software support/ maintenance and intermediary services will also move to the default rule, as there
are no exceptions carved out for these, unlike under the present law.

There are exceptions to the above default rule, wherein training services could be based on
the performance location of training, but at the same time, online training is not specified, and
therefore could fall under default rule.

Thus, A detailed analysis of the nature of services and its place of supply would need to be carried
out to determine whether the services would be treated as exports and zero rated.

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Refund of input tax credit in case of export of goods

• In case of zero rated supplies made without payment of tax, refund of input tax credit will be
available as per proviso (i) to section 54(2) of CGST Act.
• No refund of unitized input tax credit shall be allowed in cases other than exports including zero
rated supplies or in cases where the credit has accumulated on account of rate tax on inputs being
higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies – first
proviso to section 54(3) of CGST Act.
• No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of
India are subjected to export duty – second proviso to section 54(3) of CGST Act.
• No refund of input tax credit shall be allowed if the supplier of goods or services avails duty
drawback of CGST / SGST / UTGST or claims refund of IGST paid on such supplies – third
proviso to section 54 (3) of CGST Act.

Drawback – “Drawback” in relation to any goods manufactured in India and exported, means the
rebate of duty, tax chargeable on any imported inputs or on any domestic inputs or input services used
in the manufacture of such goods – section 2(42) of CGST Act.

Taxes on Import to continue after GST

Even after introduction of GST following duties may not be subsumed under GST regime and
they may continue to be levied as usual. These duties are:

• Basic Customs Duty

• Anti-Dumping Duty
• Safeguard Duties

After the introduction of full and complete GST major import gaining sectors include leather
and leather products; furniture and fixtures; agricultural sectors; coal and lignite; agricultural
machinery; industrial machinery; other machinery; iron and steel; railway transport equipment;
printing and publishing; and tobacco products. The moderate gainers include metal products; non-
ferrous metals; and transport equipment other than railways. Imports are expected to decline in
textiles and readymade garments; minerals other than coal, crude petroleum, gas and iron ore; and
beverages.

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Export Promotion under GST

Exports are priority of any country, Goods and services are to be exported, and taxes are not
to be exported. WTO stipulates free and fair global trade. Giving export incentives will be against
principle of fair trade and hence export incentives are not allowed under WTO. However, goods and
services can be free of domestic taxes. Supplies to SEZ unit and SEZ Developer are treated at par
with physical exports. Provisions in CGST Act have been designed by make exports tax free. Export
benefits under GST – In relation to GST, following are the concessions / incentives for exports:

Exemption from GST on final products or Refund of GST paid on inputs. Exporting units
need raw materials without payment of taxes and duties, to enable them to compete with world
market. Government has devised following schemes for this purpose:

a. Special Economic Zones at various places where inputs are allowed to be imported without
payment of duty and finished goods are exported,
b. Export Oriented Undertakings (EOU),
c. Duty Drawback Scheme, and
d. Schemes of Advance Authorization, DEPB and DFIA.

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 CHAPTER 5
CONCLUSION

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OBSERVATIONS

• ARN (Application Registration Number) is required for Importing Pets (Dogs)

• Pregnant Pets cannot be Exported/Imported
• For tourists importing Pets, NOC (No Objection Certificate) is valid for 1 year
• After importing Pets (Dogs), it is mandatory to undergo for 7 Days observation under
Animal Husbandry Department with a payment of Rs. 1700. This facility is available only
in metropolitan cities.
• Blue Cross of India activities comprise a wide range of animal welfare and rights like
Medical waste disposal, Shelters, Rehoming, Adaptation, Hospitals, Mobile Dispensary,
Ambulance Services.
• Flights like LUFTANSA and EMIRATES having a separate cabin for Animal transport.
• HSN Code is required for Exporting goods. HSN stands for Harmonized System of
Nomenclature which was developed by the World Customs Organization (WCO) with
the vision of classifying goods all over the World in a systematic manner. HSN contains
six digit uniform code that classifies 5,000+ products and which is accepted worldwide.
• Calculation of storage space used for goods export is different for different mode of
transportation.

For Sea Ways = LBH/6000

For Road Ways = LBH/27000 or 18000 or 40000 (Different for different products)

For Air Ways = LBH/5000

• Fumigation Department’s declaration is required for using Wooden Box for exporting
goods. This certificate is given after the process of fumigation —to suffocate or poison
the pests within.
• Archaeological Survey of India’s inspection is required before exporting Statues
• MSDS (Material Safety Data Sheet) is required for exporting Medicines and Agarbatties.
MSDS's contain useful information such as flash point, toxicity, procedures for spills and
leaks, and storage guidelines. Information included in a Material Safety Data Sheet aids
in the selection of safe products, helps to understand the potential health and physical
hazards of a chemical and describes how to respond effectively to exposure situations.

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CONCLUSION
Export and import documentation is a key means of conveying information from one person
or company to another, and also serves as permanent proof of tasks and actions undertaken throughout
the export process. Documentation is not only required for your own business purposes and that of
your business partner, but also to satisfy the customs authorities in both countries and to facilitate the
transportation and payment for goods sold. After the implementation of GST 2017, there is no GST
for export, export is zero rated and GST is applicable for import. If the documentation is complete,
accurate, agreed upon by the parties involved and signed by each of these of these parties (or their
representatives), the document will represent a legally binding document. OM EXPORTS is dealing
with Ayurvedic Products, Herbal Products, Cosmetics, Apparels, and Pets so it needs licence from
various organisations.

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 BIBLIOGRAPHY

Books & Journals:

1. Indian Foreign Trade Policy 2015-20 (Revised)

2. Export Import Management – Aseem Kumar, Excel books, 2007

3. Export Management – P.K.Khurana

4. Export and Import manual, Nabhi Publications, New Delhi

Websites:

1. www.dgft.gov.in

2. www.eximbankindia.com

3. www.gstcouncil.gov.in

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EXPORT AND IMPORT DOCUMENTS

Pro-forma Invoice

Packaging List

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Customs Invoice

Bills of Lading (B/L)

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Export Declaration

Certificates of Origin

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Declaration of Dangerous Goods

Insurance Certificate

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Inspection Certificate

Letters of Credit

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ATA Carnet

Customs Clearance

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