Final Internship Report

Chapter-1

INTRODUCTION

Before 1947 India was colonial and basically agricultural and the trade was

confined mainly to commonwealth countries and UK.  After 1947 and one plan after

another, there is a remarkable increase in the volume and value of foreign trade from

traditional items to manufactured goods, capital goods. The direction of  India’s

trade also diversified to developed countries such as USA  Germany Canada, ex-

USSR, Japan etc. through trade bilateral agreements. India has a mission to capture

2% of the global share of trade by 2010, up from the present level of less than 1%.

Export is one of the lucrative business activities in India. The government also

provides various promotional schemes to the exporters for earning valuable foreign

exchange for the country and for meeting their requirements for importing modern

technology and essential inputs. Besides, the income from export business is also

exempted to the specified extent under the Income Tax Act, 1961, Refund of Central

Excise and Custom Duty on export is also made under the Duty Drawback Scheme

of the Government. There is no Sales Tax on products meant for exports. n the last

five years, our exports witnessed robust growth to reach a level of around US$ 185

billion in 2008–09 from US$ 63 billion in 2003–04. Our share of global merchandise

trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our share

of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008.

India’s total share in goods and services trade was 0.92% in 2003; it increased to

1.64% in 2008. Despite the fact that India has not been affected to the same extent as

other economies of the world, yet our exports declined since October 2008

significantly due to less demand in the markets like US, Europe, Japan, etc. owing to

global economic slowdown and the reduced international prices of commodities. As

a result, India’s exports in dollar terms declined during 2008–09 with a growth rate

of 13.6% as compared to 29% during 2007–08. To counter the negative fall out of

the global slowdown on the Indian economy, the Government/RBI responded by

providing carefully designed and calibrated stimulus packages in the form of fiscal,

monitory and export promotion measures from time to time, to provide support,

particularly to employment intensive sectors.

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HCL Infosystems is India’s premier information enabling company.

Leveraging its 3 decades of expertise in total technology solutions, HCL Infosystems

offers value-added services in key areas such as system integration, networking

consultancy and a wide range of support services. It is one or another way helping

India’s growth, Here we come to know about the procedure of export/import

business of HCL infosystem. HCL is mainly involve in importing the hardware

component from the various destination and doing assembly work in Indian centres.

India has a mission to capture 2% of the global share of trade by 20010, up

from the present level of less than 1%. Export is one of the lucrative business

activities in India. The government also provides various promotional schemes to the

exporters for earning valuable foreign exchange for the country and for meeting their

requirements for importing modern technology and essential inputs. Besides, the

income from export business is also exempted to the specified extent under the

Income Tax Act, 1961, Refund of Central Excise and Custom Duty on export is also

made under the Duty Drawback Scheme of the Government. There is no Sales Tax

on products meant for exports.

Exports can be of goods which can be moved physically from one country to

another or can be of service rendered. Detailed list of services are given in the

Foreign Trade Policy covering more than 160 items e.g. Insurance, Hospital, Postal

and Telecommunication etc.

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Chapter-2

2.1 COMPANY PROFILE 

HCL Infosystems is India’s premier information enabling company.

Leveraging its 3 decades of expertise in total technology solutions, HCL Infosystems

offers value-added services in key areas such as system integration, networking

consultancy and a wide range of support services. HCL Infosystems is among the

leading players in all the segments comprising the domestic IT products, solutions

and related services, which include PCs, Servers, Imaging, Voice & video solutions,

Networking Products, TV and FM Broadcasting solutions, Communication

solutions, System Integration, ICT education & training, Digital lifestyle Solutions

and Peripherals. 

HCL has a direct sales, channel sales and retail sales network pan India.

Continuously meeting the ever increasing customer expectations and applications, its

focus on integrated enterprise solutions has strengthened the HCL Infosystems’

capabilities in supporting installation types ranging from single to large, multi-

location, multi-vendor & multi-platform spread across India. HCL Infosystems,

today has a direct support force of over 3000+ members, is operational

at 360+ locations across the country and is the largest such human resource of its

kind in the IT business in India. HCL Infosystems has pan India presence across

metros and non-metros. HCL Infosystems' manufacturing facilities are ISO 9001 &

ISO 14001 certified and adhere to stringent quality standards and global processes.

With the largest installed PC base in the country, four indigenously developed and

manufactured PC brands - 'Infiniti', 'Busybee' 'Beanstalk' and ‘Ezeebee’ - and its

robust manufacturing facilities, HCL Infosystems aims to further leverage its

dominance in the PC market. It has been consistently rated as Top player in PC

industry by IDC. The 'Infiniti' line of business computing products is incorporated

with leading edge products from world leaders such as Intel. Constant innovation to

meet the customized requirements of its customers has enabled HCL to create the

trusted ICT infrastructure platforms, powerful value adds like HCL Embedded

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Control & Continuity (HCL EC2) technology and the future generation of digital

lifestyle enablers.

The Channel Business of HCL Infosystems has an extensive network of

over 3000+ resellers across 900 locations. It has actively promoted the penetration of

PCs in the home and the small office/home office (SOHO) segments. HCL Infinet

Ltd, 100% owned subsidiary of HCL Infosystems Ltd. is a class A ISP focusing on

providing the corporate networking services like Virtual Private Network,

Broadband Internet Access, Internet Telephony Hosting & Co-location services,

designing & deploying Disaster Recovery Solutions & Business Continuity solution,

Application Services, Managed Security Services & NOC Services over its state-of-

the-art IP / MPLS network and end-to-end contact center solutions. 

Vision

A global corporation enriching lives and enabling business transformation for our

customers, with leadership in chosen technologies and markets. Be the first choice

for employees and partners, with commitment to sustainability.

Mission

Enable business transformation and enrichment of lives by delivering sustainable

world class technology Products, Solutions & Services in our chosen markets

thereby creating superior shareholder value.

Core Values

Uphold the dignity of the individual

Honor all commitments

Committed to quality innovation and growth in every endeavor

Responsible corporate citizens

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2.1.1 Evolution of HCL Infosystems Ltd.

1976

HCL Infosystems Ltd is one of the pioneers in the Indian IT market,

with its origins in 1976. For over quarter of a century, we have

developed and implemented solutions for multiple market segments,

across a range of technologies in India. We have been in the forefront

in introducing new technologies and solutions. 

Shiv Nadar is chairman and CEO of HCL Technologies, a subsidiary of

Hindustan Computers Limited (HCL), a firm he co-founded in August

1976 and which includes HCL Infosystems. Shiv Nadar was 22 when

he saw his first city. Now, as chairman and CEO of HCL Technologies,

he is worth some US$ 3 billion, according to a Forbes magazine

estimate last year.

1998

This office was finally converted into a wholly owned subsidiary

on July 1, 1998. Year after year we have been consistently rated

number one in India in UNIX systems revenue and unit market share

(IDC). Sun India has been growing at twice the industry average for the

last 5 years. Sun has adopted a business model of working in

partnership with key Indian partners to deliver all products and services

such as hardware platforms, services, certification training etc.

2004

HCL Infosystems Ltd (HCL Insys), India's premier Information

enabling company, today announced its un-audited results for the

quarter ended December 31, 2004.

2006 New Delhi, May 29, 2006 -- With an aim to make the most compelling

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digital music phenomenon more accessible to Indian consumers across

the country, HCL Infosystems Ltd. - nation's premier information

enabling and integration company - and Apple today formed a strategic

alliance to develop a joint go to market and support strategy for Apple

iPods in India.

2007

HCL Infosystems Limited announced that it has recommended 100%

final dividend on the paid up share capital of the Company for the

financial year ended June 30, 2007. HCL Infosystems

Limited Announces Allotment Of Equity Shares Under ESOS.

2008

About HCL Securities Ltd HCL Security is a 100% subsidiary of HCL

Infosystems Ltd. Incorporated in March 2008. The company provides

end to end integrated security solutions.

2009

 In August 2009, the Madras high court admitted two separate winding

up petitions by Kotak Mahindra Bank Ltd and HCL Infosystems Ltd to

recover their dues from Subhiksha. Subhiksha owes at least Rs750

crore to ICICI Bank, HDFC Bank Ltd, Yes Bank Ltd and other lenders.

A consortium of lenders tried to revive Subhiksha with a debt

restructuring plan, but failed to file a proposal to the CDR office by a

July deadline.

2.1.2 OUR EXECUTIVE MANAGEMENT TEAM

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AJAI CHOWDHRY

Chairman

An engineer by training, Ajai Chowdhry is one of

the six founder members of HCL and took over

the reins of HCL Infosystems, the flagship

company of the group, as President and CEO in

1994. He was appointed the Chairman of HCL

Infosystems in November 1999. In recognition of

his contribution in championing the cause of the

domestic Indian IT industry, Ajai has been

conferred the DATAQUEST ‘IT Man of the Year

2007’ Award amongst other awards.

HARSH CHITALE CEO Harsh Chitale joined HCL Infosystems as Chief

Executive Officer in 2010 and heads the overall

business strategy and operations of HCL

Infosystems. He brings a wealth of experience as

a senior business leader with rich business

management experience in both Indian and

global companies. Harsh is a recipient of the

Director’s Gold Medal at IIT Delhi, from where

he completed his Electrical Engineering.

J V RAMAMURTHY

President and Chief Operating

Officer

J V Ramamurthy is President and Chief

Operating Officer, HCL Infosystems Ltd. He

brings 3 decades of diverse Industry experience

and leadership to the company. A technocrat and

a man of broad vision, he has spearheaded

company’s entry into number of new verticals

and partnerships.

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SANDEEP KANWAR

CFO & EVP

Sandeep Kanwar joined HCL in 1988 and in a

span of eight years progressed to the position of

Chief Financial Officer at the young age of 35.

He is well respected amongst colleagues &

customers for his financial acumen and

management skills.

HARI BASKARAN

EVP

Hari, a BE graduate and alumni of IIM -

Bangalore, has been instrumental in building up

the largest retail network for digital life style

products in the country. He heads

the Distribution and Marketing Services and

Retail business division for HCL.

GEORGE PAUL

EVP

George Paul, a graduate in Electronics &

Telecommunications joined HCL in 1983.

He heads the Marketing Function along with

HCL R&D.

RAJEEV ASIJA

EVP

Rajeev, an engineering graduate, joined HCL in

1983,. With two decades of industry experience,

he heads the Enterprise Solutions & services

of HCL.

M CHANDRASEKARAN

Sr. VP

M Chandrasekaran joined HCL in 1984. With

over two decades of industry experience in sales,

support and marketing, he heads the office

automation products business for HCL.

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VIVEK PUNEKAR

VP HR

Vivek joined HCL in 1986. An engineer by

profession with over two decades of industry

experience in various functions, he heads the HR

function for the company. Credited with

innovative HR initiatives that have made HCL

among the best companies to work for.  

 l PRODUCTS l SERVICES l INVESTORS 

Relationship Programme 

HCL strongly believes in the power of relationships and partnership 

No matter the size of your business, partnering with HCL Infosystems will help you

succeed. Leveraging over three decades of experience in total technology solutions,

it’s our commitment to help you be as successful as possible. We provide you access

to HCL’s innovative technologies, marketing strategies and value added services. By

working on every aspect of the ICT industry, we have the experience to create world

class products and services to help you give the best to your customers. 

2.2 Advantage HCL

HCL's labs - Pioneers in design, development and building ICT products

India's largest Hardware, System Integration, Networking Solutions &

Distribution Company

3 decades of expertise in technology solutions

Partners with leading global players to provide the best of solutions to end

users

The largest manufacturer of PCs and Laptops in India

Largest direct sales, digital lifestyle product distribution and retail network

Extensive service network that reach out to 4,000 towns

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Benefits from a Proven Commitment from HCL Infosystems 

At HCL Infosystems, partnerships are lifelong relationships that mutually

benefit each other. We can help to enhance your business and reap the rewards of

our mutual success. We offer differentiated technology and dedicated service support

infrastructure as per the needs and requirements of your customers. We provide

technology specializations that map to areas of significant business growth for your

business and your customers. 

Reliable IT Backbone

In a world where the right technology infrastructure is a prerequisite, we offer

a reliable IT backbone to our partners. HCL combines technical innovation with

built-in reliability to keep your business running. We provide a one stop shop for

meeting end-to-end IT requirements, thus offering a smooth ICT

management. Additionally, we offer industry leading technology, designed to deliver

a price to performance advantage to help you provide increased benefits to your

customers. Our high-quality products and services give you means to work in a

smarter way and be more productive and competitive. 

Differentiated Product Access

At HCL we understand that different customers have different needs. We

have constantly innovated to offer a range of products to cater to different

requirements of the customers. We have pioneered the home PC market of India -

we designed India’s first Multimedia-enabled Beanstalk Media Centre PC for home

users; we have developed Ezeebee and Busybee PCs and ME Laptops for personal

productivity. Whether gaming, enjoying music or movies or connecting to the

Internet, these systems offer ease of use that transcends to greater performance and

more satisfaction for the individual user be for work or home. We bring this exciting

range of Desktops and Laptops through our vast network of neighborhood partner

outlets for buying convenience of the customers. Further these products are backed

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by HCL’s 24X7 Consumer Support Helpline. Enterprises have unique needs for their

computing platforms and HCL’s range of business Desktops and Laptops come with

unique features that enhance productivity while reducing TCO. For our Enterprise &

SMB customers who buy directly from us, or through Enterprise Rate Contracts or

through our vast network of Strategic Business Partners we offer customized built to

order range of ME Business Laptops and Infiniti Desktops. Leveraging on three

decades of expertise in total technology solutions, HCL business Desktops and

Laptops offers increased security, ultra-efficient manageability and maximum

productivity for a smart business landscape. 

HCL's manufacturing facilities are  ISO 9001 - 2000 & ISO 14001 certified

and adhere to stringent quality standards and global processes. HCL Desktops and

Laptops are manufactured and marketed specially to withstand unique Indian terrain

and conditions. HCL commits to manufacture “Green” PCs and Laptops that are

RoHS compliant and adhere to stringent environment management standards. As

market leaders in ICT arena we offer our partners the best of options. 

2.3 Alliance & Partnership

To provide world-class solutions and services to all our customers, we have

formed Alliances and Partnerships with leading IT companies worldwide. HCL

Infosystems has alliances with global technology leaders like Intel, AMD, Microsoft,

IBM, Bull, Toshiba, Nokia, Sun Microsystems, Ericsson, NVIDIA, SAP, Scansoft,

SCO, EMC, Veritas, Citrix, CISCO, Oracle, CA, RedHat, Infocus, Duplo, Samsung

and Novell. These alliances on one hand give us access to best technology &

products as well enhancing our understanding of the latest in technology. On the

other hand they enhance our product portfolio, and enable us to be one stop shop for

our customers.

Technology Leadership 

HCL Infosystems is known to be the harbinger of technology in the country. Right

from our inception we have attempted to pioneer the technology introductions in the

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country either through our R&D or through partnerships with the world technology

leaders.

Using our own R&D we have:

Created our own UNIX & RDBMS capability (in 80s).

Developed firewalls for enterprise & personal system security.

Launched our own range of enterprise storage products.

Launched our own range of networking products.

We strive to understand the technology from the view of supporting it post

installation as well. This is one of the key ingredients that go into our strategic

advantage. HCL Infosystems has to its claim several technology pioneering

initiatives. Some of them are:

Country's first DeskTop PC - BusyBee in 1985.

Country's first branded home PC - Beanstalk in 1995.

Country's first Pentium 4 based PC at sub 40k price point.

Country's first Media Center PC.

Philosophy of Quality

"We shall deliver defect-free products, services and solutions to meet the

requirements of our external and internal customers, the first time, every time." 

To exist as a market leader in a globally competitive marketplace, organizations need

to adopt and implement a continuous improvement-based quality policy.One of the

key elements to HCL's success is its never-ending pursuit of superior quality in all its

endeavors.

HCL INFOSYSTEMS believes in the Total Quality Management

philosophy as a means for continuous improvement, total employee participation in

quality improvement and customer satisfaction. Its concept of quality addresses

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people, processes and products. Over the last 32 years, we have adapted to newer

and better Quality standards that helped us effectively tie Quality with Business

Goals, leading to customer and employee satisfaction. 

Manufacturing 

HCL's computer hardware manufacturing plants include 4 facilities, 2 at Puducherry,

1 at Chennai & 1 at Uttranchal. The plant located in Puducherry are situated 165 kms

south of Chennai on the coast of the Bay of Bengal with proximity to Chennai

Air/Sea port, special policies for Industries of local Govt, , Inland Container Depots,

attractive power and labour rates - makes Puducherry an ideal place for business.

Started in 1996 - with only Unit 1 - it now has 4 Units with a built up area of

4,19,000 sq. ft The infrastructure is state of the art, one of the best & largest in

India. 

All 3 factories are ISO 9001:2000 and ISO 14001, ISO 13485:2003, TS 16949-2002

TUV-Accredited certified. PMO was also Awarded MAIT Level 2 - by European

Foundation for Quality Management in the year 2001. HCL was also awarded

ELCINA's (Electronic Component Industries Association) Quality Award for the

year 2002- 2003. HCL Infosystems Ltd. Puducherry, Uttarakhand, and Noida

Manufacturing Units now ISO 9001:2008 Certified. State of the art IT systems in

MRP, ERP, Online configurations enables this latest unit of HCL (Rudrapur) to

leverage the power of IT in delivering optimum efficiency. The plant is networked &

online with HCL branch and head offices. The Pondicherry plant has its own Product

Engineering Group (PEG) and R&D teams constantly engaged in developing new

products and solutions. Driven by a strong manufacturing objective, HCL promises

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to deliver defect free products, services and solutions to meet the requirements of its

external and internal customers, right from the commencement of the relationship.

Driven by a strong Manufacturing Objective

"We shall deliver defect-free products, services and solutions to meet the

requirements of our external and internal customers, the first time, every time."

2.4 Our Products

Computing Products  Offering an entire range of Computing

Products for Corporate, Businesses and

Small to Large Setups.

Display Products  Introducing great display products that

you would love setting your eyes on.

Networking Products  Enjoy fast data transfer with our

exclusive range of Networking Products.

Storage Solutions Offering an entire range of storage

solutions.

Software Licenses  Enjoy benefits of genuine software

licenses through HCL Infosystems.

Offering an entire range of Digital

Lifestyle Products and Solutions for

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Digital Lifestyle Products & Solutionsentertainment and business.

Office Automation Imaging & Printing

Solutions

Introducing world class imaging

products and solutions to meet business

requirements.

Office Automation Telecom & AVSI

Solutions

Introducing world class telecom products

and AVSI solutions to meet business

requirements.

POS, KIOSK, Customer Service

Counter Products

Offering an entire range of POS products

and solutions.

Software Solutions  Bringing to you world class software

solutions that you can depend on

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Chapter-3

Exports Management

“A management process which ensures the coordination and Integration of all

activities involved with export process. It is thus, concerned with securing export

orders and achieving their successful completion in time as per the requirement

specified by the foreign buyers.”

3.1 Export documentation

HCL Infosystems Ltd. mainly trades with China, Hong Kong, Taiwan, USA,

Thailand and Malaysia. As it is maintaining strong relationship with all its buyers,

the payment problems have been ruled out. So it mainly trades with terms of

Documents against goods or Documents against sight or Documents against

payment. So I have gone through all the procedures and documentation system

mainly what company is following. Many of the buyers of the company prefer

shipment through sea than air.

Some of the most used and most important documents of exports are as follows:

Bill of Exchange

The Documentary Letter of Credit will stipulate when payment is to be made and the

bill of exchange must be drawn up accordingly. The bill of exchange must conform

exactly to the terms of the Letter of Credit, with the sum specified not exceeding the

amount of the LC. Unless the Documentary Letter of Credit stipulates that Bills of

Exchange are required to be in duplicate, a single Bill of Exchange will be

acceptable. Bill of Exchange forms may be purchased from printers or stationers, or

they may be drawn on a company’s notepaper or even a blank sheet of paper. When

being presented for payment, the Bill of exchange must be correctly endorsed by the

payee. Defined by Bills of Exchange Act 1882, sec 1 as an unconditional order in

writing, addressed by one person (the drawer) to another (the drawee and afterwards

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acceptor), signed by the person giving it, requiring the person to whom it is

addressed to pay on demand, or at a fixed or determined future time, a sum certain in

money to, or to the order of, a specified person or to bearer (payee).

Certificate of inspection

A document issued by a grading agency that assures the buyer that the shipment of

lumber has been examined by a qualified inspector and that the lumber in the

shipment is of the grade indicated. Often used for selects and timbers where a grade

mark would not show, or where one would affect the use of the piece.

Commercial Invoice

A commercial invoice is a bill of goods from the seller to the buyer. Commercial

invoices are utilized by customs officials to determine the value of the goods in order

to assess customs duties and taxes.

In general there is no standard form for a commercial invoice although they tend to

contain many of the following features:

Seller’s contact information

Buyer’s contact information

Consignee’s contact information (if it is different from the buyers)

Invoice date

A unique invoice number

Sales terms (usually in incoterm format)

Payment terms

Currency of sale

Full quantities and description of merchandise (Generally this includes

unit price and total price. Product descriptions should be consistent with

the buyer’s purchase order. Including the Harmonized System

commodity codes can be helpful, especially in countries that are WTO

members.)

Certification that the invoice is correct (Standard language is “We certify

that this invoice is true and correct.”

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Packing List

A Packing List gives details of the contents of all the packages making up the

consignments and is required by Custom’s authorities if the packing information is

not shown on the invoice. The Packing List is usually attached to the invoice. Par

Value the official fixed exchange rate between two currencies or between a currency

and a specific weight of gold or a basket of currencies.

Certificate of origin

A certificate, which identifies the country of origin, is typically required for

international shipments. Certain countries may entirely bar shipments from certain

other countries. In select countries, a notarized certificate of the country of origin

may significantly lower the taxes levied.

Certificate of inspection

A document issued by a grading agency that assures the buyer that the shipment has

been examined by a qualified inspector, and that the goods in the shipment are of the

grade indicated.

Performa invoice

An invoice received before a sale is consummated, information the buyer of the

terms of sale. Pro forma invoices are often used in foreign trade as the buyer’s proof

of future sale when applying for import licenses and foreign exchange through

government agencies.

Certificate of insurance

A certificate issued by an insurance company or its agent. It verifies that a certain

insurance policy is in effect for stated amounts and coverage and names those

insured.

Combined Transport Document

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When goods are transported using more than one mode of transport, the issuer of the

Collection takes responsibility for the whole of the journey through a combined

transport document.

Documentary Letters of Credit

A Documentary Letter of Credit (LC) is a written undertaking given by a bank on

behalf of an Importer to pay the Exporter a given sum of money within a specified

time, providing that the Exporter presents documents, which comply with the terms

laid down in the Letter of Credit.

Letters of Credit can be for any amount, in any freely traded currency, and, subject

to the presentation of compliant documents, may be payable: at sight, which means

as soon as a compliant set of documents are presented to the paying bank; or, after a

specified term, e.g. at 30, 60, 90 or 180 days of sight or Bill of Lading date.

If the documents are not presented exactly as specified in the Letter of Credit,

payment will not be made unless the Importer gives their authority to waive or

amend the specified condition.

A fundamental principle of Letters of Credit is that banks deal with documents and

not with the goods to which the documents refer.

For example, if the Importer is not happy with the quality of the goods but the

documents comply with the terms and conditions of the letter of credit, the

Importer’s bank is obliged to pay the Exporter.

Parties involved in a Letter of Credit transaction

Types of Letter of Credit

Parties involved in a Letter of Credit transaction

In the process of a Letter of Credit transaction, there are essentially four parties

involved. These parties can be referred to by a number of terms, outlined below.

Buyer meaning Importer, Applicant, Accountee or Accreditor.

Seller meaning Exporter or Beneficiary

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The Issuing or Opening Bank (Importers Bank)

The Advising/Confirming Bank – usually a bank in the Exporters country,

which may or may not be the Exporters Bank.

Documentary Collections

A Documentary Collection would normally comprise a set of commercial documents

relating to the goods being exported, which are sent to the Importer’s bank along

with a Collection Schedule and usually a bill of exchange. A set of documents

containing a Bill of Lading would normally allow the holder to take possession of

the goods. A Collection takes one of the following forms:

Documents against Payment

The Collection documents are presented to the Importer and released in exchange for

immediate payment (payment ‘at sight’).

Documents against Acceptance

This applies with a Tenor Bill of Exchange and describes the situation where the

Collection documents are released after the Importer has ‘accepted’ them.

Acceptance is signified by the Importer’s signature on the bill of exchange or other

payment authority enclosed in the Collection. Payment will be made at a fixed or

determinable future date.

Bill of Lading

A Bill of Lading is a receipt given by the shipping company upon shipment of the

goods and is evidence of a contract of carriage. It is a document of title to the goods,

and as such is required to enable them to clear the goods at the port of destination.

Two or three signed sets of the original copies of the Bill of Lading are usually made

out. These are known as ‘negotiable copies’, any one of which can give title to the

goods. Unsigned, non-negotiable copies also exist, which are not documents of title,

but are used for record purposes.

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The goods will only be released to Consignee. Normally Bills of Lading are made

out to order, unless the documents are made out to the Importer as the Consignee of

the goods.

Types of Bills of Lading:

‘Shipped’ or ‘shipped on board’. (Indicates that the goods have been received

on ship).

‘Received for shipment’, (Signifies that the ship owner has taken delivery of

the goods, but they have not been placed on board the vessel).

‘Combined Transport’. (Issued to cover all stages of the journey if both

ocean and overland transport is used).

Insurance:

The Letter of Credit will indicate what insurance cover is required, and will state

whether an insurance policy or a certificate is needed. An insurance policy may only

be issued by the insurer and is usually in standard form covering the customary risks

for any method of transport (Lloyd’s MAR policy is normally used). Regular

Exporters can organize an open policy to cover all exports during a specific period.

Individual insurance certificates are issued for each shipment by either the insurers

and/or the Exporter. This certificate must contain the same details as the policy, with

a shortened version of the provisions of the policy under which it is issued.

Invoice

An invoice gives details of the goods involved in the transaction between the

Importer and the Exporter. Several copies of the document are produced as are

required by customs, excise authorities overseas etc. All details in the invoice need

to be exactly the same as specified in the LC or in other documents.

Freight Forwarders

An international freight forwarder is an agent for the exporter in moving cargo to an

overseas destination. These agents are familiar with the import rules and regulations

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of foreign countries, the methods of shipping, and the documents related to foreign

trade. Export freight forwarders are licensed by the International Air Transport

Association (IATA) to handle air freight and the Federal Maritime Commission to

handle ocean freight.

Freight forwarders assist exporters in preparing price quotations by advising on

freight costs, port charges, consular fees, costs of special documentation, insurance

costs, and their handling fees. They recommend the packing methods that will

protect the merchandise during transit or can arrange to have the merchandise

packed at the port or containerized. If the exporter prefers, freight forwarders can

reserve the necessary space on a vessel, aircraft, train, or truck.

Once the order is ready for shipment, freight forwarders should be reviewing all

documents to ensure that everything is in order. They may also prepare the bill of

lading and any special required documentation. After shipment, they can route the

documents to the seller, the buyer, or to a paying bank. Freight forwarders can also

make arrangements with customs brokers overseas to ensure that the goods comply

with customs export documentation regulations. A customs broker is an individual or

company that is licensed to transact customs business on behalf of others.

Incoterms – International Commercial Terms

These are the terms seller and buyer negotiate for cost, insurance, freight etc. these

terms decides who have to bear the risk or whom to transfer the risk.

a. Ex-Works: 'Ex-works' means that responsibility is to make goods available

to the buyer at works or factory. The full cost and risk involved in bringing

the goods from port of shipment to the desired destination will be borne by

the buyer. This term thus represents the minimum obligation for seller.

b. Free Alongside Ship (FAS): Once the goods have been placed alongside the

ship, seller obligations are fulfilled and the buyer notified. The buyer has to

contract with the sea carrier for the carriage of the goods to the destination

and pay the freight. The buyer has to bear all costs and risks of loss or

damage to the goods hereafter.

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c. Free on Board (FOB): Exporters’ responsibility ends the moment the

contracted goods are placed on board the ship, free of cost to the buyer at a

port of shipment named in the sales contract. 'On board' means that a

'Received for Shipment' B/L (Bill of Lading) is not sufficient. Such B/L if

issued must be converted into 'Shipped on Board B/L' by using the stamp

'Shipped on Board' and must bear signature of the carrier or his authorized

representative together with date on which the goods were 'boarded'.

d. Cost and Freight (C&F): sellers’ own risk and not as an agent of the buyer,

contract for the carriage of the goods to the port of destination named in the

sale contract and has to pay the freight. This being a shipment contract, the

point of delivery is fixed to the ship's rail and the risk of loss or of damage to

the goods is transferred from the seller to the buyer at that very point.

e. Cost Insurance Freight (CIF): The term is basically the same as C&F, but

with the addition that you have to obtain insurance at your cost against the

risks of loss or damage to the goods during the carriage.

f. Freight or Carriage Paid (DCP): While C&F is used for goods which are

to be carried by sea, the term "DCP" is used for land transport only, including

national and international transport by road, rail and inland waterways. Seller

have to contract for the carriage of the goods to the agreed destination named

in the contract of the sale and pay freight. Seller’s obligations are fulfilled

when the goods are delivered to the first carrier and not beyond. In case the

buyer desires to insure the goods till the destination, he would add 'including

insurance' before the word 'paid in Freight' or 'Carriage Paid to'.

g. EXS/EX-Ship: This is an arrival contract and means that make the goods

available to the buyer in the ship at the named port of destination as per sales

contract. Seller has to bear the full cost and risk involved in bringing the

goods there. Seller’s obligation is fulfilled before the customs border of the

foreign country and it is for the buyer to obtain necessary import license at

his own risk and expense.

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h. EXQ/Ex-Quay: Ex-Quay means that make the goods available to the buyer

at a named quay. As in the term 'Ex-Ship' the points of division of costs and

risks coincide, but they have now been moved one step further -- from the

ship into the quay or wharf i.e. after crossing the customs border at

destination. Therefore, in addition to arranging for carriage and paying

freight and insurance seller have to bear the cost of unloading the goods from

the ship.

i. Delivered at Frontier (DAF): Exporter’s obligations are fulfilled when the

goods have arrived at the frontier, but before the 'Customs border' of the

country named in the sales contract.

j. Delivery Duty Paid (DDP): This term may be used irrespective of the type

of transport involved and denotes your maximum obligation as opposed to

'Ex-Works'. seller have not fulfilled his obligation till such time that the

goods are made available at his risk and cost to the buyer at his premises or

any other named destination. In the latter case necessary documents (e.g.

transport document or Warehouse Warrant) will have to be made available to

the buyer to enable him to take delivery of goods. The term 'duty' includes

taxes, fees and charges.

k. FAO/FOB Airport: 'FOB Airport' is based on the same main principle as

the ordinary FOB term. Seller fulfills his obligation by delivering the goods

to the air carrier at the airport of departure. Without the buyer's approval

delivery at a town terminal outside the airport is not sufficient, seller’s

obligations with respect to costs and risks do not extend to the arrival of the

goods at the destination.

l. Free Carrier (Named Point) FRC: The principle on which the term is

based is same as applicable to FOB except that the seller or the exporter

fulfils his obligations when he delivers the goods into the custody of the

carrier at the named point.

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m. Freight Carriage and Insurance Paid (CIP): The term is similar to 'Freight

or Carriage Paid to'. However, in case of CIP seller have additionally to

procure transport insurance against the risk of loss or damage to the goods

during the carriage.

Duty Drawback Formalities

If the exporter intends to claim duty drawback on his exports, he has to follow

prescribed procedures and submit necessary papers. He has to make endorsement of

shipping bill that claim for duty drawback is being made. If he fails to do so due to

genuine reasons, Commissioner of Customs can grant exemption from this

provision. [Proviso to rule 12(1) (a) of Duty Drawback Rules].

G R / SDF / SOFTEX Form under FEMA

Reserve Bank of India has prescribed GR / SDF form under FEMA. “G R” stands

for ‘Guaranteed Receipt’ form, while SDF stands for 'Statutory Declaration Form’.

SDF form is to be used where shipping bills are processed electronically in customs

house, while GR form is used when shipping bills are processed manually in

customs house.

3.2 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. MCC prefers largely Post

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shipment credit and so I learnt the procedure and mechanism of it. Explanation for

post and pre – shipment finances are given below -

The following diagram depicts the export business cycle:

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 Finance.

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,

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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 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/Discount of export

bills. A margin of 10 to 25% is, however, stipulated in such cases. The rates of

interest etc., chargeable on this facility are also governed by the same rules. This

type of facility is, however, not very popular and most of the advances against export

bills are made by the bank by way of negotiation/purchase/discount.

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

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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 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

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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.

Rates of Interest

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

bill or usance 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 12% p.a.months 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

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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.

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 usance 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,

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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 upto 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 upto 360 days.

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 programme 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

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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.

Post-Shipment Credit on Foreign Currency (EBF)/Rupee (PSCR)

Purpose To provide post-shipment credit in foreign currency at internationally

competitive rates of interest by discounting of usance export bills /

purchase of sight/demand export bills and negotiation of bills under LCs.

Eligible

Borrowers

All SSI units and Export / Trading houses sourcing their requirements

from SSIs with

a. profit making units with proven track record in exports for last

three years and sound financial position

b. requirement of export finance assistance of at least Rs.100 lakh

Norms

Need based limit, depending on the normal trade terms and credit period

given to overseas buyers by exporters not exceeding 180 days.

Assistance in rupees is also considered independent of FC limits.

Rate of interest-

For EBF - Not exceeding 0.75% over 6 Month LIBOR.

For PSCR - As per RBI guidelines and the score chart introduced by

SIDBI.

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Pre-Shipment Credit in Foreign Currency (PCFC)/ Rupee (PCR)

Purpose To enable small scale industries to raise finance at internationally

competitive rates as per Reserve Bank of India guidelines to fulfil their

export commitments.

Eligible

Borrowers

Industrial concerns in the small scale sector and Government recognized

Export / Trading Houses sourcing their requirement for export from SSI

sector with

a. profit making units with proven track record in exports for last

three years and sound financial position

b. requirement of export finance assistance of at least Rs.100 lakh

Norms Pre-shipment Credit in Foreign Currency (PCFC) is being extended in

USD & EURO Currencies. Assistance in Rupees is also considered

independent of FC limits.

Quantum - need based linked to working capital gap.

Period of Credit - linked to production cycle (Maximum -

180 days)

Margin - minimum 10% and maximum 25%

Repayment - by discounting / negotiation of Export bills

within a maximum period of 180 days

Rate of interest -

For PCFC - Not exceeding 0.75% over 6 Month LIBOR.

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For PCR - As per RBI guidelines and the score chart

introduced by SIDBI.

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 a Bank in India, 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 (70% in the

case of 100-pct EOUs or units located in export processing zones). All these

measures were taken by Government of India and Reserve Bank of India to promote

exports and especially SSIs.

3.3 FINANCIAL RISKS INVOLVED IN FOREIGN TRADE

As an exporter while selling goods abroad, you encounter various types of risks. The

major risks which you have to undergo are as follows:

Credit Risk

Currency Risk

Carriage Risk

Country Risk

Credit Risks:

You can cover your credit risk against the foreign buyer by insisting upon opening a

letter of credit in your favour. Alternatively one can avail of the facility offered by

various credit risk agencies. A specific insurance cover can also be obtained from

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ECGC (Exports Credit & Guarantee Corporation) to cover your country risk besides

covering credit risk.

Currency Risks:

As regards covering the currency risk, due to the exchange rate fluctuations, you can

request your banker to book a forward contract.

Carriage Risk:

The carriage risk can be covered by taking an appropriate general insurance policy.

Country Risk:

ECGC provides cover to protect the exporter from country risks.

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Chapter-4

4.1 BASIC LEGAL REQUIREMENTS FOR IMPORTER

IEC CODE – Importer Exporter Code Number

PAN NUMBER- Permanent account number

BANK A/C- Current account number

AD CODE- Authorized dealer code

Registration of company– Registration Under Companies Act

Duty Drawback Account Number

SALE TAX REGISTRATION

SERVICE TAX REGISTRATION

4.2 WHERE TO APPLY FOR THE LEGAL REQUIREMENT

IEC- Office of the Joint Director General of Foreign Trade

PAN- Office of the Income Tax

Bank account – Any Nationalized / Private Banks

AD CODE - Account Holding Bankers

Registration – office of the companies Registration

Duty Drawback account – Account Holding Bankers

SALE TAX REGISTRATION-Sale Tax Department

SERVICE TAX REGISTRATION- Service Tax Department

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4.3 GLOBAL TENDERING

Register as an importer/export with Global tendering

Attending various enquires regarding requirements from global

sellers/buyers

Getting samples from the Suppliers

Testing Samples through – PEG Team

Negotiation of Rates

Finalizing the rates

Order Placing

4.4 INCO TERMS CONDITONS / PAYMENTS

FOB - FREE ON BOARD

CIF - COST INSURANCE FREIGHT

EX-WORKS - EX.FACTORY

L/C - LETTER OF CREDIT

DA - DIRECT ACCEPTANCE

SD - SIGHT DRAFT

TT AD- ADVANCE TELEGRAPIC TRANSFER

4.4.1 RESPONSIBILITES AGAINST TERMS

FOB – Freight Forwarder to be Fixed by the Importers

CIF – Freight forwarder to be fixed by either supplier or the Buyer but the

freight cost to be paid by the supplier.

EX-WORKS – Supplier will handover the consignment at their Factory, the

importer nominated Freight forwarder to pickup the consignment at supplier

factory upto Delivery Port the cost to be bear by the nominated Freight

forwarder .

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4.4.2 RESPONSIBILITES OF FREIGHT FORWARDER

Pickup Of Consignments From The Suppliers End

Arranging Container From The Shipping lines To Load The Consignment

Booking Space For The Particular Vessel

Executing House Bill Of Lading/House Airway bill

Manifesting The Shipping Documents With Loading And Unloading Port

Customs Authorities

Providing Sailing Schedule To The Supplier And Importer

Issuing Cargo Arrival Notice And Shipment Status Report

Delivery Order Releasing

4.4.3 RESPONSIBILITIES OF CUSTOM HOUSE AGENT

Retrieving Documents From The Importers

Scrutinizing The Documents

Checking The Vessel Arrival

Preparing Checklist For Bill Of Entry And Getting Approval From The

Importers Before Filing Of Boe With Customs

Intimating The Duty Amount And The Duty Interest

Processing The Bill Of Entry With Customs (Assessment, Inspection And

Delivery)

Transportation Of Consignment To Importers Factory

4.4.4 CUSTOMS PORT CFS

INDIAN CUSTOMS

Processing the Import and Export consignment BOE and shipping Bills

Checking the Value of the Import and Export and Verifying the Notification

Benefit Claim Genuineness

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Collection of Custom Duty / Cess Duty payment against Import / Export

shipments

Detailed Examination of Import / Export consignments at various customs

nominated Cfs / Port

4.5 TYPES OF BILL OF ENTRIES

Bill of entry for warehouse

Bill of entry for home consumption

Provisional assessment bill of entry

Final assessment bill of entry

Exbond bill of entry

Kachaa bill of entry

4.6 SCHEMES OF IMPORT

100% EOU

EPCG

DEPB

DEEC

DFRC

PROJECT IMPORTS

4.7 The Importer/Customs Broker Relationship

Select carefully; there is a difference ability, level of experience willingness

to train, product line experience

Define the relationship -- in writing. Note: Under general agency/partnership

rules. Broker needs Power of Attorney

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Give information in writing

• - Minute detail

• - Contact for additional information

• - Contact if Customs Service calls

Anticipate change.

- New products, new sources, new factories

Establish procedures for ongoing audits and periodic review.

Expect and plan for improvement in performance.

4.7.1 Responsibilities

Diligent Supervision of Employees

Record of Transactions

Retention of Records

Record Confidentiality (Other than to Customs)

Subject to Audit

Diligence in Correspondence &

Supervision of Money

Must maintain copies of all Powers of Attorney – authorized appointment of

other brokers

4.8 Tariff Classification

An item’s tariff classification is determined based on the Harmonized Tariff

Schedule of the United States, or HTSUS. The HTSUS is derived from the

Harmonized System, which is in use in more than 100 countries worldwide.

4.8.1 Harmonized Tariff Schedule

Chapter: Examples include live animals, Organic chemicals, and Lead and

articles thereof.

Heading: Examples include Potatoes, fresh or chilled; Newspapers, journals

and periodicals; and Printed circuits.

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Subheading: Examples include Rice wine or sake, Lavatory seats and

covers, and Slide projectors.

Chapter - The first two digits, or 39 in the example.

Heading - The first four digits, or 3923 in the example.

Subheading - The first six digits, or 3923.50 in the example.

Tariff item - Anything greater than six digits.

4.9 General Rules of Interpretation

Classification of goods in the tariff schedule shall be governed by the following

principles.

The table of contents, alphabetical index, and titles of sections, chapters and sub-

chapters are provided for ease of reference only; for legal purposes, classification

shall be determined according to the terms of the headings and any relative section

or chapter notes and, provided such headings or notes do not otherwise require,

according to the following provisions.

2(a) Any reference in a heading to an article shall be taken to include a reference to

that article, incomplete or unfinished, provided that, as entered the incomplete or

unfinished article has the essential character of the complete or finished article. It

shall also include a reference to that article complete or finished (or falling to be

classified as complete or finished by virtue of this rule), entered unassembled or

disassembled

3. When, by application of rule 2(b) or for any other reason, goods are, prima facie,

classifiable under two or more headings, classification shall be effected as follows:

(a) The heading which provides the most specific description shall be

preferred to headings providing a more general description. However, when

two or more headings each refer to part only of the materials or substances

contained in mixed or composite goods or to part only of the items in a set

put up for retail sale, those headings are to be regarded as equally specific in

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relation to those goods, even if one of them gives a more complete or precise

description of the goods.

3(b) Mixtures, composite goods consisting of different materials or made up

of different components, and goods put up in sets for retail sale, which

cannot be classified by reference to 3(a), shall be classified as if they

consisted of the material or component which gives them their essential

character, insofar as this criterion is applicable.

3(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall

be classified under the heading which occurs last in numerical order among

those which equally merit consideration.

5. In addition to the foregoing provisions, the following rules shall apply in respect

of the goods referred to therein:

(a) Camera cases, musical instrument cases, gun cases, drawing instrument

cases, necklace cases and similar containers, specially shaped or fitted to

contain a specific article or set of articles, suitable for long-term use and

entered with the articles for which they are intended, shall be classified with

such articles when of a kind normally sold therewith. This rule does not,

however, apply to containers which give the whole its essential character;

5 (b) subject to the provisions of rule 5(a) above, packing materials and

packing containers entered with the goods therein shall be classified with the

goods if they are of a kind normally used for packing such goods. However,

this provision is not binding when such packing materials or packing

containers are clearly suitable for repetitive use.

6. For legal purposes, the classification of goods in the subheadings of a heading

shall be determined according to the terms of those subheadings and any related

subheading notes and, mutatis mutandis, to the above rules, on the understanding

that only subheadings at the same level are comparable. For the purposes of this rule,

the relative section, chapter and subchapter notes also apply, unless the context

otherwise requires.

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Non-Sales

Gifts, samples and promotional items

Merchandise which is imported under consignment

Goods imported under a hire or lease contract

Goods supplied on loan which remain the property of the sender

Foreign Inland Freight

If purchase on CIF/DDP terms and know actual freight costs, then must

deduct;

If purchase on CIF/DDP terms but don't know actual freight costs but learn

before liquidation, then must enter at full value and notify of inclusion of

freight costs. To exercise reasonable care, must thereafter notify of actual

costs;

If purchase on CIF/DDP terms and can't discern actual freight costs, but learn

before liquidation, then must enter at full value and notify of inclusion of

freight costs. To exercise reasonable care, must thereafter notify of actual

costs;

If purchase on CIF/DDP terms and can't discern actual freight costs, then

must enter at full value and notify of inclusion of freight costs. To exercise

reasonable care, must provide statement of inability to discern actual costs;

and

If recurring use of CIF/DDP terms, then may use reconciliation

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Chapter-5

CONCLUSION

It is very clear that the common channel with export market is through

agents; therefore the success of the export business heavily depends on the

credibility of the agent and his capability of dealing with export orders.

Therefore, company adopting the caution note should select credible who

have got the reputation in the market.

Any company planning to explore the export market, it must first look into its

financial capabilities and should then expand the operation based on it.

A hide bound approach must be selected in choosing the export orders

because the wrong selection of orders would be suicidal for the organization.

The common mode of payment in export leading as evident from the survey

is the Letter of Credit, which is considered to be the safest mode.

For many prospective entrants, it is recommended that the company must

operate on Letter of Credit accepted by Bank or a Document on payment.

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Document on Acceptance is not advisable for any new entrant due to the lack

of exposure in the export market.

BIBLIOGRAPHY AND WEBLIOGRAPHY

Bibliography

Khurana P.K, “Export Management”, Prentice Hall of India Pvt. Ltd.,

New Delhi, 2006 .

Jeevanandam C., “ Foreign Exchange”, Sultan Chand & Sons, New

Delhi, 2010.

Webliography

1. www.hcl.in

2. www.hclinfosystems.in

3. www.export.gov

4. www.idrc.com

5. www.finance.indiamart.com/export_import

6. www.indiandata.com

7. www.indianindustry.com

8. www.dgft.gov.in

9. www.marketingpractice.blogspot.com

10. www.itcportal.com

11. www.ecgc.com

12. www.eximbankindia.com

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