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SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS

Import and Export Procedures and Documentation

SUBMITTED BY :

(Name) Himanshu Sharma M B A – IB (2007-2009) Roll No.: A 30101908154

INDUSTRY GUIDE

Mr. Raman Bhasin (Assistant Vice President, Commercial)

Mr. S P Singh (Senior Executive, commercial)

FACULTY GUIDE

Ms. Ritu Sharma

AMITY GLOBAL BUSINESS SCHOOL, NOIDA AMITY UNIVERSITY – UTTAR PRADESH

TO WHOM IT MAY CONCERN

This is to certify that Himanshu Sharma, a student of Amity Global Business School, Noida, undertook a project on “E x l” at E x l Service from 1 st June to 31 st July.

Mr. Himanshu Sharma has successfully completed the project under guidance of Mr. Raman Bhasin.

He is a sincere and hard – working student with pleasant manners. We wish all success in his future endeavors.

Signature with date (Name) Mr. Raman Bhasin (Designation) Assistant Vice President (Company’s Name) exl Service.com (India) Private Limited

CERTIFICATE OF ORIGIN

This is to certify that Mr. Himanshu Sharma, a student of post graduate degree in MBA, Amity Global Business School, Noida has worked in the exl Service.com (India) Private Limited (EXL) , under the able guidance and supervision of Mr. Rama Bhasin, Designation, Assistant Vice President Commercial.

The period for which he was on training was for 8 weeks, starting from 1 st June 2009 to 31 st July 2009. This summer Internship report the requisite standard for the partial fulfillment the post graduate degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and contents are bases on original research.

CERTIFICATE OF ORIGIN This is to certify that Mr. Himanshu Sharma , a student of post

Signature

Signature

(Faculty Guide)

(Student)

ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr. Raman Bhasin, (Designation), Assistant Vice President, (Company), exl Service.com (India) Private Limited(EXL), for his able guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible.

I would also like to thank the entire team of Commercial Department, for the constant support and help in the successful completion of my project.

Also, I am thankful to my faculty guide Ms. Ritu Sharma of my institute, for her continued guidance and invaluable encouragement.

Signature

(Student)

TABLE OF CONTENTS

  • 1.0 Executive Summary

  • 2.0 Introduction

    • a. Objectives

      • 3.0 Company Profile

        • a. Review of literature on the industry

        • b. Historical analysis

        • c. Growth chart

        • d. S W O T

          • 4.0 Issues and challenges facing the organization

          • 5.0 Reflections on what has been learned

          • 6.0 Recommendations

          • 7.0 Bibliography

          • 8.0 Annexure

          • 9.0 Case study

            • 10.0 Synopsis of the project

1.0 Executive Summary

exl Service.com (India) Private Limited (hereinafter referred to as EXL) is a leading end-to- end business process outsourcing solution provider. We have built lasting relationships with our clients based on consistent high-quality service delivery, trust and confidence.

As a pure-play BPO company, EXL has carved a niche for itself with its seasoned management and operations team at the core. Long-standing careers of our leadership team in the banking, financial services and insurance segment provide an unmatched insight and understanding of our clients' business. Our expertise in the domains we operate in, combined with a process centric approach, an unparalleled track record of seamless process migration, and consistent service delivery, positions us uniquely in the BPO space.

We offer integrated outsourcing solutions and have successfully migrated to our operations centers more than 230 processes covering a broad array of products and services. We are one of the few companies managing complex transaction processing operations. We combine our BPO expertise with research and analytics, risk advisory services, and process consulting services to deliver a broad suite of offerings to our customers.

EXL's deep knowledge of industry and processes enables us to provide innovative and cost effective solutions to help our clients achieve high business efficiencies. Our global culture is driven by our sense of accountability, innovation, excellence, urgency, integrity.

(2.0)

Introduction

(a) Objectives

To get an insight to the factors affecting the process of internationalization and reasons for the same.

To study the various strategies that a firm can adopt for expanding internationally.

To analyze and devise a pattern that most firms are likely to follow

(3.0) Company profile (a) Review of literature on the company

Leading Director of the Board

Steven

B.

Gruber Managing Partner - Oak

Hill Capital

Management,

Inc.

(3.0) Company profile (a) Review of literature on the company Leading Director of the Board Steven

StevenB.Gruber is a Managing Partner of Oak Hill Capital Management the investment advisor to Oak Hill Capital Partners, a multi-billion dollar private equity investment group. He was a Co-Founder and Managing Partner of Insurance Partners, L.P. (a $540 million private equity fund dedicated to investments in the insurance industry) and a Managing Partner of the management company of Acadia Partners, L.P. (a $1.6 billion leveraged high yield and private equity fund). Steven has senior responsibility for originating, structuring and managing investments for Oak Hill Capital’s Healthcare and Business and Financial Services industry groups. Prior to this Steven was a Managing Director and Co-Head of High Yield Securities at Lehman Brothers and a Managing Director of its Merchant Banking Group. He was also a member of Lehman Brothers' Investment Committee and

Investment Banking Division Operating Committee. He earned a B.A. degree from the University of Michigan and a M.B.A. from the University of Chicago Graduate School of Business.

Chairman Of The Board

Vikram Talwar

Executive Chairman – Exl Service Holdings, Inc.

Investment Banking Division Operating Committee. He earned a B.A. degree from the University of Michigan and

Prior to joining EXL, Vikram spent 26 years in the Bank of America where he held several senior management positions. He was the Senior Vice President and Country Manager from 1989 to 1993, for the bank's operations in India. He was at the helm of a 700 strong wholesale and retail operations team that was amongst the most profitable of the bank's international operations. Vikram has also worked in the capacity of CEO and Managing Director at Ernst & Young Consulting, India and as their Asia Director for the firm's Global Operate Business (Outsourcing). Vikram has had extensive international exposure in the course of his assignments, in countries such as Singapore, Indonesia, Japan and the U.S. Vikram is an MBA from Indian Institute of Management, Ahmedabad, India.

Members Of The Board

Rohit Kapoor President & Chief Executive Officer – Exl Service Holdings, Inc.

Members Of The Board Rohit Kapoor President & Chief Executive Officer – Exl Service Holdings, Inc.

As a former business head at Deutsche Bank, Rohit Kapoor led a marketing team that serviced clients in Europe, the Middle East and the Indian Sub-continent. He also managed the venture capital/private equity investments of several Ultra High Net Worth clients in start-up companies both in the US and Indian TMT sectors. Having successfully raised several rounds of venture capital funding for various companies, Rohit has also been involved in the structuring of their investments. Prior to Deutsche Bank, he worked for eight years with Bank of America, five of which were in Private Banking at New York and three in Corporate Banking in India. Rohit is a B.Tech from IIT Delhi and an MBA from Indian Institute of Management, Ahmedabad, India.

GarenK.Staglin

GarenK.Staglin Garen K. Staglin is an independent director on EXL's board. He has over 35 years

Garen K. Staglin is an independent director on EXL's board. He has over 35 years experience in the financial services and technology industries. Garen was a Director of First Data Corporation and until recently was President and CEO of eONE Global L.P., an emerging payments company.

Previously, he was Chairman and CEO of Safelite Glass Corporation, a manufacturer and retailer of replacement autoglass and related insurance services. Prior to his experience at Safelite, Garen was President of ADP Automotive Claims Services, a leading provider of auto physical damage claims estimating software and services. Garen is on the board of Global Document Solutions, Inc., a digital printing, imaging and CRM outsourcing company and Bottomline Technologies, a business to business payments company. He is also on the international board of Solera, Inc., a consulting, outsourced services and strategic technology provider focused on auto physical damage claims solutions. Garen is an investor in several private companies and hedge funds, and is a Senior Advisor to Irving Place Capital and FTV Capital. He serves on the Advisory Board of the Cambridge University Business School in the United Kingdom. Garen holds an M.B.A. from Stanford University and a B.S. in engineering from UCLA.

Edward Dardani Edward Dardani has served as a member of the board of directors since April

Edward Dardani

Edward Dardani has served as a member of the board of directors since April 27 2005. Edward is a Principal of Oak Hill Capital Partners, L.P., where he joined in 2002. He is responsible for investments in business and financial services sectors. Prior to joining Oak Hill, he was a Partner at DB Capital Partners and a Management Consultant at McKinsey & Co. He began his career at Merrill Lynch in their investment-banking group. Edward serves on the boards of directors of American Skiing Company, The Jacobson Companies, and Southern Air

Dr.Mohanbir Sawhney

Edward Dardani Edward Dardani has served as a member of the board of directors since April

Dr. Mohanbir Sawhney is a globally recognized scholar, teacher, consultant and speaker on strategic marketing, e- business and innovation. He is the McCormick Tribune Professor of Technology and the Director of the Center for Research in Technology and Innovation at the Kellogg School of Management, Northwestern University. Business Week named him as one of the 25 most influential people in e-Business. Crain's Chicago Business named him a member of "40 under 40", a select group of young

Economic Forum. He has been widely recognized as a thought leader. His research and teaching interests include collaborative marketing with customers, IT and business agility, customer-centric organization design, organic growth and business innovation. Mohanbir is the co-author of three books - The Seven Steps to Nirvana: Strategic Insights into eBusiness Transformation, Techventure: New Rules for Value and Profit from Silicon Valley, and Kellogg on Technology & Innovation. He has also co-authored Photo Wars, a strategy simulation game. His research has been published in leading journals like California Management Review, Harvard Business Review, Journal of Interactive Marketing, Management Science, Marketing Science, MIT Sloan Management Review, and Journal of the Academy of Marketing Science. Mohanbir holds a Ph.D. in Marketing from the Wharton School of the University of Pennsylvania, a Master's degree in Management from the Indian Institute of Management, Calcutta, and a Bachelor's degree in Electrical Engineering from the Indian Institute of Technology, New Delhi.

David BKelso

Economic Forum. He has been widely recognized as a thought leader. His research and teaching interests

David B Kelso is a Senior Advisor with Inductis. Prior to joining Inductis, he has held various senior executive positions during his 25 years of experience in the financial services, information services and management consulting industries. Most recently, he served as a Financial Advisor and Executive Vice President, Strategy and Finance for Aetna, Inc. in Hartford, CT. From 1996 to 2001 David was Executive Vice President, Managing Director and Chief Financial Officer of the Chubb Corporation. Before joining the Chubb Corporation, he served as Executive Vice President, Chief Financial Officer and Personal Segment Leader for Retail and Small Business Banking for First Commerce Corporation in New

Orleans. Previously, he culminated the period of increasingly responsible positions with The Mac Group/Gemini Consulting in Washington, D.C., as partner and head of the North American banking practice. Prior to that David spent a year as an Associate with GE Information Services Company after beginning his professional career at Chemical Bank in New York, NY as an Associate. David holds a B.A. in English from Princeton University and an MBA in Finance and Marketing from the Darden School of Business, The University of Virginia. He is a Director at Aetna Life Insurance Company, Chairman of the Conference Board Council of Financial Services CFOs, a Member of the AIA Council of Property & Casualty Insurance CFO's and Director of The Citizens Budget Commission (NY). He is also a Member of Episcopal High School Board of Directors and a guest lecturer at Duke, Wharton and Tulane Business Schools.

Orleans. Previously, he culminated the period of increasingly responsible positions with The Mac Group/Gemini Consulting in

Clyde Ostler

Clyde Ostler currently serves as Group Executive Vice President of Wells Fargo & Company where he is responsible for the Wealth Management Group and the Internet Services Group. Clyde joined Wells Fargo & Company in 1971 and has served in numerous roles during his tenure including General Auditor, Executive Vice President & Chief Financial Officer, and Vice Chairman in the Office of the President.

Kiran Karnik

Kiran Karnik was the immediate past President of NASSCOM, India’s apex industry body representing companies in

Kiran Karnik was the immediate past President of NASSCOM, India’s apex industry body representing companies in the information technology (IT) and IT- enabled services sectors. During his tenure as President of NASSCOM, Kiran worked closely with the industry as well as the central and state governments in India to advance this sector in India and globally. Prior to his tenure at NASSCOM, Kiran was the Managing Director at Discovery Networks in India where he spearheaded the launch of Discovery Channel and Animal Planet in South Asia. Earlier, Kiran was Founder-Director of the Consortium for Educational Communication, which was responsible for the UGC’s Countrywide Classroom broadcasts and other ICT initiatives. He has also worked for over 20 years at the Indian Space Research Organization (ISRO) in various positions including Founder- Director of ISRO’s Development and Educational Communication unit and was also a key player in the pioneering India-USA Satellite Instructional TV Experiment (SITE). Kiran is a recipient of the Padma Shri award by the Government of India in 2007 and the ‘DATAQUEST IT Person of the Year – 2005’. Business Week named Kiran as one of the ‘Stars of Asia’ in 2004 and he was selected as Forbes magazine’s ‘Face of the Year 2003’, for being a driving force behind India’s off shoring wave. A post graduate from the Indian Institute of Management, Ahmadabad, Kiran holds an Honors degree in Physics from Bombay University.

EXL has a mention among the world's leading BPO providers in various global studies. The rankings recognize EXL's position in the global market place. These rankings truly validate and reinforce EXL's positioning as a global tier 1, pure-play, offshore BPO service provider.

Consistently ranked among the leading global service providers

Among Global Outsourcing Leaders in the Global Outsourcing 100

The International Association of Outsourcing Professionals (IAOP) features EXL in the Global Outsourcing 100 as one of the IAOP Global Outsourcing Leaders". Global rankings published in April 30, 2007 issue of FORTUNE® magazine

Among the World's 100 Most Innovative Service Providers

EXL selected amongst "the world's 100 most innovative service providers" in CMP Media's

Global Services 100 based on a study conducted with NeoIT

Among the Top 50 Best Managed Global Outsourcing vendors

Recognized by the Black Book of Outsourcing as one of the Top 50 Best Managed Global Outsourcing Vendors.

Among the Top 21 F&A outsourcing providers

Featured in the Top 21 FAO (Finance and Accounting Outsourcing) providers for the year 2007 by FAO Today

First runners up position at 10th Pacific-Asia Conference on Knowledge Discovery and Data Mining (PAKDD 2006)

EXL Research and Analytics division adjudged first runner's up at the 10th Pacific-Asia

Conference on Knowledge Discovery and Data Mining (PAKDD 2006) in Singapore

The new tagline “Go Next. Now.” encapsulates the DNA of EXL - the Relentless Pursuit of Excellence. It underscores our commitment to consistently raise the bar through our differentiated Transformational Outsourcing services which deliver a unique value

proposition to

clients.

.

As we continue to grow and evolve as an organization, we felt the time was right to initiate a new brand that captured our long tradition of providing superior service by recognizing and successfully addressing the issues that would impact our clients in the future. In the process of evolution over a decade, our values have remained constant and have made us the ethical, strong and resilient organization that we are. The new brand embodies our values of accountability, innovation, excellence, urgency, integrity andrespect.

EXL’s logo has undergone changes that echo the transformation of the organization over the past decade and underscore the importance of EXL’s most valued asset – its people.

The logo retains the color palette – blue, representing the traditional values of dependability, dedication and commitment; and orange which is representative of new age values such as innovation, creativity, the drive to excel and the desire to grasp the future. The humanoid represents an effortless unison of the two points of view and embodies an air of dynamism and an irrepressible approach towards the future.

The new identity reinforces and strengthens our position as market leaders in the transformational outsourcing space. As we look to grow EXL both from a capabilities and geographies standpoint, our new brand philosophy illustrates our endeavor to help customers make effective decisions, increase efficiencies, improve their control environment and prepares them to Go Next. Now.

(b) Historical Analysis

EXL was incorporated in April 1999 in Delaware, US, by a group of experienced professionals including Vikram Talwar and Rohit Kapoor. Vikram was then the CEO and Managing Director of Ernst & Young, and Rohit managed international investments for clients at Deutsche Bank.

In August 2001, Conseco acquired EXL and operated as its wholly owned subsidiary. Later, in November 2002, Oak Hill Capital Partners L.P. and FTVentures along with some members of our senior management team bought EXL from Conseco making it a third party pure-play business process outsourcing service provider.

EXL has come a long way since. EXL has kept up its momentum and achieved several milestones-servicing approximately 50 clients, approximately 8,200 strong family of EXLites, expanding the types and sophistication of our research and analytics services by acquiring EXL Research and Analytics division.

EXL's focus on select domains and service offerings, and its rigor of consistent and significant quality improvements has made EXL one of the leading players in the global BPO space.

(c) Growth Chart- past and projections for future

(d) S W O T

(d) S W O T

(4.0) Issues And Challenges Facing The Organization

(4.0) Issues And Challenges Facing The Organization

The changing business, operating and regulatory environment has resulted in greater expectations from the organization.

  • (a) Finance operations:-

. Talent shortage and inefficient process resulting in higher

operating costs.

. Desperate legacy technology systems with manual interventions. . Volatile operating environment and need for flexible cost culture.

(b)Performance Management and Reporting

.Rapid business changes demand enhanced strategic and operational decision support.

. Increase in statutory and industry reporting requirements.

(c)

Governance

. Multiple and evolving legal and compliance requirements.

. Business complexity and changing operating environment requires greater focus to risk management and integration of risk management with decision making.

(5.0) Reflections on what has been learned during placement Experience.

Import and Export

An import is any good (e.g. a commodity) or service brought into one country from another country in a legitimate fashion, typically for use in trade. It is a good that is brought in from another country for sale. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country.

Imports, along with exports, form the basis of international trade. Import of goods normally requires involvement of the Customs authorities in both the country of import and the country of export and are often subject to import quotas, tariffs and trade agreements. When the "imports" are the set of goods and services imported, "Imports" also means the economic value of all goods and services that are imported.

Type of imports

There are two basic types of imports: 1. Industrial and consumer goods, 2. Intermediate goods and services,

Companies import goods and services to supply to the domestic market at a cheaper price and better quality than competing goods manufactured in the domestic market. Companies import products that are not available in the local market.

There are three broad types of importers:

1. Looking for any product around the world to import and sell.

  • 2. Looking for foreign sourcing to get their products at the cheapest price.

  • 3. Using foreign sourcing as part of their global supply chain.

Export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers. Export is an important part of international trade. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and e-Bay has largely bypassed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. An export's counterpart is an import.

Methods of export include a product or good or information being mailed, hand-delivered, shipped by air, shipped by boat, uploaded to an internet site, or downloaded from an internet site. Exports also include the distribution of information that can be sent in the form of an email, an email attachment, a fax or can be shared during a telephone conversation

Exports and free trade

The theory of comparative advantage materialized during the first quarter of the 19th century in the writings of 'classical economists'. While David Ricardo is most credited with the development of the theory, James Mills and Robert Torrens produced similar ideas. The theory states that all parties maximize benefit in an environment of unrestricted trade, even if absolute advantages in production exist between the parties.

In contrast to Mercantilism, the first systematic body of thought devoted to international trade, emerged during the 17th and 18th centuries in Europe. While most views surfacing from this school of thought differed, a commonly argued key objective of trade was to promote a "favorable" balance of trade, referring to a time when the value of domestic goods exported exceeds the value of foreign goods imported. The "favorable" balance in turn created a balance of trade surplus.

Mercantilists advocated that government policy directly arrange the flow of commerce to conform to their beliefs. They sought a highly interventionist agenda, using taxes on trade to manipulate the balance of trade or commodity composition of trade in favor of the home country.

Challenges

Exporting to foreign countries poses challenges not found in domestic sales. With domestic sales, manufacturers typically sell to wholesalers or direct to retailer or even direct to consumers. When exporting, manufacturers may have to sell to importers who then in turn sell to wholesalers. Extra layer(s) in the chain of distribution squeezes margins and manufacturers may need to offer lower prices to importers than to domestic wholesalers.

Importing/Exporting procedures adopted by the company:-

Glossary (Acronyms)

ACC

Assistant Commissioner of Customs

ACU

Asian Clearing Union

AEZ

Agri Export Zone

ANF

Aayaat Niryaat Form

ARO

Advance Release Order

ASIDE

Assistance to States for Infrastructure Development of Exports

BG

Bank Guarantee

BIFR

Board of Industrial and Financial Reconstruction

BoA

Board of Approval

BoT

Board of Trade

BRC

Bank Realisation Certificate

BTP

Bio Technology Park

CBEC

Central Board of Excise and Customs

CCP

Customs Clearance Permit

CEA

Central Excise Authority

CEC

Chartered Engineer Certificate

CIF

Cost, Insurance & Freight

CIS

Commonwealth of Independent States

CoD

Cash on Delivery

CoO

Certificate of Origin

CVD

Countervailing Duty

DA

Document against Acceptance

DoBT

Department of Bio Technology

DC

Development Commissioner

DEPB

Duty Entitlement Pass Book Scheme

DFIA

Duty Free Import Authorisation

DFRC

Duty Free Replenishment Certificate

DGCI&S

Director General, Commercial Intelligence & Statistics

DGFT

Director General of Foreign Trade

DIPP

Department of Industrial Policy & Promotion

DoC

Department of Commerce

DoE

Department of Electronics

DoIT

Department of Information Technology

DoR

Department of Revenue

DoT

Department of Tourism

DTA

Domestic Tariff Area

EDI

Electronic Data Interchange

EEFC

Exchange Earners’ Foreign Currency

EFC

Exim Facilitation Committee

EFT

Electronic Fund Transfer

EH

Export House

EHTP

Electronic Hardware Technology Park

EIC

Export Inspection Council

EO

Export Obligation

EOP

Export Obligation Period

EOU

Export Oriented Unit

EPC

Export Promotion Council

EPCG

Export Promotion Capital Goods

EPO

Engineering Process Outsourcing

FDI

Foreign Direct Investment

FIEO

Federation of Indian Export Organisation

FIRC

Foreign Exchange Inward Remittance Certificate

FMS

Focus Market Scheme

FOB

Free On Board

FPS

Focus Product Scheme

FT (D&R)Act Foreign Trade ( Development & Regulation) Act, 1992 (No. 22of 1992)

FTDO

Foreign Trade Development Officer

FTP

Foreign Trade Policy

GATS

General Agreement on Trade in Services

GRC

Grievance Redressal Committee

HACCP

Hazard Analysis And Critical Control Process HBP v1 Hand Book of

ICD

Procedures (Vol. 1) HBP v2 Hand Book of Procedures (Vol. 2) Inland Container Depot

ICM

Indian Commercial Mission

IEC

Importer Exporter Code

ISO

International Standards Organisation

ITC (HS)

Indian Trade Classification (Harmonised System) Classification for

ITPO

Export & Import Items, 2004-2009 India Trade Promotion Organisation

LoC

Line of Credit

LoI

Letter of Intent

LoP

Letter of Permit

LUT

Legal Under Taking MAI Market Access Initiative MDA

Market Development

MEA

Assistance Ministry of External Affairs

MoD

Ministry of Defence

MoF

Ministry of Finance

NC

Norms Committee

NFE

Net Foreign Exchange

NOC

No Objection Certificate

PRC

Policy Relaxation Committee

PTH

Premier Trading House

PSU

Public Sector Undertaking

R&D

Research and Development

RA

Regional Authority

RBI

Reserve Bank of India

REP

Replenishment

RCMC

Registration-cum-Membership Certificate

RSCQC

Regional Sub-Committee on Quality Complaints

S/B

Shipping Bill

SEH

Star Export House

SEI CMM

Software Engineers Institute’s Capability Maturity Model

SEZ

Special Economic Zone

SFIS

Served from India Scheme

SIA

Secretariat for Industrial Assistance

SION

Standard Input Output Norms

SSI

Small Scale Industry

STE

State Trading Enterprise

STH

Star Trading House

STP

Software Technology Park

TEE

Towns of Export Excellence

TH

Trading House

TRQ

Tariff Rate Quota

VA

Value Addition

VKGUY

Vishesh Krishi and Gram Udyog Yojana

WHOGMP

World Health Organisation Good Manufacturing Practices

Procedure For Import and Export

General Provisions

Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcel or as baggage with passengers. Procedures naturally vary depending on mode of import or export.

COMPUTERISATION OF CUSTOMS WORK - Work of customs at Delhi airport has been computerised. Work at Mumbai port is also computerised. Whenever the work is computerised, documents like IGM and Bill of Entry have to be filed electronically. Procedure in computerised environment has been specified in CC, New Delhi PN 22/98 dated 8.5.1998. Guidelines for preparing

data file for Bill of Entry and shipping bills for Mumbai Customs House has been prescribed vide PN 108/99 dated 30-9-1999 and PN 10/2001 dated

30.1.2001.

ENTRY – ‘Entry’ in relation to goods means an entry made in a Bill of Entry, Shipping Bill or Bill of Export. It includes (a) label or declaration accompanying the goods which contains description, quantity and value of the goods, in case of postal articles u/s 82 (b) Entry to be made in case of goods to be exported (c) Entry in respect of goods imported which are not accompanied by label or declaration made as per provisions of section 84. [section 2(16)].

AMENDMENT TO DOCUMENTS - Importer, exporter or 'Person In charge' have to submit various documents to customs authorities like Bill of Entry, Import Manifest, Export Manifest etc. Some times, it may become necessary to amend the document due to various reasons like change in classification, clerical mistake in document, change in unloading / loading plan of vessel etc. In such case, permission to amend these documents have to be obtained from customs authorities. [section 149]. Such permission can be given if there are no fraudulent intentions.

In case of bill of entry, shipping bill or bill of export, it can be amended after clearance only on the basis of documentary evidence which was in existence at the time the goods were cleared, warehoused or exported, and not on basis of any subsequent document. [proviso to section 149].

Customs Station - Imported goods are permitted to be unloaded only at specified places. Similarly, goods can be exported only from specified area. In view of this, definitions of ‘Customs Station’ is important.

Customs area means all area of Customs Station and includes any area where imported goods or export goods are ordinarily kept pending clearance by Customs authorities. Thus, ‘Customs Area’ could include some area even outside the ‘Customs Station’. Customs Station means (a) customs port (b)

inland container depot (c) customs airport and (d) land customs station.

Section 7 of Customs Act empowers CBEC (Board) to appoint * Customs ports * Customs airports * Places for inland container depots * Coastal ports. These are appointed by issuing a notification. Section 8 authorises Commissioner of Customs to approve proper places in any customs port, customs airport or costal port for unloading and loading of goods or for any class of goods and specify the limits of customs area. Thus, the place (city / town / village etc.) is approved by CBEC, while exact location within that city / town / village is approved by Commissioner of Customs.

Import Procedures

Procedures have to be followed by ‘person-in-charge of conveyance’ as well as the importer.

WHO IS 'PERSON IN CHARGE' - As per section 2(31), 'person in charge' means (a) In case of vessel - its master (b) In case of aircraft - its commander or pilot-in-charge (c) In case of train - its conductor or guard and (d) In case of vehicle or other conveyance - its driver or other person in charge.

The significance of this definition is -

  • He is responsible for submitting Import Manifest and Export Manifest

  • He is responsible to ensure that the conveyance comes through approved route and lands at approved place only.

  • He has to ensure that goods are unloaded after written order, at proper place. Loading also has to be only after permission.

  • He has to ensure that conveyance does not leave without written order of Customs authorities.

  • He can be penalised for (a) Giving false declaration and statement (b) shortages or non-accounting of goods in conveyance

Procedure to be followed by the Carrier - The 'person in charge of conveyance' (carrier of goods) has to follow prescribed procedure.

Arrival at customs port/airport only - Section 29 provides that person-in-charge of a vessel or an aircraft entering India shall call or land at customs port or customs airport only. It can land at other place only if compelled by accident, stress of weather or other unavoidable cause. In such case, he should report to nearest police station or Customs Officer. While arriving by land route, the vehicle should come by approved route to ‘land customs station’ only.

Import Manifest / Report- Person-in-charge of vessel, aircraft or vehicle has to submit Import Manifest / Report. [also termed as IGM - Import General Manifest]. (In case of a vessel or aircraft, it is called import manifest, while in case of vehicle, it is called import report.) The import manifest in case of vessel or aircraft is required to be submittedprior to arrival of a vessel or aircraft. Import report (in case of vehicle) has to be submitted within 12 hours of arrival at the customs station. If the report / manifest could not be submitted within prescribed time, person-in-charge or any person specified as responsible by a notification is liable to penalty upto Rs 50,000. Such penalty will not be imposed if the excise officer is satisfied that there was sufficient cause for the delay. [section 30(1)].

IGM can be submitted electronically through floppy where EDI facility is available.

IMPORT MANIFEST IS REQUIRED TO BE SUBMITTED BEFORE ARRIVAL OF AIRCRAFT OR VESSEL - Section 30(1) of Customs Act provides that Import Manifest should be filed before arrival of ship or aircraft. Normally, the Agents submit the Import Manifest before arrival, so that maximum possible formalities are completed before vessel or aircraft arrives. This also enables importers to file ‘Bill of Entry’ in advance.

Grant of Entry Inwards by Customs Officer - Unloading of cargo can start only after Customs Officer grant ‘Entry Inwards’. Such entry inwards can be granted only when berthing accommodation is granted to a vessel. If there is heavy congestion at port, shipping berth may not be available and in such case, ‘Entry Inwards’ cannot be granted. This date is highly relevant for determining rate of customs duty applicable.

Carrier responsible for shortages during unloading - If the goods are short landed, the carrier is liable to pay penalty upto twice the amount of duty payable on such short landed goods. It has been held that tally sheet prepared by Port Trust authorities on unloading of goods is a statutory document and should be accepted in preference to steamer survey - Scindia Steam Navigation v. CC - 1988 (33) ELT (CEGAT) followed in re India Steamship Co. Ltd. - 1992 (57) ELT 510 (GOI).

Procedure by Importer - The importer importing the goods has to follow prescribed procedures for import by ship/air/road. (There is separate procedure for goods imported as a baggage or by post.)

Bill of Entry - This is a very vital and important document which every importer has to submit under section 46. The Bill of Entry should be in prescribed form. The standard size of Bill of Entry is 16" × 13". However, for computerisation purposes, 15" × 12" size is permitted. (Mumbai Customs Public Notice No.

142/93 dated 3-11-93).

Bill of Entry should be submitted in quadruplicate – original and duplicate for customs, triplicate for the importer and fourth copy is meant for bank for making remittances.

Under EDI system, Bill of Entry is actually printed on computer in triplicate only after ‘out of charge’ order is given. Duplicate copy is given to importer.

Types of Bill of Entry - Bills of Entry should be of one of three types. Out of these, two types are for clearance from customs while third is for clearance from warehouse.

BILL OF ENTRY FOR HOME CONSUMPTION - This form, called ‘Bill of Entry for Home Consumption’, is used when the imported goods are to be cleared on payment of full duty. Home consumption means use within India. It is white coloured and hence often called ‘white bill of entry’.

BILL OF ENTRY FOR WAREHOUSING - If the imported goods are not required immediately, importer may like to store the goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. This will enable him to defer payment of customs duty till goods are actually required by him. This Bill of Entry is printed on yellow paper and often called ‘Yellow Bill of Entry’. It is also called ‘Into Bond Bill of Entry’ as bond is executed for transfer of goods in warehouse without payment of duty.

BILL OF ENTRY FOR EX-BOND CLEARANCE - The third type is for Ex- Bond clearance. This is used for clearance from the warehouse on payment of duty and is printed on green paper. The goods are classified and value is assessed at the time of clearance from customs port. Thus, value and classification is not required to be determined in this bill of entry. The columns in this bill of entry are similar to other bills of entry. However, declaration by importer is not required as the goods are already assessed.

RATE OF DUTY FOR CLEARANCE FROM WAREHOUSE - It may be noted that rate of duty applicable is as prevalent on date of removal from warehouse. Thus, if rate has changed after goods are cleared from customs port, customs duty as assessed on yellow bill of entry and as paid on green bill of entry will not be same.

Mention of BIN on Bill of Entry – A BIN (Business Identification Number) is allotted to each importer and exporter w.e.f. 1.4.2001. It is a 15 digit code based on PAN of Income Tax (PAN is a 10 digit code). [Earlier an EC (Import Export

code) number issued by DGFT was required to be mentioned on Bill of Entry].

Filing of Bill of Entry - Normally, Bill of Entry is filed by CHA on behalf of the importer. Customs work at some ports has been computerised. In that case, the Bill of Entry has to be filed electronically, i.e. through Customs EDI system through computerisation of work. Procedure for the same has been prescribed vide Bill of Entry (Electronic Declaration) Regulations, 1995.

Documents to be submitted by Importer - Documents required by customs authorities are required to be submitted to enable them to (a) check the goods (b) decide value and classification of goods and (c) to ensure that the import is legally permitted. The documents that are essentially required are : (i) Invoice (ii) Packing List (iii) Bill of Lading / Delivery Order (iv) GATT declaration form duly filled in (v) Importers / CHAs declaration duly signed (vi) Import Licence or attested photocopy when clearance is under licence (vii) Letter of Credit / Bank Draft wherever necessary (vii) Insurance memo or insurance policy (viii) Industrial License if required (ix) Certificate of country of origin, if preferential rate is claimed. (x) Technical literature. (xi) Test report in case of chemicals (xii) Advance License / DEPB in original, where applicable (xiii) Split up of value of spares, components and machinery (xiv) No commission declaration. – A declaration in prescribed form about correctness of information should be submitted. – Chapter 3 Para 6 and 7 of CBE&C’s Customs Manual, 2001.

The Noting is now done electronically in large ports, while it is done manually in small ports. Thoka Number (Serial Number) is given while noting the Bill of Entry.

Electronic submission under EDI system – Where EDI system is implemented, formal submission of Bill of Entry is not required, as it is generated in computer system. Importer should submit declaration in electronic format to ‘Service Centre’. A signed paper copy of declaration for non-repudiability should be submitted. Bill of Entry number is generated by system which is endorsed on printed check list. Original documents are to be submitted only at the stage of examination.

Assessment of Duty and Clearance

The documents submitted by importer are checked and assessed by Customs authorities and then goods are cleared. Section 2(2) defines ‘assessment’ as follows – ‘Assessment’ includes provisional assessment, reassessment and any order of assessment in which the duty assessed is Nil. Thus, ‘assessment’ includes ‘Nil’ assessment.

Noting of Bill of Entry - Bill of Entry submitted by importer or Customs House Agent is cross-checked with ‘Import Manifest’ submitted by person in charge of

vessel / carrier. It is noted if the description tallies. ‘Noting’ really means taking on record by customs officer. This date is relevant for determining rate of customs duty. Thoka number (serial number) is given in the import section. Otherwise, it is returned for clarifications. In case of EDI system, noting is done by the system itself which also generates bill of entry number.

Date of presentation of bill of entry is highly relevant and the rate of duty as applicable on this date will be considered for calculating the duty payable. Bill of Entry is accepted only after proper scrutiny vis-a-vis import manifest and various declarations given in bill of entry and attached documents like invoice, bill of lading etc. If such documents are not attached, the authorities can refuse to accept the Bill of Entry, and hence submission of such incomplete Bill of Entry cannot be taken as date of presentation of Bill of Entry - Simla Agencies v. CC - 1993 (63) ELT 248 (CEGAT).

Prior Entry of Bill of Entry - After the goods are unloaded, these have to be cleared within stipulated time - usually three working days. If these are not so removed, demurrage is charged by port trust/airport authorities, which is very high. Hence, importer wants to complete as many formalities as possible before ship arrives. Proviso to Section 46(3) of Customs Act allows importer to present bill of entry upto 30 days before expected date of arrival of vessel. In such case, duty will be payable at the rate applicable on the date on which ‘Entry Inward’ is granted to vessel and not the date of presentation of Bill of Entry, but rate of exchange will be as prevalent on date of submission of bill of entry. - confirmed in CC, New Delhi circular No 64/96 dated 10.12.1996 and CBE&C circular No 22/97-Cus dated 4.7.1997.

Assessment of Customs duty - Section 17 provides that assessment of goods will be made after Bill of Entry is filed. Date stamp of receipt is put on the ‘Bill of Entry’ and then it is sent to appraising department either manually or electronically

There are various Appraising groups for different Chapter headings. Each group is under an Assistant/Deputy Commissioner. Group consists of ‘Examiners’ and ‘Appraisers’.

APPRAISING THE GOODS - Appraiser has to (a) correctly classify the goods (b) decide the Value for purpose of Customs duty (c) find out rate of duty applicable as per any exemption notification and (d) verify that goods are not imported in violation of any law. He can call for any further documents that may be required for assessment. If he is of the opinion that goods have to be examined for appraisal, he will issue an examination order, usually on the reverse of Bill of Entry. If such order is issued, the Bill of Entry is presented to appraising staff at docks / air cargo complexes, where the goods are examined in presence of importer’s representative. Assessment is finalised after getting the

report of examination.

VALUATION OF GOODS - As per rule 10 of Customs Valuation Rules, the importer has to file declaration about full 'value' of goods. If the assessing officer has doubts about the truth and accuracy of 'value' as declared, he can ask importer to submit further information, details and documents. If the doubt persists, the assessing officer can reject the value declared by importer. [rule 10A(1) of Customs Valuation Rules]. If the importer requests, the assessing officer has to give reasons for doubting the value declared by importer. [rule 10A(2)]. If the value declared by importer is rejected, the assessing officer can value imported goods on other basis e.g. value of identical goods, value of similar goods etc. as provided in Customs Valuation Rules. [This amendment has been made w.e.f. 19.2.98, as per WTO agreement. However, it has been held that burden of proof of under valuation is on department]. - - Assessing Officer should not arbitrarily reject the declared value and increase the assessable value. He should follow due process of law and issue appealable order. – MF(DR) circular No. 16/2003-Cus dated 17-3-2003.

APPROVAL OF ASSESSMENT - The assessment has to be approved by Assistant Commissioner, if the value is more than Rs one lakh. (in cases covered under ‘fast track clearance for imports’, appraiser is also authorised to approve valuation). After the approval, duty payable is typed by a “pin-point typewriter” so that it cannot be tampered with. As per CBE&C circular No. 10/98-Cus dated 11-2-1998, Assessing Officer should sign in full in Bill of Entry followed by his name, preferably by rubber stamp.

EDI ASSESSMENT – In the EDI system, the cargo declaration is transferred to assessing officer in the groups electronically. Processing is done on the screen itself. All calculations are done by the system itself. If assessing officer needs clarification, he can raise a query. The query is printed at service centre and importer replies through service centre. Facility of tele-enquiry about status of documents is provided in major customs stations. Under EDI, normally, documents are inspected only after assessment. After assessment, copy of Bill of Entry is printed at service centre. Final Bill of Entry is printed only after ‘Out of Charge’ order is given by customs officer. – Chapter 3 Para 18 to 22 of CBE&C’s Customs Manual, 2001.

PAYMENT OF CUSTOMS DUTY - After assessment of duty, necessary duty is paid. Regular importers and Custom House Agents keep current account with Customs department. The duty can be debited to such current account, or it can be paid in cash/DD through TR-6 challan in designated banks.

After payment of duty, if goods were already examined, delivery of goods can be taken from custodians (port trust) after paying their dues. If goods were not examined before assessment, these have to be submitted for examination in

import shed to the examining staff. After shed appraiser gives ‘out of charge’ order, delivery of goods can be taken from custodian.

First and second system of assessment - There are two systems of assessment. Section 17(2) provides for assessment after examination of goods and section 17(4) provides for assessment on basis of documents, followed by inspection and testing of goods.

First appraisement system” or 'first check procedure' is followed if the appraiser is not able to make assessment on the basis of documents submitted and deems that inspection is necessary. Goods are examined first and then these are assessed. This method is followed only if assessment is not possible on basis of documents. - - The importer himself may also request 'first check procedure', if he cannot give all required details regarding description / value of goods. He has to make request for first check examination at the time of filing of Bill of

Entry or at data entry stage in case of EDI. He has to give reason for seeking first appraisement. The examination order is recorded on Bill of Entry and then returned to importer / CHA. It is then presented to import shed for examination. The shed appraiser / Dock examiner examines the goods as per examination order and records his findings. If samples are required, they are taken out. In case of EDI system, the report of examination is given in the computer itself. The goods are then assessed to duty by appraiser. - Chapter 3 Para 23 of CBE&C’s Customs Manual, 2001.

In “Second Appraisement System” or 'second check procedure', which is normally followed, assessment is done on basis of documents and then goods are examined. Such examination is not mandatory. It is done on selective basis on the basis of ‘risk assessment’ or specific intelligence report. Section 17(4) of Customs Act specifically provides that if initially assessment is done on basis of documents, re-assessment can be done after examination or testing of goods or otherwise, if it is found subsequent to examination or testing or otherwise, that any statement made on Bill of Entry or any information supplied is not true in respect of matter relevant to assessment of duty.

First appraisement is generally carried out in following cases - * If complete documents are not submitted * Goods are to be tested for correct classification * Goods are re-imported * Goods are damaged or deteriorated and abatement is claimed * Goods are abandoned and remission of duty is applied for * When goods are provisionally assessed * When importer himself requests for examination of goods before payment of duty.

EXAMINATION OF GOODS - Examiners carry out physical examination and quantitative checking like weighing, measuring etc. Selected packages are opened and examined on sample basis in ‘Customs Examination Yard’.

Examination report is prepared by the examiner.

Accelerated Clearance of Imports and Exports Scheme (ACS) – Finance Minister, in his budget speech on 28-2-2003, had announced a ‘self assessment scheme’ for importers and exporters. As per the scheme, importer will himself determine classification of goods including claim for exemption benefits. Computer System will calculate the duty based on his declaration. Physical inspection of imported goods will be done by risk-assessment and management techniques on a computer based system and not on the orders of customs examining staff. Audit of import documents will not be by existing system of concurrent audit but will be done by post-clearance audit, as prevalent in developed countries.

Subsequently, a Accelerated Clearance of Import and Export Scheme (ACS) has been announced vide MF(DR) circular No. 30/2003-Cus dated 4-4-2003. The scheme is announced through administrative instructions, without making any change in statutory provisions. Hence, the scheme is not same as ‘self removal’ under Central Excise. Presently, the scheme is introduced on trial basis at Air Customs, Sahar (Mumbai), ICD, New Delhi and Chennai Sea Customs.

In case of imports, the scheme will be open to all status holders under EXIM policy, Central and State Government PSUs and other importers who have been importing for at least two years and have filed at least 25 Bills of Entry in preceding year. - - In case of exports, the scheme will be open to all status holders under EXIM policy, EOU/STP/EHTP units whose goods have been sealed in presence of customs/excise officers, Central and State Government PSUs, manufacturer-exporters who have been exporting for at least two years and have filed at least 25 Shipping Bills in preceding year and bulk exporters. - - Certain sensitive items have been excluded from the provisions. Importer/exporter intending to avail this facility has to make application to Commissioner. The clearances will be subject to post clearance audit.

Provisional Assessment - Section 18 of Customs Act, 1962 provide that provisional assessment can be done in following cases (a) when Customs Officer is satisfied that importer or exporter is unable to produce document or furnish information required for assessment (b) it is deemed necessary to carry out chemical or other tests of goods (c) when importer/exporter has produced all documents, but Customs Officer still deems it necessary to make further enquiry. In such cases, assessment is done on provisional basis. The importer/exporter has to furnish guarantee/security as required by Customs Officer for payment of difference if any. Goods can be cleared after payment of duty provisionally assessed and after providing the security. After final assessment, difference is paid by importer or refunded to him as the case may be. If the imported goods were warehoused after provisional assessment, the Customs Officer may require importer to execute a bond for twice the difference in duty, if duty finally

assessed is higher [section

18(2)(a)].

The

bond

is

called

as

'P

D Bond'

(Provisional Duty Bond). The bond is with security or surety. Bank guarantee

can also be given as a security.

Checking of duty drawback / license documents - Documents in respect of Duty Entitlement Pass Book (DEPB), advance license, duty drawback etc. will be checked.

Execution of bond and payment of duty - Once the duty is assessed, the bill of entry is returned to importer. The Bill of Entry should be presented to comptist for calculation and pinpointing of the duty. If bond has to be executed, it will be taken in bond section.

Payment of duty - If goods are to be removed to a warehouse, duty payment is not required. The goods can be taken to a warehouse under bond, without payment of duty. However, if goods are to be removed for home consumption, payment of customs duty is required. CHA or the importer can take it for payment of customs duty. Large importers and CHA have P.D. accounts with customs. Duty can be paid either in cash or through P.D. account. P. D. account means provisional duty account. This is a current account, similar to PLA in central excise. The importer or CHA pays lumpsum amount in the account and gets credit on the amount paid. He can pay customs duty by debiting the amount in P.D. (Provisional Duty) account. If the importer does not have an account, he can pay duty by cash using TR-6 challan. Of course, payment through PD account is very convenient and quick.

The duty should be paid within five working days (i.e. within five days excluding holidays) after the ‘Bill of Entry’ is returned to the importer for payment of duty. [section 47(2)]. (Till 11-5-2002, the period allowed was only 2 days).

Interest for late payment - If duty is not paid within 5 working days as aforesaid, interest is payable. Such interest can be between 10% to 36% as may be notified by Central Government. [Section 47(2) of Customs Act, 1962.]. - - Interest rate is 15% w.e.f. 13-5-2002. [Notification No. 28/2002-Cus(NT) dated 13-5-2002] Earlier, interest rate was 24% p.a, w.e.f. 1-3-2000, as per notification No. 34/2000-Cus(NT)].

Disposal if goods are not cleared within 30 days - As per section 48 of Customs Act, goods must be cleared within 30 days after unloading. Customs Officer can grant extension. Otherwise, goods can be sold after giving notice to importer. However, animals, perishable goods and hazardous goods can be sold any time - even before 30 days. Arms & ammunition can be sold only with permission of Central Government.

Out of Customs Charge Order - After goods are examined, it is verified that import is not prohibited and after customs duty is paid, Customs Officer will issue ‘Out of Customs Charge’ order under section 47. Goods can be cleared from customs area only on receipt of such order. This is an ‘adjudicating order’ within the meaning of Customs Act, even if it is passed by Appraiser and not by Assistant Commissioner.

Demurrage if goods not cleared - Heavy demurrage is payable if goods are not cleared from port within three days.

Import of software through data communication - Import of software through data communication / tele-communication is permitted. Since such imports are not available for physical verification, proper accountal in books should be maintained. Unit intending to import software through datalink is required to inform estimated annual requirement to Development Commissioner of EOU / Director of STP. This should be approved by him. [what for ?]. After import of software through internet, written information should be submitted to Director of STP / Development Commissioner of EOU and importer shall get a certificate. This certificate should be submitted to Assistant / Dy Commissioner of Customs within 48 hours, along with Bill of Entry and certificate from Development Commissioner of EOU / Director of STP. He will issue 'out of charge' order. The documents such as invoice etc. will be routed through bank. - MF(DR) circular No. 58/2000-Cus dated 10-7-2000.

Relevant Date for Rate and Valuation of Customs Duty - Section 15 of Customs Act prescribes that rate of duty and tariff valuation applicable to imported goods shall be the rate and valuation in force at one of the following dates. (a) if the goods are entered for home consumption, the date on which bill of entry is presented (b) in case of warehoused goods, when Bill of Entry for home consumption is presented u/s 68 for clearance from warehouse and (c) in other cases, date of payment of duty.

CONCEPT OF TERRITORIAL WATERS NOT RELEVANT - It may be noted that concept of ‘ date of entering into territorial waters’ is not relevant for purposes of determination of rate of customs duty.

Export Procedures

Procedures have to be followed by (a) ‘person-in-charge of conveyance’ and (b) the exporter. The procedures are similar to procedures for import, of course, in reverse direction.

NO STOPPAGE OF EXPORT CONSIGNMENT - Exports are vital for our economy. Any stoppage in export consignment means loss of export orders to the exporter and loss of foreign exchange to the country. Hence, it has been

provided that movement of export consignment will not be interrupted and no export consignment shall be withheld for any reason whatsoever. In case of any doubt, customs authorities may ask for an undertaking that the export is on sole responsibility of the exporter. [Highlights of EXIM policy 1997-2002 as amended on 13.4.1998].

Procedures by person in charge of conveyance – Any new airline, shipping line, steamer agent should be registered in Customs Systems for electronic processing of shipping bills etc.

The ‘person in charge of conveyance’ has to follow prescribed procedures.

Entry Outward - The vessel should be granted ‘Entry Outward’. Loading can start only after entry outward is granted. (section 39 of Customs Act). Steamer Agents can file ‘application for entry outwards’ 14 days in advance so that intending exporters can start submitting ‘Shipping Bills’. This ensures that formalities are completed as quickly as possible and loading in ship starts quickly.

LOADING WITH PERMISSION - Export goods can be loaded only after Shipping Bill or Bill of Export, duly passed by Customs Officer is handed over by Exporter to the person-in-charge of conveyance. In case of baggage and mail bags, shipping bill is not necessary, but permission of Customs Officer is required (section 40).

Export Manifest - As per section 41, an Export Manifest/Export Report in prescribed form should be submitted before departure. [The report is popularly called as ‘Export General Manifest’ - EGM]. The details required are similar to import manifest. Such manifest/report can be amended or supplemented with permission, if there was no fraudulent intention. Such report should be declared as true by the person-in-charge signing the export manifest. This report is not required if the conveyance is carrying only luggage of occupants.

Procedures

to

summarized -

be

followed

by

Exporter

Export

procedures

have

been

Every exporter should take following initial steps -

  • 1. Obtain BIN (Business Identification Number) from DGFT. It is a PAN based number

  • 2. Open current account with designated bank for credit of duty drawback claims

Exporter has to submit ‘shipping bill’ for export by sea or air and ‘bill of export’ for export by road. Goods have to be assessed for duty, even if no duty is payable for most of exports, as ‘Nil Duty’ assessment is also an assessment.

Shipping Bill to be submitted by Exporter - Shipping Bill and Bill of Export Regulations prescribe form of shipping bills. It should be submitted in quadruplicate. If drawback claim is to be made, one additional copy should be submitted. There are five forms : (a) Shipping Bill for export of goods under claim for duty drawback - these should be in Green colour (b) Shipping Bill for export of dutiable goods - this should be yellow colour (c) shipping bill for export of duty free goods - it should be white colour (d) shipping bill for export of duty free goods ex-bond - i.e. from bonded store room - it should be pink colour (e) Shipping Bill for export under DEPB scheme - Blue colour.

The shipping bill form requires details like name of exporter, consignee, Invoice Number, details of packing, description of goods, quantity, FOB Value etc. Appropriate form of shipping bill should be used.

Relevant documents i.e. copies of packing list, invoices, export contract, letter of credit etc. are also to be submitted. In case of excisable goods, from ARE-1 prepared at the time of clearance from factory should also be submitted.

Customs authorities give serial number (called 'Thoka Number') to shipping bill, when it is presented.

Excise formalities at the time of Export - If the goods are cleared by manufacturer for export, the goods are accompanied by ARE-1 (earlier AR-4). This form should be submitted to customs authorities. The Customs Officer certifies that the goods under this form have indeed been exported. This form has then to be submitted to Maritime Commissioner for obtaining ‘proof of export’. The bond executed by Manufacturer-exporter with excise authorities is released only when ‘proof of export’ is accepted by Maritime Commissioner or Assistant Commissioner, where bond was executed.

Duty drawback formalities - If the exporter intends to claim duty drawback on his exports, he has to follow prescribed procedures and submit necessary papers. The procedures are discussed in the chapter on ‘Export Incentives'. 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. [provision 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.

Other documents required for export - Exporter also has to prepare other documents like (a) Four copies of Commercial Invoice (b) Four copies of Packing List (c) Certificate of Origin or pre-shipment inspection where required (d) Insurance policy. (e) Letter of Credit (f) Declaration of Value (g) Excise ARE-1/ARE-2 form as applicable (h) GR / SDF form prescribed by RBI in duplicate (i) Letter showing BIN Number.

RCMC certificate from Export Promotion Council - Various Export Promotion Councils have been set up to promote and develop exports. (e.g. Engineering Export Promotion Council, Apparel Export Promotion Council, etc.) Exporter has to become member of the concerned Export Promotion Council and obtain RCMC - Registration cum membership Certificate.

Check in customs – Document submitted is processed by customs authorities, and following are checked - Chapter 3 Para 39 of CBE&C’s Customs Manual, 2001. –

  • Value and classification of goods under drawback schedule in case of drawback shipping bills

  • Export duty / cess if applicable

  • Advance License shipping bills are checked to ensure that description in invoice and final product specified in Advance License matches. If necessary, samples may be drawn and assessment may be done after visual inspection or testing

  • Exportability of goods under EXIM policy and other laws - Some exports are totally prohibited under various Acts e.g. items restricted or prohibited under Foreign Trade (Regulation) Act; antiques; art treasures; Arms; narcotics etc. Some items like tea, coffee and coir products can be exported only against authorisation/licence under respective Acts.

Examination of goods before export - After shipping bill is passed by export department, the goods are presented to shed appraiser (exports) in dock for examination. Goods will be examined by examiner. This inspection is necessary (a) to ensure that prohibited goods are not exported (b) goods tally with description and invoice (c) duty drawback, where applicable, is correctly claimed.

Let Export Order by Customs Authorities - Customs Officer will verify the contents and after he is satisfied that goods are not prohibited for exports and that export duty, if applicable is paid, will permit clearance. (section 51) by giving ‘let ship’ or ‘let export’ order.

GR-1, ARE-1, octroi papers, quota certification for export etc. are also signed. Exporter’s copy of shipping Bill, GR-1, ARE-1 etc. duly certified are handed

over to exporter or CHA. Drawback claims papers are also processed. - Chapter 3 Para 43 and 60 of CBE&C’s Customs Manual, 2001.

Processing under EDI system – Under EDI system, declarations in prescribed form are to be filed through ‘Service Centre’ of customs. After verification, shipping bill number is generated by the system, which is endorsed on printed checklist generated for verification of data. Goods are inspected at docks on the basis of printed check list. All documents are submitted to Customs Officer along with checklist. If goods and documents are found in order, ‘let export’ order is issued. Then two copies of Shipping Bill are generated – one customs and other exporter’s copy. Exporter’s copy is generated only after EGM (Export General Manifest) is submitted by shipping agent. These are signed by CHA and customs officer and then by Appraiser. SDF, ARE-1, octroi papers, quota certification for export etc. are also signed. Exporter’s copy of Shipping Bill, SDF, ARE-1 etc. duly signed are handed over to exporter or CHA.

Conveyance to leave on written order - The vessel or aircraft which has brought imported goods or which carry export goods cannot leave that customs station unless a written order is given by Customs Officer. Such order is given only after (a) export manifest is submitted (b) shipping bills or bills of export, bills of transhipment etc. are submitted (c) duties on stores consumed are paid or payment of the same is secured (d) no penalty is leviable (e) export duty, if applicable, is paid. - - Such permission is not required if the conveyance is carrying only luggage of occupants.

Import and Export of exl is based on the Custom Notification No. 52/2003 and Excise Notification No. 22/2003.

In exercise the power conferred by sub section (1) of section 25 of the customs act, 1962(52 of 1962) (hereinafter referred to as the said customs Act), the central government, being satisfied that it is necessary in the public interest. A. All goods as specified in the Annexure -1 to this notification, when imported or procured from a public warehouse or a private warehouse appointed or licensed, as the case may be, under section 57 or section 58 of the said customs act for the purpose of-

Manufacture of articles for export or for being used in the connection with the production or job work for export of goods or services by export oriented undertaking.

Manufacture or development of software, data entry, data processing or call center

services for export by software technology parks (STP) unit under the export oriented scheme (hereinafter referred to as unit). Manufacture and development of electronics hardware and software in an integrated manner for export by an electronic hardware technolgy park (EHTP) unit under the export oriented scheme.

  • B. All goods specified in Annexure -2 to this notification, when imported into India or procured from a public warehouse or a private warehouse appointed or licensed, as the case may be, under section -57 or section -58 of the said customs Act or from the international exhibition held in India for the purpose of production, manufacture or packaging of articles specified in Annexure -2 for export by eport oriented undertaking in horticulture, agriculture and animal husbandry sector (hereinafter referred to as unit).

  • C. All goods specified in Annexure – 3, when imported or procured from a public warehouse or a private warehouse appointed or licensed, as the case may be, under section 57 or section 58 of the said customs Act or from international exhibition held in India for the purpose of manufacture of gems and jewellery and export thereof by export oriented undertaking in the Special export oriented complex an export oriented undertaking in the gems and jewellery sector (hereinafter referred to as unit).

  • D. All goods specified in the first schedule to the customs tariff Act, 1975(51 of 1975) when imported for the purpose of trading by the trading units which were in the existence prior to 31 st march 2002 and having valid letter of permission to continue under export oriented undertaking sheme; from the whole of duty of customs leviable thereon under the first schedule to the customs tariff Act, 1975 (51 of 1975) and the additional duty, if any, leviable thereon under section 3 of the said customs tariff Act, subjected to the following conditions, namely:-

1) The importer has been authorised by the development commissioner to estabilish the unit for the purpose specified in clauses (A) to (D) mentioned above of this notification.

2) The unit carries out manufacture, production, packaging or jobwork or service in customs bond and subject to such other condition as may be specified by the Deputy commissioner of customs or Assistant commissioner of customs or Deputy commissioner of central excise or Assistant commissioner of excise, as the case may be, (hereinafter referred to as said officer) in this behalf. 3) The unit executes bond in such a form and for such sum and with authority, as may be specified by the said officer, binding himself,-

To bring the said goods into the unit or and use them for the specified purpose

mentioned in clauses (A) to (D) mentioned above of this notification. To maintain proper account of the receipt , storage and utilization of goods;

To dispose of the goods and services, the articles produced, manufactured,

processed or packaged in the unit, or the waste, scrap and remnants arising out of such production, manufacture, processing , packaging in the manner as provided in this notification; To pay on demand- An amount equal to duty leviable on the goods and interest at a rate specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) issued under section 28AB of the said cutoms Act on the said duty from the date of duty free import of the said goods till the date of payment of such duty, if- In the case of capital goods, such goods are not proved to he satisfaction of the said officer to have been installed or otherwise used within unit, within a such extended period not exceeding five years as the said officer may, on being satisfied that there is sufficient cause for not using them as above within said period, allow; In the case of goods other then capital goods, such goods are not proved the satisfaction of the said officer to have been used in the connection with the production or packaging of goods in accordance with SION for export out of India or cleared from home consumption within period of three years from the date of import or procurement yhereof or within such extended period as the

said officer may, on being satisfied that there is sufficeint cause for not using them as above within the said period, allow:

Provide that-

  • a. Where no SION have been notified , the generation of waste, scrap and remnants upto 2% of the import quantity shall be allowed;

  • b. Where additional items other than those given in SION are required as input or where the unit considers the existing SION as inadequate or where the generation of waste, scrap and remnants beyond 2% of import quantity, use of such goods shall be allowed on the basis of self declared norms till such norms are fixed on ad hoc basis by the jurisdictional development commisioner within a period of three months from the date of self declared norms and the unit undertakes to adjust the self declared/ad hoc norms in accordance with norms as finally fixed by the board of approval within a six months of fixation of ad hoc norms; In the case of,-

    • a. Goods produced or packaged, such goods have not ben exported out of India, and

    • b. Unused goods (including empty cones, bobbins or containers, if any,

suitable for repeated use) as have not been exported or cleared for home consumption, within a period of one year from the date of import or procurement of such goods or within such extended period as the said officer, as the case may be, on being satisfied that there is sufficient cause for not using them as above within asid period, allow; 4) The said officer may, subject to such conditions and limitations as may be imposed by him and subject to the provisions of the foreign trade policy,-

Permit re -export of goods;

Permit the goods or goods partially processed or manufactured or packaged in the unit, to be taken outside the unit without payment of duty for the purpose of test, repairs, replacement, caliberation, refining, processing, display, job-work or any othetr operation necessary for manufacture of final product and to be returned to the unit,

thereafter or remove the same without payment of duty under bond for export from job-worker’s premises: provided that in case of export from the job-worker’s premises, such job-worker shall be central excise registrant under section 6 of the central excise Act, 1944 (1 of 1944). 5) Where whole of the process of manufacture by unit is not possible to be undertaken in bond, with the approval of commissioner of customs or commissioner of excise, as the case may be, may, subject to such conditions as may be specified by him, permit such unit to undertake such out of the processes as necessary, in customs bond. 6) The said officer may, subject to such conditions and limitations as may be imposed by him and subject to the provisions of foreign trade policy, permit the unit engaged in manufacture and export of gems and jewellery,-

To take out gold or silver or platinum for job-work in the domestic tariff area and to bring back the jewellery finished or semi finished, including studded jewellery:

provide that no cut a nd polished diamonds, precious stones shall be allowed to be taken out of the unit; To re- export the imported goods and export the domestically procured goods including goods generated out of partial processing or manufacturing of such goods; With the approval of development commissioner, export of jewellery for holding, or participating in, an exhibition abroad subject to the condition that the jewellery not sold shall be re- imported within sixty days of the close of exhibition; 7) In the event of unit engaged in manufacture and export of gem and jewellery ceasing its operation, gold, other precious metal, alloys, for the manufacture of jewellery shall be transferred to such person, undertaking, agency or authority, as the Government of India in the Ministry of Commerce and Industry, may specify in his behalf.

8)

Subject to satisfaction of the said officer, duty shall be not be leviable in respect of-

If such capital goods are destroyed within the unit or outside the unit, when it is not possible to destroy the same within the unit, in the presence of customsor central excise officer; 9) The software technology park (STP) unit may be allowed to import duty free telematic infrastructural equipment. The telematic infrastructure equipment so imported may also utilized for export by other STP units.

10) The commissioner of customs may allow infrastructural equipments imported by software technology parks (STP) unit to be linked to research or education institute as may be approved by the inter ministerial standing committee for research, education or any such non commercial purpose as per procedure specified by him in this regard and subject to necessary permission granted by inter ministerial standing committee;

Promotional Measures

Application for Grant of Status Certificate 1.1

Application for grant of status shall be filed by 31st March, in ANF 3A. An existing status

holder shall be automatically treated to be an equivalent status holder. Application for grant of status shall be filed by 31st March, in ANF 3A. An existing status holder shall be automatically treated to be an equivalent status holder as given herein under:

Status as per FTP (2004-09) (RE 2006)

One Star Export House Two Star Export House Three Star Export House Four Star Export House Five Star Export House

Converted Status as per FTP (2004-09) (RE 2007)

Export House Star Export House Trading House Star Trading House Premier Trading House

Application for Grant of Status Certificate 1.1.1

Application shall be filed with jurisdictional RA / Development Commissioner (DC). However, in cases where export performance of EOUs / SEZs is clubbed together with company or firm / Group Company in DTA, the same will be considered by jurisdictional RA only.

Application for Grant of Status Certificate 1.1.2

All newly issued Status certificates shall be valid from 1 st April of the year during which application for recognition was filed. For renewals, application filed before expiry of current validity, renewals shall have a validity commencing from 1 st April of next licensing year, otherwise validity period shall be 1st April of year during which application was filed. All Status Certificates shall be valid for a period of 5 years reckoned from the 1st April of the relevant year. All Status Certificates valid beyond 31.3.2009 shall continue to remain in force, in case provisions of Foreign Trade Policy (2009-14) continue to recognize the status. Pending the finalization of the applications for grant of recognition, existing status holders who have applied for recognition before the expiry of their status, shall have a grace period of 6 months. During this grace period of 6 months such status holders shall continue to be recognized as Status holders even after the expiry of earlier Status Certificate i.e. till

September end, unless their applications are finally rejected or recognition granted as once again the case may be.

Maintenance of Accounts 1.2

Status holder shall maintain true and proper accounts of its exports and imports based on which such recognition has been granted. Record shall also be maintained during validity period and for a minimum period of three years thereafter. These accounts shall be made available for inspection to RA concerned or any authority nominated by DGFT.

Refusal / Suspension / Cancellation of Certificate 1.3

Status certificate may be refused or suspended or cancelled by RA concerned, if status holder

or any agent or employee or authorized representative acting on his behalf:

  • (a) Fails to discharge export obligation imposed;

  • (b) Tampers with Authorisations;

  • (c) Misrepresents or has been a party to any corrupt or fraudulent practice in obtaining any

Authorisation;

  • (d) Commits a breach of FT (D& R) Act, or Rules, Orders made there under and FTP; or

  • (e) Fails to furnish information required by this Directorate.

Refusal / Suspension / Cancellation of Certificate 1.3.1

A reasonable opportunity shall be given to status holder before taking any action under above paragraph.

Appeal 1.4

An applicant, who is not satisfied with decision taken to suspend or cancel status certificate, may file an appeal to DGFT within 45 days. Decision of DGFT shall be final thereon.

SERVED FROM INDIA SCHEME (SFIS)

  • (a) A single consolidated application for Duty Credit scrip shall be filed with jurisdictional

RA in ANF 3B along with documents prescribed therein.

  • (b) Service provider shall within one month of completion of imports made or expiry of

validity of Duty Credit scrip whichever is earlier, submit a statement of imports made under it to jurisdictional RA with a copy to jurisdictional Excise authorities (service tax cell) wherever applicable.

Ineligible Remittances and Services 1.5

Foreign exchange remittances other than those that are earned for rendering of services would

not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible. For calculation of entitlement, following shall not be taken into account.

  • (a) Foreign Exchange remittances:

I. related to Financial Services Sector 1. Raising of all types of foreign currency Loans; 2. Export proceeds realization of clients;

3.

Issuance of Foreign Equity through ADRs / GDRs or other similar instruments;

  • 4. Issuance of foreign currency Bonds;

  • 5. Sale of securities and other financial instruments;

  • 6. Other receivables not connected with services rendered by financial institutions; and

II. earned through contract / regular employment abroad (e.g. labour remittances);

  • (b) Payments for services received from EEFC Account;

  • (c) Foreign exchange turnover by Healthcare Institutions like equity participation, donations

etc. (However, remittances received on account of medical treatment, surgery, testing, consultancy and health care provided by the institution shall be eligible);

  • (d) Foreign exchange turnover by Educational Institutions like equity participation, donations

etc. (However remittances received on account of the course fees and consultancy provided

by the institution shall be eligible);

  • (e) Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI /

BTP Schemes or supplies of services made to such units;

  • (f) Clubbing of turnover of services rendered by SEZ / EOU / EHTP / STPI / BTP units with

turnover of DTA Service Providers; and

  • (g) Export of Goods.

1.6 VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY)

1.6.1

Policy pertaining to VKGUY is given in Chapter 3 of FTP. Appendix 37A contains the list of VKGUY items.Application for grant of Duty Credit scrip under VKGUY for export made from 1.4.2008 onwards shall be made to RA concerned in ANF 3C along with documents prescribed therein. Applicant may file one or more applications subject to condition that each application shall contain not more than 50 shipping bills. All shipping bills in any one application must relate to exports made from one Customs House only, which shall be the port of registration for Duty Credit Scrip. For exporter with more than 50 shipping bills in one year, multiple applications can be filed and supplementary cut shall not be applicable.

Appendix 37A contains the list of VKGUY items. application for grant of Duty Credit scrip under VKGUY for export made from 1.4.2007 onwards shall be made to RA concerned in ANF 3C along with documents prescribed therein. Applicant may file one or more applications subject to condition that each application shall contain not more than 50 shipping bills. All shipping bills in any one application must relate to exports made from one Customs House only, which shall be the port of registration for Duty Credit Scrip. Application for obtaining Duty Credit scrip shall be filed within a period of twelve months from date of exports or within six months from date of realization or within three months from date of printing / release of shipping bill, whichever is later, in respect of shipments for which claim is being filed.

FOCUS MARKET SCHEME (FMS) 1.7

An application for exports made during 2006-07, 2007-08 and 2008-09 shall be filed separately, with RA concerned in ANF 3D along with documents prescribed therein. Applicant may file one or more applications subject to condition that each application shall contain not more than 50 shipping bills. For exporter with more than 50 shipping bills in one year, multiple applications can be filed and supplementary cut (Para 9.4 of HBP v1) shall not be applicable. Shipments from EDI Ports and Non-EDI Ports cannot be clubbed in one application. Port of registration for EDI enabled ports shall be any one EDI port of exports, as per the choice of the applicant. In case of exports through non-EDI port, the port of registration shall be the relevant non EDI port of exports. Accordingly separate application shall be filed for each non EDI port.

FOCUS MARKET SCHEME (FMS) 1.7.1

Applicant shall be required to submit proof of landing of export consignment in specified market. Duty Credit scrip shall be granted on FOB value realized as per BRC / FIRC. Any one of the following documents should suffice, as a proof of landing of export consignment in specified Focus Market:

i. A self attested copy of import bill of entry filed by importer in specified market, or ii. Delivery order issued by port authorities, or iii. Arrival notice issued by goods carrier, or iv. Tracking report from the goods carrier duly certified by them, evidencing arrival of export cargo to destination Focus Market, or v. Lorry receipts of transportation of goods from Port into the Focus Market, or vi. For Land locked Focus Market, Lorry receipts of transportation of goods from Port to Land locked Focus Market, or vii. Any other documents that may satisfactory prove to RA concerned that goods have landed in / reached the Focus Market.

HIGH-TECH PRODUCTS EXPORT PROMOTION SCHEME (HTPEPS) 1.8

(a), the Procedure prescribed for claiming Focus Product Scheme benefits shall apply. For others, application for obtaining Duty Credit scrip for incremental growth in exports during current licensing year 2008-09 shall be filed in ANF 3F within a period of twelve months after expiry of current licensing year. Application filed in ANF 3F, shipments from EDI Ports and Non-EDI Ports can be clubbed in one application and the port of registration shall be any one of the ports of exports, as per the choice of the applicant.

HIGH-TECH PRODUCTS EXPORT PROMOTION SCHEME (HTPEPS) 1.9

COMMON PROCEDURAL FEATURES FOR PROMOTIONAL SCHEMES, APPLICABLE TO ALL SCHEMES ,UNLESS SPECIFICALLY PROVIDED FOR:

Jurisdictional RA / RA Concerned 1.10

Applicant shall have option to choose Jurisdictional RA on the basis of Corporate Office, Registered Office, Branch Office address endorsed on IEC. However, once opted, no change

would be allowed.

Port of Registration 1.10.1

Duty Credit scrip (including splits) shall be issued with a single port of registration as per

choice of applicant. Before registration, authorities shall verify genuineness of Duty Credit scrip, from RA concerned, until EDI system of message exchange is put in place. However, applicant may use Duty Credit scrip for imports from any other port (that includes ICD / LCS) after obtaining TRA from authorities at port of registration. The above procedure shall be applicable only in respect of EDI enabled ports. In case of exports through non-EDI ports, the port of registration shall be the port of exports.

Facility for Split Scrips 1.10.2

Split certificates of Duty Credit scrip subject to a minimum of Rs 5 lakh each and multiples

thereof may also be issued, on request at the time of application with different port of registration. A fee of Rs 1000/- each shall be paid for each split certificate. After issue, request of splits shall be permitted with same port of registration as appearing on the original scrip. The above procedure shall be applicable only in respect of EDI enabled ports. In case of exports through non-EDI ports, the facility of splits shall not be allowed, after issue of scrip.

Import from private / public bonded 1.10.3

Entitlement can be used for import from private / public bonded warehouses .

Warehouses 1.10.4

of FTP and terms and conditions of DoR notification.

Re-export of defective /unfit goods 1.10.5

Goods imported and are found defective or unfit for use, may be re-exported, as per DoR guidelines. Where Duty Credit scrip has been used for imports, Customs shall issue a certificate containing particulars of scrip used, date of import of re-exported goods and amount debited while importing such goods. Based on this certificate, upon application, a fresh Scrip shall be issued by concerned RA to the extent of 98% of debited amount, with same port of registration and valid for a period equivalent to balance period available on date of import of the defective / unfit goods.

validity Period & Revalidation 1.10.6

Duty Credit scrip shall be valid for a period of 24 months.Revalidation of Duty Credit scrip shall not be allowed.

EXPORT

ORIENTED

UNITS

(EOUs),

ELECTRONICS

HARDWARE

TECHNOLOGY

PARKS

(EHTPs),

SOFTWARE

TECHNOLOGY

PARKS

(STPs)

SCHEME

AND

BIO-

TECHNOLOGY PARKS(BTPS).

1.1 Policy relating to EOUs, EHTPs, STPs and BTPs Schemes is given.

Approval / Application and renewal of Application 1.2.1

For setting up an EOU, three copies of application as in Appendix 14-I-A may be submitted to Development Commissioner (DC).

Approval / Application and renewal of Application 1.2.2

Applications for setting up units under EOU scheme other than proposals for setting up of unit in service sector (except R&D, software and IT enabled services, or any other service activity as may be delegated by BoA), shall be approved or rejected by Units Approval Committee within 15 days as per criteria indicated in Appendix 14-I-B and sector specific conditions relating to approval as in Appendix 14-I-C. In other cases, approval may be granted by DC after clearance by Board of Approval (BoA).

Approval / Application and renewal of Application 1.2.3

Proposals for setting up EOU requiring industrial licence may be granted approval by DC after clearance of proposal by BoA (as per Appendix 14-I-D) and Department of Industrial Policy and Promotion (DIPP) within 45 days on merits.

Approval / Application and renewal of Application 1.2.4.1

STP / EHTP complexes can be set up by Central Government, State Government, Public or

Private Sector Undertakings or any combination thereof, duly approved by Inter-Ministerial Standing Committee (IMSC) in Ministry of Communication and InformationTechnology (Department of Information Technology). Application for setting up EHTP / STP unit shall be in format prescribed by Ministry of Communication and Information Technology (Department of Information Technology - DoIT) and shall be submitted to officer designated by DoIT .

Approval / Application and renewal of Application 1.2.4.2

BTP can be set up by Central Government, State Government, Public or Private Sector Undertakings or any combination thereof. Application for setting up of BTP shall be submitted to Department of Bio-Technology (DoBT) and such applications which meet guidelines prescribed by DoBT will be approved and recommended to DGFT for notification. Application for setting up of BTP unit shall be submitted to Officer designated by DoBT.

Approval / Application and renewal of Application 1.2.6

LOP / LOI shall specify item(s) of manufacture / service activity, annual capacity, projected annual export for first five years in dollar terms, Net Foreign Exchange (NFE) earnings, limitations, if any, regarding sale of finished goods, by-products and rejects in DTA and such other matter as may be necessary and also impose such conditions as may be required.

Approval / Application and renewal of Application 1.2.7

LoP/LoI issued to EOU / EHTP / STP / BTP units by concerned authority would be construed

as an authorization for all purposes. Standard format for LoP for EOU units is given in Appendix 14-I-E.

Approval / Application and renewal of Application 1.2.8

EOUs shall have separate earmarked premises for separate LoP. Similarly, EOUs may be approved on leased premises provided lease has been obtained from Government Department /Undertaking / Agency. However, in case lease is obtained from private parties, it shall have a validity period of five years from date of LUT and DC shall satisfy himself of genuine nature of lease.

Approval / Application and renewal of Application 1.2.9

On completion of approval period as provided for in paragraph 6.6 of FTP, it shall be open to unit to continue under scheme or opt out of scheme. If no intimation in this regard is received from unit within a period of six months of expiry of approval period, DC will take action, suo moto, to cancel approval under EOU scheme and take further action in this regard. Where unit opts to continue, DC concerned will extend approval period.

Legal Undertaking (LUT) 1.3.1

Approved EOU / EHTP / STP / BTP unit shall execute a LUT with DC / Designated Officer concerned as in Appendix 14- I-F.

Legal Undertaking (LUT) 1.3.2

All EOU / EHTP / STP / BTP units should have permanent e-mail address. No LUT for new

units shall be executed unless unit has its permanent e-mail address and digital signature on said e-mail ID. In event of an EOU not having permanent e-mail address and digital signature, further imports and DTA sale shall not be permitted by DC.

Export of goods and services 1.3.1

Software units may undertake exports using data communication links or in form of physical exports (which may be through courier service also), including export of professional services.

Export of goods and services 1.3.2

EOUs shall be permitted to export jewellery on basis of a notional rate certificate issued by nominated agency. This rate will be based on prevailing Gold / US$ rate and US$ / INR rate in notional rate certificate. Certificate issued by nominated agency should not be older than 3 working days of date of shipment.

Export of goods and services 1.3.3

Exporter shall have flexibility to fix price and repay gold loan within 180 days from date of export. Price shall be communicated to nominated agencies who will issue a certificate showing final confirmation of rate to bank negotiating document,to ensure export proceeds are realized at this rate.

Export of goods and services 1.3.4

Gem & Jewellery and Jewellery EOUs may re-export imported goods and export domestically procured goods, including goods generated out of partial processing / manufacture. Besides, supply of unsuitable / broken cut and polished diamonds, precious and semi-precious stones upto 5% of value of imported or indigenously procured goods to DTA against valid Gem & Jewellery REP as applicable on payment of appropriate duty is also permitted.

Import / Domestic Procurement of Goods 1.4.1

Goods permitted to be imported / procured from DTA shall include:

  • (a) Raw materials, components, consumables, intermediates, spares and packing materials;

  • (b) Capital goods, whether new or second-hand, including interalia following and their spares:

  • (i) DG sets, captive power plants, transformers and accessories for all above.

(ii) Pollution control equipment. (iii) Quality assurance equipment. (iv) Material handling equipment, like fork lifts and overhead cranes, mobile cranes, crawler cranes, hoists and stackers.

  • (v) Un-interrupted Power Supply System (UPS), Special racks for storage, storage systems,

modular furniture, computer furniture, anti-static carpet, teleconference equipment, Servo Control System, Air-conditioners / Airconditioning system, panel for electricals and special data transmission cable. (vi) Security Systems. (vii) Tools, jigs, fixtures, gauges, moulds, dyes, instruments and accessories.

  • (c) Raw material for making capital goods for use within unit.

  • (d) Others including:

  • (i) Prototypes and technical samples for existing product(s) and product diversification

development or evaluation.

(ii) Drawings, blue prints, charts, microfilms and technical data. (iii) Office equipment, including PABX, Fax machines, projection system, Computers, Laptop, Server.

  • (e) Spares and consumables for above items.

  • (f) Any other items not mentioned above with approval of BOA.

Import / Domestic Procurement of Goods 1.4.2

EOUs may import plain / studded gold / platinum or silver jewellery for export after repairs / remaking.

Conditions of Import 1.5

Import of goods by EOU / EHTP / STP / BTP units shall be subject

to following conditions:

  • (a) Goods shall be imported into EOU / EHTP / STP / BTP premises. However, agriculture

and allied sectors and granite sector units in EOU may supply / transfer capital goods and

inputs in farm / fields / quarries with prior intimation to jurisdictional Customs / Central Excise authorities, provided ownership of goods rests with EOU units. Granite sector would

also be allowed to take spares upto 5% of value of Capital Goods to quarry site.

  • (b) Procedure as prescribed under Customs / Excise rules for EOUs and units in EHTP /

STP / BTP will be followed and appropriate bond executed with Customs / Excise authorities.

  • (c) Goods, except capital goods and spares, shall be utilized by EOU / EHTP / STP / BTP

units within a period of three years or as may be extended by Customs authorities. However, imported tea shall be utilized within a period of 6 months from date of import. Similarly, export obligation against import of items {covered by Chapter 9 of ITC(HS)} and coconut oil

shall be fulfilled within a period of 90 days from the date on which first import consignment is cleared by Customs Authorities. However in case of import of spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days.

  • (d) Goods already imported / shipped / arrived before issue of LoP / LoI are also eligible for

duty free clearance under EOU / EHTP / STP / BTP scheme, provided customs duty has not

been paid and goods have not been cleared from Customs.

  • (e) Consumption of inputs by the EOU / EHTP / STP / BTP unit shall be based on the

Standard Input Output Norms (SION) provided that:

  • (i) where no SION have been notified, generation of waste, scrap and remnants upto 2%

of input quantity shall be allowed; (ii) where additional items other than those given in SION are required as inputs or where generation of waste, scrap and remnants is beyond 2% of input quantity, use of such inputs shall be allowed by the jurisdictional Development Commissioner within a

period of three months from the date of and based on self-declared norms, with the unit undertaking to adjust self-declared / ad-hoc norms in accordance with norms as finally fixed by Norms Committee in DGFT; (iii) in case of any difficulty in fixation of SION as above, Board of Approval, in consultation with Norms Committee in DGFT, will decide on a case to case basis.

Import of goods by EOU / EHTP / STP / BTP units shall be subject to following conditions:

  • (a) Goods shall be imported into EOU / EHTP / STP / BTP premises. However, agriculture

and allied sectors and granite sector units in EOU may supply / transfer capital goods and

inputs in farm / fields / quarries with prior intimation to jurisdictional Customs / Central

Excise authorities, provided ownership of goods rests with EOU units. Granite sector would also be allowed to take spares upto 5% of value of Capital Goods to quarry site.

  • (b) Procedure as prescribed under Customs / Excise rules for EOUs and units in EHTP / STP /

BTP will be followed and appropriate bond executed with Customs / Excise authorities.

  • (c) Goods, except capital goods and spares, shall be utilised by EOU / EHTP / STP / BTP

units within a period of three years or as may be extended by Customs authorities. However, imported tea shall be utilized within a period of 6 months from date of import. Similarly, export obligation against import of items period of 90 days from the date on which first import consignment is cleared by Customs Authorities. In Above third sentence has been

substituted vide PN. NO. 06/2007, DT. 24/05/2007) However in case of import of spices for VA purpose like crushing / grounding / sterlisation or for manufacture of oils and oleoresins and not for simple cleaning, grading, re-packing etc., EO shall be fulfilled within 120 days.

  • (d) Goods already imported / shipped / arrived before issue of LoP / LoI are also eligible for

duty free clearance under EOU / EHTP / STP / BTP scheme provided customs duty has not been paid and goods have not been cleared from Customs.

Fax machines / laptop computers outside approved premises 1.6.1

EOU / EHTP / STP / BTP units may install one fax machine at a place of its choice, outside

premises of unit, subject to intimation of its location to concerned Customs / Central Excise authorities.

Fax machines / laptop computers outside approved premises 1.6.2

EOU / EHTP / STP / BTP units may, temporarily take out of premises of unit duty free laptop

computers and video projection systems for working upon by authorized employees.

Fax machines / laptop computers outside approved premises 1.6.3

EOU / EHTP / STP / BTP units may install personal computers not exceeding two in number, imported / procured duty free in their registered / administrative office subject to DoR guidelines.

Fax machines / laptop computers outside approved premises 1.6.4

For IT and IT enabled services, persons authorized by software units may access facility installed in EOU / EHTP / STP / BTP unit through communication links.

Leasing of Capital Goods 6.9

Value of imported capital goods financed through leasing companies or obtained free of cost and / or on loan / lease basis shall also be taken into account for purpose of calculation of NFE as defined in FTP.

Net Foreign Exchange (NFE) Earnings 1.7.1

EOU / EHTP / STP / BTP unit shall be a positive net foreign exchange earner. Net Foreign Exchange (NFE) Earnings shall be calculated cumulatively for a block of five years from commencement of production according to formula given below. Items of manufacture for export specified in Letter of Permission (LoP) / Letter of Intent (LoI) alone shall be taken into account For calculation of NFE. Positive NFE = A – B> 0 Where ‘NFE’ is Net Foreign Exchange; ‘A’ is FOB value of exports by EOU/EHTP/STP/BTP unit; ‘B’is sum total of CIF value of all imported inputs and CIF value of all imported capital goods, and value of all payments made in foreign exchange by way of commission, royalty, fees, dividends, interest on external borrowings / high sea sales during first five year period or any other charges. It will also include payment made in Indian Rupees on high sea sales. “Inputs” mean raw materials, intermediates, components, consumables, parts and packing materials. Items of manufacture for export specified in Letter of Permission (LoP) / Letter of Intent (LoI) alone shall be taken into account for calculation of NFE. Positive NFE = A – B > 0 Where ‘NFE’ is Net Foreign Exchange; ‘A’ is FOB value of exports by EOU / EHTP / STP / BTP unit;

‘B’ is sum total of CIF value of all imported inputs and CIF value of all imported capital goods, and value of all payments made in foreign exchange by way of commission, royalty, fees, dividends,interest on external borrowings / high sea sales during first five year period or any other charges. “Inputs” mean raw materials, intermediates, components, consumables, parts and packing materials.

Net Foreign Exchange (NFE) Earnings 1.7.2

If any goods are obtained from another EOU / EHTP / STP / SEZ / BTP unit, or procured from an international exhibition held in India, or bonded warehouses or precious metals procured from nominated agencies value of such goods shall be included under ‘B’.

Net Foreign Exchange (NFE) Earnings 1.7.3

If any capital goods imported duty free or leased from a leasing company, received free of cost and / or on loan basis or transfer, CIF value of capital goods shall be included pro-rata, under ‘B’ for period it remains with units.

Net Foreign Exchange (NFE) Earnings 1.7.4

For annual calculation of NFE, value of imported capital goods and lumpsum payment of foreign technical know-how fee shall be amortized as under:

1st – 10th year 10%. Provided that above amortization rates would be applicable only if an undertaking is given by an unit that it will not exit to DTA in the first 10 years. For existing units, proportionate Customs and excise duty must be paid where NFE is less than depreciation already claimed, before exit.

annual calculation of NFE value of imported capital goods and lumpsum payment of foreign technical know-how fee shall be amortized as under:

1st – 10th year 10%.

EOU / EHTP / STP / BTP unit shall maintain proper account, and shall file digitally signed quarterly and annual report as prescribed in Annexure to Appendix 14-I-F to DC / Designated Officer in DOIT / DOBT and Customs and Central Excise authorities.

Maintenance of accounts 1.8.2

Unit shall be able to account for entire quantity of each category of homogenous goods imported / procured duty free, by way of exports, sales / supplies in DTA or transfer to other SEZ / EOU / EHTP / STP / BTP units and balance in stock. However, at no point of time units shall be required to correlate every import consignment with its exports, transfer to other SEZ / EOU/ EHTP / STP / BTP units, sales in DTA and balance in stock. Any matter for clarification as to whether goods are homogenous or not shall be decided by Units Approval Committee.

Monitoring of NFE 1.9.1

Performance of EOUs shall be monitored by Units Approval Committee as per guidelines given in Appendix –14-I-G. Performance of EHTP / STP / BTP shall be monitored by DoIT / DoBT jointly with jurisdictional Central Excise / Customs authority.

Monitoring of NFE 1.9.2

Failure to ensure positive NFE or to abide by any of terms and conditions of LoP / LoI / IL /

LUT shall render unit liable to penal action under provisions of FT (D&R) Act, 1992 and Rules and Orders made there under without prejudice to action under any other law / rules and cancellation or revocation of LoP / LoI / IL.

Conversion of Scrap / dust / sweeping of Gold / silver / platinum into standard Bars 6.13

Scraps / dust / sweeping of gold / silver / platinum may be sent to Government of India Mint / Private Mint from EOU / EHTP / STP units and returned to them in standard bars in

accordance with procedure prescribed by Customs authorities or may be permitted to be sold in DTA on payment of applicable customs duty, on basis of gold / silver / platinum content, as may be notified by Customs authorities.

DTA supplies 2.1

Not withstanding provision of DTA sales in Para 6.8 of FTP, such DTA sales shall not affect application to any goods of any other prohibition or regulation affecting import thereof in force at time when such goods are imported. This also does not confer any immunity, exemption or relaxation at any time from any commitment or compliance with any requirements to which importer may be subject to under other laws or regulations.

Supplies to other EOU / EHTP / STP / SEZ / BTP units 6.15

Supplies to other EOU / SEZ / EHTP / STP / BTP units shall be counted towards NFE provided that such goods are permissible for procurement by these units.

Transfer of Power from one unit to another 3.1

Transfer of power from Captive Power plants (DG Sets) from one unit of EOU / EHTP / STP / BTP to another is permitted as prescribed in sector specific condition in Appendix 14-I-

C.

Supply of precious / semiprecious / Synthetic stones from DTA 4.1

Supplier of precious and semi-precious stones, synthetic stones and processed pearls from DTA to EOUs shall be eligible for grant of Replenishment Authorisation at rates and for items mentioned in HBP v1 . Procedure for submission of application for grant of Replenishment Authorisation as contained in relevant Chapter of HBP v1 shall be applicable. However, application shall be made to DC concerned. Such supplies to EOUs are not treated as deemed exports for purpose of any of deemed export benefits.

Application for grant of entitlements 5.1

Application for grant of all entitlements may be made to DC concerned.

Export through other exporters 6.1

An EOU / EHTP / STP / BTP unit may export goods manufactured/ software developed by it through other exporter or any other EOU / EHTP / STP / SEZ / BTP unit subject to condition that:

  • (a) Goods shall be produced in EOU / EHTP / STP / BTP unit concerned.

  • (b) Level of NFE or any other conditions relating to imports and exports as prescribed shall

continue to be discharged by EOU / EHTP / STP unit concerned.

  • (c) Export orders so procured shall be executed within parameters of EOU / EHTP / STP /

BTP schemes and goods shall be directly transferred from unit to port of shipment.

  • (d) Fulfillment of NFE by EOU / EHTP / STP / BTP units in regard to such exports shall be

reckoned on basis of price at which goods are supplied by EOUs to other Exporter or other EOU / EHTP / STP / BTP / SEZ unit.

  • (e) All export entitlements, including recognition as Status Holder would accrue to exporter in

whose name foreign exchange earnings are realized. However, such export shall be counted towards fulfillment of obligation under EOU / EHTP / STP / BTP scheme only.

Entitlements 6.1.1

FOB value of export of an EOU / EHTP / STP / BTP unit can be clubbed with FOB value of

exports of its parent company in DTA or vice versa for purpose of according Export House and Trading House status.

Other Entitlements 6.1

Sectoral norms as notified by Government shall apply to FDI in service activities.

Other Entitlements 6.2

Software units may also use computer system for training purpose (including commercial training) subject to condition that no computer terminal shall be installed outside bonded premises for this purpose.

Other Entitlements 6.7

Export of iron ore shall be subject to decision of Government. Requirements of other conditions of exports like minimum export price / export in consumer pack etc. as per ITC(HS) shall apply in case raw materials are sourced from DTA and exported without further processing / manufacturing by EOU. Export of textile items shall be covered by bilateral agreements. Wood based units shall comply with direction of Supreme Court

contained in its order dated 12.12.1996 in Writ (civil) No 202 of 1995- T.N.Godavarman Thirrumulppad v/s Union of India and others with WP(Civil) No 171 of 1996 in regard to use of timber / other wood.

Sub- Contracting 6.8

Sub-contracting by EOU gems and jewellery units through other EOUs or SEZ Units or units

in DTA shall be subject to following conditions:-

  • (a) Goods, finished or semi finished, including studded jewellery, taken out for sub-

contracting shall be brought back to unit within 90 days.

  • (b) No cut and polished diamonds, precious and semiprecious stones (except precious, semi-

precious and synthetic stones having zero duty) shall be allowed to be taken out for subcontracting.

  • (c) Receive plain gold / silver / platinum jewellery from DTA /EOU / SEZ units in exchange

of equivalent quantity of gold / silver / platinum, as case may be, contained in said jewellery.

  • (d) EOUs shall be eligible for wastage as applicable as per para 4A.2 of HBP v1 for sub-

contracting and against exchange.

  • (e) DTA unit undertaking job work or supplying jewellery against exchange of gold / silver /

platinum shall not be entitled to deemed export benefits.

Sub- Contracting 6.8.1

Facility of getting job work done from DTA unit will be available even when job worker is not registered with Central Excise authority subject to condition that goods are brought back to premises of Unit on completion of job work.

Sub- Contracting 6.8.2

Export of finished goods from job worker’s premises may be permitted provided such premises are registered with Central Excise authorities. Where job worker is SEZ / EOU / EHTP / STP /BTP unit, no such excise registration is required and export may be effected either from job worker’s premises or from premises of unit. Export of such products from job worker’s premises shall not be allowed through third parties as provided in FTP.

Sub- Contracting 6.8.3

EOUs may be permitted to remove moulds, jigs, tools, fixtures, tackles, instruments, hangers and patterns and drawings to premises of sub-contractors subject to conditions that these shall be brought back to premises of units on completion of job work within a stipulated period. Raw materials may or may not be sent along with these goods.

Sub- Contracting 6.8.4

In case of sub-contracting of production process abroad, goods may be exported from sub-

contractor premises subject to conditions that job work charges shall be declared in export declaration forms, invoices etc. and full repatriation of foreign exchange.

Contract Farming 6.9

EOUs engaged in production / processing of agriculture / horticulture / aquaculture products,

may, on basis of annual permission from Customs authorities, take out inputs and equipments (specified at Appendix 14-I-J) to DTA farm subject to following conditions:-

  • (a) Supply of inputs by EOUs to contract farm(s) shall be subject to input-output norms

approved by DGFT / BoA.

  • (b) There shall be contract farming agreement between EOU and DTA farmer(s).

  • (c) Unit has been in existence for at least two years and engaged in export of agriculture /

horticulture / aquaculture products; otherwise it shall furnish bank guarantee equivalent to duty foregone on capital goods / inputs proposed to be taken out to Deputy / Assistant Commissioner of Customs / Central Excise till unit completes two years

Export through Exhibitions / Export Promotion tour 7.1

EOU / EHTP / STP / BTP units may export goods for holding / participating in exhibitions

abroad with permission of DC subject to following conditions:-

  • (a) Unit shall produce to Customs authorities letter in original or its certified copy containing

approval of DC . For gems and jewellery items, a self certified photograph of products shall

also be submitted.

  • (b) In case of re-import, such items, on arrival shall be verified along with export documents

before clearance.

  • (c) Items not sold abroad shall be re-imported within 60 days of close of exhibition. However,

in case exporter is participating in more than one exhibition within 45 days of close of first

exhibition, then 60 days shall be counted from date of close of last exhibition.

  • (d) In case of personal carriage of goods and for holding / participating in overseas

exhibitions, value of such gems and jewellery shall not exceed US $ 2 million.

Personal Carriage of gems and jewellery for Export Promotion tours 8.1

Personal carriage of gold / silver / platinum jewellery, cut and polished diamonds, precious,

semi-precious stones, beads and articles as samples upto US $ 100,000 for export promotion tours and temporary display / sale abroad by EOUs is also permitted with approval of DC subject to following conditions:-

  • (a) EOU shall bring back goods or repatriate sale proceeds within 45 days from date of

departure through normal banking channel.

  • (b) Unit shall declare personal carriage of such samples to Customs while leaving country and

obtain necessary endorsement.

Export through showrooms abroad /duty free shops 9.1

Export of goods is also permitted for display / sale in permitted shops set up abroad or in

showrooms of their distributors / agents. Items not sold abroad within 180 days shall be re- imported within 45 days.

Sale throughshowrooms /retail outlets at International Airports 10.1

EOUs may set up showrooms /retail outlets at International Airports for sale of goods in

accordance with procedure laid down by Customs authorities. Items remaining unsold after a period of 60 days shall be exported or returned to respective EOUs.

Personal carriage of Import / export Parcels including through foreign bound Passengers 10.1.1

Import / export through personal carriage of gem and jewellery items may be undertaken as

per procedure prescribed by Customs. Export proceeds shall be realized through normal

banking channel. Import / export through personal carriage, other than gem and jewellery units, shall be allowed provided goods are not in commercial quantity.

Personal carriage of Import / export Parcels including through foreign bound Passengers 10.1.2

For Personal carriage of jewellery by foreign bound passenger, following documents shall be

submitted by EOU units as proof of exports:

  • (a) Copy of shipping bill filed by EOUs ;

  • (b) A copy of Currency Declaration Form filed by Foreign buyer with Customs at time of his

arrival; and

  • (c) Foreign Exchange Realisation / Encashment Certificate from Bank.

Personal carriage of Import / export Parcels including through foreign bound Passengers 10.1.3

In addition to this, Personal Carriage by foreign bound passenger on Document Against

Acceptance (DA) / Cash On Delivery (COD) basis is also allowed. EOUs will have to furnish following documents as proof of exports:-

  • (a) Copy of Shipping Bill;

  • (b) Bank Certificate of Export and Realisation.

Personal carriage of Import / export Parcels including through foreign bound Passengers 10.1.4

Procedure for personal carriage of import parcels will be same as for import of goods by airfreight except that parcels shall be brought to Customs by EOUs / foreign national for examination and release. Instructions issued by Customs authorities in this regard should be followed mutatis mutandis.

Personal carriage of Import / export Parcels including through foreign bound Passengers 10.1.5

Personal carriage of parts by foreign bound passengers shall be allowed in case same are required for repairs of exported goods at customer site. Following documents should be submitted as proof of exports:-

  • (a) Permission letter from Customs for exports.

  • (b) Invoice with value (for payment or free of charge)

Replacement / Repair of imported / indigenous goods 11.1

Units may send capital goods abroad for repair with permission of Customs authorities. Any foreign exchange payment for this purpose will also be allowed. However, no permission will be required for sending capital goods for repair within country.

Replacement / Repair of imported / indigenous goods 11.1.2

EOU / EHTP / STP / BTP units may, on basis of records maintained by them and prior intimation to Customs authorities:-

  • (a) Transfer goods to DTA / abroad for repair / replacement, testing or calibration and return.

  • (b) Transfer goods for quality testing / R&D purpose to any recognised laboratory / institution

upto Rs.5 lakhs per annum without payment of duty, on giving suitable undertaking to Customs for return of goods. However, if goods have been consumed / destroyed in process of

testing etc. a certificate from laboratory / institution to this effect be furnished to Customs.

Samples 12.1

EOU / EHTP / STP / BTP units may on basis of records maintained by them, and on prior

intimation to Customs authority supply or sell samples in DTA for display / market promotion on payment of applicable duties.

Samples 12.1.2

Remove samples without payment of duty, on furnishing a suitable undertaking to Customs

authorities for bringing back samples within a stipulated period.

Samples 12.1.3

An EOU may export free samples, without any limit, including samples made in wax moulds, silver mould and rubber moulds through all permissible mode of export including through courier agencies / post.

Samples 12.1.4

An EOU on basis of records maintained by them and on prior intimation to customs

authorities may send samples to other EOUs for display on returnable basis within a period of 30 days.

Donation of Computer and Computer peripherals 6.30

EOU / EHTP / STP / BTP unit may be allowed by Customs authorities concerned to donate imported / indigenously procured (bought or taken on loan) computer and computer peripherals, including printer, plotter, scanner, monitor, keyboard and storage units without payment of duty, two years after their import / procurement and use by units, to a school run by Central Government, or Government of a State or, a Union Territory or, a local body, an Educational Institution run on non-commercial basis by any organization, a Registered Charitable Hospital, a Public Library, a Public Funded Research and Development Establishment , a Community Information Center run by Central Government or, Government of a State or, a Union Territory or local body, an Adult Education Center run by Central Government or, Government of a State or, a Union Territory or a local body, or an organization of Central Government or, a Government of a State or, a Union Territory as per Customs / Central Excise notification.

Destruction of goods 13.1

No duty shall be payable in case capital goods, raw material, consumables, spares, goods manufactured, processed or packaged, and scrap / waste / remnants / rejects are destroyed

within Unit after intimation to Custom authorities or destroyed outside Unit with permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semi precious stones.

Distinct Identity 14.1

If an industrial enterprise is operating both as a domestic unit as well as an EOU / EHTP / STP / BTP unit, it shall have two distinct identities with separate accounts, including separate bank accounts. It is, however, not necessary for it to be a separate legal entity, but it should be possible to distinguish imports and exports or supplies affected by EOU / EHTP / STP / BTP units from those made by other units of enterprise.

Unit Approval Committee for EOUs 14.1.1

Powers and functions of Unit Approval Committee of EOUs shall be as under:-

  • (a) To consider applications for setting up EOUs other than proposals for setting up of unit in

services sector (except R&D, software and IT enabled services, or any other service activity

as may be delegated by BoA). Items of manufacture requiring industrial licence under ndustrial (Development & Regulation)Act, 1951 shall be considered by BoA.

  • (b) to consider and permit conversion of units in SEZ to EOU;

  • (c) to monitor performance of Units;

  • (d) to supervise and monitor permission, clearances, licences granted to units and take

appropriate action in accordance with law;

  • (e) to call for information required to monitor performance of unit under permission,

clearances, licenses granted to it;

  • (f) to perform any other function delegated by Central Government or its agencies;

  • (g) to perform any other function as may be delegated by State Governments or its agencies;

and

  • (h) to grant all approvals and clearances for establishment and operation of EOUs.

Approval of EHTP / STP / BTP units 14.1.2

In case of units under EHTP / STP scheme, necessary approval / permission shall be granted

by officer designated by DOIT / Director (STPI). Designated officer shall also exercise

powers of adjudication under Section 13 read with Section 11 of FT (D&R) Act, 1992 in respect of STP / EHTP as mentioned in Gazette Notification No. S.O. 106 (E) dated 30-1- 2006. Similarly in case of units under BTP, necessary approval / permission shall be granted by officer designated by DoBT. However, designated officers shall adopt criteria for automatic approval of new units as laid down in Appendix 14-I-B.

Administration of EOUs / Power of DC /Designated Officer 15.1

DC / Designated Officer shall have following powers in respect to units. Jurisdiction of DC is given in Appendix 14-I-K. (1) Conversion of sick / closed DTA unit into EOU; (2) Conversion of EOU to STP / EHTP / BTP and vice-versa as per prescribed procedure; (3) To allow increase in value of capital goods in terms of Indian Rupees, on account of foreign exchange rate fluctuations; (4) To permit capacity enhancement without any limit in case of de-licensed industries only; (5) Permit broad-banding for similar goods and activities mentioned in LoP or to provide for backward or forward linkages to existing line of manufacture. (6) Authorize change in name of company or implementing agency and change from a company to another provided new implementing agency / company undertakes to take over assets and liabilities of existing unit; (7) Permit change of location from place mentioned in LoP to another and/or include additional location provided that no change in other terms and conditions of approval is envisaged and that new location is within territorial jurisdiction of DC / Designated Officer; (8) Extend validity period of LoP by three years beyond initial validity period of LoP (except in case where there is a restriction on initial period of approval, like setting up of oil refinery projects); (9) Cancel LoP wherever warranted; (10) Permit merger of two or more units into one unit provided units fall within jurisdiction of same DC / Designated Officer subject to conditions that activities are covered under provision of broad banding;

(11) Exercise powers of adjudication under Section 13 read with Section 11 of FT (D&R) Act, in respect of EOUs as mentioned in Gazette Notification No. SO. 194(E) dated 6.3.2000; (12) Do valuation of exports declared on SOFTEX form by EOUs as per RBI A.D. (M.A Series) Circular AP (DIR series Circular No.9 dated 25.10.2001); (13) Issue eligibility certificates for grant of employment visa to low level foreign technicians

to be engaged by EOUs as per Ministry of Home Affairs’ letter No. 25022 / 7 / 99- F.1 dated

20.9.1999;

Registration-cum-Membership Certificate

(14) Function as a Registering authority for EOU / EHTP / STP/ BTP. A separate Registration

cum- Membership Certificate shall not be required in their cases as provided for in paragraph

2.44 of FTP except in case of spices. In case of spices, it would be mandatory for units to get themselves registered with Spices Board also.

Importer Exporter Code No.

(15) Allot Importer-Exporter Code number for EOUs, if same has already not been allotted to

entity;

Green Card

(16) Issue of Green Card automatically after execution of LUT; (17) Grant / renewal of Status Certificate in respect of EOUs provided it does not involve clubbing of FOB value of exports of its parent company in DTA; (18) Publicity of EOU / EHTP / STP / BTP Scheme under their jurisdiction.

Change of location / inclusion of additional location with BoA approval 6.34A BoA may consider change of location of EOU / EHTP / STP / BTP unit from place mentioned in LoP to another and / or to include additional location outside territorial jurisdiction of original DC / Designated Officer, subject to such conditions as BoA may decide.

Clearance of Capital Goods in DTA 16.1

Clearance of Capital Goods including second hand in DTA shall be allowed as per FTP under

EPCG Scheme. In other cases, clearance in DTA may be allowed on payment of applicable duty and Import Policy in force on date of such clearance.

Depreciation norms 16.1.1 Depreciation up to 100% is permissible for Computers and Computer peripherals in 5 years and 10 years in case of other items.

Depreciation norms for Computers and Computer peripherals 16.1.2

Depreciation for computers and computer peripherals shall be as follows:- 10% for every quarter in first year; 8% for every quarter in second year; 5% for every quarter in third year; 1% for every quarter in fourth and fifth year.

Depreciation norms for other Capital goods 16.1.3

For capital goods, other than above, depreciation rate would be as follows:- 4% for every quarter in first year;3% for every quarter in second and third year; and 2.5% for every quarter in fourth and fifth year. 2% for every quarter thereafter.

Conversion 17.1

Existing DTA units, may also apply for conversion into an EOU / EHTP / STP / BTP unit, but

no concession in duties and taxes would be available under scheme for plant, machinery and equipment already installed. On conversion, they would get Income Tax concessions but limited to period of 10 year from original commencement of manufacture or that prescribed under Section 10 of Income Tax Act whichever is earlier. For this purpose, DTA unit may apply to DC / Designated Officer concerned in same manner as applicable to new units. In case there is an outstanding export commitment under EPCG scheme / Advance Authorization Scheme, it will follow the procedure laid down in Appendix 14-I-O of HBP v1.

Conversion 17.1.2

Existing EHTP / STP / BTP units may also apply for conversion / merger to EOU unit and vice-versa. In such cases, units will continue to avail permissible exemption in duties and taxes as applicable under relevant scheme. EHTP / STP / BTP units desiring conversion as an EOU may apply to DC concerned through Officer designated by DoIT / DoBT in same

manner as applicable to new units. Likewise EOU desiring conversion into EHTP / STP / BTP may apply to officer designated by DoIT / DoBT through DC concerned.

Conversion 17.1.3

An EOU may be shifted to SEZ with approval of DC provided EOU unit has achieved pro-

rata obligation under EOU scheme.

Revival of Sick units 18.1

Subject to a unit being declared sick by appropriate authority, proposals for revival of unit or its take over may be considered by BOA . Guidelines on revival of sick units are given in Appendix 14-I-M.

FAST TRACK CLEARANCE PROCEDURE 19.1

Eligibility 19.1.1

EOUs having a status holder certificate under FTP shall be eligible for Fast Track Clearance

Procedure.

Examination of Import Cargo 19.1.2

Status holder units shall be exempted from examination of import cargo at Port of import. Jurisdictional Commissioner of Customs / Central Excise may, however, examine consignments at unit’s place on random basis.

Domestic procurement and import of goods 19.1.3

Units having physical export turnover of Rs. 15 crores and above in preceding financial year

shall be allowed to import goods without payment of duty on basis of pre-authenticated procurement certificate issued by jurisdictional Customs / Central Excise Authority.

Eligible EOUs may install one fax machine and two computers in their administrative / registered office outside bonded premises under prior intimation to jurisdictional Asst / Deputy Commissioner of Customs or Central Excise.

Procurement of DG sets 19.1.5

Procurement of DG set of capacity commensurate with actual requirement of unit shall be

permitted under intimation to DC and jurisdictional Central Excise authority.

Temporary removal of Capital Goods 19.1.6

Eligible EOU units may remove their capital goods or parts thereof for repairs under prior intimation to jurisdictional Asstt. / Deputy Commissioner of Customs or Central Excise.

Clearance of rejects in DTA 19.1.7

Request for permission for DTA clearance of rejects shall be considered by jurisdictional Excise Authority on priority basis.

Personal carriage of samples 19.1.8

Personal carriage of samples of Gems & Jewellery by status holder EOUs are allowed subject to limit fixed in Para 6.24 without a need for prior permission from DC / Customs / Central Excise.

Activities which do not require permission 19.1.9

In respect of following activities of a status holder, permission will not be required from DC or jurisdictional Central Excise authority:

DTA sale of finished products in terms of para 6.8(a) of FTP, Participation in exhibition and Personal carriage of Gems & Jewellery for export promotion tours subject to fulfillment of

conditions of para 6.24 of HBP v1. However, prior intimation thereof needs to be given.

DC shall dispose off applications expeditiously. Following time schedule shall normally be

followed to dispose of applications provided application is complete in all respects and is accompanied by prescribed documents.

S.N Category of Application Time limit o disposal (days)

  • 1. Issue of LoP / LoI

15

  • 2. Conversion of LoP / LoI

15

  • 3. Acceptance of LUT

3

  • 4. Renewal of LUT

3

  • 5. Permission for broad banding / diversification

3

  • 6. Permission for change in locations

7

  • 7. Permission for Advance DTA sale

2

  • 8. Permission for merger of units

7

  • 9. Permission for enhancement of production capacity

3

  • 10. Cancellation of LoP

3

  • 11. Permission for debonding / exit

7

  • 12. Permission for DTA sale 2

  • 13. Eligibility certificate for employment visa for lower level technicians

2

  • 14. Issue of Green Card 2

  • 15. Renewal of Green Card Same day 16 Permission to lease CG

1

  • 17. Permission for disposal of scrap/waste

2

  • 18. Permission for change in name

2

  • 19. Inter Unit Transfer

2

  • 20. Wastage Norms, ad-hoc

2

  • 21. Permission for re-import Same day

  • 22. Permission for re-export Same day

  • 23. Permission for replacement/repair of goods Same day

  • 24. Allotment of I.E. Code

1

  • 25. Authorization of softex form

1

  • 26. Reimbursement of CST claims

7

  • 27. Issue of GSP Certificate Same day

29.

Permission of final exit of EOU

5

  • 30. Permission of extension of EOU

2

  • 31. Permission to allow increase in value of CG

2

  • 32. Permission for export through exhibition / tour

2

  • 33. Reimbursement of Duty Drawback / TED

7

(6.0) Recommendations:

The Indian firms should give more importance to company-wide commitment as far as

decision about expanding internationally is concerned. The difference of culture, norms & beliefs should be looked into carefully and given

more importance bye the firms than what is given as analyzed by the study. This is imperative so as to avoid build and fulfill successful profitable relationship between the firm and the target market. More emphasis should also be bestowed on extending the learning curve. This would help the company to build a better strategic plan for international expansion.

Indian firms should also work towards developing the man-power, i.e. work-force intensification. This would be beneficial not only to better suit the target market but to better meet the demand & supply by improved procedures.

Instead of just giving importance to the time and expense involved in the process of internationalization, the firms should also carefully analyze the long-term benefits involved.

Accessing newer technology & providing a cushion to the economic cycle of the domestic market are important reasons of going global. They should be carefully looked into to successfully choose the perspective target markets. This would help broadening the horizons of the internationalization process of the firms who mostly

focus on increasing sales & replicating the competitor’s model of international expansion. Indian firms mainly consider the competitors offerings and demand for pricing there

products in the foreign market. They should start giving more importance to PLC & Innovation as the criteria for pricing. The firms should delegate the solving of legal matters in the foreign markets to agents

in the host country rather than relying on someone in the domestic market. This would help in better understanding of problem in the foreign market context. Indian firms at present are mostly involved in direct exports through an agent. They

should venture to direct exports through a wholly owned subsidiary and M&A as modes of entry as it would have a more wide-spread effect on the process of internationalization. Currently the Indian firms utilize external sources like banks & financial institutes for investments. OFDI & Strategic alliances wit global partners should increase to enhance the process of internationalization.

(7.0) Bibliography

  • (a) EXL Service.com

  • (b) EximKey.com

  • (c) Hand book of procedures volume-1

(8.0) Annexure

Goods allowed to be imported specified in annexures :

Annexure 1.

Sl.no

Description of goods

1.

Capital goods and spares and accessories thereof.

2.

Material handling equipment, namely, fork lifts, over head cranes, crawler cranes, hoists and stakers and spares and accessories thereof.

3.

Uninterrupted power supply system (ups), pollution control equipment, quality assurance equipment, storage systems and parts thereof.

4.

Captive power plant including captive generating sets and transformers of capacity commensurate with the actual requirement of the unit and recommended by the development

 

commissioner or designated officer.

5.

Spare , fuel , lubricants, consumables and accessories for captive power plants including captive generating sets.

6.

Office equipment including PABX, fax machine, video projection system, computers, laptop, server and thereof.

Raw materials.

8.

Packaging materials.

9.

Tools, jigs, gauges, fixtures, moulds, dies and thereof.

10.

Drawing, blue prints and charts.

11.

Goods re-imported within three years from the date of exportation for repair.

12.

Green house equipments, accessories, seeding machines.

Filters.

13.

Fertilizer tanks.

Annexure 2

Sl. no.

Description of goods

1.

Veterinary medicines including vaccines.

2.

Cooling equipment and its accessories.

3.

High speed diesel oil for power generating sets.

4.

Plants or parts thereof, seeds, saplings, tubers, bulbs,roots.

5.

Dripliers, drip-lines, and drip-fitting.

6.

Micro sprinklers and misters.

7.

Agriculture sprinklers.

8.

Valves.

9.

Fertilizer pumps and chemical injections.

Annexure 3

Sl. No .

Description of goods

1.

Live animals.

2.

Live trees and other plants: bulbs, roots.

3.

Fresh vegetables.

4.

Cold room apparels.

5.

Chemicals for water treatment, Zeolite, fungicides.

6.

Hydraulic excavators.

7.

Pneumatic compressors.

8.

Jack hammers.

9.

Hydraulic drilling machines.

10.

Line drillers.

11.

Dressing machine.

12.

Cranes.

13.

Welding machines.

14.

Dust collector.

(9.0) Case Study

Bermuda Import & Export

Bermuda Import & Export is a family owned business, started in 1949 as an importer and exporter of miscellaneous items. It continued much the same way until the current President, Graham Fowle (grandson of the original owner) expanded the company lines, starting with the addition of produce and alcohol. Continued growth produced a wider range of merchandise, and Bermuda Import & Export now carries produce, seafood, groceries, alcohol, dry and frozen goods, some dairy and meat. The majority of goods are perishable items. Bermuda Import & Export has 25 employees. Bermuda is a small market, (21 sq miles) so the company sells to all available outlets, which include restaurants, grocery stores, hotels, resorts, clubs and convenience stores. There are no retail sales direct to consumer.

Challenge:

The company's accounting and inventory control was running on a Real World SCO UNIX application, a text-based package which was 8 years old - with the most recent update in 1998. Real World opens many individual data files and needs a specific environment to run properly.

For Bermuda Import & Export, this system of managing inventory and accounting was keyboard intense - and used a great deal of paper as screen shots were not available, so printing out the data was the only way to analyze the information. Pre-printed forms were used for ordering, with costly reprints for each change in pricing. And it was not possible to run reports or to make queries directly from the database. No historical data was available. And two systems were used for accounting - RealWorld for Accounts Payable, and General Ledger and CounterPoint from Synchronics for inventory and accounts receivable. The server had crashed a few times. The Real World and Synchronics applications were time-consuming, cumbersome applications. Bermuda Import & Export had also been without a financial controller for over two years, and they felt they had to find an alternative solution that was more efficient.

Solution:

The company decided to investigate new accounting and business management packages, including:

A low-cost accounting program for small business, with payroll functions, reports, analysis, program help, and transaction processing. It was rejected as not powerful enough for the company's needs. A business-management solution built on a Microsoft platform. It offers e-commerce, supply chain, manufacturing, project accounting, field service, customer relationships, and human resources. It was rejected as having too many options - a lot of the program's applications would be wasted and it was seen as overkill for their needs. Blue Link Elite is an integrated accounting, business management and Inventory Management Software solution. Elite uses Microsoft SQL-Server for the back end database, and scales from single-user to dozens of concurrent users, and handles large transaction volumes.

According to Financial Controller, David Potts, Blue Link Elite "Just seemed to fit - it was exactly what we wanted." The Landed Costs feature was especially critical to Bermuda Import & Export, as the company imports 90% of its items, making Landed Costs and Customs into major cost items. In addition, it was important to be able to integrate the various hardware and software programs (including Windows '95, 2000, and XP), and the Unix server. Cost was a critical factor in choosing the new accounting package - as David Potts remarks, "There was consideration of every penny spent." Training costs in particular were important. Local training was considered too expensive - rates are very high for skilled IT people. There was talk of bringing someone in to train Bermuda Import & Export staff - but Bermuda is an expensive place, and cost for accommodation alone would run at least $300 per day. Blue Link's remote installation seemed to be the ideal solution. The cost of international telephone calls was a fraction of the cost of hands-on installation and training as suggested by other companies.

Remote Installation and Training:

Installation:

David Potts has some technical knowledge, which, he says, made the installation "relatively painless." Blue Link purchased the hardware, installed the software and then shipped the whole package to Bermuda. Data was sent to Blue Link, which also set up the network, and tied it into the computer system at Bermuda Import & Export. "We were very pleased with the installation - we were told where the challenges would occur."

Training:

There was some initial resistance to Blue Link Elite - mainly because some of the employees had over 20 years in the industry, and were resistant to any change. But Blue Link had stressed that the training was critical to the success of the implementation - and David Potts continued to stress that to the employees. The first week was tough - there was indeed a lot of information to take in, and to get a feel for what the software could do. Added Potts, "everyone in the company was used to the old system, and were accustomed to being able to blame any failings on the old, out-of-date software - with the new Blue Link Elite installed, that excuse was no longer viable." The process gradually became smoother although the complete data conversion took longer than initially anticipated; for about three months, both systems were being used.

Results:

Ordered in April 2006, the installation and training was complete by November 2006. David Potts says, "I'm amazed what Blue Link Elite lets me do with the data, including accessing reports that simply couldn't be done before." He cites a salesman asking for - and getting - such previously unavailable reports as an analysis, by customer, brand, amount, cost, changes, month, and day. He says that "We haven't even touched some of the things it can do - it's great knowing the other options are there." Costs have reduced significantly - less paper being used; pre-printed forms no longer necessary; landed costs and custom information readily calculable. "The old system allowed selling to negative numbers, but Blue Link Elite doesn't allow that, so old habits had to be cleaned up."

Conclusion:

BIE operates in a self-identified 'loose' structure, but is aware of the need for some basic controls - "Blue Link gave us that structure, and the software changes as people change - it's a nice balance." As an example, David Potts recalls one man who has been with company for over 35 years - long before computers - and he is an expert on landed costs and customs. He is also close to retirement, and there was fear that would choose to retire early as opposed to learning new computer skills, but instead, "he has found Blue Link Elite simple enough, and intuitive enough, to take it on right away." The Remote Desktop feature is in constant use, even from office to next-door office. Problems can be solved immediately without need to go to the other computer - and people can be trained to solve their own problems. David Potts says that, after that first week, "everyone was really pleased with the new system". He adds that, "getting Blue Link Elite was the best decision I've made, and that Bermuda Import & Export has made, as it really has helped us out."

(10.0) Synopsis Of The Project

E X L Service

Student,s Name : Himanshu Sharma

Student,s Name : Himanshu Sharma

E X L Service Student,s Name : Himanshu Sharma Industry Guide : Mr. Raman Bhasin Faculty

Industry Guide : Mr. Raman Bhasin Faculty Guide : Ms. Ritu Sharma

Objectives

Findings

Conclusion

Student perception about Industry Guide

Management professional with a career reflecting strong leadership coupled with liaison expertise. Maintain focus on achieving bottom line results while formulating and implementing innovation, technology and business solutions to meet a diversity of needs. Team based management style and excellent interpersonal/communication skills.