EXPORT & IMPORT DOCUMENTATION

EXPORT DOCUMENTATION INTRODUCTION:

The export process is made more complex by the wide variety of documents that the exporter needs to complete to ensure that the order reaches its destination quickly, safely and without problems. These documents range include those required by the exporter (such as bills of entry, foreign exchange documents, export permits, etc.), those required by the importer (such as the proforma and commercial invoices, certificates of origin and health, and pre-shipment inspection documents), those required for payment (such as the Reserve Bank forms, the letter of credit and the bill of lading) and finally, those required for transportation (such as the bill of lading, the airway bill or the freight transit order). Documentation requirements for export shipments also vary widely according to the country of destination and the type of product being shipped. Most exporters rely on an international freight forwarder to handle the export documentation because of the multitude of documentary requirements involved in physically exporting goods and it is strongly recommended that you also make use of a freight forwarder to help you work your way through the maze of documentation. Functions of export documentation:

An attestation of facts, such as a certificate of origin Evidence of the terms and conditions of a contract if carriage, such as in the case of an airwaybill

Evidence of ownership or title to goods, such as in the case of a bill of lading A promissory note; that is, a promise to pay A demand for payment, as with a bill of exchange A declaration of liability, such as with a customs bill of entry

A receipt for goods received.

STEPS IN EXPORT: Few step for an enterprise to become an export organisation are:1) REGISTRATION AS A BUSINESS ENTITY: A new export unit can be started by registering as proprietorship, partnership or Limited Liability Company. 2) IEC NUMBER: Any company wish to export/import need to obtain a Import Export code(IEC) number. IEC is issued by Regional licensing authority of DGFT. For communication with any office in regard to for export and import needs IEC number.

3) RCMC: It means the certificate of registration and membership granted by an Export Promotion Council/ Commodity Board/ Development Authority or other competent authority as prescribed by Foreign Trade Policy to an exporting unit. Any person, applying for a license/ authorization/certificate/permission to import/ export or any other benefit or concession under Foreign Trade Policy is required to furnish (RCMC). It is also required for executing a bond before Central Excise authorities, which exempts exporters to furnish bank guarantees. Export Promotion Councils have been set up by various ministries of the Central Government to promote and develop the exports of particular group of products, projects and services. For certain group of products, which are sensitive from the viewpoint of national consumption, there are commodity boards instead. Thus while we have export promotion councils for apparel, leather, software, chemicals, engineering goods etc., India has commodity boards for tea, coffee, jute etc. 4) REGISTRATION WITH SALES TAX OFFICE: Exported goods from India are exempt from central & state sales tax. However, for getting exemption of such taxes or claiming their refund, wherever permissible under Foreign Trade Policy,

the exporting unit should be registered with sales tax authorities.

5) REGISTRATION WITH EXCISE DEPT.: If an exporting unit is engaged in manufacturing of products, it needs registration with excise department & formalities remain the same as for any domestic unit. This registration is required for claiming refund of excise duties under various schemes of the government. PRE-SHIPMENT DOCUMENTS These documents can be broadly classified into the following categories: I) Documentation as per requirements of the contract: Commercial Invoice Packing List Insurance Certificate/Policy Bill of Exchange Shipment Advice Certificate of Origin Inspection Certificate Transportation Documents: - Bill of Lading - Airway Bill - Combined Transport Document II) Documentation as per requirement of Government of India: Export License, if necessary, AR4/AR5 Form Pre shipment Inspection Certificate Export Declaration Form GR/PP/VPP/COD/SOFTEX Form Shipping Bill III) Documents as per requirement of the importing Country:

 Customs Invoice GSP Certificate of Origin IV) Documents required for claiming export assistance: Application form Shipping Bill duly authenticated by customs Commercial invoice attested by bank Bank certificate Statement of Exports certified by the negotiating bank Registration cum membership form of concerned export promotion council. Another way of looking at the documents is to classify them as principal and auxiliary documents. Principal Documents These are: 1. Commercial Invoice 2. Packing List 3. Marine Insurance Policy/Certificate 4. Bill of Exchange 5. Letter of Credit 6. Bill of Lading 7. Airway Bill 8. Combined Transport Document 9. GR/PPNPP/COD/SOFTEX Forms 10. Export Inspection Certificate 11. AR4/AR5 Forms 12. Shipping Bill 13. Certificate of Origin 14. Shipment Advice 15. Consular Invoice Auxiliary Documents These documents may be required for the preparation or procurement of some of the principal documents or for arranging some of the preliminaries in effecting shipment of goods, such as giving shipping instructions to freight forwarders, arranging pre-shipment inspections, marine insurance cover, shipping space, procurement of bills of lading etc. Documents normally required are:

1. Shipping Instructions Form 2. Application for Export Inspection Agency 3. Shipping Order 4. Mate Receipt and 5. Dock Challan.

Essential Documentation:
The invoice and bill of lading are the two documents required for every export shipment. As such, you should ensure that all other documents associated with the shipment match the information on these documents.

Invoices
Commercial Invoice It is a basic document which gives full details of the contents of the shipment and serves as seller's bill of goods and, therefore, sets out the terms of sale. An exporter is required to prepare this complete document which must fully identify the overseas shipment and serve as a basis for the preparation of all other documents which, in greater or lesser detail reproduce information from it. Normally, apart from the special requirements of the importer, form of invoice will be similar to that used for domestic business. There is no standard form and it is left to the exporter to change his own design, always ensuring that it will be convenient for use by foreign parties. In fact, the exporter should strictly follow the requirements of the purchaser in regard to invoicing and, as the requirements of foreign laws vary widely and are revise from time to time,' it is important for an exporter to keep himself fully informed, about such changes in government regulations of the importing countries.

Pro-forma Invoice A pro-forma invoice is an invoice sent to the buyer before the shipment, giving the buyer a chance to review the sale terms (quantity of goods, value, specifications) and get an import license, if required in their country. It also allows the buyer to work with their bank to arrange any financial process for payment. For example, to open a Documentary Credit (Letter of Credit), the buyers bank will use the pro-forma invoice as a source of information. The exporter/seller should not send their

customer a pro-forma invoice unless they fully understand what they are offering to the buyer. If no changes are required on the pro-forma invoice after the buyer reviews it, the exporter can simply change its date and title and turn it into a commercial invoice.

Consular invoice: A consular invoice is the commercial invoice stamped or notarized by the consulate or embassy of your customers country, if required. For example, if you are exporting to Egypt and your buyer requires a consular invoice, the Egyptian embassy in India will do this for a small fee. Usually a freight forwarder will offer this service, but an exporter can send the original invoice to the consulate, have it notarized/legalized as required, pay the fee, and have the documents returned or forwarded on. It is important to understand that consular invoices are required in the buyers country, so you need to add the time/costs associated with obtaining one to the price of the goods you are shipping.

Material Handling
Packing List: A packing list is prepared by the shipper and is a detailed breakdown of the items within a shipment. It may also include any special marks for identification. For example, the customer may want ABC XX in blue letters on the side of the packaging. For insurance claims and tracking purposes, it helps to describe what is in each package. The packing list should also reference the customers purchase order number and destination. Often, a packing list is taped to palletized cargo or on the main carton/box of a shipment so that the importers customs agency or any transportation handlers can have easy access to it to know what the goods are and their destination. The quantity and items listed on the commercial invoice must match with the packing list, but not necessarily match the pro-forma invoice. Some companies prepare a packing list that is identical to the commercial invoice, minus the prices and other monetary details.

Dock (or Warehouse) Receipt: The dock or warehouse receipt is issued by a warehouse supervisor or port officer and certifies that the goods have been received by the shipping company. This document is used to transfer accountability when goods are moved by the domestic carrier to the port of embarkation and left with

the international carrier. At this time, the carriers Bill of Lading is also signed by both parties and copies are issued accordingly

Bill of Lading
Of all the documents, bill of lading is unquestionably the most important and valuable document. Issued by the shipping company, a bill of lading is A receipt/acknowledgement of cargo delivered for transportation. A contract of affreightment between the shipper and the carrier specifying their respective responsibilities and obligations. A document of title to goods and provides interested parties including banks with title to the goods mentioned therein. A collateral, that can be used for any advances made to the seller or to the buyer in the process of financing the shipment.

Bills of lading are prepared by the shippers on printed forms supplied by the shipping company concerned and necessary particulars are entered therein the blank spaces provided for the purpose. Normally, a bill of lading shows the date of shipment., port of shipment, name of the carrying vessel, name of the consignor, consignee and notify party, port of discharge, number, contents and identification marks of packages and goods shipped, and the amount of freight `paid' or to 'pay'. Bills of lading are normally issued in sets of four. Three copies duly signed are delivered to the shipper, while the fourth copy is unsigned and retained by the shipper's master for his own use. Different copies are sent by different mails to reduce the risk involved by delay or loss in transit. Goods are released at the port of destination against one of the copies of the bill of lading presented first and other copies becoming void. Banks invariably take possession of full set of bi 11 of lading, the number comprising the full set being indicated by the bill of lading itself. Bills of lading may be issued either in negotiable or non negotiable form. A negotiable bill of lading is issued to the order of consignee, or endorsed either in blank by a shipper or endorsed to the order of named party.

Bill of Lading can. be of various types as discussed below :

Received for Shipment B/L: It is issued by the shipping company when goods have been given into the custody of the shipping company but have not yet been placed on board the ship. On Board Shipped B/L: It certifies that the goods have been received on board the ship. Clean B/L: It indicates a clean receipt. In other words, it implies that there was no defect in the apparent order and condition of the goods at the time of receipt or shipment of goods by the shipping company, as the case may be. Claused or Dirty B/L: This bill bears a superimposed clause of annotation, which expressly declares a defective condition of the goods. The clause may state "package number 20 broken" or "bale number 20 hookdamaged". By superimposing such clauses on the B/L, the shipping company limits its responsibility at the time of delivery of goods at the destination. It is very important to note that only a clean B/L is acceptable for negotiation of documents with the bank. Combined B/L: It covers several modes of transport for performing the complete journey from the exporting country to the importer's warehouse. For example, part of the journey may be completed by ship while subsequent parts may be undertaken by road, rail and air. Through B/L: It covers goods being transshipped enroute but where the first carrier had the responsibility as the principal carrier for all stages of the journey. For example, goods may be shipped from Bombay to Dubai and transshipped from Dubai to port in Latin America. Trans-shipment B/L: It has similar characteristic as the Through B/L except that in this case the first carrier acts only as an agent for effecting Trans-shipment of cargo.

Charter Party B/L: It covers shipment on a chartered ship.

The contract or the letter of credit will specify the nature of bill of lading that the exporter has to procure for the importer. Generally, the importers insist on the "clean on-board shipped" bill of lading, with the prohibition of the trans-shipment of goods. Air Way Bill (AWB)/Air Consignment Note In air carriage, the transport document is known as the Air Way Bill (AWB) or Air Consignment Note. The AWB merely evidences the air carrier's receipt of the goods on the terms of the contract of carriage and does not represent the goods/title of goods. The goods are delivered to the consignee (receiver) mentioned in the AWB. The consignee will have to identify himself as the party named in the AWB and the goods may be delivered to him without any hindrance, usually on payment of some charges (depending upon the terns of the trade). When the seller has made the contract with the air carrier, the buyer can protect himself against the seller's rerouting of the goods by obtaining the shipper's copy of the AWB. The air carrier may not accept instructions from any person other than the holder of such a copy of AWB, and if this duty is not observed, the air carrier will be liable to pay compensation for the loss incurred. Some of the important details contained in the AWB are the name of the consignee/ consignor/notified party, the flight number and date on which the goods will be airlifted, brief description of the goods and quantity, departure airport and the destination airport, freight amount and AWB number, teens on which carriage is undertaken, and signature of carrier/its agent and shipper/agent.

Certificates
Marine Insurance Policy/Certificate A marine insurance policy/certificate is a document associated with transit of goods in trade, whereby the insurer undertakes to indemnify the assured against damage for loss of goods due to risks/hazards in transit, to the extent and in the manner mentioned in this document. In a OF contract of sale, the seller has to take the requisite insurance cover to protect his own as well as the buyer's interests in case of damage or loss of goods. The insurance policy/certificate must be, such as to satisfy the conditions of the letter of credit/ sale contract, and roust coder all risks specified therein, or which are considered to be normally associated with trade in a particular product.

Certificate of Inspection: Some customers will require a pre-shipment inspection to satisfy their own requirements or local regulations, according to an industry, government, or carrier specification. Neutral organizations specialize in these types of certifications, whereby an inspector checks the goods in question prior to shipment. Sometimes an inspector can look at a sample, but other times inspection must occur when the goods are packaged to issue a certificate. Certificate of Authentication: An original document that has been notarized may require authentication by the Secretary of the Commonwealth. An Apostille certificate will be issued according to the country (language) of destination, confirming the status of the notary who has witnessed the original document. Letter of Credit A letter of credit is a written undertaking by a bank, the issuing bank, to the seller, the beneficiary in accordance with the instructions of the buyer, the applicant, to effect payment upto a prescribed amount, within a prescribed time period against prescribed documents, provided these are correct and in order i.e. they conform with the instructions of the applicant. Letters of credit are one of the most used methods of payment in international transactions. Letters of credit are usually issued subject to the provisions of the "Uniform Customs and Practices for Documentary Credits" issued by the International Chamber of Commerce. It contains the rules governing the letter of credit transactions and the interpretation of various terms relating thereto and has been subscribed by almost all the major trading countries of the world. There are usually two banks involved in a documentary credit operation. The issuing bank is the bank of the buyer. The second bank, the advising bank, is usually a bank in the seller's country. The second bank can, be simply an advising batik, or it can also assume the more important role of a confirming bank. In either case, it undertakes the transmission of the credit, and by doing so, implies the authenticity of the signature of the issuing bank. If the second bank is simply "advising the credit" it will mention this fact when it forwards the credit to the seller. Such a bank is under no commitment to pay the seller. If the advising bank is also 'confirming the credit' it will so state. This means that the confirming bank, regardless of any other consideration, must pay, accept, or negotiate without recourse to the seller, provided all the documents are in order & the credit requirements are met. Figure below summarizes the relationships between the partners to the letter of credit. A letter of credit contains

essential details like seller's name, buyer's name, value, usance documents required, description of goods, shipment & negotiation dates, port of shipment & destination etc

GR/PP/VPP/COD/SOFTEX Forms These forms are submitted to the customs authorities in compliance of exchange control regulations. All exporters other than those exporting to Nepal and Bhutan are required to submit a declaration in the prescribed form duly supported by such evidence as nay be prescribed or so specified and true in all material particulars which, among others, shall include the amount representinga) the full export value of the goods; or b) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to. the prevailing market conditions, expects to receive on the sale of goods in the overseas markets, and affirms in the said declaration that the full export value of the goods

(whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner. These Forms are: GR Form: It is required to be filled in duplicate for all exports in physical form other than by post. PP Form : It is required to be filled in duplicate for all exports to all countries, made by post parcel, except when made on "value payable" or "cash on delivery" basis. VP/COD Form: It is required to be filled in one copy for exports to all countries by post parcel wider arrangements to realise proceeds through postal channels on "value payable" or "cash on delivery" basis. SOFTEX Form: It is required to be prepared in triplicate for export of computer software in nonphysical form.

AR4 and AR5 Form Refund of central excise is an important fiscal incentive for export promotion. As you know, exports should not bear the burden of indirect taxes. Hence, exportable goods are either exempted from such taxes or these taxes are refunded, if exemption is not possible. In India, excisable goods are free from the incidence of excise duty levied by the central government, both on finished product and raw materials. The scheme is governed by section 37 of the Central Excise and Salt Act, 1944 as amended from time to time. The rebate is granted on the duty levied at finished product and on inputs for this finished product. Rule.12, 191-B, and 191-BB of Central Excise Rules have been integrated into Rule 13. This rule is applied for exports of goods in bond and utilisation of non-duty paid raw material for manufacture and export of excisable goods. Both AR4 and AR5 forms can be used for export in Bond or under Rebate of Central Excise duty. AR4 form is to be used where either finished stage duty is not paid or its rebate is to be claimed later on. It can be elaborated as under: i) Form AR4 is to be used in case of exports in Bond, of all goods without payment of duty on finished item (not on inputs). ii) AR4 Form is also used where finished stage duty is paid and rebate thereof is to be claimed after exports. Form AR5 is used where goods are manufactured/exported without the payment of duty or inputs (inputs stage duty). It can be elaborated as under:

AR5 form is used where no duty is paid on production inputs and the finished stage duty is also not paid on the account of their export being made in bond. AR5 form is also used where inputs stage duty is not paid but duty on finished goods is paid and the rebate thereof is to be claimed after export.

Shipping Bill Shipping Bill is the principal document required by the customs authorities. It contains description of export goods and other particulars like number and description of package(s), marks and number,. quantity and value as defined in the Sea Customs Act, Indian or foreign merchandise, name of the vessel in which goods are to be shipped, country of destination, etc. It is only after the Shipping Bill, is stamped by the customs that cargo is allowed to be carted to Port sheds and Docks. It is used for export by sea or air or even for transportation from one port to another within the country. There are separate forms of shipping bill for free goods (Free Shipping Bill), goods on which export duty is payable (Dutiable Shipping Bill), goods for which there is a claim for drawback of duty (Drawback Shipping Bill) and in case of imported goods for re-export which are kept in custom bonded warehouses (Shipping Bill for Shipment ex-bond). AUXILIARY DOCUMENTS

Shipping Instruction Form

It is used to send shipping instructions to the shipping company or the shipping agent regarding shipment of export cargo. This facilitates the preparation of bill of lading and other documents by the shipping agent. Also known as Cargo Declaration Form, it usually contains information about country of origin, marks on cases, number of packages, name and address of the consignee, exporter's name and address, invoice value, steamer freight payable etc.

Application for Export Inspection

For obtaining the certificate as required under the provisions of Export (Quality Control and Inspection) Act, 1963, the exporter has to submit an application in the prescribed form (in duplicate) submitting the original to Export Inspection Agency and duplicate to the Export Inspection Council, seven days in advance of the expected date of shipment. The application form contains details of shipment including technical requirement including specifications as stipulated in the export contract. Upon receipt of the application, the goods are inspected and certificate issued, if found in order.

Shipping Order

For booking space, the exporter has to apply to the shipping company either directly or through a freight broker. If the space is available, the shipping company will issue to the broker/shipper a document called a shipping order, instructing the Commanding Officer of the ship that the goods from the shipper concerned, as per details given, should be received on board the vessel. The original is given to the shipper and duplicate is sent to the Commanding Officer of the ship.

IMPORT DOCUMENTATION

The procedures are similar to procedures for export, of course, in reverse direction. 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 submitted prior 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. 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 Nilassessment. 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 importers 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.

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. 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 lump sum 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 / telecommunication 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 certificatefrom 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