exporting from india: part 3

Exporting from IndiaPart III

Tariffs

FrontalRain Technologies Pvt Ltd.

A Tariff (duty) is the tax levied by governments on the value including freight and insurance of imported products.

• Tariffs increase the product’s cost to the importer• Tariffs increase the cost of a foreign product in the domestic market• Hence, tariff affects the product’s cost-competitiveness• Knowledge about tariff can help the exporters in market placement• Components include - Basic customs duty, additional customs duty, special

additional customs duty and education cess

Calculating Customs Duty


Duties Steps to calculationAssessable Value CIF Value + Landing Charges (@1% of CIF Value)Basic Duty of Customs (%) (AV x BD rate) / 100Basic Duty Pref (%) (AV x BD Pref rate) / 100

Additional Duty of Customs(CVD) (Including Cess, if any) (%) (AV + BD. Amt.) x CVD rate / 100 CVD=10%

Central Excise Education Cess (%) (CVD Amt.) x Central Excise Edu. Cess Rate / 100 Edu Cess= 3%

Customs Education Cess (if any) (%) (BD Amt. + CVD Amt. + Edu. Cess. Amt.) x Custom Edu. Cess Rate / 100 Edu Cess= 3%

Special Additional Duty of Customs(Spl.CVD) (if any) (%)

(AV + BD Amt. + CVD Amt. + Edu. Cess. Amt. + Custom Edu. Cess Amt.) x Spl. CVD Rate / 100 Special CVD=4%

Total Customs Duty BD Amt. + CVD Amt. + Edu. Cess Amt. + Custom Edu. Cess Amt. + Spl. CVD Amt.

Determining Import duty


• Determine the HS code• Access the tariff details on WTO tariff database/respective country’s customs

websites• Data is also accessed on WITS-Trains, Tariff Analysis Online, Eurostat Online

Database, Directorate of Trade Statistics- IMF, OECD-WTO Trade in Value Added

http://www.eximdesk.com/buzz/hs-code

http://www.eximdesk.com/buzz/hs-code

https://www.wto.org/english/tratop_e/tariffs_e/tariff_data_e.htm

https://www.wto.org/english/tratop_e/tariffs_e/tariff_data_e.htm

Steps in Export Shipment


Exporter has to file his bill of shipment

Check the documents thoroughly

Goods need to be physically examined

Assess the goods qualitatively and quantitatively

Goods need to be loaded on carrier


Factory stuffing of containers

FactoryGoods for export

Official Interventionbefore loading to container(Excise/ Customs Official)

Container StuffingUnder official vigilance

DocumentVerification

‘Let Export’ order toMove goods to shipping terminal

Container is loaded in ship

Factory stuffing of containers


• Excise officials are intimated about the cargo carting from factory.• Empty container from the container yard is transported to the factory.• Commercial invoice, packing list, shipper declaration, purchase order, Statutory Declaration Form

(SDF), Authorized Dealer Code (ADC), Excisable goods (AR-4), shipping bill and Importer Exporter Code (IE code) are kept ready for inspection.

• Container stuffing proceeds with the official vigilance. Documentation is endorsed after checking.• Physical checking of goods is also done and goods are permitted to trucking.• Loaded and sealed container moves to port of loading.• All the documents are filed for customs clearance at the gateway port/ Container Freight Station

(CFS). Subject to document clearance and inspection of container seals, ‘Let Export’ order is given.• Container is moved to its designated terminal for loading on vessel.


Factory Goods for export

Official Interventionbefore loading to container into vessel

(Excise/ Customs Official)

Container StuffingUnder vigilance

DocumentVerification

‘Let Export’ order toMove goods to shipping terminal

Export cargo is moved to port

Stuffingpermission

Dock/ Container Freight Station (CFS) stuffing

Dock/ Container Freight Station (CFS) stuffing


• Commercial invoice, packing list, shipper declaration, purchase order, Statutory Declaration Form (SDF), Authorized Dealer Code (ADC), Excisable goods (AR-4), shipping bill and Importer Exporter Code (IE code) have to be filed at the dock/CFS.

• Export cargo is moved from factory to designated port.• Appraisal of shipping bill with all its export documents is done and permissibility of export

is verified. • Post Cargo evaluation, duty is calculated and verification of incentive is claimed when

applicable. • Stuffing/consolidation permission is granted.• Cargo is stuffed in the container on dock.• Cargo undergoes examination under official supervision, and container is sealed. • Documents are released with ‘Let Export’ order.


Factory Goods for export

Official Intervention(Excise/ Customs Official)

Cargo loadedAfter

Cooling period

DocumentVerificationAt airport

‘Let Export’ order toMove goods to airline shed

Export cargo is moved to airport

Stuffingpermission

Air Cargo Carting

Air Cargo Carting


• Export documentation including commercial invoice, packing list, shipper declaration, purchase order, Statutory Declaration Form (SDF), Authorized Dealer Code (ADC), Excisable goods (AR-4), shipping bill and Importer Exporter Code (IE code) have to be filed at Customs at Airport.

• Export cargo is moved from factory to Airport warehouse.• Appraisal of shipping bill with all its export documents is done and permissibility of export is

verified.• After cargo evaluation, duty is calculated and verification of incentive is claimed when applicable.• Stuffing/consolidation permission is granted after which cargo is stuffed in the container on dock

where the cargo undergoes examination under official supervision, and container is sealed.• Documents are then released with ‘Let Export’ order after which the cargo is carted to Airline

shed and loaded after cooling period.

Frequently Asked Question 1


Should the exporter send an invoice to the buyer in Indian rupees or the foreign currency?

• There is no restriction put for invoicing. It can either be done in Indian rupees or foreign currency

• Export proceeds shall be realized in freely convertible currency• Vostro account of a non-resident bank other than ACU or Nepal or Bhutan uses

Rupees for transactions

FAQ 2


What’s the timeline for realizing the export proceeds?

• Repatriation within 12 month period from the date of export is obligatory on the part of the exporter

• Exception of another three months for exporter from the date of shipment if the destination of your goods exported is a warehouse established outside India

FAQ 3


Can export proceeds be accumulated in the exporter’s foreign bank? Should the exporter convert the proceeds in Indian rupee or foreign currency?

• A person residing in India may open with, an AD Category – I bank in India, an account in foreign currency called the Exchange Earners’ Foreign Currency (EEFC) Account, in terms of various RBI regulations

FAQ 4


Is RBI permit required in case of short realization for export proceeds, or can the exporter himself write it off?

• For export proceeds due within the prescribed period during a financial year all exporters (Including Status Holder exporters) have been allowed to write-off (including reduction in invoice value) outstanding export dues and extend the prescribed period of realization beyond 12 months or further period as applicable, subject to certain conditions


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exporting from india: part 3

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