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  • Global Sourcing

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    Bishnu S. Mukherjee
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    The document provides information on global sourcing, import, and customs. It discusses key aspects of global sourcing including definitions, predecessors, competitive strategies, benefits, and problems. It also outlines India's import policy established by the Government of India including principles of restriction, restricted goods, license/authorization requirements, and other import rules. Finally, it describes the key steps in the global sourcing and import processes including identifying and qualifying suppliers, negotiating deals, implementing deals, and customs clearance procedures.

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    The document provides information on global sourcing, import, and customs. It discusses key aspects of global sourcing including definitions, predecessors, competitive strategies, benefits, and problems. It also outlines India's import policy established by the Government of India including principles of restriction, restricted goods, license/authorization requirements, and other import rules. Finally, it describes the key steps in the global sourcing and import processes including identifying and qualifying suppliers, negotiating deals, implementing deals, and customs clearance procedures.

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    232 views22 pages

    Global Sourcing

    Uploaded by

    Bishnu S. Mukherjee
    The document provides information on global sourcing, import, and customs. It discusses key aspects of global sourcing including definitions, predecessors, competitive strategies, benefits, and problems. It also outlines India's import policy established by the Government of India including principles of restriction, restricted goods, license/authorization requirements, and other import rules. Finally, it describes the key steps in the global sourcing and import processes including identifying and qualifying suppliers, negotiating deals, implementing deals, and customs clearance procedures.

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    © All Rights Reserved
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    of 22

    GLOBAL

    SOURCING,
    IMPORT
    &
    CUSTOMS
    PRESENTER
    B. B. CHATTERJEE

    GLOBAL SOURCING
    DEFINITION:
    SOURCING OF MATERIALS, PARTS, COMPONENTS,
    SERVICES (BPO) ETC. FROM OUTSIDE.
    PREDECESSORS:
    LEADER JAPAN TOOK LEAD (1980) TO AVOID
    VERTICAL INTEGRATION (TOYOTA 60% - 70%
    OUTSOURCING).
    FOLLOWER USA GMS OUTSOURCING WENT
    UP 30-60%, EUROPE FIAT.
    MAJOR COMPETITIVE STRATEGY:
    MAIN REASONS:
    LOWER PRICE, MORE ADVANCED TECHNOLOGY,
    BETTER QUALITY, MORE CONSISTENT ATTITUDE,
    SOMETIMES ONE SOURCE ONLY, MORE COOPERATIVE IN DELIVERY, COUNTER TRADE
    REQUIREMENT.
    OTHER BENEFITS:
    REDUCED REQUIREMENT OF BOTH CAPITAL & MANPOWER
    DEVELOPS FLEXIBILITY IN CONDITIONS LIKE
    RECESSION.

    PROBLEMS:
    MORE DEPENDENCE ON OUTSIDERS (LEAKAGE /
    CULMINATING IGNORENCE), LEAKAGE OF
    TECHNOLOGY & CUSTOMER SECRECY DEVELOPING
    IN-HOUSE INCOMPETANCY, STRENGTHENING
    OUTSIDERS FOR COMPETITION.
    PROSPECTS:
    INTERNATIONAL SOURCING ACCOUNTS FOR 1/3RD
    OF WORLD TRADE.
    PRODUCTION SHARING IS QUITE COMMON LIKE:
    - DESIGNING & TECHNICAL DEVELOPMENT IN
    ONE COUNTRY
    - VARIOUS COMPONENTS MANUFACTURED IN
    ANOTHER COUNTRY
    - ASSEMBLING & MARKETING BY SOME OTHER
    COUNTRY
    RESOURCES OF THE DEVELOPING COUNTRIES
    LIKE LABOUR, SKILL ETC. ARE BROUGHT TOGETHER
    WITH THE RESOURCES OF DEVELOPED COUNTRIES
    LIKE MANAGEMENT, TECHNOLOGY, MARKET,
    PURCHASING POWER (i.e. CAPITAL) ETC.
    A NUMBER OF INTERNATIONAL PROCUREMENT
    ORGANISATIONS (IPOs) ARE GROWING UP WHO
    WILL HELP BIG PROCUREMENTS AT ECONOMICAL
    COST AND TIME.

    KEY GLOBAL SOURCING STEPS

    IDENTIFY SUPPLIERS
    KNOW THE SUPPLY BASE
    STUDY

    QUALIFY SUPPLIERS
    - VALIDATING SUPPLIER CAPABILITIES
    - PAST EXPERIENCE, CUSTOMER REFERALS
    - ONSIGHT DUE DILLINGENCE ETC.

    CAPABILITY

    NEGOTIATE DEALS
    - PRICE, PAYMENT TERMS, DELIVERY TERMS
    (INCOTERMS), IF ANY LOCAL CONTRACT ISSUES,
    MODE OF DELIVERY TIME, PLACE ETC.; ALSO
    DOCUMENTS.

    PLAN IMPLEMENTATION OF DEALS


    - EFFECTIVELY MANAGING LOGISTICS.
    - REGULATORY REQUIREMENTS, ETC.

    IMPLEMENTION OF DEALS
    - ONGOING SUPPLIER MANAGEMENT
    - FOLLOW-UP ALL ALONG THE CHAIN
    (SUPPLIER, EXCHANGE RISK, CUSTOMS,
    TRANSPORTATION)

    IMPORT POLICY GOI


    IMPORTS FREE UNLESS REGULATED BY FTP
    OR ANY OTHER LAW FOR THE TIME BEING.
    ITEMWISE IMPORT AS SPECIFIED IN ITC (HS)
    PUBLISHED & NOTIFIED BY DGFT FROM TIME TO
    TIME.
    EVERY IMPORTER SHALL COMPLY WITH THE
    PROVISIONS
    OF
    THE
    FOREIGN
    TRADE
    (DEVELOPMENT & REGULATION) ACT, 1992 &
    FOREIGN TRADE (REGULATION) RULES 1993 /
    FOREIGN TRADE (EXEMPTION FROM APPLICATION
    OF RULES IN CERTAIN CASES) ORDER 1993.
    DGFTS DECISION SHALL BE FINAL ON ANY
    INTERPRETATION,
    QUESTION
    OR
    DOUBT,
    CLARIFICATION ETC. REGARDING FTP PROVISIONS
    OR PROCEDURES INCLUDED IN HAND BOOKS, ITC
    (HS) & PUBLIC NOTICES ISSUED FROM TIME TO
    TIME.
    ANY RELAXATION, RELIEF OR EXEMPTION FROM
    POLICY PROCEDURE OR PROVISIONS SHALL BE
    DONE ONLY BY THE DGPT. IN SOME CASES HE MAY
    CONSULT THE POLICY RELAXATION COMMITTEE.

    PRINCIPLES OF RESTRICTION: DGFT MAY THROUGH


    NOTIFICATION, ADOPT & ENFORCE ANY MEASURE
    NECESSARY FOR
    PROTECTION OF PUBLIC MORALS PROTECTION OF HUMAN,
    ANIMAL OR PLANT LIFE / HEALTH.
    PROTECTION OF PATENTS, TRADE MARKS & COPY RIGHTS &
    PREVENTION OF DECEPTIVE PRACTICES.
    PROTECTION OF NATIONAL TREASURES OF ARTISTIC,
    HISTORIC OR ARCHAEOLOGICAL VALUE.
    CONSERVATION OF EXHAUSTIBLE NATURAL RESOURCES.
    PREVENTION OF TRAFFIC IN ARMS, AMMUNITION AND
    IMPLEMENTS OF WAR.
    RESTRICTED GOODS AS PER THE ITC (HS) MAY BE
    IMPORTED WITH A LICENCE / AUTHORIZATION /
    CERTIFICATE / PERMISSION OR UNDER A PUBLIC NOTICE
    ISSUED ON IT
    TERMS AND CONDITION OF LICENCE /AUTHORIZATION/
    CERTIFICATE / PERMISSION:
    -

    VALIDITY AS SPECIFIED THEREIN


    SPECIFIED QUANTITY, DESCRIPTION & VALUE OF GOODS.
    ACTUAL USER CONDITION
    EXPORT OBLIGATION
    VALUE ADDITION TO BE ACHIEVED
    MINIMUM EXPORT PRICE

    NO PERSON CAN CLAIM ABOVE INSTRUMENTS AS A RIGHT


    AND DGFT HAS POWER TO REFUSE TO GRANT OR
    RENEWAL.
    PENALTY AS PER THE ACT, RULE AND ORDER FOR
    VIOLATING CONDITIONS OF THE ABOVE INSTRUMENTS OR
    NON FULFILMENT OF EXPORT OBLIGATION.
    FOR CANALISED ITEMS DGFT MAY ALLOW OTHER
    PERSONS THAN THE STATE TRADING IF SATISFIED WITH
    THE REASONS FOR SUCH DIRECT IMPORT.
    IMPORTER EXPORTER CODE NUMBER (IEC) IS MUST FOR
    ANY PERSON TO IMPORT UNLESS SPECIFICALLY EXEMPTED
    BY THE DGFT.
    TO PROMOTE TRADE AND STRENGTHEN ECONOMIC TIES
    WITH THE NEIGHBOURING COUNTRIES THE DGFT MAY
    FRAME SCHEMES OR ISSUE INSTRUCTIONS FROM TIME TO
    TIME.
    UNDER THE ACTUAL USER CONDITION, ONLY ACTUAL
    USER CAN IMPORT UNDER LICENCE / AUTHORIZATION
    CERTIFICATE / PERMISSION ISSUED BY DGFT / CUSTOMS.
    TRANSIT FACILITY OF GOODS THRU INDIA FROM OR TO
    ADJUCENT COUNTRIES SHALL BE REGULATED IN
    ACCORDANCE WITH BILATERAL TREATIES SUBJECT TO
    SUCH RESTRICTIONS AS SPECIFIED BY THE DGFT IN
    ACCORDANCE WITH INTERNATIONAL CONVENTIONS.

    IN RESPECT OF TRADE WITH RUSSIA UNDER DEBTREPAYMENT AGREEMENT ANY INSTRUCTION OR SCHEME
    FRAMED BY THE DGFT WILL HOLD GOOD EVEN THOSE MAY
    BE CONTRARY TO THE CURRENT FTP.
    EXCEPTING CAPITAL GOODS, ALL SECOND HAND GOODS
    ARE RESTRICTED FOR IMPORT. REFURBISHED,
    RECONDITIONED CAPITAL GOODS AND SPARES ARE FREE.
    DUTY-FREE IMPORT OF SAMPLES UPTO Rs.3 L FOR
    EXPORTERS ARE ALLOWED AS PER CONDITIONS OF
    CUSTOMS NOTIFICATION. BONAFIDE TECHNICAL & TRADE
    SAMPLES OF RESTRICTED GOODS MAY BE IMPORTED
    WITHOUT AUTHORIZATION (LICENCE) EXCEPT VEGETABLE
    SEEDS, BEES & NEW DRUGS.
    IMPORT OF FREELY IMPORTABLE GOODS AS GIFTS ARE
    PERMISSIBLE. IN OTHER CASES CUSTOMS CLEARANCE
    PERMIT (CCP) IS REQUIRED FROM THE DGFT.
    BONAFIDE HOUSEHOLD GOODS AND PERSONAL EFFECTS
    MAY BE IMPORTED AS PART OF PASSENGER BAGGAGE
    LIMITED TO LIMITATION NOTIFIED BY THE MINISTRY OF
    FINANCE BAGGAGE RULES.
    NEW OR SECOND HAND CAPITAL GOODS, EQUIPMENTS,
    COMPONENTS, PARTS, ACCESSORIES, CONTAINER MEANT
    FOR PACKING OF EXPORTABLE GOODS, JIGS, FIXURES,
    DIES & MOULDS MAY BE IMPORTED FOR EXPORT (FREE
    GOODS) WITHOUT LICENCE / AUTHORIZATION / CERFICATE
    / PERMISSION ON EXECUTION OF LEGAL UNDERTAKING /
    BANK GUARANTEE WITH THE CUSTOMS AUTHORITIES.

    RE-IMPORT OF GOODS REPAIRED ABROAD:


    SAME AS ABOVE PROVIDED THESE ARE FREE ITEMS
    IMPORT OF GOODS USED IN PROJECT ABROAD AFTER
    USE FOR AT LEAST ONE YEAR OR COMPLETION OF THE
    PROJECT IS PERMITED FOLLOWING ABOVE PROCEDURE.
    SALE OF GOODS IN HIGH SEA FOR IMPORT INTO INDIA
    IS PERMITTED SUBJECT TO ANY OTHER LAW .
    NEW CAPITAL GOODS UNDER LEASE FINANCING IS
    PERMITTED.
    GOODS ALREADY IMPORTED / SHIPPED / ARRIVED, IN
    ADVANCE, BUT NOT CLEARED FROM CUSTOMS MAY BE
    CLEARDED (WHERE LICENCE / AUTHON NEEDED) AFTER
    OBTAINING SUCH DOCUMENTS SUBSEQUENTLY.
    PRIVATE / PUBLIC BONDED WAREHOUSES MAY BE USED
    FOR KEEPING IMPORTED GOODS IF THOSE ARE MADE AS
    PER THE NOTIFICATION ISSUED BY THE DEPARTMENT OF
    REVENUE.

    FLOW CHART - IMPORTATION


    1. NEED IDENTIFICATION (COST BENEFIT ANALYSIS).
    2. ASCERTAINING IMPORTABILITY (REF. EXIM POLICY FTP)
    3. SOURCE DEVELOPMENT (SUPPLIER)
    4. INVITATION OF QUOTES (OFFERS)
    5. EVALUATION OF QUOTES (PRICE, TERMS, CURRENCY, ETC.)
    6. FINALISATION OF SUPPLIER (THRU NEGOTIATION)
    7. CONTRACT EXECUTION (ORDER PLACEMENT WITH TARIFF
    NOMENCLATURE & DESCRIPTION)
    8. FINANCIAL ARRANGEMENT (LC OPENING, ETC.)
    9. IF FOR EXPORT PRODUCTION, ARRANGE AUTHORISATION
    10. PERIODIC FOLLOWS-UP
    11. CHA FIXATION / WRITE-UP FOR CUSTOMS / INSURANCE,
    ETC. (FOR SURVEYOR ALSO)
    12. RECEIPT OF SHIPMENT ADVICE (COPIES OF MAIN DOCS.)
    13. ACCEPTANCE OF DOCUMENTS THRU BANK OR PAYMENT TO
    BANK
    14. OBTAINING ORIGINAL DOCUMENTS FROM BANK
    15. HANDING OVER DOCS TO CHA FOR CUSTOMS CLEARANCE
    16. IF DOCUMENTS DELAYED, OBTAIN SHIPPING GUARANTEE
    FROM BANK
    17. FOLLOW-UP WITH CHA FOR SUBMISSION OF BILL OF
    ENTRY WITH RELEVANT DOCUMENTS TO CUSTOMS FOR
    EXAMINATION, APPRAISAL, ASSESSMENT, EVALUATION &
    DUTY FIXATION
    18. ARRANGE PAYMENT OF DUTY (FOR CLEARANCE OF
    GOODS)
    19. ONCE CUSTOMS CLEARANCE OBTAINED, ARRANGE PORT
    FORMALITIES & PAYMENT THRU CHA FOR TAKING OUT GOODS
    FROM PORT TO DESTINATION AFTER ARRANGEMENT OF VAT
    FORMALITIES
    20. OBTAIN BILL OF ENTRY COPIES FOR CENVAT CREDIT,
    EXCHANGE CONTROL COMPLIANCE AND COMPLETE
    RECORDINGS.

    IMPORT CLEARANCE
    - FILING OF BILL OF ENTRY(NOTING) (NOTING
    MANIFEST APPRAISEMENT LICENCE ACCOUNTS
    CASH CHA)
    - EXAMINATION AT DOCKS (SECOND APPRSNT SYSTEM)
    OPENING WEIGHT MEASUREMENT VERIFICATION
    AS PER BE / INVOICE / LICENCE ETC.)
    - OBSERVATION ON ORIGINAL / DUPLICATE OF B/E (AND
    IF DUTYPAID GIVES OUT OF CHARGES)
    BEFORE FILING (DOCUMENTS)

    PURCHASE ORDER / ORDER CONFIRMATION


    LETTER OF CREDIT, IF ANY
    INVOICE (DULY ENDORSED BY BANK)
    PACKING LIST
    AWB / BILL OF LADING
    CERTIFICATE OF ORIGIN
    CAN (ARRIVAL BY AIR)
    FREIGHT BILL / INSURANCE CERTIFICATE
    IMPORT LICENCE, IF ANY
    CATALOGUE OF THE IMPORTED ITEM
    TECHNICAL WRITE-UP
    IMPORTERS DECLARATION
    GATT DECLARATION
    ANY OTHER LIKE AZO CERTS ETC.

    TRADE CONTRACTS
    ALL TRADE TRANSACTIONS, SPECIALLY INTL TRADE ARE
    CONDUCTED BY SUCH A CONTRACT.
    IT AIMS TO MINIMISE RISKS, PROTECT TRADERS FROM
    POSSIBLE DISPUTES / CLAIMS OR LEGAL ACTIONS.
    IT CLEARLY INDICATES BOTH THE TRADERS
    RESPONSIBILITIES THRU STIPULATED TERMS &
    CONDITIONS.
    MAJOR ONES ARE:
    DATE OF CONTRACT
    SELLERS AND BUYERS NAMES (FULL LEGAL)
    PRODUCT DESCRIPTION (BRIEF AND SION BASED WITH
    HSN CODE)
    PACKING MODE / MARKING
    QUANTITY (NUMBER, MEASUREMENT, WEIGHT OR
    VOLUME)
    UNIT PRICE / CURRENCY / TOTAL VALUE
    TERMS OF DELIVERY (INCOTERMS 2010)
    TERMS OF PAYMENT (FROM DATE OF SHIPMENT)
    TAXES, DUTIES & CHARGES (EXPLICIT MENTION)
    DELIVERY DATE (NO AMBIGUITY)
    PART-SHIPMENT / TRANSHIPMENT
    DOCUMENTATION (INVOICE / PL / BL / COO, ETC.)
    INSURANCE (IF NOT IN INCOTERMS)
    INSPECTION (SPECIFIC MENTION)
    RETENTION OF TITLE (UNTIL PRICE IS PAID, ETC.)
    CLAIMS CLAUSE
    PENALTY / REWARD (LD / BONUS)
    ARBITRATION CLAUSE (ICC MODEL CLAUSE)

    INCOTERMS
    2010
    APPLICABLE TRADE TERMS IN VARIOUS MODE OF
    TRANSPORT
    GROUP TERM
    E
    F
    C

    EXW
    FCA
    FAS
    FOB
    CFR
    CIF
    CPT
    CIP
    DAT
    DAP
    DDP

    LAND
    OCEAN
    AIR
    MULTI MODAL

    STANDS FOR
    EX WORKS
    1
    FREE CARRIER
    134
    FREE ALONGSIDE SHIP
    2
    FREE ON BOARD
    2
    COST AND FREIGHT
    2
    COST INSURANCE & FRT
    2
    CARRIAGE PAID TO
    1234
    CARRIAGE AND
    INSURANCE PAID TO
    1234
    DELIVERED AT TERMINAL 1 2 3 4
    DELIVERED AT PLACE
    1234
    DELIVERED DUTY PAID
    1234
    1
    2
    3
    4

    INCOTERMS 2010
    DIVISION OF COST / REPOSIBILITIES OF
    EXPORTER (OR IMPORTER)
    1 LOADING ON TRUCK
    2 EXPORT CUSTOMS FORMALITIES
    3 CARRIAGE TO PORT OF LOADING (POL)
    4 UNLOADING FROM TRUCK AT POL
    5 LOADING CHGS AT POL
    6 CARRIAGE TO PORT OF DESTINATION (POD)
    7 UNLOADING AT POD
    8 UNLOADING ON TRUCK AT POD
    9 CARRIAGE TO FINAL DESTINATION
    10 INSURANCE
    11 IMPORT CUSTOMS FORMALITIES
    12 IMPORT TAX AND DUTIES
    EXW

    NO

    1 12

    YES -

    FCA

    NO

    5 12

    YES 1 4

    FAS

    NO

    6 12

    YES 14, 5 UPTO SHIP

    FOB
    CFR
    CIF
    CPT
    CIP
    DAT
    DAP
    DDU

    NO
    NO
    NO
    NO
    NO
    NO
    NO
    NO

    6 12
    YES 1 5
    7 - 12
    YES 1 - 6
    7 - 9, 11 & 12 YES 1 6 & 10
    7 - 12
    YES 1 6
    7 - 9, 11 & 12 YES 1 6 & 10
    10 12
    YES 1 9
    10 12
    YES 1 9
    YES 1 12

    BONDED WAREHOUSE
    - FACILITIES AVAILABLE FOR KEEPING IMPORTED GOODS IN
    CUSTOMS BONDED WAREHOUSES WITHOUT PAYMENT OF
    DUTY (CUSTOMS ACT 1962 CHAPTER IX, WAREHOUSES
    GOODS (REMOVAL) REGULATIONS, 1963 AND
    MANUFACTURE AND OTHER OPERATIONS IN WAREHOUSED
    REGULATIONS, 1966.
    - DUTY IS COLLECTED AT THE TIME OF CLEARANCE FROM
    THE WAREHOUSE AT PREVAILING RATE.
    - GOODS MAY REMAIN IN A WAREHOUSE WITHOUT AND
    WITH INTEREST LIABILITY.
    - ANY GOODS DEPOSITED IN A BONDED WAREHOUSE MAY
    BE STORED UPTO A PERIOD OF ONE YEAR ONE MONTH
    INTEREST FREE AND BEYOND THAT PERIOD WITH INTEREST
    @ 24% ON THE DUTY PAYABLE AMOUNT.
    - IN CASE OF CAPITAL GOODS FOR 100% EOU STORING IS
    ALLOWED FOR 5 YEARS WITHOUT INTEREST BEYOND
    THAT INTEREST AT 24% ON APPLICABLE IMPORT DUTY.
    - INTEREST MAY BE WAIVED BY THE BOARD IN PUBLIC
    INTEREST.
    -EXTENSION OF STORING PERIOD IS POSSIBLE BEYOND
    ABOVE PERIOD BY COMMISSIONER OF CUSTOMS FOR 6
    MONTHS AND FURTHER BY CHIEF COMMISSIONER.

    - IMPORTER OR ITS CHA IS REQUIRED TO PRESENT TO


    CUSTOMS A BILL OF ENTRY FOR WAREHOUSING (INTO
    BOND BE) WITH RELEVANT DOCUMENTS REQUIRED WHEN
    BONDING IS NEEDED.
    - A SUITABLE BOND HAS TO BE EXECUTED WITH THE BOND
    SECTION FOR NOTIONAL DUTY AMOUNT.
    - IF THE WAREHOUSE IS AT SAME PORT / AIRPORT
    STATION THE GOODS ARE ESCORTED FOR WAREHOUSING.
    - OTHERWISE, GOODS ARE ALLOWED TO BE MOVED UNDER
    A TRANSIT BOND.
    - BOND IS DISCHARGED ONLY AFTER FULL SATISFACTION
    OF CUSTOMS OFFICER ABOUT PAYMENT OF DUTY FULLY
    WHILE CLEARANCE IS DONE FROM WAREHOUSE AGAINST
    EX-BOND BILL OF ENTRY.
    - WAREHOUSES ARE LICENSED AT PARTICULAR PLACES
    WHICH HAVE BEEN DECLARED BY CENTRAL BOARD OF
    EXCISE & CUSTOMS (DELEGATED TO THE CHIEF
    COMMISSIONER & COMMISSIONERS OF CUSTOMS).
    - AFTER PLACE IS DECLARED, THE ASSISTANT / DEPUTY
    COMMISSIONERS OF CUSTOMS MAY APPOINT A PUBLIC
    BONDED WAREHOUSE OR PRIVATE BONDED WAREHOUSE
    WHERE IMPORTED DUTIABLE GOODS MAY BE DEPOSITED.
    - CARRYING OUT MANUFACTURE INSIDE OR INSPECTING
    STORES INSIDE THE WAREHOUSE IS POSSIBLE WITH THE
    PERMISSION OF THE ASSISTANT / DEPUTY COMMISSIONER
    OF CUSTOMS.

    CUSTOMS
    (AN INDIRECT TAX)
    AN AUTHORITY OR AGENCY IN A COUNTRY RESPONSIBLE
    FOR COLLECTING AND SAFE GUARDING CUSTOMS DUTIES,
    CONTROLLING THE FLOW OF GOODS (INCLUDING
    ANIMALS, PERSONAL EFFECTS AND HAZARDOUS ITEMS)
    IN & OUT OF A COUNTRY.
    CUSTOMS DUTY IS A TARIFF OR TAX ON BOTH IMPORTS
    OF OR EXPORTS OF GOODS (ANCIENT CUSTOM).
    MAJOR DOCUMENTS FOR TRADE ARE:
    -SHIPPING BILL FOR EXPORT (PASSING)
    &
    - BILL OF ENTRY FOR IMPORT (CLEARANCE)
    THESE ARE THE DOCUMENTS GIVING DETAILS OF THE
    GOODS GOING OUT OR COMING IN THE COUNTRY (WITH
    VALUE OF GOODS).
    THE CUSTOMS ACT 1962
    (SEC. 1-40)
    AUTHORITY FOR LEVY OF DUTY UNDER THE ACT.
    SECTION 12; VALUE SECTION 14
    ALSO CUSTOMS TARIFF ACT 1975SEC. 3
    DIFFERENT TYPES OF CUSTOMS DUTY:
    BASIC CUSTOMS DUTY (AD VALORED/ SPECIFIC)
    AUXILIARY DUTY (AD HOC THRU FINANCE ACT) OR
    (SURTAX THRU FINANCE ACT)
    ADDITIONAL DUTY OF CUSTOMS (COUNTERVAILING
    EQUIVALENT TO EXCISE DUTY ON LIKE ARTICLES
    PRODUCED IN THE COUNTRY MODVATABLE)

    CURRENTLY THERE HAS REEN IMPOSITION OF EDUCATION


    SURCHARGE ON BASIC DUTY; AND SPECIAL ADDITIONAL
    CUSTOMS DUTY (INTRODUCED TIME TO TIME FROM 199899 BUDGET NON-MODVATABLE).
    A TYPICAL CALCULATION SHOWN LATER

    ASSESSABLE VALUE ON WHICH THE CUSTOMS


    DUTY IS CALCULATED CONSISTS OF (MAINLY):
    F.O.B. VALUE
    FREIGHT INCURRED FOR BRINGING THE GOODS
    INSURANCE PREMIUM
    NOTIONAL LANDING CHARGES
    (ASSESSABLE VALUE) X RATE% = DUTY

    DUTIES ARE OF THREE TYPES:


    TARIFF RATE OF DUTY (SPECIFIED IN THE FIRST &
    SECOND SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975)
    PREFERENTIAL RATE OF DUTY (AVAILABLE FOR IMPORT
    OF SPECIFIED COMMODITIES FROM PREFERENTIAL
    COUNTRIES NOTIFIED).
    EFFECTIVE/CONCESSIONAL RATE OF DUTY(UNDER
    SECTION 25 OF THE CUSTOMS ACT - THE GOVT. THRU
    CUSTOMS NOTIFICATION MAY EXEMPT PARTIALLY OR FULL
    DUTY, WITH SOME CONDITION OR WITHOUT ANY
    CONDITION.

    CUSTOMS VALUATION (DETERMINATION OF PRICE


    OF GOODS) RULES, 1988
    TRANSACTION VALUE PRICE ACTUALLY PAID OR
    PAYABLE FOR GOODS WHEN SOLD FOR EXPORT TO INDIA
    (GENERALLY INVOICE VALUE)
    TRANSSACTION OF VALUE OF IDENTICAL GOODS
    GOODS IMPORTED AT OR ABOUT THE SAME TIME AS THE
    GOODS BEING VALUED, AT THE SAME COMMERCIAL
    LEVEL AND IN SUBSTANTIALLY THE SAME QUANTITY
    TRANSACTION VALUE OF SIMILAR GOODS THIS IS
    USED WHEN TRANSACTION VALUE IS NOT AVAILABLE.
    DEDUCTIVE VALUE THE VALUE OF IMPORTED GOODS
    SHALL BE BASED ON A COMPUTED VALUE OF MATERIAL
    AND FABRICATION OR OTHER PROCESSING EMPLOYED IN
    PRODUCING THE IMPORTED GOODS AND THE COST OF
    COMMISSIONS AND BROKERAGE ETC.
    RESIDUAL VALUE WHERE THE VALUE OF THE IMPORTED
    GOODS CANNOT BE DETERMINED UNDER THE
    PROVISIONS OF ANY OF THE ABOVE RULES.

    CALCULATION
    CIF VALUE OF ALUMINIUM SCRAP
    US $ 33,000 @ Rs.50/ #
    ADD:

    LANDING CHARGES
    (NATIONAL) @ 1% ON CIF

    ASSESSABLE VALUE (AV.)


    BCD @ 10% ON A.V.

    Rs.
    16,50,000
    16,500
    16,66,500
    1,66,650
    18,33,150

    CVD (ADDITIONAL) CUSTOMS


    DUTY @ 14%

    2,56,641

    CESS:

    EDUCATION @ 2% ON CVD

    5,133

    S&h EDU. @ 1% ON CVD

    2,566

    EDUCATION @ 2% ON BCD
    (BCD+CVD+CESS ON CVD)

    8,620

    S&h EDU. @ 1% ON BCD


    (BCD+CVD+CESS ON CVD)

    4,310

    ADD:

    SPECIAL CVD (SAD) @ 4%

    LESS:
    A.V.
    TOTAL CUSTOMS DUTY
    (INCLUDING CESS)

    21,10,420
    84,417
    21,94,837
    16,66,500
    5,28,337

    OTHER EXPENSES
    CONTAINER DETENTION
    THC (TERMINAL HANDLING)
    PORT CONGESTION (30X50)
    GROUND RENT
    CHA (CUSTOMS HOUSE AGENT) CHARGES
    TRANSPORTATION

    20,000
    12,000
    1,500
    500
    10,000
    8,000
    52,000

    TOTAL CLEARING CHARGES WITH DUTIES ETC.


    A.
    B.

    TOTAL CUSTOMS DUTIES


    OTHER EXPENSES

    5,28,337
    52,000
    5,80,337

    TOTAL COST OF THE ALUMINIUM SCRAP


    CIF VALUE OF MATERIAL
    DUTIES
    OTHER EXPENSES

    16,50,000
    5,28,337
    52,000
    22,30,337

    Thank You

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