NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

Answer 1: An indirect tax applied to items made in India is called the Central Excise duty.

Under the jurisdiction of Entry 84 of the Union List-1's Seventh Schedule, the tax is managed by the Central
Government together with India's Constitution's Article 226.

According to the Central Excise Act of 1944, the duty is assessed, and Schedules I and II of the Central
Excise Tariff contain the ad valorem and particular rates of duty.

The Central Excise law defines "manufacture" as the taxable event, and the moment the items are made, a
charge for Central Excise duty becomes due.
Additionally, additional duties imposed under the Additional Duties (Goods of Special Importance) Act,
Additional Duties (Textiles and Textile Articles) Act, Cess, etc. are delegated to the Central Excise Officers.

Excisable Goods:
Article 366(12) of the Constitution, which governs the Central Excise Act, defines "goods."

as "goods comprise all commodities, minerals, and objects."

taxable items

The Central Excise Act Section 2( d) lists the Excisable Goods as follows:

goods listed as being subject to an excise duty in the Central Excise Tariff Act of 1985, which includes salt.
Any item, substance, or thing that can be purchased and sold for money is considered a "good," and such
items must be

Items that are "excisable" even though they are duty-free: Excisable

The mere fact that goods are exempt from duty due to an exemption notification does not cause them to
become non-excisable goods.

"Non-excisable goods" are products that are not covered by CETA:

Several products, including wheat, rice, cut flowers, horses, soy beans, and others, are not included in the
Central Excise Tariff and are therefore not "excisable goods‟,

Mere mention in CETA insufficient: Unless these are "goods," i.e., unless the condition of marketability is met,
mere mention in the Excise Tariff will not generate duty, according to Bhor Industries Ltd.

Only if excisable items are "made" or "produced" are they subject to duty.

Products excisable even with no duty:

 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

● The products listed in the tariff would still be treated as excisable goods on which NIL rate of tax
was payable even if the rate of duty was decreased to NIL due to an exemption notification.
● Exempt goods are not items that have been removed under bond.
● Exempted goods are those that were exempted as a result of a notification issued in
accordance with Section 5A of the CEA.
● The commodities removed under bond without paying duty are neither exempt from duty nor
subject to a zero percent duty rate.

According to section 3(1) of the CE Act, excisable goods are "excluded excisable items" and include
products made in SEZ (except goods manufactured or produced in the Special Economic Zone).
Consequently, products made or produced in SEZ are "excisable products, however since charging
section 3(1) excludes those goods, no charge is imposed. Consequently, the products made in SEZ are
not "exempt goods‟. They are known as "excluded excisable items."

Classification of Goods for Central Excise:

1. Central Excise Tariff History:

Based on the classification of the items read with the pertinent exemption notification, the rate of duty is
established.
The Central Excise Tariff and the Customs Tariff serve as the basis for classification.
Both tariffs are based on the WCO-developed HSN (Harmonized System of Nomenclature).
20 sections are used to categorize products (21 in case of customs). Each segment is made up of a
number of chapters.
The classification of items is based on an eight-digit tariff. The first two digits denote the chapter, the
next two the heading, and the final two the sub-classification. There are three types of dashes: single,
double, and triple.
Tariff is an eight-digit categorization item. Only against "tariff" is the rate of duty given.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

3. General Guidelines for Classifying Articles

The meaning of words used in tariffs should be the same as how they are used in commerce. This is
known as "trade parlance hypothesis." Unless a word is clearly defined in the Tariff itself, the meaning
as used in commerce is more significant than dictionary or technical definitions.

HSN is a crucial classification guide that should typically be followed.

Except when the tariff description specifically states otherwise and classification is related to the
function of the product, end use is typically not important for classification.

Manufactured or Produced:

A tax on the "manufacturing or production" of items is known as excise.

The definition of "made" or "produced" is crucial since excise is a levy on manufacturing, and if no
manufacturing occurs, there is no obligation to pay central excise duty.

Since the sales tax is a tax on purchases, it can only be applied when a purchase is made.
Example : There will be no sales tax on a machine or furniture made by a company if it uses them
internally and builds them in the plant rather than selling them.

Excise duty is a levy on manufacture, and the obligation to pay it is affixed as soon as items are
produced. Example : Due to the fact that the machine or furniture has been manufactured, excise duty
will apply. However, the duty payment may be postponed until the removal of the items from the
manufacturer for administrative reasons.

Manufacture:

The Central Excise Act Section 2(f) merely specifies that "manufacturing"
covers any procedure:

1. Related to the completion of a produced good.

2. Which is designated as amounts to manufacturing in relation to any goods in the Section or Chapter
notes of the Central Excise Tariff Act, 1985's Schedule.

3. In relation to the items included in the third schedule to the CEA, this includes packaging or
repackaging such goods in a unit container, labeling or relabelling containers, declaring or changing the
retail sale price, as well as any other treatment to make the product marketable to consumers. [The
terms "deemed manufacture" are used in clauses (ii) and (iii)].
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

The term "manufacture" refers to:

(a) Manufacture as defined by numerous court rulings, i.e., the emergence of a novel and identifiable
product.
(b) Considered a manufacture

There are two deeming clauses in Section 2(f), which defines "Manufacture."

Two categories of deemed manufacture exist:

Some processes are designated by CETA as "amounting to manufacture." Even if these methods may
not amount to "manufacture" according to court decisions, items will be considered to have gone
through one of these processes if they are completed [section 2(f)(ii)].

Repackaging, relabeling, putting or changing the retail sale price, etc., will be considered
"manufacturing" in relation to the items listed in the third schedule of the Central Excise Act.
The items listed in the Central Excise Act's Third Schedule are the same items for which excise tax is
due under Section 4A based on the MRP displayed on the package. [section2(f)(iii) with effect from
14-5-2003]

Answer 2: One of the primary elements of international trade is considered to be exports, along with
the import system. Additionally, since the LPG programme, imports and exports have accelerated
rapidly. The country must comply with numerous legal and necessary requirements before it can export.

These formalities that encourage domestic economic activity will be covered in this section. It is crucial
to understand how a corporation exports its goods and services to other countries while still abiding by
the law and fundamental ideals.

Export Procedure:

An export procedure typically begins with the desire to send goods and services to other countries for a
fee; these export procedures are listed below:

Step1: Receipt Order

The order will come to the Indian exporter either directly from the importer or via the import houses.

Step2: Obtaining License and Quota

The Indian exporter must submit an application to the Export Trade Control Authority and receive a
valid license in order to export goods from India after receiving the importer's order.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

Step3: Letter of Credit

In the event that the importer does not submit the letter of credit along with the order, the exporter then
requests it from the importer.

Step4: Fixing the Exchange Rate

Then, a fixed exchange rate between the domestic currency and the foreign currency is established. As
a result of periodic fluctuations in the foreign exchange market, the exchange rate must be fixed.

Step 5: Foreign Exchange Formalities

Every exporter of products is obliged to submit a declaration in the form specified in a manner in
accordance with the Foreign Exchange Regulation Act of India (FERA).

Step 6: Preparation for Executing the Order

The exporter should make the required arrangements to execute the order:

Step 7: Formalities by a Forwarding Agent

The agent is next required to complete the procedures, which include getting a permit from the customs
agency, creating the shipping bill, and paying the dues after giving the necessary information about the
commodity being exported.

Step 8: Bill of Lading

The products' Indian exporter issues the Bill of Lading and gives the shipping company a copy of the
receipt.

Step 9: Shipment Advice to the Importer

To advise the importer of the goods of the shipment of the items, the Indian exporter gives shipment
advice.

Step 10: Presentation of Documents to the Bank

The Indian exporter must confirm that he is in possession of the required shipping documentation.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

Step 11: The Realization of Export Proceeds

After submitting the bill of exchange, the exporter of the goods must follow certain banking procedures.

Export Procedure and Documentation

We studied about the formalities of the export process in the section prior, and now we will learn about
the paperwork required.

Step 1: Obtain a Request: When someone persuades them to purchase goods, that is the first stage in
the shipping paperwork procedure.
Step 2: Check the Country and Potential Buyer
The next step is to determine whether you can do business with the buyer when you receive their
inquiry.
Provide a proforma invoice in step three: We must deliver the proforma invoice for the transaction
after screening the customer.
Finalize the Sale in Step 4: Your offer will be rejected or accepted by the buyer, which will complete
the deal.
Prepare the goods and the shipping documents in step five: All of the following documents must be
ready: Commercial Invoice, Packing List, Certificate of Origin, Shipper's Letter of Instruction, and Bills
of Lading.
Run a Restricted Party Screening in Step 6:Once more, the procedure must be followed before the
items are shipped for export.
Step 7: Complete Other Forms and Ship Your Items: Before exporting the products, further
documentation may need to be prepared.

Documents Required for Exporting

The best place to start when determining which documentation are required for an export operation is
with your overseas customer/importer or a freight forwarder. By acquiring accurate information, you
could assist your client in getting their products cleared by customs in the target market. Commonly
used expert documents are:
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

Pro Forma Invoice: This document states that the seller will offer the buyer the goods and services at
the time and price specified, and includes information on the products such as price, number, weight,
and kind.

Commercial Invoice: A commercial invoice is a legally binding document that specifies the goods
being sold as well as the agreed-upon purchase price. It is exchanged between a seller and a buyer.

Packing List- This list includes the invoice number, seller, buyer, shipper, carrier, date of shipping,
mode of transport, itemized quantity, description, package type, package quantity, total net, and gross
weight (in kilograms), packaging markings, and measurements.

Document that is transported with products by a global airline is known as an air waybill. The
documentation allows tracking and gives all the necessary information about the package.

Export licenses are legal documents issued by the government that permit the movement of particular
goods in precise quantities to a particular location for a specific end-use.

Formalities of Registration and Export Documentation

An exporter must make numerous preparations before beginning their export firm because export is a
very broad notion.

● Establishing an Organization
● Opening a Bank Account
● Obtaining Permanent Account Number (PAN)
● Obtaining Importer-Exporter Code (IEC) Number
● Registration cum membership certificate (RCMC)
● Selection of product
● Selection of Markets
● Finding Buyers
● Sampling
● Pricing/Costing
● Negotiation with Buyers
● Covering Risks through ECGC
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

Answer3 a) Buying foreign goods to use or sell on the domestic market is referred to as importation.
Importing entails investigating international marketplaces for reliable suppliers and products, arranging
for the transfer of the product to the domestic market, securing funding, negotiating import documents
and customer procedures, and creating plans for the use or resale of the goods or service.

The fulfillment of the claimed benefits and planning for product acceptance are therefore necessary for
successful importation, which goes beyond just making good purchases. It is the obligation of the
importing company to assess if the imported goods or service will satisfy domestic demand.

Essentially the import process comprise the following five stages:

1. Determining market demand and purchasing motivation.

2. Locating and negotiating with sources of supply.
3. Securing physical distribution.
4. Preparing documentation and customs processing to facilitate movement among
countries and organizations.
5. Develop a plan for resale or use.

Determining market demand and purchasing motivation:

Importers typically have a unique advantage over international competitors in the domestic market
because they are more familiar with or can pick up on these characteristics more quickly. They may
reside there, be market natives, or just be closer to the market.

They are accustomed to institutions and information sources. This knowledge, however, can be a
drawback if familiarity breeds carelessness and people mistakenly believe they possess a degree of
expertise that is not actually present.

Exclamations of joy from family and friends over international souvenirs are no substitute for a thorough
market investigation. The local importer also needs studies and market analysis to produce reasonable
estimations of the market potential and a foundation for the promotional plan.

Imported raw materials and component parts are used by domestic manufacturers to construct their
own finished goods. The predicted sales of the manufacturers who employ them determine the
potential for such materials and products. Importers can estimate the market potential for both finished
goods and components by carefully examining trade reports and business conditions. Manufacturers
may operate mines and processing facilities abroad from which they import raw materials in order to
suit their needs.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

The quantity and sorts of manufactured goods that merchants import for resale are influenced by
wealth and societal behaviors.

To expedite and improve the efficiency of our manufacturing, commercial, educational, and
governmental activities, some materials and equipment are imported.

Locating and negotiating with sources of supply:

To ensure that they can deliver promised items at the agreed-upon time and location, and in the
agreed-upon amount and quality, importers must establish dependable supply sources.

There are many different sourcing tactics available, from the ownership and control of supplying
companies to the ongoing scouring of the foreign market by the importer, local buyer, or middlemen.
The peculiarities of the supply market, the product at hand, and the importer's capacity to fund and
oversee the operation all play a role in the decision between the many possibilities.

Physical Distribution
In order to guarantee themselves and their clients that they can deliver promised items at the
agreed-upon time and location, in the agreed-upon amount, and in the agreed-upon quality, importers
must establish trustworthy supply sources.
There are many different sorts of sourcing strategies accessible, ranging from the ownership and
control of supplying companies to the ongoing scouring of the foreign market by the importer, resident
buyer, or middlemen.
The peculiarities of the supply market, the product at hand, and the importer's capacity to fund and
manage the operation will all influence which alternative is selected.

Documentation
In global trade, documentation is critical. More complex systems are needed for international trade than
for domestic trade due to the distances between trading partners and the sovereign rights of nations.
Every entrepreneur wants to safeguard their own interests, and every country wants to make sure that
its laws are upheld, its resources are secured, and its sovereignty is maintained.
The individual importer is essentially forced to comply, at least initially. It might be expensive and result
in nondelivery if documentation procedures are not followed.
Exporters who want irrevocable verified letters of credit will not send goods on revocable unconfirmed
letters. Particularly pertinent are customs procedures.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

Develop a Plan for Resale or Reuse

Importers must have a strategy for using or reselling the products they purchase. If not, they risk being
trapped with a product that does not necessarily fit the production and usage methods of a particular
business or institution or does not necessarily appeal to the local populace.
Therefore, it is advantageous for the importer to have a strategy for persuading people of the virtues of
a good or service. Because selling in the domestic market may be much more tough and competitive
than in overseas markets, the distribution routes, promotional activities, price, and finance should be
coordinated for orderly and effective marketing.
No more than it would be the case for domestic goods, there is no reason to anticipate that the bulk of
foreign products will sell themselves.

Answer2 b) Selecting a product is one of the key considerations when starting an import-export firm,
along with locating reliable suppliers or buyers.

When you want to select the commodity/product to be imported, please find below

● Travel Abroad on an Import/Export Search Mission

One of the most wonderful possibilities is to travel overseas. Don't worry if you can't manage it; it's not
always practical in terms of money, time, or other responsibilities you might have, like your day job or
family. However, it's not always necessary either. The ability to browse foreign goods that you can
import into your nation is a plus. In the case of export, you can also determine whether you have the
kinds of goods that people in other countries use.

● Get Import-Export Data with Shipment Details

To identify a product for importing or exporting, the most practical, accurate, and cost-effective method
is to purchase import-export data with shipment details from a reputable market intelligence provider,
which offers worldwide trade data of different countries. This will assist you in learning about and
comprehending the supply-demand chain for a certain good or sector of the economy. To locate a
product to import into India, for instance, you must first research which goods India imports and from
which foreign nations.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course:Export Import Procedures and Documentation
Internal Assignment Applicable for September 2022 Examination

● Attend Global Trade Show

Meeting overseas producers, distributors, importers, and business representatives at trade events is a
great idea. These events are put on by foreign governments to promote their own producers and
goods. This will assist you in deciding the goods to import. Additionally, if you plan to export your goods,
you can research the global market for commodities.

● Contact Foreign Embassies’ Trade Development Offices

For information on the global market for different products and industries, you can also get in touch with
trade development offices housed in embassies. There are offices sponsored by a variety of nations
and areas where you can obtain detailed information on producers and importers of anything from
toothpicks to truck tyres to fur coats.

● Track Down Leads on Internet and in Trade Publications

You can also get online and read trade periodicals to learn more about the state of the market for
traded goods and industries. You will be assisted in comprehending the product and making the best
decision by government websites, market research websites, internet distribution channels for trade
periodicals, and other helpful sources.You'll want to investigate every possibility, just like a good bounty
hunter.

Don't forget to check and double-check all of the information you gather from different online and offline
sources. You'll be able to locate and select the ideal goods for importing or exporting, as well as
increase your company's revenues.