Remaning Topics
Remaning Topics
Remaning Topics
Exports are given priority in India and enjoy lot of incentives. However, the major
problem lies in the process of realising them. Unfortunately, exporters have to
approach multiple organisations for seeking sanction.
It is essential to the exporters to plan carefully in respect of incentives, even at the time
of shipment, though their benefits are available only after completion of the shipment
Exporters have to draw a suitable plan of action for claiming incentives in a timely
manner to avoid delays and cuts in realisation. Exporters have to understand the
different procedural formalities, connected with multiple and diverse agencies.
TYPES OF INCENTIVES
Excise Duty—Refund/Exemption
Refund of central excise is an important financial incentive for export promotion.
Universally, exporters do not bear the burden of indirect taxes. In India, indirect taxes
are levied at the Central, State and Local level
Exemption from payment of excise duty is made on execution of Bond by exporter.
Where exemption is not made available, exporter has to make payment, initially, which
is refunded later.
Alternatively, under Duty Drawback, refund of excise duty and customs duty is made on
inputs paid. By this, exporter is freed from the burden of excise duty and customs duty
both on inputs and output to make their products globally competitive.
➢ This Act replaced the earlier Act which used to be called as Import and Export
(Control) Act 1947.
➢ The basic objective of FTDR 1992 is to provide a frame work for development and
regulation of foreign trade by facilitating imports into the country, as well as, taking
measures to increase exports from India and any other related matters.
➢ In terms of these powers contained in FTDR Act 1992, the government makes
provisions to fulfill the objectives by way of formulation of the Export and Import
Policy.
➢ Earlier this policy used to be called as Export and Import Policy i.e. Exim Policy,
however, of late the Policy is being termed as Foreign Trade Policy (FTP) of the country
as it covers areas beyond export and import in the country. This Policy, in terms of the
Act is formulated by the office of the Directorate General of Foreign Trade (DGFT), an
attached office of the Ministry of Commerce & Industry, Government of India. 7 FTDR
Act, 1992 and Foreign Trade Policy
➢ The Act lays down that no person can enter into import or export business in India
unless he is issued an Importer Exporter Code No. (IEC No.) by the office of the DGFT.
➢ In case any exporter or importer in the country violates any provision of the
Foreign Trade Policy or for that matter any other law inforce, like Central Excise or
Customs or Foreign Exchange, his IEC number can be cancelled by the office of DGFT
and thereupon that exporter or importer would not be able to transact any business
in export or import.
➢ The Act also provides for issuance of a permission called licence or authorization
for import or export, wherever it is required in terms of the policy. Similarly, powers to
suspend and cancel the licence for import or export are also provided for in the Act.
➢ The powers related to search and seizure etc. of the premises, where any violation
of Export Import Policy has taken place or is expected to take place are also provided
for in the Act.
➢ To operationalize the provisions of any Act, Rules are required. For the FTDR Act,
the rules framed and issued by the Government are called Foreign Trade (Regulation)
Rules, 1993 which lay down the various operational provisions such as fee
requirements for issuance of licenses, conditions of licenses, refusal, suspension and
cancellation of licenses etc.
When exporter is ready for shipment of goods, it is necessary for him to secure
clearances from Central Excise and Customs Authorities. Excise duty is an indirect tax
imposed by the Central Government on goods manufactured in India. This is
collected at source, at the time of removal of goods from the factory/warehouse. All
excisable goods can be removed only 13 after their clearance by Central Excise
Authorities.
In other words, the intention of Government is exporters should not bear the burden
of excise duty, both on inputs and outputs. The procedure is laid down in section 37
of the Central Excise and Salt Act.
CENTRAL EXCISE CLEARANCE OPTIONS
A. Export Under Claim of Rebate of Duty
Under this method the exporter has to pay excise duty, initially, and can claim
refund of excise duty, after exportation of goods to countries except Nepal and
Bhutan. However, this method involves blockage of finances as the procedure
involves time for getting back refund of excise duty.
B. Export Under Bond
Under this method, exporter does not make payment of excise duty. He has to
obtain bank guarantee or surety to an amount equivalent to excise duty payable.
This is beneficial to the exporter, as finances are not blocked. Once evidence of
export is shown, the excise authorities would release the bond.
CUSTOMS CLEARANCES
Every exporter is required to obtain customs clearance in respect of export goods before they are sent
to buyer, irrespective of the mode of shipment. The mode of shipment could be either by sea, air, rail or
road. Customs procedures in different modes of shipment are 15 122 one and the same, barring minor
variations.
The exporter through the clearing and forwarding agent, also known as Customs House Agent (CHA),
normally, obtains the customs clearance.
Documentary Requirements
For movement of goods by sea or air, customs permission for shipment of goods is
given on a prescribed document known as ‘Shipping Bill’. In other cases, such as by
road/rail, the 124 Export-Import Procedures, Documentation and Logistics
prescribed document on which the customs permission given is called ‘Bill of Export’.
There are four types of Shipping Bill/Bill of Export used in export of goods. These are:
Dutiable Shipping Bill/Bill of Export: Export goods attract duty/cess.
(ii) Drawback Shipping Bill/Bill of Export: Export goods fall under Duty Drawback
scheme. In this case, customs duty is paid first and later duty is refunded, after
shipment of goods.
(iii) Free Shipping Bill/Bill of Export: This form is used when export goods attract
neither export duty/cess nor are covered under Duty Drawback scheme (Free
trade samples, gift parcels, warranty replacements etc).
(iv) Ex-Bond Shipping Bill/Bill of Export: Goods are shipped from the customs
bonded warehouse.
Exporter or CHA has to submit the following documents to the customs
department for securing customs clearance:
Shipping Bill (Appropriate type) in quadruplicate, if clearance is manual or
Annexure A or B, in case clearance is given in computerised manner;
(ii) Commercial Invoice (2 copies);
(iii) Exchange Control Form- GR Form or SDF as applicable, in duplicate. SDF form
is used in place of GR Form where customs operations are computerised;
(iv) Copy of Letter of Credit/Copy of Export Order/ Export contract, duly attested
by bank;
(v) Packing List;
(vi) Certificate of Origin or GSP certificate of Origin; (vii) Shipper’s declaration
form for export of goods;
(viii) ARE-1, duly approved by the Central Excise office (ARE-1 has replaced AR-4);
(ix) Original copy of Certificate of Insurance, wherever necessary;
(x) Marine Insurance Policy;
(xi) Export Licence, where required and
(xii) Any other documents.