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SNAPS NOTICE FOR BROCHURE

2009-11-15T00:18:00.000-08:00

THIS IS TO INFORM TO ALL THE STUDENTS OF THE DEPT . THAT SNAPS FOR BROCHURE WILL TAKE PLACE . EVERYBODY MUST BE THERE IN THE FOLLOWING DRESS CODE .
-BLACK COAT
-BLUE SHIRT
-BLACK PANT
-BLACK TIE
SCHEDULE :
17 NOV 1 PM ONWARDS MIB,MFC,MMT&MRLM (PREVIOUS)
18 NOV 1PM ONWARDS MIB,MFC,MMT &MRLM (FINAL)

UN CONVENTION ON SHIPPING

2009-11-14T06:08:00.000-08:00

UN CONVENTION ON SHIPPING BY NEERU AND RAJDEEP
· UNCTAD
· Develop country’s hegemony in shipping
· Complaints against conference system
· Battle for liner code
· UN Convention-The final act
· Convention on liner code: Highlights

UNCTAD
[United Nations Conference on Trade and Development]

UNCTAD was establish in the year 1964.One special feature is that, it has a committee on shipping, which deals mainly with the commercial and international trade aspects of shipping.
The work programme in the field of shipping adopted by the UNCTAD‘s committee on shipping at the committees first session held from eight to 23rd Nov. 1965 and at its special session held from 18th to 25th July 1966 and as amended at subsequent sessions constitutes the foundation of the numerous reports and studies on various aspects of shipping and shipping economics prepared and issued by the unctad.
Before establishment of the unctade of few shipping economist and the institute of shipping economist at Bergen in Norway and the institute of shipping economist at Bremen in German had brought out very valuable studies on some aspect of shipping and shipping economist. The reports and the studies prepared by the unctad secretariat in pursuance of the work programme in the field of shipping admirably further the cause of economist of shipping in as much as they covered wide and various aspects of shipping and there economist significance.
The research and studies included in the work program adopted by the unctad committee on shipping cover the following topics:

Establishment of National and Regional Consultation Machinery;
Level and structure of Freight Rates, Conference Practices and Adequacy of Shipping Services;
Improvement of port and connected facilities;
Establishment of merchant marines in developing countries;
Technological program of shipping;
Review of current and long-term aspects of maritime in shipping;
International seminars on shipping economics; and
International legislation on shipping.

Developed Countries Hegemony in Shipping

Although many developing countries were aware that the development of their shipping industry world contributes their economic growth, the shipping circles in the developed countries had propagated many misconceptions and myths. The later contended that the establishment of shipping industries by the developing countries was insufficient of their scarce of their resources, which could be more beneficially employed by them in the improvement of their infrastructure such as ports. Such connection is move by the developing countries to develop their shipping; they argued, would trade and were not in interest of world economy. Shipping, according to them was a highly capital-incentive and sophisticated industry in the provision of which developed countries had a great economic advantage over developing countries. The specialization of developed countries in shipping was economically most desirable and viable and any interference with this state of affairs would be at the cost of the world trade and economy. The developed countries had convinced themselves that on the basis of “sound economic criteria”, the development of merchant marine by developing countries was not desirable.

Complaints against conference system
Conference system serves the general trade of the world and spreads in monopolistic and oligopolistic tentacles.
The most importance institutional arrangement in shipping which preponderantly influences and acquisition and operation of liner ships, freight rate and important aspects of carriage of cargo in liner trades in the conference system, which has been in existence for a country. Although world sea-borne system, which is carried by linear ships, in much best in quantity than world sea-borne trade in dry bulky cargo and in oil cargoes, it far out weighs other cargoes in value.conferances which consisted almost exclusively until nineteen-fifties and thereafter predominantly of shipping lines from developed countries, possess semi-monopoly powers, and they control entry of new shipping companies into linear trades, control competition among their members and by competitive action among their member eliminate outside competition. This has the effect of preventing new shipping lines from participating in the trades and also of fixing and setting the freight rates, of adopting practices and of providing services which in many case of providing services which in many cases were not in the best interests of the trades to which they catered.
The developing countries were adversely affected in two ways.
Firstly, they could not build up liner fleets for participation in their own trades.
Second, their import and export trades also suffered because the conferences were in a very strong position and the shippers or consignees of cargo who were unorganized could not negotiate on equal terms with the conferences. The shipping circles and even the government of the developed countries resented the criticism on the ground that the critics did not understand the basic tenets of shipping economics in regard to provision of regular liner services.

Most of the complaints against the conference related to:
1. Fright rates: General insurance of freight rates, fixation of specific freight rates, and promotional freight rates;
2. Participation and share: Participation of share of national shipping line; that is; entry into conferences covering trades;
3. Unfair clauses: Unfair clauses in loyalty agreements and imbalance of obligations between shippers and ship-owners.
4. Inadequacy shipping: The inadequacy of shipping services, e.g. failure to serve particular port or range of ports.
5. Quality of shipping services: The quality of shipping services particularly the suitability of vessels and their cost of operation.
6. Unreasonble withholding: The unreasonable withholding of dispensation to use non-conference vessels.

In some circumstances, a shipping may not have an option on the vessels to be used. Because of certain laws enacted to protect a country’s interest, mandatory use of a particular vessel is not uncommon.

In general the rates changed by U.S. conference lines are higher than threats changed by lines of other nations. Operators of certain countries are able to charge lower rates because of subsidies and support received from their government. Some ships at one time were able to quote rate as much as two-thirds lower than U.S. conference lines published prices. Subsequently, conference lines decided to give illegal rebates to major customers in order to win bank cargo shipments lost to the soviets.
Recognizing both that nations have shipping interests and that subsidies cause problem, the UNCTAD proposed the UNCTAD code of liner conduct.
According to UNCTAD code. Each trading partner is allowed to reserve 40% of the total liner cargo for its national flag lines and to allocate 20% cargo to third flag operators

Battle for code of conduct:
The battle for the code began in right earnest at UNCTAD-3rd in Santiago in April-May 1972. It was at that conference that developing countries were able to agree upon the unified draft of a code of conduct for liner conferences and get it remitted to the UN general assembly for further necessary processing and adoption as an international convention any multilateral legally binding instrument.

DRY PORTS

2009-11-14T06:03:00.000-08:00

DRY PORTS by shivani and Megha Nayyar

India has a long coastline spanning 7600 kilometres forming one of the biggest peninsulas in the world. It is serviced by 12 major ports and 185 notified minor and intermediate ports].
Major ports handled over 80% of all cargo traffic . However, the words "major", "intermediate" and "minor", do not have a strict association with the traffic volumes served by these ports. As an example, Mundra Port, a newly developed minor port in the state of Gujarat registered a cargo traffic of around 28.8 million tonnes per annum during the financial year of 2008, which is higher than that of many major ports
The classification of Indian ports into major, minor and intermediate has an administrative significance. Indian government has a federal structure, and according to its constitution, maritime transport falls under the "concurrent list", to be administered by both the Central and the State governments. While the Central Shipping Ministry administer the major ports, the minor and intermediate ports are administered by the relevant departments or ministries in the nine coastal states of West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat. Several of these 185 minor and intermediate ports are merely "notified", with little or no cargo handling actually taking place. These ports have been identified by the respective governments to be developed, in a phased manner, a good proportion of them involving Public-private partnership.
Cargo handling is projected to grow at 7.7% until 2013-14. Some 60% of India’s container traffic is handled by the Jawaharlal Nehru Port Trust inMumbai. It has just 9 berths compared to 40 in the main port of Singapore. It takes an average of 21 days to clear import cargo in India compared to just 3 in Singapore.
IMPORTANCE OF MARINE SECTOR

• Marine transportation plays a key role in Global economy
• 90% of the world’s trade involves shipping
• Importance of water transport is increasing with economic Globalization
• Only mode of transport that can effectively linked the centers of industrial production to their markets . Ports in developing countries represent a key asset for economic development

• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets
• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,

• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets

• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,
INDIAN PORT SECTOR SCENARIO
At the central level, the Department of Shipping of the Ministry of Shipping, Road Transport and Highways (MoSRTH) is responsible for formulating policies and overseeing the sector.
} At the state level, the maritime boards oversee non-major ports in Gujarat, Maharashtra and Tamil Nadu. In other states, port departments of the respective state governments oversee non-major ports.

WHAT IS MAJOR AND NON-MAJOR PORTS

The Indian port sector has been broadly divided into - Major ports and Non-major ports.
The technical nomenclature Major and Non-major is based on the legal distinctions made under the two key source laws viz. Indian Ports Act 1908 and Major Ports Act 1963.
The distinctions between the Major and Non-major Ports is in terms of the distribution of maritime jurisdiction between the Central and State governments.
Major ports are listed in serial 27 of the Constitution and are administered under Major Port Trust Act of 1963. All ports, other than major ports are listed under the concurrent list of the Constitution and administered jointly by Central and State governments under the Indian Port Act 1908.

LEGAL FRAMEWORK OF PORTS

} In 1998, the foreign direct investment (FDI) limit in the port sector was raised to 74 per cent and subsequently, in 1999, 100 per cent FDI in the sector.
} In 1998, the shipping ministry came out with Guidelines for Private Sector Participation in Ports” through JVs and foreign collaborations.
} In 2000, the Major Port Trusts Act, 1963 was re-amended to allow major ports to form JVs with non- major foreign ports and companies.
} During 2003, Rail Vikas Nigam Limited (RVNL), a Special Purpose Vehicle (SPV), was created to undertake rail-port connectivity projects under the National Rail Vikas Yojana (NRVY) which was initiated in 2002.

} In August 2004 - Formulation of the Draft Maritime Policy. The draft maritime policy, which is still awaiting final cabinet approval, has been partially implemented.
} In July 2004, the ISPS Code, which is a set of regulations designed for maritime security, came into force.
} Sethusamudram Ship Canal Project (SSCP) and the National Maritime Development Programme (NMDP)- were launched in 2005, in May and December respectively.
} The Rs 993.44 billion NMDP aims to increase capacity levels, enhance private investment, improve service quality and promote competition in the maritime sector.
} In January 2006 beginning of port based SEZ - approval of Vallarpadam and Puthuvypeen within the Cochin Port Trust area
} The main highlight of 2008 was the approval of the new model concession agreement (MCA) by the union government in January.

} PRIVATE SECTOR PARTICIPATION

· Inter-port and intra-port competition.
◦ Generally by tender; provision for nomination for captive facilities.
◦ Obligation to take workers in case of lease of existing facilities.
◦ Provision to handle operations outside strikes / breakdowns, etc.
◦ Preference to Indian companies except in few ports.
◦ Trade to be consulted before charges affecting them are amended.

} LAND MATTER

◦ Full powers to ports for leasing of land up to 30 years.
◦ Ports to be allowed to renew lease in favour of sitting occupants.
◦ Provision for subletting / partially subletting.
◦ Port Land not to be given for religious purposes.
◦ Change of land use as per land use. be allowed.
◦ Annual escalation reduced from 5% to 2%.

REGULATORY FRAMEWORK

◦ TAMP will be strengthened.
◦ Cost plus approach will be replaced by normative approach.
◦ Increase in efficiency by the private investor to be rewarded.
◦ Enforce and extend ISPS code implementation and adhere to IMO Conventions
◦ Measures for Wreck Removal, Oil Spill Management at Ports consistent with international norms.

NATIONAL MARITIME DEVELOPMENT PROGRAM- (NMDP)

} Introduction:
◦ National Maritime Development Programme launched in December 2005
◦ Programme being formulated to enhanced private investment
◦ Utmost importance is given to development of Infrastructure
◦ This programme would assure a good framework for facilitating Public and Private investments and competitions and improved efficiency.

} Focus Area :

◦ Deepening port channels - higher drafts
◦ Modernization of the system and usage of latest technology
◦ To exploit potential of hinterland
◦ Setting up Maritime Universities
◦ Promote training for better manpower
◦ Encouragement to inland water transport
◦ Development of sea waterways and SPMs through private sector participation
◦ Enhancement of coastal shipping
◦ Navigational safety
◦ Ship building and repairing yard
◦ Minor ports have to play important role in creation of capacity

INDIAN PORTS- AREAS ALLOWED FOR PRIVATE SECTOR PARTICIPATION

(a) Leasing out existing port assets;
(b) Construction/creation of additional assets, such as:
(i) Construction and operation of container terminals;
(ii) Construction and operation of bulk, break-bulk, multi-purpose and specialized cargo berths;
(iii) Warehousing, container freight stations, and storage facilities;
(iv) Cranage/handling equipment;
(v) Setting up of captive power plants; Dry docking and ship repair facilities.
(c) Leasing of equipment for port handling and leasing of floating crafts from the private sector;
(d) Pilotage;
(e) Captive facilities for port-based industries.

PORT LED DIRECT DEVELOPMENT

Capital goods
Ship Building
Fisheries
Refineries
Core Industries
Power Projects
POL Chemical
Cement Plants

PORT LED OTHER DEVELPOMENT

· Cold Chain
· Warehouses
· Area Development
· Revenue Generation
· Ancillary Industries
· Employment
· Tourism
· Green development

ISSUES

} Way behind international developments.
} Not a single port in top ten
} Severe connectivity issues
} No major shipping line in the country
} Poor levels of containerization
} Lack of seamless customs procedures
} Crippling man-power constraints
} Economy not export driven
} Hiatus between centre and State

OVERVIEW
SIZE
· Indian ports handled cargo of 510 million tonnes in 2004-05, 10.8% increase over 2003-04
· 80% of the port traffic by volume is dry and liquid bulk, remaining 20% is general cargo, including containers
o Containerised cargo has grown at a rate of 15% p.a. over the last 5 years
· India has 12 Major Ports and 185 Minor Ports along 7,517 km long Indian coastline
o Cargo handled by Major Ports has increased by 9.5% p.a. over last 3 years
o Major ports handle 75% of the total traffic

The JNPT port where thecapacity will be over3 million TEU by 2006
The port sector has seensignificant investment bymajor global port operators

· Of the 12 Major Ports, 11 ports are run by Port Trusts while the port at Ennore is a corporation under the Central Government. These ports handled 383 million tonnes of cargo in 2004-05
· Two major Government projects underway:
o Project “Sethusamundram”: Dredging of the Palk Strait, in Southern India to facilitate maritime trade through it
o Project “Sagarmala”: $22 billion project for the modernisation of Major and Minor Ports

STRUCTURE
· Government of India dominated maritime activity in the past. Policy direction is now oriented to encouraging the private sector to take the lead in port development and operations

· Many Major ports now operate largely as landlord ports - International port operators have been invited to submit competitive bid for BOT terminals on a revenue share basis
· Significant investment on BOT basis by foreign players including Maersk (JNPT, Mumbai) and P & O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA Singapore (Tuticorin)
· Minor ports are being developed by domestic and international private investors: Pipavav Port by Maersk, Mundra Port by Adani Group (with a terminal operated by P & O)

POLICY
· 100% FDI under the automatic route is permitted for port development projects
· 100% income tax exemption for a period of 10 years
· Tariff Authority of Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports/port operators (not applicable to Minor ports)
· A comprehensive National Maritime Development Policy is being formulated to facilitate private investment, improve service quality and promote competitiveness.

Cargo handled by Major Ports in India
Major Port
Trade(04-05, MMT)
Container Traffic(04-05)(million TEU*)
Chennai Port
44
0.62
Cochin Port
14
0.19
Ennore
9.5
—
Haldia
36
0.13
JNPT
33
2.37
Kandla Port
42
0.18
Kolkata Port
10
0.16
Mormagao
31
0.01
Mumbai Port
35
0.22
New Mangalore Port
34
—
Paradip Port
30
—
Tuticorin Port
16
0.30
Vizag Port
50
0.05
Source: Indian Ports Association
* Twenty foot equivalent unit

OPPORTUNITY
OUTLOOK
· Cargo handling at all the ports is projected to grow at 7.7% p.a. till 2013-14 with Minor ports growing at a faster rate of 8.5% compared to 7.4% for the Major ports
o Traffic estimated to reach 960 million tonnes by 2013-14
o Containerised cargo is expected to grow at 17.3% over the next 9 years
· The New Foreign Trade Policy envisages doubling of India’s share in global exports in next five years to $150 billion
o A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by value
POTENTIAL
· Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in port infrastructure
· Investment need of $13.5 billion in the major ports under National Maritime Development Program (NMDP) to boost infrastructure at these ports in the next nine years
o Under NMDP, 219 projects have been identified for the development of Major ports
o Public–Private partnership is seen by the Government as the key to improve Major and Minor ports
§ * 64% of the proposed investment in Major ports envisaged from private players
· The plan proposes an additional port handling capacity of 530 MMTA in Major Ports through:
o Projects related to port development(construction of jetties, berths etc.)
o Procurement, replacement or up-gradation of port equipment
o Deepening of channels to improve draft
o Projects related to port connectivity
· Investment need of $4.5 billion for improving Minor Ports

DRY PORTS

In recent times, global trade, in line with it the Indian foreign trade has grown phenomenally both in terms of volume and complexities. Infrastructure needs and innovative methods in logistics management are growing hand in hand with the International trade needs. Ports these days mainly act as gateways and cater to the hinterlands of India which are now serviced by the advent of ICDs. ICDs thus generate business opportunities, general employment and global competitiveness of the local industry.

} A DRY PORT IS AN INLAND INTERMODAL TERMINAL DIRECTLY CONNECTED TO A SEAPORT BY RAIL, WHERE CUSTOMERS CAN LEAVE AND / OR COLLECT THEIR STANDARDISED UNITS AS IF DIRECTLY TO THE SEA PORT

} “Dry port is a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road”. - Wikipedia

CONTAINER TERMINALS(ICD/CFS)
REGIONAL TALLY

Region
CONCOR’s
Others
Total
Northern India
15
22
37
Southern India
10
58
68
Western India
13
39
52
Central India
9
-
9
Eastern India
8
3
11
Total
55
122
177

RATIONALE & SIGNIFICANCE

} An ICD or a CFS, located away from a seaport, providing facilities for cross-border trade in close vicinity of production/consumption in hinterland, with linkages to gateway ports.
◦ A common user facility, for handling and temporary storage of import/export, laden/empty containers, for clearance by Customs for home consumption, warehousing, onward transit, or export.
◦ A CFS: generally on off-dock facility close to servicing port, helping decongest port by shifting cargo and customs-related activities outside the port.
◦ Also set up inland for linkage to a regional rail-linked ICD and to gateway port(s) by road.
} In India, only 40 dry ports close to seaports; all others – 137 – inland.

INSTITUTIONAL FRAMEWORK: A VITAL FACTOR

} IMC (Inter-Ministerial Committee):
◦ for appraisal and approval of applications for ICDs/CFSs
◦ Ministry of Commerce and Industry: nodal agency, coordinating with Ministry of Shipping, Roads and Highways; Ministry of Railways; Ministry of Finance
} IMC approval implies:
◦ single-window facility for mandatory clearances, payments, and incentives certification: presence of Customs, banks, shipping lines and agents, NVOCCs, CHAs, transport operators.

LEGAL AND LIABILITY FRAMEWORK:

◦ Multimodal Transportation of Goods Act, 1993
◦ Refinement of Motor Vehicles Act
◦ Single document of carriage – for inland transportation with clear liability and quick claim settlement terms.

Public-Private Partnership

Consistent with country’s concerted strategy, towards blending synergy and strength of state and private sectors in finance, management and technology, PPP steadily materialises in infrastructure sectors.
- All recent container terminals at ports heralded PPP concept, e.g., at JN port, Chennai, Tuticorin, Visakhapatnam, Cochin.
- New large CFSs developed in PPP mode in collaboration with CONCOR.
- Intermodal rail networks developed as PPP projects, linking Gujarat coast ports by Pipavav Rail Corporation and Kutch Railway Co.
- Public sector Central Warehousing Corporation generated an ingenious model for its CFSs being managed and operated by private sector enterprises.
- Several inland CFSs uniquely managed as public-public partnership – CONCOR as a Central sector PSU joined hands with many state warehousing corporations to optimally manage and operate them.
- Dry port development in India itself a good blend of private sector and state sector: 108 of them set up by different public sector corporations, 69 others by private companies.
- Some 14 private sector companies now registered with IR for owning rolling stock and operating container trains in addition to CONCOR.

} Customs clearance made easy

◦ Risk Management System (RMS) for selective screening of only high-risk cargo for customs examination.
◦ Faster delivery system by creating separate area in port premises earmarked for instant delivery of cargo to specified accredited importers.
◦ Simplified procedure for amendment of IGM
◦ Simplified customs procedure for transshipment between gateway port and dry port (ICD/CFS).
◦ LCL carrying containers allowed movement from one CFS to another CFS for final consolidation/stuffing.
◦ Customs messages exchange with ports, airports, ICDs/CFSs, CONCOR, banks and DGFT.
◦ Facility of customs duty payment through more banks and via e-banking.
◦ 24x7 operations.

Conclusion

India’s ports are working well and their use is increasing at high speed , due to increase in its work ICD have developed which decrease its work load and helps in increasing efficiency of ports. Indian govt. is going to develop more ICD
in north region due to its effectiveness.
Today India’s most of the exports are send through ships and custom clearances are done their only.

SHIPPING OPERATIONS

2009-11-14T05:49:00.000-08:00

SHIPPING OPERATIONS BY VIKAS AND ANIL MUNDAY
The shipping operations policy formally sets out the Bank’s strategy in this sector. Previous to the approval of the policy, there was a Shipping Guidelines document, approved by the Board in December 1994 (BDS 94-161). The shipping operations policy was approved by the EBRD board on 31 October 2001.
Since the early 1990s, the Bank has been active in financing the Shipping Sector and has been catalytic in introducing western financial institutions to shipping companies in the region. The Bank’s role continues to be relevant because many banks are still unable or reluctant to consider investing or providing long-term finance directly to companies operating in the region without the comfort and involvement of the Bank. This is demonstrated by the fact that out of a cumulative commitment to-date of Euro 664 million, assisting a total investment cost of Euro 1.19 billion, the Bank has mobilized more than 50% of its total financing, involving 22 commercial banks, in its co-financing efforts.
The Bank’s involvement has so far concentrated on debt financing for the acquisition and construction of various types of cargo vessels. The Bank will continue to finance deep-sea ship-owners, including its existing clients, in their on-going efforts to modernize their fleets. However, the Bank will also seek to diversify its portfolio to finance the renewal of other types of vessels including passenger and river ships. The majority of the shipping fleet (including river vessels) in the region is in imminent need of replacement and this renewal process is critical for the sector if it is to maintain or improve its competitiveness, and eliminate sub-standard vessels in order to improve crew safety and address environmental concerns. All Banks financed shipping projects should comply with IMO standards for safety and protection of the environment and ships should be operated in open and commercial markets.

Although the Bank has reviewed several proposals from a number of shipyards, it has not completed any operations in this sub-sector to-date. The Bank is intensifying its efforts to develop appropriate structures for projects in the shipbuilding industry.
Besides acting as a catalyst in channeling long-term financing to the region, the Bank’s involvement will provide the opportunity to achieve its transition goals. For the Bank’s future operations in the Sector, the following transition objectives have been identified:

Promotion of competitiveness through fleet renewal

Promotion of privatization and restructuring

Transfer of technical know-how and management skills

Promotion of good corporate governance and best business practice

Promotion of safety and environmental consciousness

Development of appropriate regulatory and legal framework

Facilitation of regional trade

These objectives will be appropriately adapted depending on the transition stage of the relevant country. Russia, where most of the Bank’s existing shipping projects have been located, will continue to be an important country for the Bank's operations. However, in order to expand and diversify the country profile in this Sector a new focus is being developed in other countries of operation, notably in the BAL tics, Caucasus and Caspian regions.

The Bank will face a considerable challenge in the river shipping sub-sector in which companies operate along many of the large inland waterways located in the region. This is because domestic legislation governing mortgagees’ rights in this sub-sector has still to be fully developed.

In shipbuilding, the Bank will continue to explore and structure projects that are not only sustainable, but also encourage the much needed and invariably difficult restructuring process. In shipbuilding, including conversion and repair, the Bank will not finance projects which receive state subsidies in excess of levels permitted under any applicable (EU, WTO and OECD) guidelines. In this sub-sector the Bank will seek to identify shipyards which have either benefited from strategic investors, have proven strong management or where the relevant national government has a clear commitment to the restructuring and privatization of their shipbuilding activity.

Service Routes

Currently, shipping lines operate three general types of deep-sea itineraries: end to end, pendulum and round the world service routes, End to end services schedule vessels back and forth between two continents. Pendulum services schedule vessels back and forth between three continents with one of these continents as a fulcrum, with the points at either end of the pendulum swing linked only through the fulcrum. This type of service offers a way to fill container slots four times on the same voyage and to eliminate certain overlapping port calls in the fulcrum area. The merging of separate end-to-end services into a pendulum or round the world service serves the two main purposes of broadening the range of through services and reducing the number of ships required to provide the same coverage. This gives a major cost saving by merging the previously duplicated port calls in the central region of the pendulum. Also round the world services can overcome the problems of end-to-end operations, by accommodating the needs of global corporations.

The world’s three principal trade corridors are tied together into one and this type of service can move in either direction, moving westward or eastward or in both directions. Intense competition in container markets not only makes it necessary for ship owners to offer high quality services between major trading regions but also makes it imperative for them to optimize fleet utilization. Such pressures have led to the development of multi-route operating patterns, notably ‘Round-the-World’ and ‘Pendulum’ services, enabling carriers to maximize vessel employment and slot utilization. North America-Europe-Asia, with vessels continually circling the globe in an eastbound or westbound direction. ‘Pendulum’ services, operated by a large number of carriers including Hanjin and Yang Ming, typically operate over all or some portion of the route linking the East Coast of North America, via Europe and Asia to the West Coast of North America, returning via the same route. Since vessels employed on ‘Pendulum’ services, unlike those employed in RTW services, are not required to transit the Panama Canal, post-Panamax vessels may be used.
A ship routing and scheduling problem for the industrial shipping industry is far from unique, and this review will give us an overview of the variety of problems. The objective of a classical industrial ship scheduling problem is to minimize the transportation costs for each ship in the fleet while ensuring that all cargoes are lifted from their loading port to their port of discharge. Normally, a cargo consists of a designated number of units of a product.

Liner Operation

Agreement between two or more shipping companies to provide scheduled cargo and/or passenger service on a particular trade route under uniform rates and common terms also called shipping conference. Cargo and/or passenger carrying shipping line operating a scheduled service between fixed points (ports) on a trade route.

Liner service is the backbone of international trade in manufactured goods. Liners, sailing on regular schedules along established ocean trade lanes, move vast quantities of consumer, industrial and military commodities ranging from video cameras to night-vision scopes, perfume to paint, jeans to milling machines.

Tramp Operation
Charter shipping is a tramp service. The term tramp, as used in the ocean shipping, refers to a cargo ship not operating on regular routes and schedules, and picking up cargo only when it is chartered (hired) from the ship operator.
While conference and non-conference shipping are for general cargoes, charter shipping usually is for bulk cargoes like oil, coal, ore, and grain. Charter shipping has the lowest freight rate per unit of weight or measure.

A charter party is required in charter shipping. A charter party---charter party contract---is a written contract between the ship operator and the charterer (shipper). The contract normally includes the ports, freight rate and time involved in the voyage(s).
The ship operator issues a charter party bill of lading. Unless a letter of credit (L/C) permits or calls for a charter party bill of lading, the bank will reject such transport document in the L/C negotiation

In tramp shipping, tramp ships are being used. As the name indicates, this branch of the shipping industry is very irregular in its activities. Tramp ships are sent in where the most paying freights are available. Therefore, tamping is very unstable and very little organized.

Tramp ships are, in accordance with the demand, contractually put at the disposal of charterers, to carry, for one or more voyages, a quantity of goods between named harbors (in voyage charter) or to carry out a number of transport assignments in a certain period of time (in time charter). In the broadest sense of the word, tramp shipping is the activity that is done with ships in voyage charter. Usually, under a charter agreement, they have to perform only one voyage so that each voyage stands completely apart from the other. The vessel is an independent operating and competing unit and its operation is highly individual. The sailing schedule of a tramp ship is consequently very irregular. The ship operator must see to it that his ship is rarely idle and in the port of discharge - or in a harbor as close as possible to the port of discharge - he must always try to get a new charter for the ship.

Tramp ships vary considerably in size and are sometimes of lesser quality than the liner ships. Because the cargoes usually don't have to be transported at a high speed and the ship doesn't need highly sophisticated equipment, tramp ships are relatively slow and cheap. However, the present-day tramp fleet counts numerous modern bulk carriers suitable for different sorts of cargoes, including tankers and specialized ships. Owners of modern and cost-effective tramp ships have a better chance than their competitors who offer inferior and less flexibility in the freight market.
Liner conferences are tolerated in other jurisdictions. What if the EU changes its regime and others do not?
The Commission is particularly aware of the international dimension of this dossier and of the fact that up to now conferences have been tolerated worldwide. That is why it has taken the initiative to establish close and frequent contacts with our major international partners (US, Canada, Australia, Japan). The outcome of those contacts is positive. We intend to keep up these bilateral contacts throughout discussions in Council.
If the EU were to repeal the present EU liner conference block exemption regulation this would mean that carriers (EU and non-EU) that are presently part of conferences operating on trades to and from the EU would have to stop their conference activities on those trades (namely price fixing and capacity regulation). Nothing would stop them from continuing being part of price fixing conferences on non-EU trade routes.
To give a concrete example, an EU carrier like Maersk, member of the Trans-Atlantic conference Agreement (TACA), could no longer be involved in price fixing and capacity regulation on the North Atlantic-EU and EU-North Atlantic trades, but could still do so on the US-Pacific trades. The same applies to non-EU carriers.

This is a logical consequence of the fact that there is not an identical competition regime in force world-wide. In fact, already today there are differences in what liner shipping companies are allowed to do in different jurisdictions. For example, today US law allows carriers to fix prices jointly on inland transport, while EU law does not. A conflict of law does not arise. This would only be the case if one jurisdiction were to require carriers to participate in conferences, whereas another was to prohibit it. This is not the case today.

The liner shipping industry is asking for a new regime to replace the conference block exemption. What will the Commission do about that?

Industry is divided on the need for a substantive alternative to Regulation 4056/86. The European Liner Affairs Association a carrier association representing roughly 80% of world capacity has proposed that the conference block exemption should be replaced with an exchange of information system.
The
European Shippers Association representing over 100,000 exporting companies, and generating around 90% of the EU's international maritime traffic, considers that a replacement regime is not necessary because carriers are already allowed to co-operate extensively under the consortia block exemption Regulation. This co-operation results in the provision of reliable liner services by groups of shipping lines in consortia and alliances. The European business organizations UNICE and consumer associations back this position.
To be acceptable, any new system for information exchange must respect the competition rules. Some elements of the current ELAA proposal appear to be in line with these requirements. However, others are problematic notably because they do not differ in effect from what conferences do today. Accepting the ELAA proposal as it is today would remove all the pro-competitive effects of the abolition of the conference system.

The Commission remains committed to continuing the dialogue with the ELAA with a view to assisting it in developing an alternative system compliant with EU competition rules. It has acknowledged that exchanges of information leading to greater market transparency may contribute to the improvement in the way liner services are provided, in the interest of carriers, transport users and the public in general.
Discussions will be focusing on the details of the various elements of the ELAA proposal. Thereafter, the Commission intends to issue guidelines on the application of the competition rules apply to liner and tramp shipping. The guidelines would treat issues such as an independent data warehouse, the creation of a trade association and of trade fore, the publication of a price index and common formulae for charges and surcharges. The guidelines would explain how the competition rules apply to the liner sector in general, including exchange and publication of capacity utilization information. As an interim step, the Commission will publish an issues paper on liner shipping in September 2006.

What is the impact of the proposal on small liner shipping carriers and on small short sea trades?

The European Community Ship owners’ Associations (ECSA) and the European Parliament have drawn the Commission’s attention to the needs of specific services, particularly short sea services and services to smaller trades. Since such trades generally do not require a large number of vessels to be serviced, relatively small carriers might be able to operate side by side with large carriers on these trades. ECSA and the European Parliament, therefore, questioned whether these relatively small carriers would be more affected by repeal than large ones.

The Commission is not aware of any liner shipping carrier that would fall with the scope of the Commission Recommendation concerning the definition of small and medium sized enterprises.1
After significant research, the Commission did not find that relatively small EU carriers would be adversely affected by a repeal of the conference block exemption. To the contrary, liberalization creates a market environment that allows for quicker growth than a regulated environment, in particular for small companies. It creates more new services and new niche markets which especially small companies are able to quickly enter. These market niches usually allow for rapid growth. Hence, small innovative companies are able to grow much quicker in a competitive environment – see for example the rapid growth of Ryan air that started as a small company with a new innovative business model in the recently deregulated aviation market. The success of small carriers depends on their ability to adapt to a competitive environment and not on their actual size.

the difference between the two…??
Some of you might have heard the terminology Tramp service or Tramper or Tramp vessel and also the terminology Liner Service. What is the difference between the two..??

Liner Service– Liner Service is a service that operates within a schedule and has a fixed port rotation with published dates of calls at the advertised ports. A liner service generally fulfills the schedule unless in cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes.

Example: The UK/NWC continent service of MSC which has a fixed weekly schedule calling the South African ports of Durban, Cape Town and Port Elizabeth and carrying cargo to the UK/NWC ports of Felixstowe, Antwerp, Hamburg, Le Havre and Rotterdam..

Tramp Service: Tamper on the other hand is a ship that has no fixed routing or itinerary or schedule and is available at short notice (or fixture) to load any cargo from any port to any port.
Example: A ship that arrives at Durban from Korea to discharge cargo might carry some other cargo from Durban to the Oakland in the West Coast of USA which in an entirely different direction. From Oakland say for example it could carry some cargo and go to Bremerhaven.
Liner shipping is distinct from tramp shipping. Liners operate as common carriers:-
1. They publish a freight tariff, operate on scheduled routes, and leave at scheduled times regardless of whether the ship has a full load of cargo. They usually carry a large number of smaller packages for a number of different shippers.
2. Tramp vessels, as distinct from liners, are usually chartered in some form by a shipper to carry a full shipload of cargo.
3. Both liner and tramp shipping have been subjected to a variety of different kinds of government regulation other than the self-regulation of the conference system (Fox and White, 1997).

It is useful to distinguish bulk from general cargo. Bulk cargo does not have to be packaged before loading; it is simply poured into holds in tramp ships specialized to bulk cargo. General cargo is anything that would be packaged in bags, bales, or boxes, and frequently comes from many small shippers. Since the late 1960s, general cargo has come to be carried largely in containers in specially designed container ships.

F.I.
(Free In)
The word "free" as used in the charter shipping term means not including. FI is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of loading goods onto the vessel.
F.O.
(Free Out)
FO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of unloading goods from the vessel.
F.I.O.
(Free In and Out)
FIO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the costs of loading goods onto the vessel and unloading goods from the vessel.
The dominant flows in the containerized trades are found on East-West arteries, such as those between Western Europe and the US. East Coast, and between Asia and the U.S. West Coast. The North-South lanes are of lesser density and, in some carrier networks, consist of feeder services linked to the East-West lanes at specific hub port locations.

Conclusion
Tramp/bulk shipping cannot effectively and appropriately be brought under an ETS scheme, due to its structure and operation.

INTERNATIONAL ARBITRATION

2009-11-14T05:44:00.000-08:00

INTERNATIONAL ARBITRATION BY SUSHIL DHANGI

Types of dispute resolution-disputes may not be avoidable altogether but can be minimized by using standard terms and commercial practices and these are as:
Ø law suit
Ø Arbitration
Ø Collaborative law
Ø Meditation
Ø Conciliation
Ø Many types of negotiation
Ø Facilitation

International arbitration

International arbitration is the established method for resolving disputes between parties to international commercial agreements. As with arbitration generally, it is a creature of
contract, i.e., the parties' decision to submit any disputes to private adjudication by one or more arbitrators appointed in accordance with rules the parties themselves have agreed to adopt, usually by including a provision for the same in their contract. The practice of international arbitration has developed so as to allow parties from different legal and cultural backgrounds to resolve their disputes, generally without the formalities of their underlying legal systems.

Meaning of Arbitration- The hearing and determination of a cause between parties in controversy by a person or persons chosen by the party.
Arbitrator’ means an arbitrator selected from the panel of arbitrators.
‘Arbitral Tribunal’ mean one or more arbitrators constituting a tribunal to
adjudicate a reference to arbitration.
‘Arbitration and Conciliation Act’ means Arbitration and Conciliation Act,
1996 and any amendments thereto.
‘Applicant’ means a person who makes a reference to arbitration by filing an
application as prescribed by the Exchange.
‘Respondent’ means a person against whom the applicant makes a reference
to arbitration whether or not there exists a transaction or is a claim against
such person.
‘Panel of Arbitrators’ means a body of arbitrators, constituted by the
Releva.nt Authority from time to time.

Arbitration is international if:

The parties to the agreement have, at the time of the conclusion of execution of that agreement, their places of business in different countries; or
one of the following places is situated outside the country or countries in which the parties have their places of business: (i) the place of arbitration if determined in, or pursuant to, the arbitration agreement; (ii) the place where the predominant part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is mostly closely connected; or
the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.

Main Features of International Arbitration
The main reason that parties elect to have their international disputes resolved through arbitration is to avoid the uncertainties associated with litigation in national courts and the resulting need to enforce judgments in a foreign court.

Causes of Arbitration with the Company
The claims, differences or disputes between a company and any party may be:
arising out of or in relation to transfer, non-transfer, delay in transfer, nonreceipt
of dividend, interest, securities and/or any other corporate
entitlements, delay in conversion into demat or non-demat or keeping in
abeyance any one or more of the aforesaid actions;arising from and in connection with any one or more of the actions mentioned in Bye-law 15.5.1 above, which affects the right to ownership of securities and / or any entitlement thereon, or
arising out of or in relation to issue or non-issue of company objections /
duplicate company objections, delay in issue of company objections and /
or non-submission of valid, requisite and supporting papers / documents
thereto Provided that all the causes/actions mentioned under Bye-laws 15.5.1,
15.5.2 and 15.5.3 arise out of or in relation to or with reference to the
provisions in the Bye-laws, Rules and Regulations of the Exchange and /
or with reference to Good/Bad Delivery Guidelines, Depository
Guidelines, provisions under the Companies Act and/or any other
guidelines or circulars issued by the Government or statutory bodies and/or any depository.
.
Trades, Contracts and Transactions Subject to Arbitration
In all trades, contracts and transactions, which are made or deemed to be made
subject to the Rules, Bye-laws and Regulations of the Exchange, the provisions
relating to arbitration as provided in these Bye-laws and Regulations shall form
and shall be deemed to form part of the trades, contracts and transactions and
the parties shall be deemed to have entered into an arbitration agreement in
writing by which all claims, differences or disputes of the nature referred to in
Bye-law 15.5 shall be submitted to arbitration in accordance with the provisions
of these Bye laws and Regulations that may be in force from time to time.

Jurisdiction
All parties to a reference to arbitration under these Bye-laws and Regulations
and the persons, if any, submitting claims under them, shall be deemed to have
submitted to the exclusive jurisdiction of the courts in or any other court, as may be prescribed by the Governing Board or Managing Director or Relevant Authority for the purpose of giving effect to the provisions of the Arbitration and Conciliation Act, these Bye-laws and Regulations.

Construction of References
For the purpose of the Arbitration and Conciliation Act, in all claims, differences
or disputes which are required to be submitted to arbitration in accordance with
the provisions of these Bye-laws and Regulations, wherever the Arbitration and
Conciliation Act leaves the parties free to determine a certain issue, the parties
shall be deemed to have authorized the Managing Director or Relevant Authority
to determine that issue.

Administrative Assistance
For the purpose of the Act, in all claims, differences or disputes which are
required to be submitted to arbitration in accordance with the provisions of these
Bye-laws and Regulations, the parties shall be deemed to have agreed for
administrative assistance of the Relevant Authority in order to facilitate the
conduct of the arbitral proceedings.

Trading Members Liable for Transactions Executed on the ATS
The provisions of these Bye-laws shall become applicable to all claims,
differences and disputes between the parties mentioned therein for all trades,
contracts and transactions executed on the ATS of the Exchange and made
subject to the Bye-laws, Rules and Regulations of the Exchange provided such
trades, contracts and transactions had been entered into between the parties
mentioned therein upto and including the date on which the clearing member or
trading member was either declared a defaulter or expelled or has surrendered
his clearing membership or trading membership.

Explanation :
Rules, Bye-laws and Regulations and circulars, orders, directions, or rulings
issued by the Exchange or Clearing Agency shall form part of all trades,
contracts and transactions.

Reference of the Claims, Differences or Disputes
Save as otherwise specified by the Governing Board or Managing Director or
Relevant Authority, if the value of the claim, difference or dispute is more than
such value, as may be specified in the relevant Regulations on the date of
application, then such claim, difference or disputes shall be referred to an
arbitral tribunal comprising of odd number of arbitrators who are more than
one , as may be decided by the Regulatory Authority from time to time and if
the value of claims, difference or dispute is upto the value referred to above,
then the same shall be referred to an arbitral tribunal comprising a sole
arbitrator .Provided no claim, difference or dispute which is less than such value, as may
be specified in the relevant Regulations on the date of the application, shall be
allowed to be submitted to arbitration by the Exchange and the same may be
decided administratively by the Managing Director or Relevant Authority from
time to time.

Limitation Period for Reference to Arbitration
All claims, differences or disputes referred to in the Bye-laws above shall be
submitted to arbitration within six months from the date of the transaction or from
the date on which the client claims to have given instruction/order to buy or sell a
security or from the date on which the client claims to have paid money or given
a security, whichever is earlier, provided where the claim/complaint is not
settled/resolved through the process of the Investors’ Grievance Cell of the
Exchange within three months of the receipt of the claim / complaint, the
Exchange shall in such cases advise the concerned client to refer the case to
arbitration. The time taken in dispute resolution and/or conciliation proceedings,
if any, initiated and conducted in accordance with the provisions of the Arbitration
and Conciliation Act and these Bye-laws and the time taken by the Managing
Director or Relevant Authority or the investors’ Grievance Cell to administratively
resolve the claims, differences or disputes shall be excluded for the purpose of
determining the limitation period of six months under the Rules, Bye-laws and
Regulations of the Exchange. Any claim made or any difference/dispute raised
by any complainant/aggrieved person, after expiry of the time limit specified
herein, shall become time-barred for the purpose of availing of the remedy under
the Rules, Bye-laws and Regulations of the Exchange and may not, however, be
invalid for seeking remedy under appropriate civil laws.
Provided where a company fails or refuses to submit or abide or comply with any
award in arbitration, such company shall render itself liable for suspension of
trading in its security. The other party in whose favour the arbitration award has
been given shall be entitled to institute legal proceedings to enforce the award.

Penalty on Failure to Submit to or Abide by Award in Arbitration
A trading member/clearing member, who fails or refuses to submit to or abide by
or comply with any award in arbitration between clearing members, between a
clearing member and a trading member, between a clearing member and a nontrading
member, between trading member or between a trading member and a
non-trading member, as may be provided in these Bye-laws and Regulations,
shall be declared a defaulter or expelled by the Relevant Authority, as is
applicable, and thereupon the other party shall be entitled to institute legal
proceedings to enforce the award under the Civil Procedure Code in the same
manner as if it is a decree of the court.

Selection of Arbitrators
The procedure for selection of arbitrators shall be in accordance with the
provisions, as may be specified by the Relevant Authority from time to time.

Procedure for Appointment of Arbitrators
The procedure for appointment of arbitrators, in each case, by the applicant and
the respondent, or the Exchange shall be, as may be provided in the relevant
Regulations from time to time.

Vacancy in the Office of the Arbitrator
At any time before making of the arbitral award, if the office of the arbitrator falls
vacant for any reason whatsoever, including any vacancy due to the illness or
death of the arbitrator or termination of the mandate of the arbitrator by the
Managing Director or Relevant Authority, or for any other reason, the vacancy
shall be filled in by the Managing Director or Relevant Authority by following the
same procedure as specified by the Exchange for appointment of the arbitrator.

Recorded Proceedings and Evidence
Unless otherwise agreed upon by the parties, any arbitrator who has been
appointed by the Managing Director or Relevant Authority to fill the vacancy of

the office of the arbitrator may rely on the proceedings and evidence recorded
earlier or may conduct any hearing afresh for any hearing previously held.

Order or Ruling of Previous Arbitrator
An order or ruling of the arbitrator made prior to the termination of his mandate
shall not be invalid solely because his mandate has been terminated;
Provided that when the termination has been effected pursuant to Bye-laws
15.21 and 15.22.4, the order or ruling of the arbitrator made prior to termination
of his mandate shall become invalid, unless otherwise agreed upon by parties.
Disclosure by Person to be Appointed as Arbitrators
Every person, who is approached in connection with his possible appointment as
an arbitrator, shall disclose to the Managing Director or Relevant Authority in
writing, any circumstances likely to give rise to justifiable doubts as to his
independence and impartiality. If the person discloses any circumstances,
which, in the opinion of the Managing Director or Relevant Authority, are likely to
give rise to justifiable doubts as to his independence and impartiality, then he
shall not be appointed as an arbitrator in respect of such case.
Termination of Mandate of the Arbitrator
The mandate of the arbitrator shall terminate if;
The arbitrator withdraws from office for any reason; or
In the opinion of the Managing Director or Relevant Authority, which
shall be final and binding on the parties, the arbitrator becomes de jure
or de facto unable to perform his functions or for other reasons, fails to
act without undue delay, including failure to make the arbitral award
within the time period prescribed; or
the mandate of the arbitrator is terminated by the Managing Director or
Relevant Authority upon receipt of written request for the termination of
the mandate of the arbitrator from both the parties to arbitration; or the arbitrator discloses any circumstances referred to in Byelaws 15.21
which in the opinion of the Relevant Authority are likely to give rise to
justifiable doubts as to his independence and impartiality; or
the arbitral proceedings are terminated as provided for herein.

Place of Arbitration
The place of arbitration shall be any office of the Exchange, as may be notified
by the Exchange from time to time, or any such other place, as may be
designated by the Exchange or the Regulatory Authority from time to time.

Fees and Charges
The fees for arbitration and the charges for submitting to and for regulating the
proceedings of the reference prescribed in the relevant Regulations shall be
payable in advance and when there is a failure, neglect or refusal on the part of a
party or parties to pay accordingly, the other party shall be responsible for
making such payment in advance without prejudice, however, to its right, if any,
to recover the same from such party or parties failing, neglecting or refusing to
pay. It shall be a condition precedent to the hearing of any reference that the
prescribed fees and charges shall have been paid in advance to the Exchange
by the party or parties to the reference. The Exchange shall collect all such fees
and charges and make the necessary payments for regulating the proceedings of
the reference, provided that the sum collected shall not be greater than the sum
to be paid, and provided further that the fees and charges payable by the other
party shall not be collected from a client, who may lodge a claim against a
trading member, whether active or inactive or a trading member who has been
declared a defaulter or has been expelled from the trading membership if there

is no adequate asset vesting in the Committee for Settlement of Claims Against
Defaulters and such defaulter/expelled trading member has not paid the fees.
his counsel, attorney or advocate, after
obtaining necessary approval from the arbitral tribunal.
.

Differences with Domestic Arbitration and Mediation

International arbitration is a significant variant of the practice in many countries of arbitration, from which it is derived and shares many features. It is not just the fact that international arbitration arises in the context of international contracts that makes it different. In the international dispute resolution community, it is widely accepted to be a different animal entirely, involving different practices and rules, and being represented by a different community of arbitrators and legal practitioners.

Although the procedural laws of many countries provide for "international" arbitrations to take place, an "internationalized" form of a provincial or domestic arbitration practice should not be confused with genuine international arbitration, which can be fairly said to exist outside and beyond the rules of any particular jurisdiction. (See Redfern, Hunter, Blackaby & Partasides, Law and Practice of International Commercial Arbitration (2004), at 1-21, "an international arbitration will usually have no connection with the state in which the arbitration takes place, other than the fact that it is taking place on the territory of that state.").

In the international context, it is also worth making a firm distinction between Arbitration and Mediation, which are both sometimes characterized as forms of ADR (Alternative Dispute Resolution). In countries where mediation is new or struggling to be introduced as a concept, this association has given rise to the misleading impression that mediation is a form of non-binding arbitration, with the arbitrator "proposing" or suggesting outcomes based on an assessment of the parties' rights. In fact, arbitration and mediation are fundamentally different: the former is a determination of legal rights, the latter a form of facilitated negotiation which looks beyond rights and allows the parties to focus on their underlying interests. The one leads to a binding determination (arbitration), the other only in the event the parties agree to settle their dispute on mutually satisfactory terms (mediation).

The Advantages of International Arbitration

For international commercial transactions, parties may face many different choices when it comes to including a mechanism for resolving disputes arising under their contract. If they are silent, they will be subject to the courts of wherever a disaffected party decides to initiate legal proceedings and believes it can obtain jurisdiction over the other party. This may not sit well with parties that need to know at the time of entering into their contract that their contractual rights will be enforced. The alternative to silence is to specify a method of binding dispute resolution, which can be either litigation before the domestic tribunal of one of the parties or arbitration. If the parties choose to resolve their disputes in the courts, however, they may encounter difficulties. The first is that they may be confined to choosing one or the others' courts, as the courts of a third country may decline the invitation to devote their resources to deciding a dispute that does not involve any of that country's citizens, companies, or national interests. The second, and perhaps more significant difficulty, is that judicial decisions are not very "portable" in that it is difficult and sometimes impossible to enforce a court decision in a country other than the one in which it was rendered.

Neutrality and Enforceability of Arbitration Awards

The ability to resolve disputes in a neutral forum and the enforceability of binding decisions are often cited as the main advantages of international arbitration over the resolution of disputes in domestic courts. And there is solid legal support for this view. An international award originating in a country that is a party to the New York Convention of 1958 may be enforced in any other country that is also a signatory, as if they were rendered by domestic courts. Here is an example of this important concept: assume that parties from countries A and B have agreed to resolve their disputes in country C, and all three countries are parties to the New York Convention. This will mean that even though the arbitration will take place in country C, the resulting award can be enforced in the countries A (or B), as if it were a court decision rendered in the domestic courts of that country. (By contrast, there is no equivalent treaty for the international recognition of court decisions, although a draft treaty was initiated in 2005.)

Thus, parties to international contracts can decide to site their disputes in a third, neutral country, knowing that the eventual award can be easily enforced in any country that is a signatory to the New York Convention, which has been ratified by a significant majority of commercial nations, with notable exceptions like Qatar, which not having ratified the New York Convention cannot be assumed to give effect to arbitration decisions rendered in other countries. An international award therefore has substantially greater executory (legal) force than a domestic court decision.

International Commercial Arbitration

The resolution of disputes under international commercial contracts is widely conducted under the auspices of several major international institutions and rule making bodies. The most significant are the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), the international branch of the American Arbitration Association), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre, and the Singapore International Arbitration Centre (SIAC).

Association of international arbitration (AIA)

The association for international arbitration (AIA) was founded in 2001 in Paris. The AIA works towards promotion of ADR in general and Arbitration in particular, as a means of dispute resolution and strives to bring together the global community in this field, namely the professionals such as Judges, Lawyers, Arbitrators, and Mediators or as Academicians as well Research Scholars and Students. With this unique blend of people, it is our endeavor to inculcate an interest in ADR, not only in the professional sphere but also create awareness and interest in it among budding professionals in law schools/universities all around the globe. In the past AIA organized a Conference on critical issues raised in the “The Commission of The European Communities” Green Paper on Alternative Dispute Resolution in Civil and Commercial Law (Paris 2003).

For the present, the Association for International Arbitration would work from the intellectual aspect and endeavor to bring together all interested professionals in this field and work towards finding ways and means of promoting cooperation and understanding between them, to the common benefit of all.

International Investment Arbitration

The last few decades have seen the promulgation of numerous Bilateral Investment Treaties (BITs), as well as Multilateral Investment Treaties, which are designed to encourage investment in signatory countries by offering protections to investors from other signatory states. One of the significant features of BITs is that they provide investors with the ability to resolve disputes with the host states before the International Centre for the Settlement of Investment Disputes (ICSID).

]

INCOTERMS & EXPORT CONTRACT

2009-10-24T03:28:00.000-07:00

International Commercial Terms (INCOTERMS) BY RAMGOPAL
The INCOTERMS (International Commercial Terms) is a universally recognized set of definitions of international trade terms, such as FOB, CFR and CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial term like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight, cargo insurance, and other costs and risks.
The INCOTERMS was first published in 1936---INCOTERMS 1936---and it is revised periodically to keep up with changes in the international trade needs. The complete definition of each term is available from the current publication---INCOTERMS 2000. The publication is available at your local Chamber of Commerce affiliated with the International Chamber of Commerce (ICC).
Many importers and exporters worldwide are accustomed to and may still use the INCOTERMS 1980, the predecessor of INCOTERMS 1990 and INCOTERMS 2000.
Under the INCOTERMS 2000, the international commercial terms are grouped into E, F, C and D, designated by the first letter of the term (acronym), as follows:

International Commercial Terms( INCOTERMS )
GROUP
TERM
Stands for
E
EXW
Ex Works
F
FCA
Free Carrier
FAS
Free Alongside Ship
FOB
Free On Board
C
CFR
Cost and Freight
CIF
Cost, Insurance and Freight
CPT
Carriage Paid To
CIP
Carriage and Insurance Paid To
D
DAF
Delivered At Frontier
DES
Delivered Ex Ship
DEQ
Delivered Ex Quay
DDU
Delivered Duty Unpaid
DDP
Delivered Duty Paid

In practice, trade terms are written with either all upper case letters (e.g. FOB, CFR, CIF, and FAS) or all lower case letters (e.g. fob, cfr, cif, and fas). They may be written with periods (e.g. F.O.B. and c.i.f.).
In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade terms that would hold the seller responsible for the import customs clearance and/or payment of import customs duties and taxes and/or other costs and risks at the buyer's end, for example the trade terms DEQ (Delivered Ex Quay) and DDP (Delivered Duty Paid). Quite often, the charges and expenses at the buyer's end may cost more to the seller than anticipated. To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to handle the import routines.
Similarly, it would be best for importers not to deal in EXW (Ex Works), which would hold the buyer responsible for the export customs clearance, payment of export customs charges and taxes, and other costs and risks at the seller's end.

EXW ( the named place)Ex Works
Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks.
In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee.
In the quotation, indicate the named place (seller's premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio.
The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory, which means the same as Ex Works.

FCA ( the named point of departure)Free Carrier
The delivery of goods on truck, rail car or container at the specified point (depot) of departure, which is usually the seller's premises, or a named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks.
In the air shipment, technically speaking, goods placed in the custody of an air carrier are considered as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air shipment.
The term FCA is also used in the RO/RO (roll on/roll off) services.
In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example FCA Hong Kong and FCA Seattle.
Some manufacturers may use the former terms FOT (Free On Truck) and FOR (Free On Rail) in selling to export-traders.

FAS ( the named port of origin)Free Alongside Ship
Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks.
In the export quotation, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen.
The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels.

FOB ( the named port of origin)Free On Board It constitute the following:-
Ex-work price
packing charges
inland transportation cost
Wharfage porterage
Customs dues
Export duty, if any.
Cost of checking operations like checking of quality, measure, weight or quantity, if any.
FOB price actually comprises FOB port town plus charges incidental to actual shipment of goods but minus ocean fright and marine insurance charges. This quotation is very common in case where goods are exported through Export House and merchant exporters as also to such overseas customers in whose country import duty is charged on FOB Value at the port of shipment.
FOB transactions are carried out on a “mixed contract” basis, which implies that ‘exporter would base his quotation and costing on FOB basis but in addition act on behalf of his customer in arranging shipment, procuring the bill of lading and also arranging insurance.
The term i.e. FOB (named port of shipment) can only be used for sea or inland waterway transport . When the ship’s rail serves no practical purpose, such as in the case of “roll-off or container traffic, the FCA term is more appropriate.

CFR ( the named port of destination)Cost and Freight
CFR means the seller (exporter) must pay the cost and fright necessary to bring the goods to the named port of destination (and not departure or loading) but the risk of loss or dames to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ships rail in the port of shipment. It requires the seller to clear the goods for export.
This term can also be used for sea and inland waterway transport. When the ship’s rail serves no off or container traffic, the CPT term in more appropriate to use.
It is equivalent to the term “C&F” used normally
CIF ( the named port of destination)Cost, Insurance and Freight
It is most commonly used in export transactions, includes FOB price plus cost of ocean freight and marine insurance, up to the port of destination. In CIF quotation, care must be taken to state the name of the port to which the goods are intended to be shipped .However, if the “CIF price is applicable all over the world, the quotation should be “CIF Main Port”.
CIF does not, however, include any charges for unloading the goods or for import duties, if any, in the country of importation .It is the preferred type of quotation because the importer can know what exactly the goods will cost him at his port. Moreover, it means fewer responsibilities for him because it is the export who takes all risks for fluctuations in ‘rates of insurance and freight, unless otherwise specified in the export contract’.
Thus, it is CFR plus marine insurance against the buyer’s risk of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. It can only be used for sea and inland waterway transport. When the ship’s rail serves no practical purposes such as in the case of roll-on /roll-off or container traffic, the CIP term is more appropriate to use.
CIF³ & c
Cost, Insurance and Freight & commission
In this type of quotation, besides cost, insurance and freight, commission charged by a middleman, if any, is included in the price. It may also include the commission of the exporter which he may charge the buyer (importer) while acting on his behalf.
The small letter ‘c’ must, therefore, be explained clearly in the export quotation/contract as it may sometimes relate to the commission of the import agent.
CIF &C³ or FOB & C³
These are quoted where the exporter assumes the risk of exchange fluctuations that may occur between the date of contract acceptance and payment.
CIF & c & I³
The word’c’ & ‘I’ in this quotation stands for commission & interest and, hence, it makes clear to the buyer that bank’s interest and commission are payable by him. This type of quotation is used when export is affected to distant places in which case the settlement of the bill of exchange drawn on the importer takes some time.
CIF ex³
It includes cost, insurance, freight and exchange. The expression ‘exchange’ is, however, ambiguous in this type of quotation. Sometimes, it refers to the banker’s commission or charge and sometimes to exchange fluctuations. When it refers to exchange fluctuation , it means that the purchase price is not affected by the subsequent rise or fall of the agreed currency of payment between the exporter and the importer.
CPT ( the named place of destination)Carriage Paid To
The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the place of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka.

CIP (the named place of destination)Carriage and Insurance Paid To
The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.

DAF ( the named point at frontier)Delivered At Frontier
The delivery of goods to the specified point at the frontier at seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes, and other costs and risks.
In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example DAF Buffalo and DAF Welland.

DES ( the named port of destination)Delivered Ex Ship
The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm.

DEQ ( the named port of destination)Delivered Ex Quay
The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ Maputo.

DDU (the named point of destination)Delivered Duty Unpaid
The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym DDU, for example DDU La Paz and DDU Ndjamena.

DDP ( the named point of destination)Delivered Duty Paid
The seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or buyer's premises. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.
Export Contract

There are certain peculiar characteristics of international trade contracts which are not present in those for sale of goods in domestic market. The parties to all international trade contracts provide all their relative rights and obligations in several ways.
As far as export by Indians is concerned, all sale transactions whether in the domestic market or abroad are covered by the Sales of Goods Act. 1930 in the absence of any provisions to the contrary agreed to by the buyer and the seller.
The Indian” Sale of Goods Act, 1930” is generally based on common law system and, therefore, it bears a close resemblance to the relevant enactments on the subjects in U.K., the U.S.A. and the other Commonwealth countries which derive their laws from the common law systems”.
According to Section 5 of this Act,” A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. It may provide for delivery to be made and price to be paid immediately or in future. It may be made orally or it may be implied from the conduct of the parties in each case”.

Standard Contract Forms:-
Notwithstanding the efforts are made by various national/international organizations like the United Nations Commission on international Trade Law (UNCIRAL) the Economic Commission for Europe (ECE) the Council for Mutual Economic Aid (CMEA), etc., “there is still no perfection or a device which would give the parties an accurate and complete idea of each others understanding of the various trade terms, the commercial practices and the rights and obligations vis-à-vis each other so that misunderstandings are practically eliminated. There is considerable diversity and plurality of commercial laws and practices in various parts of the world.”

General Conditions:-
On account of the fact that it is impractical to evolve a comprehensive standard contract form which is applicable to all trades and commodities, efforts should be made to put in the letter of sale/purchase which may as well be termed as export or sale/purchase contracts, certain minimum and important general requirements or standard general conditions. These conditions should give the parties a clear cut idea of trade transactions and also draw their attention to all important terms which should generally be included in international trade contracts.

Elements of Export Contracts
An export contract between the exporter and the importer should determine the exact point at which the expense and responsibilities change from seller to buyer it should be as explicit as possible and without any ambiguity regarding the exact specification of goods and terms of sale including export price mode of payment storage and distribution methods type of packaging part of shipment delivery schedule etc.
All the terms have a special connotation and meaning in international trade which must be understood by the parties particularly these days when there is by and large complete absence of sale and purchase or of transactions on the basis of as is where is . The different elements of an export contract are discussed below.

Products, standards and specifications

The first important element of an export contract is explicitly state the following
Product name including technical name if any
Sizes if any in which to be supplied.
Standards specifications national or according to specific requirements of buyer or as per the sample approved by him. Details of specification of the sample must be given in the contract.

Quantity

Put the quantity both in figures and words clearly specify whether it is in terms of number, weight or volume .if the quantity refers to goods by weight or measurement specify the nature of the same for example weight could be in terms of a metric ton of 1000 kgs. 2200 lb etc.
3. Inspection

Whereas a number of goods are now subject to pre shipment inspection by designated agencies the foreign buyer may still stipulated his own conditions and manner of inspections by any other agency.

4. Total value of the contract

The total value of the contract may also be put in both figures and words specifying the currency along with the name of the country.

5. Terms of delivery

Also known as the type of price terms of delivery should be clear incorporated in the contracted it could be a FOB, c.i.f., c & f etc.

6. Taxes duties &charges

The taxes duties and charges relating to exportation of goods are normally a part of the price terms of delivery quoted by the seller. Similarly, such levies if any in the country of importation are to the buyer. Nevertheless the contract should be explicit on this account so that no misunderstanding arises between the parties.

7. Period of delivery/ shipment etc.

As distinguished from terms of delivery period of delivery/ shipment relates to the actual date or dates of delivery/ shipment. In addition it must states the places of dispatch and delivery because if it is not designated the place of the business of he seller is usually deemed to be the place of delivery. The exact date of delivery should be essentially put in the contract as expressions like immediate delivery or prompt delivery is quite ambiguous. Moreover, it should be clarified whether the time for delivery will run from the date of the contract or from the date of receipt of the date of the contract or from the date of receipt of the notice of issuance of the import licence by the seller, etc.

Part- shipment/transshipment / Consolidation by cargo scheme.

The contract must clearly state whether part-shipment/transshipment are agreed upon by the parties. In the absence of such stipulations, a dispute generally arises when the seller (exporter) is unable to ship the goods in one lot or directly to the port of delivery (destination). If any, of the port of transshipment and the number, if any of the port shipment agreement and the goods are likely to be dispatched (shipped)under the consolidation of export-Cargoes scheme ,do make a reference to the same in the export contract. The incorporation of such a clause in the L/C opened by foreign buyer in favour of exporter will facilitate realization of export proceeds.

8. Packing, Labeling & Marking

The export contract must be as explicit as possible about the type of package and particular labels and marking requirements, if any. These requirements are normally quite different in case of export consignments and such involve additional cost necessitating an upward revision in export price. The language, colors of labels and even of marking have care of as required by the buyer.

9. Terms of Payment-Amount, Mode & Currency

The mode and manner of payment for the goods to be contracted vary from contract to contract depending upon the “term” settled between the parties. While quoting different payment terms, the exporter should specify as to whether the prices are based on current rate of exchange of the Indian rupee on the basis of another currency. It should also be stated whether fluctuations in the rate of exchange are to the account of the seller or buyer.

10. Discounts & Commissions

Depending upon the source of export enquiry and the intermediary involved, if any, in the execution of an order, the contract should be specify the amount of discount/commission to be paid and by whom. The basis of calculation of commission and the rate of the same may also be clearly stipulated. Some exporters may not prefer to include the term” commission/discount“ in their export contracts as it may encourage a buyer to ask for commission though the seller does not want to offer the same.

11. Licences and Permits

Normally, all export/import transactions involve obtaining of licences and permits/quotas to export/import in the country of exportation/importation. The problem with regard to import licences in the buyer’s country is sometimes more prominent and acute in different developing countries. The parties should, therefore, clearly state as to whether the export/import licences and whose responsibility and expense it would be obtain the same.

12. Insurance

It is important in international trade contracts to provide for insurance of goods against loss, damage or destruction during the voyage as it takes a long time before they are received by the buyers. The extent of insurance risk & its incidence needs to be clearly described & proper insurance policies obtained.

13. Documentary requirement

International trade transactions usually involve certain special documents which can be broadly divided into four categories:-

(i) Document required for exportation/importation of goods.

(ii) Documents needed by the buyer for taking delivery of goods.

(iii) Document relating to the payment.

(iv) Special documents depending upon the nature of goods & the conditions of sale. For ex. certain engineering goods may involve documents relating to erection, repair, maintained.

Documents commonly asked for & relating to the four diff. aspects stated above include:-

(i) Bill of exchange

(ii) Commercial invoice

(iii) Bill of lading

(iv) Insurance policy

(v) Letter of credit

(vi) Technical documents

Then, there may be certain conditions or cost attached to the preparation, & presentation of documents which need to be stated clearly the party who would bear the same.

14. Guarantee

The element of “guarantee” is usually dependent upon the “nature of goods their quality, the use for which they are intended & the like” The guarantee usually extend in respect of “faulty design, material or work-man ship & to such other characteristics as may be agreed upon between the parties”. Hence it is not a general element of contract as “guarantee” is applicable to specified goods only,

15. Force Majeure or For Non-Performance of Contract

However faithfully one may attempt to fulfill the conditions of contract, certain supervening circumstances render it impossible for a party to the contract to fulfill its obligations under the contract. Therefore, it is desirable for the parties to include in the contract certain provisions defining the circumstances which would relive them of their liability for non performance of their contract. Such provision which are also known as Force Majeure” are intended to deal with the relief which may be available to either party to the contract in the event of supervening circumstances taking place after the conclusion of the contract.

Definition of Force Majeure
The best approach in regard to the definition of “Force majeure” is to list the important event and circumstances which are agreed upon between the parties as specific grounds for relief and further add general wards to cover up anything that may have been omitted, e.g. or any other cause beyond the control of the concerned party which could not have been foreseen or avoided by the exercise of due diligence and so it be impossible of performance.

16. Remedies

It is always better to include in sale /purchase contract certain specific remedies in respect of deferent default of contractual obligation by any of the parties, mandatory should be in consonance with the mandatory provision of the applicable law to the contract. The Indian Council of Arbitration has suggested various clauses providing for possible remedies against contract. Exporters may, therefore, approach the ICA for obtaining its expert advice.

17. Arbitration

Last but not least id the need for providing an arbitration clause for amicable and quick settlement of disputes or difference that may arise between the parties. The various arbitration clauses and other aspect are dealt with in a separate chapter on Trade Disputes.

Model Contract Form

There is no particular form prescribed for the drawing up of trade contracts, except that they must fulfill all the essential requirements of a valid contract under the law applicable thereto.

Despite the difficulties in preparing a model contract from applicable to all trades, an attempt is made here to give a specimen export contract. It provides for various elements of export contracts described in fore going paragraphs & can be modified to suit the needs of exporters/importers.

Specimen Export Contract

ABC( international India) Telex:
W-13, C.P. Cable:
New Delhi-110001 Phone:
Fax:
Contract NO ……………. Date……………….

CONTRACT

We have agreed (to buy from) (or sell to) you this day....................... The following:-

Product, standards & specifications.
Quality
Inspection
Total value of the contract
Terms of delivery
Taxes, Duties & Charges
Period of Delivery/ Shipment or Transshipment
Packing, Labeling & Making
Terms of payment
Discount & commission
Licenses & permits
Insurances
Documentary requirements
Guarantee
Force Majeure
Remedies
Arbitration

For & on behalf of
ABC (International)INDIA
Director

This contract is subject to the condition overleaf or attached here with. Received from ABC (International) INDIA, NEW DELHI, Contract No............ Dated................... for which we hereby confirm.
For & on behalf of………………………
Signature……………….

Please sign & return this portion

Proforma Invoice

Along with the export contract, a Proforma invoice is also dispatched to the foreign buyer, even if not asked for him.
This is a preliminary, provisional, and temporary invoice covering a contemplated shipment. It is advisable to send this invoice to the importer along with the quotation and terms set out in the contract form. The proforma invoice is usually made out in the exporter’s own commercial invoice forms and contains estimates and is not intended to have the status of bill for payment. It is useful to buyer in the following ways.

(i) It helps the importer to obtain an import licence in cases where proforma invoice is insisted upon by the authorities concerned.

(ii) L/C may be opened in accordance with this ‘invoice’.

(iii) It may help eliminate common mistake like incorrect spelling or description of goods, etc.

Sample of Proforma Invoice

To …………..., 2009

XYZ International
P.O.Box 1867
London MK 46 ABN (England)

Proforma Invoice No. -------------------

Your reference No…………..dated………………for the supply ………………Of ………………………as per the terms and conditions set out herein and/or the export (sale) contract to be signed between us, to be dispatched by sea/air/post to……………….. (Port/place of destination).

Description of Goods
& Specifications
Code
Size
Quantity
Unit price &Currency
f.o.b./c.&f./c.i.f. etc
Amount

E.&O.F

Prepared by:-

Checked by:-

For ABC(India) International

Director (Sale)

NB. See’ Terms &Conditions’ below:↓
Terms & Conditions

Price : f.o.b. (Mum./Cal./Chen./Cochin)
& C. &f. ( )
Validity c.i.f ( )

Insurance
& freight : Only approximate charges are given in this invoice. Actuals may vary either side
Payment Terms : By irrevocableL/C confirmed by a bank in New Delhi for full Amt.
Commission : Nil or ……..%

Pre-shipment : By us or Export Inspection Agency
Inspection

Certificate of : As advised
Origin

Import : Buyer’s responsibility
Lincence

Port of Shipment : Mum./Cal./Chen./Cochin

Shipping &
Insurance co. : As available at the time of shipment

Delivery period : Goods to be delivered (loaded for shipment) with in ………… days of the receipt of firm order & its confirmation by us.

Part ship-ment : Part / partial shipment permissible / not perm

Transshipment : permissible / not perm

Net weight : Each pack of…. Kegs

Export
License or visa / : our responsibility
Quota

References

Export, What where & How (Parasram)

Web Pages:

Inco terms.mht

www.export911.com

Google.com

CUSTOM HOUSE AGENT

2009-10-05T03:24:00.000-07:00

LAST DATE 12 TH OCT. TO SEND BY PARDEEP

custom house agent

Customs House Agent (CHA) is a person who is licensed to act as an agent for transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs station.

Liabilities on a CHA
Section 146 of the Customs Act is the enabling provision, which allows agents of importers and exporters to act on behalf of importers and exporters. This is necessitated by the highly involved and technical nature of the work to be done in connection with clearance of imports into and exports out of country. The importers and exporters themselves may have neither time nor the requisite knowledge on their own. Therefore, agents are allowed to act on their behalf. The work of the agents is governed by the Customs House Agents Licensing Regulations, 1984 framed under this section read with Section 157.
There are certain liabilities fastened on the agent of the importer or exporter under Section 147. Some of these liabilities are in the nature of extension of and exceptions to the liability of an agent under the Indian Contracts Act, 1872. Sub-section (1) empowers the agent to do everything that an importer or an exporter can do. Filing a bill of entry, shipping bill, submitting supporting documents therewith, helping in examination of goods, payment of duty on behalf of the principal, warehousing of goods, removal from warehouse and the like. The common law principle that an agent’s actions bind the principal is given the status of a legal presumption. The consequences of all actions of a CHA will bind the importers and exporters on whose behalf they act. An agent who is authorized to act on behalf of the importer or exporter is treated as the owner of imported or exports goods. In respect of that particular transaction, a notice could be given to that agent. This does not normally extend to recovery of duty not paid or short paid by the owner, importer or exporter of goods. As an exception, this is permissible when the Deputy/Assistant Commissioner is of the opinion that such recovery from the owner, importer or exporter of goods is not possible.
Essential features of CHA Licensing Regulations, 1984
1. No ceiling for number of CHAs who can be appointed in a Customs House.
2. Issue of regular licence is preceded by a period of grant of temporary licence.
3. Prescribing criteria of experience and financial soundness for appointment.
4. Grant of regular licence is subject to passing examination, satisfying minimum volume of business and complying with obligations under Regulation No.14.
5. Change in the constitution of partnership or firm not to affect the operations of CHA.
6. Commissioners have been empowered to prescribe fees to prevent excess billing by the CHAs.
Application for licence
Under Regulation 4, every January, the Commissioner of Customs has to notify and advertise and call for applications from persons for acting as CHAs within his jurisdiction. Individuals, firms and companies can act as CHAs. In case of firms and companies, the application has to give the particulars of partner or director who will actually do the work of clearance of goods at the Customs station. Application is made in Form A.
Applications made by the firms or companies should contain full details of the directors or partners.
Qualifications of an applicant
The applicant individual working for a firm or a company should be:
- A graduate from a recognized University.
- Should hold a pass in Form G as employee of the firm / company.
- Should have engaged in Customs clearance work for three years.
- Should possess assets of Rs.1 lakhs or Rs.50,000/- as certified by a scheduled bank.
- Reliability of the applicant and soundness of financial status are very important criteria.
- If there are too many applicants than the licenses that can be granted, the Commissioner has to select persons for licensing by seniority of holding G pass. If there are two persons of same seniority, the older person will be preferred [Regulation 8(3)].
Relaxations, which can be granted by the Commissioner:
An applicant need to possess pass in Form G for one year only if permitted by the Commissioner for reasons to be recorded in writing.

Qualification
Various Custom Houses and Commissionerate prescribe certain volume of business as qualification for considering application for regular licences:
1. 150 documents per year (for ex: shipping bill or bill of entry)
2. Clearance or shipment 1500 packages per year.
3. Clearance or shipment of packages of value not less than Rs.60 lakhs.
A G-Pass holder with one year experience may also appear for examination if permitted by the Commissioner for reasons to be recorded in writing.
Other clarifications as to qualification
1. Diploma in “Customs clearance and freight forwarding” offered by Bombay University is not considered as graduation for the purpose of eligibility.
2. An employee or partner or director of a CHA licensee authorized to take examination under Regulation 9(5) is allowed to take three examinations in a period of two years from the date of application by the licensee for examination.
3. Level of knowledge of local language has to be determined by the Commissioners as the Regulations do not prescribe any requirement. Knowledge of local language by the authorized representative is considered sufficient.
4. A person who passes examination under Regulation 9(5) can apply for independent CHA licence when applications are called for, subject to possessing other qualifications.
5. Persons who were granted CHA licence before the amendment of 1997 prescribing graduation as qualification would continue to qualify for renewal of licence.
Multimodal transport operators as CHAs
Multimodal transport operators (MTOs) are appointed under Multimodal Goods Transportation Act, 1993 by the Ministry of Surface Transport. Their work involves carriage of goods by more than one mode of transport between India and any place abroad. They handle export cargo stuffing and destuffing. This does not automatically confer any right on them to obtain appointment as steamer agents or CHAs unless thy are otherwise qualified for such appointment. Their role is different from that of a CHA or a steamer agent.
Temporary licence
After scrutinizing and accepting the application a temporary licence for a period of one year is granted under Regulation 8 in Form B.
Before receiving the temporary or regular licence, the applicant has to go through another important step. He is required to execute a bond and give a surety or bank guarantee in Forms D and E. For major ports , the surety amount is Rs.25000/- For other ports, it is Rs.10000/- Surety may also be given in the form of National Savings Certificates or postal security. In the last two forms of surety, these should be pledged in the name of the Commissioner. It is important to note that since a regular licence holder is allowed to work in more than one Customs station, separate bond and surety have to be given in respect of each Customs station.
Curriculum
[Regulation 9(3)]
1. Preparation of various kinds of bill of entry and shipping bill.
2. arrival entry and clearance of vessels.
3. Tariff classification and rates of duty.
4. Determination of value for assessment.
5. Conversion of currency.
6. Nature and description of documents to be filed with various kinds of bills of entry and shipping bill.
7. Procedures for assessment and payment of duty.
8. Examination of merchandise at the Customs stations.
9. Provisions of the Trade and Merchandise Marks Act,1958.
10. Prohibitions on imports and exports.
11. Bonding procedure and clearance from bond.
12. Re-importation and conditions for free re-entry.
13. Drawback.
14. Offences under the Act.
15. Provisions of allied Acts including Customs Tariff Act,1975, Foreign Trade (Development and Regulation) Act, 1992,Foreign Exchange Regulation Act,1973, Indian Explosives Act,1884, Arms Act,1959, Opium Act, 1878, Drugs and Cosmetics Act,1940, Destructive Insects and Pests Acts, 1914, Dangerous Drugs Act, 1930 insofar as they relate to the clearance of the goods through Customs.
16. Refund procedures, appeals and revision petitions.
Although not a part of curriculum, the Commissioner has to satisfy himself that the applicant-candidate has good knowledge of English and local language of Customs station. For a person working exclusively in docks, knowledge of English is not compulsory. But, knowledge of Hindi will be considered as advantageous. [Regulation 9(4)].
Examinations
Regulation 8 itself refers to two opportunities to a temporary licence holder for writing and passing the examinations. A third opportunity may be given by the Commissioner if the temporary licence holder has met with the minimum work criteria (number of package, value, tonnage, Duty amount etc). This extension of time is granted for minimum six months and maximum one year.
If this extension of time is refused by the Commissioner, a representation can be made to the Chief Commissioner.
The candidate will have three opportunities to pass the examination within two years. One may take examinations as soon as temporary licence is granted. The examination fee is Rs.500/-per appearance.
There will be two examinations each year. There will be both oral and written examinations. A person who passes written examination but fails in oral examination is treated as failed. But, he need not write examination again.
The reference to applicant or candidate or temporary licence holder or regular licence holder must be correctly understood. Where the applicant is an individual, it is the same person who holds the temporary licence and also writes the examination. On the other hand, if the applicant is a firm or company, the person who writes the examination is an employee of the firm or company. But the temporary or regular licence may be issued in the name of the firm or company. This position is clear from Regulations 5 and 6.
Regulation 9(5) allows a CHA to permit one of the employees, or partners or directors to appear in the examination conducted under Regulation 9. This would be in addition to the person already present and who has passed this examination. The person so permitted to appear for examination must be a graduate. But, he need not be a G pass holder or have experience in the capacity of a G pass holder.

Customs House Agent An application for regular licence can be made by a person who has passed the examinations. Application for regular licence is made in Form C. Form A and Form C are almost identical except that while the first form is issued under Regulation 5, the latter form is issued under Regulation10. Licence fee is Rs.5000/-. Regular licence is granted in Form D. The applicant for regular licence has to satisfy following conditions:
A. The applicant must satisfy the norms regarding quantity or value of cargo cleared form the Custom House. This is determined by the Commissioner.
B. The conduct of the applicant during the period of holding temporary licence must be business like. There should be no delay in clearance of goods or in payment of duty on account of conduct of the applicant. There should be no complaint of misconduct of the applicant. There also should not be any complaint of non-compliance of provision of Regulation 14, which casts some important obligations on the CHAs.
Disqualifications for regular licence
Regulation 10(1) specifies that only a person who qualifies in the examination can apply for a regular licence, Nevertheless, sub-regulation (3) provides that the Commissioner may reject the application of a person who fails to qualify in the examination, It further provides that if performance criteria is not satisfied (regarding quantity and value of clearances or conduct), the application may be rejected. A representation can be made against an order of rejection within 30 days to Chief Commissioner. The Chief Commissioner is also empowered to review the procedure of grant of regular licence within one year.
Regular licence granted to a person cannot be transferred [Regulation 13].
Validity of licence
Under Regualtion12 (1), the validity of licence is for a period of five years.
Extension of licence
An applicant seeking revalidation or extension of licence has to apply before the validity expires, to the Commissioner. It will be renewed for a period of five years either from the date of expiration of licence or from the date of last renewal of licence, A CHA seeking renewal has to satisfy the Commissioner that he has conformed to the norms fixed by the Commissioner regarding minimum quantity and value of cargo clearance and that he is not guilty of misconduct or that he has not been the cause of delayed clearance of goods or delayed payment of duty. There should also be no complaint that he has violated the obligations cast on him under Regulation 14 read with Regulation 12.
The renewal fee payable is Rs.3000/-[Regulation 12(3)]
A person who has passed examination can act on behalf of another firm or company which is holding a regular licence. But, at any time, he can act for only one such firm or company.
A CHA who has been granted licence cannot acquire a right to obtain office accommodation in the Custom House [Regulation 24].

SHIPING INDUSTRY

2009-10-05T03:23:00.001-07:00

INDIAN SHIPING INDUSTRY BY RASHMI NAYAR SENT ON 23 OCT 2009

Logistics Management Service information available at

http://www.agsystems.com/logistics-management.html

Shipping plays an important role in the transport sector of India's economy. Approximately, 90 per cent of the country's trade by volume (70 per cent in terms of value) is moved by sea. India has the largest merchant shipping fleet among the developing countries and ranks 20th amongst the countries with the largest cargo carrying fleet with 8.83 million GT as on 01.06.2008 and the average of the fleet being 18 years. Indian maritime sector facilities not only transportation of national and international cargo but also provides a variety of other services such as cargo handling services, shipbuilding and ship repairing, freight forwarding, lighthouse facilities and training of marine personnel, etc.
Coastal Shipping
Coastal Shipping is an energy-efficient, environment-friendly and economical mode of transport in the Indian transport network and a crucial component for the development of domestic industry and trade. India, with her 7,517 km long cost line studded with 13 major ports and 200 non-major ports provides congenial and favourable conditions for the development of this alternate mode of transport.
Aids to Navigation
Since Independence, India has made rapid growth in aids to Marine Navigation. From 17 Lighthouses prior to Independence, the present strength of aids to Navigation consists of 171 Lighthouses, one Lightship, one Loran-C Chain Stations, 59 Racoons, 21 Deep Sea Lighted Buoys 01 wreck making and 22 installations under Differential Global Positioning System (DGPS). To cater the needs of light stations in the islands and for maintaining the buoys, the Directorate General of Lighthouses and Lightships is maintaining three launches, one mechanised board and two large ocean going vessels, M.V. Sagardeep-II ad M.V. Pardeep.
Maritime Training
The Director General of Shipping is responsible for creation of the trained manpower required for the merchant navy fleet of the country. This national obligation is being met through the Government training institutes and a number of other approved training institutes in the private sector. The importance of organised training was recognised in the year 1927 when the Training Ship "Dufferin" was established. Since then many highly skilled Indian seafarers have been trained in India who have earned commendable reputation at home and abroad.

The four training institutes, which were established by the Government, are:-
Training Ship 'Chanakya' which conducts
Three years B.Sc degree course in Nautical Sciences under the University of Mumbai
Pre-Sea training course for Deck Cadets.
Marine Engineering and Research Institute (MERI), Kolkata which conducts four years degree course in Marine Engineering under Jadavpur University.
Marine Engineering & Research Institute (MERI), Mumbai conduct
one year Training Marine Engineering Course for graduate Mechanical Engineering’s and
Three-year B.Sc. degree course in Maritime Sciences (polyvalent degree) under the University of Mumbai
LBS College of Advance Maritime Studies & Research, Mumbai, conducts almost 46 post-sea training courses for serving Marine Officers.
In addition to the above, there are about 124 training institutes in the private sector approved by the Director General of Shipping, imparting pre-sea and post-sea training in various disciplines.
Shipping Corporation of India Limited
The Shipping Corporation of India Ltd (SCI) was formed on 2nd October 1961. The present authorised capital of the Company is Rs. 450 crore and paid up capital is Rs 282.30 crore. The status of SCI has been changed from a private limited company to Public limited from 18 September 1992. The SCI was conferred 'Mini Ratna' status by the Government of India on 24 February 2000. At present, the Government is holding 80.12 per cent of share capital and the balance is held by financial institutions, public and others (NRIs, Corporate Bodies, etc.). SCI signed Memorandum of Understanding with the Ministry of Shipping, Road Transport & Highways, and Government of India on 27 March 2008.
On 8th March, 2007, SCI was awarded MOU Excellence Certificate for the year 2004-05 and 2005-06 by the Government of India, Ministry of Heavy Industry and Public Enterprises, Department of Public Enterprises. SCI was the winner of the best international solution award and the third annual HBSC global payments and cash management partnership award, which was posted in Bengaluru on 5th November 2007. The SCI won the "Shipowner/operator of the year 2007" at the sea trade middle east and Indian sub-continental award 2007, held in Dubai in November, 2007 SCI also won the "Shipowner of the year 2007" at Lloyds list Middle east and Indian Sub-continental award, held in Mumbai in November 2007

Cochin Shipyard Limited
Situated in the Western coast of India in the city Cochin, State of Kerala, Cochin Shipyard is the largest shipyard in the country. Incorporated in the year 1972, Cochin Shipyard can build ships up to 1, 10,000 DWT and repair ships up to 1, 25,000 DWT. The year has built varied types of ships including tankers, bulk carriers, ports crafts, offshore vessels and passenger vessels. The orders executed by CSL in recent past include carriers for M/s Clipper Group, Bahamas, fire fighting tugs for M/s ATCO, Saudi Arabia and Platform Supply Vessels for M/s Deep Sea Supplies, Norway. The yard is also a leading ship-repairer of the country and has repaired more than 1200 ships of all types. These include up gradation of vessels belonging to ONGC, periodical layup repairs and life extension of ships of Navy and Coast Guard. The yard had been consistently achieving profits for the last several years.
Garden Reach Shipbuilders & Engineers LTD. KOLKATA
The Garden Reach Shipbuilders & Engineers Limited was incorporated as a joint stock company in 1934, under the name M/s Garden Reach Workshop Limited (GRW). The Government of India acquired the company in 1960. It was renamed as "Garden Reach Shipbuilders & Engineers Limited (GRSE)" on 01 January 1977. The company builds and repairs warships and auxiliary vessels for the Navy and Coast Guard. Its present product range includes corvettes, frigates, fleet tankers, patrol-vessels, fast attack craft, high technology ship borne equipment, portable bailey type steel bridges, turbine pumps for the agricultural sector, Marine Sewage Treatment Plants, Diesel Engines etc. "Mini-Ratna Status Category-I" was conferred on GRSE on 5 September 2006.
Hindustan Shipyard Limited, VISAKHAPATNAM
Hindustan Shipyard Limited (HSL), Visakhapatnam as set up in 1941 in the private sector and was taken over by the Government in 1952. In 1962, the shipyard became a central public sector enterprise. The shipbuilding capacity of the yard is 3.5 pioneer class vessels of 21,500 DWT each. The maximum size of vessel that could be built is 50,000 DWT. HSL is the first shipbuilding yard in the country which was awarded ISO: 9001 certification by Lloyds Register of Quality Assurance, London for international standard of quality assurance. For ship repairs, the yard has facilities such as modern dry dock, wet basin, repair shops, etc., and it can undertake repairs of submarine, tankers and ships up to 70,000 DWT. HSL has an exclusive offshore platform construction yard capable of constructing two platforms per annum.

Hooghly Dock and Port Engineers Limited, KOLKATA
Hooghly Dock and Port Engineers Limited (HDPEL), Kolkata became a Central Public Sector undertaking in 1984. The company has two working units in Howrah District of West Bengal, one at Salkia and another at Nazirgunge. The installed capacity in shipbuilding is 1,100 tonnes per annum and in ship repairs 125 ships per annum. Apart from a dry dock and a jetty, it has six shipways. The yard is capable of constructing various types of ships (including passenger ships) and other vessels such as dredgers, tugs, floating dry docks, fishing trawlers, supply-cum-support vessels, multi-purpose harbour vessels, and lighthouse tender vessels, barges, mooring launches, etc., and undertaking repairs of different types of vessels.

INDIAN SHIPPING ON A NEW WAVE

With fleet acquisition by Indian shipping companies happening on a massive scale over the last year, the 10-million-GRT mark may be crossed soon.
A BOOMING freight market and the recent introduction of a Tonnage Tax regime have caught the shipping industry on a high wave, with the Indian fleet tonnage crossing the 7.6 million GRT (gross registered tonnage) mark for the first time ever.
Though the Ninth Plan target was 9 million GRT, only twice in the past has the tonnage crossed the 7 million GRT — once in 1995-96 when it nudged 7.1 million GRT and then in 1999-2000 when it touched 7.06 million GRT.
Says Mr P. K. Srivastava, chairman of the Shipping Corporation of India (SCI) and president of the Indian National Shipowners Association (INSA): "Just in the last one year alone, over 1.5 million GRT has been added to the Indian tonnage. Compared with the tonnage figure of 6.3 million GRT, which stagnated throughout the last decade, this growth is certainly impressive." Undoubtedly, it was the surge in freight markets that prompted Indian ship-owners to go on an acquisition spree.
Consider this: In the dry bulk sector, the Capesize rates hit an unprecedented $100,000 per day in January, before slipping to $68,000 in April and stabilising at $75,000 in October. Even more prominent were the Panamax earnings, which crossed $40,000 per day in January and remained more or less at that level thereafter.
The tanker market also witnessed a dramatic rise in rates, with VLCC (Very Large Crude Carrier) earnings touching $1 lakh per day and Suezmaxes lagging not far behind.
But the real ballast was provided by the introduction of Tonnage Tax, which considerably reduced the tax liability of ship-owners. Just between April and August this year, the fleet increased from 6.9 million GRT to 7.4 million GRT, with eight oil tankers being added, including four by Great Eastern Shipping and one each by SCI, Essar Shipping and Sanmar Shipping, totalling 5.5 lakh GRT.
"With the massive fleet acquisition plans undertaken by the shipping companies, it is hoped that the Indian fleet would cross the 10 million GRT mark shortly and subsequently emerge as one of the top ten maritime nations," Mr Srivastava points out.
The shipping industry feels that with the next fiscal would see a significant jump in tonnage in the wake of the new tax regime.
Says Mr Yudhishthir Khatau, INSA vice-president: "We see lot of possibilities of FDI (foreign direct investments) coming into the Indian shipping sector as a result of the Tonnage Tax. Whether it would be in the form of foreign companies setting up shop here or forging strategic alliances with Indian companies will have to be seen."
According to the INSA's latest annual report, the average age of the Indian fleet was 16.9 years as on August 1. The age profile of the fleet in terms of GRT shows that over 31.2 per cent of the overseas fleet totalling 2.06 million GRT was over 20 years old, while another 26.1 per cent is between 15 and 19 years. "Thus, over 59 per cent of the Indian fleet needs to be replaced within the next five years," the INSA report says.
However, the share of Indian ships in the carriage of the country's overseas trade has been declining over the years, despite the total volume of cargo moving in India's trade expanding progressively. The share of Indian lines in India's overseas trade flagged from 17 per cent to about 15.1 per cent.
While the total volume of trade moving in India's overseas trade has slightly increased from 273.04 million tonnes to 280.34 million tonnes, the share of Indian ships came down from 46.3 million tonnes to 42.43 million tonnes. "One reason is that Indian ship-owners have begun to increasingly adopt a global approach by looking at trading outside," according to a shipping expert. In fact, the inadequacy of the national fleet to support the country's trade has been one of the major problems facing India and other developing countries. And as a result, India had to depend on foreign ships to a significant extent, leading to higher freight payments in the carriage of its trade.
Reports indicate a significant variation in the freight cost rations among the developed and developing maritime nations.
For example, against 6.11 per cent freight cost of the total CIF import value in the world trade, the share of freight costs in the imports of developing countries is about 8.70 per cent, which is significant higher than that of the developed nations' 5.12 per cent.
One aspect that continues to worry the industry is that in spite of the hectic pace of containerisation of cargoes in India, container shipping still faces "procedural irritants". Perhaps, the setting up of the National Coordinating Agency (NGA) to oversee all the activities connected with multi-modal transportation goods will iron out these problems.
The Indian shipping industry has a bright future. To put it in Mr Srivastava's words: "The golden era of Indian shipping is indeed upon us."
REQUIRED CHANGES IN INDIAN SHIPPING
The falling share of the Indian Shipping Industry in carriage of India’s total overseas sea borne cargo has been a cause of concern. The protection of Indian flag vessels carrying imported crude from other locations to Indian ports, strategic port locations in India, and offshore terminals and pipelines is essential from the point of view of energy and national security. There is a strong need for Indian flag vessels to carry imported crude, and maintain supply chains for all essential commodities in times of emergency. Essential support should be given to service the oilfields support sector and port services support sector to minimize risks. There is also an important need for presence of Indian flags for strategic reasons.

COMPETITIVENESS OF THE INDIAN SHIPPING INDUSTRY
SMARTING under a clutch of problems, including a debilitating tax regime, the domestic shipping industry is increasingly facing the threat of market erosion in the face of stiff competition from foreign companies.
Shipping analysts feel that if the Government does not create a conducive investment and operating environment so that it gets a level playing field, the industry's competitiveness in the global market will be severely blunted. Indeed, the industry is currently struggling to cope with the trend of flagging tonnage and thinning margins for the shipping companies, leading to increased deployment of vessels with foreign flags for carrying cargoes to and from India.
Says Mr Srivastava, Chairman of Shipping Corporation of India (SCI): ``It is clear that the shipping industry suffers from some inherent disadvantages, which is depriving it of a level playing field in the global market. This disadvantage is even greater for more capital-intensive segments like containers and tankers due to their higher financing costs.''
The major disadvantage that confronts the industry pertains to ship finance, with lack of adequate price-competitive sources for financing ships posing an awesome challenge and resulting in postponement of ship acquisition programmes — companies are today forced to go in for older and cheaper vessels, which are less cost efficient. As ship acquisition costs are financed primarily through ECBs up to a level of 60 per cent to 80 per cent, ship owners belonging to countries with higher sovereign rating are in a better position to access the ECB market as compared to their Indian counterparts. To make matters worse, the Government has made ECB costlier by about 20 per cent with the withdrawal of the exemption on withholding tax on interest payment on such loans, with this burden resting entirely on the Indian shipping companies as they cannot pass on the increased costs to the users of their services.
A study by Tata Energy Research Institute (TERI) recently has shown that to procure an Aframax tanker, the Indian flag registry will be at a disadvantage of 7.4 per cent of the cost of the vessel as compared to the free flag registry.
To add to the woes of the industry, Indian ship owners are statutorily required to insure their fleet for hull and machinery with domestic insurance companies, with the premium rates, fixed by the tariff advisory committee, having been traditionally much higher than those prevailing internationally. To top it all, the shipping industry, despite being an indispensable sector, has not been given the status of an infrastructure industry, not given any export industry benefits. This has resulted in low depreciation rate at 25 per cent, while transport vehicles like trucks and cars are permitted 40 per cent rate of depreciation.
The biggest problem that the industry faces is the tax regime, which is considered to be among the highest in the global shipping industry. At present, the Indian shipping companies come under the purview of the 35 per cent corporate tax regime, while 94 per cent of the world shipping is under a very low tax structure. Points out the TERI report: ``About 70 per cent of world shipping is owned by a group of countries following the conventional tonnage tax system, under which ship owners have the benefit of paying a very low and fixed amount of tax based on their tonnage.''
The TERI analysis shows that the profitability of operating a 75,000 dwt Panamax bulk carrier aged less than five owned and registered in India is significantly lower than the one owned and registered outside India. The profit after tax for such a vessel owned and registered in India comes to about $405 as against $888 that would come from the same vessel owned and registered outside India.
In fact, after facing an exodus of a large number of ships from their National Registers, major European maritime countries such as Norway, the Netherlands, UK and Germany had modified the tax structure — it was actually Greece which first introduced the tonnage tax regime in 1975.
According to the TERI report, a number of countries have benefited from the tonnage tax regimes. ``For example, in the UK in 2001, 47 companies opted for a TT regime which resulted in 598 ships getting added to the fleet. Similarly, in Norway, in a two-year period under TT regime, 5.5 million GRT (229 ships) were added to the fleet; while in the Netherlands 1.1 million GRT (142 ships) were added within two years of introduction of TT. In Germany, TT has had a stabilising effect on shipping industry with a 2.1 million GRT increase in 2001, while in Greece it stemmed flight of ships being registered abroad.''
What would be the implications of introduction of TT regime in India? The Working Group on Shipping for the Tenth Plan has estimated that about 2.75 million GRT would be deleted by 2007, given the age of the Indian fleet, and to maintain a steady growth an additional tonnage of 3.25 million GRT (156 ships) would be needed, which would require an investment of $3.3 billion. Based on these assumptions, TERI has projected that the tonnage would decline to 5.6 million GRT by 2007 and 4.6 million GRT by 2027.
It has been estimated that as per the tonnage tax rates proposed, a 45,000 GRT ship would attract a tax of about Rs 9.64 lakh, based on the vessels income for the entire year. Based on this, it has been shown that the TT that the entire industry would have to pay would first decrease from Rs 163 million in 2003 (fleet size of 6.87 million GRT) to Rs 147 million by 2010 (6.20 million GRT) and then begin to rise from Rs 150 million in 2011 (6.31 million GRT) to touch Rs 160 million in 2017 (6.71 million GRT) and Rs 180 million lin 2024 (7.56 million GRT). This is based on the assumption that introduction of TT regime would result in addition to the Indian tonnage, as shipping companies would go in for fresh acquisitions.

RECENT DEVELOPMENTS:-

Shipping industry seeks Rs 10 crore bailout ON 3RD APRIL 2009.
Thanks to global recession, the Indian Shipping industry is in dire consequences. Now the Indian Shipping Industry is seeking a bailout package to the tune of Rs 10,000 crore.The credit crisis is the biggest issue for the shipping industry as nobody is willing to lend, lamented S Hajara, chairman and managing director of Shipping Corporation of India."The bulk carrier business has declined by about 95 per cent, container sector is affected badly and rates are down by about 40 to 60 per cent and the least-affected tanker market also has suffered by about 25 to 30 per cent," he said.However, in spite of recession Industry did not witness job cut downs. Reason: There is already acute shortage of manpower.Speaking at a press conference on Thursday, Apr 2 he elaborated on the credit crisis. "For shipping companies, external commercial borrowing was the main funding source, which has dried up completely." he said.He said: "Indian banks are also not interested in lending to shipping companies. We have urged the government to ask banks to provide credit to the shipping companies."

BIBLIOGRAPHY
EXPORT –IMPORT AND LOGISTICS MANAGEMENT BY USHA KIRAN RAI
www.google.co.in
www.indiashippingsummit.com

AIR TRANSPORTATION

2009-10-05T03:22:00.000-07:00

NOT SEND BY ANUBHAV

LOGISTCS NATURE AND SCOPE

2009-10-05T03:21:00.001-07:00

NOT SEND BY AKHIL

EXPORT FINANCE

2009-10-05T03:20:00.000-07:00

EXPORT FINANCE by SHIPRA AND ANCHAL
Introduction
A product is sold and shipped overseas, therefore, it takes longer to get paid. Extra time and energy is required to make sure that buyers are reliable and creditworthy. In addition, foreign buyers - just like domestic buyers - prefer to delay payment until they receive and resell the goods. All sellers want to get paid as quickly as possible, while buyers usually prefer to delay payment, at least until they have received and resold the goods. This is true in domestic as well as international markets.

Increasing globalization has created intense competition for export markets. Importers and exporters are looking for any competitive advantage that would help them to increase their sales. Flexible payment terms has become a fundamental part of any sales package.

Definition :
Exporting activity often places a strain on exporters’ cash flow reserves, limiting the amount of working capital available to fund new orders and to ultimately grow the business. Export finance overcomes these demands, allowing your business to trade without damaging your cash flow.
So financial assistence is extended by the banks to the exporters at pre-shipment and post-shipment stages.

Export finance provides alternative solutions that balance risk and payment. In this overview, we'll outline the two broad categories of trade finance:
Pre-shipment financing to produce or purchase the material and labor necessary to fulfill the sales order; or
Post-shipment financing in order to generate immediate cash while offering payment terms to buyers.
PR
PRE SHIPMENT FINANCE :

Pre Shipment Finance is issued by a financial institution when the seller want the payment of the goods before shipment. A pre requisite to avail of pre-shipment financing is that the Exporter should have a credit facility in place with a bank. Each bank has a credit process that determines the amount of funding the bank can give the company
The main objectives behind preshipment finance or pre export finance is to enable exporter to:
Procure raw materials.
Carry out manufacturing process.
Provide a secure warehouse for goods and raw materials.
Process and pack the goods.
Ship the goods to the buyers.
Meet other financial cost of the business ack the goods.

Types of Pre Shipment Finance :
Packing Credit
Advance against Cheques/Draft etc. representing Advance Payments.
Preshipment finance is extended in the following forms :
Packing Credit in Indian Rupee
Packing Credit in Foreign Currency (PCFC)

Eligibility :
Pre shipment credit is only issued to that exporter who has the export order in his own name. However, as an exception, financial institution can also grant credit to a third party manufacturer or supplier of goods who does not have export orders in their own name.In this case some of the responsibilities of meeting the export requirements have been out sourced to them by the main exporter. In other cases where the export order is E divided between two more than two exporters, pre shipment credit can be shared between them.

Quantum of Finance :
The Quantum of Finance is granted to an exporter against the LC or an expected order. The only guideline principle is the concept of NeedBased Finance. Banks determine the percentage of margin, depending on factors such as:
The nature of Order.
The nature of the commodity.
The capability of exporter to bring in the requisite contribution

Tenor of this funding :
The RBI has allowed banks to grant this funding at a concession for a maximum period of 180 days. This period can be extended by the bank without referring to RBI for a further period of 90 days. Banks grant this extension in cases where the exporter faces genuine hardships in completing his order.
If an extension is required beyond 270 days (i.e. 180+90 days), the RBI has the discretion to grant another (maximum) extension of 90 days. However, if the exports do not take place at the end of this period, the bank will charge interest from day one, at a rate left to the bank’s discretion.

Currency's get :
Most often the pre-shipment borrowal is in the domestic currency, in the case of an exporter based in India, the Indian Rupee. However in some cases, the exporter may want to borrow in foreign currency because his product has a large import component or he finds the cost of borrowing in foreign currency lower than borrowing in the local currency .

Pre-shipment credit :
Upto 180 days - 10%
Between 180 –270 days - 13%
Over 270 days - Commercial rates which are likely to be higher than the rate applicable upto 270 days.
USD Lending (PCFC) - Maximum of Libor + 1.5 pct
Ppp
Post shipment finance:
Post Shipment Finance is a kind of loan provided by a financial institution to an exporter or seller against a shipment that has already been made. This type of export finance is granted from the date of extending the credit after shipment of the goods to the realization date of the exporter proceeds. Exporters don’t wait for the importer to deposit the funds
.
Purpose of Finance:
Postshipment finance is meant to finance export sales receivable after the date of shipment of goods to the date of realization of exports proceeds. In cases of deemed exports, it is extended to finance receivable against supplies made to designated agencies.

Basis of Finance:
Postshipment finances is provided against evidence of shipment of goods or supplies made to the importer or seller or any other designated agency.

Quantum of Finance:
As a quantum of finance, postshipment finance can be extended up to 100% of the invoice value of goods. In special cases, where the domestic value of the goods increases the value of the exporter order, finance for a price difference can also be extended and the price difference is covered by the government. This type of finance is not extended in case of preshipment stage.Banks can also finance undrawn balance. In such cases banks are free to stipulate margin requirements as per their usual lending norm.

Period of Finance:
Postshipment finance can be off short terms or long term, depending on the payment terms offered by the exporter to the overseas importer. In case of cash exports, the maximum period allowed for realization of exports proceeds is six months from the date of shipment. Concessive rate of interest is available for a highest period of 180 days, opening from the date of surrender of documents. Usually, the documents need to be submitted within 21days from the date of shipment.

Various Types of Export:
Postshipment finance can be provided for three types of export :
Physical exports: Finance is provided to the actual exporter or to the exporter in whose name the trade documents are transferred.
Deemed export: Finance is provided to the supplier of the goods which are supplied to the designated agencies.
Capital goods and project exports: Finance is sometimes extended in the name of overseas buyer. The disbursal of money is directly made to the domestic exporter.

Types of Post Shipment Finance :
The post shipment finance can be classified as :
Export Bills purchased/discounted.
Export Bills negotiated
Advance against export bills sent on collection basis.
Advance against export on consignment basis
Advance against undrawn balance on exports
Advance against claims of Duty Drawback.

. Export Bills Purchased/ Discounted.(DP & DA Bills):
Export bills (Non L/C Bills) is used in terms of sale contract/ order may be discounted or purchased by the banks. It is used in indisputable international trade transactions and the proper limit has to be sanctioned to the exporter for purchase of export bill facility.
2. Export Bills Negotiated (Bill under L/C):
The risk of payment is less under the LC, as the issuing bank makes sure the payment. The risk is further reduced, if a bank guarantees the payments by confirming the LC. Because of the inborn security available in this method, banks often become ready to extend the finance against bills under Lc.
3. Advance Against Export Bills Sent on Collection Basis:
Bills can only be sent on collection basis, if the bills drawn under LC have some discrepancies. Sometimes exporter requests the bill to be sent on the collection basis, anticipating the strengthening of foreign currency. Banks may allow advance against these collection bills to an exporter with a concessional rates of interest depending upon the transit period in case of DP Bills and transit period plus usance period in case of usance bill.The transit period is from the date of acceptance of the export documents at the banks branch for collection and not from the date of advance.
4. Advance Against Export on Consignments Basis:
Bank may choose to finance when the goods are exported on consignment basis at the risk of the exporter for sale and eventual payment of sale proceeds to him by the consignee.However, in this case bank instructs the overseas bank to deliver the document only against trust receipt /undertaking to deliver the sale proceeds by specified date, which should be within the prescribed date even if according to the practice in certain trades a bill for part of the estimated value is drawn in advance against the exports.In case of export through approved Indian owned warehouses abroad the times limit for realization is 15 months.
5. Advance against Undrawn Balance:
It is a very common practice in export to leave small part undrawn for payment after adjustment due to difference in rates, weight, quality etc. Banks do finance against the undrawn balance, if undrawn balance is in conformity with the normal level of balance left undrawn in the particular line of export, subject to a maximum of 10 percent of the export value. An undertaking is also obtained from the exporter that he will, within 6 months from due date of payment or the date of shipment of the goods, whichever is earlier surrender balance proceeds of the shipment.
6. Advance Against Claims of Duty Drawback:
Duty Drawback is a type of discount given to the exporter in his own country. This discount is given only, if the inhouse cost of production is higher in relation to international price. This type of financial support helps the exporter to fight successfully in the international markets.In such a situation, banks grants advances to exporters at lower rate of interest for a maximum period of 90 days. These are granted only if other types of export finance are also extended to the exporter by the same bank.After the shipment, the exporters lodge their claims, supported by the relevant documents to the relevant government authorities. These claims are processed and eligible amount is disbursed after making sure that the bank is authorized to receive the claim amount directly from the concerned government authorities.

Post-shipment credit :
Sight Bills - Not more than 10%
Upto 90 days - Not more than 10%
91 days upto 6 months - 12%

Types of EXPORT FINANCE:
Working Capital Loans :
For exporters, working capital loan programs are normally associated with pre-shipment financing. Many small businesses need pre-export financing to cover the operating costs related to a sales order or contract. Loan proceeds are commonly used to finance three different areas:
Labor: The people needed to build or buy the export product.
Materials: The raw materials needed to produce the export product.
Inventory: The costs associated with buying the export product.
Eg: TradePort Export Finance Online (TEFO) offers a Working Capital Loan Program
Term Financing for Foreign Buyers:
Frequently, foreign buyers don't have the cash on hand to pay for major purchases. So the buyers ask for extended credit terms and/or financing. Few exporters can manage the cash flow dilemma or commercial and political risks caused by these long-term contracts.
Buyer Credit Programs are often an effective solution that benefits the exporter, their buyer and commercial lenders providing the loans. Programs typically provide loan guarantees to commercial lenders. These kind of programs benefit all the parties involved. The exporter benefits because they’re paid cash on delivery and acceptance of the product or service. The foreign buyer benefits because they get extended credit terms at markets rates or better. And the lender benefits because guarantees, many backed by the U.S. Government, mean full repayment of the loan and a reasonable return on funds loaned.

Eg: TradePort Export Finance Online (TEFO) provides Term Financing for foreign buyers.
TEFO:
The TradePort Export Finance Online (TEFO) Program is a managed financial network of banks, lenders and brokers focused on the small business market. The TEFO/TradePort partnership brings together the international trade strengths of TradePort, the CalTrade Coalition, California’s trade promotion community, private sector banks and lenders, the U.S. Commercial Service, the U.S. Export-Import (EXIM) Bank and the Small Business Administration (SBA) for the benefit of small business trade development.

Sources of Export Financing:

Commercial Banks
Large multinational banks are generally thought to be the most experienced in trade finance. Frequently these services are reserved for their major clients and maintain transaction minimums of $1M or more. These banks are less interested in working with small businesses because of smaller deal size and volumes accompanied by greater risk. In fact, small importers and exporters often present a business profile that creates obstacles to financing. Even SMEs with large trade deals are not attractive to larger banks due to risk and credit issues such as loan concentration, debt-earnings ratio restrictions or insufficient collateral.

Due Diligence:
As part of your due diligence when selecting a bank and a financial solution, ask the following questions:
What are the charges for confirming a letter of credit, processing drafts, and collecting payments?
Does the bank have foreign branches or correspondent banks? Where are they located?
Can the bank provide buyer credit reports? At what cost?
Does the bank have experience with U.S. and state government financing programs that support small business export transactions? If not, is it willing to consider participating in these programs?
What other services, such as trade leads, can the bank provide?

Assistance from the Federal Government :
Several federal and local government agencies offer programs to assist exporters with their financing needs. Some are guarantee programs that require the participation of an approved lender, while others provide loans or grants to the exporter or a foreign government. Government programs generally are aimed at improving an exporter's access to credit. They are not intended to subsidize the cost of credit at below-market levels. With few exceptions, banks are allowed to charge market interest rates and fees; a portion of those fees are paid to the government agency to cover the agencies' administrative costs and default risks
Government guarantee and insurance programs are used by commercial banks to reduce the risk associated with loans to exporters. Lenders who are concerned with an exporter's ability to perform under the terms of sale, and with an exporter's ability to be paid, often use government programs to reduce the risks that would otherwise prevent them from providing financing.

Export Import Bank of the United States (EXIM Bank):
EXIM Bank is an independent federal government agency responsible for assisting export financing of U.S. goods and services. It offers a variety of information services, insurance, loan, and guarantee programs.
Ex-Im Bank operates an export financing hotline that provides information on the availability and use of export credit insurance, guarantees, direct and intermediary loans extended to finance the sale of U.S. goods and service abroad. Briefing programs are offered by Ex-Im Bank to the small business community. These programs includes regular seminars, group briefings, and individual discussions held both within the Bank and around the country

U.S. Department of Agriculture (USDA):
The Foreign Agricultural Service (FAS) of USDA administers several programs to help make U.S. agricultural exporters competitive in international markets and make U.S. products affordable to countries that have greater need than they have ability to pay.
These programs are designed to make it easier for commodity exporters to obtain bank financing by providing repayment guarantees to the lenders.
The USDA's Commodity Credit Corporation (CCC) operates Export Credit Guarantee Programs to provide United States agricultural exporters or financial institutions a guarantee that they will be repaid for short- and intermediate-term commercial export financing to foreign buyers. These programs protect against commercial or noncommercial risk if the importer's bank fails to make payment. Under one program, the CCC will guarantee credit terms of up to 3 years and under another, credit terms from 3 to 10 years are guarantee

Small Business Administration (SBA):
The SBA has some services specifically designed to help the small business get started in exporting. The SBA provides financial assistance programs for U.S. exporters. Applicants must qualify as small businesses under the SBA's size standards and meet other eligibility criteria. The SBA has two main programs to assist U.S. exporters—the Export Working Capital Program and the International Trade Loan (ITL) program.
The SBA programs provide the small business owner with financing aids that will enable the business to obtain the capital needed to get into exporting.
This program is designed to help small business exporters obtain financing by reducing risks to lenders. The SBA will guarantee up to 90% of a loan from a private bank. The proceeds from the loan can be used for pre-shipment working capital, post-shipment exposure coverage, or a combination of both.

BENEFITS OF EXPORT FINANCE:
Each export finance solution can be tailored to meet a business’ individual funding needs.

While export factoring advances funding against your invoices within 24 hours of their issue, pre-shipment and post-shipment finance will help to fund exporting activity before you receive payment.

Funding can be advanced in the favoured currency to mitigate any fluctuations in exchange rates.

Funders will have a strong knowledge of the overseas countries in which you operate.

BIBLIOGRAPHY
www.importexporthelp.com
www.infodriveindia.com
www.hiltonbaird.com
www.indiamart.com

PRESHIPMENT INSPECTION

2009-10-05T03:18:00.000-07:00

NOT SENT BY REENA TILL DATE

PROCESSING OF IMPORT ORDER

2009-09-30T06:35:00.000-07:00

Processing of import order BY KUSUM AND KHYATI

IMPORT ORDER –Import order is an open interface that consists of interface tables and set of API’s. By using import order we can new, updated or changed sales order from other applications.
v ORDER IMPORT CAN DO FOLLOWING THINGS FOR US:
1. Validation
2. Defaulting
3. Processing constraints checks
4. Apply & releasing or order holds
5. Scheduling of shipments
with Order management checks all the data during the import process to ensure its validity with order management so is prepared for anything horrible. Valid transactions then converted into order lines,reservations,price adjustments and sales credit in OM base tables.
v FOLLOWING ARE PREREQUISITEES FOR ORDER IMPORT:
1. Set up order management.
2. Customer should be created along with BILL TO & SHIP TO.
3. Pricing should be defined for all those item which are part of upload.
4. Item should be assigned to inventory organisation.
5. Define order import source.
6. Payment term should be setup.
7. Currency shoud be setup if order currency is different from SOB currency then conversion rate and conversion type should be defined.

PROCESS OF IMPORT ORDER

IMPORT PROCESSERS –
Procedures have to be followed by ‘PERSON-IN-CHARGE’ of conveyance’ as well as the importer.
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 –
1.He is responsible for submitting Import Manifest and Export Manifest.
2.He has to ensure that conveyance does not leave without written order of Customs authoritie.
3.He has to ensure that goods are unloaded after written order, at proper place. Loading also has to be only after permission.

4.He can be penalised for (a) Giving false declaration and statement (b) shortages or non-accounting of goods in conveyance.
GENERAL PROVISION - Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcel or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this Chapter are applicable for imports by sea, air or land, but not as baggage or postal despatch.

v Computerisation of custom work - Work of customs at Delhi airport has been computerised. Work at Mumbai port is also computerised. Whenever the work is computerised, documents like IGM and Bill of Entry have to be filed electronically. Procedure in computerised environment has been specified in CC, New Delhi PN 22/98 dated 8.5.1998. Guidelines for preparing data file for Bill of Entry and shipping bills for Mumbai Customs House has been prescribed vide PN 108/99 dated 30-9-1999 and PN 10/2001 dated 30.1.2001.
v Entry – ‘Entry’ in relation to goods means an entry made in a Bill of Entry, Shipping Bill or Bill of Export. It includes (a) label or declaration accompanying the goods which contains description, quantity and value of the goods, in case of postal articles u/s 82 (b) Entry to be made in case of goods to be exported (c) Entry in respect of goods imported which are not accompanied by label or declaration made as per provisions of section 84. [section 2(16)].
v Amendment of document - Importer, exporter or 'Person In charge' have to submit various documents to customs authorities like Bill of Entry, Import Manifest, Export Manifest etc. Some times, it may become necessary to amend the document due to various reasons like change in classification, clerical mistake in document, change in unloading / loading plan of vessel etc. In such case, permission to amend these documents have to be obtained from customs authorities. [section 149]. Such permission can be given if there are no fraudulent intentions.
In case of bill of entry, shipping bill or bill of export, it can be amended after clearance only on the basis of documentary evidence which was in existence at the time the goods were cleared, warehoused or exported, and not on basis of any subsequent document. [section 149].
v Customs Station - Imported goods are permitted to be unloaded only at specified places. Similarly, goods can be exported only from specified area. In view of this, definitions of ‘Customs Station’ is important.
Customs area means all area of Customs Station and includes any area where imported goods or export goods are ordinarily kept pending clearance by Customs authorities. Thus, ‘Customs Area’ could include some area even outside the ‘Customs Station’. Customs Station means (a) customs port (b) inland container depot (c) customs airport and (d) land customs station.
Section 7 of Customs Act empowers CBEC (Board) to appoint * Customs ports * Customs airports * Places for inland container depots * Coastal ports. These are appointed by issuing a notification. Section 8 authorises Commissioner of Customs to approve proper places in any customs port, customs airport or costal port for unloading and loading of goods or for any class of goods and specify the limits of customs area. Thus, the place (city / town / village etc.) is approved by CBEC, while exact location within that city / town / village is approved by Commissioner of Customs.

.
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.
v 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.
v 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.
v 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
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.
v 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’.
v 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.
v 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.
v 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].
v 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.
1.ASSESSMENT OF DUTY & 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 ‘Nil’ assessment.
v 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.
v 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.
.
2.ASSESMENT OF CUSTOM 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. Each group is under anAssistant/Deputy Commissioner.
v 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.
v 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)]. 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.
v 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.
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 & 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.
v “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. 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.
v “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.
3.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.
v Checking of duty drawback / license documents - Documents in respect of Duty Entitlement Pass Book (DEPB), advance license, duty drawback etc. will be checked.
v 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.
v 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 lumpsum 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.
v 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).
v 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)].
v 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.
v Out of Customs Charge Order - After goods is 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.
v Demurrage if goods not cleared - Heavy demurrage is payable if goods are not cleared from port within three days.

Bibliobraphy

v WWW.Google.com
v WWW.Scribd.com

v PPT Given by Prasanna Srinivasan.
.

METHODS OF PAYMENT

2009-09-20T07:38:00.000-07:00

Methods of Payment in International Trade BY SHRUTI

Methods of Payment in International Trade
To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown in figure 1.1, there are four primary methods of payment for international transactions. During or before contract negotiations, you should consider which method in the figure is mutually desirable for both you and your customer.
Figure 1.1. Payment Risk Diagram

Key Points
• To succeed in today’s global marketplace and win sales against International trade presents a spectrum of risk, which causes uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer).
• For exporters, any sale is a gift until payment is received.
• Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer.
• For importers, any payment is a donation until the goods are received.
• Therefore, importers want to receive the goods as soon as possible but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

Cash-in-Advance
With cash-in-advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, because it creates cash-flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. Cash in Advance/Prepayment occurs when a buyer sends payment in the agreed currency and through agreed method to a seller before the product is manufactured and/or shipped. Upon receipt of payment this seller then ships the goods and all the necessary shipping and commercial documents directly to the buyer.
Time of Payment
*Prior to manufacturing and/or shipping, through the agreed upon method (cash, wire transfer, check, credit card, etc.).
Goods Available to Buyer
*After payment is received.
Risks to Seller
*Product is manufactured and never paid for.
Risks to Buyer
*Seller does not ship per the order (quantity, product, quality, shipping method).*Seller does not ship when requested.
When Appropriate to Quote or Use
*When there is no established relationship between the buyer and seller.*Product is a special order and can only be sold to this specific buyer since it contains company logo, etc.*Seller is confident that importing country will impose regulations deferring or blocking transfer of payment.*Seller does not have sufficient liquidity or access to outside financing to extend deferred payment terms.
Financing
*Buyer must have cash or financing available.

Letters of Credit
Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects the buyer because no payment obligation arises until the goods have been shipped or delivered as promised. A letter of credit is a bank instrument that can be used to even the risk between a buyer and a seller since a buyer is guaranteed to receive payment if when he/she has complied with the exact requirements of this buyer. A letter of credit offers a seller numerous advantages but only if that seller complies exactly with its terms and conditions of the transaction. In addition to providing reduced risk for both a seller and a buyer, there are many variables that can be used with a letter of credit to reduce the political and commercial risks that may accompany the transaction as well as provide extended terms to a buyer through the letter of credit instrument.
The terminology that is used when working with letters of credit is very specific and should be understood.
Involved Parties:
Applicant = Buyer/ Importer
Beneficiary = Seller/Exporter
Opening Bank = Importer’s Bank >> Issues L/C
Advising Bank= Exporter’s Bank >> Advises L/C
Confirming Bank = Advising Bank or 3rd Party Bank >> Confirms L/C
Paying Bank = Any Bank as Specified in L/C >> Pays the Draft
Activities and Terms:
Advice – review and approval of L/C
Amendment – change to L/C
Confirmed – the commercial, political and economic risk of the transaction absorbed by the confirming bank
Discrepancy – mistake in the documentation
Documentation – documents required within L/C
Draft – negotiable order to pay
Sight Draft – payment assured upon shipment and presentation of documents in compliance with its terms
Time Draft – bank assurance of payment at the maturity of the banker’s acceptance with option of obtaining immediate funds by discounting the BA (30, 60, 90 days at sight or acceptance)
Irrevocable – cannot be changed without approval from beneficiary or advising bank
Issuance – opening of L/C
Negotiation – review of documents
Revocable – can be changed without approval of beneficiary or advising bank
Types of L/Cs:
Back-to-Back – credit and terms of a transaction rollover to a new transaction upon completion, which eliminates the need to apply or issue a new L/C for identical shipments
Confirmed – credit risk taken by bank and agreement to pay (fee charged)
Straight – payable only at paying bank
Negotiation – payable at negotiating bank
Sight – payable at acceptance of documents
Standby – used by the beneficiary for payment should the applicant not pay the exporter directly
Transferable – part or all of the proceeds from the L/C may be transferred to another party, used by sales brokers or agents to disguise buyers and sellers
Usance – time draft based on invoice, bill of lading, or documents, up to 180 days

Time of Payment
•As agreed between the buyer and seller and stipulated in the L/C, at sight of documents or acceptance of time draft.
Goods Available to Buyer
•Upon release of documentation and payment or acceptance of time draft.
Risks to Seller
•Delays in availability of foreign exchange and transferring of funds from buyer’s country if the L/C is not confirmed.•Payment blocked due to political events in buyer’s country if the L/C is not confirmed.
Risks to Buyer
•Seller creates documents to comply with L/C but does not ship actual product.•Seller does not ship.•Buyer ties up commercial lines of credit to secure L/C.
When Appropriate to Quote or Use
A seller should consider a number of factors:•corporate credit policy and ability to absorb risk•credit standing of the buyer•political environment in the importing country•type of merchandise to be shipped and value of the shipment•availability of foreign exchange•buyer and seller are establishing a new relationship•when buyer and/or seller’s governments require use of banks to control flow of currencies and products•products and/or services comply with quality steps during production and documentation is presented for payment•used less frequently in international transactions because of the high bank fees and time-consuming process
Financing
•Often a bank will favorably consider a request for an increase in a credit line to finance production of the goods. This is done with the knowledge that letters of credit have been opened and advised to an exporter for an export order. The bank may further require that the beneficiary assign its interest in the letter of credit to them.

FORMAT OF LC

FROM :( NAME & ADDRESS OF OPENING BANK )

TO :( NAME & ADDRESS OF ADVISING BANK )
(FOR Haldia Shipments ) STATE BANK OF INDIA OVERSEAS BRANCH KOLKATA SWIFT CODE
SBININBB106
(FOR Vizag Shipments ) STATE BANK OF INDIA OVERSEAS BRANCH VIZAG SWIFT CODE
SBININBB123
40A TYPE OF L/C :IRREVOCABLE
20 L/C Number :
31C DATE OF ISSUE :
31D DT. & PLACE OF EXPIRY : __________________________________IN INDIA
50 NAME & ADDRESS OF THE:
APPLICANT
51 NAME & ADDRESS OF THE: Steel Authority of India Limited,
BENEFICIARY Central Marketing Organisation,
40 J.N.Road, Calcutta-700001, India
32B AMOUNT OF CREDIT IN :
US DOLLARS /EURO/ANY
OTHER FREELY
EXCHANGEABLE CURRENCY
(IN FIGURES & WORDS)
39A PERCENTAGE CREDIT : AS PER CONTRACT
AMOUNT TOLERANCE
41A CREDIT AVAILABLE WITH: STATE BANK OF INDIA, KOLKATA/VIZAG
CREDIT AVAILABLE BY : PAYMENT
42C USANCE OF THE DRAFTS : AT SIGHT
42A DRAFTS TO BE DRAWN ON:
43P PARTIAL SHIPMENT : AS PER CONTRACT
43T TRANSHIPMENT : AS PER CONTRACT
44A SHIPMENT FROM :
44B SHIPMENT TO :
44C LATEST SHIPMENT DATE :
45A DESCRIPTION OF GOODS :
a) Description of Materials
b) Size ( in mm) (except for Pig Iron) and Quantity (in MT)
c) Specification
d) Tolerance (except for Pig Iron)
e) Quantity
f) Quantity Tolerance
g) Price per MT (in USD/Euro/any other freely exchangeable currency)
46A DOCUMENTS REQUIRED :
1. Beneficiary’s Commercial Invoice - one original plus two signed copies covering materials shipped.
Invoices will be raised on the basis of (THEORETICAL/ ACTUAL/ DRAFT SURVEY) WEIGHT.
2. Full set 3/3 original on board ocean or charter party Bills of Lading (CONGEN) issued to the order of
the Shipper and blank endorsed marked “Stowed under deck” further more marked “freight prepaid/freight payable as per
charter party/ freight to pay” evidencing shipment from __________ Port, India to ________ Port in ________ . Bills of
Lading (CONGEN) with remarks “Materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty
edges” and/or “unprotected cargo” and/or “said to be” and/or “said to weigh” and/or “stored in open area prior to loading”
are acceptable.
3. Works Test Certificate in duplicate issued by the Steel Plant (s) of the beneficiary and confirming that
the materials are as per contracted specification.
4. Pre- shipment Inspection certificate issued by M/s ., (herein after referred to as )
certifying the following:
(a) The materials were inspected prior to loading at the load port and that the markings were as per General Terms
and Conditions for Export(FOB) between beneficiary and the opener.
(b) Quantity loaded on board the vessel.
(c) The materials were loaded on board the vessel without apparent damage and were found to be in good order
and condition. That the loading was done under their supervision , and were properly lashed and secured (except for pig
iron) inside the hatches / holds of the vessel.
Remarks such as “materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty edges”
and/or “stored in open area prior to loading” and/or “unprotected cargo” appearing on Pre-shipment inspection certificate
are acceptable.
5. Beneficiary’s packing list (except for pig iron) indicating details of the materials shipped - 3 copies.
6. Certificate of origin.
7. Copy of Telex/e-mail or Fax from Steel Authority of India Limited, ________ / CALCUTTA/ NEW
DELHI addressed to the opener’s FAX No. __________ within FIVE working days after the on board Bill of Lading
(CONGEN) date advising the name of the vessel, Bill of Lading (CONGEN, materials an) number and date d quantity,
destination ports in __________ (Country).
47A ADDITIONAL CONDITIONS :
1. Ocean freight is payable by the openers over and above the value of this Letter of Credit.
2. Marine Insurance to be covered by the opener.
3. In the event of (a) the failure of the opener to nominate a suitable vessel within 21 days, including lay days , from
the date of beneficiary’s Notice of Readiness of cargo (herein after referred to as NOR) OR (b) the vessel nominated by the
opener and accepted by the beneficiary failing to arrive at __________ port within 21 days including lay days from the date
of NOR for reasons other than Force Majeure as defined under Clause 10 of the said contract OR (c) the vessel (nominated
by the opener and accepted by the beneficiary) being found unsuitable after its arrival at _______ Port as certified by
independent marine surveyors, this credit is payable at sight at your counters in Kolkata/Vizag against presentation of
beneficiary’s draft drawn on ourselves for 100 per cent value of invoice accompanied by the following documents:
a) Beneficiary's commercial invoice in duplicate.
b) Copy of Beneficiary’s Notice of Readiness,
c) One copy of Works Test Certificate issued by the Steel Plant (s) of the beneficiary.
d) Certificate issued by M/S ..............., certifying that the materials were inspected at the storage yard of the
beneficiary at ______ Port and that the markings are as per requirement of the said contract and that the materials are in
good condition and further that the materials and quantity as per the Commercial Invoice are ready for shipment.
Remarks such as “materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty edges’ and/or
‘stored in open area prior to loading’ and/or ‘unprotected cargo’ appearing in the Pre-Shipment Inspection Certificate are
acceptable.
e) Beneficiary’s declaration that suitable vessel has not been nominated by the opener within 21 days including lay
days from the date of NOR OR that the vessel nominated by the opener and accepted by the beneficiary failed to arrive at
________ Port within the agreed lay days for reasons other than Force Majeure as defined in Clause No. 10 of the said
contract OR that the vessel (nominated by the opener and accepted by the beneficiary) being found unsuitable after its
arrival as certified by the independent Marine Surveyors (copy of certificate of Marine Surveyors to be presented in such an
event) as the case may be.
f) Beneficiary’s declaration that (i) the materials as mentioned in the commercial invoice will be held in custody by
the beneficiary at the risk and responsibility of the opener at the storage yard of the beneficiary at Haldia/Vizag Port. (ii)
The materials will be covered by tarpaulin at the cost of the opener. (iii) The Materials shall be held by the beneficiary free
of ground rent for a period of 30 days from the date of payment (against documents negotiated under this clause) and for
storage extending beyond 30 days from the date of payment the ground rent calculated at the rate of USD 1.00 per metric
tonne for 15 days or part thereof upto 30 days shall be paid by the opener to the beneficiary and for the period beyond this
till the date of acceptance of vessels’s NOR, when the vessel finally calls at the loadport, the cost of holding the materials
shall be paid by the opener to the beneficiary at the rate of US $ 1 per metric tonne for every week(s) (7 days) or part
thereof. (iv) Upon nomination of suitable vessel within reasonable time by the opener for taking delivery of the materials for
which payment has been realized by the beneficiary as aforesaid and subject to such vessel arriving at Haldia/Vizag Port
within the agreed lay days, the beneficiary shall at his cost deliver FOB (Stowed) as per terms of the said contract the
materials for which payment has been realized by the beneficiary as aforesaid.
4. Any amendment to the letter of credit without the prior written consent of the beneficiary shall not be taken cognizance of
under this letter of credit.
71B CHARGES :
All Bank charges incurred outside India shall be borne and paid for by the opener.
All Bank charges incurred in India shall be borne and paid for by the beneficiary.
48 PERIOD FOR PRESENTATION :
Within 21 days from the date of B/L.
49 CONFIRMATION INSTRUCTIONS:
Paying Bank may add their confirmation to this Letter of Credit at the request and expense of the beneficiary and
such confirmation shall also apply to any amendment (s) to this credit.
78 REIMBURSEMENT INSTRUCTIONS:
Upon presentation of documents complying in all respects to Letter of Credit terms, the negotiating bank is
authorised to claim on us by tested telex certifying that all terms and conditions have been complied with and that the
relative documents have been forwarded to us by Registered Airmail/ Courier. We undertake to remit within two working
days after receipt by us of your tested telex/swift claim in US Dollars/Euro/any other freely exchangeable currency in
accordance with your instructions. This Letter of Credit is subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision) International Chamber of Commerce Brochure No. 500. This telex/swift may be treated as the
operative instrument.
All apparent spelling mistakes/mistakes in LC documents, which do not alter
meaning/specification/description/Quantity/value of goods are acceptable and will not count as a discrepancy

Documentary Collections
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporter’s bank), which sends documents to a collecting bank (importer’s bank), along with instructions for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The draft gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment. Drafts are generally less expensive than LCs. Using a documentary collection process requires that a seller ship the product and create a negotiable document, usually a draft or bill of exchange. The draft and shipping documents are then processed either through a buyer’s bank (the collecting bank) or through the seller and buyer’s banks. Upon arrival at the buyer’s bank, the buyer is notified to make payment; then the documents are released and used to clear the shipment through customs upon arrival.
The primary advantage of documentary collections is that a seller who extends credit terms to a buyer under a D/A collection obtains an enforceable debt instrument in the form of a trade acceptance. The seller’s rights to payment are protected under the negotiable instruments law of that buyer’s country. In the event this buyer defaults or delays payment at maturity, the possession of the trade acceptance may put the seller in a stronger position before the court than if he/she had sold under open account, in which evidence of indebtedness is provided by the unpaid commercial invoice alone. In addition, a bank presenting a collection on behalf of a seller may obtain prompt payment from a buyer who might be inclined to delay payment if the seller were invoicing under open account.
A documentary collection is best used for ocean shipments where original bills of lading are required. An original bill of lading is a document of title which enables a buyer to gain possession of the goods. When all the originals of a bill of lading are sent to the collecting bank, it is in the interest of the buyer to effect payment in order to obtain title to the goods.
Documentary collections may be more competitive than letter of credit terms because they are less costly and do not require the buyer to tie up his/her local bank credit lines.
There are a variety of terms associated with documentary collections that should be understood:
Buyer = Importer
Seller = Exporter
Remitting Bank = Exporter’s Bank >> receives payment
Collecting Bank = Importer’s Bank >> transmits funds from buyer to seller
Bill of Exchange/Draft – document issued by exporter and used for remittance of funds
Time/Usance Bill of Exchange – tenured at 30, 60, 90, 120 or 180 days, etc.
There are four types of processes available to buyers and sellers:1. D/P – Documents against Payment2. D/A – Documents against Acceptance3. Clean Collection4. Cash Against Documents
D/P – Documents against Payment
The export documents and the bill of exchange provided to a collecting bank are only made available to an importer when payment is made. The collecting bank then transfers the funds to the seller through the remitting bank.
D/A – Documents against Acceptance
The export documents and a time/usance bill of exchange are sent to a remitting bank. The documents are then sent to a collecting bank with instructions to release the documents against a buyer’s acceptance of the bill of exchange.
Clean Collection
The exporter creates a bill of exchange, which is sent without any export documents to a buyer for collection through the remitting bank to the collecting bank. There is less security for an exporter since the documents are sent directly to the importer.
Cash Against Documents
This process lacks the security and legal protection of a documentary collection since the exports documents are sent through a remitting bank to a collection bank without a bill of exchange. It is, however, still a collection through the banking system.
Time of Payment
*Either at sight of documents or acceptance as agreed to by the parties (30, 60, 90 days after acceptance).
Goods Available to Buyer
*Upon arrival of goods after payment or acceptance of draft has been made.
Risks to Seller*Buyer defaults on payment obligation.*Delays in availability of foreign exchange and transferring of funds from buyer’s country.*Payment blocked due to political events in buyer’s country. Risks to Buyer*Seller does not ship per the order (quantity, product, quality, shipping method).*Seller does not ship when requested, either early or late.
When Appropriate to Quote or Use
*Seller and buyer have done some business together and are transitioning away from a prepayment policy.*Seller has some trust that buyer will accept shipment and pay at agreed time.*Seller is confident that importing country will not impose regulations deferring or blocking transfer of payment.*Seller has sufficient liquidity or access to outside financing to extend deferred payment terms.
Financing
*Seller finances buyer through deferred payment terms. *Seller can use trade acceptances, which are negotiable instruments, to obtain financing.*Leverage /or financing comes from domestic/global business.

Open Account
An open account transaction is a sale where the goods are shipped and delivered before payment is due, which is usually in 30 to 90 days. Obviously, this option is the most advantageous option to the importer in terms of cash flow and cost, but it is consequently the highest risk option for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. However, the exporter can offer competitive open account terms while substantially mitigating the risk of non-payment by using of one or more of the appropriate trade finance techniques, such as export credit insurance. Open account occurs when a seller ships the goods and all the necessary shipping and commercial documents directly to a buyer who agrees to pay a seller’s invoice at a future date.
Time of Payment
•As agreed between a buyer and seller, net 15, 30, 60 day terms, etc., from date of invoice or bill of lading date.
Goods Available to Buyer
•Before payment (depending on how the products are shipped and the length of payment option).
Risks to Seller
•Buyer defaults on payment obligation.•Delays in availability of foreign exchange and transferring of funds from buyer’s country occur.•Payment is blocked due to political events in buyer’s country.
Risks to Buyer
•Seller does not ship per the order (product, quantity, quality, and/or shipping method).•Seller does not ship when requested, either early or late.
When Appropriate to Quote or Use
•Seller has absolute trust that buyer will accept shipment and pay at agreed time.•Seller is confident that importing country will not impose regulations deferring or blocking transfer of payment.•Seller has sufficient liquidity or access to outside financing to extend deferred payment terms.•Used more regularly in international transactions to avoid high banking fees.
Financing
•Seller finances buyer through deferred payment terms.•Seller may be able to obtain bank financing through pledge of receivables.•Selling receivables on a non-recourse basis to a bank.•Leverage and/or financing from domestic/global business.

UCP 600 LEAFLET FORMAT: UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS

ICC Uniform Customs and Practice for Documentary Credits UCP 600 Leaflet Format ICC Publication No. 600L, 2006 Edition UCP 600 Leaflet Format $ 389.95 The leaflet contains the full text of the UCP 600 (including the 12 articles of the eUCP, governing presentation of documents in electronic or part-electronic form) in a handy format: - ICC Publication No. 600L - 8 page, fold-out Leaflet, size 21 x 29.7 cm - Sold in sets of 25 Leaflets UCP 600 came into effect on 1 July 2007. It contains significant changes you will need to know, including: A reduction in the number of articles from 49 to 39; * New articles on "Definitions" and "Interpretations" to provide more clarity and precision in the rules; * The replacement of the phrase "reasonable time" for acceptance or refusal of documents by a firm period of five banking days; * New provisions which allow for the discounting of deferred payment credits; * A definitive description of negotiation as purchase of drafts of documents. The new UCP 600 also contains within the text the 12 Articles of the eUCP, ICC's supplement to the UCP governing presentation of documents in electronic or part-electronic form. Used by letter of credit practitioners worldwide, the Uniform Customs and Practice for Documentary Credits (UCP) are the most successful private rules for trade ever developed. Bankers, traders, lawyers, transporters, academics and all who deal with letter of credit transactions worldwide, will refer to UCP 600 on a daily basis.

What is the UCP 600?

The UCP 600 (“Uniform Customs & Practice forDocumentary Credits”) is the official publication
Issued by the ICC (International Chamber of Commerce).
The UCP provisions have determined the rules of engagement between the various parties to a LC(Letter of Credit) and in particular between the banks
involved in a transaction in some capacity.The current version of the UCP - UCP 500 - has been in force since1993 and is now to be replaced with the revision
titled “UCP 600”
The UCP 600 has taken over 3 years to develop and deliver a more proactive business oriented set of rules for those involved in international trade.

When does UCP 600 come into effect?
The UCP 600 comes into effect from 1st July 2007.All banks are expected to issue new LCs under the UCP 600 guidelines from that date. Existing LCs
covered by earlier versions of UCP will continue until their maturity.

MUST HAVE” KNOWLEDGE ABOUT UCP 600

The revision, which came into effect on July 1, 2007, incorporates a number of changes from the UCP 500. These changes include:

* A reduction in the number of articles from 49 to 39
* New articles on “Definitions” and “Interpretations” providing more clarity and precision in the rules
* A definitive description of negotiation as “purchase” of drafts of documents
* The replacement of the phrase “reasonable time” for acceptance or refusal of documents by a maximum period of five banking days
* New provisions allow for the discounting of deferred payment credits
* Banks can now accept an insurance document that contains reference to any exclusion clause

Everyone involved with a Letter of Credit needs to be knowledgeable about the way these “rules” apply to their transaction. These rules affect all parties involved in transactions covered by documentary credits including:

* Banks and other institutions that issue, confirm, or otherwise process them
* Buyers (applicants) who cause them to be issued
* Sellers (beneficiaries) who look to them for payment
* Service providers such as forwarders, carriers, customs brokers who provide or use the documents that the credits stipulate

NEW UCP 600: Changes & Opportunities”

INTRODUCTION
Documentary Letter of Credit is the main method of payment in international trade transaction. This payment method is considered easy, safe and protects the interest of involved parties. Approximately 14% of world trade payments roughly equivalent to US1 Trillion per year is settled by using Letter of Credit.

COMPLIANCE MANAGEMENT
As per survey of various organizations, more than 70% of documents presented under L/Cwere rejected on first presentation on flimsy discrepancies. While handling letter of credittransaction parties involved has to understand compliance management of commercial & financial documents. Presentation of flawless documents is essential to good export L/C management where banks decide the compliance and payments.

LETTER OF CREDIT & PAYMENT ISSUES
Letter of Credit is considered to be safe instrument for payment settlement in internationaltrade transactions. In certain cases due to efforts of finding motivated discrepancies L/C system failsto produce desired results of protecting interest of involved parties. Documents under L/C arerejected not for late shipment or on the basis of solid reasons but using certain minor defects or misinterpretation of the condition to serve their bad motives. Such approach result in rejecting of the payment or delays causing increase in cost of export transaction. Some of the banks have prescribed charges for discrepancy found in each document to add further cost to L/C transaction.
Disputed cases due to misinterpretation, misunderstanding and misapplication of practices are increasing all over the world.

NEED FOR CHANGE OF RULES
To address these issues and other relating concern, a consulting group at ICC wasconstituted to review latest developments in banks, transport, insurance, international trade environment etc. The objective of UCP is to create a set rules that would establish uniformity in practicesfollowed by involved parties in the handling L/C. UCP represents the work of a private internationalorganization ICC which insists on self regulations. UCP remains the most successful set of private rules for international trade ever developed.

ROLE OF ICC
A significant function of ICC is the preparation & promotion of its uniform rules ofpractices so to ensure same interpretation all over the world. ICC rules of practice are designed by banks merchants and not by local and political considerations. The rules accordingly represent the need, customs & practices of international business. Revision incorporates the change in practices and new problems/issues of the commercial parties. Primary objective is to encourage the flow ofinternational trade. The aim was to create a set of contractual rules that would establish uniformity in practice so that there would be less need to misinterpretation.

Uniform Customs and Practice for Documentary Credits

The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. The UCP is utilised by bankers and commercial parties in more than 175 countries in trade finance. Some 11-15% of international trade utilises letters of credit, totalling over a trillion dollars (US) each year.

Historically, the commercial parties, particularly banks, have developed the techniques and methods for handling letters of credit in international trade finance. This practice has been standardized by the ICC (International Chamber of Commerce) by publishing the UCP in 1933 and subsequently updating it throughout the years. The ICC has developed and moulded the UCP by regular revisions, the current version being the UCP600. The result is the most successful international attempt at unifying rules ever, as the UCP has substantially universal effect. The latest revision was approved by the Banking Commission of the ICC at its meeting in Paris on 25 October 2006. This latest version, called the UCP600, formally commenced on 1 July 2007.

ICC and the UCP

A significant function of the ICC is the preparation and promotion of its uniform rules of practice. The ICC’s aim is to provide a codification of international practice occasionally selecting the best practice after ample debate and consideration. The ICC rules of practice are designed by bankers and merchants and not by legislatures with political and local considerations. The rules accordingly demonstrate the needs, customs and practices of business. Because the rules are incorporated voluntarily into contracts, the rules are flexible while providing a stable base for international review, including judicial scrutiny. International revision is thus facilitated permitting the incorporation of the changing practices of the commercial parties. ICC, which was established in 1919, had as its primary objective facilitating the flow of international trade at a time when nationalism and protectionism threatened the easing of world trade. It was in that spirit that the UCP were first introduced – to alleviate the confusion caused by individual countries’ promoting their own national rules on letter of credit practice. The aim was to create a set of contractual rules that would establish uniformity in practice, so that there would be less need to cope with often conflicting national regulations. The universal acceptance of the UCP by practitioners in countries with widely divergent economic and judicial systems is a testament to the rules’ success.

UCP600

The latest revision of UCP is the sixth revision of the rules since they were first promulgated in 1933. It is the fruit of more than three years of work by the ICC's Commission on Banking Technique and Practice.

The UCP remain the most successful set of private rules for trade ever developed. A range of individuals and groups contributed to the current revision including: the UCP Drafting Group, which waded through more than 5000 individual comments before arriving at this final text; the UCP Consulting Group, consisting of members from more than 25 countries, which served as the advisory body; the more than 400 members of the ICC Commission on Banking Technique and Practice who made pertinent suggestions for changes in the text; and 130 ICC National Committees worldwide which took an active role in consolidating comments from their members.

During the revision process, notice was taken of the considerable work that had been completed in creating the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 645. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit. It is the expectation of the Drafting Group and the Banking Commission that the application of the principles contained in the ISBP, including subsequent revisions thereof, will continue during the time UCP 600 is in force. At the time UCP 600 is implemented, there will be an updated version of the ISBP to bring its contents in line with the substance and style of the new rules.

Reference : Nabhi publication
Usha Kiran Rai (Prentice Hall)
M.I Mahajan
INTERNET

By :- Shruti

Dress Notice

2009-09-19T08:28:00.000-07:00

All must come in formals from next class ,whichever day going .
so wear the tie too . And is rules are not followed they the following penalty .
- Reduction of half marks per day in case of formals

COPYRIGHTS

2009-09-18T03:38:00.001-07:00

This is been informed to all the students that they are responsible for the copyrights of the data which they publish on this blog . So all have to take care of the copyrights of the data too while sending me . I will or the Tejinder Sir does not holds any resposibility in case of copyrights voilation for posting the material .

SOURCES OF SECONDRY DATA

2009-09-16T03:08:00.000-07:00

Sources of data (secondary)– by megha and shivani 16 sept 2009
www.indianseaports.com
Introduction- Covers the activities of the 15 Indian sea ports. The domain www.indianseaports .com is owned by Seven Hills Technology &Solutions Ltd, here in referred to as Seven Hills, a company incorporated under the provisions of the companies act 1956 and having its corporate office at Plot no.107, Road no.72, Jubilee Hills Phase-III, Hyderabad - 500033 Andhra Pradesh, INDIA.
Type of information provided-
The ports in India are divided into major ports (11), medium ports (19), minor ports (15), and private ports (4).
This website provides information only to the members, about the Indian ports, like the average number of vessels coming to that port, the routes and it also provides a shipping directory of all the shipment companies which come to India or leave from India.
It also provides a facility for tracking the containers shipped and about the distances between various ports in India and around the world. It provides a detailed account of shore facilities and port restrictions of the various ports and lastly it provides the facility of various maps.

www.indiacatalog.com
Introduction- A web directory where you can find information on any kind of business organization or service provider in India and the related global sites.
Type of information- Several directories are formed under various heads like:
Automobiles, agriculture and forestry, aviation industry, business services, chemicals, computers, IT/ITES, educational, electronics, tourism, immigration, real estate, intelligence, etc.
Directory is also categorized under the city names.
Each head is then further classified like the head business services is be further categorized as:
Banks, financial institutions, courier and shipping services, financial consultants, insurance, health care, investment banks, legal services/law firms, office supplies, trade fair organizations, mutual funds, hospitals, job placement agencies, matrimony, phone cards to India, chambers of commerce, stock exchanges, stock brokers, venture capital firms, ports, foreign banks, money transfer, packers and movers, financial advisors, customer retail, personal services, baby care, etc.
Again under each of these heads the total numbers of recognized agencies are listed and their web addresses are also added for further inquiry.
For each services information on their foreign competitors is also available.

www.sec.gov
Introduction- SEC stands for US Securities and Exchange Commission. The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. SEC is a federal agency established by the securities exchange act of 1934. The SEC’s headquarters are in Washington, D.C., and it has 11 regional offices located throughout the country.
Type of information-
SEC issues various publications for the interest of the investors around the globe.
Its publications include:
American Depositary Receipts
Arbitration
Auditing
Bankruptcy
Banks and Banking
Bonds
Brokers and Brokerages- Online, Electronic Accounts
Certificates of Deposit
Corporations — Directors and Officers
EDGAR (SEC's online database of company reports)
Financial Statements
Fraud - Identity Theft
Futures
Hedge Funds
Insider Trading
Insurance - equity-indexed annuities, life, variable annuities
Investment Advisers, Advisors
Investment Clubs
Investment Companies
Investments - calculators, planning, foreign (non-U.S.), Internet, prepaid tuition, college savings plan, products, choices, research, education, retirement income
Investors –accredited investors, complaints, investigations, foreign (non-U.S.), privacy rights, protections, seniors
Mutual Funds
Options
Promissory Notes
Securities Investor Protection Corp.
Small Business
Stock - Certificates, Dividends, Exchanges, Indexes, Prices
Tender Offers
Trading Securities - day trading, electronic trading, margin, purchase agreements, laws, rules and regulations
US Securities and Exchange Commission - divisions and offices guides, handbooks, research tools.

4. www.ecr.ca
ECR-Efficient Consumer Service
It is an industry cost reducing initiative of North American councils and industries. Its main sponsors are : Electronic Commerce Council of Canada(ECCC) , Canadian Council of Grocery Distributors(CCGD) , ETC.

TYPE OF INFORMATION: Companies throughout the grocery industry are working together to find ways to eliminate inefficient practices that are not value added to the consumers , so they research about this industry and consumers.

PUBLICATIONS: Partners in Customer Service (1997)
1998 EDI Business Process Survey Results
Transportation-A critical link in the grocery industry supply chain (1995)

5. www.economywatch.com/asian-developmentbank

ADB: ASIAN DEVELOPMENT BANK
Bank established for the help of its member countries having head office at Asian Development Bank P.O. Box 789, Manila, Philippines.
sdbs.adb.org

TYPE OF INFORMATION:
Its Statistical Database System stores macroeconomic and social data of its developing member countries.

It has annual data on national accounts, prices, and govt.
Finance, trade, BOP, money and banking, external debt, population and social indicators.

6. www.aimoindia.com

AIMO: ALL INDIA MANUFACTURES ORGANISATION
Established for the help of govt and member countries in making polices and representing in other countries. Its head office is at D7 , Ambattur Industrial Estate , Chennai – 600 058 , India.
Regd. Office: Round table House , 2nd floor , 80/69 Nengam bakkam, high road , Chennai.

TYPE OF INFORMATION: Mainly it provides information on trade shows , trade fairs organizers and exhibitions.
It publishes journals , reports , etc time to time for the help of its members.

7. www.icar.org.in

ICRA: INDIAN COUNCIL OF AGRICULTURAL RESEARCH
It is a govt. organization which conducts and promotes research and training in the field of agriculture and allied sciences.
Head Quarter: New Delhi

TYPE OF INFORMATION: It provides information on agricultural products and irrigation facilities. It provides information on seeds and facilitate research in new generation of seeds.

8. www.bnai.com

BNA INTERNATIONAL:
This is a certified company founded in 1929 and was incorporated as employee – owned company in United States.

TYPE OF INFORMATION:
It gives accurate news and detailed analysis of world wide legal developments. It provides information and suggestions especially on:
INTERNATIONAL TAX, IP, COMMUNICATION AND TECHNOLOGY,
BUSINESS AND FINANCE

LATEST REPORT: ‘GROWING MARKET IN EAST AND SOUTH ASIA’

9. www.thunderbird.edu
www.wiley.com
THUNDERBIRD INTERNATIONAL BUSINESS REVIEW:
This is a JOURNAL which is published by Willey in cooperation with THUNDERBIRD SCHOOL OF GLOBAL BUSINESS MANAGEMENT . It is a peer – reviewed journal that is published six times in a year.
TYPE OF INFORMATION: Its aim is to advance and disseminate research in the field of international business.
This journal covers various aspects and challenges of global business i.e. Human management, marketing , economic, social , political etc.
LATEST PUBLICATION: “AFRICA IS OPEN FOR BUSINESS”
On July 1 2009

10. www.ifad.com
IFAD: INTERNATIONAL FUND FOR AGRICULTURE DEVELOPMENT:
It is a agency of United Nations established in 1977 for the development of agriculture and rural areas.
Head Office: Via Poalo di Dano,
142 Rome, Italy

TYPE OF INFORMATION: It collects information on agriculture and rural areas. It publish its reports on this areas periodically .
PUBLICATIONS: Rural Poverty Report
Advocacy and Public Information

11. www.oecd.com
OECD: ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT:
It is a organization of 30 countries for economic development.
Head Office: OECD
2, rue Andre Pascal
F- 75 775 Paris Cedex 16
France
TYPE OF INFORMATION: It is best known for its outlooks , country surveys , and statistics and you will find that publications cover a wide variety of topics, all dedicated to help govt. and citizens on the challenges of a globalised world.

LATEST PUBLICATION: OECD Economic Survey of Iceland
18 – Aug - 2009

12. UNIVERSITY OF HELSINKI
CITY LIBRARY’S ANNUAL REPORT – 17- Aug – 2009
Report about cruise liners at Baltic Sea and Helsinki
DATA ANALYSIS MINES INFORMATION - JOURNAL
HUB – Helsinki University Bulletin
13. WHO: WORLD METEOROLOGICAL ORGANISATION
Bulletin, Journals, etc on services for transportation
PUBLICATION: Meteorological services to aviation

14. ARC ADVISORY GROUP:
It is a company which do periodic MARKET ANALYSIS
And publish its report time to time
PUBLICATION: Flowmeters – Coriolis – 17- Aug – 2009
Type: Sensors and field devices

Automation Expenditures for Minning and Metal Industry - 6- Jan-2009

Topic covered

2009-09-15T11:08:00.003-07:00

What to export
Where to export
When to export
Why to export
How to export

(a)FT Policy

(b)Methods of payments

Notice

2009-09-15T11:01:00.000-07:00

ASSIGNMENT NOTICE
This is informed to all MIB final student that all have to
submit their assigement according to schedule.
Lat date 17sept2009
If not submitted then starting reduction of marks
Half mark per day after due date
CLASS NOTICE
This is intimated to all the mib 3rd students that sir is going to anounce date of test this week any day , so all must come in the documentation and logistics class daily .
date : 30 sept. onwards
Presentation on 6th october
-Megha will present on the Discrepencies finding in Export-import
-Shushil will present on the ICD
ABOUT THE TOPICS
Everybody who is left now , must take their topic for assignment another five marks will reduce directly from their internal .

DAILY CLASS REPORT

2009-09-15T08:41:00.000-07:00

FREIGHT RATE IN DIFFERENT COUNTRY by Manish

From Kandla To Jebal Ali(Dubai) : 20' USD236 & 40' USD356
From Kandla to Port Luice : 20' USD1256

From Mumbai to Jebal Ali : 20' USD156 & 40' USD206
From Mumbai to Port Luice : 20' USD1156
FROM : -OASIS SHIPPING & LOGISTICS PVT. LTD.Laxminarayan Chamber.Ground Floor, plot no.140. sector-1/A. GANDHIDHAM. Kutch (GUJARAT)TELE no.02836 232729/30 FAX no.02836 228554Cell # +91 98985 14347
short presntation of SGS by sheetal
four types of document :-
1. commercial document
2. regulatory document
3. transport document
4. document required by the importer
1,commercial document included L/C , invoice, paking list
2.regulatory document included shipping bill, export-import licence, GSP, certificate of origin, duty drawback
3. transport document included bill of lading, airway bill, lorry receipt, railway receiptinvoices are 4 types:-
1. commercial invoice
2. custom invoice
3. legalised invoice
4. counsler invoice types of bill of lading:-
1. clean bill of lading
2. claused bill of lading
3. straight bill of lading
4. multimodel bill of lading
MARINE INSURANCE:- three types of marine insurance are
1. institute classification caluse (a),(b), (c) two types of insurance:-
1. consignmen twise
2. open cover

Excise clearance:- by Reena
it is preliminary the revenue clearance.there is two types of goods
1. excisable goods
2. nonexcisable goods how this particular clearance is achived:-
1. pay excise duty
2.proof of export
3.claim the exemption problemin this:-
time is major problem
another method is
export under bond:-
prepare bank guarantee towards the tax authorities.the important invoice of excise clearance is ARE-1 PROOF OF EXPORT:- stamped by the the custom inspector in the port of loading
2.VAT:- (value added tax) when you export the goods than you have to submmited the FORM-H exemption:-
OCTORI:- FILL FORM -N PRESHIPPMENT INSPECTION AND QUALITY CONTROL:-
QUALITY IS A SYSTEM ,
QUALITY IS ARESULT

INCO Terms: BY CHINKI ON 15 SEPT
The INCOTERMS (International Commercial Terms) is a universally recognized set of definition of international trade terms, such as FOB, CFR & CIF, developed by the International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller.
Modes of payment in exports (payment terms):
The commonly used methods of payment are:
1. Advance payment.
2. Documents against cash.
3. Documents against acceptance.
4. Letter of credit.
5. Consignment sales.
Advance payment:
Of all the method of payment, advance payment is the method in which seller has minimum risk. The exporter’s financial strength increases if the buyer is ready to pay in advance. The buyer runs a risk of non-delivery or delayed delivery, will pay in advance only to an established exporter or to a regular client.
Documents against cash:
In this method the buyer’s bank and shipping company are also involved. When seller dispatches the goods through the shipping line, the shipping company issues a bill of lading (B/L); bill of lading is an undertaking by the shipping company to transport the material to the destination and hand it over to the consignee against original documents. Then the seller sends the original documents to the buyer’s bank with the request to transmit the documents to the buyer on full payment. By producing the original B/L the consignee can take the delivery of goods from the shipping company.
Documents against acceptance:
The only difference between this and the previous method is that the seller gets the advantage of credit period. The seller can get the documents from the bank against a written declaration of making the payment till a certain date instead of paying cash at sight.
Letter of credit (L/C):
L/C is an undertaking by the buyer’s bank to make the payment to the beneficiary upon compliance of certain terms and conditions.

UCP 600 BY MANISH
ARTICLE CONTENTS
Article 1 Application of UCP
Article 2 Definitions
Article 3 Interpretations
Article 4 Credits v. Contracts
Article 5 Documents v. Goods, Services or Performance
Article6 Availability, Expiry Date and Place for Presentation
Article 7 Issuing Bank Undertaking Article 8 Confirming Bank Undertaking
Article 9 Advising of Credits and Amendments
Article 10 Amendments 10
Article 11 Teletransmitted and Pre-Advised Credits and Amendments
Article12 Nomination
Article 13 Bank-to-Bank Reimbursement Arrangements
Article 14 Standard for Examination of Documents
Article 15 Complying Presentation
Article 16 Discrepant Documents, Waiver and Notice
Article 17 Original Documents and Copies
Article 18 Commercial Invoice
Article 19 Transport Document Covering at Least Two Different Modes of Transport
Article 20 Bill of Lading Article21 Non-Negotiable Sea Waybill
Article 22 Charter Party Bill of Lading
Article 23 Air Transport Document
Article 24 Road, Rail or Inland Waterway Transport Documents
Article 25 Courier Receipt, Post Receipt or Certificate of Posting
Article 26 "On Deck", "Shipper's Load and Count", “Said by Shipper to Contain” and Charges Additional to Freight
Article 27 Clean Transport Document
Article 28 Insurance Document and Coverage
Article 29 Extension of Expiry Date or Last Day for Presentation
Article 30 Tolerance in Credit Amount, Quantity and Unit Prices
Article 31 Partial Drawings or Shipments
Article 32 Instalment Drawings or Shipments
Article 33 Hours of Presentation
Article 34 Disclaimer on Effectiveness of Documents
Article 35 Disclaimer on Transmission and Translation
Article 36 Force Majeure
Article 37 Disclaimer for Acts of an Instructed Party
Article 38 Transferable Credits
Article 39 Assignment of Proceeds

Export contract: BY MEGHA NAYYAR ON 30 SEPT
A contract is any agreement that has legal binding on the parties involved. There are certain, peculiar characteristics of international trade contract which are not present in those for sales of goods in the domestic market. For example, they may agree to adopt the Law of either country, buyer’s or seller’s and any other specifications.
In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important conditions of the trade deal.
The different aspects covered under an export contract are as under:
Names and addresses of the buyer and the seller
Name and address of the consignee
Product, Standards and Specifications
Price (with INCO terms)
Quantity
Inspection
Total Value of Contract
Terms of Delivery
Taxes, Duties and Charges
Period of Shipment
Credit period
Tolerance
Packing, Labeling and Marking
Terms of Payment-- Amount/Mode & Currency
Licenses and Permits
Insurance
Documentary Requirements
Arbitration clause
Proforma invoice:
Proforma invoice is another option that can be used by regular trading parties instead of the contract. Proforma invoice is a non-negotiable document issued by the seller. Proforma invoice in itself does not carry any commercial meaning but it is the basis for all other commercial documents.
Opening of L/C:
After the various terms and conditions are finalized among the two trading parties, the buyer next applies for opening up of an L/C. Once the L/C is issued the next step for the seller is to process the order.
Processing of export order:
The steps involved in processing of an export order are:
· Sourcing: Sourcing is getting the right quality material at right place at right time. It can be internal as well as external. For a merchant exporter sourcing is external while in the case of a manufacturer exporter sourcing is internal. In case of internal sourcing a manufacturer exporter has to finalize the last date of dispatch of material from the factory, for this purpose he has to use backward calculation method from the last date of shipment.
· Dispatch from the factory: After the product is produced it is ready shipment. An exporter has the facility to stuff the cargo in the factory premises only. For that purpose the CHA applies to the customs dept for a container to be sent in the factory for stuffing.
While stuffing of cargo the following steps are covered. Firstly the container and the product is checked by the excise officer and the quality inspector. Then after the goods are loaded in to the container, the container is locked and sealed by the one time excise seal.

PRESENTATION OF L/C BY SANGEETA ON 29 SEPT

packing list

commercial invoice

shipping certificate

insurance certificate

TOPICS COVERED ON 6th OCTUBER
Sharing of training knowledge by way of presentation by:
Ø SUSHIL (30)
Ø MEGHA (04)
ICD (Inland Container Deport) BY SUSHIL
MEANING
ICD is short term for Inland Container depot. This is related to deals in India specifically. The ICD is usually a place where there is no sea port & located in different locations in the country as designated by Indian Customs.Most of them are well connected by rail & serve the importers/exporters who are located away from the seaports.It is a way of decongesting the main ports where containers are kept for customs clearance & inspection.
FUNCTIONs OF ICDs/CFSs
The primary functions of ICD/CFS may be summed up as under:
a. Receipt and dispatch/delivery of cargo.
b. Stuffing and stripping of containers.
c. Transit operations by rail/road to and from serving ports.
d. Customs clearance.
e. Consolidation and desegregation of LCL cargo.
f. Temporary storage of cargo and containers.
g. Reworking of containers.
h. Maintenance and repair of container units.

THE OPERATIONS OF THE ICDS/CFSS REVOLVE AROUND THE FOLLOWING CENTRES OF ACTIVITY:-
1. Rail Siding (in case of a rail based terminal): The place where container trains are received, dispatched and handled in a terminal. Similarly, the containers are loaded on and unloaded from rail wagons at the siding through overhead cranes and / or other lifting equipments.
2. Container Yard : Container yard occupies the largest area in the ICD.CFS. It is stacking area were the export containers are aggregated prior to dispatch to port, import containers are stored till Customs clearance and where empties await onward movement. Likewise, some stacking areas are earmarked for keeping special containers such as refrigerated, hazardous, overweight/over-length, etc.
3. Warehouse: A covered space/shed where export cargo is received and import cargo stored/delivered; containers are stuffed/stripped or reworked; LCL exports are consolidated and import LCLs are unpacked; and cargo is physically examined by Customs. Export and import consignments are generally handled either at separate areas in a warehouse or in different nominated warehouses/sheds.
4. Gate Complex: The gate complex regulates the entry and exist of road vehicles carrying cargo and containers through the terminal. It is place where documentation, security and container inspection procedures are undertaken.

BENEFITS OF ICDs/CFSs
The benefits as envisaged from an ICD/CFS are as follows :-
The main benefits from ICDs/CFSs
1. Concentration points for long distance cargoes and its unitisation.
2. Service as a transit facility.
3. Customs clearance facility available near the centres of production and consumption
4. Reduced level of demurrage and pilferage.
5. No Customs required at gateway ports.
6. Issuance of through bill of lading by shipping lines, hereby resuming full liability of shipments.
7. Reduced overall level of empty container movement.
8. Competitive transport cost.
9. Reduced inventory cost.
10. Increased trade flows.

DISCREPANCIES IN L/C BY MEGHA
The dictionary meaning of discrepancy is a difference between conflicting facts or claims or opinions and L/C that (1) does not comply with the terms and conditions under which it was established, (2) is without a required item of information, or (3) the information provided is inconsistent with the associated documents. The issuing bank of a discrepancy L/C is not obliged to pay its beneficiary and (if it is a confirmed L/C) nor is the confirming bank. Such L/Cs are normally referred back to the buyer or importer (the 'account party') for instructions.
TYPES OF DISCREPANCIES
1. Bill of exchange
In bills of exchange mainly following types of discrepancy may occur:
· L/C reference no. may not match( mainly copy paste problem)
· Tenure may not match
· Swift code may not match
2. Invoice
As far as invoice is concerned following should be considered
· No.s to be marked as original
· No.s to be marked as copy
· Merchandise and description of goods
3. Insurance
· Insurance should be done in the currency of L/C only
· Date should be on or before
· The date of L/C
· Insurance policy should not be covered with insurance certificate
· Insurance amount is always 10% more than the actual amount
4. Transport
5. Bill of lading
· B/L should be clean
· Port of destination should not differ

EXPORT INCENTIVE

2009-09-13T09:07:00.000-07:00

Export Incentives
The Government of India has framed several schemes to promote exports and to obtain foreign exchange. These schemes grants incentive and other benefits. The few important export incentives, from the point of view of indirect taxes are briefed below:Free trade area
Free trade area is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods and services traded between them. It can be considered the second stage of economic integration. Countries choose this kind of economic integration form if their economical structures are complementary. If they are competitive, they will choose customs union.[citation needed]
Description
Unlike a customs union, members of a free trade area do not have a common external tariff (same policies with respect to non-members), meaning different quotas and customs. To avoid evasion (through re-exportation) the countries use the system of certification of origin most commonly called rules of origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Goods that don't cover these minimum requirements are not entitled for the special treatment envisioned in the free trade area provisions.
Cumulation is the relationship between different FTAs regarding the rules of origin — sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs. A free trade area is a result of a free trade agreement (a form of trade pact) between two or more countries. Free trade areas and agreements (FTAs) are cascadable to some degree — if some countries sign agreement to form free trade area and choose to negotiate together (either as a trade bloc or as a forum of individual members of their FTA) another free trade agreement with some external country (or countries) — then the new FTA will consist of the old FTA plus the new country (or countries).
Within an industrialized country there are usually few if any significant barriers to the easy exchange of goods and services between parts of that country. For example, there are usually no trade tariffs or import quotas; there are usually no delays as goods pass from one part of the country to another (other than those that distance imposes); there are usually no differences of taxation and regulation. Between countries, on the other hand, many of these barriers to the easy exchange of goods often do occur. It is commonplace for there to be import duties of one kind or another (as goods enter a country) and the levels of sales tax and regulation often vary by country.
The aim of a free trade area is to so reduce barriers to easy exchange that trade can grow as a result of specialisation, division of labour, and most importantly via (the theory and practice of) comparative advantage. The theory of comparative advantage argues that in an unrestricted marketplace (in equilibrium) each source of production will tend to specialize in that activity where it has comparative (rather than absolute) advantage. The theory argues that the net result will be an increase in income and ultimately wealth and well-being for everyone in the free trade area. However the theory refers only to aggregate wealth and says nothing about the distribution of wealth. In fact there may be significant losers, in particular among the recently protected industries with a comparative disadvantage. The proponent of free trade can, however, retort that the gains of the gainers exceed the losses of the losers.
Qualifying for a free trade agreement
To determine eligibility for a free trade agreement (FTA), importers must obtain product information from the all suppliers within the supply chain. An automated solution should be in place for an importer to solicit his/her suppliers. Once supplier documentation is received the importer must determine the eligibility of the product based on the many rules of origin surrounding the products Harmonized Schedule Number. Each free trade agreement will qualify an importer's products in different ways, however the basis of the qualification surrounds the idea that the finished product must have a minimum percentage of local/regional content.
Under the North American Free Trade Agreement (NAFTA), qualifying rules include De Minimis, Regional Value Content, and Tariff Shift.
De Minimis states that the finished good must be less than or equal to 7% of the transaction value of the product
Regional Value Content is a calculated percentage of the value of the product that represents its North American content
Tariff Shift is a substantial transformation that takes place in a NAFTA country
A finished good must qualify under one of these rules to be eligible for free trade under NAFTA. This is just one example of a qualification for a free trade agreement. If a certificate of origin is present from a supplier demonstrating that the good originated in a country under the associated free trade agreement, no further calculations are needed.
When qualifying products for an FTA, the use of an automated system allows importers to stay up-to-date on international compliance regulations, as well as solicit suppliers via the web instead of manually. A functional solution should also perform the required calculations for the associated FTA during the Bill of Material (BOM) analysis, ensuring correct eligibility.
ADVANCE LICENCE

Advance Licence
4.1.3
An Advance Licence is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts etc. which are consumed in the course of their use to obtain the export product, may also be allowed under the scheme.
Duty free import of mandatory spares upto 10% of the CIF value of the licence which are required to be exported/ supplied with the resultant product may also be allowed under Advance Licence.

Advance Licences are issued on the basis of the inputs and export items given under SION. However, they can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of Handbook.

Duty free import of mandatory spares upto 10% of the CIF value of the licence which are required to be exported/ supplied with the resultant product may also be allowed under Advance Licence.
Advance Licence can be issued for:-

a)
Physical exports:- Advance Licence may be issued for physical exports including exports to SEZ to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for import of inputs required for the export product.

b)
Intermediate supplies:- Advance Licence may be issued for intermediate supply to a manufacturer-exporter for the import of inputs required in the manufacture of goods to be supplied to the ultimate exporter/deemed exporter holding another Advance Licence

c)
Deemed exports:- Advance Licence can be issued for deemed export to the main contractor for import of inputs required in the manufacture of goods to be supplied to the categories mentioned in paragraph 8.2 (b), (c), (d) (e) (f),(g) (i) and (j) of the Policy.

In addition, in respect of supply of goods to specified projects mentioned in paragraph 8.2 (d) (e) (f), (g) and (j) of the Policy, an Advance Licence for deemed export can also be availed by the sub-contractor of the main contractor to such project provided the name of the sub contractor(s) appears in the main contract.
Such licence for deemed export can also be issued for supplies made to United Nations Organisations or under the Aid Programme of the United Nations or other multilateral agencies and paid for in foreign exchange.

4.1.4
Advance Licence is issued for duty free import of inputs, as defined in paragraph 4.1.1 subject to actual user condition. Such licences (other than Advance Licence for deemed exports) are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty, if any.
Advance Licence for deemed export shall be exempted from basic customs duty ,additional customs duty and education cess only. However in case of supplies to EOU/SEZ/ EHTP/STP/ BTP under such licences, anti-dumping duty and safeguard duty shall also be exempted.

4.1.5
Advance Licence and/or materials imported there under shall not be transferable even after completion of export obligation.

4.1.6
Advance Licences (including Advance Licence for deemed exports and intermediate supply) shall be issued with a positive value addition.

However, for exports for which payments are not received in freely convertible currency, the same shall be subject to value addition as specified in Appendix-32 of Handbook (Vol.1).

4.1.7
Advance Licence shall be issued in accordance with the Policy and procedure in force on the date of issue of licence and shall be subject to the fulfilment of a time bound export obligation as may be specified.

4.1.8
The facility of Advance Licence shall also be available where some or all of the inputs are supplied free of cost to the exporter.

In such cases, for calculation of value addition, the notional value of free of cost inputs along with value of other duty-free inputs shall be taken into consideration. However, if all the inputs are supplied free of cost, it shall be covered under paragraph 4.2.7 of the Policy.
Export Obligation
4.1.9
The period for fulfilment of the export obligation under Advance Licence shall be as prescribed in the Handbook (Vol.1). Supplies to SEZ would also be counted for fulfillment of export obligation under the Advance Licence for physical exports.
Advance Licence for Annual Requirement
4.1.10
Advance Licence can also be issued on the basis of annual requirement for physical exports, intermediate supplies or deemed exports.

One to Five Star Export House shall be entitled for the Advance Licence for annual requirement.

However, if the status holders are holding the certificate as merchant exporter, they are also entitled to the Advance Licence for Annual Requirement provided they agree to the endorsement of the name(s) of the supporting manufacturer(s) on the relevant licence.

The entitlement under this scheme shall be upto 200% of the FOB value of export in the preceding licensing year. Such licence shall have positive value addition.

Advance Release Orders
4.1.11
An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC intending to source the inputs from indigenous sources/State Trading Enterprises/ EOU/SEZ/ EHTP/STP/BTP units in lieu of direct import has the option to source them against Advance Release Orders denominated in foreign exchange/ Indian rupees.

The transferee of a DFRC shall also be eligible for ARO facility. However, supplies may be obtained against the licence from EOU/ EHTP/ BTP/STP/SEZ units, without conversion into ARO.
Back-to-Back Inland Letter of Credit
4.1.12
An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC may, instead of applying for an Advance Release Order, avail of the facility of Back-to-Back Inland Letter of Credit in accordance with the procedure specified in Handbook (Vol.1).
Prohibited Items
4.1.13
Prohibited items of imports mentioned in ITC(HS) shall not be imported under the licence issued under the scheme.

Admissibility of Drawback
4.1.14
In the case of an Advance Licence, the drawback shall be available in respect of any of the duty paid materials, whether imported or indigenous, used in the goods exported, as per the drawback rate fixed by Ministry of Finance (Directorate of Drawback). The Drawback shall however be restricted to the duty paid materials as mentioned in the licence.
DEPB (Duty Entitlement Pass Book )
It is an export incentive scheme of Indian Government provided toExporters in India
Duty Entitlement Pass Book Scheme in short DEPB is an export incentive scheme. Notified on 1/4/1997, the DEPB Scheme consisted of (a) Post-export DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book Scheme at a pre-determined credit on the FOB value. The DEPB rates is allows import of any items except the items which are otherwise restricted for imports. Items such as Gold Nibs, Gold Pen, Gold watches etc. though covered under the generic description of writing instruments, components of writing instruments and watches are thus not eligible for benefit under the DEPB scheme.
The DEPB Rates are applied on the basis of FOB value or value cap whichever is lower. For example, if the FOB value is Rs.700/- per piece, and the value cap is Rs.500/- per piece, the DEPB rate shall be applied on Rs.500/-. The DEPB rate and the value cap shall be applicable as existing on the date of exports as defined in paragraph 15.15 of Handbook (Vol.1).
DEPB Scheme is issued only on post-export basis and pre/export DEPB Scheme has been discontinued. The provisions of DEPB Scheme are mentioned in Para 4.3 and 4.3.1 to 4.3.5 of the Foreign Trade Policy or Exim Policy. One significant change in the new DEPB Scheme is that in terms of Para 4.3.5 of the Exim Policy even excise duty paid in cash on inputs used in the manufacture of export product shall be eligible for brand rate of duty drawback as per rules framed by Department of Revenue which was not mentioned in the earlier DEPB Scheme.
Benefits of DEPB Rates
The benefit of DEPB schemes is available on the export products having extraneous material up to 5% by weight. In such cases, extraneous material up to 5% shall be ignored and the DEPB rate as notified for that export product is be allowed.
Review of DEPB Rates
The Government of India review the DEPB rates after getting the appropriate a export import data on FOB value of exports and CIF value of inputs used in the export product, as per SION. Such data and information is usually obtained from the concerned Export Promotion Councils.

Implementation of the DEPB Rates
Some additional facilities as listed below have been provided for better implementation of the DEPB Rates
DEPB rates rationalized to account for the changes in Customs duties.
Caps fixed on certain items but there would be no verification of Present Market Value (PMV) on such items.
A number of ports have been added for availing facilities under the Duty Exemption Scheme, including DEPB.
The threshold limit of Rs. 200 million for fixing new DEPB rates removed.
Provisional DEPB Rate
The main objective behind the provisional DEPB rates is to encourage diversification and to promote export of new products. However, provisional DEPB rates would be valid for a limited period of time during which exporter would furnish data on export and import for regular fixation of rates.
Maintenance of Record
It is necessary for Custom House at ports to maintain a separate record of details of exports made under DEPB Schemes.
Port of Registration
The exports/imports made from the specified ports given shall be entitled for DEPB.
Sea Ports: Mumbai, Kolkata, Cochin, Dahej, Kakinada, Kandla, Mangalore, Marmagoa, Mundra, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam, Surat (Magdalla), Nagapattinam, Okha , Dharamtar and Jamnagar.
Airports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.
ICDs : Agra, Ahmedabad, Bangalore, Bhiwadi, Coimbatore, Daulatabad, (Wanjarwadi and Maliwada), Delhi, Dighi (Pune), Faridabad, Guntur, Hyderabad, Jaipur, Jallandhar, Jodhpur, Kanpur, Kota, Ludhiana, Madurai and the land Customs station at Ranaghat Mallanpur, Moradabad, Meerut Nagpur, Nasik, Gauhati (Amingaon), Pimpri (Pune), Pitampur (Indore), Rudrapur (Nainital), Salem Singanalur, Surat, Tirupur, Udaipur, Vadodara, Varanasi, Waluj, Bhilwara, Pondicherry ,Garhi-Harsaru, Bhatinda, Dappar, Chheharata (Amritsar), Karur, Miraj and Rewari.
LCS: Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and Mahadipur.
The exports made to the following Special Economic Zones (SEZ) are also entitled to DEPB.
SEZ : Santacruz , Kandla, Kochi, Vishakhapatnam, Chennai, FALTA, Surat, NOIDA
Credit under DEPB and Present Market Value
In respect of products where rate of credit entitlement under DEPB Scheme comes to 10% or more, amount of credit against each such export product shall not exceed 50% of Present Market Value (PMV) of export product. During export, exporter shall declare on shipping bill that benefit under DEPB Scheme would not exceed 50% of PMV of export product.
However PMV declaration shall not be applicable for products for which value cap exists irrespective of DEPB rate of product.
Utilization of DEPB credit
Credit given under DEPB Schemes is utilized for payment of indian customs duty including capital goods, which are free to import.
Re-export of goods imported under DEPB Scheme
In case of return of any exported goods, which has been found defective or unfit for use may be again exported according to the exim guidelines as mentioned by the Department of Revenue.
In such cases 98% of the credit amount debited against DEPB for the export of such goods is generated by the concerned Commissioner of Customs in the form of a Certificate, containing the amount generated and the details of the original DEPB. On the basis of certificate, a fresh DEPB is issued by the concerned DGFT Regional Authority. It is important to note that the issued DEPB have the same port of registration and shall be valid for a period equivalent to the balance period available on the date of import of such defective/unfit goods.

Export Promotion Capital Goods Scheme

EPCG Scheme
5.1
The scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of licence. Capital goods would be allowed at 0% duty for exports of agricultural products and their value added variants.
However, in respect of EPCG licences with a duty saved of Rs.100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.
In case CVD is paid in cash on imports under EPCG, the incidence of CVD would not be taken for computation of net duty saved provided the same is not Cenvated .
The capital goods shall include spares (including refurbished/ reconditioned spares) , tools, jigs, fixtures, dies and moulds. EPCG licence may also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the licence holder.
Second hand capital goods without any restriction on age may also be imported under the EPCG scheme.
Spares (including refurbished/ reconditioned spares), tools, refractories, catalyst and consumable for the existing and new plant and machinery may also be imported under the EPCG scheme .

However, import of motor cars, sports utility vehicles/ all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators whose total foreign exchange earning in current and preceding three licencing years is Rs 1.5 crores. However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc cannot be imported under the EPCG Scheme.

5.1A
Spares (including refurbished/ reconditioned spares), tools, spare refractories, catalyst & consumable for the existing plant and machinery may also be imported under the EPCG Scheme subject to an export obligation equivalent to 8 times of duty saved to be fulfilled over a period of 8 years reckoned from the date of issuance of licence.

EPCG for Projects
5.1B
An EPCG licence can also be issued for import of capital goods for supply to projects notified by the Central Board of Excise and Customs under S.No 441 of Customs Exemption Notification No 21/2002 dated 01.03.2002 wherein the basic customs duty on imports is 10% with a CVD of 16%.

The export obligation for such EPCG licences would be eight times the duty saved. The duty saved would be the difference between the effective duty under the aforesaid Customs Notification and the concessional duty under the EPCG Scheme.

Eligibility
5.2
The scheme covers manufacturer exporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers.
Conditions for import of Capital Goods
5.3
Import of capital goods shall be subject to Actual User condition till the export obligation is completed.
Export obligation
5.4
The following conditions shall apply to the fulfillment of the export obligation:-

(i)
The export obligation shall be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme.
The export obligation may also be fulfilled by the export of same goods, for which EPCG licence has been obtained, manufactured or produced in different manufacturing units of the licence holder/specified supporting manufacturer (s).
When Capital Goods are imported for pre/ post- production or license is taken for import of spares, the license holder shall fulfill the export obligation by export of products manufactured from the plant / project to which the pre/ post- production capital goods/ spares are related.
The import of capital goods for creating storage and distribution facilities for products manufactured or services rendered by the EPCG licence holder would be permitted under the EPCG Scheme.
The export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products except for categories mentioned in Handbook (Vol.1).
Alternatively, export obligation may also be fulfilled by exports of other good(s) manufactured or service(s) provided by the same firm/company or group company/ managed hotel which has the EPCG licence.
However, in such cases, the additional export obligation imposed under EPCG scheme shall be over and above the average exports achieved by the unit/company/group company/ managed hotel in preceding three years for both the original and the substitute product(s) /service (s) even in cases where the average is exempt for the substitute product (s)/ service (s) as given in para 5.7.6 of the Handbook (Vol 1).
The incremental exports to be fulfilled by the licence holder for fulfilling the remaining export obligation can include any combination of exports of the original product/ service and the substitute product (s)/ service (s). The exporter of goods can opt to get the export obligation refixed for the export of services and vice versa.

The licencee can also opt for the re-fixation of the balance export obligation based on 8 times of the duty saved amount for the CIF value in proportion to the balance Export obligation under the scheme. The guidelines for the re-fixation of export obligation is given in para 5.19 of the Handbook (Vol 1).

The aforesaid facilities shall only be available to manufacturer exporters/ service provider on all the licences where export obligation period including extended export obligation period is valid on the date of application . In this regard, exports made only on or after submission of application for alternate item and/ or re-fixation of the export obligation based on duty saved amount will be taken into account for fulfillment of export obligation.

(ii)
The export obligation under the scheme shall be, in addition to any other export obligation undertaken by the importer, except the export obligation for the same product under Advance Licence, DFRC, DEPB or Drawback scheme.

(iii)
The export obligation can also be fulfilled by the supply of ITA-1 items to the DTA provided the realization is in free foreign exchange.

(iv)
Exports shall be physical exports. However, deemed exports as specified in paragraph 8.2 (a), (b), (d), (f), (g) & (j) of Policy shall also be counted towards fulfilment of export obligation alongwith the usual benefits available under paragraph 8.3 of the Policy.
Royalty payments received in freely convertible currency and foreign exchange received for R& D services shall also be counted for discharge under the EPCG scheme. Payment received in rupee terms for the port handling services, in terms of Chapter 9 of the Foreign Trade Policy shall also be counted for export obligation discharge under the Scheme.

Provision for BIFR units
5.5.1
Any firm/company registered with BIFR or any firm/ company acquiring a unit, which is under BIFR shall be allowed EO extension as per the rehabilitation package prepared by the operating agency subject to subsequent approval of BIFR.
However, in cases where the rehabilitation package does not specify the EO extension period, a time period upto 12 years reckoned from the date of issue of licence would be permitted on merits of the case for fulfillment of export obligation.
Similarly, small-scale SSI units shall also be entitled for similar facility as per the rehabilitation scheme of the concerned State government. However, in cases where the State rehabilitation scheme does not specify the export obligation extension period, a time period upto 12 years reckoned from the date of issue of licence would be permitted on merits of the case for fulfillment of export obligation
EPCG for agro units
5.5.2
In the case of EPCG licences issued to agro units in the agri export zones, a period of 12 years reckoned from the date of issue of the licence would be permitted for the fulfillment of export obligation.
The agro units in the agri export zones would also have the facility of moving the capital good (s) imported under the EPCG within the agri export zone.
An LUT/ Bond in lieu of BG may be given for EPCG licence granted to units in the Agri Export Zones provided the EPCG licence is taken for export of the primary agricultural product (s) notified in Appendix 15 or their value added variants.

Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier
5.6
A person holding an EPCG licence may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG licence holders shall be eligible for deemed export benefit under paragraph 8.3 of the Policy.
Benefits to Domestic Supplier
5.7
In the event of a firm contract between the EPCG licence holder and domestic manufacturer for such sourcing, the domestic manufacturer may apply for the issuance of Advance Licence for deemed exports for the import of inputs including components required for the manufacturer of said capital goods.

The domestic manufacturer may also replenish the inputs including components after supply of capital goods to the EPCG licence holders.
Fixation of Export Obligation
5.7A
In case of direct imports, the export obligation relating to the EPCG licence shall be reckoned with reference to the duty saved value on the CIF value of capital goods (including spares, jigs, fixtures, dies and moulds) actually imported. In case of domestic sourcing, the export obligation relating to EPCG shall be reckoned with reference to the notional Customs duties saved on the FOR of capital goods (including spares, jigs, fixtures, dies and moulds).

5.8
Service provider in Agri export zone shall have the facility to move or shift the capital goods within the zone provided he maintains accurate record of such movements. However, such equipments shall not be sold or leased by the licence holder.
Maintenance of Average exports under EPCG
5.9
As per the provisions of para 5.4(i) , the EPCG licence holder would have to maintain the average level of exports equivalent to the average of the exports in the preceding three licencing years for the same and similar products except for exempted categories given in Handbook (Vol 1) during the entire period of export obligation.
Notwithstanding the above, the licence holder shall maintain at least 75% of the average exports in any particular year (s) provided the same is offset by excess exports to fulfil the average in other year (s).
Technological Upgradation of existing EPCG machinery
5.10
EPCG licence holders can opt for Technological Upgradation of the existing capital good imported under the EPCG licence.
The conditions governing the Technological Upgradation of the existing capital good are as under:

(i)
The minimum time period for applying for Technological Upgradation of the existing capital good imported under EPCG is 5 years from the date of issuance of the licence.

(ii)
The minimum exports made under the old capital good must be 40% of the total export obligation imposed on the first EPCG licence

(iii)
The export obligation would be refixed such that the total export obligation mandated for both the capital goods would be the sum total of 6 times the duty saved on both the capital goods.

(iv)
The procedure governing the replacement of capital good is given in para 5.20 of the Handbook (Vol1).
Promotional Measures

Assistance to States for Infrastructure Development of Exports (ASIDE)
3.1
The State Governments shall be encouraged to participate in promoting exports from their respective States. For this purpose, Department of Commerce has formulated a scheme called ASIDE.
Suitable provision has been made in the Annual Plan of the Department of Commerce for allocation of funds to the states on the twin criteria of gross exports and the rate of growth of exports.
The States shall utilise this amount for developing infrastructure such as roads connecting production centres with the ports, setting up of Inland Container Depots and Container Freight Stations, creation of new State level export promotion industrial parks/zones, augmenting common facilities in the existing zones, equity participation in infrastructure projects, development of minor ports and jetties, assistance in setting up of common effluent treatment facilities, stabilizing power supply and any other activity as may be notified by Department of Commerce from time to time.
Market Access Initiative (MAI)
3.2
The Market Access Initiative (MAI) scheme is intended to provide financial assistance for medium term export promotion efforts with a sharp focus on a country and product.

The financial assistance is available for Export Promotion Councils, Industry and Trade associations , Agencies of State Governments , Indian Commercial Missions abroad and other eligible entities as may be notified from time to time,.

A whole range of activities can be funded under the MAI scheme. These include market studies, setting up of showroom/ warehouse, sales promotion campaigns, international departmental stores, publicity campaigns, participation in international trade fairs, , brand promotion, registration charges for pharmaceuticals and testing charges for engineering products etc. Each of these export promotion activities can receive financial assistance from the Government ranging from 25% to 100% of the total cost depending upon the activity and the implementing agency, as indicated in the detailed guidelines. The full text of the guidelines can be seen at http://commerce.nic.in/ .

Marketing Development Assistance (MDA)

Meeting Legal expenses for Trade related matters
3.2.1

3.2.1.1
The Marketing Development Assistance (MDA) Scheme is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis every year.

As per the revised MDA guidelines with effect from 1st April,2004 assistance under MDA is available for exporters with annual export turnover upto Rs 5 crores.

These include participation in Trade Fairs and Buyer Seller meets abroad or in India, export promotion seminars, etc

Further, assistance for participation in Trade Fairs abroad and travel grant is available to such exporters if they travel to countries in one of the four Focus Areas, such as , Latin America, Africa, CIS Region, ASEAN countries, Australia and New Zealand.
For participation in trade fairs, etc, in other areas financial assistance without travel grant is available.

Financial assistance would be provided to deserving exporters on the recommendation of Export Promotion Councils for meeting the cost of legal expenses relating to trade related matters.

Towns of Export Excellence
3.3
A number of towns in specific geographical locations have emerged as dynamic industrial clusters contributing handsomely to India's exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets.

Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns of Exports Excellence on the basis of potential for growth in exports. However for the Towns of Export Excellence in the Handloom, Handicraft, Agriculture and Fisheries sector, the threshold limit would be Rs 250 crores.

Common service providers in these areas shall be entitled for the facility of the EPCG scheme.

The recognised associations of units will be able to access the funds under the Market Access Initiative scheme for creating focused technological services.

Further such areas will receive priority for assistance for rectifying identified critical infrastructure gaps from the ASIDE scheme.
The notified towns of export excellence are listed in Appendix 41.

Brand Promotion and Quality
3.4.1
The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products. The Central Government will extend support and assistance to Trade and Industry to launch a nationwide programme on quality awareness and to promote the concept of total quality management.
Test Houses
3.4.2
The Central Government will assist in the modernisation and upgradation of test houses and laboratories in order to bring them at par with international standards.
Quality Complaints/ Disputes
3.4.3
The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the Regional Offices of the Directorate General of Foreign Trade shall investigate quality complaints received from foreign buyers. The guidelines for settlement of quality complaints, in particular, and such other complaints, in general, is given in Appendix- 37 of Handbook (Vol.1).
Trade disputes affecting trade relations
3.4.4
If it comes to the notice of the Director General of Foreign Trade or he has reason to believe that an export or import has been made in a manner that

(i)
is gravely prejudicial to the trade relations of India with any foreign country; or

(ii)
Is gravely prejudicial to the interest of other persons engaged in exports or imports;

(iii)
has brought disrepute to the country;

The Director General Foreign Trade may take action against the exporter or importer concerned in accordance with the provisions of the Act, the Rules and Orders made thereunder and this Policy.

STAR EXPORT HOUSES
Star Export House
3.5.1
Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri Export Zone (AEZ's), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio Technology Parks (BTPs) shall be eligible for applying for status as Star Export Houses.

Status Category
3.5.2
The applicant shall be categorized depending on his total FOB/FOR export performance during the current plus the previous three years.:

Category

Performance (in rupees)
One Star Export House
15 crore
Two Star Export House
100 crore
Three Star Export House
500 crore
Four Star Export House
1500 crore
Five Star Export House
5000 crore

Note
1.
Units in Small Scale Industry/Tiny Sector/Cottage Sector, Units registered with KVICs/KVIBs, Units located in North Eastern States, Sikkim and J&K, Units exporting handloom/ handicrafts/hand knotted or silk carpets, exporters exporting to countries in Latin America/CIS/sub-Saharan Africa as listed in Appendix-17C, units having ISO 9000 (series)/ ISO 14000 (series) /WHOGMP/HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-28A, exports of services and exports of agro products shall be entitled for double weightage of exports made for grant of Star Export House status.

2.
Exports made on re-export basis shall not be counted for the purpose of recognition.

3.
Exports made by a subsidiary of a limited company shall be counted towards export performance of the limited company for the purpose of recognition only if the limited company has a majority share holding in the subsidiary company.

Privileges
3.5.2.1
A Star Export House shall be eligible for the following facilities:

i)
Licence/certificate/permissions and Customs clearances for both imports and exports on self-declaration basis.

ii)
Fixation of Input-Output norms on priority within 60 days;

iii)
Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels;

iv)
100% retention of foreign exchange in EEFC account;

v)
Enhancement in normal repatriation period from 180 days to 360 days.

vi)
Entitlement for consideration under the Target Plus Scheme

vii)
Exemption from furnishing of Bank Guarantee in Schemes under this Policy.

Validity Period
3.5.3
All status certificates issued or renewed on or after 01.09.2004 shall be valid from 1st April of the licensing year during which the application for the grant of such recognition is made upto 31st March, 2009, unless otherwise specified. On the expiry of such certificate, application for renewal of status certificate shall be required to be made within a period as prescribed in the Handbook (Vol.1). During the said period, the star export house shall be eligible to claim the usual facilities and benefits.

Services exports

Export Promotion Council for Services
3.6.1

3.6.2
Services include all the 161 tradable services covered under the General Agreement on Trade in Services where payment for such services is received in free foreign exchange. A list of services is given in Appendix-36 of Handbook (Vol.1). All provisions of this Policy shall apply mutatis mutandi to export of services as they apply to goods, unless otherwise specified.
Service exporters are required to register themselves with the Federation of Indian Exporters Organisation. However, software exporters shall register themselves with Electronic and Software Export Promotion Council.

In order to give proper direction, guidance and encouragement to the Services Sector, an exclusive Export Promotion Council for Services shall be set up.

The Services Export Promotion Council shall:

(i)
Map opportunities for key services in key markets and develop strategic market access programmes for each component of the matrix.

(ii)
Co-ordinate with sectoral players in undertaking intensive brand building and marketing programmes in target markets.

(iii)
Make necessary interventions with regard to policies, procedures and bilateral/ multilateral issues, in co-ordination with recognised nodal bodies of the services industry.
Common Facility
Centres
3.6.3
Government shall promote the establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena.

SERVED FROM INDIA SCHEME
Objective
3.6.4.1
The objective is to accelerate the growth in export of services so as to create a powerful and unique 'Served From India' brand, instantly recognized and respected the world over.
Eligibility
3.6.4.2
All Service providers who have a total foreign exchange earning of at least Rs.10 lakhs in the preceding or current financial year shall be eligible to qualify for a duty credit entitlement.

For individuals who are service providers, the total foreign exchange earned criteria would be Rs.5 lakhs in the preceding financial year.
Entitlement

Hotels & Restaurants
3.6.4.3

3.6.4.4
All Service providers (other than hotels and restaurants) shall be entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the preceding financial year.

Hotels of one-star and above (including managed hotels and heritage hotels) approved by the Department of Tourism, and other Service providers in the tourism sector registered with the Department of Tourism, shall be entitled to duty credit equivalent to 5% of the foreign exchange earned by them in the preceding financial year.

Stand-alone restaurants will be entitled to duty credit equivalent to 20% of the foreign exchange earned by them in the preceding financial year.

Note: In the case of one and two star hotels and stand-alone restaurants, the foreign exchanged earned through International Credit Cards and sources as may be notified only shall be taken into account for the purposes of computation of duty credit entitlement under the scheme.
Imports allowed
3.6.4.5
Duty credit entitlement may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables, provided it is part of their main line of business.

In the case of hotels and stand-alone restaurants, the duty credit entitlement may also be used for the import of food items and alcoholic beverages.
Non Transferability
3.6.4.6
The entitlement and the goods imported shall be non-transferable.
Healthcare & Education
3.6.4.7
In order to enable Healthcare and Educational Institutions to have world-class state-of-the-art infrastructure, service providers in these sectors shall, as for other service sectors, be entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the previous financial year.

(i)
The foreign exchange turnover for Healthcare Institutions would include amounts earned through medical treatment, surgery, testing, consultancy and health care provided by the institution.

(ii)
The foreign exchange turnover for Educational Institutions would include amounts earned through the courses and consultancy provided by the institution.

(iii)
In either case, it will not include foreign exchange remittances through any other source including equity participation, donations etc.

(iv)
The capital goods and the consumer goods imported under the duty free entitlement shall have a nexus with the activities of the healthcare or educational institutions concerned.

Special provisions
3.6.4.8
Government reserves the right in public interest to specify from time to time the category or type of service exports which shall not be eligible for calculation of either eligibility or of entitlement.

Similarly, Government may from time to time also notify the goods which shall not be allowed for import under the duty free entitlement certificate issued under the scheme.

TARGET PLUS SCHEME
Objective
3.7.1
The objective of the scheme is to accelerate growth in exports by rewarding Star Export Houses who have achieved a quantum growth in exports. High performing Star Export Houses shall be entitled for a duty credit based on incremental exports substantially higher than the general annual export target fixed (Since the target fixed for 2004-05 is 16 %, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year.).
Eligibility Criteria
3.7.2
All Star Export Houses (including Status Holders as defined in para 3.7.2.1 of Exim Policy 2002-07) which have achieved a minimum export turnover in free foreign exchange of Rs 10 crores in the previous licencing year are eligible for consideration under the Target Plus Scheme .
Entitlement
3.7.3
The entitlement under this scheme would be contingent on the percentage incremental growth in FOB value of exports in the current licencing year over the previous licencing year, as under:

Percentage incremental growth
Duty Credit Entitlement (as a % of the incremental growth)

20% and above but below 25%
5%

25% or above but below 100%
10%

100% and above
15% (of 100%)

Note:
(1)
Incremental growth beyond 100% will not qualify for computation of duty credit entitlement.

(2)
For the purpose of this scheme, the export performance shall not be transferred to or transferred from any other exporter. In the case of third party exports, the name of the supporting manufacturer/ manufacturer exporter shall be declared.

(3)
Exporters shall have the option to apply for benefit either under the Target Plus Scheme or under the Vishesh Krishi Upaj Yojana, but not both in respect of the same exported product/s. Provided that in calculating the entitlement under Para 3.7.3 the total eligible exports shall be taken into account for computing the percentage incremental growth but the duty credit entitlement shall be arrived at on the eligible exports reduced by the amount on which the benefit is claimed under para 3.8.2.

(4)
All exports including exports under free shipping bill verified and authenticated by Customs and Gems& Jewellery shipping bills but excluding exports specified under para 3.7.5, shall be eligible for benefits under the Target Plus Scheme.

Applicant Companies
3.7.4
Companies which are Star Export Houses as well as part of a Group company shall have an option to either apply as an individual company or as a Group based on the growth in the Group's turnover as a whole. (For the purpose of this scheme the definition of Group Company' as given in Chapter 9 will be applicable. Furthermore , only such companies of the Group as are Star Export Houses will be considered).
If a Group company chooses to apply based on the export of one or more of its individual Star Export House companies, the entitlement would be calculated considering the export performance of the applicant company during the previous licencing year and current licencing year. It shall be necessary that the adjusted export performance of all the Star Export House companies of the Group during the current licencing year does not fall below the combined performance of all Star Export House companies of the Group in the previous licencing year.

In case the Group chooses to apply based on the overall growth in Group's turnover (i.e the turnover of all the Star Export House companies) , any one of the Star Export House companies of the Group may file an application on behalf of all the Star Export House companies of the Group.

3.7.5

The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the scheme:

(a)
Export of imported goods covered under Para 2.35 of the Foreign Trade Policy or exports made through transshipment.

(b)
Export turnover of units operating under SEZ/EOU/EHTP/STPI/ BTP Schemes or products manufactured by them and exported through DTA units

(c)
Deemed exports (even when payments are received in Free Foreign Exchange and payment is made from EEFC account).

(d)
Service exports

(e)
Rough, uncut and semi polished diamonds and other precious stones

(f)
Gold, silver, platinum and other precious metals in any form, including plain jewellery thereof. However exports of studded jewellery and any item as may be notified from time to time will be counted for the entitlement under the scheme.

(g)
Export performance made by one exporter on behalf of another exporter
Imports allowed
3.7.6
The Duty Credit may be used for import of any inputs, capital goods including spares, office equipment, professional equipment and office furniture provided the same is freely importable under ITC (HS), for their own use or that of supporting manufacturers as declared in Appendix 17 D.
Agricultural products listed in Chapter 1 to 24 of ITC (HS) except as may be notified from time to time, shall not be permissible for imports under this scheme.
Cenvat/ Drawback
3.7.7
Additional customs duty/excise duty paid in cash or through debit under Target Plus shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue.
Special Provision
3.7.8
Government reserves the right in public interest, to specify from time to time the category of exports and export products, which shall not be eligible for calculation of incremental growth/ entitlement.

Similarly, Government may from time to time also notify the list of goods, which shall not be allowed for import under the duty credit entitlement certificate issued under the scheme.

VISHESH KRISHI UPAJ YOJANA
(SPECIAL AGRICULTURAL PRODUCE SCHEME)
Objective
3.8.1
The objective of the scheme is to promote export of fruits, vegetables, flowers, minor forest produce, and their value added products, by incentivising exporters of such products.
Entitlement
3.8.2
Exporters of such products shall be entitled for duty credit scrip equivalent to 5% of the FOB value of exports for each licencing year commencing from 1st April, 2004 . The scrip and the items imported against it would be freely transferable.
Imports allowed
3.8.3
The Duty Credit may be used for import of inputs or goods including capital goods, as may be notified, provided the same is freely importable under ITC(HS).
Imports from a port other than the port of export shall be allowed under TRA facility as per the terms and conditions of the notification issued by Department of Revenue.
Cenvat/ Drawback
3.8.4
Additional customs duty/excise duty paid in cash or through debit under Vishesh Krishi Upaj Yojana shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue.
Special Provision
3.8.5
Government reserves the right in public interest, to specify from time to time the export products which shall not be eligible for calculation of entitlement.

Duty Drawback Drawback Claim FormIn case of drawback parcels, the exporters need to file prescribed application Form (in quadruplicate). Its format is at Annexure 26.Form AR4This Form is to be filled in quadruplicate in case of goods to be exported by post under excise rebate. The duplicate copy of these duly processed Forms should be affixed with sufficient postage stamps at the rate of Rs. 0.20 per packet, before presentation to Post Office. (Also see ‘declarations’ in Chapter 6.)Customs Declaration FormThe CDF is used for export by post, and available in post offices.Booking at the Post OfficesParcels of trade goods including those against which customs duty drawback claim is being made, may be presented to any post office in India for dispatch to any permissible destination abroad. However, all parcels must be addressed to the branch or correspondent of the exporter’s bank in the country concerned, unless the goods are covered by a Letter of Credit (L/C) or where advance payment has been received or specially permitted by the RBI. The parcel should be made up according to given specifications and properly addressed and weigh to the specified limits as detailed in the book ‘Export – What, Where, How’ by Paras Ram. These parcels are routed through the main post offices of exchange located at Bombay, Calcutta, Delhi, Jaipur and Madras or through the sub-offices of exchange at Ahmedabad, Bangalore and Cochin, etc.Declare on the outer packing carrying the address of the consignee, in bold letters the words: “Drawback Export”.DocumentsThe drawback parcels should be accompanied with the following documents: -(i) Drawback Claim Form (in quadruplicate) as at Annexure 26.(ii) PP Form (in duplicate) duly countersigned by the exporter’s bank or RBI. In case of jewellery items, it should be countersigned by the customs as well.(iii) Export licence, Quota certificate, if applicable.(iv) AR4 Form, in duplicate, duly processed by the Central Excise Authorities.(v) Invoice (two copies)(vi) Customs declaration form (triplicate). One copy of this form should be pasted on the parcel.(vii) A self-addressed envelope (with sufficient) postage stamps affixed on it to cover charges of registration and transmission back to the sender (exporter). Every care should be taken to attach the envelope carefully in order to avoid its loss in transit.The following additional documents should also be sent along with parcel.(i) Commercial invoice for canalised items must be got endorsed by the Canalising Agency concerned.(ii) Packing list in case there is more than one parcel in one consignment.(iii) Quality control and pre-shipment inspection certificate, if required.(iv) Any other document prescribed for the export/claim of drawback for/against the concerned product.Processing at Post OfficeThe booking clerk at the Post Office will receive the parcel and issue necessary receipt. The number and date of parcel will be entered in the concerned forms. He will also return the 4th copy of the Drawback Claim Form to the exporter.All parcels will, then, be passed on to the Foreign Post Office concerned for customs clearance before the final dispatch to overseas destinations.Customs ExaminationDate of Receipt. The date of receipt of the aforesaid Drawback Claim form by the Customs from the Post Offices, shall be the date of filing of drawback claim for the purpose of interest payable on delayed payment of drawback, under section 75A of the Customs Act. An intimation of the same shall be given by the Customs to the exporter.Deficiency Memo. In case the Drawback Claim Form is not complete in all respects, a Deficiency Memo will be issued within 15 days of the receipt from Post Offices. When the exporter complies with the requirements specified in the deficiency memo within 30 days of its return, he shall be issued an acknowledgment by the Customs. The date of such acknowledgment shall be deemed to be the date of filing of claim for the purpose of time permitted for payment of drawback and interest thereon, if any.If the claim contents including the fulfillment of requirements in the Deficiency Memo issued, if any, are correct as declared, the same will be certified in Form ‘D’. The Customs will also attest the original PP Form and one copy of the invoice. Thereafter, the parcels will be returned to the Foreign Post Office with recommendation for allowing their dispatch out of India. The supdt., FPO will thereafter certify the actual dispatch in Drawback Claim Form, return a copy of the form to the exporter and two copies to the Drawback Section in the Customs and Central Excise Department for necessary action regarding payment of drawback.The original PP Form duly attested will be forwarded by the Customs directly to the Reserve Bank of India. The invoice (one copy) duly authenticated will be returned by the Customs to the postal department for onward delivery to the concerned exporter.Payment of DrawbackThe export should simultaneously follow the drill explained at stage 2 in Chapter 2 for opening a bank account and drawback ledger account etc so that the cheque for drawback amount could be sent here.The exporter may also collect the cheque personally.But contact the concerned Custom House attached to the Foreign Post Offices for further details as the procedure may slightly differ depending upon local conditions.

Deemed ExportsThe Indian suppliers are entitled for the following benefits in respect of deemed exports:
Refund of excise duty paid on final products
Duty drawback
Imports under DEEC scheme
Special import licenses based on value of deemed exports
The following categories are treated as deemed exports for seller if the goods are manufactured in India:
Supply of goods against duty free licences under DEEC scheme
Supply of goods to a 100 % EOU or a unit in a free trade zone or a unit in a software technology park or a unit in a hardware technology park
Supply of goods to holders of licence under the EPCG scheme
Supply of goods to projects financed by multilateral or bilateral agencies or funds notified by the Finance Ministry under international competitive bidding or under limited tender systems in accordance with the procedures of those agencies or funds where legal agreements provide for tender evaluation without including customs duty
Supply of capital goods and spares upto 10% of the FOR value to fertilizer plants under international competitive bidding
Supply of goods to any project or purpose in respect of which the Ministry of Finance permits by notification the import of goods at zero customs duty along with benefits of deemed exports to domestic supplies
Supply of goods to power, oil and gas sectors in respect of which the Ministry of Finance permits by notification benefits of deemed exports to domestic supplies