Sri Sharada Institute Of Indian Management -Research

Approved by AICTE
Plot No. 7, Phase-II, Institutional Area, Behind the Grand Hotel, Vasant Kunj,
New Delhi 110070 Website: www.srisiim.org

INTERNATIONAL BUSINESS (DM406)

PROJECT REPORT
ON

CUSTOM CLEARENCE
IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT OF 4th TRIMESTER

Submitted To:Prof. V P Gupta

Faculty of SRISIIM

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Submitted By:Anurag Choudhary(20130109)

Anmol Raina(20130108)
Amit Singh (20130104)
Nitesh Verma(20130130)

DECLARATION
We hereby declare that the following project report of CUSTOM CLEARENCE is an
authentic work done by us. This is to declare that all work indulged in the completion of this
work such as research, analysis of activities of macro is a profound and honest work of ours.

Sri SIIM
Place: New Delhi
Anurag Choudhary(20130109)
Amit Singh(20130104)
Anmol Raina(20130108)
Nitesh Verma(20130130)

PGDM
Batch: 2013-2015

ACKNOWLEDGEMENT
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We would like to express our hearty gratitude to our faculty guide, Prof. V P
Gupta for giving us the opportunity to prepare a project report on CUSTOM
CLEARENCE and for his valuable guidance and sincere cooperation, which helped us in
completing this project.

Amit Singh (20130104)

Anmol Raina (20130108)
Anurag Choudhary (20130109)
Nitesh Verma (20130130)
PGDM: 2013 15

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Table of Contents
INTRODUCTION......................................................................................... 5
EXPORT.................................................................................................. 15
IMPORT.................................................................................................. 24
SUGGESTIONS........................................................................................30
CONCLUSION..........................................................................................31

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INTRODUCTION
In view of the rapidly and constantly changing business environment globally and fast
evolving trade and commerce scenario in India vis--vis global market, there is
increasing requirement of reliable and dependable integrated logistics solutions
providers who can provide comprehensive, professional and dependable logistics
support to the industry, keeping the same in mind and with the vision to provide
quality and professional comprehensive logistics solutions to the international &
domestic trade. In the development of any countrys economy, exports play a crucial role.
Export is the most important aspect of earning foreign exchange. A country should have to be
equipped with natural resources, so that it can sell these resources into the
international market. With the opening up of the Indian economy, the international trade has been
increased significantly as there are less restriction on exports and imports. More and more
multinationals are registering their entry into the Indian market. The
imported products are now in well reach of Indian customers. The living standard has
been improved. This results in substantial amount of growth in both exports and
imports. The procedure of both the exports and imports are time consuming and complicated. In
this regard there are several logistic companies and custom house agents providing their
services on the behalf of the exporters and importers to facilitate the trade between them.
These custom house agents and logistics companies take over the
responsibility of sending the goods from the exporters premises to the importer
premises, which also includes the most important aspect of custom clearance.

Indian shipping scenario:

India has 12 major ports and 185 minor/intermediate ports. Over 90
percent by volume and 70 percent by value of Indias overseas trade, aggregate of exports
and imports, is carried out through maritime transport along its 7617 km long coast line. India
has the largest merchant shipping fleet among the developing countries and its merchant
shipping fleet ranks 18th in the world, in terms of fleet size. Another silver lining is the average
age of the Indias merchant shipping fleet is only 12.7 years as compared to the international
average of 17 years .but, Indias share, sadly, constitutes only 1.45% of the worlds cargo
carrying capacity. As on April 1, 2005, India has a total of 686 ships comprising 8.01 Million
Gross Tonnage (GT) and 13.28 Million Dead Weight Tonnage (DWT). The shipping
corporation of India (SCI), the countrys largest carrier, owns and manages 82 ships with 2.54
million GT and accounts for 40 percent of national tonnage. India is also among the few
countries that offer fair and free competition to all shipping companies for obtaining cargo. There
is no cargo reservation policy in India. Indian shipping has remained a deferred subject till
independence. Only after independence, the development of shipping has attracted the state
policy. The subject of shipping, in the beginning, has been dealt with by the ministry of
commerce, till 1949 and subsequently, in 1951, it has been shifted to the ministry of transport
and shipping. In 1947, the government of India has announced the national policy on
shipping, aiming at the total development of the industry. In order to accelerate the
developmental efforts, the necessity for a centralized administrative organization has been felt.
Accordingly in September necessity for a centralized administrative organization has been
felt. Accordingly in September 1949, the directorate general of shipping with its headquarters at
Bombay has been established with the objectives of promotion and development of Indian
shipping industry.

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Shipping Company:
Shipping Company is companies which invest his capital in purchase of
ships and provide transport service through the sea to its customers is known as shipping
company.
Basically the shipping companies provide services in two ways 1. TRAMP SHIPS
2. LINER SHIPS
Tramp Ships:Tramp ship or general trader, does not operate on a fixed sailing schedule, but
merely trades in all parts of the world in search of cargo, primarily bulk shipments. It is a
chartered ship prepared to carry anything anywhere. Its cargoes include coal, grain,
timber, sugar, ores, fertilizers, etc like which are carried in complete shiploads.
Tramp tankers are specialized vessels. They may be under charter or be
operated by an industrial company, that is oil company, motor manufacturer, etc to suit their
own individual/market needs.
Liner Ships:Liner ship operates on a fixed route between two ports or two series of ports.
They operate on a regular scheduled service. They sail on scheduled dates/times whether
they are full or not. The cost of using the service (freight) can be quoted from a fixed
tariff. Container ships in deep sea trades and roe ship in the short sea trades feature
prominently in this field.
Different Types of Ships:1. Container ships
2. Roll-on/roll-off ships
3. Break-bulk ships
4. Crude carries
5. Dry-bulk carriers
6. Gas carriers
Container Ship: Container ship is also known as a BOX SHIP
Container ships cater to only containerized cargo and generally have cranes on
board.
They can store up to 4 tiers of containers below the main deck and up to 3 tiers above deck.

Roll - on / Roll - off Ships:6 | Page

Roll-on/roll-of ships were created to accommodate cargo that was self

propelled, such as automobiles or trucks, or cargo that could be wheeled into a
ship, such as railroad cars. They are essentially floating garages. It takes long time
to load such vehicles over the rail it is preferable to load them by rolling them onto
the ship.
Roll-on/Roll-of ships therefore have a portion of their hull that opens up and acts as a ramp
on which the vehicles are driven before being parked on the many decks of the ship and
secured with chains. The hull opening is either on the side of the ship or on its stern (rear).This
ship have an advantage in that specialized lifting equipment is not required, even for the
heaviest of loads, since the cargo rolls under its own power or pulled by a tractor.

Break-Bulk Ships:
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 Break-bulk cargo ships are multipurpose ships that can transport shipments of unusual
sizes, unitized on pallets, in bags, or in crates.
Due to increasing role of RORO (Roll-on/Roll-off) ships, container ships, breakbulk ships share of international trade is decreasing.
The advantage of break-bulk ships is that they can call at just about any port to pick up
different kinds of cargo loads, giving them a flexibility that container ships do not yet
have.
The main problem with a break-bulk ship stems from its labor-intensive loading
and unloading because each unit of cargo handles separately.

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Crude Carriers: Crude carriers are the bulk ships dedicated to the transport of petroleum products,
whether unrefined or refined, such as gasoline or diesel fuel.
The crude carriers are also known as VLCC (Very Large Crude Carriers) and
ULCC (Ultra Large Crude Carriers).
VLCCs and ULCCs are such large ships that they can call on only a few ports in the
world; since their draft, when loaded, can reach 35 meters(115 feet) they need very
deep ports for berthing.

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Dry-Bulk Carriers:
Dry-bulk carriers operate on the same basis as oil tankers in that they are chartered for a
whole voyage
Dry-bulk ships have several holds in their hull, in which non-unitized cargo is
placed.
Dry bulk ships carry agricultural products, such as cereals, as well as coal, ores,
scrap iron, dry chemicals, and other bulk commodities.
Dry-bulk ships are generally small enough to fit through the PANAMA CANAL.

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Gas Carriers:
Another important bulk trade is the transportation of Liquefied Natural Gas
(LNG) and of Liquefied Petroleum Gas (LPG). These types of carriers have a very
distinctive shape. These ships hold several spheres of compressed gasses, only
part of which are visible above their main deck.
The LNG and LPG trades tend to be slightly different than the average bulk
transport, as they are used in a particular trade for long periods of time, on longterm contracts-called time charter parties and therefore nearly have a sailing
schedule, not unlike liner ships.

Containerization:
Containerization, the term very familiar to present day shipping
industry is a completely unknown concept, a few decades back. Malcolm McLean,
owner of a huge trucking company in USA, who has first conceived the idea of
containerization by transporting containers though ideal-x in 1956 and initiated a
revolution in the history of shipping industry.
Before containerization, cargo has to be loaded first into the truck and later
truck
is
to
driven to the port, unload the goods at the port and them into the ship at the port. This
has been a cumbersome process and, in consequence, consumed a lot of time. For
completing the exercise, ships are detained in the port for about ten days for the entire
process of unloading and loading. With the arrival of containerization, shippers have
started stuffing into containers, at their own place, and containers are brought to the
container yard (inland container depot) for shipment. This process has greatly
facilitated in two, after unloading the containers and loading them again into the ship.
The process of containerization has decongested the ports that are heavily crowded.
Shipping is truly the lynchpin of global economy and international trade.
More
than
90% of world merchandise trade is carried by sea and over 50% of that volume is
containerized. In todays era of globalization, international trade has evolved to the
level where almost no nation can be self-sufficient and global trade has fostered an
interdependency and inter-connectivity between countries. Shipping has always
provided the most cost-effective means of transportation over long distances and
containerization has played a crucial role in world maritime transport.
What is meant by containerization?
Containerization is the practice of carrying goods in containers of uniform
shape
and
size for shipping. Almost anything can be stored in a container, but they are
particularly useful for the transport of manufactured goods. It is a method of
distribution of goods using containers. The use of containers has, indeed, facilitated
carriage of goods using containers. The use of containers has, indeed, facilitated
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carriage of goods. Exporters need to go to the seaport for export of goods. Instead the
goods sent to inland container depot/ container freight station for sending to the
destination.
Since 1950s, containers have revolutionized sea-borne trade, and now
carry around 90% of all manufactured goods by sea. The transporters in developed
countries have started making use of containerization, early now; developing countries
have started making use of containerization, early. Now, developing countries too are
taking a greater advantage in using containers for transportation of goods. Different
countries are giving logistic support, giving the necessary boost to improve the
required infrastructure to containerization, for encouraging export industry.
Containerization is to contribute about 22.66% to total cargo by 2010-11.The robust growth of
Indias manufacturing industry has pushed up Indias containerization. Indias containerization has over
70% of total exported cargo, andaround 40% imported cargo. The Government of India has pursued a
policy ofdeveloping a number of Inland Container Depots and Container Freight Stations to
facilitate modal interchange and distribution of cargo and most importantly to avoid
awkward customs procedures from the waterfront. Containerization at major ports of
India contributed about 11% of total cargo handled at those ports in 2000-01; it
increased to 16% in 2005-06 and is estimated to further increase to 22.7% by 2010-11.

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Challenges Container port demand and capacity imbalance:

In view of the buoyant global merchandise trade scenario, container port
demand
has
been growing rapidly. Globalization has spurted merchandise trade, which is ready for
big stride. During the last four years, world container traffic has been growing at over 9.2%
per annum, while container port capacity is growing at an average 4.5% per
annum. There will be requirement for additional port capacity to be built if the current
trend and port utilization level is maintained by 2010. The projected global container
demand and container port capacity illustrates that there will be a huge difference
between container port demand and capacity in the next four to five years. This is one
of the major challenges for global container trade. Extra capacity should be built to
meet the growing demand.

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Types of containers-:
There are different types of containers. The popular types are:
1. General purpose containers-:
There are the most common type of containers and are the ones with
which most people are familiar. Each general-purpose container is fully closed and
has width doors at one end for access. Both liquid and solid substances can be loaded in
these containers. Based on length of the container, the container is generally known as a
20 ft container or 40 ft container, in practice. Hazardous or dangerous cargo can not be
loaded into general-purpose containers.
2. Reefer containers (refrigerated) -:
These play an important role in South - Africas exports of perishable
products, andare designed to carry cargoes at temperatures reading down to deep
frozen. Forrefrigeration, they are fitted with electrical equipment for supply of
necessary electricity.
3. Dry bulk containers-:
These are built especially for the carriage of dry powders and granular substances in bulk.
4. Open top/open sided containers-:
These are built for heavy and awkward pieces of cargo. These containers are ideal
where height of the cargo is in excess of height of the standard general purpose
containers.
5. Liquid cargo containers-:
These are ideal for bulk liquids, such as wine, fruit concentrates,
vegetable oils, detergents and various other non-hazardous chemicals. Bulk liquid bags,
designed to carry specific commodities, can fit into these containers.
6. Hanger containers-:
They are used for the shipment of garments on hangers.
7. Custom House Agent:
Custom House Agent means a person licensed, temporarily or otherwise,
under the regulations made under sub-section (2) of section 146 of the Customs Act, 1962.
A person is permitted to operate as a customs house agent,
temporarily under regulation 8(1) and permanently under regulation 10, of the Customs
House Agents Licensing Regulations, 1984. The services rendered by the custom house
agent are not merely limited to the clearing of the import and export consignment. The
CHA also renders the service ofloading/unloading of import or export goods
from/at the premises of the exporter/importer, the packing, weighment, measurement
of the export goods, the transportation of the export goods to the customs station or the
import goods from the custom station to the importers premises, carrying out of various
statutory and other formalities such as payment of expenses on account of de-stuffing/
pelletisation terminal handling, fumigation, drawback/ DEEC processing, survey
/amendment fees, dock fees, repairing and examination charges, landing and container
charges, statutory labour etc this expenses paid on behalf of importer and exporter.
The CHA is ordinarily reimbursed by the importer/ exporter for whom the above
services are rendered.
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EXPORT
Export preliminaries:
In order to enter into export business, certain preliminary steps have to
be taken by every business organization. The setting up of an export firm is
completed in two stages. They are:
A)Establishing a business firm-:
There are various formalities and registrations to be made with different
authorities before an exporter can enter into export business and accept an export order.
1) Selection of name of the firm-: An entrepreneur can choose any name for the firm he

wants to start. It is desirable that the name of the firms indicates that the business
relates to export/import.
2)Approval to name of firm-: There is no need to obtain prior approval of
regional licensing authority of DGFT (Directorate General of Foreign Trade) for
the proposed name of business firm. However, if the firm is planning to export
readymade garments to any country; approval from Apparel Export Promotion
Council (AEPC) is required. The entrepreneur has to apply to AEPC in the
prescribed application form for the clearance of the name. Once the name is
approved, registration of firm in that name with AEPC is to be made within a
period of three months. After the registration is done, the firm would become
registered exporter.
2) Registration of Organization-: The form of organization can be sole

partnership, partnership firm under Indian partnership act, 1932 or join stock
company registered under the companies act, 1956.
4)Opening of Bank Account-: The firm or company has to open a bank account
with branch of a commercial bank, authorized by reserve bank of India to deal in
foreign exchange. The firm may require pre and post shipment finance for its
business.
5) Obtaining Permanent Account Number-: export income is subject to a number of
exemptions and deductions under the income tax act. For claiming those
exemptions and deductions, it is necessary for every exporter to obtain permanent account
number from the income tax authority.
6) Registration with Sales Tax Authorities-: exporter need not pay sales tax while
making purchases meant for export. But for availing the benefit, firm has to register
with sales tax authorities and secure sales tax number.

B)Obtaining the importer-exporter code number -:

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This is required for completing other registrations.

1.Importer - Exporter Code Number (IEC)-: No export orimport transaction can be made
without obtaining an importer-exporter code number. IEC number is a pre-condition for exports
from and imports into India. IEC number entitles to import or export any item of non-prohibited
goods. This code number is made compulsory now. The registered /head office of the applicant
shall make an application for grant of IEC number to the regional office of DGFT
(known as Regional Licensing Authority), having territorial jurisdiction over the
firm, along with the following documents: profile of the exporter/importer,
demand draft from a bank for rs.1000 as fees, certificate from the banker of the
applicant, two copies of passport size of the applicant, declaration on applicants
letterhead that there is no association of the applicants firm with caution listed
firms. The licensing authority shall allot the IEC number in prescribed format.
There is no expiry date for iec number. This number is invariably used in all
documents particularly in bill of entry in case of imports and shipping bill in case
of exports.
2.Registration Cum Membership Certificate (RCMC) -: It is obligatory for every exporter to
register with appropriate Export Promotion Council (EPC) and obtain registration cum
membership certificate. Any person applying for import or export license or any other benefit under
the current exim policy is required to obtain registration cum membership certificate (RCMC). The
benefits provided in the current EXIM policy are available only to those having Functional Procedure
of Custom Clearance valid RCMC with the receipt of the certificate the exporter will be known
as Registered Exporter
3.Registration with Export Credit and Guarantee Corporation (ECGC)-: The
exporter should also register with export credit and guarantee corporation of India (ECGC) in
order to secure export payments against political and commercial risks. It also helps to get
financial assistance from commercial banks and other financial organization.
4.Registration with other authorities -: It is desirable for the exporters to become members of
local chamber of commerce, productivity council or any other trade promotion organization
recognized by the ministry of commerce or industry. Local membership helps the exporters in
different
ways,
including in obtaining certificate of origin, which is vital for exporter to certain countries.
5.Registration for business identification number (BIN)-: The exporters have to obtain pan based
Business Identification Number (BIN) from DGFT (Director General Foreign Trade) prior to filling
for custom clearance of export goods. Purpose of bin is to bring a common identification number
to all persons dealing with various regulatory agencies such as custom department,
central excise etc.
6.Export Licensing -: Many items of goods are free for exports without obtaining any license, if
they do not fall in the negative list. The negative list consist of goods the import or export of which is
prohibited, restricted or canalized.
7. Prohibited items-: these items can not be exported or imported. These items include wild
life, exotic birds, wood and wood products in the form of logs, timber, pulp and charcoal.
8. Restricted items -: these are the items, export or import of which is restricted through
license. They can be imported or exported only in accordance with the regulations governing in this
behalf.
9.Canalized items -: goods which are canalized can be imported or exported through the canalizing
agency, specified in the negative list.
So it is necessary for the exporter to check the nature of the item before he
enters into the contract or even makes efforts to secure the export order. Needless to add,
the items of export agreed upon should not be fall in the negative/ banned list.
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Exporters incentives & drawback:

Advance license -: inputs required for manufacturing export products can be imported
without payment of custom duty under advance license. Since the raw materials can be imported before
exports
of
final
product,
the
license
issued
for
this
purpose
is
called advance licenses. An advance license is issued under duty exemption scheme
to allow import of inputs, which are physically incorporated in the export product.
Duty free replenishment certificate (DFRC):- DFRC is issued to a merchant exporter or manufacturer
exporter for the duty free import of inputs such as raw materials, components, intermediates, consumables,
spare parts, including packing materials to be used for export production. Such license is given subject of the
fulfilment of time bound export obligation.
Duty entitlement passbook scheme (DEPB) :- under the DEPB scheme, an exporter may apply for
credit as a specified percentage of fob value of exports, made in freely convertible currency. The credit shall
be available against such export products and at such rates as may be specified by the director general of
foreign trade (DGFT) by way of public notice issued in this behalf, for import of raw materials,
intermediates, components, parts, packaging materials, etc.
Export promotion capital goods scheme (EPCG) :- EPCG scheme was introduced by
the EXIM policy of 1992-97 in order to enable manufacturer exporter to import
machinery and other capital goods for export production at confessional or no
customs duties at all. This facility is subject to export obligation, i.e., the exporter is
required to guarantee exports of certain minimum value, which is in multiple of tit1e value of capital goods
imported.

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The different steps involved in export department are as follows:

Step 1:
Exporter sends the following document to Shakti Forwarder:
Letter of credit: Assures exporter his payment promise to pay a seller (beneficiary)
upon receipt of goods by a buyer if certain conditions outlined in the letter have been met. It is a
method of payment for goods in the buyer establishes which his credit with a local bank,
clearly describing the goods to be purchased, the price, the documentation required, and
a time limit for completion of the transaction. Upon receipt of documentation, the bank is either
paid by the buyer or takes title to the goods themselves and proceeds to transfer funds to the
seller.
Types of letter of credit Clean letter of credit: negotiated against a clean draft without any documents
Documentary letter of credit: documents specified in the letter of credit must
accompany the draft
Revocable letter of credit: can be cancelled or revoked any time without the consent or notice
to the beneficiary
Irrevocable letter of credit: cannot be amended, revoked or modified by the issuing bank
without the express consent of all parties concerned. Thus the issuing bank has definite
undertaking to honor drafts drawn under that credit, provided that the conditions in letter of credit
are met.
Confirmed letter of credit: Issuing bank sends letter of credit to the bank located in
beneficiarys country with a request to add confirmation to the credit. Confirmation involves legal
undertaking on the part of the confirming bank that it will duly honor payment or acceptance on
presentation of documents
Back to back letter of credit:
SECONDARY CREDIT: In favour of a domestic supplier. The original credit backs the
secondary credit and facilitates the purchase of goods from a local supplier by the original
beneficiary of L/C.
Red clause letter of credit: Allows exporter to withdraw a predetermined
amount so that he is able to pay his suppliers and purchase relevant letter of credit
Packing list: A list which shows number and kinds of packages being shipped, totals of gross,
legal, and net weights of the packages, and marks and numbers on the packages. The list
may be requested by an importer or may be required by an importing country to facilitate
the clearance of goods through customs.
Invoice: One of the common to both international and domestic transactions is the bill
(invoice) that the exporter sends to the importer. However, the content of an
international invoice is more complex and should be prepared slightly differently for a foreign
customer than for a domestic one.

Step 2:
On the basis of invoice, Shakti Forwarder preparing Annexure - A, Annexure - C, Annexure
- D and SDF ( Statutory Declaration Form ) along with the invoice.

Step 3:
Send these annexure to the custom house. The custom prepares the shipping bill in four
copies on the basis of these annexure.

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Step 4:
Custom calculate the duty (CESS) on the value of the goods. Using the Treasury Challan the duty can be paid.
Cargo can enter the port premises.

Step5:
Custom examined the cargo by using the sample. (Customs examined the cargo only
after the duty is paid) in case of more than one container in one B/L than A.C give
some container no. randomly for examination and that container must be de-stuff by
CHA.

Step 6:
The duplicate shipping bill and wharf age duly paid is given to the container agent. The
container agent hand over the duplicate shipping bill to the vessel agent who is here uses it for
the purpose of filling EGM (Export General Manifest).
The container agent gives the wharf age form paid is given to the container agent
grants the loading permission. (But in case of the break bulk cargo, the CHA itself
submits the wharf age paid form to the port authority, so that loading can be allowed
in the vessel).

Step 7:
In the case of break bulk, after loading the cargo the chief officer issues the mate receipt, on
the basis of which captain of the vessel issues the bill of lading.

Step 8:
Besides all the CHA sends the phytosanitary certificates/pre inspection certificate to the
exporter so that with all documents he can submit this to the bank.
In case of charter, after processing and shipment of the goods following documents are sent
back by the CHA to exporter.
Full set of bill of lading: For pre carriage is through ship the bill prepared for export is called bill of lading
& if the shipment is by air then the bill prepared is called airway bill. A bill of lading is a very important
document. It is issued by the logistics service providers. It can be well explained as a document issued by a
common carrier to a shipper that serves as: A receipt for the goods delivered to the carrier for shipment. A
definition of the contract of carriage of the goods. A Document of Title to the goods described therein.
This document is generally not negotiable unless consigned "to order." If we ask to the
logistics companies than a Bill Of Lading is a product for them. They do the whole business
on the Bill of Lading. Increase in Bill of Lading shows increase in companys turnover.
Bill of Lading, On Board: A bill of lading acknowledging that the relative goods have been received on board
a specified vessel.
Bill of Lading, Order:It is a negotiable bill of lading. There are two types:
A bill drawn to the order of a foreign consignee, enabling him to endorse the bill to a third
party.
A bill of lading drawn to the order of the shipper and endorsed by him either "in
blank" or to a named consignee. The purpose of the latter bill is to protect the shipper
against the buyer's obtaining the merchandise before he has paid or accepted the
relative draft.
To get B/L, software (Visual Samudra) is used. Various details are entered in the
software such as Vessel Name & Number, Consignee, Shipper, Notify Address,
Quantity, No. of Packages, Packing List (Details of Material), Container No. etc. The invoice is
given to the company by the shipper. And a shipping bill is generated in the customs clearance on
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the basis of the invoice and packing list.

The container is stuffed and the required information is received from the port office, such as the
container number, and the Vessel name and No. The details are entered in the Software (Visual
Samudra) also each B/L is given a manual entry if not computerized. Than the details are
entered in the software and the final print of the B/L is taken. In B/L there are two types.
Receipt for shipment: If the shipper wants a receipt the shipper can get the receipt when the
container is ready to load on a vessel.
HBL - House Bill of Lading
HBL - House Bill of lading is made when the information is received for the port office. If
the shipper wants a bill before the loading of vessel on board, than HBL is provided. HBL is also
sent to shipper for approval.
MBL - Master Bill of Lading
MBL- Master Bill of lading is the final copy of Bill. It is given to the shipper it contains all the details
of everything. The Bill is used to charge the fees from the shipper. It is only given after the container is
loaded on to the vessel for sail. Now if the freight charges are paid by the exporter then bill of lading is
stamped as freight prepaid & if the freight charges are to be paid by importer then bill of lading is stamped
as freight to pay.
Copy of Mate Receipt:
Issued by commanding officer of the ship that cargo has been loaded to
the ship name of the vessel, date of shipment, condition of cargo at the time of receipt,
berth, and description of packages. Mate receipt is handed over to the port authorities so
that port dues are cleared by the exporter. Bill of lading is issued by the shipping
company only after the mates receipt is submitted by the exporter
Self Declaration Form or G R Form:
Under customs act, every exporter is required to declare export value of
shipment ad give an undertaking that export proceeds would be realized within a
period of six months from the date of shipment or due date, which ever is earlier. If
customs clearance for the shipment is made manually, declaration is made in GR
form, in duplicate. If the clearance is computerized, SDF form, in duplicate, is used in
place of GR form.
Copy of shipping bill (triplicate and quadruplicate).
Bill is generated in the customs clearance on the basis of The invoice is given to the
company by the shipper. And a shipping the invoice and packing list. When cargo is
stuffed, inside the container, in our port office or at factory. The details are given to
the corporate office documentation department via fax. The details as such received
are feed in to software called Visual Impex. Than, the details are sent via Ice gate link
to the customs database. In return, the customs allocate a shipping bill number and
print a shipping bill in the port office which is to be collected from the port office.
Further, the procedure goes for carting and loading the cargo into the vessel.
Following three types of shipping bill with custom authorities :
Dutiable shipping bill: it is used in case of goods, which attract export duty may or may not
be entitled to duty drawback. It is printed on yellow paper.
Free shipping bill: it is used in case of goods which neither attract any export duty nor entitled
for duty drawback. It is printed on simple white paper.
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Drawback shipping bill: it is used in case when refund of duties is allowed on the goods
exported generally it is printed on green paper, but when the drawback claim is paid to a bank,
then it is printed on yellow paper.
Certificate of origin:
A document provided by the exporters chamber of commerce that
attests that the goods originated from the country in which exporter is located.
Documents submitted by CHA to the customs:
a. Invoice.
b. Packing list.
c. Self Declaration Form Or Gr Form
d. Acceptance of contract.
e. Letter of credit.
f. Quality Control Certificate.
Lists of documents required to be submitted by the exporter to various authorities,
organizations, and agencies.
1) To the custom authority: Commercial invoice
GR Form ( Original and Duplicate )
Shippers Declaration Form
Copy of the Export Contract /L/c/Export Order
Inspection certificate
AR-4 Form Export License
Export license
Weighment Certificate
Shipping bill

2) To the port authorities: Port Trust Copy of the Shipping Bill

Wharf age application.
3)To the bank: Letter of credit
Commercial invoice
Bill of lading
Insurance Policy/Certificate
Bill of exchange
GR Form (duplicate copy)
Bank certificate
Export Inspection Certificate
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 Certificate of OriginShipment advice

4) To the RBI: Copy of the invoice
Sales Contract
Bill of lading
Inspection / Analysis Report
5) To the EXIM Bank:
Export contract
Letter of Contract
Balance sheet of the exporter
Statement of profit and loss in the transaction covered by the export contract
Statement regarding the projections of the credit requirement.
Short shipment:
In case of short shipment customs sends the short shipment notice Annexure C to the RBI
(Reserve Bank of India) along with G R form.
Short shipment notice is in five copies: Original - Customs
Second copy - Agent
Third copy Exporter
One copy- Wharf age refund
One copy is for CESS
Treasure Challan:This is document is used at the time of payment of the duty to the customs. It shows the amount
to be paid to the customs authority.
It is in four copies: Original
Duplicate
Triplicate
Quadruplicate
Customs keeps the original and duplicate copies. Triplicate and Quadruplicate copies are sent to
the CHA.

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IMPORT
Import Procedure:
The import procedure is quite different the export procedure. It starts with the importer asks for the three
original bills of lading from the bank. The bank issues the bill of lading only when the importer cleared all
the payments due to the bank.
The importer then sends the following documents CHA :a)
b)
c)
d)

Bill of lading
Invoice
Packing list
Certificate of origin

e)
Pre shipment inspection certificate
f)
Insurance certificate
g)
Sales contract
h)
Bond copy (if H.S.S)
The CHA shows the bill of lading to the shipping agent in order to get the NOC (Non
Objection Certificate in Kandla Port only).
No objection certificate has been issued by the shipping line to make sure that they have no
objection to open the containers for the examination of goods.
CHA then presents the bill of entry to the customs for noting and then customs
gives the import department the serial no. that comes on all copies of bill of entry.
CHA pays wharf age to the port authority and the original copy of wharf age goes to the
treasury of port trust.
Customs give the examination order on the back of original bill of entry in case of first check
procedure.
Cargo is inspected in front of the customs. Customs give the examination report at the back
of the bill of entry.
Customs assessed the duty to ensure that the duty evaluated by the CHA is
correct.
Prior to this, the CHA on the basis of invoice, packing list prepares the bill of entry. The bill of
entry is a proof that the goods have been imported. For custom clearance purpose, the importer
has to submit to the customs authority a form, which is known as bill of entry.

Bill of entry is in three copies:Original copy:-This is called the customs copy. In first check procedure it contains the examination report
on the back of it.
Duplicate copy:-It is submitted in port either in container section or in break bulk section along with wharf
age, NOC, Delivery order. It shows charges have been paid to customs and contain on the back, passed out
of custom charges.
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Triplicate copy:-This copy is for central excise for availing certain benefits.
Quadruplicate copy:-This copy is submitted to the bank.
Port trust copies:-Out of 5th, 6th, and 7th copies, one copy is given to the port authority. The other two copies
are kept by the CHA for his record.
Types of bill of Entry:I.
II.
III.

Bill of entry for home consumption

Bill of entry for warehousing
Bill of entry for Ex-bond clearance for home consumption

Bill of entry for home consumption:-This type of bill of entry is used when importer wants to take the delivery
of goods on payment of custom duty.
Bill of entry for warehousing:-This type of bill of entry is used when importer wants to warehousing the
goods in custom bonded warehouse.
Bill of for ex-bond clearance for home consumption:-This type of bill of entry is used for clearing the
goods from custom bonded warehouse against warehouse bill of entry on the payment of custom duties.
Another important document that is used in import is bill of lading. It plays an important
role both for the exporter and importer.
Calculation of duty in import:The duty has been calculated on the basis of assessable value.
Assessable value in rupees = CIF (Cost Insurance Freight) value + landing charges (1% of CIF
value and H.S.S. (High Seas Sale) CIF+2%+1) If the case is of FOB (Free on Board) then freight
and insurance is to be added. If insurance is not there then 1.125% of the C & F (Cost and
Freight) value is taken as insurance charges. Duty calculation is done by CHA as per the given rate
of duty for a particular product.
There are six kinds of duties, which have to be paid at the time of custom clearance in case of
imports those are:
1.
2.
3.
4.
5.
6.
7.

Basic Custom Duty

CVD
Additional cess on CVD
Secondary and higher cess on CVD
CESS
Custom sec & higher education cess
Additional Custom Duty

Let us consider that basic custom duty on the ALL ALUMINIUM SCARP is 0%, CVD 8%,
and additional duty is 4%. Say basic custom duty in rupees be X, Additional custom duty
be Y and CVD be Z (12.826688%)
X = 0% of assessable value
Z = Assessable value *8%(CVD)

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Y = Assessable value + 4% of ASS. VAL.+Z+ CESS on CVD 2%+ SEC.&HIGHER EDU.CESS

ON CVD 1%+ CUS. EDU.CESS 2+1%
CESS on CVD = 2% of Z
SEC.& HIGHER EDU.CESS ON
CVD = 1% OF Z Total duty amount (in
rupees)
=
X+Y+Z
CUS. EDU.CESS on Total duty =
2% of Z +EDU.CESS ON CVD+S&H
EDU.CESS
ON
CVD
1% of Z +EDU.CESS ON CVD+S&H
EDU.CESS ON CVD
Documents to be used in import:
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.

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Bill of lading
Invoice
Certificate of origin
59- Bond warehousing bond
Wharf age
Bill of entry
Packing list
NOC (No Objection Certificate)
Delivery order
Treasury challan
Gate pass

DOCUMENTS WHICH ARE TO BE USED IN IMPORT AND EXPORT CUSTOM

CLEARANCE.
Letter of Credit:
A Letter of credit is a document containing guarantee of a bank to honor drafts drawn on it
by an exporter, under certain conditions and up to certain amounts, provided that the
beneficiary fulfills the stipulated conditions.
Packing list:
Its is a detailed document provided by the exporter that spells out how many
containers there are in the shipment and which merchandise is contained in each
container.
Invoice:
It is a document which shows the total amount of the goods and the description of
goods.
Bill of lading:
In generic term used to describe a document issued by the carrier to the shipper.
Mate receipt:
Mate receipt is issued by the mate (assistant to the captain of the ship) after the cargo is
loaded into the ship. It is an acknowledgement that the goods have been received on board the
ship
Shipping bill:
It is issued by the custom authority. Shipping is the main document of the basic of which the
custom permission is given. After the shipping bill is stamped by custom, then only the
goods are allowed to be enter to the deck. It is prepared by EDI system or manually system.
Certificate of Origin:
A document provided by the exporters chamber of commerce that attests that the goods
originated from the country in which exporter is located.
Phyto-sanitary certificate:
A document provided by an independent inspection company, or the Agriculture Department of
the exporting countrys government, that attests that the goods confirm to the agriculture
standard of the importing country.
Manifest:
A document internal to the shipping company (the carrier) that lists all cargo onboard the
transportation vehicle.
Forms AR-4/AR-4A:
These forms are meant for applying for the removal of excisable goods for export by sea/post.
Form AR-4 is used for applying for excise inspection at the factory and form AR-4A is used
when goods are to be exported under a claim for rebate of excise duty or under bond.
Certificate of Measurement:
Freight can be charged either on the basis of weight or measurement. When it is charged on
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weight basis, the weight declared by the overseas supplier is accepted. The certificate contains
the name of the vessel, the port of destination description of goods, quantity, length, breadth,
depth etc of the packages.
Shipping advice:
A shipping advice is used to inform the overseas customer about the shipment of goods. There
is no particular form of shipping advice. The exporter only advises his importer about the
invoice number, Bill of lading / Airway bill number and date, name of the vessel with date of
sailing of the vessel.
Bill of entry:
The bill entry is a document, prepared by the importer or his clearing agent in the
prescribed form under bill of entry regulation, 1971, on which clearance of imported goods can
be made.
Certificate of insurance:
A document providing by the insurance company of the exporter that the goods are insured
during their international voyage.

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SUGGESTIONS
The custom clearance for import and export cargo is such a long procedure so it takes time to
clear, so the employee must be try to make their work on time and quick.
Some of the complicated procedure in custom clearance so if we get the support of all
employees it must be easy.
If custom clearance done through online then it should be more simple.

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CONCLUSION

The Indian business environment is changing with the rapid growth in infrastructure and
technology. With the increasing inflows of multinationals, trade has been increased,
which result in stiff competition between the organizations.
Despite of the stiff competition Shakti Forwarfers pvt. Ltd known as the leading custom
clearance agent, because of their effective implementation of quality management
system and customer centric approach.

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