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Introduction To Import Liberalisation Of Imports. Types Of Importers. Special Schemes For Importers. Import Procedure :provisions of the EXIM Policy 2002-07 or any other law for the time being in force. Moreover, the customs duties on imports have been considerably reduced and rationalised during the last few years. The procedure for imports has been considerably simplified and the bureaucratic controls have been reduced to the bare minimum. Besides, availability of foreign exchange for imports has also been eased. Regulations regarding personal imports such as consumer goods, baggage etc., have been substantially liberalised. The Import Process Importing has been considered in several place in this text. The present chapter serves: i) ii) To organize the various aspects of importing by presentation of the import process, To describe major importing institutions,

Pre-import Procedure. Legal Dimensions of Import Procedure.

Question Bank.
Introductio In 1992 import of goods and services into India were valued at Rs. 50,000 crores. Merchandise imports exceeded exports. This flow of goods and services from abroad provides a wide verity of critical materials, parts and products not otherwise available. Additionally the flow provides a basis for foreigners to pay for Indian exports and provides Indian consumers with a wide selection of goods from which to purchase. The import function however often receives little attention because of the emphasis on the expansion of exports, except when imports directly compete with domestically produced products. Despite the quantitative importance of the function and the critical need for imported goods, the import function remains little understood by many in universities, government and businesses alike. Importing refers to the purchase of foreign products for use or sale in the home market. It involves searching foreign markets for acceptable products and sources of supply providing for transfer of the product to home market, arranging financing negotiating the import documentation and customs procedure and developing plans for use or resale of the item or service. Thus successful importing depends on more than good buying, it requires planning for acceptance of the product and delivery of the promised benefits. The importing firm has the responsibility to determine whether the foreign product or service meet the needs of the home market.

iii) To portray probation confronting Indian importers. iv) To elucidate major facts of the custom law and procedure and v) Because of its close relationship to customs arrangements. The discussion should aid you in conceptualizing the import process and should provide a somewhat different perspective on Indian commercial policy. Essentially the import process comprises the following five stages: i) ii) Determining market demand and purchase motivation. Locating and negotiating with sources of supply.

iii) Securing physical distribution. iv) Preparing documentation and customs processing to facilitate movement among countries and organization. v) Developing plan for resale or use. 1. Determining Market Demand And Purchase Motivation:Importers can have a distinct advantage over foreigners in the home market, because often they know or can more easily learn the requirements and nuances of the market. They are closer to the market, may live there and may be native to the market. They are familiar with information sources and institutions. This knowledge can however be a disadvantage when familiarity leads to carelessness and individuals assume a level of knowledge that does not really exist. Enthusiastic exclamations of family and friends over souvenirs from aboard are no substitute for careful market analysis. Home country manufacturers in fabricating their own final products import raw material and component parts for use. The potential for such materials and parts is determined by the expected sales of the manufacturers who use them. A careful analysis of trade report and business conditions will and importers in determining the market potential for both final products and components. Manufacturers may not only buy

Liberalisation of Imports
Consequent upon a comfortable balance of payments position of the country, increasing necessity of imports for export production and globalisation of Indian economy, the Government of India has liberalised the import regime from time to time. At present, practically, all controls on imports have been lifted. Under the new EXIM Policy 2002-07 announced on March 31,2002, the Government has initiated a comprehensive package intended to make international trade a vital part of development strategy. It has substantially eliminated licensing, quantitative restrictions and other regulatory and discretionary controls both on exports and imports. All goods may be imported freely in India without any restriction except to the extent such imports are regulated by the


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crude materials from abroad but operate mines and processing plants abroad from which they import to meet their requirements. 2. Locating and Negotiating with sources of supply:Importer must develop dependable supply sources in order to assure customers and themselves of their ability to deliver promised goods at the negotiated time and place and in the correct quantity and quality. Various negotiated time and place and in the correct quantity from a constant scouring of the foreign market by the importer, resident buyer, or middlemen to the worshiped control of supplying firms. The choice among the various options is dependent on supply market characteristics, the product involved. And the importers ability to finance and manage the operation. 5.

result in no delivery. Exporters who require irrevocable confirmed letters of credit will not ship merchandise on revocable unconfirmed letters. Customs procedures are especially relevant. Developing a Plan for Restate or Reuse :-Importers need to have a plan for resale or use of the goods they buy Otherwise, they may find themselves stuck with a product that doesnt appeal to the local people or does not necessary fit the production and use systems of specific business or institution. It is advantageous, then, for the importer to have a plan for convincing others of the merits of a product or service.


The importer and the importers customers are interested in supply sources that are capable of producing the quantities and the quality levels possible, sources should be operating in an environment that is conducive to satisfactory future performance if the relationship is expected to continue. Product quality is partly a technical matter of specifications or conformance to samples or description. It also has another dimension Foreign products may be perceived differently than local ones. Some foreign products from some countries may be seen as being of higher quality than local products 9 (e.g. cars) while other foreign products may find it difficult to overcome an image of poor quality. The quality perception can change over time, but importers should at least, be aware of the potential differences perceived by their customers. Price financial arrangements, terms of trade, and promotional aids are among other factors for negotiation. Even among parent companies and their subsidiaries negotiation may be needed to establish policy transfer pricing, priorities, product line, and deliveries. 3. Physical Distribution:-The logistics of supply, including delivery dates, transportation modes, inventory policy and claims servicing, may be the responsibility of either the buyer or seller or both-and may be subject to negotiation. These considerations affect the ability of a exporter to deliver goods to customers or the assembly line on time and they the final cost. Risk management policies will vary with the negotiated results. Documentation:- Documentation is important in international trade. The distances between trading partners and the sovereign rights of nations require more elaborate systems than those in domestic trade. Each business person desires to protects a personal interest and each nation wishes to be certain its laws are upheld, its revenues protected, and its sovereignty maintained its laws are upheld, its revenues protected, and its sovereignty maintained Previous chapters have indicated some of the documents needed to support these systems. The individual importer has little choice but to conform at least in the short-run Failure to carry out the documents needed to support these systems. The individual importer has little choice but to conform at least in the short-run. Failure to carry out documentation procedures can be costly and

Types of Importers Four basic types of importing institutions are found in the most countries: private industrialists end users, government agencies and facilititating agencies. These are augmented by many agents of foreign suppliers. 1. Private Industrialists:- Private industrialists who buy and sell for their own account. There are numerous private industrialists may carry on a significant portion of the import business while in India, the activities of industrialists are hampered by government attempts to achieve economic development goals. Restrictions such as the following are not unusual: Private industrialists are precluded from importing any item on the controlled list and they are often unable to get government approval to import on deferred payment terms . for industrial raw material importation licensing has been liberalised by the government of India. 2. End Users:- End users are manufacturers public- utilities, hospitals, colleges, university etc, who buy for their own use. They purchase raw materials, supplies, machinery and equipment to facilitate their own operations and gear level of their importing to their expected level of operations. Imports of this group often constitute the major source of imports for our country.


Traditionally Indian industrial buyers purchased from abroad only the domestic suppliers could not service their requirements. Recently however the growth of multinational companies improved transportation and communication supply shortages and increased exposure to foreign firms have led to increased use of foreign sources. The importation of goods from abroad has enabled many end users to gain the advantages of technological developments abroad as the Europens, Japanese, and others have expanded their research and development. Often goods are available at lower prices than from domestic sources, thereby permitting domestic manufacturers to be more competitive when they incorporate materials and parts in their final product. 3. Governmental agencies :- governmental agencies constitute a separate class of importers because of their operating characteristics, usually being subject to an extensive budgeting process detailed procedures for bidding and bidding and ordering and attempted close co-ordination with governmental development and social plans. The


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exact role of governmental agencies varies among countries. In India purchases by government agencies and government owned corporations account for a large percentage of all imports. This is true of all developing countries where the emphasis is on developmental plans and conservation of foreign exchange. 4.Facilitating Agencies a) Clearing agents: For the routine associated with clearing merchandise through customs as well as resolving controversies that may ensue an importer may engage the services of a customhouse broker. These intermediaries are export in the complicated paperwork connected with customs procedures. They often combine functions and serve also as forwarding agents.

products covered under the Standard Input Output Norms (SIONs). (c) 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 (d) Advance Licence :- An advance licence is issued for duty free import of components which are physically incorporated in the, products manufactured for export. In addition, fuel, oil, energy, catalysts, etc., which; are consumed in the course of production process may also -be allowed. Duty free import of mandatory spares up to 10% of the C.I.F. value of the licence which are required to be exported or supplied with the resultant product may also be allowed. Advance Licence can be issued for :--


The clearing agent verifies the documents on shipments into India, sees to the payment of duties and collects freight charges and arranges for the shipment of goods from ports to importers. Not only must brokers have knoeledge of documents, classifications and duty rates but they must also be familiar with countervailing duties. The value of their services is indicated by the fact that over 90% of all imports are processed customhouse brokers. b) Customs Bonded Warehouses:- Importers may not always want to take immediate possession of imported merchandise. They can postpone the payment of duty by storing dutiable import in customs bonded warehouses where they may clean sort repack and make certain changes in the condition of merchandise. Customs bonded warehouses are in the charge of a customs officer who jointly with the proprietor has custody of all stored merchandise subject to detailed customs regulations. Imported merchandise may be withdrawn from the warehouse: 1) 2) 3) For consumption For transportation and exportation or For transportation and warehousing at the another port.

Physical Exports. Intermediate Supplies. Deemed exports.

Pre- Import Procedure (a) Selecting the Commodity :- An importer should select the commodity for import after considering various commercial factors as well as legal considerations including the regulations contained in the EXIM Policy. Imports may be made freely except to the extent they are regulated by the provisions of the EXIM Policy.. Prohibited goods cannot be imported at all. Import of restricted items is permitted through licensing only while canalised items can be canalised through specified State Trading Enterprises (STEs). (b) Selecting the Overseas Supplier :- Imports can be made from any country of the world except Iraq. However, there shall be no ban on the import of items form Iraq in case where the prior approval of the concerned sanction committee of the UN Security Council has been obtained. The information regarding overseas suppliers can be obtained from various trade directories, consulate generals, international trade fairs and exhibitions and chamber of commerce. (c) Capability and Creditworthiness of Overseas Supplier :Successful completion of an import transaction mainly depends upon the capability of the overseas supplier to fulfil his contract. Therefore, it is advisable to verify the creditworthiness of the overseas supplier and his capacity to fulfil the contract through confidential reports about him from the banks and Indian embassies abroad. It is. advisable to finalise contract through indenting agents of overseas suppliers situated in India. (d) Role of Overseas Suppliers Agents in India :- Some reputed overseas suppliers have their indenting agents stationed in India. These agents procure orders from the

Special Schemes for Importers As per the latest EXIM Policy 2002-07, import of goods is permissible under the following special schemes, designed for encouraging exports :(a) 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 concessional 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 the value of capital goods imported. (b) Duty Free Replenishment Certificate (DFRC) :, DFRC is issued to a merchant exporter or manufacturer exporter for the duty free in:1port of inputs such as raw materials, components, intermediates, consumables, Spare paJ1:S, including packing materials to be used for. export production. Such certificate is subject to the fulf1lment of time bound export obligation, arid is issued in respect of

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Indian parties and arrange for the supply of goods from their principal abroad. It is advisable to import through such agents as they can be readily contacted in case there is any dispute regarding quality or quantity of goods imported, receipt of payment, documentation formalities, etc. (d) Inquiry; Offer and Counter-offer :- It is advisable that before finalising the terms of import order, one should call for the samples or catalogue and other relevant literature and the specifications of the items to be imported. Import of samples of goods is exempted from import duties under Geneva Convention of 7th November 1952. After satisfying- himself with the samples and the creditworthiness of the overseas supplier, the importer should proceed to fmalise the terms of the contract to be entered into. Stages In An Import Transaction The following stages mark the various steps involved in importing goods into India under an import licence and quota: 1. Placing the Indent:- The importer places order for the goods he requires and for which he holds an import licence. The order is called indent and may be placed either directly or through specialized intermediaries called indent house. The word indent is used for import of goods according to which two or three copies of the order are prepared and indented is one which does not specify the price and other details of the goods ordered but leaves them but leaves them to the discretion of the buyer in the exporting country. A If an indent specifies the price at which goods are sought to be imported it may give rise to negotiations between the parties. In such a case the indent incorporating the price finally settled is called a confirmatory indent. Though one order goods directly generally importers prefer to make use of the services of indent houses for this purpose. The indent firms serves as middlemen between the exporters and importers and charge a certain %age of commission from the importer . in India many of the big indent houses have their offices in port towns like Bombay, Calcutta. The indent houses maintain close touch with the well known foreign firms who send the samples of their products to them. Their salesmen take these samples to the intending importers and book orders from them. The details of the order taken down by the salesmen in their note books are entered in the indent form. Two copies of the indent form are sent to the importer for his acceptance. The importer returns one of the copies duly accepted and signed to the indent house which then sends a copy of the indent to its agent in the foreign country concerned. If an importer does not act through an indent house, he may place an order directly with the exporter. 2. Obtaining Foreign Exchange:- The foreign exchange reserves of any country are controlled by the Government and are released through the central bank. In India, the exchange Control Department of the Reserve Bank of India deals with applications for the release of foreign

currency. However an importer is able to get the foreign exchange only from an exchange bank approved and recognized by the Reserve Bank of India for dealings in foreign exchange. The importer has to produce the import licence along with the prescribed form for securing foreign exchange required to pay for the goods ordered from another country. The exchange back through which the payment is proposed to be routed puts its endorsement on the application form. On the strength of the application and the licence and the exchange policy of the government of India in force at the time of application the Reserve Bank of India sanction the release of a certain amount of the desired foreign currency. This paves the way for the importer to go ached with the other formalities in connection with an import transaction. It must be noted that while licence is issued by the Government for all imports during the period of its validity exchange made available only for a specific transaction for which an order has been placed. 3. Arrangement for Payment :- After the importer has succeeded in securing the requisite amount of foreign exchange from the Reserve Bank of India, he has to make arrangements for paying for the goods ordered. This may be done through an L/C where it is intended to enable the shipper to obtain payment for the goods immediately on surrendering a documentary bill to a bank in his own country.


Another method will be to request the exporter to forward the documentary bill through his banker to the importer for being delivered to him either against acceptance of the bill of exchange or against its payment. In such cases, when the shipper (exporter) has shipped the goods and the an advice note to the importer stating the date of shipment the goods and the probable date when the ship is expected to reach its destination. At the same time he draws a bill of exchange on the importer (also called indentor) for the full invoice value of the goods. Various documents like master document, insurance policy, bill of lading and certificate of origin are attached to this bill. That is way it is called the Documentary Bill A Documentary Bill may either be D/A or D/P i.e. the banker through which it is sent may be instructed to deliver the document against the acceptance of the bill by the importer or against the payment by him.. (D/A=Documents against Acceptance: D/P = Documents against payment) The banks branch in the importing country, or its agent thee, arranges for the bill to be presented to the drawee (importer). The attached documents are handed over to him immediately thereafter if it is a D/A bill in case of a D/P bill, the bank delivers the documents only after the importer pays the amount of the bill on maturity. Generally, indent house is mentioned as the Referee in case of need on the bill. In case, the importer cannot comply with the requirements regarding acceptance or payment the indent house does so on his behalf. 4. Clearing the Goods:- Assuming that the importer has taken possession of the various documents relating to the goods shipped, he will have to comply with the formalities prescribed for clearing the goods. When the


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ship carrying the goods touches at a port, it is notified in the newspapers and the importer has to secure the release of cargo from the custody of the customs authorities. The first thing for him to do is to obtain the Endorsement for Delivery delivery or order on the back of the bill of Lading which is the document of title of goods. The shipping campus of the such endorsement only if it is satisfied that the freight has been paid it freight has not already been paid by the shipper or exporter, the importer will have to make the payment on this score before he can be given a given a green signal by the shipping company. The importer then presents two copies of the Port Trust Dues Receipt and three copies of the Bill of Entry to the Port Trust Office to obtain clearance regarding dock dues, etc. Thereafter, one copy of the first form and two copies of the second are presented to the Customs office. Bill of Entry. The Bill of Entry, drown in triplicates, attests the fact that goods of specified quantity, value and description are entering the bounds of the country. Separate forms of the Bill of Entry are used used for each one of the three classes of good: (i) free goods which are exempted from customs duty, (ii) goods for home consumption, and (iii) bonded goods. 5. Payment of Customs Duties:- If the goods are free, no import duty is to be paid at the Customs Office. On dutiable goods, the importer or his agent will pay the import duty which may be specified, i.e. based on weight measurements etc. It may be advalorem, i.e according to the tariff or the market value of the commodity or its invoice value.

Under the new procedure, import licences/customs clearance permits will have validity of 12 months. However, capital goods licences and customs clearance permits will be valid for 24 months. Revalidation may be granted on merits. Other highlights of import procedure are: grant of licences for certain items of raw materials. Components and consumables in the negative list of imports decentralized application for second hand capital good upto a CIF value of Rs 50 lakh to be considered by the regional licensing authorities. Imports through courier service up to a value of Rs. 5000 at a time can be made in accordance with the policy. Licences for import of cloves, cinnamon and cassia to be granted to the extent of 10 per cent of best years imports in value in any of the preceding 5 licensing years, subject to fulfillment of export obligation. Items qualifying for exports include tea, coffee, tobacco and certain spices. Dealers of books may be granted licences on the basis of 20 per cent of the purchase turnover for import of fiction and other books. Import of motor vehicles including tourist coaches and airconditioning units will be permitted within the entitlement of the licences given to hotels travel agent and tour operators. The import entitlement of any one licensing year can be carried forward either in full or in part and added to the entitlement of the two succeeding licensing years. A special licensing committee headed by the Chief controller of Imports and Exports may consider applications for advice on the grant of licence for import of restricted items. Import of spares for imported motor vehicles and tractors upto a maximum value per year of Rs. 20000 (for motor vehicles ) and Rs.10000 for tractors for each imported vehicle can be made without a licence. Similarly, aircraft aprs can also be imported without a licence on the basis of the manual of the aircraft or on the recommendations of the department of civil aviation. Goods imported without restrictions may be transferred to other. However, in the case of goods imported with actual used conditions can be transferred only with the prior permission of the licensing authority. Import licences issued under various provisions of the policy will indicate the value both in rupees and in foreign currency at the exchange rate prevailing on the date of the issue of licence. No enhancement of rupee value will be necessary if the imports are covered by the amount of foreign currency indicated in the licence. Authorized dealers of foreign exchange will indicate the value in foreign currency as well as in rupees determined on the basis of the market and official exchange rate in the letters of credit opened for import of freely importable items or the items proposed to be imported against a licence.


Payment of customs duty can also be made under the system called the Permanent Deposit System Under this system, an importer may maintain a running account with the Customs Office and make deposits from time to time. The duty payable on a particular consignment of goods received at the customs is charged to the account and the importer is informed of this. In case the importer is not in a position to pay the customs duty on the whole of imported goods, he may apply to the customs authorities to get when placed in the Bonded Warehouse. He can then pay the duty on each installment of goods that he withdraws from time to time. To save themselves from the botheration of going through all the above mentioned formalities, the importers may entrust the hob to clearing and forwarding agents. In such a case, these agents will take it upon themselves to deliver the goods at the exporters warehouse. Clearing agents charge commission for their services. Import Procedure Simplified As per the new Import Policy 1992-1997 Import procedure has been simplified: Against seven application forms required for import of various items in the negative list only one form will now be required.

Most of the imports are now free from licensing. However, where licensing is required-cases like duty-fee imports for export production-considerable delegation of powers has been made to the regional licensing authorities.


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Legal Dimensions Of Import Procedure:(a) Finalisation of the Terms of Contract :- The import contract should be carefully and comprehensively drafted incorporating therein, precise terms as well as all relevant conditions of the trade deal. There should not be any ambiguity regarding the exact specifications of the goods and terms of the purchase including import price, mode of payment, type of packaging, port of shipment, delivery schedule, licence and permits, discount and commission, insurance, arbitration, etc (b) Mode of Pricing and INCOTERMS :- While finalising terms of import contract, the importer should, inter-alia, be fully conversant with the mode of pricing and the manner of payment for the imports. As regards mode of pricing, the overseas supplier should quote the terms prevailing in international trade. International Chamber of Commerce (ICC), Paris, has given detailed definition of a few standard terms popularly known as INCOTERMS. These terms have almost universal acceptance. (c) Mode of Settlement of Payment :- There are mainly three modes of settling international transactions depending upon the creditworthiness of the importer or exporter,. demand for the commodity in the international market, exchange control regulations prevailing in the importer or exporter countries and other relevant factors : Advance Payment.

in order to avoid huge demurrages on the imported goods lying uncleared for want of payment. Banks normally do not extend any fund based assistance to importers. However, they enable industrial units and others to have access to imported inputs and machinery by establishing letters of credit in favour of the overseas suppliers. (h) Obtaining Import L/C Limit:- Import L/C limits are sanctioned by the banks on submission of complete loan proposal as in the case of other types of credit facilities. This requires advance financial planning so as to retire import bills under L/C on time. Any delay in retirement of bills not only strains the relations is of the importer with his bank but also results in additional costs by way of extra commission, penal interest, demurrage charges, etc. (i) Dispatching Letter of Credit :- If the term of payment agreed between the importer and the overseas supplier is a letter of credit then the importer should obtain the letter of credit from his bank and forward it to the overseas supplier well within the time agreed for the same. The importer must see to it that the letter of credit has been prepared in the strict conformity of the import contract entered between them.


Payment or Acceptance against Documentary


Payment under Letter of Credit.

(d) Obtaining lEC Number :- In India, it is obligatory for every importer and exporter to register themselves with the Director General of Foreign Trade (DGFT) and obtain Import-Export Code (IEC) Number. The application form -for obtaining IEC number should be accompanied by a fee of Rs. 1000 and two copies of passport size photographs of the applicant duly attested by the banker of the applicant and other relevant documents. . (e) Obtaining Import Licence :- If the item to be imported falls in the . prohibited list, then such item cannot be imported at all. However, if it falls in restricted list then the necessary clearance must be obtained from appropriate licensing authority. Similarly, if it is subject to the canalisation through State Trading Enterprises (STEs), then the necessary formalities are to be completed pertaining to the same. (f) Obtaining Foreign Exchange :- In India, all foreign exchange transactions are regulated by the Exchange Control Department of the Reserve Bank of India (RBI). Therefore, every importer is required to make an application to the Reserve Bank of India (RBI) for getting. sanction for making overseas payments. The Exchange Control Department scrutinises the application and if satisfied, sanctions necessary foreign exchange for the import transaction. (g) Arranging Finance for Import :- It is advisable that the financial planning for imports should be done in advance

Import By Export Oriented Units/ Export Processing Zones Units The Government of India decided to establish export processing zones in 1965 in order to provide all facilities to the exporters to promote exports from India. The entire scheme was reviewed in 1980 when it was decided by the Government to introduce the scheme of export oriented units and provide them with all facilities in order to achieve faster rate of growth in exports. The export oriented units could be established in the export processing zones or outside the zones. The 100% EOUs located in export processing zones were known as EPZ units. Besides, the export processing zones the Government also established specialised processing zones to promote the export of elec-tronics hardware, and computer software. For this purpose electronics hard. ware technology parks and software technology parks were established. The basic requirement of the units to be established under these zones or for the export oriented units outside the zones is that these units shall undertake to export their entire production of goods and services. The units established as export oriented units or units in the export processing zones may be engaged in the manufacture, services, trading, development of software, agriculture, agroprocessing, aqua-culture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granites. Such units are allowed to export all prod-ucts except banned items. Duty Free Imports The most significant feature of the units in these zones or export oriented units is that these units are allowed to make duty free import of all types of goods including capital goods required by the units for the manufacture of goods or trading of goods or supply of services. The only condition is that the

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items of import should not be banned under the Export Import Policy 1997--2002. Such units are also allowed to import goods including capital goods required by them free of cost or on loan from their clients in foreign countries. The units in the STP /EHTP /EPZ are also allowed to import duty free all types of goods for creating a central facility for use by software development units in STP /EHTP /EPZ. The EOU /EPZ/EHTP /STP units can procure the goods from bonded warehouses in the domestic tariff area without payment of import duty .The units are allowed to import even second hand capital goods or import goods on lease basis. The EOU /EPZ/EHTP /STP units are allowed to import without payment of import duty all other goods besides capital goods required by them for their activities. The list of items permitted for export is as follows: Capital goods, as defined in the Policy including the following and their spares. (i) DG sees, captive power plants, transformers and accessories,

A bonafide commercial traveller or businessman may import commer-cial samples without payment of import duty upto a value. limit of Rs. 60,000 or 15 units in number, within a period of twelve months subject to the fol-lowing conditions: The samples are imported as a part of personal baggage or by post or by air. 1. 2. The importer produces Importer-Exporter Code (1EC) Number at the time of importation.


3. The goods are clearly marked as samples. 4. The importer, at the time of importation: Commercial Samples and Prototypes (Free of Charge) A bonafide business firm may import, without payment of import duty, bonafide commercial samples and prototypes by post or by air or by courier service upto a value limit of Rs. 5,000 provided the said goods have been supplied free of charge. The postal charges or the air freight is not taken into account for determining the value of commercial samples and prototypes.

Question Banks
Q.1 Name the different categories of importers. Q.2 Explain the special schemes of import liberalisation in India. Q.3 Explain the main steps in pre-import procedure. Q.4 What are the legal dimensions of import procedure? Notes

(ii) Pollution control equipment, (iii) Quality assurance equipment, (iv) Material handling equipment, like fork lifts and overhead cranes, (v) Un-interrupted Power Supply System (UPS), Special racks for storage, storage systems, modular furniture, computer furniture, anti-static carpet, teleconference equipment, servo control system, air-con-ditioners, panel for electrical Security Systems. (vii) Tools, jigs, fixtures, gauges, moulds, dyes, instruments and acces-sories; Raw materials, components, consumables, intermediates, spares and packing materials; viii) Prototypes and technical samples for product diversification, development or evaluation; viii) Drawings, blue prints, charts, microfilms and technical data; ix) Office equipment, including P ABX, fax machines, video projection system; Spares and consumables for the above items. The facility of duty free import available to the EOO / EPZ/ STP /EHTP is subject to fulfilment of export obligation by these units. The obligations of these units are at two different levels as explained below: Import of Commercial Samples: The import of commercial samples is exempt from the levy of import duty as provided vide General Exemption No. 42 (Notification No. 154/94-Cus dated 13.07.1994 - with latest amendment on 6.07.1999 vide notification no. 86/99-Cus). The samples may be paid for or imported free of any charge. The exemptions from import duty are different in both the cases. Commercial Samples (Paid for)


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