EXPORT PROCEDURE

UNIVERSITY OF MUMBAI

T.Y.B.COM

SUBJECT

EXPORT PROCEDURE & DOCUMENTATION

PROJECT BY

MR. Rahul Singhaniya

Roll No 4094

Div: D

ACADEMIC YEAR 2012-13

MALINI KISHOR SANGHVI COLLEGE OF COMMERCE AND ECONOMICS

VILE PARLE (WEST) MUMBAI-400049

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EXPORT PROCEDURE

INDEX

PARTICULARS Pg. No.

INTRODUCTION 4

SET UP FOR AN EXPORT ORGANISATION 5

STRUCTURE OF AN EXPORT ORGANISATION 7

REGISTRATION FOR OBTAINING IMPORTER EXPORTER CODE (IEC)

NUMBER.

8

HOW ONE BEGINS TO DO EXPORT 9

FINDING A CUSTOMS 11

NEGOTIATING CONTRACT 13

EXPORT SALES, CONTRACT TERMS & CONDITIONS 14

ENTERING INTO AN EXPORT CONTRACT 15

PROCESSING AN EXPORT ORDER 17

FINANCIAL RISKS INVOLVED IN FOREIGN TRADE 19

MARINE INSURANCE POLICY 20

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EXPORT PROCEDURE

SHIPPING AND CUSTOMS FORMALITIES 21

PROCEDURE OF EXCISE CLEARANCE: 27

FACTORY STUFFING OF CARGO 30

SALES TAX EXEMPTION PROCEDURE 31

BIBLIOGRAPHY 34

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EXPORT PROCEDURE

INTRODUCTION

India has a mission to capture 2% of the global share of trade by 2010, up from the

present level of less than 1%. Export is one of the lucrative business activities in India. The

government also provides various promotional schemes to the exporters for earning valuable

foreign exchange for the country and for meeting their requirements for importing modern

technology and essential inputs. Besides, the income from export business is also exempted to

the specified extent under the Income Tax Act, 1961, Refund of Central Excise and Custom Duty

on export is also made under the Duty Drawback Scheme of the Government. There is no Sales

Tax on products meant for exports.

Exports can be of goods which can be moved physically from one country to another or

can be of service rendered.

TWO CLASSES OF EXPORTS:

1. Physical Exports

If the goods physically go out of the country or services are rendered outside the country

then it is called as physical export.

2. Deemed Exports

Where the goods do not go out of the country physically they can be termed as deemed

exports. Under Deemed Exports, the goods may be supplied to the manufacturer exporter

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EXPORT PROCEDURE

who ultimately export a finished product of which this supply forms a part and ultimately

go out of the country.

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SET UP FOR AN EXPORT ORGANISATION

The proper selection of organization depends upon

Ability to raise finance.

Capacity to bear the risk.

Desire to exercise control over the business.

Nature of regulatory framework applicable to anyone

If the size of the business is small, it would be advantageous to form a sole proprietary business

organization. It can be set up easily without much expenses and legal formalities. It is subjected

to only few governmental regulations. However, the biggest disadvantage of sole proprietorship

business is limited ability to raise funds which restricts the growth. Besides the owner has

unlimited personal liabilities. In order to avoid this disadvantage, it is advisable to form a

partnership firm.

The partnership firm can also be set up with ease and economy. Business can take benefit of the

varied experiences and expertise of the partners. The liability of the partners though joint and

several, is practically distributed amongst the various partners, despite the fact that the personal

liability of the partner is unlimited. The major disadvantage of partnership firm of business

organization is that conflict amongst the partners is a potential threat to the business. It will not

be out of place to mention here that partnership firms are governed by the Indian Partnership

Act, 1932 and, therefore they should be formed within the parameters laid down by the Act.

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Company is another form of business organization, which has the advantage of distinct legal

identity and limited liability to the share holders.

It can be a private limited company or a public limited company. A private limited can be formed

by just two persons subscribing to its share capital. However, the number of its shareholders

cannot exceed 50, public cannot be invited to subscribe to its capital and the members right to

transfer their share is restricted. On the other hand, a public limited company has a minimum of

seven members. There is no limit on the maximum number of its members. It can invite the

public to subscribe to its capital and permit the transfer of share. A public limited company

offers enormous potential for growth because of access to substantial funds. The liquidity of

investment is high because of easiness of transfer of shares. However its formation can be

recommended only when the size of the business is large. For small business, a sole proprietary

concern or a partnership firm will be the most suitable form of business organization. In case it is

decided to incorporate a private limited company, the same is to be registered with the Registrar

of Companies.

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STRUCTURE OF AN EXPORT ORGANISATION

Marketing manager for generating sales

Commercial manager for looking activities of the execution of the orders.

Staff personnel for carrying out the day-to-day activities namely

o Preparation of pre - shipment documents.

o Co-ordinating with clearing agents on the progress of the shipment to be made.

o Co-ordinating with the ware house\C. excise department regarding packing and

clearance of the goods for export.

o Preparation of post shipment documents foe banks.

o Follow-up with the bank on dispatch of documents, receipt of payment, an

ailment of bank loans etc.

To look into the requirement of licenses, claiming of export benefits filing of documents

with the Government Authorities in Discharge of Export Obligations, if any, filing of

returns to the various Government Agencies which are mandatory, prepare and keep an

information bank of various transaction of the company, their domestic as well as

international competitors.

An office boy for doing leg work.

A clearing and forwarding agent to handle the documents and the goods in the customs premises\ in the ports of lading.

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Depending upon the size of the business the numbers of personnel under each category may

increase. For example if a company is transacting substantial volume of business in more than

one product. Then it is necessary to have marketing manager for each product so that the person

can concentrate on a particular trade to enhance the business.

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REGISTRATION FOR OBTAINING IMPORTER EXPORTER CODE (IEC) NUMBER.

The Customs Authorities will now allow the exporter to export or import goods into or from

India unless he holds a valid IEC number. Before applying for IEC number it is necessary to

open a bank account in the name of the company with any commercial bank authorized to deal in

foreign exchange. The duly signed application form should be supported by the following

documents.

Bank receipt ( in duplicate ) / Demand Draft for payment of the fees of Rs. 1000/-

Certificate from the banker of the applicant firm as per Annexure 1 to the form given.

One copy of PAN number issued by Income Tax Authorities duty attested by the

applicant.

One copy of Passport Size photographs of the applicant duly attested by the banker to the

applicant.

Declaration by the applicant that the proprietor/partners/directors as the case may be of

the applicant company, are not associated as proprietor/partners/directors in any other

firm, which has been caution, listed by the RBI. Where the applicant declares that they

are associated as proprietor/partners/directors in any other firm, which has been caution,

listed by the RBI, they will be allotted IEC No. but with an additional condition that they

can export only with RBI’s prior approval and they should approach RBI for the purpose.

Each importer/exporter shall be required to file importer/exporter profile once with the

licensing authority shall enter the information furnished in Appendix 2 in their database

so as to dispense with changes in the information given in Appendix-2, importer/exporter

shall intimate the same to the licensing authority.

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PROFORMA OF IEC

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EXPORT PROCEDURE

HOW ONE BEGINS TO DO EXPORT

Before entering into the venture of exports, one must look for the product to be exported and the

market where he intends to export.

In case of a manufacturer, obviously he would like to export the product he manufactures as is or

with possible modification as may be required by the market. However, in case of a merchant

exporter or a trader, one has to identity the product to export. If the exporter is already in the

trade in the domestic market and is familiar with the product it would be an advantage to export

the said product of which he has reasonable knowledge.

Before selecting a product, one must simultaneously made a study and find out the prospective

market. For finding out the market for the selected product, the following methods will help.

Get statistical information as to imports of the product by various countries and their

growth prospects in the respective countries

Approach the chamber of commerce for their guidance to find out the market.

Approach the Export Promotion Council dealing in the product of selection to get

more information.

Once you are ready with the product you wish to export and have found the market for the same,

you are ready to proceed further. Following sequences can be followed:

Any one, who wishes to export, must first of all get an Importer Exporter Code

Number (IE Code).This can be obtained by making a formal application to the office

of the Regional Directorate General of Foreign Trade (DGFT).12

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Get yourself registered with the related Export Promotion Council and become a

member. Also arrange to obtain Registration-Cum-Membership Certificate (RCMC)

from the council. This has twin objectives:

o Under the Foreign Trade Policy, it is mandatory that an exporter gets him

registered with the Export Promotion Council to avail of various export facilities.

o Being a member, you will have access to all the information relating to the

product that could be made available by the council

o Many foreign buyers send their enquiries for the imports to the Export Promotion

Council. Hence you will have few customers interested in your product.

If you are a manufacturer, find out the provisions under the EXIM Policy of getting the

raw materials duty free.

Get familiar with the excise formalities as goods meant for export can be cleared without

payment of C. Excise duty on the finished product subject to compliance of certain

formalities.

Understand the local government regulations in relations to the export of the product.

Get information of the government’s regulations of the importing country as to

restrictions on the quantity, product specification, packing regulations, customs

regulations, requirement of specific documents/information etc.

Availability of Vessels/Airlines, the transport charges, frequency of operation etc.,

To look for a Custom House Agent (CHA) (also know as freight forwarders or clearing

agents) for handling the documents/cargo in the customs.

If the product is covered under any quota regulation, find out the agency/council who is

handling the quota distribution for the product and the availability of quota for exports.

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FINDING A CUSTOMS

Once you have selected the market, the next step is to find a prospective customer. This you

can get

From the directory of importers of the country

By writing to the Embassy of India in that country for assistance

By writing to the chamber of commerce of that country

By means of participation in a Fair/Exhibition abroad either directly or through the

Export Promotion Council

By participating in international fair if organized locally

Through the personal contacts in that country. By these processes one can only have the

list of customers. One has to dialogue or correspond with these customers by sending

samples, getting feedback from the customers etc. to ultimately select the customer with

whom to deal with. It is necessary to know the financial standing of the company which

can be obtained through the bank channel or through the office of ECGC.

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NEGOTIATING CONTRACT

Once the prospective customer is found, the business deal has to be concluded. The following

aspects may be considered before entering into a final contract with the buyer.

Credit Worthiness of the Customer.

Availability of the Steamer/Airlines and the frequency

The freight charges

The full product specification

The quantity, Price

Terms of Payment

Type of packing and markings on the packages

Mode of shipment & Shipment schedule

Tolerance of quantity to be shipped

Documentation requirement for the customer

Documentation requirement of the government of importing country

Compliance of the local governmental rules and regulations

Before entering into contract one should take note of the above factors. While these are

indicative, the requirements will vary from country to country, product to product and buyer to

buyer.

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EXPORT SALES, CONTRACT TERMS & CONDITIONS

Very often exporters do not enter into any formal contract and finalize the trade deal through the

exchange of letters, cable, telex etc. It is, however, expedient that the parties (exporters &

importers) incorporate all important terms & conditions of their trade deal in a separate

document or contract that will avoid disputes arising out of uncertainty or ambiguity. Export

contract may be sent in duplicate along with the Proforma Invoice to the overseas buyer.

STANDARD CONTRACT FORMS

Notwithstanding the efforts made by various national/international organizations like the United

Nations Commission on the International Trade Law, there is still no perfection or a device

which would give the parties an accurate and complete idea of each others understanding of

various trade terms, the commercial practices and the rights and the obligations vis-à-vis each

other so that the misunderstandings are practically eliminated.

Nevertheless, the Indian Council of Arbitration published in 1966 a booklet on “Standard

Contract Forms and Model Arbitration Clause for use in Foreign Trade Contracts”. It was

revised and reprinted in 1969 and 1977. It can be referred to by exporter for various clause to be

incorporated in the Export Contract.

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ENTERING INTO AN EXPORT CONTRACT

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.

There should not be any ambiguity regarding the exact specifications of goods and terms of sale

including export price, mode of payment, storage and distribution methods, type of packaging,

port of shipment, delivery schedule etc. The different aspects of an export contract are

enumerated as under:

Product, Standards and Specifications Quantity

Inspection Total Value of Contract

Terms of Delivery Taxes, Duties and Charges

Period of Delivery/Shipment Packing, Labeling and Marking

Terms of Payment-- Amount/Mode &

Currency

Discounts and Commissions

Licenses and Permits Insurance

Documentary Requirements Guarantee

Force Majeure of Excuse for Non-

performance of contract

Remedies

It will not be out of place to mention here the importance of arbitration clause in an export

contract Court proceedings do not offer a satisfactory method for settlement of commercial

disputes, as they involve inevitable delays, costs and technicalities. On the other hand, arbitration

provides an economic, expeditious and informal remedy for settlement of commercial disputes.

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Arbitration proceedings are conducted in privacy and the awards are kept confidential. The

Arbitrator is usually an expert in the subject matter of the dispute. The dates for arbitration

meetings are fixed with the convenience of all concerned.

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PROCESSING AN EXPORT ORDER

You should not be happy merely on receiving an export order. You should first acknowledge the

export order, and then proceed to examine carefully in respect of :

Items Specification

Pre-shipment inspection Payment conditions

Special packaging Labeling and marketing requirements

Shipment and delivery date Marine insurance

Documentation requirement etc.

If you are satisfied on these aspects, a formal confirmation should be sent to the buyer, otherwise

clarification should be sought from the buyer before confirming the order. After confirmation of

the export order immediate steps should be taken for procurement/manufacture of the export

goods. In the meanwhile, you should proceed to enter into a formal export contract with the

overseas buyer.

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EXPORT PROCEDURE

Before accepting any order necessary homework should have been done as to availability of the

production capacity, raw material e.t.c. It would be in the interest of the exporter to look into

entering into forward contract to safeguard against exchange rate fluctuations. Ensure that the

mode of payment is also agreed upon. In case of shipment against letter of credit, the buyer

should be advised to open the credit well in advance before effecting the shipment.

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FINANCIAL RISKS INVOLVED IN FOREIGN TRADE

As an exporter while selling goods abroad, you encounter various types of risks. The major risks

which you have to undergo are as follows:

Credit Risk

Currency Risk

Carriage Risk

Country Risk

You can protect yourself against the above risks by initiating appropriate steps.

CREDIT RISK: You can cover your credit risk against the foreign buyer by insisting upon

opening a letter of credit in your favour. Alternatively one can avail of the facility offered by

various credit risk agencies. A specific insurance cover can also be obtained from ECGC

(Exports Credit & Guarantee Corporation) to cover your country risk besides covering credit

risk.

CURRENCY RISKS: As regards covering the currency risk, due to the exchange rate

fluctuations, you can request your banker to book a forward contract.

CARRIAGE RISK: The carriage risk can be covered by taking an appropriate general insurance

policy.

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COUNTRY RISK: ECGC provides cover to protect the exporter from country risks. A detailed

procedure how an exporter can get him protected against the above risks are given in separate

chapters later.

MARINE INSURANCE POLICY

Goods in transit are subject to risks of loss of goods arising due to fire on the ship, perils of sea,

thefts etc. Marine insurance protects losses incidental to voyages and in land transportation.

Marine Insurance Policy is one of the most important document used as collateral security

because it protects the interest of all those who have insurable interest at the time of loss. The

exporter is bound to insure the goods in case of CIF quotation, but he can also insure the goods

in case of FOB contract, at the request of the importer, but the premium payment will be made

by the exporter.

There are different types of policies such as

SPECIFIC POLICY: This policy is taken to cover different risks for a single shipment. For a

regular exporter, this policy is not advisable as he will have to take a separate policy every time

the shipment is made, so this policy is taken when exports are infrequent.

FLOATING POLICY: This policy is taken to cover all shipments for same months. There is no

time limit, but there is a limit on the value of goods and once this value is crossed by several

shipments, then it has to be renewed.

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OPEN POLICY: This policy remains in force until cancelled by either party, i.e. insurance

company or the exporter.

OPEN COVER POLICY: This policy is generally issued for 12 months period, for all shipments

to one or all destinations. The open cover may specify the maximum value of consignment that

may be sent pre ship and if the value exceeded, the insurance company must be informed by the

exporter.

INSURANCE PREMIUM: Differs upon from product to product and a number of other such

factors, such as, distance of voyage, type and condition of packing etc. Premium for air

consignments are lower as compared to consignments by sea.

The Insurance Policy Normally Contains:

The name and address of the insurance company.

The name of the assured & description of the risk covered.

A description of the consignment.

The sum insured & the date of issue.

The place where claims are payable together with details of the agent to whom claims

may be directed & Any other details, as applicable.

SHIPPING AND CUSTOMS FORMALITIES

(As per the Prevailing Law i.e., ICA 62)

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The shipment of export cargo has to be made with prior permission of, and under the close

supervision of the custom authorities. The goods cannot be loaded on board the ship unless a

formal permission is obtained from the custom authorities. The custom authorities grant this

permission only when it is being satisfied that the goods being exported are of the same type and

value as have been declared by the exporter or his C&F agent, and that the duty has been

properly determined and paid, if any.

The custom procedure can be briefly explained as follows:

Submission of Documents: The exporter or his agent submits the necessary documents

along with the shipping bill to the Custom House. The documents include:

o ARE-1 (Original and duplicate)

o Excise gate pass (Original and duplicate transporters’ copy

o Proforma Invoice

o Packing List

o GRI form (Original and duplicate)

o Customs Invoice (where required in the importing country)

o Original letter of credit/contract

o Declaration form in triplicate

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o Quality Certificate

o Purchase memo

o Labels

o Licence (if any required) including advance licence copy

o Railway receipt/lorry way bill

o Inspection Certificate by Export Inspection Agency

Verification of Documents: The Customs Appraiser verifies the documents and appraises

the value of goods. He then makes an endorsement of “Examination Order” on the

duplicate copy of shipping bill regarding the extent of physical examination of the goods

at the docks. All documents are returned back to the agent or exporter, except

o Original Copy of GR to be forwarded to RBI

o Original copy of shipping bill

o One copy of commercial invoice

Carting Order: The exporter’s agent has to obtain the carting order from the Port Trust

Authorities. Carting Order is the permission to bring the goods inside the docks. The

carting order is issued by the superintendent of Port Trust. Carting Order is issued only

after verifying the endorsement on the duplicate copy of shipping bill. The Carting Order

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enables the exporter’s agent to cart goods inside the docks and store them in proper

sheds.

Storing the Goods in the Sheds: After securing the carting order, the goods are moved

inside the docks. The goods are then stored in the sheds at the docks.

Examination of Goods: The exporter’s agent then approaches the customs examiner to

examine the goods. The customs examiner examines the cargo and records his report on

the duplicate copy of the shipping bill. The customs examiner then sings the “Let Export

Order”.

Let Export Order: The Let Export Order is then shown to the Customs Preventive

Officer, along with other documents. The CPO is in charge of supervision of loading

operations on the vessel. If CPO finds everything in order, he endorses the duplicate copy

of shipping bill with the “Let Ship Order” This order helps the exporter/shipper to load

the goods on the ship.

Loading Goods: The goods are then loaded on the ship. The CPO supervises the loading

operations. After loading is completed, the Chief Mate (Cargo Officer) of the ship issues

the “Mate’s Receipt”. The Mate’s Receipt is sent to the Port Trust Office. The C&F agent

pays the port trust dues and collects the mate’s receipt. The C&F agent then approaches

the CPO and gets the certification of shipment of goods on AR Forms and other

documents.

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Obtaining Bill of Lading: The Mate’s Receipt is then handed over to the shipping

company (on whose vessel the goods are loaded). The shipping company issues bill of

lading. The Bill of Lading is issued in:

o 3 negotiable copies of Bill of Lading

o 10 to 12 Non-negotiable copies of Bill of Lading.

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PROFORMA OF SHIPPING DOCUMENT

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PROFORMA OF BILL OF LADING

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PROCEDURE OF EXCISE CLEARANCE:

The common procedure of excise clearance under “bond” and under “rebate” is discussed as

follows:

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Preparing of Invoice: The export goods have to be cleared from the factory under invoice.

The invoice contains details like name of the exporter, value of goods, excise duty

chargeable, etc. The invoice is to be prepared in triplicate. In case of export under Bond,

the invoice should be marked as “For Export without payment of duty”. In addition to the

invoice, a prescribed for ARE 1 has to be filed in by exporter.

Filling up of ARE-1 form (Annexure-20): The ARE-1 form needs to be filled in four

copies. A fifth (Optional) may be filled in by the exporter, which can be used at the time

of claiming other export incentives. The ARE-1 copies have distinct color for the purpose

of verification and processing.

Application to Assistant Commissioner of Central Excise (ACCE): The exporter has to

make an application to ACCE regarding the removal of goods from the

factory/warehouse for export purpose.

Information to Range Superintendent of Central Excise (RSCE): The ACCE will inform

the RSCE under whose jurisdiction the goods are intended to be cleared for export

Deputation of Inspector: The RSCE will then depute an inspector to clear the goods,

either at the factory or warehouse, or in certain cases at the port.

Processing of ARE-1 Form: The Excise Officer/Inspector will make endorsement on all

copies of ARE-1. The handling of ARE-1 Form is done as follows:

o The inspector returns the original and duplicate copies to the exporter

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o The triplicate copy is sent to officer (ACCE or Maritime Commissioner (MCCE)

to whom bond was executed or letter of undertaking (LUT) was given. This

copy can also be handed over to the exporter in a tamper proof sealed cover to

be submitted to ACCE/MCCE.

o The 4th copy will be retained by the excise inspector.

o The 5th copy is also handed over to the exporter.

o At the time of export, original, duplicate and the 5th copy (optional) will be

submitted to customs officer. The customs officer will examine these copies

and then export will be allowed.

o The customs officer will then make endorsement of export on all copies of ARE-

1. He will cite shipping bill number and date and other particulars of export on

ARE-1.

o The original copy and quintuplicate (optional) will be returned to the exporter.

The duplicate copy will be sent directly to the ACCE\MCCE i.e. excise officer

with whom bond was executed will get 2 copies, one from RSCE (or excise

inspector) when goods are cleared from factory and other Custom Officer after

export. This will enable him to keep track to ensure that all goods cleared from

factory or warehouse without payment of duty are actually exported. In case of

export after payment of duty, under claim of rebate, the basic procedure is

same as above, except that the triplicate copy (by excise inspector) and

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duplicate copy(by customs officer)will be sent to the officer to whom rebate

claim is filed. If claim of rebate is by electronic submission, these copies well

be sent to excise rebate audit section at the place of export.

Refund or Release of Bond: The exporter should make an application to the excise officer

for refund or release of bond. The application must be supported by original copy of

ARE-1 form. The excise officer crosschecks the original copy of ARE-1 form and the

duplicate and triplicate copies of ARE-1 form, which he had received earlier. If the

copies match, then refund is given or the bond is released.

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FACTORY STUFFING OF CARGO

Clearance of goods to docks: If the goods meant for export is of a small quantity which may

not be sufficient to make one full container, the cargo is said to be less than container load

(LCL) cargo. Such cargo has to be taken to the docks where the goods will be consolidated

(combining the cargo of other exporters to make up quantity for a full container) by the agent

and loaded into a container. Here the examination of the cargo is done at the docks. If the

goods meant for export is of sufficient quantity to make up a full container, the exporter has

the option to take the goods to the docks and get them examined and stuffed into a separate

container. An exporter gets the benefit on the freight amount for a full container.

Alternatively, he can have a container allotted to him and get the same to his Mills Premises.

The goods meant for exports can be stuffed into the container under the supervision of the

regional Central Excise Authority. Here the exporter has to

Obtain permission from the Customs for getting the container to his mills premises

for stuffing (House Stuffing)

Inform the Central Excise Authorities at least 24 hours before bringing the container

for loading.

The Central Excise Authority will supervise the loading, seal the container and certify the

invoice as directed in the permission given by the custom authorities. A special Lock is used to

lock the doors of the container. Samples from the goods will be drawn, if necessary, as required

under the customs permission. Such samples will be sealed and forwarded along with the

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container. The examiner in the docks may arrange to send the sample for testing. Then the

container is moved to the dock for loading.

SALES TAX EXEMPTION PROCEDURE

Export good are exempted from the payment of sales tax. The exporter can claim exemption

from sales tax (on purchases or sales for export purpose), provide the exporter is registered with

the Sales-Tax Department. If the exporter is not registered with the sales tax department, he

cannot utilize the facility of sales tax exemption. Therefore, it is necessary for the exporter to get

his organization registered with sales tax department.

I Registration Procedure

Application: The exporter must apply to the Sales Tax Officer (STO) under whose

jurisdiction the head/ registered office of the exporter is located.

Deputation of Inspector: The STO may depute an inspector to visit the office of the

exporter and inspect:

o Relevant books showing sales/ purchases.

o Partnership Deed or Memorandum and Articles of Association along with

Incorporation Certificate.

o Other Relevant documents.

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Inspection: The inspector visits the office of the exporter and inspects the necessary

books and other documents.

Report by Inspector: The Sales Tax Inspector makes a report to the STO for registration

or otherwise. The STO verifies the inspector report. The STO, before granting the ST

Reg. Number may cal the exporter for necessary clarifications, if required.

Security Bond: The STO normally requires the exporter to provide a security bond from

another firm which is registered with the Sales Tax Department.

Granting of Sales Tax Reg. Number: After completing necessary formalities, the STO

grants Sales Tax Reg. Number to the exporter.

II. Exemption Procedure

Obtaining Form ‘H’: the registered exporters need to apply to the concerned STO for

obtaining Form ’H’. the exporter should submit:

o A copy of Letter of Credit

o A copy of Letter of Credit /Export Order.

o Copy of the Invoice, where goods are already purchased for export purchase.

o A copy of shipping bill duty certified by customs.

The exporter has to affix the prescribed court fee stamp on each of the Form ‘H’ issued. The

STO then affixes the exporter’s company stamp on the Form ’H’. 36

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Filling the details in Form ‘H’: After export of goods, the exporter fills the relevant

details in ‘Form H’. The Form ‘H’ needs to be prepared in triplicate.

The exporter retains one copy, and other two copies are sent to the seller from whom the

exporter purchased the goods for export purpose. The seller than sends on copy of Form

‘H’ to STO along with the Return of Sales Tax. The other copy is retained by seller. The

STO may issue refund order to the exporter.

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BIBLIOGRAPHY

www.google.com

www.indiandata.com

www.eximkey.com

www.careers-india.com

Text book Mr. Michael Vaz (Export Marketing)

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