Institute of Management Development and Research, Pune

Institute of Management Development and Research

Post Graduate Diploma in International Trade

Summer Internship ReportOn

Import Export Procedure and Documentation

Hellmann Worldwide Logistics

MUMBAI

Submitted by: Aishwarya Gupta(04)

PGDIT(09-11)TABLE OF CONTENTSSERIAL NOINDEXPAGE NO.

1ACKNOWLEDGEMENT3

2EXECUTIVE SUMMARY4

3TRAINING SCHEDULE 5

4ENTITIES INVOLVED IN INT. TRADE 6

5TYPES OF CONTAINER12

6DOCUMENTS IN OCEAN EXPORT13

7EXPORT PROCEDURE15

8AIRWAY BILL16

9CALCULATION OF CHARGES19

10IMPORT PROCEDURE21

11DOCUMENTS IN IMPORT23

12IMPORT DUTY CALCULATIONS25

13CUSTOM CLEARANCE27

14WORKING OF SALES29

15CONCLUSION29

16BIBLIOGRAPHY30

ACKNOWLEDGEMENT

I thank our Summer Internship Organization Hellmann Worldwide Logistics India Pvt. Ltd., Mumbai for giving us with the great opportunity to build practical knowledge relating to the working of a Freight Forwarder and Custom House Agent. I are very grateful to Mr. Shekhar Oak (General Manager Western India) and Mr. Rosario Dcruz (Manager Ocean), who guided us throughout the course.I would also like to express our gratitude to Mr. Bala (Assistant Manager- Air Exports), Virendra Rawat (Dy. Manager Ocean Exports), Miss Smitha, Miss Parvathy, for their guidance and support in explaining the various procedures to us.I would also like to thank Mrs. Ujjwala Mulik, Miss Shefali Naik, Mr. Vinod Shelke, Miss Tammy Bothelo, and all the staff of various departments, for providing us all the practical information needed by us. I would also like to express our gratitude to Mr. S. Kandalgaonkar(Director-IMDR), Mr. Ajay Nagre (Former Director - IMDR) and Mrs. Vipra Tiwari (Placement Coordinator) for making us aware of the ground realities of the industry by grooming us for this.

EXECUTIVE SUMMARYThe main objective behind the Summer Internship Program is to make oneself aware about the Import - Export procedures and the documentation required for the same. Also, to understand the operations in the field of Import and Export. This helps one to understand the complex working procedures of the customs department and how the custom clearance takes place.

The Summer Internship was the first step towards getting practical knowledge in the field of international trade. Describing each and every activity, all the happenings, big and small is impossible to cover in this report. But surely it will give a window view of my experience in the Summer Internship.The main objective of doing the summer internship training at Hellmann Worldwide Logistics is to learn the various practical aspects of working of Freight Forwarders, consolidators and customs. This report gives a window overview regarding practices and procedures adopted by a Freight Forwarder. It did help in achieving the Summer Internship objectives and gave an opening to learn how this industry works.The PGDIT course in our Institute is designed in such a way that students get the necessary theoretical knowledge regarding the International Trade and also get a practical exposure towards the functioning of a company, which is involved in International Trade. At the end of the course, we are supposed to know the roles and responsibilities of the Organization.

Observing the cases and handling consignments was the most effective tool which equipped us practically with the challenges faced by the International Trade Industry.Hellmann has achieved a great success and reputation in this industry and working with Hellmann was a great experience.TRANING SCHEDULE

In this report, I have put down the knowledge I gain during our training period. The 6 weeks of summer training has helped us to achieve the objectives of our training program.SL NO.DEPARTMENT

1.Air ExportWeek 1

2.Air ImportWeek 2

3.Ocean ImportWeek 3

4.Ocean ExportWeek 4

5.Custom ClearanceWeek 5

6.Sales DepartmentWeek 6

What is a Freight Forwarder?

Freight Forwarding is a vital part of international trade activity. The company will face many difficulties if it does not take into account how the goods will be delivered to the market.

The issue of freight forwarding must be considered at an early stage of the development of the export marketing plan as it raises several concerns that need to be addressed quickly. Not only does the exporter need to understand which INCOTERMS to stipulate and work to, but the method of transport also needs to be considered (see road, rail, sea, air).

Packaging is also another factor that needs to be considered, as is insurance. Much of the hassle can be taken out of the exporters hands by using an effective freight forwarder, but as with any supplier care needs to be taken to ensure that the supplier meets the needs of the organisation.

A freight forwarder is an agent who handles export shipments for a fee. Hence, freight forwarders play a very important role for exporters. Here are few of the many activities that you will conduct as a freight forwarder:

International documentation and packaging

Carrier and routing information

Export license assistance

Marine insurance rates and coverage

Warehouse and distribution services

Hazardous materials shipping compliance informationROLES OF A FREIGHT FORWARDER:-

The Freight Forwarder plays a very important role in International Trade. He is the entity who on behalf of the Shipper does all Procedural & Documentation Formalities involved to get the goods Custom Cleared. They also look after warehousing & carting of cargo before shipment of export consignments & after a discharge of import cargoes, by sea carriers. There is a important aspect of their work- consolidation of shipments.The role of a Freight Forwarder is as Follows:-

Selection of routes

Determination of shipping documents

Delivery to carriers & collection of documents

Keeping the consignor & consignee informed

Assisting for preparation of shipment documents

Preparing & processing documents through Customs, port & Octroi authorities, payment of fees, duty etc.FLOW CHART SHOWING FUNCTIONS OF FREIGHT FORWARDER:-

In the above diagram, E1, E2 & E3 send their LCL cargo to CFS 1. The consolidator stuffs the cargo into the container. This container could be his or of another shipping line. The process is called Consolidation. Then the container is sent overseas via ocean journey, to CFS 2 in another country. There the container is de-stuffed and LCL cargos are given to the respective importers.

The above process involves both consolidation & freight forwarding. Today, the services of a forwarder are usually available in a consolidator, and the forwarder often engages in the consolidation of cargo. Hence, the term forwarder is often used synonymously with the consolidator.

Charges: The forwarder usually receives the forwarder's charges from the exporter.

In the ocean shipment, the forwarder may 'buy' the shipping space, in a special arrangement with the carrier, and 'resell' the space to individual shippers, instead of receiving a commission. In such an arrangement, the forwarder functions as an independent distribution or logistical company known as the NVOCC (non-vessel operating common carrier).

NVOCC (Non Vessel Operating Common Carrier):

Generally they are the carriers, that dont own their vessel. They reserve space on the vessels of the shipping lines for the containers that are being dispatched by them, as they have tie-up with shipping lines. For this the shipping line charges some extra to them for the same. This is because; the carriers have the benefit of dispatching the container on board the ship for the particular destination even though the space is full on the vessel. They have an advanced reserved space on the vessel for their containers. These carriers have the authority to issue the Bill of LadingThe freight forwarder ensures that your goods receive the priority it requires; your documentation is appropriately filled and your goods reach its destination in the specified time.Important incoterms usedFOB, DDP, DDU, Ex-works, C&F and CIFOther important entities involved in the business of International trade. C.H.A A role of C.H.A starts:-

When an exporter or ;

An importer asks him to work for him.

A Custom House Agent firm prepares:-

Bill of entry or

Shipping Bill

As per the requirement of their customers. For these services the customer provides them with all the required documents like;

Invoice,

Packing list and other relevant documents.

A C.H.A firm should try to prepare documents on time to get goods delivered. The C.H.A collects these documents from the customer and according to that they prepare shipping bills or bill of entry. After preparing the documents some time they collect the goods from the exporter and with the document they go to ICD or at the PORT of DISCHARGE and get the goods custom cleared. If an exporter or an importer has some special requirement like if they want there goods to be exported under special schemes then they prepares documents according to that and vice versa for an importer.

They collect

services charges

services tax

custom charges and;

Other charges from the customer.

SURVEYORS

There are various kinds of examinations conducted by surveyors on the basis of which survey report is issued. There are many types of surveys conducted by surveyors as asked by Importer or Exporter under heading:

Cargo Lashing report

Import cargo survey report

Container examination report etc.

The survey report contains following details,

1) Survey applicant

2) Survey date and time

3) Place of survey

4) Consignee

5) Invoice no & Date

6) No of Packages

7) Description

8) Gross weight & Net weight

In case of survey of cargo, the details examination is mentioned i.e. the condition of cargo where damaged or proper. If damaged, then total description and reason for damage of goods is given in survey report.

CONSOLIDATORS

Consolidators, as the name suggest is an entity which is responsible for consolidation of cargo. In the case of LCL shipment (lesser than container load), the consignment is sent to consolidators. Who then after getting other sufficient LCL consignments which are supposed to be shipped the same destination, books the place in container.

After which as the place in container is utilized, the container is shipped to particular destination. Hence by converting LCL shipments to FCL consolidators earn huge profits.

CUSTOMS

The checking of cargo is done by customs. Not only goods but all the documents are also checked. The description of goods should match with the description given in the documents. All the goods moving out and coming in the country are checked by the customs dept. They play a very important role in safeguarding the interest of the domestic industry by making it sure that ill-legal movements of goods do not take place.

CO-loaders

CO-loaders are the people who consolidate the various LCL cargo

From various exporter, they book the container from shipping line,FF are customers to them

Eg Team Global

All Cargo etc

TYPES OF CONTAINER The exterior dimensions of all containers conforming to ISO standards are 20 feet long x 8 feet wide x 8 feet 6 inches high or 9 feet 6 inches high for high cube containers.

VENTILATED CONTAINER20'Ideal for cargo requiring ventilation

BULK CONTAINER20'For bulk cargoes

TANK CONTAINER20'For transportation of liquid chemicals and food stuffs

DRY FREIGHT CONTAINER20' and 40'General purpose container

HIGH CUBE CONTAINER40' and 45'9'6" High - For over height and voluminous cargo

OPEN TOP CONTAINER20' and 40'Removable tarpaulin for top loading of over height cargo

FLAT RACK20' and 40'For over width and heavy cargo

PLATFORM20' and 40'For extra length and heavy cargo

INSULATED CONTAINER20' and 40'For additional insulation of sensitive cargo

REEFER CONTAINER20' and 40'For cooling, freezing or heating of foods or chemicals

HIGH CUBE REEFER CONTAINER40' and 45'9'6" High - For over height and voluminous cargo requiring cooling or freezing

The main documents in Ocean Export

Shipping BillShipping bill is the main customs document, required by the customs authorities for granting permission for the shipment of goods. The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e., certified by the customs. Shipping bill is normally prepared in five copies:(a) Customs copy.

(b) Drawback copy.

(c) Export promotion copy.

(d) Port trust copy.

(e) Exporter's copy.

TYPES OF SHIPPING BILL

(a) Drawback Shipping Bill: - Drawback shipping bill is useful for claiming the customs drawback against goods exported.

(b) Dutiable Shipping Bill: - Dutiable shipping bill is required for goods which are subject to export duty.

(c) Duty-free Shipping Bill: - Duty-free shipping bill is useful for exporting the goods on which there is no export duty.

(d) Bill for Shipment Ex-bond is for use in case of imported goods for Re. exports and which are kept in Bond.

Following documents are required for the processing of a Shipping Bill: (a) GR Forms in duplicate for shipments to all countries.

(b) Four copies of Packing list giving contents, quantity, gross and net weight of each Package.

(c) Four copies of Invoices indicating all relevant particulars such as no. of packages, quantity, unit rate, total FOB/CIF value, correct and full description of goods, etc. (One copy of this Invoice is to be pasted on the duplicate copy of Shipping Bill).

(d) Contract, Letter of Credit, Purchase Order

(e) Inspection/Examination Certificate.

The Formats presented for the Shipping Bill are as under: (a) White Shipping Bill for export of Duty Free goods prepared in triplicate in the Standardized Format.

(b) Green Shipping Bill for export of goods under claim for Duty Draw back prepared in quadruplicate in the prescribed Form.

(c) Yellow Shipping Bill for export of dutiable goods prepared in triplicate in the prescribed Form.

(d) Pink Shipping Bill for export of Duty Free goods ex-Bond prepared in triplicate in the prescribed Form

SIGNIFICANCE OF SHIPPING BILL

(a) Shipping bill is the main customs document, required by the customs authorities for granting permission for the shipment of goods.

(b) The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e., certified by the customs.

(c) Duly endorsed shipping bill is also necessary for the collection of export incentives offered by the government.

(d) It is useful to the Customs Appraiser while determining the actual value of goods exported.

EXPORT PROCEDURE

AIRWAY BILL

It is a very important document in air export.it is an evidence for contract for carriage An airway bill, also called an air consignment note, is a receipt issued by an airline for the carriage of goods. As each shipping company has its own bill of lading, so each airline has its own airway bill. . Airway Bill or Air Consignment Note is not treated as a document of title and is not issued in negotiable form

There are more than 9 copies of Air Waybill is prepared. Three of them are original (original 1, original 2 and original 3.) and rest are copies of Air Waybill. Air Waybill copy and their distribution

Original 1 Airlines copy (for issuing carrier), Purpose: Proof for accounting (Green)

Original 2 (for consignee), accompanies the shipment to the airport of destination. The consignee receives it together with the shipment (Pink)

Original 3 (for shipper), verification of handing over the shipment for transport; proof of the signature of the airline and shipper for the contract of carriage, voucher for the payments made to the airport of departure (Blue)

Copy 4 (delivery receipt), accompanies the shipment to the airport of destination. It is signed by the consignee and kept by the last airline; Purpose: Proof of delivery of the shipment, voucher for the fulfillment of the contract of carriage by the airline (Yellow)

Copy 8 (for agent), remains with the agent or the station of the issuing airline (white)

Copies 5, 6, 7, 9 and 10 are additional copies, use as required (white)

CHANGE IN AIRWAY BILL

F F can change any airway bill before it,he can mke any changes in airway bill when the goods are in transit

But not at all when importer receives it,if any changes are to be made when the goods are received by importer than ff will have to pay some charges

Airway bill no

Hellmann keeps stock of airway bill, different airlines will have different airway bill, and the codes are also different for different airline e.g. AIR FRANCE 057

The code for each airway bill is different its of 11 digit, the 1ST 3digit, will be airline code ,i.e. at the prefix e.g. 057-1289 1804=serial no of one of the air France airway bill, any air way bill will never end with 7,8&9,last digit is called as check noCONTENTS OF AIRWAY BILL

(a) Name of the airport of departure and destination.

(b) The names and addresses of the consignor, consignee and the first carrier.

(c) Marks and container number.

(d) Packing and container description.

(e) Total number of containers and packages

(f) Description of goods in terms of quantity.

(g) Container status and seal number.

(h) Amount of freight paid or payable

(i) Signature and initials of the issuing carrier or his agent.

IMPORTANCE OF AIRWAY BILL

(a) It is a contract between the airlines or his agent to carry goods to the destination.

(b) It is the document" of instructions for the airline handling staff.

(c) It acts as a customs declaration form.

(d) Since, it contains details about freight it also represents freight bill.Use of airway bill

a)For transportation of individual shipment

b)For transportation of consolidated shipment

HOUSE AIRWAY BILL

There are 5 copies of house airway bill

1HWB=customs

2HWB=Shipper

3HWB=Importer

4HWB=extra copy

MASTER AIRWAY BILL

It is send from HELLMANN TO HELLMANN

CALCULATION OF CHARGES

The forwarder in his godown weights the cargo to calculate the chargeable weight. But if the dimensions of the cargo are more, then the volume is calculated and the volume is divided by 6000 to get the volume weight. Then the gross weight and the calculated volume weight is compared, the weight which is greater is considered as the chargeable weight.volume weight/=Length*Bredth*Height*no of packets

6000 This formula is used when calculation is in cubic cm,and when calcu are in inches than instead of 6000 we use 366,Now if the weight increases above 500 than there is no problem to exporter bz his freight will be same but his

EXPORTER TO AIRLINES WILL HAVE TO PAY FOLLOWING CHARGES

1. FUEL

2. ESSE CHARGES=WAR CHARGES

3. X-RAY CHARGES=SCAN CHARGES

Will increase, these charges are played by ,exporter to airlines EXPORTER TO FF

1. AWA

2. MAA

3. Cartage charge=These are the f f charges, these are 1rs per chargeable weigh Import ProcedureImportant Documents required in Imports

Master Bill of Lading

House Bill Of Lading

Cargo Manifest

Covering Letters in the favor of liner.

Bill of Entry

Debit Note

Deliver OrderIMPORT PROCEDURE:

The procedure begins by receiving the documents from the shipper by the consignee or the consignees CHA.

These documents are received either by fax, courier or email.

Duty on consignment is then calculated.

When the vessel reaches the POD (port of delivery) the importers CHA is informed by the liner or by the shipper.

Entry is done in the software VISUAL IMPEX giving details of consignor, consignee, shipping lines.

CHA receives the IGM no. from the custom.

TR6 challan is made by paying the duty amount in the bank.

DO is taken from the shipping company after paying all the dues of the ware house and the liner. There are two types of D/O:

Examination D/O: in case the consignee wishes to examine his cargo before taking the final delivery, he can get an examination D/O against a first check examination order issued by the customs. If the consignee, after examination, does not find his cargo in good or acceptable condition, he can reject to take the delivery of the cargo. Cargo can only be examined and appraised by the customs officer but cannot be delivered against this order. For this no original document is required only a letter from the customs is mandatory.

Final D/O: this is issued for a final delivery of the goods.

DOCUMENTS REQUIRED AT VARIOUS STAGES OF CLEARANCE OF IMPORT CONSIGNMENTS:1. DOCUMENTS REQUIRED FOR BILL OF ENTRY:

Bill of Lading.

Invoice.

Packing list.

COO (optional).

Importers declaration.

Insurance documents or freight memo (optional).

2. DOCUMENTS REQUIRED FOR DOCK DESTUFFING (IMPORT)

Original Bill of lading 2 copies.

Bill of entry 2 copies.

Duty paid 2 copies.

3. DOCUMENTS REQUIRED FOR LOADING THE CARGO:

Same as above + Loaded container bond + marine insurance.4. DOCUMENTS REQUIRED FOR FINAL D/O:

Bill of entry.

TR-6 Challan (duty paid with bank seal).

Original copy of bill of lading.(if bill of lading is not surrendered at load port)

DD/cheques for payment of shipping companys charges.5. DOCUMENTS REQUIRED FOR OUT OF CHARGE ORDER:

Yard destuffing:

-D/O .

Factory destuffing:

-D/O, Survey letter, form 13 & 18Form 13 & 18 are for container movement. These forms are for destuffing at factory premises. These forms are used for destuffing the FCL at factory premises

IMPORT DUTY CALCULATIONWhen goods are imported into India for purpose of domestic consumption they are subject to payment of Customs Duty. Duties are charged on ad Valorem basis i.e. as a percentage of value or specific i.e. Rs per kg. Etc.Import Duty generally consists of the following types:1. Basic Duty: It may be at the standard rate or, in the case of import from some countries, at a preferential rate.

2. Additional customs duty equal to Central Excise duty livable on like goods produced in India. The MRP based valuation prevailing under Central Excise is extended to customs also. Now the value for calculating the additional duty equal to the Excise duty, in respect of commodities covered under Standards of Weights and Measures Act, would be the declared retail price, less the amount of abatement allowed under the notification.3. Value Added Tax: This Tax has been introduced since 01.04.05. to counter balance various international taxes like sales tax. This additional duty will not be included in the assessable value for levy of education cess on imported goods. Manufactures will be able to take credit of this additional duty for payment of Excise duty on their finished products

4. Anti-Dumping Duty for import of specific goods with a view of protecting domestic industry from unfair injury.5. Education Cess at the rate of 2% of aggregate duties of customs(including CVD)FormatCALCULATION OF DUTY: 1. Total Value in Rs. = Invoice Value (in CIF term) X Exchange Rate.

2. Landing Charge = 1 % of the Total Value.

3. Total Assessable Value = Total Value in Rs. + Landing Charges.

4. Basic Amount = Basic Rate % of Total Assessable Value.

5. Value for the customs purpose = Total Assessable Value + Basic Amount.

6. Counter Vieling Duty = 14 % of Value for the customs purpose.

7. Education Cess = 2 % of Counter Veiling Duty (CVD)8. SHE cess = 1% of CVD9. Additional Educational Cess = 2 % of (Basic Amount + CVD + Educational Cess +

SHE cess)

10. C. Cess = 1% of CVD.11. H.S. Cess = 1% of (CVD + C. Cess. + Basic Amount)

12. Additional Duty = 4% of (Total Assessable Value + Basic Amount + CVD + Edu.

Cess + Add. Edu. Cess + C. Cess + H.S. Cess)

13. Final duty to be levied Z = Assessable value Additional dutyCUSTOMS CLEARANCEDocuments need for custom clearance taken for custom clearance

From FF to CHA 8copies of awb

Shipping bill invoice=2

export value declaration=annexure

any copy of DEPB certificate if requires

gate pass=4

EXPORT DOCUMENTS SUBMITTED BY EXPORTER TO CHA1. I.E.C (import export code) number, original

2. Invoice (original 5 copies)

3. Packing list(original 5 copies)

4. Purchase Order

5. G.R Form duly signed with name and address of the banker through whom documents are negotiated

6. Declaration Form (DEPB, DEEC)

7. Shipping instruction duly filled and signed and if commission is paid, percentage of commission.

8. A.R.E Forms (original and duplicate)

9. Other details mentioning types of goods and detailed information of goods with different types of schemes papers.

Flow-Chart for working of Sales.

Conclusion:

The summer training is one learning experience as it brings you closer to the reality. I actually used my theoretical knowledge to know more about the practical one and vice-versa.The service organizations like F.F, CHA, Shipping lines ets. in international trade play a very important role in boosting exports by forwarding the goods in a short duration, and releasing the exporter from all worries of the complex procedural formalities. Services like consolidation provided by the C&F agent is beneficial not only for the importer and exporter but also helps the Airline and Shipping line by giving them huge quantities of goods at one go.

To work in the service organization you have to be very well aware of the changing rules and regulations of the industry. The freight forwarders have to not only satisfy the exporter and importer but also have to keep good relation with the custom authorities. It is due to a good reputation with the customs that Clearing and Forwarding Agent can perform successfully and satisfactorily in their field.

To sum up I can say that this summer training was a unique experience where I got an insight into the supporting activities performed by service organizations and the part it plays in the operations of international trade.

BIBLOGRAPHY:

1) THE CUSTOM LAW MANUAL.

2) THE CUSTOM TARIFF ACT.

3) THE EXCISE MANUAL

4) THE FOREIGN TRADE POLICY

5) NOTES DURING SUMMER TRAINING.6) NOTES FROM HELLMANN TRAINERS.

Container

CFS 1

Stuffing

Vessel

Container

De-stuffing

CFS 2

Importer 2

POL

POD

OCEAN JOURNEY

Importer 1

Importer 3

Exporter 3

Exporter 1 1

Exporter 2

Forwarding agent

Local Transport

Exporter

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