The Procedure of Imports & Exports in Foreign Payment: For Bhel
The Procedure of Imports & Exports in Foreign Payment: For Bhel
The Procedure of Imports & Exports in Foreign Payment: For Bhel
For
BHEL
By
Pooja Rajput
237
2009-2011
For
BHEL
Under the supervision
Of
Faculty’s Comments :
CHAPTER1-Executive summary
CHAPTER2-Literature Review
CHAPTER7- References
APPENDIX
“APPLICATION FOR LETTER OF CREDIT”
CHAPTER-1
Executive summary
Every Organization, irrespective of its size and mission, may be viewed
as a financial entity. Management of an organization, particularly a
business firm, is confronted with issues and decisions, which have
financial implications.
This project report puts forward the various aspects relating to the
Imports and Exports along with Export Incentives being claimed by the
HEEP unit of BHEL.
BHEL has been regularly exporting a large portion of its turnover & it
has proved itself in terms of quality & quantity.
HEEP being a unit of BHEL, Hardwar has also been a part of this
economic as well as social cause. It has also been exporting the goods
for a pretty long period.
This project has been undertaken with the sole objective of reviewing
the process of Imports and Exports along with the procedure of claiming
Export Incentives, so that it may be possible for HEEP to produce its
goods at the most competitive terms.
This study also reveals the hindrances that come in between while
undergoing this study and my confidence and ability to contact people is
increased. The main advantage of experience cannot be ruled out.
The present study is mainly based on the data made available from
various sources. The data and information has been collected by
compiling the figures from the Annual reports of the HEEP, BHEL and
the books concerned with the BHEL awareness. Further with the help of
the unstructured questionnaire the information was gathered on the
actual proceedings of the HEEP, BHEL. Availability of the data on
actual performance as required for analysis is very important in carrying
out a meaningful project report. The interpretation and the analysis of
the data depend entirely upon the reliability of the data. The time of 2
months for my training is very short a time to study the various financial
patterns of the HEEP, BHEL still I have tried my level best to get
acquainted with the working pattern of the unit as well as Import and
export related details. This report is a step in this regard.
Literature Review
2.1 COMPANY BACKGROUND
About BHEL
Established in 1956, Bharat Heavy Electricals Limited (BHEL) is the largest
engineering and manufacturing enterprise of its kind in India today. The
company is engaged in engineering, development and manufacture of wide
variety of electrical and mechanical equipment for generation, transmission and
utilization of energy and electrical power.
The first plant of BHEL was set up in Bhopal, which signaled the dawn the heavy
electrical industry in India. In the early sixties three more major plants were set up
in Hardwar, Hyderabad & Tiruchirapalli.
BHEL or the Bharat Heavy Engineering Limited is one of the largest engineering
and manufacturing organizations in the country and the BHEL, Haridwar is their
gift to Uttaranchal. With two large manufacturing plants, BHEL in Haridwar is
among the leading industrial organizations in the state. It has established a Heavy
Electrical Equipment Plant or HEEP and a Central Foundry Forge Plant or CFFP in
Haridwar. The Heavy Electrical Equipment Plant in
Haridwardesignsandmanufactures turbo generators, AC and DC motors, gas
turbines and huge steams. The Central Foundry Forge Plant in Haridwar deals with
steel castings and manufacturing of steel forgings.
The BHEL plants in Haridwar have earned the ISO - 9001 and 9002 certificates for
its high quality and maintenance. These two units have also earned the ISO - 14001
certificates. Situate in Ranipur near Haridwar, the Bharat Heavy Engineering
Limited employs over 8,000 people.
Power
Air Preheaters
Boilers
Control Relay
Panels
Electrostatic
Precipitators
Fabric Filters
Fans
Gas Turbines
Hydro Power
Plant
Piping Systems
Pulverizers
Pumps
Seamless Steel
Tubes
Soot blowers
Steam
Generators
Steam Turbines
Turbogenerators
Valves
Industry
Capacitors
Ceralin
Compressors
Desalination Plants
Diesel Generating Sets
Industrial Motors & Alternators
Gas Turbines
Oil Field Equipment
Solar Photovoltaics
Power Semiconductor Devices
Seamless Steel Tubes
Sootblowers
Steel Castings & Forgings
Steam Generators
Steam Turbines
Turbogenerators
Valves
Transmission
Bushings
Capacitors
Control Relay Panels
Dry-type Transformers
Energy Meters
HVDC Transmission System
Insulators
Switchgears
Power System Studies
Control Shunt Reactor
Transportation
Electric Rolling Stock
Electrics for Rolling Stock
Electrics for Urban Transportation System
Mini/Micro
Hydro Sets
Solar Lanterns
Solar
Photovoltaics
Solar Water
Heating
Systems
Wind Electric
Generators
R&D Products
Fuel Cells
Surface Coatings
Automated storage &
Retrivals
Load Sensors
Transparent Conducting
Oxide
# BUSSINESS OFFICES
**********************
1. BANGLORE
2. JAIPUR
3. LUCKNOW
4. CHENNAI
5. NEW DELHI
6. PATNA
7. RANCHI
8. SECUNDRABAD
9. BARODA
10.BHUBANESHWAR
11.MUMBAI
12.CALCUTTA
13.CHANDIGARH
14.GUWAHATI
15.JABALPUR
# MANUFACTURING UNITS
***************************
1. BANGALORE
2. BHOPAL
3. GOINDWAL
4. HARDWAR
5. HYDERABAD
6. JAGDISHPUR
7. JHANSI
8. RUDRAPUR
9. RANIPET
10.TIRUCHIRAPALLY
# SERVICE CENTRES
*********************
1. BANGLORE
2. BARODA
3. CALCUTTA
4. CHANDIGARH
5. SECUNDRABAD
6. NEW DELHI
7. NAGPUR
8. PATNA
9. VARANASI
2.2.4 DIVISIONS OF BHEL
1. HEEP, Hardwar
2. HPEP, Hyderabad
3. HPBP, Tiruchy
5. CFFP, Hardwar
6. BHEL, Jhansi
7. BHEL, Bhopal
8. EPD, Bangalore
9. ED, Bangalore
10.BAP, Ranipet
12.COTT, Hyderabad
14.CFP, Rudrapur
15.HERP, Varanasi
1. Ansaldo Italy
3. Beehtel USA
6. Costain U.K.
7. Electrim Poland
8. Energostio Russia
11.Fuji Japan
14.Hitachi Japan
15.Mitsubishi Japan
16.Mitsui Japan
17.Raytheon USA
18.Rolls Royce Germany
20.Seimens Germany
21.Toshiba Japan
22.Westinghouse USA
2.2.6 CUSTOMERS OF BHEL’s PRODUCTS
DOMESTIC:-
4. APPOLO TYRES
5. ABB
12.SAIL
13.BCCL
16.BIRLA CEMENT
17.BIRLA TYRES
23. DLW,VARANSI
29. ONGC
30. L&T
31. KIRLOSKAR
32. JK CEMENT
3. SIMMCO INTERNATIONAL
4. SIEMENS,GERMANY
5. SIEMENS,SINGAPORE
Strengths
Ability to set up power plants on turnkey basis, complete know- how for
manufacture of entire equipment is available with the company.
Ability to manufacture or procure to supply spares.
For non- BHEL products, services and spares are not easily available and if
they are,price charged are very high.
Weaknesses:
Due to poor financial position of state electricity boards, which are the
major customers of BHEL in India, liquidity position of BHEL is not
satisfactory.
Opportunities:
Ageing power plants would give rise to more spares and services business.
Export opportunities.
Threats:
Level playing ground not available, foreign companies spending much more
on business promotion tactics
Performance.
CHAPTER-3
INTRODUCTION TO
THE PROJECT
3.1 FOREIGN PAYMENT SECTION
The foreign payment section deals with all foreign currency payments for Imports
collaborators . Further the section also deals with Insurance of all assets , buildings
, incoming and outgoing materials etc. In addition to the above all accounting of
Foreign Payment Section of BHEL, HEEP, Hardwar also looks after the total
INSURANCE coverage of the unit. The various Insurance Policies which are
usually taken are as follows:-
INDENTOR :- The department or the person who requires the material makes
the request for the same to the stores department. Such a request is made in a
specified format and that is called indent or material requisition .
The stores department then verifies the availability of the requisite material with
it and issues Stores Issue Voucher through which the material is issued. But if the
material is not available then the Purchase Department is intimated to initiate
purchase procedure.
Before inviting the tenders from various suppliers of the material, it is seen
whether we have purchased this material earlier or not and if we have then from
which parties?
There might be:
A sole supplier , or
The company may have a set of registered vendors for each type of item
(This ensures maintenance of quality standards since before registration, these
suppliers are measured against specified standards), or
Many suppliers
In the third case a call tender is floated in various leading news dailies. Once all
the interested parties have submitted their bids, a comparative statement of all
these are drawn to find out their relative suitability to the firm's requirement.
At first their technical suitability is assessed and thereafter the party costing the
least and accepting terms of payment favourable to the company, is awarded the
order.
However, after the initial processing, further terms are negotiated with the
selected supplier. Based on such agreed terms, a purchase order (P.O.) is drawn by
the Purchase Department.
3.2.1 Purchase Order –
Purchase Order is an order placed on the supplier for the supply of specified
quantity of specific material at a specified rate in accordance with the terms and
conditions spelt out in the order. The purchase order contains the following
essential information:
d) Quantity to be supplied
f) Terms of delivery
h) Terms of payment
The purchase order also contains reference to indent number, name of the
indentor, financial concurrence and allocation (capital or revenue). In case of plant
and machinery items, additional information like trans number is also given in
some of the divisions.
3.2.2 What is “ Letter of credit”?
L/C. A binding document that a buyer can request from his bank in order to
guarantee that the payment for goods will be tranferred to the seller. Basically, a
letter of credit gives the seller reassurance that he will receive the payment for the
goods. In order for the payment to occur, the seller has to present the bank with the
necessary shipping documents confirming the shipment of goods within a given
time frame. It is often used in internationl trade to eliminate risks such as
unfamiliarity with the foreign country, customs, or political instability.
Retirement of Documents.
Normally foreign suppliers are paid through irrecoverable letter of credit opened
for the purpose. Whenever payments to any foreign suppliers are involved, a
requisition for opening a letter of credit is received from the purchase department.
The purchase department should arrange to obtain release of foreign exchange and
import license before forwarding the requisition. The following document will be
furnished to the bankers at the time of making a request for opening a letter of
credit :
As a condition of letter of credit, the original negotiable bill of lading along with
sight draft has to be sent to the BHEL’s bankers immediately after the shipment of
goods. The following documents should also the enclosed of the bill of lading :
a) Commercially certified invoices describing the goods, quality, unit and total
value.
b) Certificate of country of origin.
c) Detailed packing list.
d) Test certificate as per the terms of the purchase order.
e) Bank guarantee for the agreed percentage of the value of the contract as per
the terms of the purchase order.
f) Formal receipt from the seller as an evidence for having received payment
for the goods delivered.
g) Declared by the supplier certifying that :
i. The contents in each case are not less that those entered in the
invoices/packing list;
ii. The invoicing for the supplies effected is strictly in accordance with
the agreed rates as stipulated in the relative purchase order; and
iii. The quality of goods are guaranteed as new and to the specification
required by BHEL.
h) Declaration by the supplier that the set of non negotiable copies of dispatch
documents have been sent to the Regional Manager, BHEL at
Madras/Bombay/Calcutta (i.e. the port of entry) as the case may be.
i) Certified copy of the telegraphic message sent by the beneficiary giving full
particulars of dispatch of goods.
Retirement of Documents :
When the bankers receive all documents (usually received in triplicate) as stated in
the purchase order and the conditions of Letter of Credit, they will retire the
documents debiting the account of BHEL. If there is any discrepancy, the bankers
will intimate the BHEL division concerned and ask for acceptance before retiring
the documents. If the discrepancy is minor in nature like expiry of Letter of Credit,
stale bill of lading etc., the stores Accounts section will give clearance for
accepting the documents for retirement. If the discrepancy is not a minor one, the
purchase department will be addressed and only after obtaining their acceptance,
the bankers will be requested to clear the documents. After retirement, the entire
document is sent to the stores accounts section i.e. to the group dealing with
payment for imported purchases. One copy each of bill of lading and invoices are
retained in the Stores Accounts section and the other sets are forwarded to the
Purchase Department and the port clearance officer in the Regional Officer for
clearing the goods from the port. Generally purchase order provides that the
supplier should forward advance sets of non negotiable documents to the Stores
Officer of the plant as well as the Regional Manager located at the port of
clearance to ensure timely action for clearance of goods.
After keeping a note of the details of bank advice slip on the invoice, the
same forwarded to the Cash and Bank section (Bank Wing) to make an entry in the
bank book. After making an entry in the bank book, the Cash and Bank section will
send bank payment advice slip to the Stores Accounts section dealing with
imported supplies for allocating the debit to the concerned head of account.
Before making the entry in the advance register, the debit given by the
bankers will be verified with reference to the invoice and the terms of the purchase
order. Apart from making an entry in the advance register, note will also be kept in
the monthly statement in Form SAM 15 sent to purchase department which is
intended to provide necessary feedback on the outflow of foreign exchange.
The document received from the bankers and the bank debit advice will be filed
along with the purchase folder for reference.
Foreign suppliers are normally paid 100% advanced payment against the
document.
In some cases, 90% or 95% payment is also made against the document in such
cases before admitting the balance payment,
a) Whether the balance payment is due as per the terms of the purchase
order.
b) Normally the balance payment is paid directly to the suppliers bankers
without operating letter of credit; however, if the payment of balance
amount is also insisted upon through letter of credit payment will be
made accordingly.
A note of final payments will also be kept in the memorandum of
payments in Form SAM 9 and also supplier wise bill register in Form
SAM 4.
a) Name and full address of the party in favour of whom bank draft is to be
obtained.
b) Amount of bank draft in Foreign/Indian Currency.
c) Three copies of invoices (two for bankers and one for the stores accounts
section).
d) Import license number and its date of validity.
e) Exchange control copy of the import license or in the absence, the
particulars of tits where about.
f) Country of origin of Goods.
g) Name of carrying streamer (if dispatched by post parcel or air, the details
thereof should be furnished).
h) The dates and other details of Bill of Lading, if the materials have been
dispatched.
The bill will be passed after due verification of endorsements on the memorandum
of payment against the same invoice has not already been authorized. A note of
authorization will also be kept in the memorandum giving the particulars of
requisition number and date, invoice number, date and amount, date of
authorization and amount authorized. The form ‘A’ obtainable from the State Bank
of India will also be completed and forwarded along with the cheque for obtaining
the bank draft.
Payments against UK Credits, IDA Credits and Other Foreign Credits Procedure in
Bhopal Division :
The responsibility for obtaining necessary release of foreign exchange and import
license vests in the Purchase Departments. It is also for the Purchase Department to
ensure at the time of issue of Purchase Orders that the release of foreign exchange
is not exceeded. The purchase orders should invariably contain indication of the
source from which payment is to be met. BHEL Bhopal may authorize the Chief
Accounting Officer, High Commission of India, London to make payments against
UK Credits and copies of payment certificates issued by them to the High
Commission of India, London with reference to the shipping documents and
invoices are endorsed to the Stores Accounts (foreign payment) section and the
purchase department of Bhopal division. Payment certificates received along with
invoices are posted in the memorandum register of raw materials and plant and
machinery in Form SAM16 (Bhopal division form FPF 06). Necessary entries
should also be made in import license register wherein separate pages are allotted
for each import license to facilitate compiling of the report due to purchase
department once a quarter showing the amount utilized against each license and
also against each credit.
On account of purchases made by Bhopal division from overseas suppliers
payments are made through High Commission of India, London, which has to be
settled by Bhopal division in accordance with the procedure laid down by
Government of India from time to time.
Each payment by Bhopal division will be linked with the entries in the
memorandum register of raw materials and plant and machinery.
Facility of deferred payment in installments for the value of raw materials and
components, equipments and other fixed assets are extended by the foreign
supplier/collaborators on the basis of guarantees issued by the Government of
India. The procedure followed in this regard is indicated below. The payment
under deferred credit system involves the following stages :
a) Cash down payment for a portion of the value of the supplies. This is
converted into rupee equivalent of the foreign currency at the actual rate
of exchange prevailing on the date of payment.
b) Payment against Letter of Credit when shipping documents are received
for a percentage of the value of supplies. This is also done by converting
the foreign currency at the actual rate of exchange prevailing on the date
of payment.
c) The balance i.e. the deferred position is converted into rupees at the
official exchange rate prevalent on the date of down payment/payment
against letter of credit as the case may be the rupee equivalent of the
deferred payment will be divided by the total number of installments to
arrive at the rupee equivalent of the individual installments.
The determination of the maturity dates of installments in respect of deferred
payments is done with reference to the last date of scheduled or as per the
conditions stipulated in the contract with the foreign suppliers/collaborators. In
orders to arrange the remittances of installments with interest thereon promptly
on the due dates, the application along with Form ‘A’ duly completed will have
to be submitted to the Reserve Bank of India at least one month in advance for
obtaining the permission. On receipt of the Reserve Bank of India’s permission,
the company’s bankers will be authorized to remit the amount to the foreign
bankers for credit to the account of the supplier. A register in Form SAM 17
will also be maintained for keeping a record of total payments on the deferred
credits and also to ensure that the payments are released by the due dates.
For example, a trade document about the bill of lading is a proof that goods have
been shipped on board, while Inspection Certificate, certifies that the goods have
been inspected and meet quality standards. So, depending on these necessary
documents, a seller can assure a buyer that he has fulfilled his responsibility whilst
the buyer is assured of his request being carried out by the seller.
Air Waybill
Bill of Lading
Certificate of Origin
Combined Transport Document
Draft (or Bill of Exchange)
Insurance Policy (or Certificate)
Packing List/Specification
Inspection Certificate
Air Waybills
Air Waybills make sure that goods have been received for shipment by air. A
typical air waybill sample consists of of three originals and nine copies. The first
original is for the carrier and is signed by a export agent; the second original, the
consignee's copy, is signed by an export agent; the third original is signed by the
carrier and is handed to the export agent as a receipt for the goods.
Air Waybills serves as:
Bill of Lading is a document given by the shipping agency for the goods shipped
for transportation form one destination to another and is signed by the
representatives of the carrying vessel.
Bill of landing is issued in the set of two, three or more. The number in the set will
be indicated on each bill of lading and all must be accounted for. This is done due
to the safety reasons which ensure that the document never comes into the hands of
an unauthorised person. Only one original is sufficient to take possession of goods
at port of discharge so, a bank which finances a trade transaction will need to
control the complete set. The bill of lading must be signed by the shipping
company or its agent, and must show how many signed originals were issued.
It will indicate whether cost of freight/ carriage has been paid or not :
"Freight Prepaid" : Paid by shipper
"Freight collect" : To be paid by the buyer at the port of discharge.The bill of
lading also forms the contract of carriage.
To be acceptable to the buyer, the B/L should :
Shipper
o The person who send the goods.
Consignee
o The person who take delivery of the goods.
Notify Party
o The person, usually the importer, to whom the shipping company or
its agent gives notice of arrival of the goods.
Carrier
o The person or company who has concluded a contract with the shipper
for conveyance of goods
The bill of lading must meet all the requirements of the credit as well as complying
with UCP 500. These are as follows :
Certificate of Origin
The certificate must provide that the information required by the credit and be
consistent with all other document, It would normally include :
Commercial Invoice
Commercial Invoice document is provided by the seller to the buyer. Also known
as export invoice or import invoice, commercial invoice is finally used by the
custom authorities of the importer's country to evaluate the good for the purpose of
taxation.
Bill of Exchange
Bill of Exchange after Date: In this case the due date is counted from the
date of drawing and is also called bill after date.
Bill of Exchange after Sight: In this case the due date is counted from the
date of acceptance of the bill and is also called bill of exchange after sight.
Insurance Certificate
Also known as Insurance Policy, it certifies that goods transported have been
insured under an open policy and is not actionable with little details about the risk
covered.
It is necessary that the date on which the insurance becomes effective is same or
earlier than the date of issuance of the transport documents.
Also, if submitted under a LC, the insured amount must be in the same currency as
the credit and usually for the bill amount plus 10 per cent.
The name of the party in the favor which the documents has been issued.
The name of the vessel or flight details.
The place from where insurance is to commerce typically the sellers
warehouse or the port of loading and the place where insurance cases usually
the buyer's warehouse or the port of destination.
Insurance value that specified in the credit.
Marks and numbers to agree with those on other documents.
The description of the goods, which must be consistent with that in the credit
and on the invoice.
The name and address of the claims settling agent together with the place
where claims are payable.
Countersigned where necessary.
Date of issue to be no later than the date of transport documents unless cover
is shown to be effective prior to that date.
Packing List
Also known as packing specification, it contain details about the packing materials
used in the shipping of goods. It also include details like measurement and weight
of goods.
Have a description of the goods ("A") consistent with the other documents.
Have details of shipping marks ("B") and numbers consistent with other
documents
Inspection Certificate
In this process seller submit a valid Inspection Certificate along with the other
trade documents like invoice, packing list, shipping bill, bill of lading etc to the
bank for negotiation.
It is different from the letters of credit, in the sense that the bank only acts as a
medium for the transfer of documents but does not make any payment guarantee.
However, collection of documents are subjected to the Uniform Rules for
Collections published by the International Chamber of Commerce (ICC).
Exporter
The seller ships the goods and then hands over the document related to the goods
to their banks with the instruction on how and when the buyer would pay.
Exporter's Bank
The exporter's bank is known as the remitting bank , and they remit the bill for
collection with proper instructions. The role of the remitting bank is to :
Buyer/Importer
Pay the bill as mention in the agreement (or promise to pay later).
Take the shipping documents (unless it is a clean bill) and clear the goods.
Importer's Bank
The collecting bank act as the remitting bank's agent and clearly follows the
instructions on the remitting bank's covering schedule. However the collecting
bank does not guarantee payment of the bills except in very unusual circumstance
for undoubted customer , which is called availing.
Importer's bank is known as the collecting / presenting bank. The role of the
collecting banks is to :
May arrange storage and insurance for the goods as per remitting bank
instructions on the schedule.
Protests on behalf of the remitting bank (if the Remitting Bank's schedule
states Protest)
Requests further instruction from the remitting bank, if there is a problem
that is not covered by the instructions in the schedule.
Once payment is received from the importer, the collecting bank remits the
proceeds promptly to the remitting bank less its charges.
Risks :
Under D/P terms the exporter keeps control of the goods (through the banks) until
the importer pays. If the importer refuses to pay, the exporter can:
Protest the bill and take him to court (may be expensive and difficult to
control from another country).
Find another buyer or arrange a sale by an auction.
With the last two choices, the price obtained may be lower but probably still better
than shipping the goods back, sometimes, the exporter will have a contact or agent
in the importer's country that can help with any arrangements. In such a situation,
an agent is often referred to as a CaseofNeed, means someone who can be
contacted in case of need by the collecting bank.
If the importers refuses to pay, the collecting bank can act on the exporter's
instructions shown in the Remitting Bank schedule. These instructions may
include:
Removal of the goods from the port to a warehouse and insure them.
Contact the case of need who may negotiate with the importer.
Protesting the bill through the bank's lawyer.
Under Documents Against Acceptance, the Exporter allows credit to Importer, the
period of credit is referred to as Usance, The importer/ drawee is required to accept
the bill to make a signed promise to pay the bill at a set date in the future. When he
has signed the bill in acceptance, he can take the documents and clear his goods.
The payment date is calculated from the term of the bill, which is usually a
multiple of 30 days and start either from sight or form the date of shipment,
whichever is stated on the bill of exchange. The attached instruction would show
"Release Documents Against Acceptance".
Risk
Under D/A terms the importer can inspect the documents and , if he is satisfied,
accept the bill for payment o the due date, take the documents and clear the goods;
the exporter loses control of them.
The exporter runs various risk. The importer might refuse to pay on the due date
because :
He finds that the goods are not what he ordered.
He has not been able to sell the goods.
He is prepared to cheat the exporter (In cases the exporter can protest the bill
and take the importer to court but this can be expensive).
The importer might have gone bankrupt, in which case the exporter will
probably never get his money.
A Usance D/P Bill is an agreement where the buyer accepts the bill payable at a
specified date in future but does not receive the documents until he has actually
paid for them. The reason is that airmailed documents may arrive much earlier than
the goods shipped by sea.
The buyer is not responsible to pay the bill before its due date, but he may want to
do so, if the ship arrives before that date. This mode of payments is less usual, but
offers more settlement possibility.
These are still D/P terms so there is no extra risk to the exporter or his bank. As an
alternative the covering scheduled may simply allow acceptance or payments to be
deferred awaiting arrival of carrying vessel.
There are different types of usance D/P bills, some of which do not require
acceptance specially those drawn payable at a fix period after date or drawn
payable at a fixed date.
Bills requiring acceptance are those drawn at a fix period after sight, which is
necessary to establish the maturity date. If there are problems regarding storage of
goods under a usance D/P bill, the collecting bank should notify the remitting bank
without delay for instructions.
However, it should be noted that it is not necessary for the collecting bank to
follow each and every instructions given by the Remitting Banks.
STORES RECEIPT VOUCHER
S.R.V. - it is a document through which the receipt of the materials by the stores
department and their acceptance is communicated to the stores accounts section
and other departments. The stores receipt voucher contains the following
information :
a) Ward/section from which the SRV is issued or where the stores are to be
stocked ultimately.
e) Charge order / work order number (to be given in the case of directly
chargeable items).
g) Railway receipt / luggage way bill number and wagon number, carrier
receipt number and material delivery challan number and date under which
the materials are received.
l) Quantity supplied.
Provision may also be made in the stores receipt voucher to indicate the date
of receipt of stores in the Material Receiving section, the date of handing over
for inspection, the date of completion of the inspection and the date of taking
over of the stores by the store keeper.
3.3 Import Regulations
Payment
– Within 180 days of shipment date
– Maximum interest for the credit period : Prime rate of the currency of
payment
– Delayed payment permitted only in genuine cases
– No interest for delay normally, only on insistence, interest upto 60
days beyond 180 days
– Payment by debit to account/cheque/rupee payment into NR account.
– Cash for settlement not permitted.
– Nepal/Bhutan - settlement in Rupees only.
Advance Payment
– Supplier’s insistence on advance payment
– Import within 3 mth (12 mth for Capital Goods)
– Undertaking to submit Bill of Entry within 15 days from the end of
this period
– For amounts > USD 25,000, bank guarantee required
1. CONDITION:
That the exporter shall furnish a general bond in the form specified Annexure-I
to the Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise having jurisdiction over the factory, warehouse or such approved
premises, as the case may be, or the Maritime Commissioner or such other officer as
authorized by the Board on this behalf in a sum equal at least to the duty chargeable
on the goods, with such surety or sufficient security, as such officers may approve for
the due arrival there of at the place of export and their export there from under
Customs or as the case may be postal supervision. The manufacture-exporter may
furnish a letter of undertaking in the Form specified in Annexure-II in lieu of a bond.
That goods shall be exported within six months from the date on which these
were cleared for export from the factory of the production the manufacture or
warehouse or other approved premises within such extended period as Assistant
Commissioner of Central Excise or Deputy Commissioner of Central Excise or
Maritime Commissioner may in any particular case allow.
That when export is from a place other registered factory or warehouse, the
excisable goods are in original packed condition and identifiable as their origin;
That export of mineral oil products falling under Chapter27 of the First
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as stores for consumption
on board of an aircraft on Foreign run shall be subject to conditions and limitation, to
be applied mutatis mutandis, as notified in the Ministry of Finance (Department of
Revenue), Notification No. 40/2001-Central Excise (N.T.). dated 26 th June issued
under rule 18 of Central Excise (No.2) Rules, 2001.
2. Procedure:
(i) Procedure for removal without payment of duty under this notification-
(d) Such Central bond or letter of undertaking shall not be discharged unless the
goods are exported to the satisfaction of the Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise or Maritime Commissioner
or such other officer as may be authorised by the Board on this behalf within the
time allowed for such export or otherwise accounted for to the satisfaction of such
officer, or until the full duty due upon any deficiency of goods, not accounted so,
and interest, if any, has been paid.
(a) For the sealing of goods intended for export at the place at dispatch the
exporter shall present the goods along with four copies of application in the
Form A.R.E.-1 specified in Annexure –IV to the superintendent or Inspector
of Central Excise who will verify the identity of goods mentioned in the
application and the particulars of goods mentioned in the application and the
particulars of duty paid or payable, and if found in order, he shall seal by the
Commissioner of Central Excise and endorse each copy of the application in
token of having such examination done;
(b) The said Superintendent or Inspector of Central Excise shall return the
original and duplicate copies of application to the exporter and retain the
quadruplicate copy;
(c) The triplicate copy of application shall be sent to the officer to whom bond
or letter of undertaking has been furnished, either by post or by handing over
to the exporter in a tamper proof sealed cover after posting the particulars in
official records;
(d) The exporter may prepare quintuplicate copy of application for claiming any
other export incentive. This copy shall be dealt in the same manner as the
original copy of application;
(e) In case of export by parcel post after the goods intended for export has been
sealed, the exporter shall affix to the duplicate application sufficient postage
stamps to cover postal charges and shall present the documents, together with
the package to which it refers, to the postmaster at the office of booking.
Dispatch of goods by self-sealing and self-certification-
(a) Where the exporter desires self-sealing and self-certification for removal of
goods from the factory, warehouse or any approved premises, the owner, the
working partner, the Managing Director or the Company Secretary, of the
manufacturing until of the goods or the owner of warehouse or a person duly
authorized by such owner, working partner or the Board of Directors of such
company, as the case may be, shall certify on all the copies of the application
that the goods have been sealed in his presence, and shall send the original and
duplicate copies of the application along with the goods at place of export, and
shall send triplicate and quadruplicate copies of the application to the
Superintendent or Inspector of Central Excise having jurisdiction over the
factory, warehouse, any such approved premises within twenty four hours of
removal of the goods;
(b) The said Superintendent or Inspector of central Excise shall return the original
and duplicate copies of application to the exporter and retain the quadruplicate
copy;
(c) The triplicate copy of application shall be sent to the officer to whom bond or
letter of undertaking has been furnished, either by post or by handing over to
the exporter in a tamper proof sealed cover after posting the particulars in
official records;
(d) The exporter may prepare quintuplicate copy of application for claiming any
other incentive. This copy shall be dealt in the same manner as the original
copy of application;
(e) In case of export by parcel post after the goods intended for export has been
sealed, the exporter shall affix to the duplicate application sufficient postage
stamps to cover postal charges and shall present the documents, together with
the package to which it refers, to the postmaster at the office of booking.
The superintendent or the inspector of the central excise shall, after verifying
the particulars of the bond or letter of undertaking an endorsing the correctness or
otherwise, of the particulars on the application, send to the officer to whom the bond
or the letter of undertaking has been furnished either by post or by handing over to the
exporter in a tamper proof sealed cover after recording the particulars in the official
record;
The exporter may prepare quintuplicate copy of application for claim any other
export incentive. The copy shall be dealt in the same manner as the original copy of
application,
In case of export by parcel post after the goods intended for export has been
sealed, the exporter shall affix to the duplicate application sufficient postage stamp to
cover postal charges and shall present the document, together with the package to
which it refers, to the postmaster at the office of booking.
On arrival at the place of export, the goods shall be presented together with
original, duplicate and quintuplicate (optional) copies of the application to the
commissioner of customs or other duly appointed officer;
The commissioner of custom or other duly appointed officer shall examine the
goods with the particulars as specified in the application and if he finds that the same
are correct and exportable in accordance with the laws for the time being in force,
shall allow export thereof and certify on the copies of the application that goods have
been duly exported citing the shipping bill number and date and other particulars of
export:
Provided that if the superintendent or inspector of central excise sealed
packages or container at the place of dispatch, the officer of customs shall
inspect the packages or container with reference to declarations in the
application to satisfy himself about the exportability thereof and if the seals
are found intact, he shall allow export.
(c) The commissioner of customs or the other duly appointed officer shall return the
original and quadruplicate (optional copy for exporter) copies of application to the
exporter and forward the duplicate copy of application either proof sealed cover to the
officer specified in the application, with whom the exporter has furnished bond or a
letter of undertaking.
(d) The exporter shall use the quintuplicate copy for the purchase of claiming any
other export incentive.
Cancellation of applications-
If the excisable goods are not exported the Assistant Commissioner of Central
excise or the Deputy Commissioner of Central Excise or Maritime Commissioner or
such other as authorized by the Board on this behalf, as the case may be, to whom the
bond or letter of undertaking has been furnished, may, on written request for
cancellation of application, cancel said application and allow diversion of goods for
consumption in India subject to the sub-para (b);
The exporter shall pay the specified application along with interest at the rate of
twenty four per cent per annum on such duty from the date of removal for export from
the factory or warehouse or any other approved premises till the payment of duty.
Exported excisable goods which are re-imported for carrying out repairs, re-
conditioning, refining, re-making or subject to any similar process may be returned to
the factory of manufacture for carrying out the said processes and subsequent re-
export.
Any waste or refuse arising as result of the said processes shall be removed
from the factory on payment of appropriate duty or destroyed after informing the
proper officer in writing at least 7 days in advance and after observing such condition
and procedure as may be specified by the commissioner of Central Excise and there
upon the duty payable on such waste or refuse may be remitted by the said
Commissioner of Central Excise.
EXPORT REGULATIOS:
PAYMENT
To be received within 180 days ofshipment date .
Paymen through banking chanel or DDs/Pos/Cheques/out of
FCNR/account/Curreny notes/Credit Cards.
Can retain 50% in EEFC account.
GR/PP/Softex Forms
Duly certified by customs,declare velue of export and undertaking to realize
export proceeds.
To be forwarded to RBI by the bank after realization.
OTHER REGULATIONS
QUICK CHECK
Amount complies
Quantity of goods complies
Shipped before latest shipment date
L/C still valid
All called-for documents present
Documents not stale
Short shipment may be partial shipment if permitted
CHATER-4
MAJOR LEARNING
MAJOR LEARNING
Bank.
CHAPTER-5
RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY :-
I choose the project of analysis the whole role of LETTER OF CREDIT in
He approved the project, After that a simple course of action has been
followed for Working on this project. Entire information and data were
gathered from the other internal documents, which were personally shown by
A great help was provided by our instructor MR. INDER Kr. ARORA in
understanding the facts and figures. Mr. INDER Kr. ARORA made it possible
to us to ask our query from that person who can answer it best then anybody
else in the company. Although it has been a difficult task but the availability of
proper data and timely guidance given by Mr. INDER Kr. ARORA made it
CONCLUION
CONCLUION
From the study of the PROCESS OF IMPORTS & EXPORTS in BHEL, HEEP,
Hardwar I conclude that BHEL, HEEP unit is both an importer and exporter with
par excellence. All legal formalities, Exchange control requirements / FEMA /
EXIM Policy requirements are adhered by the Company. Even in the case of
Exports BHEL has never faulted in fulfillment of its legal formalities. All bonds
have been duly redeemed in time.
Imports have shown a decreasing trend in 2008 compared to 2009 whereas Exports
have shown an increasing trend .BHEL has built a natural leverage against the rise
and fall of the Rupee since the overall receivables (Debtors) of the Company
broadly match the foreign exchange outflow/payables (Creditors). Libya order is
also recently received by the Company. The Libya order is the single largest
Export order in the country’s history. All Export Incentives are received by the
Company with strict adherence to the legal formalities prescribed by
DGFT/Ministry of Commerce.
So, from the above study I had a very good experience about the practical aspects
of Imports & Exports in a large Engineering firm like BHEL.
INFORMATION REGARDING IMPORTS & EXPORTS
2001-2002 2000-2001
VALUE OF IMPORTS (CIF BASIS):
RAW MATERIALS 3386.60 2264.65
COMPONENTS & SPARE PARTS 1991.02 941.97
CAPITAL GOODS 408.15 188.52
EXPENDITURE IN FOREIGN CURRENCY ON ACCOUNT
OF :
-ROYALTY 32.17 24.78
-KNOW-HOW , PROFESSIONAL CONSULTATION FEES 0.97 0.90
-INTEREST & OTHERS (INCLUDING ON FOREIGN SITES) 223.6 183.33
VALUE OF CONSUMPTION-RAW
MATERIALS,COMPONENTS
STORES & SPARE PARTS:
-IMPORTED (INCL. CD & INCINDENTIALS) 4335.64 2884.22
-INDEGENOUS 11251.79 7516.47
PERCENTAGE OF TOTAL CONSUMPTION:
-IMPORTED (INCL. CD & INCINDENTIALS) 28% 28%
-INDIGENOUS 72% 72%
EARNING IN FOREIGN EXCHANGE:
EXPORT OF GOODS 1569.74 817.53
INTEREST 0.06 0.02
ERACTION CHARGES 196.55 119.70
MISCELLANEOUS 18.19 1.84
CHAPTER-7
References