SUMMER TRAINING REPORT ON

FUNCTIONAL PROCEDURE OF CUSTOM

CLEARANCE
Undertaken at
MEMCO TRADING LIMITED
Submitted in partial fulfillment of the requirements
For the award of the degree of
Bachelors of Business Administration (BBA)
TO
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, NEW DELHI
SUBMITTED BY:
RISHABH LOHIYA
02514901713

BATCH OF 2013-16
MAHARAJA SURAJMAL INSTITUTE
C-4 JANAKPURI, NEW DELHI-58
AFFILIATED WITH GURU GOBIND SINGH INDRAPRASTH
UNIVERSITY

ACKNOWLEDGEMENT
Project work is never the accomplishment of an individual rather it is an amalgamation of the
efforts, ideas and cooperation of number of entities.
I would like to thank GURU GOBIND SINGH INDRPRASTHA UNIVERSITY for
providing me with an to work on a valuable project like this.
I would like thank Mr. Salim Memon, Director, Memco trading limited for guiding me and
helping me throughout my summer training in their overseas office.. I would also like to
thank my mentors Mr. Avdhesh sharma and Mr. Manohar Joshi for providing me with
invaluable information as well as insight into my work.
I would like to thank Mr. Naushad siddiqui, for selecting me and giving me an opportunity
for my Internship. I would also like to thank the Advances Department for providing me
with the technical assistance whenever I Required.
I would also like to thank all those Individuals whom I met during my field visit. Without
your insight and help, this project would have been impossible to complete.
Last but not least I would like to thank Ms Sumita Kukreja, Assistant Professor,
Department of Business Administration, Maharaja Surajmal Institute for helping me
and guiding in completing my training report.

TABLE OF CONTENTS

Description
Chapter 1

i) Introduction to study

Page No.
5

ii) Objectives of study

iii) Research methodology
iv) Limitations of study
Chapter 2

i) Company profile
- Overview
- History
- Services provided by company

Chapter 3

i) analysis and interpretation

- Export process
- Import process

Chapter 4

i) Conclusion and recommendation

Bibliography

CHAPTER ONE
1. INTRODUCTION
I have prepared this study on the topic of functional procedure of custom clearance
undertaken at Memco trading pvt. Ltd. in Accra, Ghana. It was eight weeks duration summer
training at an On-yard dock facility.
I have prepared this study to know more about the entire custom procedure. This report also
tells about the present scenario of Indian shipping and also tells about development of
shipping in India and particularly in Gujarat.
In view of the rapidly and constantly changing business environment globally and fast
evolving trade and commerce scenario in India vis--vis global market, there is increasing
requirement of reliable and dependable integrated logistics solutions providers who can
provide comprehensive, professional and dependable logistics support to the industry,
keeping the same in mind and with the vision to provide quality and professional
comprehensive logistics solutions to the international & domestic trade.
In the development of any countrys economy, exports play a crucial role. Export is the most
important aspect of earning foreign exchange. A country should have to be equipped with
natural resources, so that it can sell these resources into the international market.
With the opening up of the Indian economy, the international trade has been increased
significantly as there are less restriction on exports and imports.
More and more multinationals are registering their entry into the Indian market. The imported
products are now in well reach of Indian customers. The living standard has been improved.
This results in substantial amount of growth in both exports and imports.
The procedure of both the exports and imports are time consuming and complicated. In this
regard there are several logistic companies and custom house agents providing their services
on the behalf of the exporters and importers to facilitate the trade between them. These
custom house agents and logistics companies take over the responsibility of sending the
5

goods from the exporters premises to the importer premises, which also includes the most
important aspect of custom clearance.
Memco trading Pvt. Ltd. is a leading name for custom clearance. Over the years they have
operated smoothly with their wide spectrum of personalized services.

Indian shipping scenario:

India has 14 major ports and 215 minor/intermediate ports. Over 90 percent by volume and
70 percent by value of Indias overseas trade, aggregate of exports and imports, is carried out
through maritime transport along its 7617 km long coast line. India has the largest merchant
shipping fleet among the developing countries and its merchant shipping fleet ranks 18 th in
the world, in terms of fleet size. Another silver lining is the average age of the Indias
merchant shipping fleet is only 12.7 years as compared to the international average of 17
years .but, Indias share, sadly, constitutes only 5.45% of the worlds cargo carrying capacity.
As on April 1, 2005, India has a total of 686 ships comprising 8.01 Million Gross Tonnage
(GT) and 13.28 Million Dead Weight Tonnage (DWT). The shipping corporation of India
(SCI), the countrys largest carrier, owns and manages 82 ships with 2.54 million GT and
accounts for 40 percent of national tonnage. India is also among the few countries that offer
fair and free competition to all shipping companies for obtaining cargo. There is no cargo
reservation policy in India.
Indian shipping has remained a deferred subject till independence. Only after independence,
the development of shipping has attracted the state policy. The subject of shipping, in the
beginning, has been dealt with by the ministry of commerce, till 1949 and subsequently, in
1951, it has been shifted to the ministry of transport and shipping. In 1947, the government of
India has announced the national policy on shipping, aiming at the total development of the
industry. In order to accelerate the developmental efforts, the necessity for a centralized
administrative organization has been felt. Accordingly in September necessity for a
centralized administrative organization has been felt. Accordingly in September 1949, the
directorate general of shipping with its headquarters at Bombay has been established with the
objectives of promotion and development of Indian shipping industry.

Introduction to Gujarat port:

Ports of Gujarat

Along the 1600 kms. Of coastline of Gujarat, there are 41 ports, of which Kandla is a major
port. Out of remaining 40 ports, 11 are intermediate ports and 29 are minor ports under the
control of Gujarat maritime board.
Gujarat, situated on the western coast of India, is a principal maritime state endowed with
favorable strategic port locations. The prominence of Gujarat is by virtue of having nearly
1600 kms long coastline, which accounts for 1/3rd of the coastline of India and being the
nearest maritime outlet to Middle East, Africa and Europe.
In 1991, government of India initiated various economic, trade and industrial reforms,
through the policy of liberalization to enhance industrial and trading activities. The
rationalization of import duties and stress on export promotion has seen imports increasing by
24% and exports by 25%. Gujarat state is one of those frontline states that can take up the
policy of liberalization and privatization announced by the government of India through the
process of globalization.
7

Gujarat itself is experiencing a phenomenal interest in investments both from mega-industrial

sectors within the country and also from top multi-national abroad. Investments to the tune of
$30 billion are already in the pipeline. From an analysis of the present investments and those
that are flowing in, one can perceive a particular trend which is manifesting itself investments are converging in and around potential port sites. Investments of over Rs.16,000
crores are taking place at Hazira, Rs.15,000 crores are planned at Varga, Rs.20,000 crores are
planned in areas near Pipavav and near Jamnagar port locations. The logic of locating these
industries is rather clear, viz. The large business houses want to import industrial rawmaterials and want access to the international market through sea routes, which is definitely
more viable and feasible as against the surface transport or air transport.
Export of salt and import of coal are other major potential cargo apart from the existing items
of import and export. As indicated earlier, the massive spurt in industrialization also opens up
scope for import of industrial raw materials and export of finished goods to the global market
through ports. The vast coastline of Gujarat, also offers tremendous potential for marine
fisheries and subsequent processing and exports. Over and above this, any development in the
hinterland state has a direct impact on Gujarat ports.
In all over India, Gujarat ports are handling more cargo then other states and by the year by
year cargo handling is increasing. From the below data we can find that Kandla port is
handling more cargo than all over India.

In Gujarat, ports are playing major role for growth of state GDP (Gross Domestic Product)
below are the figure for the year 2006-2007

Shipping Company:
Shipping Companies are companies which invest their capital in purchase of ships and
provide transport service through the sea to its customers is known as shipping company.
Basically the shipping companies provide services in two ways
1.

TRAMP SHIPS

2.

LINER SHIPS

Tramp Ships:Tramp ship or general trader, does not operate on a fixed sailing schedule, but merely trades
in all parts of the world in search of cargo, primarily bulk shipments. It is a chartered ship
prepared to carry anything anywhere. Its cargoes include coal, grain, timber, sugar, ores,
fertilizers, etc like which are carried in complete shiploads.
Tramp tankers are specialized vessels. They may be under charter or be operated by an
industrial company, that is oil company, motor manufacturer, etc to suit their own
individual/market needs.

Liner Ships:Liner ship operates on a fixed route between two ports or two series of ports. They operate on
a regular scheduled service. They sail on scheduled dates/times whether they are full or not.
The cost of using the service (freight) can be quoted from a fixed tariff.
Container ships in deep sea trades and roe ship in the short sea trades feature prominently in
this field.

10

Different Types of Ships:Container Ship:

Container ship is also known as a BOX

SHIP

Container ships cater to only containerized

cargo and generally have cranes on board. They
can store up to 4 tiers of containers below the
main deck and up to 3 tiers above deck.

Roll on /
Ships:-

Roll-on/roll-of ships were created to accommodate

Roll - off

cargo that was self-propelled, such as automobiles or

trucks, or cargo that could be wheeled into a ship, such
as railroad cars. They are essentially floating garages.
This ship have an advantage in that specialized lifting
equipment is not required, even for the heaviest of loads,
since the cargo rolls under its own power or pulled by a
tractor.

Break-bulk cargo ships

Break-Bulk

Break-bulk cargo ships are multipurpose ships

Ships:-

that can transport shipments of unusual sizes,

unitized on pallets, in bags, or in crates.

The advantage of break-bulk ships is that they

can call at just about any port to pick up different
kinds of cargo loads, giving them a flexibility that
container ships do not yet have.

11

Crude

Carriers: Crude carriers are the bulk ships dedicated to the

transport of petroleum products, whether unrefined
or refined, such as gasoline or diesel fuel.
LCCs and ULCCs are such large ships that they can
call on only a few ports in the world; since their
draft, when loaded, can reach 35 meters(115 feet)
they need very deep ports for berthing.

Dry-Bulk

Dry-bulk carriers operate on the same basis as oil

Carriers:

tankers in that they are chartered for a whole voyage.

Dry-bulk ships have several holds in their hull, in
Gas

which non-unitized cargo is placed.

Carriers:

Dry bulk ships carry agricultural products, such as

cereals, as well as coal, ores, scrap iron, dry
chemicals, and other bulk commodities.
Liquefied
(LNG)

Natural

Gas

Another important bulk trade is the transportation of

Liquefied Natural Gas (LNG) and of Liquefied
Petroleum Gas (LPG). These types of carriers have
a very distinctive shape.
The LNG and LPG trades tend to be slightly
different than the average bulk transport, as they are
used in a particular trade for long periods of time.

Containerization:
12

Containerization, the term very familiar to present day shipping industry is a completely
unknown concept, a few decades back. Malcolm McLean, owner of a huge trucking company
in USA, who has first conceived the idea of containerization by transporting containers
though ideal-x in 1956 and initiated a revolution in the history of shipping industry.
Before containerization, cargo has to be loaded first into the truck and later truck is to driven
to the port, unload the goods at the port and them into the ship at the port. This has been a
cumbersome process and, in consequence, consumed a lot of time. For completing the
exercise, ships are detained in the port for about ten days for the entire process of unloading
and loading. With the arrival of containerization, shippers have started stuffing into
containers, at their own place, and containers are brought to the container yard (inland
container depot) for shipment. This process has greatly facilitated in two, after unloading the
containers and loading them again into the ship. The process of containerization has
decongested the ports that are heavily crowded.
Shipping is truly the lynchpin of global economy and international trade. More than 90% of
world merchandise trade is carried by sea and over 50% of that volume is containerized. In
todays era of globalization, international trade has evolved to the level where almost no
nation can be self-sufficient and global trade has fostered an interdependency and interconnectivity between countries. Shipping has always provided the most cost-effective means
of transportation over long distances and containerization has played a crucial role in world
maritime transport.

13

Challenges Container port demand and capacity imbalance:

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

14

Types of containers-:
15

There are different types of containers. The popular types are:

1. General purpose containers-:
There are the most common type of containers and are the ones with which most people are
familiar. Each general-purpose container is fully closed and has width doors at one end for
access. Both liquid and solid substances can be loaded in these containers. Based on length of
the container, the container is generally known as a 20 ft container or 40 ft container, in
practice. Hazardous or dangerous cargo can not be loaded into general-purpose containers.
2. Reefer containers (refrigerated) -:
These play an important role in South - Africas exports of perishable products, and are
designed to carry cargoes at temperatures reading down to deep frozen. For refrigeration, they
are fitted with electrical equipment for supply of necessary electricity.
3. Dry bulk containers-:
These are built especially for the carriage of dry powders and granular substances in bulk.
4. Open top/open sided containers-:
These are built for heavy and awkward pieces of cargo. These containers are ideal where
height of the cargo is in excess of height of the standard general purpose containers.
5. Liquid cargo containers-:
These are ideal for bulk liquids, such as wine, fruit concentrates, vegetable oils, detergents
and various other non-hazardous chemicals. Bulk liquid bags, designed to carry specific
commodities, can fit into these containers.
6. Hanger containers-:
They are used for the shipment of garments on hangers.

Custom House Agent:

16

Custom House Agent means a person licensed, temporarily or otherwise, under the
regulations made under sub-section (2) of section 146 of the Customs Act, 1962.
A person is permitted to operate as a customs house agent, temporarily under regulation 8(1)
and permanently under regulation 10, of the Customs House Agents Licensing Regulations,
1984.
The services rendered by the custom house agent are not merely limited to the clearing of the
import and export consignment. The CHA also renders the service of loading/unloading of
import or export goods from/at the premises of the exporter/importer, the packing,
weighment, measurement of the export goods, the transportation of the export goods to the
customs station or the import goods from the custom station to the importers premises,
carrying out of various statutory and other formalities such as payment of expenses on
account of de-stuffing/ pelletisation terminal handling, fumigation, drawback/ DEEC
processing, survey /amendment fees, dock fees, repairing and examination charges, landing
and container charges, statutory labour etc this expenses paid on behalf of importer and
exporter. The CHA is ordinarily reimbursed by the importer/ exporter for whom the above
services are rendered.

2. OBJECTIVE OF THE STUDY

17

 To know the present scenario in Indian shipping line and particularly in

state of Gujarat. This study is undertaken to appraise the development of
shipping line.
To know the relation between the CHA and exporter as well as importer.
The report also aims to describe why shipping line invest their amount to
purchase ship and type of ship for transportation of goods.
Another objective is to know the documentation process done by the CHA
(clearing house agent) to clear the goods from custom.
To know the future of Indian shipping.

18

3. RESEARCH METHODOLOGY
Research methodology is the process of collecting all sorts of information & data pertaining
to the subject in question. The objective is to examine all the issues involved & conduct
situational analysis. The methodology includes the overall research design, sampling
procedure & fieldwork done & finally the analysis procedure. The methodology used in the
study consistent of sample survey using both primary & secondary data. The primary data has
been collected with the help of questionnaire as well as personal observation book, magazine;
journals have been referred for secondary data. The questionnaire has been drafted &
presented by the researcher himself.
The data which has been collected from various sources can be categorized into two fields
mainly:-

Primary data:Primary data collected through personal interview with the employee of the Memco trading
pvt. Ltd and I have initiated my research by going through the whole step wise processes of
its routine activities.

Secondary data:Secondary data is collected through some good articles of shipping times and some sites from
internet.

19

4. LIMITATIONS OF STUDY
While preparing this study, few limitations were faced. Though these limitations didnt affect
the making of this project. But, it was felt that may be if these limitations were overcome
then the end result would be accurate.

Time constraint: - Time for research was very short. So collecting information
and conducting research was a difficult task.

Shortage of Information was not sufficiently available: The source of data

collection is secondary so the information available is not sufficient.

No direct source of information available:- The information is collected from

indirect sources so inaccuracy of data might be a possibility.

Lack of primary data

Lack of numeric values in terms of company revenue, sales and profits..

20

CHAPTER TWO
COMPANY PROFILE:Memco trading Pvt. Ltd. was established in 2007. A leading custom house agent, for import
and export, memco trading has established its basis at four different places across india. We
have offices located at mumbai, kandla, delhi and vapi. It is not just operating on domestic
level but has started operating on international level and operates through various offices
worldwide.

Major items handled by Memco trading Pvt. Ltd. are as follows:

Exports: sanitary ware, stainless steel utensils, readymade garments, soya, engineering
goods, sesame seeds, groundnuts, rice, textiles etc.
Imports: nonferrous and ferrous metal scrap, consumer goods, soap raw material, chemicals,
fabrics, capital goods, rubber products, dates, dry fruits, auto parts etc.

Management Team:

Sr. No.

Director's Name

Designation

MR. SALIM MEMON

DIRECTOR

MR. PRANAV BHAGAT

DIRECTOR

MR. AVDHESH SHARMA

MR. MANOHAR JOSHI

MR. NAUSHAD SIDDIQUI

DOCK HANDLER
LOGISTICS
SUPERVISOR

21

Head office of Memco trading Pvt. Ltd.:

Gandhidham
Sector no- 1, Plot no -48/8
Gujarat (kutchh) - 370201

CARE! COMFORT! COMMITMENT!!!

Our job is to keep your business on the move and hence creating value for our customer is
paramount for us. Aligning with our philosophy of Care, Comfort and Commitment, we
have perfected our solutions by carefully integrating policy, process and procedure has
resulted in timely, cost efficient, secure and high quality service. We partner with you to
manage your supply chain efficiently, effectively and competitively so you can focus on your
core competencies and consign the logistics to us.
Specialties:
Customs Brokerage, Air and Ocean Freight Forwarding, 3PL - Third Party Logistics,
Multimodal Transportation, Remote Pickups and Door deliveries, Warehousing and
Distribution, Supply Chain Management

22

SERVICES PROVIDED BY MEMCO TRADING LIMITED

1. CY/CFS Shipments
Cargo stowed at your premises or delivered at our warehouses/ facility is handled with equal ease.
The/your FCL consignments are as important as your LCL shipments to multiple buyers. Being one of
the pioneers in cargo consolidation in India, is rest assured that your shipments will be handled with
care.
2. Vendor Off- dock facility

Different components manufactured across multiple locations would need to be assembled or packed
together as a set/unit. Our off dock management services enable you to outsource this activity and
relocate your non-core business to a dedicated facility. This facility will also enable staggered
shipments.

3. Buyer Consolidation
Working with multiple vendors and smaller quantities is essential to distress the
capital outlays. This service enables to load a dedicated container for you from a
particular port loaded with merchandise from different suppliers. Our weekly
departures would mean there will be regular uninterrupted supplies.

4. Customs Brokerage
We are one of the oldest Customs Brokers in Mumbai; our brokerage team will facilitate the
smooth and timely movement of your cargo through set statutory policies and requirements.

23

The Brokerage services are handled in-house by licensed professionals with years of
experience in local and global customs requirement.

CHAPTER THREE
DATA ANALYSIS AND INTERPRETATION
3.1 EXPORT
Export preliminaries:
In order to enter into export business, certain preliminary steps have to be taken by every
business organization. The setting up of an export firm is completed in two stages. They are:

A)

Establishing a business firm-:

There are various formalities and registrations to be made with different authorities before an
exporter can enter into export business and accept an export order.
1)

Selection of name of the firm-: An entrepreneur can choose any name for the firm he
wants to start. It is desirable that the name of the firms indicates that the business relates
to export/import.

2)

Approval to name of firm-: There is no need to obtain prior approval of regional

licensing authority of DGFT (Directorate General of Foreign Trade) for the proposed
name of business firm. However, if the firm is planning to export readymade garments to
any country; approval from Apparel Export Promotion Council (AEPC) is required. The
entrepreneur has to apply to AEPC in the prescribed application form for the clearance of
the name. Once the name is approved, registration of firm in that name with AEPC is to
be made within a period of three months. After the registration is done, the firm would
become registered exporter.
24

3)

Registration of Organization-: The form of organization can be sole partnership,

partnership firm under Indian partnership act, 1932 or join stock company registered
under the companies act, 1956.

4)

Opening of Bank Account-: The firm or company has to open a bank account with
branch of a commercial bank, authorized by reserve bank of India to deal in foreign
exchange. The firm may require pre and post shipment finance for its business.

5)

Obtaining Permanent Account Number-: export income is subject to a number of

exemptions and deductions under the income tax act. For claiming those exemptions and
deductions, it is necessary for every exporter to obtain permanent account number from
the income tax authority.

6)

Registration with Sales Tax Authorities-: exporter need not pay sales tax while
making purchases meant for export. But for availing the benefit, firm has to register with
sales tax authorities and secure sales tax number.

B)

Obtaining the importer-exporter code number -:

This is required for completing other registrations.

1.

Importer - Exporter Code Number (IEC)-: No export or import

transaction can be made without obtaining an importer-exporter code number. IEC
number is a pre-condition for exports from and imports into India. IEC number entitles to
import or export any item of non-prohibited goods. This code number is made compulsory
now. The registered /head office of the applicant shall make an application for grant of
IEC number to the regional office of DGFT (known as Regional Licensing Authority),
having territorial jurisdiction over the firm, along with the following documents: profile
of the exporter/importer, demand draft from a bank for rs.1000 as fees, certificate from the
banker of the applicant, two copies of passport size of the applicant, declaration on
applicants letterhead that there is no association of the applicants firm with caution listed
firms. The licensing authority shall allot the IEC number in prescribed format. There is no
expiry date for iec number. This number is invariably used in all documents particularly in
bill of entry in case of imports and shipping bill in case of exports.

25

2.

Registration Cum Membership Certificate (RCMC) -: it is

obligatory for every exporter to register with appropriate Export Promotion Council
(EPC) and obtain registration cum membership certificate. Any person applying for
import or export license or any other benefit under the current exim policy is required to
obtain registration cum membership certificate (RCMC). The benefits provided in the
current EXIM policy are available only to those having valid RCMC with the receipt of
the certificate the exporter will be known as Registered Exporter

3.

Registration with Export Credit and Guarantee Corporation

(ECGC)-: the exporter should also register with export credit and guarantee corporation of
India (ECGC) in order to secure export payments against political and commercial risks.
It also helps to get financial assistance from commercial banks and other financial
organization.

4.

Registration with other authorities -: it is desirable for the

exporters to become members of local chamber of commerce, productivity council or any
other trade promotion organization recognized by the ministry of commerce or industry.
Local membership helps the exporters in different ways, including in obtaining certificate
of origin, which is vital for exporter to certain countries.

5.

Registration for business identification number (BIN)-: the

exporters have to obtain pan based Business Identification Number (BIN) from DGFT
(Director General Foreign Trade) prior to filling for custom clearance of export goods.
Purpose of bin is to bring a common identification number to all persons dealing with
various regulatory agencies such as custom department, central excise etc.

6.

Export Licensing -: many items of goods are free for exports

without obtaining any license, if they do not fall in the negative list. The negative list
consist of goods the import or export of which is prohibited, restricted or canalized.
Prohibited items-: these items can not be exported or imported. These items include wild
life, exotic birds, wood and wood products in the form of logs, timber, pulp and charcoal.

26

Restricted items -: these are the items, export or import of which is restricted through
license. They can be imported or exported only in accordance with the regulations
governing in this behalf.
Canalized items -: goods which are canalized can be imported or exported through the
canalizing agency, specified in the negative list.
So it is necessary for the exporter to check the nature of the item before he enters into the
contract or even makes efforts to secure the export order. Needless to add, the items of export
agreed upon should not be fall in the negative/ banned list.

Exporters incentives & drawback:

Incentives & facilities:
Advance license -: inputs required for manufacturing export products can be imported
without payment of custom duty under advance license. Since the raw materials can be
imported before exports of final product, the license issued for this purpose is called
advance licenses. An advance license is issued under duty exemption scheme to allow
import of inputs, which are physically incorporated in the export product.
Duty free replenishment certificate (DFRC):- DFRC is issued to a merchant exporter or
manufacturer exporter for the duty free import of inputs such as raw materials, components,
intermediates, consumables, spare parts, including packing materials to be used for export
production. Such license is given subject of the fulfillment of time bound export obligation.
Duty entitlement passbook scheme (DEPB) :- under the DEPB scheme, an exporter
may apply for credit as a specified percentage of fob value of exports, made in freely
convertible currency. The credit shall be available against such export products and at such
rates as may be specified by the director general of foreign trade (DGFT) by way of public
notice issued in this behalf, for import of raw materials, intermediates, components, parts,
packaging materials, etc.
Export promotion capital goods scheme (EPCG) :- EPCG scheme was introduced by the
EXIM policy of 1992-97 in order to enable manufacturer exporter to import machinery and
other capital goods for export production at confessional or no customs duties at all.
27

This facility is subject to export obligation, i.e., the exporter is required to guarantee exports
of certain minimum value, which is in multiple of tit1e value of capital goods imported.

EXPORT PROCEDURE

28

The different steps involved in export department are as follows:

Step 1: Exporter sends the following document to memco trading:

Letter of credit: Assures exporter his payment promise to pay a seller (beneficiary)

upon receipt of goods by a buyer if certain conditions outlined in the letter have been met.
It is a method of payment for goods in the buyer establishes which his credit with a local
bank, clearly describing the goods to be purchased, the price, the documentation required,
and a time limit for completion of the transaction. Upon receipt of documentation, the
bank is either paid by the buyer or takes title to the goods themselves and proceeds to
transfer funds to the seller.
Types of letter of credit
Clean letter of credit: negotiated against a clean draft without any documents
Documentary letter of credit: documents specified in the letter of credit must accompany the
draft
Revocable letter of credit: can be cancelled or revoked any time without the consent or notice
to the beneficiary
Irrevocable letter of credit: cannot be amended, revoked or modified by the issuing bank
without the express consent of all parties concerned. Thus the issuing bank has definite
29

undertaking to honor drafts drawn under that credit, provided that the conditions in letter of
credit are met.
Confirmed letter of credit: Issuing bank sends letter of credit to the bank located in
beneficiarys country with a request to add confirmation to the credit
Confirmation involves legal undertaking on the part of the confirming bank that it will duly
honor payment or acceptance on presentation of documents.
Back to back letter of credit:

SECONDARY CREDIT: In favour of a domestic supplier. The original credit backs

the secondary credit and facilitates the purchase of goods from a local supplier by the
original beneficiary of L/C

Red clause letter of credit: Allows exporter to withdraw a predetermined amount so

that he is able to pay his suppliers and purchase relevant letter of credit

Packing list: A list which shows number and kinds of packages being shipped, totals of gross,
legal, and net weights of the packages, and marks and numbers on the packages. The list may
be requested by an importer or may be required by an importing country to facilitate the
clearance of goods through customs.
Invoice: One of the common to both international and domestic transactions is the bill
(invoice) that the exporter sends to the importer. However, the content of an international
invoice is more complex and should be prepared slightly differently for a foreign customer
than for a domestic one.

Step 2: On the basis of invoice, memco trading prepares Annexure A, Annexure C,

Annexure D and SDF (Statutory Declaration Form) along with the invoice.

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

Step 4: Custom calculate the duty (CESS) on the value of the goods. Using the Treasury
Challan the duty can be paid. Cargo can enter the port premises.
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Step5: Custom examined the cargo by using the sample. (Customs examined the cargo only
after the duty is paid) in case of more than one container in one B/L than A.C give some
container no. randomly for examination and that container must be de-stuff by CHA.

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

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

Step 8: Besides all the CHA sends the phytosanitary certificates/pre inspection certificate to
the exporter so that with all documents he can submit this to the bank.
In case of charter, after processing and shipment of the goods following documents are sent
back by the CHA to exporter.

Full set of bill of lading:

For pre carriage is through ship the bill prepared for export is called bill of lading & if the
shipment is by air then the bill prepared is called airway bill.
A bill of lading is a very important document. It is issued by the logistics service
providers. It can be well explained as a document issued by a common carrier to a shipper
that serves as:
A receipt for the goods delivered to the carrier for shipment.
A definition of the contract of carriage of the goods.
A Document of Title to the goods described therein.
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This document is generally not negotiable unless consigned "to order." If we ask to the
logistics companies than a Bill Of Lading is a product for them. They do the whole business
on the Bill of Lading. Increase in Bill of Lading shows increase in companys turnover.

Copy of Mate Receipt:

Issued by commanding officer of the ship that cargo has been loaded to the ship name of the
vessel, date of shipment, condition of cargo at the time of receipt, berth, and description of
packages. Mate receipt is handed over to the port authorities so that port dues are cleared by
the exporter. Bill of lading is issued by the shipping company only after the mates receipt is
submitted by the exporter

Self-Declaration Form or G R Form:

Under customs act, every exporter is required to declare export value of shipment ad give an
undertaking that export proceeds would be realized within a period of six months from the
date of shipment or due date, whichever is earlier. If customs clearance for the shipment is
made manually, declaration is made in GR form, in duplicate. If the clearance is
computerized, SDF form, in duplicate, is used in place of GR form.

Copy of shipping bill (triplicate and quadruplicate).

Bill is generated in the customs clearance on the basis of The invoice is given to the company
by the shipper. And a shipping the invoice and packing list. When cargo is stuffed, inside the
container, in our port office or at factory. The details are given to the corporate office
documentation department via fax. The details as such received are feed in to software called
Visual IPEX. Then, the details are sent via Ice gate link to the customs database. In return, the
customs allocate a shipping bill number and print a shipping bill in the port office which is to
be collected from the port office. Further, the procedure goes for carting and loading the
cargo into the vessel.
Following three types of shipping bill with custom authorities
Dutiable shipping bill: it is used in case of goods, which attract export duty may or may not
be entitled to duty drawback. It is printed on yellow paper.
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Free shipping bill: it is used in case of goods which neither attract any export duty nor
entitled for duty drawback. It is printed on simple white paper.
Drawback shipping bill: it is used in case when refund of duties is allowed on the goods
exported generally it is printed on green paper, but when the drawback claim is paid to a
bank, then it is printed on yellow paper.

Certificate of origin.

A document provided by the exporters chamber of commerce that attests that the goods
originated from the country in which exporter is located.

Documents submitted by CHA to the customs:

Invoice.

Packing list.

Self-Declaration Form Or Gr Form

Acceptance of contract.

Letter of credit.

Quality Control Certificate.

Lists of documents required to be submitted by the exporter to various

authorities, organizations, and agencies.
1) To the custom authority:-

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Commercial invoice

GR Form ( Original and Duplicate )

Shippers Declaration Form

Copy of the Export Contract /L/c/Export Order

Inspection certificate

AR-4 Form Export License

Export license

WeighT Certificate

Shipping bill

2) To the port authorities:

Port Trust Copy of the Shipping Bill

Wharf age application.

3) To the bank

Letter of credit

Commercial invoice

Bill of lading

Insurance Policy/Certificate

Bill of exchange
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GR Form (duplicate copy)

Bank certificate

Export Inspection Certificate

Certificate of Origin

Shipment advice

4) To the RBI:

Copy of the invoice

Sales Contract

Bill of lading

Inspection / Analysis Report

5) To the EXIM Bank:

Export contract

Letter of Contract

Balance sheet of the exporter

Statement of profit and loss in the transaction covered by the export contract

Statement regarding the projections of the credit requirement.

35

Short shipment:
In case of short shipment customs sends the short shipment notice Annexure C to the RBI
(Reserve Bank of India) along with G R form.
Short shipment notice is in five copies:

Original Customs

Second copy Agent

Third copy Exporter

One copy Wharf age refund

One copy is for CESS

Treasure Challan:This is document is used at the time of payment of the duty to the customs. It shows the
amount to be paid to the customs authority.
It is in four copies:

Original

Duplicate

Triplicate
36

Quadruplicate

Customs keeps the original and duplicate copies. Triplicate and Quadruplicate copies are sent
to the CHA.

37

IMPORT
Import Procedure

38

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

a) Bill of lading
b) Invoice
c) Packing list
d) Certificate of origin
e) Pre shipment inspection certificate
f) Insurance certificate
g) Sales contract
h) Bond copy (if H.S.S)

The CHA shows the bill of lading to the shipping agent in order to get the NOC (Non
Objection Certificate in Kandla Port only).

No objection certificate has been issued by the shipping line to make sure that they have
no objection to open the containers for the examination of goods.

CHA then presents the bill of entry to the customs for noting and then customs gives the
import department the serial no. that comes on all copies of bill of entry.
39

 CHA pays wharf age to the port authority and the original copy of wharf age goes to the
treasury of port trust.

Customs give the examination order on the back of original bill of entry in case of first
check procedure.
Cargo is inspected in front of the customs. Customs give the examination report at the
back of the bill of entry.
Customs assessed the duty to ensure that the duty evaluated by the CHA is correct.
Prior to this, the CHA on the basis of invoice, packing list prepares the bill of entry. The bill
of entry is a proof that the goods have been imported.
For custom clearance purpose, the importer has to submit to the customs authority a form,
which is known as bill of entry.

Bill of entry is in three copies:Original copy:This is called the customs copy. In first check procedure it contains the examination report on
the back of it.
Duplicate copy:It is submitted in port either in container section or in break bulk section along with wharf
age, NOC, Delivery order. It shows charges have been paid to customs and contain on the
back, passed out of custom charges.
Triplicate copy:40

This copy is for central excise for availing certain benefits.

Quadruplicate copy:This copy is submitted to the bank.
Port trust copies:Out of 5th, 6th, and 7th copies, one copy is given to the port authority. The other two copies are
kept by the CHA for his record.

Types of bill of Entry:I.

II.
III.

Bill of entry for home consumption

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

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

There are six kinds of duties, which have to be paid at the time of custom clearance in case of
imports those are:
1. Basic Custom Duty
2. CVD
3. Additional cess on CVD
4. Secondary and higher cess on CVD
5. CESS
6. Custom sec & higher education cess
7. Additional Custom Duty
Let us consider that basic custom duty on the ALL ALUMINIUM SCARP is 0%, CVD 8%,
and additional duty is 4%. Say basic custom duty in rupees be X, Additional custom duty be
Y and CVD be Z (12.826688%)
X = 0% of assessable value
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Z = Assessable value *8%(CVD)

Y = Assessable value + 4% of ASS. VAL.+Z+ CESS on CVD 2%+ SEC.&HIGHER
EDU.CESS ON CVD 1%+ CUS. EDU.CESS 2+1%
CESS on CVD = 2% of Z
SEC.& HIGHER EDU.CESS ON CVD = 1% OF Z
Total duty amount (in rupees) = X+Y+Z
CUS. EDU.CESS on Total duty =
2% of Z +EDU.CESS ON CVD+S&H EDU.CESS ON CVD
1% of Z +EDU.CESS ON CVD+S&H EDU.CESS ON CVD

Documents to be used in import:

I.
II.

Bill of lading
Invoice

III.

Certificate of origin

IV.

59- Bond warehousing bond

V.

Wharf age

VI.

Bill of entry

VII.

Packing list

VIII.
IX.

NOC (No Objection Certificate)

Delivery order
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X.
XI.

Treasury challan
Gate pass

DOCUMENTS WHICH ARE TO BE USED IN IMPORT AND EXPORT CUSTOM

CLEARANCE.
Letter of Credit
A Letter of credit is a document containing guarantee of a bank to honor drafts drawn on
it by an exporter, under certain conditions and up to certain amounts, provided that the
beneficiary fulfills the stipulated conditions.
Packing list
It is a detailed document provided by the exporter that spells out how many containers
there are in the shipment and which merchandise is contained in each container.
Invoice
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It is a document which shows the total amount of the goods and the description of goods.
Bill of lading
A generic term used to describe a document issued by the carrier to the shipper.
Mate receipt
Mate receipt is issued by the mate (assistant to the captain of the ship) after the cargo is
loaded into the ship. It is an acknowledgement that the goods have been received on board
the ship
Shipping bill
It is issued by the custom authority. Shipping is the main document of the basic of which
the custom permission is given. After the shipping bill is stamped by custom, then only
the goods are allowed to be enter to the deck. It is prepared by EDI system or manually
system.
Certificate of Origin
A document provided by the exporters chamber of commerce that attests that the goods
originated from the country in which exporter is located.
Photo-sanitary certificate
A document provided by an independent inspection company, or the Agriculture
Department of the exporting countrys government, that attests that the goods confirm to
the agriculture standard of the importing country.
Manifest
A document internal to the shipping company (the carrier) that lists all cargo onboard the
transportation vehicle.
Forms AR-4/AR-4A

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These forms are meant for applying for the removal of excisable goods for export by
sea/post. Form AR-4 is used for applying for excise inspection at the factory and form
AR-4A is used when goods are to be exported under a claim for rebate of excise duty or
under bond.

Certificate of Measurement
Freight can be charged either on the basis of weight or measurement. When it is charged
on weight basis, the weight declared by the overseas supplier is accepted. The certificate
contains the name of the vessel, the port of destination description of goods, quantity,
length, breadth, depth etc of the packages.
Shipping advice
A shipping advice is used to inform the overseas customer about the shipment of goods.
There is no particular form of shipping advice. The exporter only advises his importer
about the invoice number, Bill of lading / Airway bill number and date, name of the vessel
with date of sailing of the vessel.
Bill of entry
The bill entry is a document, prepared by the importer or his clearing agent in the
prescribed form under bill of entry regulation, 1971, on which clearance of imported
goods can be made.
Certificate of insurance
A document providing by the insurance company of the exporter that the goods are
insured during their international voyage.

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WHY SWOT ANALYSIS IS NEEDED?

The SWOT analysis is your key to setting up a stable organization. The S stands for strength,
the W stands for Weaknesses, the O stands for Opportunities while the T stands for threats.
An analysis of such kind is of great use to your business. It helps you to understand your
aims, goals, and ambitions. At the same time, you get a clear image of the pros and cons
related to your business. Based on that image, you can capitalize on advantages or avoid the
disadvantages.
If you are an executive at a shipping company, then the SWOT analysis is mandatory for
your companys success. However, keep in mind that the SWOT analysis for a shipping
company is often quite different from that of other companies.
SWOT ANALYSIS FOR COMPETITIVE EDGE
Shipping companies can be quite similar and quite different at the same time. They are
similar in the sense that they have a homogeneous working mechanism. Each company
strives to provide the best service
The companies may have the same missions and visions. Its how they plan to carry out those
missions and visions that make them unique. The path that they choose will determine the
limitations of their strengths, the vulnerability of their weaknesses, the frequency of their
opportunities and the danger of their threats.
SWOT EXCLUSIVES FOR DELIVERY SERVICE
SWOT analysis is one of the simplest and most basic ways of setting your company apart
from the rest. If you want to edge ahead of others in the competition, then start employing
your resources into SWOT analysis.
This begs the question, how will you be able to identify the strengths, weaknesses,
opportunities and threats.

47

1) STRENGTHS
Shipping companies have certain strengths that they can always take advantage of. But first,
your SWOT analyst needs to pinpoint these strengths.
Customer loyalty- When it comes to international trade, customers dont like to
experiment or explore much. Sticking with the same brand gives them a sense of
assurance. As a result, as an executive of a shipping company, you can be sure to
almost always retain your customers unless you make a major mistake.
Always available- Most of the shipping companies are available round the clocks and
allow their customers to reach them 24/7, usually through their website. Unlike other
companies, which are shut down for a certain time of the day or the week or the
month, your companys business will roll on continuously and the influx of orders
should not die down.
One of the fastest growing container ship operators and supply vessel in IndiaMemco trading is one of the fastest growing shipping companies in India and aims to
become a market leader in next 10 years.
Strong customer base- Memco trading already operates in 28 countries and
increasing. These offices are handled by a workforce of over 2,000 highly trained
employees who take their work very seriously.
Versatility- we are not merely a shipping company. Apart from shipping, company
engages in energy, transportation, offshore, retail, and manufacturing businesses.

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2) WEAKNESSES
Every shipping company has its own set of weaknesses. The world has become technology
based.
Lack of proper research and development- Once again, shipping company needs to
adapt and evolve constantly. Without proper research and development, you cannot
take your company to the next level. You will soon see your rivals outdo you in sales
and revenue simply because they reaped the rewards of having done thorough
research on their internal system and external services.
Low profit margins- Decreasing profitability over the years and Increasing debt
burden is a concern in this line of business. Strict ground rules from government and
strong competition has added up.
Limited global tie-ups and associations- shipping business is a crude line of
business which results in limited associations and tie-ups with other business
organisations.
Lack of latest technology- Shipping companies are trying their best to adapt to new
technology. Those who fail to adapt end up lagging behind. For instance, if your
company does not have a proper IT department, then your delivery service website is
likely to crash from time to time. Every minute that is it out of service you lose a huge
amount of orders from your customers.

49

3) OPPORTUNITIES
The opportunities that you are presented in a shipping company are often due to external
factors.
Acquisition synergies- acquisition synergies can be a potential game changer for
such companies. Combining the resources of two different companies will make the
base of a company much bigger. Strategic alliances and joint ventures is a great way
to move forward.
Innovations- This is kind of similar to the evolution factor that was mentioned above.
Your ability to invent and innovate will propel your company to new heights.
Innovative products and services are always in demand. Making these available to the
customers gives you the opportunity to out-muscle your opponents.
Expansion- Expanding customer base geographically or through new services will
help in growing.

50

4) THREATS
There is danger lurking in every corner for shipping companies. It is imperative to anticipate
these dangers and measure the damage they can cause.
Political unrest- Delivering goods from one part of the country to the other when you
have hundreds and thousands of people protesting and rioting in the streets becomes a
steep task. You even run the risk of endangering your life and jeopardizing the safety
of the goods to be delivered.
International competition- If you are running a shipping company, you are always
vulnerable to being overpowered by a foreign company.
Economic slowdown- economic slowdown directly affects the business of a shipping
company as there is slow movement of goods and services. There is a lesser trade
between countries due to the low purchasing parity of customers.
Changes in regulations of various countries- as shipping business is all about
transferring goods from one country to another, changes in rules and regulations of
countries has a direct impact on the business.
Intense competition to gain market share- there is a cut throat competition to tap
the largest share of market and increase customer base.

51

CHAPTER FOUR
52

CONCLUSION
The Indian business environment is changing with the rapid growth in
infrastructure

and

technology.

With

the

increasing

inflows

of

multinationals, trade has been increased, which has resulted in stiff

competition between the organizations.
Despite of the stiff competition Memco trading Ltd. Has emerged as the
leading custom clearance agent. Their effective implementation of quality
management system and customer centric approach is few of the reasons
for this success.

RECCOMENDATION
Due to the highly dynamic business environment, companies like memco
trading Ltd. has to put in extra efforts to keep with the pace of this
competitive market. It needs to focus on effective completion of job and
customer satisfaction.
The custom clearance for import and export cargo is a long procedure so it
takes time to clear, so the employees must try to complete their work on
time and quick.
Some of the procedures in custom clearance are quite complicated. So if
we get the support of all the employees it will make the entire process
much easier
In this technologically advance world where almost everything is operated
online, it would make business really smooth if the process of custom
clearance can be completed online. This would reduce lot of paperwork
and save time. This would aslo result in cost effectivenss.

53

54

BIBLIOGRAPHY
Websites:
www.cbec.gov.in
www.kandlaport.com
http://www.cygnusindia.com/pdfs/CONTAINERISATION%20-%20India%20and%20Global
%20Scenario.pdf
http://www.gmbports.org/port_pog.htm
http://www.projectsmonitor.com/NewsImages/photo%207/Transport%20Table.jpg

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