PROJECT REPORT ON EXPORT DOCUMENTATION AND PROCEDURES

AT TAL MANUFACTURING SOLUTIONS LIMITED. C/O TATA MOTORS, CHINCHWAD, PUNE 411 033.

SUBMITTED BY xxxxxxxxxxxxxxx IN PARTIAL FULFILLMENT OF 19TH CERTIFICATE COURSE ON FOREIGN TRADE CONDUCTED BY MCCIA PUNE

PREFACE
This Project Report has been compiled in the partial fulfilment of the19th Certificate course in Foreign Trade, at the MCCIA Pune. This project was completed SOLUTIONS at TAL LTD.,

MANUFACTURING

CHINCHWAD, PUNE 411 033, which is a 100% subsidiary of TATA Motors Ltd.

TAL MANUFACTURING SOLUTIONS LTD

A PROFILE TAL Manufacturing Solutions Ltd was incorporated

on 1 April 2000 as a separate Company by merging the resources of the erstwhile Machine Tool and Growth Divisions of Tata Motors. The main business of TAL Manufacturing Solutions Ltd is to design and manufacture complete factory automation solutions to serve industries like automobile OEM, automobile component, light engineering, railways and defence production units. TAL manufactures machine tools, equipments, test rigs, fixtures, material handling systems, assembly and process lines for a wide range of industrial applications and integrates them to deliver complete manufacturing solutions. TAL Manufacturing Solutions Ltd (TAL) is built around three business units : Machine Tool Business Unit Equipment Business Unit Material handling Business Unit

TAL's Machine Tool Business Unit, in its earlier form of Machine Tool Division, has designed, built and installed more than 2000 Machine Tools for the production shops of Tata Motorss Automobile and other Divisions. Since the formation of TAL the customer base as well as range of products has been substantially enhanced. TAL machines are being intensively used for round-theclock production and they have stood the test of time for over three decades. TAL's Technology base has been strengthened by inputs from world renowned manufacturers like Huller-Hille and Schaudt of Germany, Niigata Engineering Company and Nachi Fujikoshi Corporation of Japan through technical collaborations. TAL also has a collaboration with Nachi Fujikoshi Corporation of Japan for the manufacture and integration of Robots. TAL has continuously

updated its technology to meet the growing demands for integration of manufacturing facilities, upgradation of production techniques and meeting the requirements of flexible production.

contd2 2 TAL's Equipment Business Unit and Material handling Business Unit, in its earlier form of Growth Division, has designed and built a large number of material handling systems, process equipment, washing machines, heat treatment equipment and painting systems for Tata Motors. It has made a very substantial contribution in the setting up of the Indica car plant. Since the formation of TAL, the customer base and range of products of both these Business Units has increased. PRODUCTS TALs product range covers a broad spectrum of Machines, Equipment and Material Handling Systems. The product range includes: Machines Special Purpose Machines Transferlines Flexible Manufacturing Machines - CNC Vertical Machining Centres - CNC Horizontal Machining Centres - CNC High Performance Machining Centres - CNC Inline Production Centres - CNC Special Purpose Machines - CNC Transfer lines - CNC Turning Machines CNC Die and Mould Milling Machines Specialised Machines - Internal and Surface Broaching Machines - Gun Drilling machines - Special CNC Milling Machines - Precision Cylindrical Grinding Machines - Internal and Face Grinding Machines - High Speed Gear Shaping Machines - Gear Shaving Machines - Gear Tooth Rounding/Chamfering Machines - Honing Machines

- Super Finishing Machines - Spline Milling & Grinding Machines Water Jet Cutting Machines Robots for welding, sealant dispensing & material handling

Contd3 3 Equipment Pretreatment & cathodic electrode coat deposition systems Painting systems including Baking oven for painting systems Asphalt plants Foundry equipment like core-making machines and moulding lines Gravity die casting machines Shot blasting machines. Heat Treatment Equipment like continuous carburising and hardening furnaces Quenching Press and plug-quenching machines Welding fixtures and Stretch Welding Machines Rivet Guns Test Rigs for automobile aggregates. Material Handling System Power and free conveyors Slat conveyors Pusher conveyors Scrap conveyors Towveyor conveyors Overhead monorail Roller conveyors Turn tables and swivel tables for machining lines Packaging conveyors Multi level lifts Scissors lift Destackers Plate handling system for press lines Car parking systems Autoloaders Manipulators Walking beams Lift and carry conveyors

Contd4 4 STRENGTHS TAL has adequate infrastructure to keep pace with rapidly advancing technology. Some Highlights: TAL employs highly qualified design engineers backed by CAD facilities and a network of Computerised Information Systems. These engineers design mechanical aggregates as well as hydraulic / electrical / electronic control systems. TAL also has highly skilled and trained operatives to support its high technology work. TAL has a well equipped manufacturing set-up comparable to that of any internationally reputed manufacturer. This set up is common to all three business units. The sophisticated and high precision machines in TAL include : : : : : : : : : 'WALDRICH COBURG Plano Machining Centre, PMC 2500 AT-M2, 'DIXI' 510 5-Axis CNC Horizontal Jig Boring Machine, 'SIP' 6A & 7A Vertical Jig Boring Machines, 'MAS' WKV 100 Jig Boring Machines, 'WALDRICH COBURG' Slideway Grinding Machines 'FORTUNA' Cylindrical Fine Grinding Machine 'STUDER' Cylindrical Fine Grinding Machine 'WOTAN' Internal Grinding Machines, 'REISHAUER' Gear Grinding Machines,

A fully equipped Fabrication Shop and Heat Treatment facility.

Contd5

5 Quality Assurance Department is equipped with latest sophisticated Metrological instruments such as : : : Laser Beam Interferometer, 'Talysurf' Surface Roughness Checking Machine, 'Zeiss' 3 Axis Co-ordinate Measuring Machine.

The Assembly Department is provided with specialised equipment, test rigs and instruments to help in building machines and equipment of excellent quality. Controlled temperature and dust free air-conditioned environment is provided for : : Jig Boring & Finish Grinding machines, Final assembly of CNC Machines and other precision Machines.

The most important asset of TAL Manufacturing Solutions Limited is its production work force - a team of talented and dedicated Artisans, Craftsmen and Engineers. Their skills are being upgraded continuously through retraining to take on new and challenging tasks. It is their team work that fructifies into TAL's products. TAL has been actively involved in designing and execution of the welding and painting facilities of Telco's "Indica" Car Plant. The state of art plant boasts of 75 robotic set-ups, High-technology paint shop, SPM's and CNC machines. TAL has also supplied high precision spindles with HSK adapters for High Velocity Ingersoll Machining Centres having run out, ovality and taper within 2 microns.

Contd6 6

With the onset of reforms and globalisation, Indian manufacturing industry is on the threshold of a vast opportunity of playing a very significant international role. However it also faces challenges in technology, quality and price. TAL, with its vast experience in this field, is uniquely poised to offer solutions which are optimal, cost effective and technologically advanced to meet these challenges. As a pioneer in providing total engineering solutions, TAL can leverage technology to meet global technology needs. The prized customers TAL has an impressive list of customers, both in India and abroad. Some of the overseas customers include: IIG, and AAM of USA, EDAG and Ipsen International of Germany, Tata International, and many others. The Indian customers include - Ashok Leyland, Mahindra & Mahindra, Tata Motors, Bajaj Auto, Yamaha, TVS Motors, Daimler Chrysler, Escorts JCB, ZF Steering, Comau India, Escorts Railway Products, Hindustan Composites, Audco and many more

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INTRODUCTION

Globalization and liberalization have opened the gates of countries in the world for Imports and Exports. Thus International Trade plays a very important role in Todays global economy. Today no country can survive without being a part of International Trade. In India, liberalization started in 1991. Since then, started looking forward, for globalization of its trade. Today India is well recognized as a major force in International Trade. India exports its products to almost all the countries of the world like U.S.A. etc. Indias exports can be broadly classified into two categories.

1. Traditional products 2. Non-traditional products

Traditional products include Coffee, Tea, Tobacco, Cotton, Yarn, Spices, Jute etc. The non-traditional products include Engineering, Ready-made Garments, Leather & Leather Manufactures, Gems & Jewellery, Chemicals and allied products, Computer Software etc.

India also imports items from many countries like U.S.A., U.K., Germany, U.A.E. etc. The main items of imports are Equipment and Machinery, Crude Oil, Electronics, Newspaper, Computer Hardware etc.

EXPORT DOCUMENTATION

Export documentation is crucial to export trade operations. There is, however, no denying the fact that it constitutes a heavy charge on our export activity. This is mainly due to the involvement of a number of bodies and agencies, from both government and trade circles, which have developed their documents to suit their own individual convenience with little regards to the strains and stress on the totality of export operations. Besides, because of the difference in their size and layout, these documents have got to be prepared individually and separately, despite commonality of information. Consequently, our export documentation work tends to be repetitive, time consuming, and prone to errors and discrepancies involving delays at every stage of export activity. However correct documentation is very important because it alone can secure the swift passage of information of goods through the customer resulting in prompt payment of goods exported.

Export Documentation plays a very crucial part in the export procedure. One of the most important differences between Domestic trade and international trade is the much heavier documentation involved in the latter. Documentation is perceived to be one of the most complex, difficult and crucial activities of export from India.

Recent developments in trade documentation and office systems have conclusively shown that the Aligned Documentation System (ADS), based on the UN Layout Key, can help to provide an effective alternative to the repetitive, dilatory and unproductive method of preparation of export documents. The ADS is a methodology of creating information on a set of standardized forms printed on paper of the same size and in such a way that the items of identical information occupy the same position on each form. This makes it possible to prepare one Master Document embodying the information common to all the documents included in the aligned series and to run off all the aligned documents from the same Master Document with the help of suitable masking and reproduction techniques. This now can be effectively done with the help of computers.

WORK PLAN EXIM OVERVIEW FLOW OF ACTIITIES: 1. ENQUIRY, OFFER, ORDER 2. Work Order, Planning , ORDER EXECUTION 3. PRESHIPMENT & POSTSHIPPMENT DOCUMENTS, BRC, SHIPMENT INSPECTION, DECLARATIONS, RETURNS EEPC/ECGC, ETC EXPORT BENEFITS: EPCG, ADVANCE LICENSE,DEPB, DFRC,ARO, DBK(All Industry Rate and Brand Rate) EOU OPERATIONS EXCISE PROCEDURE, DOCUMENTATION IMPORT PROCEDURE- DTA IMPORT PROCEDURE- EOU

Enquiry, Offer and Order: For TAL Manufacturing Solutions Limited (TMSL) we have our separate associates named TATA International in India . For marketing we have mutual co-operation with our associates who get clients for us. We send invoice to our associates- they add up their margin and send another invoice to the consignee. No advertising through media is done for marketing.

We have also appointed M/s International Industrial Group (IIG) as our agent in USA for marketing and sales promotion activities in USA and Canada.

STEPS TO BE TAKEN FOR EXECUTION OF AN EXPORT ORDER: Scrutiny of export order with reference quotation. Intimation of order confirmation to the buyer with specific terms & conditions. Initiate action for pre-shipment export finance like Packing Credit Initiate action for manufacture/ procurement. Decide on whether to apply for duty free license/duty drawback Prepare a time schedule for order execution Obtain the letter of credit if any, and scrutiny thereof Confirmation of letter of credit, if any Place purchase order on manufacture if required Open L/C on indigenous supplier, if required Prepare application for duty free license, if required Obtain the duty free license, if essential and scrutiny thereof Executions of legal undertaking, Bond, Bank, Guarantee as the case may be Import clearance of essential input duty/free paid Inspect packing cases for exact dimensions and weights Appointment of CHA if required

Pre-Shipment inspection of export product Finalization of freight with shipping company Nomination of vessel if required Preshipment documentation as per letter of credit (if any), with special care for fulfillment of export obligation under EPCG license, and duty free license and/ or to claim duty drawback/DEPB/DFRC

Execution of bond with central excise department, if required

Ensure Octroi exemption from Octroi Naka Central excise clearance documentation Arrange safe and smooth transportation of goods Obtain by fax the shipping details from CHA Intimation of shipping details to foreign buyer, consignee and insurance company Ensure timely receipt of documents from the CHA, Inspection authorities, insurance company, consulates, etc. Preparation of post- shipment documents Negotiation of documents with the bank Ensure receipts of export proceeds in time. Arrange payment of commission to overseas agent, if any Obtain bank certificate of exports and realization Returns to ECGC

Application for and receipt of export benefits such as refund of excise duty/ cancellation of bond, duty drawback/DEPB/DFRC

Include shipping details in returns to EPC/commodity board/DGFT etc.

Movements of Documents This case study is all about the movements of goods in the manufactures company i.e. the Export Company, custom house agent (CHA), port authorities etc. Suppose that company X is an exporter and company Y is an importer. Now Company X in India gets a Purchase Order for supply of CNC Machining Centre from company Y in USA. X sends its Pro-forma Invoice toY in USA. Once the pro-forma invoice gets accepted by , X may export the machine

against advance payment or on CAD basis or X may request Y to establish Letter of Credit. In case Letter of Credit is established it is thoroughly scrutinized by the exporter to see whether they can meet all the requirements of the

customer. To facilitate this the exporter has to prepare their own checklist.

The L/C is checked as per the checklist and important information such as Terms of Payment, Date Of Expiry, special requirements if any are noted

separately and attached along with the L/C. A new file is taken and a Work Order number i.e. W.O. No. is given to the file. This number is entered into a register called W.O. no. Register. The importers name, the L/C amount, last date of delivery, etc are also entered in this register. Now this L/C is sent to the bank for confirmation. The bank confirms the L/C in consultation with the opening bank and returns it back to the company.

Production and Planning, Design, Stores and Engineering department plans their activities to complete the Work Order. For the exemption of payment of the central excise duty. Finance department executes a b-1 bond on RS. 100 stamp paper with the excise department for the required amount and agree to give the Excise Department proof of their exports as soon as possible. Then the Export Cell in Finance department decides an Invoice No. and this number is in accordance with the serial numbers maintained by the department for their invoices. This number is then entered into the Invoice Register, which is separately maintained. Then the person in charge of the documentation starts preparing the Invoice, and the Shipping Instructions. Packing List is provided by Dispatch Department. The information is fed into the Computer where the format of the above documents already exists. The printouts are taken and the information is cross-checked. The packing list preparation takes a little more time because it

can be prepared only after the packing department sends its details of packing to the export department.

The following set of documents (Preshipment documents) are sent to the Companys Customs House Agent (CHA): Purchase order Proforma invoice Packing list Packing details Shipping instructions Self Declaration Form (SDF)/General Remittance Form (GR) Duty Drawback Declaration N-form Octroi Declaration Once the set reaches the CHA, he starts his own procedures. First of all he prepares the Shipping Bill in set whether it is Duty Free or Duty Drawback Shipping Bill as the case may be .

The information of the Shipping Bill is then fed into the computer by the CHA himself in a particular format. The CHAs computer is directly linked to the computer at the Customs House. Thus the information which is fed by the CHA is easily available to the customs authorities. The customs officer then verifies that the shipping bill is in order and then gives a number, which is the Shipping Bill No. This process is known as the noting of the shipping bill

This Shipping Bill No. is then stamped by the agent onto all the copies of the Shipping Bill. He then goes to the customhouse for passing of the Shipping Bill. This entails of the cross checking the information on the Shipping Bill with the other documents. Once the Customs Personal is satisfied that the documents and the Shipping Bill are in order, they sign it. Then the Bill is passed onto the next counter i.e. for pre- auditing. Here the exchange rate mentioned on the Shipping Bill is cross-checked. Once this is done, the customs agent removes the original copy of the shipping Bill and the original GR form. As a proof of this, a security number is put, onto the rest of the copies of the Shipping Bill. He then adds his signature on them. Meanwhile at the exporter informs the Inspection Agency of the day the goods would be ready and asks them to come for the inspection, which is

required for the customer. For the inspection the export department has to submit certain documents to the inspecting authorities. When the inspection is over, the authorities take copies of the commercial invoice for the purpose of affixing on them their stamp. Once this is done the goods are packed and dispatched to the CHA. The CHA has his own warehouse where the goods are then stored. Once the CHA has completed the formalities with the customs, the goods have to cross the Octroi Naka. It is here that the Octroi Declaration and the N form are to be submitted.

Once the goods are taken to the shed at the Mumbai Port, the inspection agent has to be intimated. He then checks the goods physically to see if they are as per the description in the various documents. Once he is satisfied with the products, he signs the Shipping Bills. He retains the Export Promotion Copy with him and the rest are given to the CHA. The CHA then loads the goods onto the ship and is given the Mates Receipt and the On Board Bill of Lading. The CHA faxes the details of the vessel along with the bill of lading to the exporter. Two days after the ship has sailed he goes to collect the E.P Copy of the Shipping Bill from the customs shed. The customs officer then adds the Mates receipt number to the E.P copy and then hands it back to the CHA. This copy is usually retained by the customs for at least two days because sometimes the ship leaves the port but returns back immediately in a few days time, due to

technical troubles. So this ensures that the ship has finally sailed for its final destination.

Now the CHA makes arrangements to send a set of documents to the Octroi Naka to close the account and the rest of the documents are sent to the exporter.

The exporter now starts preparing the Post Shipment Documents. Firstly the importer has to be informed that the shipment has been made and the shipping details has to be faxed to them. This is called Shipment Intimation. The Post Shipment Documents are prepared in two sets. One is the non negotiable set, which is sent by Courier to the Importer. These documents are as per the letter of Credit. The second set is sent to the bank for negotiating. According to the law in India, the negotiable set of documents cannot be directly sent to the importer, they have to be routed through the Bank. This set of documents include: Letter to the Bank for Collection/ of documents Letter of Credit Commercial Invoice Packing List Packing details

Bill of lading/ Air waybill Certificate of Origin Test certificate (if required) Purchase order Bill of Exchange (if bill collection basis) Insurance Cover note / Policy Any other documents mentioned in the L/C

L/C endorsed by Exporter The Bank checks these documents for discrepancies, if there are any. If any discrepancies are found the Bank informs the exporter of the same and if there are none, the bank pays to the exporter The bank keeps the GR form and 4 copies of the Invoice for its records. The GR form is to be sent to the RBI on receipt of the payment from the importer. Meanwhile the bank certifies two invoices and sends it back to the exporter.

Important Notes: 1. The customs department is under the jurisdiction of Ministry of Finance. The Ministry monitors its function through the Central Board of Excise and Customs (CBEC).

All policy and clarificatory circulars are issued by the Board for effective implementation of Customs Act Provisions. 2. If import and Export activities are done between the related persons, the valuation method, applicable would be as per valuation code 1988. There are number of case Laws by which various aspects of valuation are settled. The importer/ exporter needs to get familiarized with the special valuation procedure

3. To get familiarized with the Customs Policy and Procedures you should refer to the Customs Law Manual. 4. In the endeavor of government of India to have a common identification for any exporter importer, based on an Importer Exporter Code number allotted by the office of DGFT a new Business Identification Number (BIN) is generated electronically. This number is required to be mentioned in all statutory documents. Customs department will not process any import export clearance documents without the BIN.

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