DIRECTORATE OF CNS, AAI,CHENNAI

Transcription

1 1 DIRECTORATE OF CNS, AAI,CHENNAI Compiled By G. Vijendran AGM-Stores

2 2 INTRODUCTION Airports Authority of India is a Government Undertaking Organization besides maintaining airports, provides Communication, Navigational and Surveillance aids as per the International Civil Aviation Organizations (ICAO) requirements, ensuring smooth flow of air traffic over 2.8 million Square nautical miles of airspace. Modernization of Airports and its CNS infrastructures is a continuing process which requires updating of facilities and systems. Up gradation of CNS facilities involves induction of new systems and state-of-the-art systems and equipments. Besides indigenous equipments and systems number of equipments is necessarily to be imported from abroad to meet the International Standards for efficient Air Traffic Management. Under these Circumstances, as CNS Material Management Person, the stores officer apart from the routine procurement and issue of stores to various units has to handle Import Consignment. Chennai Airport is one of the important Port Consignees that involves import of equipment and system from abroad both by sea and by air. Thus the stores officer needs to have adequate knowledge to handle the various procedures of the customs, ports relating importing of goods. AAI official need to interact with the various levels of customs officials and the appointed clearing Agent. Though Clearing Agent is appointed for the work since these involves with technical matters AAI official need to interact with the customs officials. After the Customs clearance of the consignments the same has to be dispatched to various airports in India which involves coordination with the companies dealing with air, road and Sea transportation. Even for the dispatch of material there are number of standard procedures that are to be followed. Number of books and documents are available pertaining to the Import and Export by various Authors. Also different web sites provide details about the Indian Customs procedure, Tariff, Central Excise Duty, IEC code, licensing etc. While carrying out the import or re-export of consignments a comprehensive hand out is needed to the Material management personal for clearing the consignment without delay following the laid down procedures. It is pertinent to mention that the CNS stores are handled by the technical persons who need to have interaction with various agencies on technical details and it is imperative to have adequate knowledge on the Import/export procedures. During 2009 January to 2011May Chennai CNS stores has cleared sixteen cost intensive Consignments and dispatched to various airports as per the instructions safely. These experiences at various levels have prompted to make a document for practical understanding and application. This is aimed to provide the necessary guidelines for the material management personal for smooth handling of import/export works. This could not have been achieved but for the full support and suggestion given by my Colleague Mrs. R.Parvathi, Manager (Tech) and Mr. K.Karunanidhi, Superintendent Stores.

3 3 I am very much thankful to the department for the opportunity given me to understand the practical functioning of the CNS stores and especially in handling a number of export/import works relating to CNS systems. I am very much thankful to Sri Veeraswamy and Sri.Madhavan General Managers (Fin) for their guidance on the customs and insurance procedures. These two areas that is very important for the above work. My sincere gratitude to Mr. K.Ganesan GM(CNS) Chennai, and Mr. S.Perumal JGM (CNS) for their motivation and advice that encouraged me to make an attempt for this simple practical guide to know about imports. This guide contains nine chapters which cover general information, Customs procedures, In-land Insurance details, Inland shipments methods, Finance related matters, Re-export procedure and Refund Claim from the Customs in one place. I am dedicating this document to my Guru Late D.Pitcumani, Retired S.T.O.

4 4 INDEX CHAPTER CONTENTS P.NO 1 General Description about Import 03 2 Description of documents 19 3 Description of Served from India 50 Scheme [SFIS] 4 Details of Returnable Original 76 Documents to CHQ 5 Inland Insurance 78 6 Procedure for Despatch of 89 Consignment 7 Finance related works 93 8 Re Export Procedures 95 9 Appeal for Claim from Customs Mnemonics 97

5 5 CHAPTER-1 IMPORT During the years when airports were maintained by Ministry of Civil Aviation, equipment was imported mostly through the Government of India Under-taking organizations like BEL/ ECIL as per the Ministry Guide lines. Once National Airports Authority (NAA) was formed as a Government under-taking organization, under the Ministry of Civil Aviation, the Government permitted NAA to import various types of equipment and spares from foreign manufacturers and suppliers under the prescribed rules and regulations. IMPORT AND EXPORT CODE (IEC) What is IEC code? To import or export any material by any organization, as per Government guide lines, the concerned organization has to apply for Import and Export License from the Director General Foreign Trade, Government of India. Accordingly AAI has obtained the Import and Export license with the code number. This is mandatory for any organization who wants to export or import material. AAI Head quarters, New Delhi had already taken up and details are given below. AAI IEC code Number Date of issue Once decision is taken at CHQ to import equipment/systems, Directorate of CNS Planning (CHQ) New Delhi, after completing the procedures, (through Global Tender) sends purchase order to the foreign supplier. Copy of the said purchase order placed to the foreign supplier, will be sent to the respective port consignee. The consignments may arrive by air or sea depending up on the contractual agreement between Directorate of CNS planning, New Delhi and the supplier. INSURANCE: The insurance coverage will be taken for Air or Sea (all risks covered) against the Invoice value in Indian rupees either by AAI or by the supplier depending on the agreement. In general, the insurance will be taken by the CRSD, New Delhi up to destination only i.e. this insurance is valid up to first landing point in India and the copy will be sent to the respective port consignee station.

6 6 ENLISTING OF THE CLEARING AND FORWARDING AGENTS Before empanelling the CHA (Customs House Agent) for the consignee station, the following procedures are to be followed. a) In-principle approval to be obtained from the Competent Authority by mentioning the reasons for appointing the CHA b) After obtaining approval, Notice Inviting Quotations (NIQ)are to be floated. Before calling NIQ s from the Clearing Agents, make sure that the Clearing Agent is well experienced and possesses the Permanent License with validity. c) In NIQ the terms and conditions should be clearly mentioned like, the firms experience, the validity of license etc. d) Once NIQs are opened by the committee with Finance representative as per the procedures, the file has to be submitted along with the Comparative statements to Directorate of finance for financial concurrence. e) After getting the financial concurrence, once again it is verified and the order is placed with the firm (L1), the lowest quoted firm. WHY CHA TO BE APPOINTED? The importer organization itself can clear the consignments from the customs. In all practical purposes it is very difficult to move the files at Sea/ air Customs office at various levels. This procedure is complex in nature and requires continuous updating of procedure as per the customs rules. Moreover the Clearing and forwarding company should have qualified persons who posses the permanent Valid License issued by the Commissioner of Customs under Ministry of Commerce as per their rules. Hence, it is better to have a CHA for smooth clearance. For an example if AAI files a Bill of Entry, it requires personal follow-up at various levels at customs house and co-ordinate with the customs officials for clearance of the consignments. AAI do not have dedicated official with the requisite knowledge and expertise. Therefore, by appointing the CHA, the agent will be co-coordinating with the customs officials for speedy clearing of the consignments. Role of CHA:AHH In general, there is a thought that once a CHA is appointed, the consignment has to be cleared without participation of the concerned (importer) organization. The CHA is the coordinator between the Customs Office (Sea or Air) and Importer Department for smooth processing without delay. Once the import destination sea/air of the consignment is known then CHA will intimate in detail, the various documents that are to be submitted to customs. Once documents are handed over to customs office by the CHA it will be processed. Should there be a need to clarify any details

7 7 regarding the material, the purpose of import etc., to the customs officials then CHA will intimate, and it will the responsibility for AAI to clarify the same. At that time, the representative of the importer department has to go along with the CHA and clarify the doubts/points raised by the concerned customs officials. This is necessary since the CHA may not be aware of the technical details, the exact usage, and other details regarding the various functions of the equipment/systems which is imported. It has been observed that many times the higher officials had clarified the doubt raised by the custom officials at various levels. It should be ensured that the CHA official take the documents, letters in person for submission of Customs office. While submitting any letter or documents to Custom Office, it is essential to make list of it and obtain the signature of the CHA, which will help for monitoring the day to day progress. TYPES OF GOODS IMPORTED BY AAI AH As per the customs Notification and its guide lines the imported goods are classified as follows: 1. Restricted goods 2. Non-restricted goods. Restricted Goods:- Goods that contain any Chemical, Radio Frequencies, hazardous material etc. To Import the equipments like/hf Transmitters and receivers /VOR/DME/ILS and Radar equipment, CHQ will apply for DGFT license to the Director General of Foreign Trade, Government of India, Ministry of Commerce, New Delhi giving details of the equipments that are imported, and its costs with the final destination of the consignee. After scrutinizing the application, the DGFT authority will issue the license. WPC license: This license is issued by the Wireless Planning co-ordination Department, Government of India, Ministry of Communication, in connection with the frequencies that are to be used in the imported equipments. To get a WPC license, CHQ will submit an application and obtain the license as per the guide lines. Thus the following important documents are required: 1. DGFT License 2. WPC License The above documents are required for restricted goods only.

8 8 Non-Restricted Goods: These types of goods do not contain any RF frequencies; hence the DGFT and WPC licenses are not required. Procurement Action: The procurement of various equipments for the CNS discipline (all India level) ED CNS (P) CHQ will process the file as per the procedure. The ED CNS (P) Directorate will be procuring through the Global Tender. After the approval of the competent authority, the purchase order (PO) will be placed to the eligible supplier with the destinations of the port consignee. The consignment may arrive by Air or Sea. This type of purchased orders contain various of terms and conditions as per legal requirements. Once the P.O is placed by ED CNS (P) New Delhi, the same will be intimated to the General Manager CRSD, New Delhi, for necessary insurance coverage for the said consignment. Insurance: As per the purchase order and the cost of the equipments with its accessories and spares, The General Manager CRSD (Central Radio Stores Depot) at New Delhi will be taking necessary action for the Insurance Coverage (for all risks) up to destination of the port consignee. Depends upon the consignment arrival i.e. by Air or Sea the insurance premium amount vary. To get the insurance coverage for the said imported consignments, the CRSD Directorate will follow the procedure and get the Financial Concurrence and take the insurance policy accordingly. This types insurance covered from the place of shipment i.e. where the said consignments are dispatched by Air or Sea at Foreign countries by the supplier to the Consignee at India where it gets terminated at first landing. Port Consignee may be Chennai/ Kolkatta and Mumbai as per the purchase order placed to the supplier by the CHQ. Hence this insurance will not be valid for Inland Transit Insurance purposes. Once the purchase order is placed by the ED CNS(P) Directorate, the CNS (P) Directorate will be sending the P.O copy well in advance to the General Manager CNS (Delhi Chennai / Kolkatta/Mumbai ). The same will be handed over to the CNS Stores Officer for further action. Role of Stores Officer for importing the consignment: It is important to note that the stores officer in CNS stores is posted from the Technical side because, with the knowledge of the CNS equipments, it is easier for coordination and discussion on technical matters with the customs and with CHA. As a technical person he/she has to update the technical skill and same way he/she has to update the knowledge towards the import procedures. The stores officer should update the procedures involved in import consignment clearance along with the CHA. At times certain practical hiccups will be there while clearing, apart from

9 9 understanding the details of customs tariff. As mentioned earlier, this process is complex in nature and requires continuous updating of procedure as per the customs rules. Once the purchase order copy is received by the stores officer, immediately the stores officer has to coordinate with the G.M. CRSD and try to get the Insurance copy for the said import consignment. This is one of the important documents for the customs clearance. The stores officer has to coordinate frequently with ED CNS (P) Directorate through their G.M. or Jt.General Manager of the station to know about the shipment details of the consignment. After the shipment, the supplier will intimate details to the CNS (P) Directorate and will be sending the original documents pertaining to the consignment under the bank grantee as per the agreement. Once CHQ receives the intimation of the dispatch of documents, then CHQ will initiate necessary follow-up to get the documents by remitting the amount to the concerned bank as per the agreement. Sometimes it may be delayed to get the documents from the bank due to the Administrative/Financial procedures. During this period CNS (P) Directorate will be sending the copies of the available documents to the concerned Station G.M (CNS) for initiating the clearance of the consignments. What are all the documents are required for customs clearance? The following original documents are required for customs clearances are as follows: 1. Commercial Invoice with copies 2. Bill of Lading or Airway bill 3. Packing List 4. Certificate of Origin 5. Factory Acceptance Test (of equipment - station wise ) 6. DGFT License if required 7. WPC license if required 8. Served From India Scheme (SFIS Scrips) 9. Copy of the Insurance Policy from the CRSD 10. Copy of the Import and Export code certificate. 11. Copy of the purchase order 12. Technical Write up will be given by the G.M or J.G.M. about the Equipment 13. Request letter to Customs Authority to clear the consignments under Green channel (if required) The concerned stores officer of the station should try to get the copies of the above important documents which are to be handed over to the Clearing and Forwarding Agent to initiate the action.

10 10 Invariably copies of the following documents are to be made in case the original is not obtained in time, for reference: a. Commercial Invoice (for 100% value) b. Bill of Lading or Airway Bill c. Packing List d. Insurance copy The appointed CHA will try to file the bill relating to the consignment with the above given minimum documents and try to get a Check List Bill of Entry. The idea of getting the check list B.E. is to verify the consignment and relevant chapter as per the Customs Tariff and central exercise manuals. This will indicate whether the consignment is Restricted goods or not. Further it will give an idea about the details on Free Basic Customs Duty of the said consignments. As an example for the VCCS equipment the Basic Customs Duty is not applicable. How to verify the Commercial Invoice documents? Commercial Invoice Value for 100% It has been observed sometime the Invoices are not given by the supplier correctly which causes lots of hardship for clearing the consignment. The Value of the commercial Invoice should be for 100% total value of the consignment only. If it is for 80%, customs authority will not agree to process the file. Please make sure that while receiving the copy of the invoice the value is mentioned for 100% of the consignment/material only. Immediately the Stores officer should bring to the knowledge of G.M (CNS) and try to get the invoice for 100%. At the initial stage itself the CHA will return the invoice if the value is not for 100%. This will help us to avoid future implications criticism by the customs official.. Why particular about invoice value for 100%? If the supplier gives the invoice without mentioning the value i.e for 80% or 100% and later when supplier claims that the given invoice was for 80% only then it becomes very difficult to process with the customs office. It is complicated as it becomes difficult to process for 20% balance duty, the interest for the amount etc. Such case was faced by this office for the three consignments. Under these circumstances the customs office should be kept informed about the invoice details. However it will take time and thus delay final settlement. Freight On Board (FOB): If the supplier mentions that the said consignment is under FOB which means the invoice should have the Freight cost (May be by air or by Sea) and insurance cost (in foreign rates). This freight and insurance coverage

11 11 will depend on the contractual agreement and the same will be emphasized in AAI Purchase Order issued by the ED CNS (P) Directorate, Delhi. Suppose the supplier mentioned in invoice only the cost of the equipments and spares then it clearly indicates that the Freight charges and insurance should be borne by the AAI. In this case there will be a separate Bill of lading or Air way bill. This is one of the importance elements for customs calculations at later stage. CIF Value: If in the invoice the supplier mentions that the said consignment is under CIF, this indicates that the cost of consignments are inclusive of cost, insurance and freight as per the agreement. Depending upon the FOB or CIF, customs calculation will be done. Bill of Lading or Airway Bill Bill of lading means the consignment will arrive by ship only. In general the consignments will arrive through the SCI (Shipping Corporation of India). The shipping Corporation of India will intimate the arrival notice in advance to the G.M (CNS) of the concerned station or to the ED CNS (P) at CHQ. As it was mentioned earlier that the supplier will intimate the shipment details, accordingly the approximate date of consignment arrival may be known. The original Bill of Lading will be sent to CHQ by the SCI. Supplier owned container: Some time the supplier will send the consignment through their own container and it will be taken back by the supplier after completion of installation. In this case it has to clarified from the CHQ and a letter for the same is to be obtained. This has to be intimated to concerned shipping company (SCI or any other) accordingly they raise the Bond and security charges as per the size of the container declared by the supplier in their freight bill. Then it has to be intimated to the CHA, thereby duty for the containers will not be levied by the customs. However, the customs will come to know through the shipping company through the details on security deposit. The amount will be reimbursed by the shipping company by producing the BE copy during the import time as well as when the container is returned back to the supplier with the proof. Airway Bill: If the consignment booked by air by the supplier, the copy of the Master Airway Bill and Master House Number should be obtained from CHQ or through the supplier s Indian Agents. After getting the Check List B.E. as mentioned earlier, verify the relevant chapter for classification and the custom duty amount to be paid. It is better

12 12 to discuss with the G.M. or J.G.M. and call the CHA person to confirm the same. This will help for the final filing of Bill of Entry. Once the check list B.E. is verified then the stores officer has to get the amount for payment towards custom duty. Here it should be noted that the beginning of every month the Foreign Exchange rate invariably changes and accordingly the duty amount is to be finalized. While finalizing the custom duty, date of B.E, the anticipated date of getting approval from CHQ and the sanctioned amount are to be verified and considered. For clearing the consignments, the original documents as mentioned earlier and with copies, are mandatory. (Sl.No, 1 to 11) Any delay in submission due to non receipt of the required original documents and other copies, will result in payment of demurrage charges as applicable by the Shipper Company or Airlines. It is imperative that delay should be avoided and the relevant documents should be obtained well in advance through regular coordination with CHQ. It was observed that the demurrage charges will be heavy and it will not be approved by the RED of respective Region due limited D.O.P. Thus it has to be approved by the Competent Authority at CHQ level only. Only after due approval from the authority the demurrage charges and fright bill can be paid. The mode of payment towards the freight bill may be through demand draft or Cheque as requested by the freight agencies. The payment should be made in time to avoid penalty. Without the payment details, the customs authority will not process the consignment for clearance. It is one of the important documents for clearance. This payment can be made through our CHA or C&F agent. Consignment clearing process: While handing over the above mentioned documents to the Local CHA, the stores officer has to emphasis that the said consignment to be cleared through SFIS (Served From India Scheme) only or under merit. If we do not mention this, the CHA will process the bill in a normal way which indicates that the customs duty payment will be made through Demand Draft. This type of bill will be processed by the certain group of customs officials. Later stage if it is to be cleared under SFIS scheme, the file has to go through some other group and it will take time. The local CHA will find difficult to clear in time, as this involves different sections in customs office. However this problem has been addressed by CHQ. As per the CHQ directive strict Instructions and finance directorate guide lines, payment of Customs Duty by Demand Draft is not applicable. Instead this should be taken up with DGM Taxation (Finance Directorate), CHQ for sending SFIS (Scrips). What is SFIS? This Served from India Scheme Certificate (scrips) is the amount allotted by the Government of India for the Government Departments/ the Government Undertaking Organizations, the Government Research Institutions and certain private companies, to encourage the foreign trades. AAI is one of

13 13 the beneficiaries for utilizing the same. It is as good as an ATM Card. The paid duties are debited from this and the balance will be entered duly signed by the Customs officials in the SFIS and RA (Release Advise). This RA is not required at present because the customs office has simplified the process though computer network. Only SFIS will do. How to apply to get SFIS Certificate (Scrip s)? The following guide lines are given by the Finance Directorate at Delhi with the instructions. In this regard, the Finance Directorate CHQ has appointed the CHA consultant for coordinating with the Delhi customs / ED CNS (P) and port consignee stores officer directly or through the respective G.M. CNS or J.G.M. Procedure to be followed for the issuance of SFIS: 1. Issue of release advice format to be duly filled and the amount required for the duty payment, is to be made. 2. Copy of the check List Bill of Entry ( contains the duty amount of equipments & spares) 3. Invoice copy 4. Bill of Lading or airway Bill copy The above mentioned documents are to be sent to the DGM Finance directorate (taxation department) at CHQ with the covering letter. Copy of the same is to be sent to ED CNS(P) and to CHA consultant firm at Delhi as mentioned by the CHQ. The CHA consultant will process and send the SFIS certificate with the required amount with the signature of customs officials at Delhi Customs. Before sending this check list B.E, the duty declared is to be verified. During the processing of SFIS the Local CHA will process the bill and ask for any clarification on points raised by the customs officials. It is preferred to have personal interaction with the concerned customs official along with the local CHA. Why Technical Write up is mandatory for customs? The Technical Write up will give a brief explanation about the import of the equipment and its usages. This is required for customs officials to know under what chapter the material is classified. This write up can be delivered through the local CHA, but at times our presence is required to clarify the text of the letter content. Based on this letter, customs office will decide about the classification of the chapter for duty calculation purposes. In this regard the stores officer should take the senior officers of the rank of Jt.GM and above so that any further clarifications, if required by the office of Customs, can be provided. The personal briefing to the concerned officer of the customs should be in brief. Even after clearance of the consignment, the customs audit may raise objection of the

14 14 chapter under which the material was classified. If it not in agreement the customs office will serve a notice regarding the classification and the resulted duty amount short-levied. Therefore, necessary care should be taken for classifying the chapter and for the technical write up that are submitted to the customs. Clarification to custom Audit should be submitted under the signature of the G.M (CNS) or J.G.M (CNS). What is a green Channel Clearance? Most of the sophisticated equipment/systems imported by AAI are to opened and installed in controlled environments and are sensitive to temperature, moisture and cleanliness. Checking these consignments in open air will invariably affect the material. The customs officials may insist to carry out the open examination of the consignment that are packed in a container or in a wooden crate. AAI should explain the sophistication and environmental requirement for opening the consignment and should take it up with the Joint Commissioner of Customs to clear the said consignment under green channel to avoid opening the consignment in open, with the assurance that it can be verified during the installation time at AAI premises. This letter should also be signed by the G.M. or J.G.M. It has been observed that merely submitting the letter will not suffice. Customs office expects higher ranking officials should interact with them to clarify the doubts raised by them regarding the green channel delivery. It should be ensured that after clarifications on the above, the customs officials should clearly mention the permission to green channel delivery after verification of the docket number or container number (if the goods are in container) or package number of the crates. If it is not clear while clearing the goods from storage point, the container-yard, the customs official will not allow to take the consignment without open examination as per their rule. Always make sure that the request for green channel is obtained considering the sensitivity of the consignment. During the discussion time the higher official of the local CHA should be present. The customs gives green channel permission with the restrictions, only to Government offices and Government of India Undertakings.. What are the action to be taken before clearance from the customs? The appointed local CHA will intimate that the duties are paid and the consignment will be removed from the Sea Port or Airport. In this regard the stores officer has to coordinate with CHA for physical verification of the Consignment condition at Sea Port or Airport. Verification at sea port: When the consignment arrives in a container or in wooden crates, the Shipping Company will inform details to AAI directly. CHA will inform about the free period for keeping the goods in a container. After the free period the port office will levy the charges till the goods are removed. If there is any delay in clearing the goods from the container, the container will be shifted from the port office location to a

15 15 container storage yard by the port authorities. Normally the storage yard will be at a distant location from the port office. Under these circumstances with the knowledge of the G.M(CNS) of the station, the stores officer should visit the Sea port office along with the CHA person to inspect the goods and ascertain its nature and volume. Depending on the situation, stores officer has to find the possibility of de-stuffing the goods at proper covered place for the safety of goods. If it is not viable, then it should be brought to the notice of G.M. for further action. If the consignment is not cleared in time within the free storage period in the port Demurrage charges as applicable for the excess period will be levied. Another important point is that, before clearing the container from the container yard, the Seal of the container provided by the customs office/company seal (supplier) if any and the container number with the invoice or packing list, are to be verified. If any discrepancies are found the same should be brought to the notice of port officials and G.M. for further action. Verification at Airport: Once arrived at airport, the consignments are kept in respective storage place by the I.A.D. Cargo Division. Beyond the free storage period, storage charges will be levied by the Cargo Division. As soon as the arrival of goods are known it is better to find out the location and check up the physical condition of goods (crates or carton boxes) along with the CHA representative. If there is any delay in clearing the goods within 30 days then the automatic system at IAD Cargo will not indicate the location of the cargo position. Under this condition we have to physically check the cargo location with the help of IAD Cargo official on duty. It is a very tough job, because with the heavy arrival of cargo every day, the consignment are shifted to different locations and locating the cargo by verifying the consignment is very difficult. During this period the IAD cargo division levies the demurrage charges. This demurrage chares can be waived off by requesting through the letter enclosing copies of the Master Airway Bill, Master House No and declaration of duty paid. Initially the CHA will pay the demurrage charges and clear the goods. The same will be claimed by the CHA in their service charges with the waiver letter issued by IAD division of AAI. Insurance Surveyor Role: While inspecting the goods along with the CHA person on its arrival or before clearing from the Sea Port or Airport, check for any physical damages of the wooden crates or carton boxes (packages). If found, immediately inform G.M(CNS) or next higher official. A Government Licensed Insurance surveyor with the intimation to CHA is to be called for inspecting the goods and the date and time of Insurance Surveyor arrival for inspecting the goods to be intimated to GM(CNS) The CHA will inform the concerned Airlines cargo division/logistic division and IAD Cargo Division. The inspection should be carried out in the presence of nominated

16 16 higher official by the G.M. The following documents are to be handed over to Insurance Surveyor: 1. Invoice Copy 2. Bill of lading or Airway Bill 3. Purchase order copy 4. Packing list copy 5. Bill of Entry copy With the above documents the insurance surveyor will inspect the goods in presence of respective representatives of airlines operator / logistic division/iad cargo and AAI officials. As per the rules the insurance surveyor will inspect with the given documents and assess the cause and its damages. Later the insurance surveyor will submit the report with the photograph. The payment to the surveyor will be paid by AAI. The damage details should be informed to ED CNS (P) for information and necessary action. Also a letter intimating the damages should be sent to the Indian Agents of the supplier or the installation engineer of the supplier. If need be, the stores officer may ask for replacement of the damaged modules or spares under intimation to CHQ and copy to the installation engineer of the firm. Claims from Insurance Company: The insurance coverage taken by the supplier or by the Department has to be referred to the ED CNS (P) Directorate. It will be investigated by the supplier and its insurance company with AAI officials at CHQ level or local level. Depending on the policy taken and its legality, the various factors such as loading, off loading, storage, packing etc., are examined. Based on the factors, the decision regarding cause for the damage, will be arrived. However, the claims will be as per the terms and conditions of the insurance policy. It is a lengthy legal and administrative procedures involving quarries/clarification put by the insurance surveyor, handling agencies, airlines etc. If the damages are due to poor packing as reported by the insurance surveyor, the supplier will nominate a person to ascertain the damages. The same will be communicated to their department. As mentioned above the replacement for the damaged items may be asked for. Delivery of the consignment by CHA; While taking the delivery of the consignment, verify the delivery Chelan and its quantities like number of wooden crates /carton boxes with its serial number whatever mentioned as per the packing list. Cargo should be unloaded safely in a secured place. After the unloading has been done by the CHA, duplicate of Chelan to be signed with date and stamp of AAI. In many occasion it has been seen that these imported items may not be for the port consignee station, but is meant for other Airports in India. This is applicable to Chennai/Kolkatta/Mumbai/ Delhi. The details of final destination (Station) will be available in the purchase order.

17 17 The clearing agent will give the copy of the final B.E along with the delivery Chelan. On receipt of the B.E. check the duty amount claimed by the customs as per the notification. If any discrepancy is there it should be brought to the notice of AAI higher officials, with intimation to CHA for immediate correction of the B.E. Calculation of the customs will be discussed later. Documents to be returned by the CHA: After the completion of the consignment clearance from the Customs Sea or Air, the clearing agents (CHA) will return the following documents which were submitted by AAI to customs:: 1. The original DGFT License with amendment letter 2. The original WPC license 3. The original SFIS certificate with RA if it is there 4. The original Bill of Entry (duplicate) which contains the duty details of the goods 5. The original Bill of Entry (triplicate) Exchange control which contains the duty details. On receipt of the above documents, immediately details in respect of the Served from India Scheme (SFIS) should be verified. In SFIS, the customs official will record the balance amount after debiting the duty amount from the sanctioned amount. This can be checked with the B.E. In case if any discrepancy found, the SFIS should be returned to the CHA with the letter to the customs for correction of the discrepancy amount. Accordingly the balance amount will be corrected in AAI SFIS certificate. This immediate action will solve the financial implication which will otherwise be cumbersome at later date. What are all the financial implication that can arise? At times the customs official makes error (error may be at higher or lower side) while entering the balance amount in AAI SFIS against the BE duty amount. This result in difference of balance SFIS amount after debiting the duty paid. If immediate action is not taken for correction it will be pointed out at later stage either by AAI or by the Customs Fiancé Directorate and audit departments. If customs audit raise this issue with the issuance of notice it becomes a serious problem and may lead to penalty payment of duties for the short levied duties and if the duty amount paid excess against then it will be difficult to get refund. The AAI being the Government Undertaking organization, it is better to find out error made by the customs and inform to the customs official for corrective action. This avoids the financial and administrative problem at later date. This only emphasis the importance of carrying of checks at each stage and take immediate corrective action.

18 18 Original documents to be returned back to CHQ: The following original documents received from the EDCNS (P) CHQ: 1. The Original DGFT license 2. The Original W.P.C license 3. The Original B.E of Exchange Control 4. The Original SFIS scrip s In above mentioned serial number 1 to 3 can be directly sent to ED CNS (P) by speed post with the acknowledgement due through the Dispatch Section (R&I) because in the office copy will have the dispatch number with date. For returning of the SFIS certificate the following procedure to be followed: The Utilization form should be duly filled as per the finance directorate guide lines. In this form the amount utilized for the customs duty paid, to be entered with the B.E number & date/invoice number & date/ Airway Bill number & date and the copies of the above mentioned documents. These documents should be sent back to ED CNS (P) Delhi with copies to DGM Finance Directorate at Delhi (Taxation Department) and to CHA consultant at Delhi. (Consultant is appointed by the CHQ) The above mentioned tasks clearly indicate the responsibilities of the stores officers when taking up the import clearance. After the customs clearance of the consignments then the next tasks for stores officer will be despatching imported cargo to various Airport in India as per the CHQ instructions. Inland Insurance Coverage: To take inland insurance coverage, get the estimate from the Government Insurance Company and submit to G.M (CNS) for the in-principal approval. After the in-principal approval, NIQ should be sent to the Government Insurance Companies only, with the required terms and conditions. As per the procedures the quotation should be opened by the Committee. Details with the comparative statement are to be submitted for the Financial Concurrence. On receipt of FC, the selected company should be intimated. After obtaining the acceptance letter from the company the order should be placed. The quoted premium (against the sum assured) to be remitted to the firm, for the issuance of open policy for the inland transit insurance coverage under all-riskscovered with all modes of Transportation like by Air, Rail, Sea, Post and reputed currier companies. The acceptance of currier service should be verified before

19 19 calling the NIQ s. In general, all the Regional Head Quarters will have an empanelled insurance company for a period of one year for the transit insurance for the cargos transportation. Mode of Dispatch: The cargos can be dispatched through Air/Rail/Sea and Reputed curriers. (1) Dispatch by Air The Regional Head Quarters are having the credit facility with Air India Company. Hence there will not be any problem to send by Air India except the availability of flight movement to the required station, volume and weight of the consignments. If it is small cargo then it is accepted even in ATR flight. However always verify with giving airlines the details on flight and destination, maximum acceptable size of Cargo (dimension) and weight. Most of the airlines have restriction on accepting heavy weight cargo. (weight is 150Kgs or less is preferred by the airlines). (2) By Road: The heavy cargos like Radar, ILS, and communication equipments can be dispatched through this mode for which the following procedures are to be followed. 1. In-Principal approval with the estimate of expected expenditure amount should be obtained from the competent authority. 2. As per the procedure NIQ or NIT to be floated. 3. The terms and conditions should be very clear by giving details like volume, weight, and charges for loading/transportation, halting charges if any, service tax etc. 4. If we take insurance then it should be mentioned to the transporter. 5. Unloading charges whether to be borne by the respective station should be mentioned. 6. On receipt of the quotations or tenders, process the file and obtain the FC before placing the order to the respective transporter company as recommended. Road permit The important point to be noted here is that, if the consignments are to be sent to places via different states, then issue a letter to the respective station to get a road permit from their state commercial department. The consignor station has to send the following documents copies: 1. Invoice, 2. Packing list 3. Purchase order Copies of the above may be required to the consignee station for producing to respective state commercial department to assess the entry tax. The

20 20 consignee station in charge will take necessary payment action as per the procedures. On receipt of the original road permit the same has to be sent to the consignor station. It is mandatory document for the transporter during the transportation through different states in India. On completion of the above tasks then fix a date with the transporter for shipment. The transporter has to load the material with adequate supporting machinery and man power. The transporter will demand the above documents copies with the original road permit with the telephone numbers and correct postal address. The transporter will give the copy of the Lorry Receipt with their vehicle or vehicles numbers. Intimation regarding the shipment should be given to ED CNS (P) details for information. After the dispatch of the consignment, immediately intimate to the respective consignee station. The information should include (1) the details of LR number, (2)vehicle number, (4)Phone number of the transport firm and (3) tentative date of arrival of goods with clear instructions that the unloading should borne by them. This un-loading of the goods should be intimated to the station in advance by providing the details of goods, the size, weight etc which help the station for taking up appropriate action for unloading. The consignee station should send the acknowledgement of receipt of the goods. This is very important to the stores officer because the stores officer has to provide the details to the local finance directorate for accounting purposes.

21 21 CHAPTER- 2 Reasons for the documents that are required by the customs and it usages As mentioned in the earlier chapter the CHA will demand for certain original and photo copies of the documents to be submitted to the customs office (Air or Sea) for their verifications and duty calculation purposes. The available copies of the specimen documents are kept in annexure for reference. Commercial Invoice: These types of commercial invoice value will be in foreign currency only and it contains the following details: 1 Types of equipments with quantity 2. components/spares with quantity 3. Unit price and net amount. 4. CIF value or FOB Apart from the above mentioned details it will have the address details with reference number of the order with the date. It is very important for duty calculations. CIF value means it includes the cost, freight and insurance. In case, the invoice contains only value for the cost and spares then freight details with charges and insurance copy is to be submitted to the customs. Depending on the CIF or FOB, the duty amount will be derived. The method of calculations will be discussed later. Bill of Lading or Airway Bill: It provides the shipment details as mentioned below: 1. Mark & No with the method of packing with their reference numbers 2. Number of packages 3. Description of the goods 4. Gross Weight 5. Measurements of packages details Based on the above details the freight bill will be raised by the company and the same should be paid to the respective shipping agency or airway agency through CHA for which the receipt will be handed over to the CHA. This freight bill amount is one of the important values for the customs calculations. Packing List: AHAH Packing list contains the details of equipments quantity and spares. The customs official verifies this list with the invoice and purchase order placed to

22 22 the supplier. The reason is that the duty calculations for the equipments and spares will be different. At times the supplier will not send the goods in one consignment they may send at different stages and it is known as partial delivery against the purchase order. Certificate Origin: This certificate will be issued by the chamber of commerce and industry of the respective country. This contains the following information: 1. Consignor name and address 2. Consignee name and address 3. Transport details 4. Country of Origin 5. Remarks which contains invoice number and date 6. Description of the goods 7. Quantity which gives the details of Net weight and Gross weight 8. Declaration by the Exporter 9. Certification authority signature with the stamp. Factory Acceptance Test: This factory acceptance test (FAT) is known as pre inspection of the equipments, machinery at the premises of the supplier factory. To carry out this FAT the organization will depute a group of engineers to check the equipment (s) and machinery as per the technical specification and its parameter as provided in the Technical Bid. After successful testing of the equipment/machinery as per the specifications, FAT will be signed by the AAI representatives. Only after signing the FAT the supplier will initiate for dispatch action. DGFT License: The Director General of Foreign Trade, Government of India is a Regulatory Authority to regulate and monitor the imports and exports of foreign trades. To import the equipments its value and other details are to be furnished in application and along with the prescribed fee. After scrutinizing the application the DGFT license is issued. AAI also obtain these certificates for restricted goods. The DGFT license contains the following details: 1. License No 2. Category of license 3. License period 4. Export Period 5. Value in Rupees 6. Foreign currency (for consignments value) 7. Export obligation period

23 23 8. Importer Exporter (IEC) code. 9. Issued by 10. Messer s 11. SL No. 12. Name of the items with import details as per the items list attached. 13. Item code 14. Unit of measurement column should have name and code 15. Quantity 16. CIF/FOB value in Rupees 17. Foreign Currency (consignment value) 18. Country of Origin 19. CIF value in words/rupees 20. in words foreign currency 21. Period of shipment 22. Any other conditions if applicable This certificate will be duly signed by the foreign Development Officer with the Seal and date. With this certificate the amount declared by the organization will be verified along with the Purchase Order. The reason is at times the supplier will not send the consignment in one shipment there may be a partial shipment then it will be verified by the customs at every stage of import. This also helps to make cross verification about the import of goods items wise vis-à-vis the said amount in the purchase order is mentioned in this license. After each clearance the balance amount of the goods will be entered in foreign value and Indian value by the customs officials. W.P.C. License: For importing, certain types of Communication Equipments which may use Radio frequency like Transmitter/ Receiver/ Radar/VOR etc. WPC license is required. To get this license the necessary documents with the details are to be furnished along with the application and the same will be scrutinized by the Ministry of Communication and Information Technology, Department of Telecommunications WPC Wing (Wireless Planning and Coordination).This license is issued only for the import of said goods only and not for the operating of x equipments. For operating the required frequency, the necessary approval should obtain from this department separately. This WPC License Contains: 1. Item No. 2. Description of Apparatus 3. Model or Type of No and Manufacturer 4. Frequency of operation (in MHz) 5. Quantity

24 24 After thorough securitization the WPC License is issued. AAI is also getting this License from the Ministry for importing the equipments for import purpose and it is one of the important documents for the customs towards the restricted goods. Served from India Scheme (SFIS scrip s): By name it self gives that the government of India is providing the services for encouraging the Foreign Trade byway of importing and exporting of goods. Which ever organization is earning huge amount of revenues by way of remitting the duties by importing or exporting, Ministry of Commerce and Industry, Government of India, is crediting the amount as requested. Airports Authority of India is also one of the beneficiaries. What ever duty amount to be paid, the same will be debited from this certificate and the balance amount will be entered and duly signed by the customs official. On completion of the duty payment part this SFIS will be returned back to us. The benefit is that the some amount money will get back from the duty paid amount for which the Finance Directorate (Taxation Section) at AAI CHQ is assigned. This is the reason, the CHQ is insisting to use this SFIS certificate. Insurance: Once the purchase order is placed to the supplier by the ED CNS (P) Directorate, the same will be sent to the General Manager CRSD, New Delhi for the insurance coverage as per the terms and conditions. The values mentioned in the purchase order for the equipment (s) and spares then the Central Radio Stores Depot will initiate an action for the insurance coverage for all risks will be taken towards the importing item by Air or Sea as per the guide lines in AAI. The premium will be depending on the value mentioned in NIQ/NIT. All risks covered, means, it is covered for all possible risks such as War/Accident/Theft/Fire/Natural calamity and pilferages. This insurance coverage is valid up to first termination point in India.(by air or sea) and it is one of the important documents for customs duty calculation purposes. This insurance coverage is not for in land transit. The inland insurance will discuss in next chapter in details. IMPORT AND EXPORT CODE (IEC): To import or export any consignments by any organization, as per Government guide lines the concerned organization has to apply for Import and Export License from the Director General of Foreign Trade, Government of India. Accordingly AAI also obtained the Import and Export license with the code number. This is mandatory for any organization who wants to Import or Export their consignments. This has been done by our AAI Head quarters, New Delhi and got the IEC code and its Number is and date of issue Purchase order copy:

25 25 This purchase order copy (P.O) will be sent to the consignee station by the ED CNS (P) Directorate, Delhi. This P.O. will contain lot of terms and condition to the supplier should follow. For an example the total cost of the equipment (s) /Spares cost/training Cost/ Installations, Testing and Commissioning details will be given item wise and the grand total. Some times the spares will be given in the Annexure. This P.O is one of the important documents for the customs for their cross verification with the invoice. At times the supplier will send the consignments in different spells, then once again the customs will verify the amount with the invoice previous submitted till the total consignments are cleared. The reason for verification is that the value declared in the purchase order should match with the total number of invoices received. Whatever may be the reasons the value of the invoice should not exceed the value declared. The value declared for getting the DGFT license will be the same. Moreover, the purchase order helps us to check the amount for each import of consignment with that invoice against the purchase order amount. Technical write up: The technical write up about the import of equipment must be self explanatory and if needed certain details can bed attached from the as a support document. Going through the details the customs official is able to decide the classification of the chapter about the consignment. The customs department has their manual which contains the brief explanation about each item and gets a brief detail about each item. This is one of the important documents for the customs for verification at any stage, even after customs clearance. It will be examined with the given invoice. Their audit department will thoroughly study the details and if needed ask for clarifications. Green Channel: In general the customs official will carry out the verification of the goods along with the given packing list before clearance as per their rule. Once the boxes are opened for the verification then the modules of the equipments spares will get damage due to the external temperature, moisture etc. These spares are kept in a sealed static-electricity protected cover and even it should not be touched with free hand. Moreover repacking of the same will be very difficult and it may not be possible to pack or repack taking all precautions taken by the company. Then it is very difficult to dispatch. Under this circumstance AAI will request the Joint Commissioner to waive of the open examination by giving a letter duly signed by the senior officers of the rank of Joint General Manager/General Manager by giving assurance that the same may be verified at the installation at site. Merely giving a letter won t be sufficient and it is preferable to discuss with JC. After justification, JC will permit to waive off the open examination and the same will recorded in their file. Customs duty and its details: Method of duty calculation:

26 26 FOB In this regard, the duty calculation will be done as mentioned in the invoice i.e that the goods are under FOB (Freight On Board) or under CIF value which was mentioned in earlier chapter-1. The duty calculations will differ and is based on the FOB and CIF value. By assuming that the invoice is under FOB then for the calculations purposes the following values are required 1. Cost of the consignments with the spares in foreign rates only 2. Insurance coverage amount in rupees 3. Freight charges in rupees Important to know that for these calculations the Exchange rate of foreign currency should be known for converting the invoice value in Indian rupees. To get this value contact the CHA person. These rates are variable. On receipt of the Check List Bill of entry (not contains any number and date) immediately the stores officer should know the duty amount based on the classification and same is to be to be checked... This will give an idea about the free basic duty for certain goods. Check List Bill of Entry must be submitted to G.M. or J.G.M. along with the working sheet of calculation, then the classification can be verified with the customs tariff manual and if any error is there, then the correct classification must be informed to the CHA to ratify and get a fresh check list bill of entry. In earlier days the duty calculation was done manually but now days everything is done by the system. However, for verifying the duty it has to be done by manually. The given figures are for calculation purposes only. For any type of equipment(s) and spares the calculations are as follows. I. Calculation under FOB method: Cost of the equipments as per invoice is = 20,000 Euros Insurance cost is = Rs. 4, Freight amount is = Rs.35, First convert the cost of the equipments and its spares as mentioned the exchange rate in the check list B.E. Foreign exchange rate: one EURO = Rs Cost of the equipment is = 20,000 X 68 Cost in Indian rupees is =Rs Insurance amount is = Rs Freight amount is = Rs.35, CIF value is = Cost + Insurance + Freight CIF = Rs

27 27 Landing of 1%) = Rs On CIF value ) 1. Assessable value (AV) = CIF + Landing charges = AV = Rs Basic Customs Duty 7.5% on AV = X 1% BCD = Rs Counter valid duty 10% on AV + BCD = X 10% CVD = Rs Hr.edu 2% on CVD = X 2% 2% CVD = Rs Hr educ 1% on CVD = X 1% 1% CVD = Rs Hr educ BCD 2% on = BCD+CVD+ CVD 2%+CVD 1%+ X 2%. = x 2% BCD 2% cess = Rs Hr educ BCD 1% = X 1% 1% BCD = Rs % duty on = AV+BCD+CVD+ CVD2%+CVD1%+BCD2%+BCD1% X 4% = X4% 4% duty amount = Rs Total duty amount =BCD+CVD+CVD2%+CVD1%+BCD2%+BCD1%+ 4% DUTY = Rs.18, 46, Total duty payable is =Rs.18, 46, The above said amount will be mentioned in the Check list B.E. to be verified as per the calculations and at the same time verify the chapter classified by the CHA is correct or not. Always show the calculation done by you to the higher official for cross verification as well as for the chapter classified. If any discrepancies are there immediately inform CHA as per the instructions given by the higher official, for corrective action. The CHA is filling the bill based on the invoice where the supplier mentioned the type equipments and its spares details.

28 28 The stores officer is representing the AAI and should take utmost care at the initial stage it self to avoid implication at later date. II. Calculation under CIF method: In this type of invoice the supplier will mention that the value includes Cost, Insurance and freight. For the calculation purposes the above mentioned value has taken as CIF then the calculation will be as follows: CIF value is = 20,000 Euro Exchange rate is 1 EURO = Rs Cost of the equipment =20,000 X 68 Cost =Rs Landing of 1% on CIF = X 1% CIF value is =Rs Assessable value (AV) = CIF + Landing charges = AV = Rs Basic customs 7.5% on AV+ = X 7.5% BCD = Rs Counter valid on = Assessable value + Basic customs duty = X 10% CVD = Rs Hr.educ 2% on CVD = X 2% 2% CVD = Rs Hr educ 1% on CVD = X 1% 1% CVD cess = Rs Hr educ 2% on BCD =BCD+CVD+2%CVD+1%CVD x 2% = X 2% 2% BCD cess = Addlcustomsduty@4%on =AV+BCD+CVD+CVD2%+CVD1%BCD2%+BCD1%X4 % = X 4% 4% additional duty = Rs Total duty =BCD+CVD+CVD2%+CVD1%+BCD2%+BCD1%+4% duty = Rs

29 29 Payable duty amount is Rs III. Calculation for the equipment/system consisting of Hardware and software the Calculation is as per customs B.E. Part 1 hard ware calculation: As per Invoice value = USD Exchange rate 1 USD = 42 INR Cost in INR = X 42 = Rs Landing 1% on Cost = X1% LC = Rs Total cost Net cost = LC + Invoice = Rs Duty calculations for Hardware As per invoice = 6000 USD Exchange rate 1 USD = 42 INR Cost in INR = 6000 X 42 =Rs % CVD on Invoice = X 10% CVD = Rs %CVD cess on above = X 2% 2% CVD = Rs %CVD cess = Rs % CVD = Rs %BCD cess on = CVD+2%CVD cess+1%cvd X 2% = X 2% 2%BCD = Rs %BCD cess = Rs % BCD = Rs % Adl duty on = Invoice +CVD=2%CVD+1%CVD+2%BCD+1%BCD X 4% = X4% 4% duty = Rs

30 30 Total duty amount DUTY =CVD+2%CVD+1CVD+1%BCD+1%BCD+4% Hard ware duty amount = RS Software duty calculations: Cost in invoice = 4000USD Exchange rate 1 USD = 42 INR Cost in INR = Landing 1% cost = X 1% LC = Assessable value AV 10%CVD on AV CVD = LC+ Cost = Rs = Rs = Rs %CVD on = Rs X 2% = Rs % CVD = Rs %BCDcess on = CVD+2%CVD+1%CVD X 2% = X2% 2% BCD cess = Rs % BCD Cess = Rs Total Duty = CVD+2%CVD+1%CVD+2%BCD+1%BCD =Rs Software duty is Rs Net Amount = Hardware duty +Software duty Payable duty amount is = Rs ` III Method of calculation for Three Radars : Invoice of the Equipment (Radar) Spares Value Total Value = Euro = Euro = Euro

31 Exchange Rs.58.1 = X Total Value in Inr = Rs on total value = X 0.033% Insurance Amount = Rs Freight = Rs CIF Value = Cost + Insurance + Freight CIF Value = Rs Landing on CIF = LC = Assessable Value (AV) = CIF + LC AV total = Item No 2. (Spares) AV Spares AV Total AV X Spares Cost Total Invoice X Spares AV = Equipment AV = Total AV Spares AV = Equipment Av = on Equpt AV = X 7.5% BCD euipment = % on = AV + BCD eupt CVD = Hr.Educ cess on 2% = X 2 % CVD Cess 2% = Hr.Educ Cess on = CVD 1% = Hr. Educ 2% 0n BCD = (BCD + CVD+CVD 2% + CVD 1%) X 2% 2% BCD Cess = Hr.Educ 1 % on BCD = (BCD + CVD+CVD 2% + CVD 1% + 2% BCD) X 2% = X 1% 1% BCD = Addl Customs 4% on = (AV+ BCD+CVD2%+CVD1%+BCD2%+BCD1%) X 4% = X 4% Addl Customs Duty for 4 % = Final Duty = (BCD+CVD+2%+1%+2%+1%+ 4%) Final Duty paid for equipment = Rs Customs duty calculation for Spares: Assessable Value for Spares =

32 32 10% on AV = X 10% BCD = % on = AV + BCD X 10% CVD = Hr.Educ on CVD = X 2% 2% CVD cess = Hr.Educ on CVD = Hr.Educ 2% on BCD = (BCD+CVD+2%CVD+1%CVD) X2 = X 2% 2% BCD Hr. Educ. Cess = % BCD Hr.Educ.Cess = X 1% 1% BCD Hr. Educ Cess = Addl. Customs Duty 4% on = (AV+BCD+CVD+2%CVD+1%CVD+2%BCD+1%BCD) X 4% = X 4% 4% Addl Customs Duty = Final Duty = BCD+CVD+2%CVD+1%CVD+2%BCD+1%BCD+4%Al.Duty Duty Paid for Spares = Item No.1 Duty Paid for Equipment = Rs Item No.2 duty Paid for Spares = Rs Total Duty Paid Rs.3,48,28,371.95

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52 52 CHAPTER-3 The Issuance of Served From India Certificate from Finance Directorate Delhi. To get this certificate from Finance Directorate certain guide lines are issued by them with the Annexure A and Annexure B. It is important to note that the above mentioned SFIS will be issued with the duty amount to be credited as requested by the consignee based on the Check List Bill of Entry. Whenever the consignee airport is requesting for SFIS, remember that the date of check list BE. As mentioned earlier since the exchange rate will change on 1 st of of the every month and also the processing time for the SFIS with Release advice will take time, it is preferred that always demand the duty amount on the higher side. And for any doubt better to consult the CHA for clarification For asking the SFIS by the consignee the Annexure-A should be filled with the copies of the following document to be attached 1. Invoice 2. Bill of Lading / Airway Bill 3. Provisional Bill of Entry (check list BE) 4. Freight/Insurance 5. The format issued by CHQ should be duly filled. The Annexure - A form is attached as specimen The Finance Directorate at CHQ Delhi appoints the CHA as a consultant to coordinate with the Customs Authority at Delhi /Finance department/ E.D. CNS (P) and its related matters with the other agencies. The consultant also examines the documents submitted by the consignee. The consignment arrival or arrived port (sea port /Air port/icd) should be mentioned. Accordingly in the SFIS, the duty amount is credited for Sea port or Airport or ICD. What is ICD? Wherever the Customs ware House is there then the ICD (Indian Customs Department) is functioning. For an example, if Hyderabad air port is importing their consignment through Sea port then the appointed local CHA at Hyderabad will submit the documents to the local customs office for processing and it will be cleared at first landing point being the Chennai Port. The Chennai Sea port customs will clear the goods as per the rule and the said consignment will be sent to Hyderabad Customs Ware House. Suppose, the Hyderabad CHA have a Branch at Chennai then it can be cleared at Chennai and the same may be dispatched to Hyderabad Airport other wise the goods will reach directly to the ware House of customs at Hyderabad. On reaching at Customs Ware House, the local CHA will coordinate and deliver the goods. Release Advice (RA):

53 53 This Release advice will be issued by the Delhi Customs (airport). In this RA the amount required by the consignee will be issued and the communication will be in sealed cover with serial number and date of issue, exclusively to the sea or air customs office purposes which should be opened by the addressee. Along with the RA the SFIS is also to be sent with the amount credited. From this RA and SFIS, the required duty amount will be debited and the balance will be endorsed by the concerned customs officials. This is like using a ATM Card. On payment of duty, the customs will allow to clear the goods by issuing a gate pass to the CHA. Before taking out the goods from the customs premises, the clearing and forwarding agent will intimate AAI for pre delivery inspection. If need be, the stores officer can carry out the inspection at site. If any damages are found then it has to be informed to G.M. and J.G.M. for further action. Sometimes J.G.M. may inspect the damaged goods or other senior rank officials will be nominated to inspect. Under this conditions inform the damages to the concerned officials at Customs depart or officials concerned in the container yard. As per the procedure the insurance surveyor should be called for assessing the damages and the report will be submitted at later date. As per the surveyor instructions the goods can be removed. Details should be intimated to the ED CNS (P) directorate under intimation to the supplier for necessary action. This Release Advice is not required at present for customs clearance, because the customs department is introduced as in built in their officer software. However, the Served from India Scheme is required for debiting the duty amount and the un-utilized balance amount will be endorsed in this SFIS itself. After this, the Final Bill of Entry will be given with the exchange control copy in original. This completes the SFIS requirement for the said consignment. In case another consignment is anticipated at a short period then the SFIS can be retained with the approval of Finance Directorate at CHQ and ED CN(P) subject to that the arriving destination of the consignment should be at the same port. This indicates that while asking for SFIS we have to mention the port of arrival (Sea or Air). For an example, the SFIS issued for sea port then it can not be used for airport customs which is not valid. This is very important point to keep in mind before asking for the retention of the SFIS. Delivery of Consignment (s): On completion of the clearing process the consignments will be delivered by the clearing and forwarding Agent (CHA) as per AAI directive and the station official will intimated in time for un-loading the goods. On delivery the CHA will hand over the Delivery Chelan with the packages details. After a couple of weeks the CHA will return certain original documents like DGFT/SFIS/WPC/Final BE (duplicate)/ Final Be Exchange Control (Triplicate) and CHA will submit their bills which includes their service and other charges with the vouchers for payment.

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78 78 CHAPTER-4 On receipt of the goods certain original documents are to be returned to E.D.CNS (P) under intimation to the Deputy General Manager (F&A) Taxation section, CHQ and CHA consultant at Delhi. The returnable original documents are as follows: 1. DGFT License 2. WPC License 3. SFIS certificate 4. Final Bill of Entry (triplicate) Exchange control to submit to RBI by CHQ 5. Copy of the BE (duplicate) On returning of the SFIS certificate the utilization of duty credit scrip s (Annexure-B) form should be filled and signed by the stores officer. In this form, the duty amount availed from the SFIS with the balance unutilized amount should be endorsed by the concerned customs official. This will help CHQ persons to know about the available balance for further action. Along with this annexure -B form are copies of Bill of Lading/Airway Bill/Bill of entry (duplicate). The specimen Annexure B form is attached. The SFIS is one of the important documents for the finance directorate at CHQ to send other airport consignee. Depends upon the unutilized amount and the required amount by the other station the decision will be taken by the CHQ. The final BE (Triplicate) Exchange control, original has to be submitted to Reserve Bank of India, Delhi by the Finance Directorate or Communication Planning Directorate, This is a mandatory requirement as per Government rules. Further all the activities of imports and exports will be monitored by the Director General of Foreign Trade who is the regulatory authority. This Directorate will coordinate with the customs and central excise department for their official purposes. Important to know that before sending any documents keep a copy of the same in the respective file. This will help when any reference is required at later stage. Always send these documents by Speed Post with Acknowledgement-Due through the dispatch section. There by the correspondence will have dispatch number with the date in our office copy.

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80 80 In land Insurance: CHAPTER- 5 After the customs clearance, the goods have to be dispatched to various airports in India as per the instructions given in the purchase order copy. Apart from this, under the Executive Director (CNS) (O & M) CHQ Delhi, the operational and maintenance of the CNS wings are functioning at various Airports. One of the important sections is Central Maintenance Cell (CMC) at CHQ, New Delhi which has number of Specialised Maintenance Units (SMU) functioning at station level. SMUs carry out repairing the various defective communication equipments/ modules of various CNS systems all over India. The SMU will receive the unserviceable modules for servicing. And after repairing and testing the repaired modules/equipment are sent to the respective stations. These modules are cost intensive and sophisticated. Hence the insurance under all risks coverage is required. The store officer will enlist Government Insurance Company as per the procedures and award the order for inland transit insurance for one year. While taking the insurance, the sum assured should be known. To arrive the anticipated total amount of insurance coverage for one year, the stores officer should give details regarding the number of modules sent, its cost and destination. In addition, in case of any imported goods that are to be dispatched, value as per the invoice is taken and the total amount will be intimated to the insurance companies during the empanelment and selection of insurance company for a period of one year. It is important to note that if field stations are not having empanelled Government insurance company, then the insurance coverage should be taken by declaring the value of each item to the transporter who will take the insurance for goods. Amount will be decided by the transporter accordingly. The transporter may agree to transport the material as materials with no value declared With out the minimum value of the goods the road transporter will never agree for dispatch. But at the same time the airlines may agree by mentioning as No Value Declared in their prescribed format. The Reason for taking the insurance separately instead of declaring the Value for each shipment to the air/road transporter. How the airlines operators calculate the rates? Example: A consignment to be sent from Chennai to Bhubaneswar. The calculation is based on 2007 rates,

81 81 (Case 1)Value of the goods is not declared Let the dimensions are as per the packing list and weight be Dimension = 130cms X 90cms X 110cms Weight of the goods = 210 Kgs. Destination is Bhubaneswar Weight calculation = 120cm X 80cms x 50cms = 80 kilo grams 6000 (6000 is an worked out figure taken by the airline operator and is called parameter The airlines operators will take higher side i.e. 100 kilo grams The rate per kilo gram is Rs.36/- for 100 kilo grams = Rs Documentation charges = Rs Total amount = Rs Service 12.36% on above value = Rs Net amount payable = Rs The payable amount is Rs (Case 2) value declared Let us assume that for the same dimension, weight and value declared is Rs.50, 000/ Calculation is as follows The weight as per airlines is 100 kilo grams The parameter is 450 Then the calculation will be= 100X450 (parameter) =Rs.45, 000/- Declared value = Rs.50, 000/ Difference amount (-) = 5,000/- Insurance 0.5% on the above difference amount Premium charges will be = Rs.25/- but the airlines minimum premium charges is =Rs.40/- The rate per kilo gram is Rs.36/- for 100 kilo grams = Rs Documentation charges = Rs Insurance premium amount = Rs Total amount = Rs Service on total value = Rs Net payable amount = Rs

82 82 *Suppose the CNS Stores is sending the goods by declaring the value as Rs. 100,000/- then the premium amount will be Rupees Five Hundred. For each declaration value the premium will be calculated. Case 3)The Transporter (s) (currier) calculations: Dimension of the goods = 130 X 90 X 110 Cms Weight is = 210 kilo grams = 130X90X = 286 kilo grams 4500(parameter) Rate per kilo gram = Rs.10/- For 286 kilo gram = Rs % fuel charges on above = Rs Documentation charges = Rs Total amount Rs Service 10.34% Rs Net amount Rs Method II For sending the heavy cargo of gross weight 5500kgs to Delhi, The value is Rs.50, 00,000/- then the calculations charges are different- 1. Say, the gross weight is based on the dimension kilo grams 2. Per kilo rate of Rs.10/- For 5500kgsX10 =R.s Destination is 2000 kilo meters Fuel consumption is calculated =2000/4 = 500 Litres fuel is required 4. of Rs.50/- for 500 litres =Rs Driver of Rs.1000/- per day for 10ays =Rs Cleaner of Rs.800/- per day for 10 days =Rs Per day of Rs.1500/- for 10 days =Rs Say toll tax is =Rs Halting charges per day Rs.2000/- =Rs Net Chargeable amount Rs This amount is without the insurance coverage by the transporter for the shipment which it indicates that the insurance has taken separately.

83 83 Example: In case, the insurance coverage is be done by the road transporter for the consignment value. Insurance premium is 1%. Value is Rs.50, 00,000/- Premium to be paid = 50, 00,000 X 1% = Rs.50, 000/- Net payable amount (including insurance) = ,000 = Rs. 1, 10, 200/- The calculations will vary from transporter to transporter. The calculations depends on the type of vehicle required, distance (to & fro) number of days to reach (duration), fuel consumption that is based on the vehicle and insurance coverage. It is important to note that, the transport company will have a consolidated inland transit insurance coverage. The transporter will get a profit margin on (1) the value declared for each goods, (2) on insurance amount and (3) the charges for transportation. Thus it will be clear, when insurance is done through the empanelled insurance company for the assured amount declared it will be advantages for AAI. As mentioned in the beginning of the chapter, let us discuss the government Insurance Company and calculate their premium amount against the value declared. How to know the values of the goods? Stores officer will get the details from the outward register where every items value will be entered and mode of transport by which the material was dispatched. By checking this data, the amount to be insured will be known. Before finalizing the amount, the anticipated value of the future requirements should also be considered. As for as Chennai is concerned the SMU unit will be sending their modules to dispatch with the value for each item for various stations in India. And Chennai being the one of the importing termination as per the CHQ, the import consignments values for in land shipment also need to be taken. Let us assume that the value declared is Rs.2, 00, 00,000/- The of % Then the premium amount =Rs Service 10.35% on above =Rs Add stamp duty =Rs Total Amount Rs As per the procedure X Company offered the lowest % then the same will be recommended for the payment for insurance company through General Manager

84 84 (CNS) for getting the cheque for payment. On receipt of the cheque the same will handed over to the company with the covering letter and the signature of the branch manager in our office copy is obtained. On the date of remitting the payment the insurance company will permit AAI to carryout the transactions. Then the Insurance Policy will be sent as requested by AAI in the initial stage.(by Air/Sea/Road/Rail and under risk covered) The insurance company will provide the format to be filled which contains the dispatch details, value of each goods, and total number of items sent and total amount declared towards the dispatch of various items at different dates to the consignee stations. In their format, the amount declared and balance amount available should be entered.. These details should be sent to the insurance office within ten days with the covering letter. On receipt of the letter, the insurance company will send official letter giving details of the balance amount. Every time the declared values will be debited from the sum assured i.e. Rs /- and the balance amount will be shown. On completion of one year, if, the sum assured is not fully utilized then we request the insurance company to refund premium amount towards the unutilized portion. Getting refund will take some time. (It is pertinent to note that this clause for refunding the un-utilised amount, should included in the NIQ stage it self) Therefore by empanelling an insurance company AAI will be benefited.

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91 91 CHAPTER-6 DESPATCH OF CONSIGNMENT (S): As mentioned earlier, enlisting of the Transporter Company must be done as per the procedure: a. Get an estimate for the consignments to be dispatched, by providing details the consignment like volume, weight, consignee/consignor address, loading, required machinery with manpower, halting charges if any, types of vehicle i.e closed/open/container. The estimate should include all applicable taxes. b. Submit for a in-principal approval from the competent authority c. Call for NIQ and opened the quotations as per the procedure by the committee and submit the file with the comparative statement for financial concurrence. d. After the FC, place a work order to the transporter company. This can be sent by fax or post. Also fix a date for shipment. e. The transporter company should provide their Bank details such as current account No., Branch, Branch so no etc.,as required by the finance wing. Road Permit: During the above mentioned processing period, the stores officer has to coordinate with the consignee airport to get a Road Permit (Entry Tax) depending on the respective State Government rule (some states do not require a road permit) by providing the invoice and packing list to them. If required, by remitting the entry tax amount based on the value declared by the store officer, they may get the road permit. After getting the same the original should be sent to the consignor airport because this is one of the important documents for the transporter. After the shipment (s) the details like Lorry Receipt Number and vehicle Number and tentative date of arrival with the instruction that the unloading should be borne by the consignee airport only should be communicated. The consignee station should acknowledge the receipt of the goods once received. It is advisable to keep one set document with invoice and packing list while despatching. The same has to be intimated the by Fax or or phone to the respective stations. While loading the consignment, the stores officer and its team must supervise the work for proper handling of the goods and ensure that necessary covering is done to protect from natural calamities.the following copies of the documents are to be handed over to transporter: 1. Road Permit (original) 2. Whomsoever it may concern letter mentioning that the goods are not for sale and for use at the destination airport, by the consignor. Sufficient number of copies as required by the transporter should be provided for en-route check post purposes. 3. The cover contains invoice copy/ packing list and Transporter name and phone Number to the consignor.(driver should hand over without fail)

92 92 4. The correct address with the contact person and phone number to the driver 5. Any document, if needed by the transporter should be provided. On receipt of consignment, the consignee station will sign on the Lorry Receipt with the date and seal. This is the only proof for the transporter, for claiming payment. By verifying this, the stores officer easily ascertain that the consignment have reached safely, in addition to the acknowledgement sent by the consignee station. After all the consignments are delivered to the respective stations the transporter company will submit their bills with the consignee stations signature (acknowledging the receipt of the consignment) and official stamp with date. It has to be scrutinized along with the work order regarding the amount, destination etc., and then it will be submitted for payment action to Finance Directorate through proper channel. The amount will be credited to the transporters bank account by the Finance wing. Removal of spares from the imported consignment from container or wooden crates At times, the supplier will not be sending certain spares items along with the equipment already shipped to India. In turn the same will be dispatched by the importer (Chennai) to the respective station as instructed by the CHQ. The same will be shipped along with the other consignment which is meant for some other Airport. Thus spares for different stations will be packed and sent in one container. In these circumstances the supplier will intimate to CHQ and request to remove the spares from this consignment for dispatch to different stations where the material is required for installation. Accordingly it will be intimated to General Manager of the concerned station by fax or letter. Advice will be issued by the local authority to the stores officer for necessary action. The stores officer has to assess the expenditure that is likely to be incurred for shipment to the consignee destination. The details are to be projected and prior approval for taking up the work should be obtained. Also an official who is in charge of the project should be nominated to be present during the execution of the above work. The removal of packages will be very tough job because sometimes the packages will be well inside the container or bottom of the crate (s) then all the items are removed and verified before removing the required items. After removal of the spares boxes, remaining boxes are to be kept properly (in the container or wooden cases as the case may be) for the safety transit. All necessary precaution should be taken by the stores officer. During the shipment the necessary documents to be handed over to the transporter as required by them. The dispatch details to be informed to the concerned in charge of the station, for necessary actions at their end with the request to acknowledge on receipt of the items.

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95 95 CHAPTER-7 Finance Related Works In this chapter the finance related works pertaining to the imports and dispatch details are discussed. 1. Payments for Freight charges: On receipt the freight bill like Airway Bill or Shipping Bill, the stores officer must submit the copy of the bill along with the purchase order copy. The Payments section will verify and hand over the cheque for the amount of the bill, to stores and the same will be handed over to CHA for submission to the concerned transporter company. Without remittance of this cheque, the clearance is not possible 2. Storage Charges: Storage charges will be levied for the Consignment at the customs port or at the container storage place beyond the free period viz demurrage charges. Necessary approval is required from the competent authority for this. A file need to be put up with the supportive documents giving reasons for the delay in clearance. After scrutinizing the details, this is to be approved either by the local authority or by CHQ. Once again the bill has to be submitted for payment. Before releasing the payments the TDS will be deducted for which certain details are required from the company. With the details it will be decided whether DTS is allowed or not, and accordingly the payments will remitted in their Bank Accounts. 3. Clearing and Forwarding Agents (CHA) Bills: After the clearance of consignments, the CHA will submit their charges with the statuary payments, transportation charges (from the Sea or Airport customs to AAI un-loading place) etc., with the supportive documents. The same will be verified by the stores officer and submit for payment action. 4. The imported consignments have to be dispatched to the various airports in India. The transporter will submit their bills after delivering the goods with the Supportive documents including one of the LR copies signed by the consignee with their seal and date of arrival. These bills are verified by the stores officer before submitting to the finance for for payment action. 5. After the dispatch of the consignment the details are to be submitted to the compilation section. With the details the Finance Directorate will book the capital items to the respective stations.

96 96 Example: Dispatch details of VCCS Equipments and its brake up Sl.No Name of the station 1 Tiruchi 2 Imphal 3 Mumbai Cost of the equipment in Rs. Duty Paid in Rs. Mode of Despatch Date of Despatch Freight charges paid Net Amount The details are to be submitted in the above shown format with the letter addressed to G.M. Finance and copy to E.D. CNS (P) Delhi / G.M. (CNS) Chennai/ D.G.M. CNS (P) S.R.

97 97 CHAPTER-8 Re-Export Procedure: If the imported consignment equipments/spares becomes unserviceable during the warranty period; the same has to be Re- Exported to the supplier for repair and return for which the following procedures are to be followed. 1. Enlisting the Clearing and Forwarding Agent (if already empanelled this is not required) 2. Enclose copies of the documents during the imported period with the Exchange Control copy 3. Export Certificate 4. Export Invoice and packing list from AAI 5. Authorization letter to the CHA 6. Write up of the consignment 7. Check whether the Serial Number of the item(s) tally with the import packing list, otherwise the Customs will not clear the consignment for re-export 8. If reserve Bank clearance is required then it is necessary to coordinate with the Reserve Bank and submit the required document for their clearance 9. Submit the copy of the I.E.C certificate 10. Bank Endorsement by the Bank for all the exporting documents like invoice, packing lists etc. 11. The consignments can be booked through Sea or Air 12. The Customs duty for re-exporting to be paid by AAI and the same will reimbursed from the supplier, subject to the contractual agreement. 13. On arrival of the items after repair, the import procedure to be followed for clearing the consignment. 14. The actual payment made towards freight/insurance and duty amount may be claimed from the supplier as per the contractual agreement. 15. Incase if any further clarification is required, CHQ is to be consulted. 16.Intimate to CHQ on arrival of consignments under intimation to local finance. While carrying out the re-export task, the stores officer must maintain a separate file and keep a record for future reference, if required. Some times the supplier will take actions for re-export then whatever documents required by their agent are to be provided.

98 98 CHAPTER-9 Appeal for Claim: If any excess payment made against duty amount or the penalty levied by the customs, the same should be represented immediately and interacted with the customs official for justification. In case if customs official is not agreeing to AAI representation then the payment should be made under protest in the form of letter and obtain the endorsement from the concerned official with the customs seal and date. This representation is very important for appealing to the commissioner of customs at later stages. The letter under protest should not be delayed. If delayed the same will not be acceptable by the customs as per their rule. For Appealing the claim there is permissible time period that should be verified from the appeal section. How to apply for Appeal? The appeal letter must be duly signed by the of the level of General Manager and addressed to The commissioner of Customs (Appeal). The application along with the supporting documents pertaining to imports period with the protest letter should be submitted. Proof for the submission of earlier protest (which was submitted during payment under protest ) is to be obtained from concerned Customs department with date and seal. Then only the representation will be accepted for Appeal by the appeal section by endorsing in AAI office copy. After scrutinising, customs authority will send a letter by name to General Manager for personal hearing specifying the date and time. In case if GM is not in a position to attend the personal hearing, GM may nominate higher officials (not below the rank of DGM), and the same should be intimated to the Commissioner of appeal section prior to the hearing date with the authorization letter for the person. The Commissioner of appeal will hear the claim in person along with the concerned customs officials. After hearing both sides (the customs and AAI) the decision of the commissioner will be reserved and will be intimated by letter. If not in favour, AAI may have to appeal to the Customs tribunal by AAI lawyer. Final decision will be intimated to the office about the rejection or acceptance of AAI claims. If it is in our favor, then immediate action may be initiated for the claim.

99 99 Mnemonics In customs certain terminology are used frequently by the Clearing and forwarding Agent: 1. I.E.C. - Certificate Import Export code 2. CHA- Customs House Agent 3. B.E. - Bill of Entry 4. R.A. - Release Advice 5. SFIS Certificate- Served From India Scheme 6. DGFT Director General of Foreign Trade 7. W.P.C. - Wireless Planning and Co ordination 8. Bill of Lading Freight Bill by Air or Sea 9. Green Channel waving of for open examination 10. CIF - Cost + Insurance + Freight of the goods 11. L.C. - Landing Charges 12. A.V - Assessable Value 13. BCD- Basic Customs Duty 14. CVD- Counter Valid Duty 15. V.O.R. - Very High Frequency Omni Range 16. ILS Instruments Landing System 17. D.M.E.-Distance Measuring Equipment 18. MSSR- Mono Pulse Secondary Surveillance Radar 19. TDS- Tax Deducted at Source