Concise executive summary

Comprehensive Study of Niche Market Potential and

Regulatory Policy for Kona Coffee in South India

This study was made possible by a grant from the

Emerging Markets Program

of the

United States Department of Agriculture

Central Fund Agreement 2009-01

E09MXMAKAI

WSN Inc.

Kona, Hawaii 96704-1242

Comprehensive Study of Niche Market Potential and Regulatory Policy

for Kona Coffee in South India

FINAL REPORT

I. Concise executive summary

Comprehensive Study of Niche Market Potential and Regulatory Policy for

Kona Coffee in South India

Executive Summary

Although the goal of exporting Kona Hawaii grown coffee to India is in its infancy the information gathered in this report will enable Kona growers and marketers to save significant resources as well as give a sense of direction to those marketing Hawaiian Grown coffee to India.

The report includes outlines on both current coffee import duties and taxes (Table 1) and touches on near future expectations for change as outlined in supplemental reports as well as survey responses.

One primary function of this report was to determine Indian consumer preferences for Hawaiian coffee and their willingness to pay for a high-end gourmet product. Consumer surveys using conjoint choice experimental design were gathered in Bangalore, India in June of 2009 which give the socio-demographic profile and economic background of respondents (Table 2), Coffee consumption habits (Table 3) and imported coffee awareness profiles (Fig 6). Comparative data on Indian importation is also shown. (Table 4)

Preliminary research was gathered from an International Coffee Trade show held in Bangalore in Oct 2009 and from meetings held with coffee grower and affiliated agriculture groups to explore the possibility of cooperative marketing efforts.

Information gleaned from numerous U.S. Embassy, Indian government and Coffee Board of India reports are encapsulated and included in this report. The full reports from outside sources follow as an appendix.

Outreach programs within the Kona Coffee community. Presentations to coffee groups have take place with additional presentations planned as well as the circulation of this report once accepted.

A number of conclusions are outlined in this report but to summarize, clearly there is niche market potential for Kona Coffee in India given assistance with strategic marketing plans.

The project wishes to thank the Foreign Agricultural Service Emerging Market Program for funding and their personnel for continued assistance. We also wish to thank the Agriculture Attaché office at U.S. Embassy in New Delhi for their extremely valuable backgrounders and contact information.

II. Objectives of the project and description of the activities undertaken

The goal of this project is to enhance the economic viability of small Kona coffee growers’ income through exporting to India. Specifically, the project objectives are:

Objective 1. To gather information on import regulations, custom duties and infrastructure for Kona coffee in India.

Information on import regulations and customs duties has been collected. Please refer to the attached documents:

Appendix 1: Procedure for Imports. It provides details on the procedure to import commodities through air, sea, baggage, courier and post;

Appendix 2: The Foreign Trade (Development and Regulation) Act 1992, No: 2 2. It provides details on the “development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for matters connected therewith or Incidental thereto”.

Appendix 3: Food and Agricultural Import Regulations and Standards- Narrative for India, 2009. Prepared by Dr A. Govindan, USDA-New Delhi, India. The report is part of the Global Agricultural Information Network, (GAIN Report IN9113) and it contains assessments of commodity and trade issues made by USDA staff and not necessarily statements of official U.S government policy.

Appendix 4: - Coffee Annual, India 2010, USDA-FAS

Appendix 5: Coffee Consumption Report 2009-Coffee Board of India

Appendix 6: Financial Report

The image below is a table that provides description of type of coffee imported and their corresponding import duties currently in effect.

Table 1: Classification, Description & Import Duties on Coffee in India

Any additional information can be obtained from the Ministry of Commerce, Department of Commerce and Industry, Government of India. The department website address is as follows: http://commerce.nic.in/index.asp

Objective 2. To estimate the demand for Hawaiian Gourmet Kona coffee in South India.

Objective 3. Find out Indian consumers’ preferences for Hawaiian Gourmet Kona Coffee

Objective 4. Find out Indian consumers’ willingness to pay for imported Hawaiian Gourmet Kona Coffee.

1. Report on Objectives 2, 3 and 4: Discussion

As mentioned earlier, our key objectives were 1. To find out South Indian coffee consumers’ knowledge on imported gourmet coffee; 2. Find out consumers’ preferences for Hawaiian Gourmet Kona Coffee compared to other imported brands; and 3. Find out consumers’ willingness to pay for imported Hawaiian Gourmet Kona Coffee.

To accomplish the objectives, a survey was conducted to find out consumer preferences for imported gourmet coffee using a combination of price and other coffee attributes preferred by consumers. This information is intended to assist the Kona farmers and exporters in understanding what the consumer preferences for imported gourmet coffee and the key issues that need to be addressed to capitalize on the export potential in South Indian markets.

Even though our original intention was to survey both in Bangalore and Chennai, Bangalore, Karnataka was decided as the study site. Bangalore is the biggest and the most cosmopolitan of the cities in the South. This site was also decided based on meetings with the local coffee experts and professionals working at the U.S. Foreign Agricultural Service, Office of Agriculture Attaché, and New Delhi, India. Also the Coffee Board of India’s head office is located in Bangalore. It is also the city that has the largest number of coffee outlets and is one of the highest coffee consuming urban cities in South India. Approximately 200 surveys were collected mainly focusing on high-income professionals in Bangalore. The sample size was decided based on a recent study by the Coffee Board of India, 2008 where 240 samples were taken for the whole of Bangalore (Coffee Consumption Study in India, 2008) and the recommendation by the Sawtooth Software for such study (i.e. Conjoint Choice Experiment). Since the product is imported high-end gourmet coffee, high-end consumers were targeted. Various Coffee houses and multinational companies and exclusive clubs were contacted and the data was collected from five different locations across Bangalore. They included two of the largest cafes of India’s biggest coffee retail chain- Café Coffee Day, a multinational company, two International Banks and a five-star hotel. The surveying was accomplished over 7 days (June 8^th, 2009 to June 12^th, 2009) and was conducted through face-to-face interview using a questionnaire format. The survey included questions on the respondents’ coffee consumption habits, their knowledge on imported gourmet coffee, where they are likely to purchase imported gourmet coffee, their gifting habits and preferences, their willingness to pay and the socio-demographic profile. The conjoint choice experiment (CCE) surveys focused on finding out consumer preferences based on the different imported gourmet coffee attributes such as price, taste, grind preference and place of origin. The analysis was carried out using descriptive analysis and latent class analysis.

Conducting surveys with executives at a local multinational company

2. Results

Table 2: Socio-Demographic Profile of Respondents

Gender
Male	55%
Female	45%
Average Age	31 Years
Educational Background
Post Graduate	67%
Undergraduate	31%
Higher Secondary	1%
High School	1%
Others	1%
Annual Income (USD)
below 50,000	19%
50,001-70,000	17%
70,001- 90,000	10%
90,001-100,000	11%
100,000- above	43%
Average Gift Purchased	16,989 INR	345 USD
Average WTP	28.30287356	~$19/ box

Conducting surveys at a local high-end coffee outlet in Bangalore.

Table 3: Coffee Consumption Habits of the Respondents

Indicators	Scale	Percentage
Coffee Drinking Habits
	Often	53%
	Sometimes	40%
	Never	4%
	No response	3%
Purchasing Habits- Home consumption
	Yes	84%
	No	15%
	No Response	1%
Rate of Coffee Consumption at Home
	Yearly	14%
	Monthly	66%
	Weekly	12%
	No Response	8%
Purchasing Habits- Location
	High-end Dept. Store	38%
	Coffee Specialty Shop	36%
	Internet	1%
	Other sources (local shops, dept stores	25%
Consumer Awareness on specialty coffee (respondents were asked to choose all the brands they were aware of)
	Indian	91%
	South American	47%
	South East Asian	42%
	African	37%
	Hawaiian Kona	20%

Besides these results from the study, additional Information on Coffee Consumption patterns in India is available in the attached report (Appendix 4) by the Coffee Board of India “Coffee Consumption in India-2008”, Economic & Market Intelligence Unit, COFFEE BOARD, Government of India.

Consumer Awareness of Imported Specialty Coffee

According to the survey, as far as consumer awareness regarding places of origin of specialty coffee goes, not surprisingly, majority are aware of Indian coffee (91%) followed by 47% aware of South American Coffee, 42% aware of South East Asian Coffee, 37% aware of African coffee and only 20% aware of Hawaiian Kona Coffee. In terms of purchasing coffee from the main coffee producing regions, majority is showing to have purchased from India, which is again expected. However as far as imported coffee is concerned majority have purchased South American coffee.

Results also showed that the average amount spent on gifts by the respondents, the previous year was approximately US $345. However their willingness to pay for a box of imported specialty coffee was only about US $19, much less than the actual cost of importing, which can be attributed to the lack of awareness on imported specialty coffee among the target population sample. However their willingness to pay as well as their product attribute preferences and knowledge were explored further using Conjoint

Menu at a local high-end local café chain indicating the imported coffee from different regions of the world.

Choice Experiments discussed later. On an average it was estimated that the total cost of imported specialty coffee (e.g. Hawaiian Kona Coffee) is somewhere in the range of US$ 60 (2900 INR) to US $90 (4400 INR) for 500 grams. This is much less than their indicated willingness to pay but within their average gift expenditure.

The conjoint choice experiment (CCE) surveys was useful in finding out consumer preferences based on the different imported gourmet coffee attributes such as price/500gms, taste, grind preference and place of origin ( Table ). Each of these attributes had different levels. Price had three levels- US $ 60, US $ 75, US $90; Grind Preferences had three levels- Fine Grind, Ground Regular, Whole Bean; Taste had three levels- Light, Medium, Strong and; Place of Origin had four levels- Kona Coffee, South American Coffee, South-East Asian Coffee and African Coffee. Different combinations which included these attributes and their levels were generated and respondents were asked to select their choice. To establish a minimal level of knowledge on the issue prior to completing the survey, a brief description of the study was explained to respondents regardless of their knowledge on the area. Then, each respondent was given 12 pairs of product profiles with differing levels of attributes and asked to select one from each pair. The response rate for the surveying was 86%.

Table 4: Coffee Attributes and their Levels used for the CCE survey

Attributes	Levels
Price	$ 60/ 500gms	$75/ 500gms	$90/500gms
Grind Preference	Whole Bean	Ground Regular	Fine Ground
Taste	Light	Medium	Strong
Place of Origin	Kona, USA	S.E. Asian	South America	African

The CCE survey results indicated that majority (Class I, 60%) are interested in buying Kona coffee. As far as the remaining 40%, they do not seem to care as much about the place of origin however taste is an important attribute preferred by all the three classes. There is significant preference for taste with a preference for light or strong coffee, although in terms of importance strong taste is more preferred than light taste. The relative importance of price is not as high as taste but the analysis indicates it as a negatively significant attribute which means that the willingness to buy decreases with increasing price. However there is also a section of the population (about 15%) who do not care about price at all. Their choice is solely driven by taste, preferably strong tasting and the place of origin is not of importance either.

3. Conclusions and Implications

The main goal of this study is to enhance the economic viability of small Kona coffee growers’ income through exporting to emerging markets. Until now Kona coffee’s main international buyer has been Japan. As a major coffee consuming country in the world and the evolving café trends being seen among the young professionals, India, particularly South-India, is a potential export market for Kona coffee. Harish Bijoor, a
consultant and former vice president of marketing at Tata Coffee Ltd, Rising demand may force India to import the Arabica coffee favored by some of the large specialty roasters and high-end café chains, as the share of the milder varieties in total production drops. “A key issue with Indian coffee is that our Robusta are growing in volume and Arabica are shrinking and so an increase in imports of Arabica is expected, even as India keeps exporting its Robusta (Abraham, 2010,www.bloomberg.com)” Kona coffee which is 100% Arabica, therefore has a great market potential in India and with the changing coffee consumption trends seen in these regions, it was crucial to explore the awareness and preferences of consumers in India (South) and also their willingness to pay for imported gourmet coffee. It was also important to identify the niche group that preferred high end Kona Coffee in relation to other export brands and identify the key attributes consumers looked for while buying gourmet coffee. This information is valuable from a marketing perspective. It basically means that India offers a great export market for Kona coffee, provided it caters to the preferences of the consumers and at competitive pricing.

The following are the key points that need to be considered:

· Price is a crucial factor for majority of the respondents and this fact cannot be overlooked.

· There is strong competition from South East Asia but pure Kona coffee is a high-end gourmet product and cannot be made competitive with South East Asian coffee in terms of price. However our results showed that there is a percentage of population (15%) who do not care about price but care about taste only. This offers an opportunity to tap into this niche market segment for 100% pure Kona coffee.

· With the rate at which the coffee industry is expanding in India, this region as a potential market for Kona coffee cannot be disregarded or ignored. Recent reports indicate large expansions by some of the biggest café chains in India such as Cafe Coffee Day. Café Day with its recent concept of Café Day Square is offering many international brands in its menu although Kona coffee is not one among them. Besides Café Day, there are also increasing expansions by other competitors. Under the circumstances, it is important that measures be taken to assist local Kona farmers in creating business linkages with the Indian market.

· There is a lack of awareness and visibility when it comes to Kona coffee. Therefore steps must be taken to launch the product in the Indian market through collaborations with big café chain outlet.

· Majority of the population that frequent these cafes are high-income, highly educated professionals with an average age of 31 years and marketing campaigns must cater to this population for both blended or 100% pure Kona coffee Appropriate marketing campaigns catering to target population for both blended or 100% pure Kona coffee needs to be launched.

· Tie-ups with high-end restaurants and five star hotels such as the Taj are also recommended. The Taj group of hotels are already featuring Kona coffee in their menu but according to Mr. Vinod Pandey, the Food and Beverage Manager Taj West End, awareness on Kona coffee is very minimal and hence not the most in demand in their cafes or restaurants. It is also very expensive. According to him the product should be made more visible with more awareness on the uniqueness and high quality of Kona Coffee. Taste was found to be a very important attribute and opportunities need to be explored for South Indian consumers to experience the taste of Kona coffee.

· There is also potential for exporting Kona coffee as gifts. Our result showed that gift giving is an important cultural aspect in the country considering the number of festivals and other elaborate family events. This is a key area to tap into provided cultural preferences are considered in terms of quantity and also packaging.

All said, awareness on import regulations in India and shipping options must also be laid out and clearly understood by the exporters. Also, policy level and other support must be provided to the local Kona coffee growers to expand their export market and bring in the much-needed revenue both to the farmers and the State. Clearly there is a niche market potential for Kona coffee in India with appropriate and strategic marketing intervention.

Businesses where surveys were conducted.

Siemens India,

Bangalore Office

Unit II
2nd Floor, Duparc Trinity,
17, MG Road
Bangalore 560 001
Tel.: + 91 80 2511 24307
Fax: + 91 80 2511 24310

Café Coffee Day Square /Coffee Day Headquarters

23/2 Vittal Mallya Road

Richmond Town

Bengalooru-560038

Karnataka, India

Tel: 080 64514523

Website: http://www.cafecoffeeday.com‎/

Cafe Coffee Day,

Msk Plaza,

100ft Road, Indiranagar,

Bangalore, Bengaluru, India.

Koshy’s

Adinistrative & Management Office

No:39 Saint Marks Road

Bangalore 560001

Tel: 08022215030

Email: feedback@koshys.com

Website: http://www.koshys.com/

ING Vysya Bank Ltd.

Corporate Headoffice
#22, M G Road,
Bangalore - 560 001.
Phone: +91 80 25005000 begin_of_the_skype_highlighting ;end_of_the_skype_highlighting 25559222
Email: ingvysyabank@ingvysyabank.com

HSBC Premier

Mahatma Gandhi Road,

Bengaluru

Karnataka 560001

India

Tel: 080 25589595

Objective 5. Preliminary survey of Indian wholesalers, roasters and food service buyers on their interest in Hawaiian Gourmet Kona Coffee.

A preliminary survey of Indian wholesalers, roasters and food service buyers on their interest in Hawaiian gourmet Kona Coffee was carried out at the International Coffee Festival and Conference held in Bangalore, October 2009. The results of the survey indicates that

- As far as knowledge of imported coffee goes, majority have knowledge of South American Coffee. This is consistent with what the consumers’ knowledge of imported coffee as well.

-Majority of the respondents prefer to import the coffee as green coffee and they consider medium roast as the most suitable in terms of taste and grind preference.

-Majority of the respondents are aware of import regulations and they prefer to import as 200gms bags.

-Majority of the respondents said they are interested in buying Kona coffee and collaborating with Kona Coffee growers. They also prefer to make purchases directly from the growers.

Visitors to the international coffee expo in Bangalore visit the Hawaii Kona display to inspect samples and fill out questionnaires. More than 20 Kona growers submitted samples and collateral for display.

Besides the surveying, there were opportunities to interact with local coffee farmers and buyers and also key officials of leading Café chains such as Café Day. From the meetings these were some of the key points that were gathered.

There is clearly a demand for coffee in the South India market. There is also a drive to promote local Indian coffee as a high quality specialty item in the local market. However, there is definitely niche market availability for gourmet imported coffee as evidenced by its presence in major coffee outlets and five star restaurants and high-end retail outlets. Also the following table gives an indication of import trends for coffee for the last two years.

Table 4: Comparative Data on Different Coffee types Imported to India- 2008-2010 (April – Present)

S.No.	Commodity	2008-2009 (USD-million)	%Share	2009-2010(Apr-Jun), USD million	%Share
1	Coffee whether or not roasted or decaffeinated, coffee husks and skins, coffee substitutes containing coffee in any proportion.	55.59	0.0183	8.98	0.0146
*	India's Total Import	303,696.31		61,305.19
2	Coffee, tea, mate and spices	245.87	0.081	67.49	0.1101
*	India's Total Import	303,696.31		61,305.19
3	Coffee neither roasted nor decaffeinated	55.01	0.0181	8.9	0.0145
*	India's Total Import	303,696.31		61,305.19
4	Average percentage change in overall coffee imports		0.04		0.05

Src: Import: Commodity–wise, Export Import data Bank, Dept. of Commerce, Govt. of India. http://commerce.nic.in/eidb/Icomq.asp

As per the latest statistics, for the year 2009-2010 (April- to present), the percentage share of coffee imported in terms of US dollars is showing an increasing trend. Considering these Kona coffee has the potential to capture a share of India’s gourmet imported coffee niche market. The fact is that Kona coffee production itself is not large enough to capture the entire import market of high-end coffee in India however there is definitely an interest among Indian consumers and buyers to experience Kona coffee. Kona coffee presently lacks visibility in the Indian high-end gourmet coffee market. Therefore it is essential to introduce Kona coffee to Indian consumers and this can be done through collaborations with key coffee chains such as Café Day and also high end hotels such as the Taj Group and others. Contacts with potential customers in India has been established and support to US Kona farmers or those interested in exporting Kona coffee to emerging markets such as India needs to be provided. It is proposed that with additional resources efforts to launch Kona coffee in India, particularly in South India must be undertaken. As mentioned earlier, with the changing economic and lifestyle trends in India, the potential for high-end consumer goods is very high and this opportunity must be utilized by the US Kona farmers and exporters.

III. Description of difficulties encountered in the implementing the project, in particular whether the project¹s objectives were achieved.

Surveying of the wholesalers was delayed due to the cancelling of the International Coffee Conference in Bangalore in March 2009. It was held in October 2009 and the attendee comprised of Indian wholesalers, roasters and food service buyers. A preliminary survey was conducted and their preferences were collected (please refer Objective 5). However a detailed understanding of wholesaler /buyer preferences would have provided better insights on potential collaboration strategies between the Indian buyers and local Kona farmers.

Much less difficulty was experienced than anticipated in surveying consumers due to the great cooperation from the various private companies. Prices for Indian coffee are much lower than expected so the willingness to pay for Kona Coffee was much less than what was expected. However this could also be due to the fact that Kona coffee lacks visibility in the Indian market. Its availability is mostly restricted to high end restaurants and coffee outlets.

Gathering information from guests at high-end hotel and private club members would have provided additional insights but permission to survey them could not be attained.

IV. Description of cooperation received from participating parties (US and foreign)
Extensive cooperation from FAS officers and staff in the U.S. Embassy in New Delhi enabled this project to gather much more detailed information than first anticipated. This is especially due to assistance from Dr. Govindan.

Cooperation from the companies where project staff interviewed their employees was also very extensive. The project principals are indebted too:

Project Principals:

WSN, Inc. Ken Love, President

Private US Consultant, Catherine Chan-Halbrendt

Private Indian Consultant, Jyotsna Krishnakumar

Meeting Indian Agriculture Stakeholders and Interested Parties

In addition to the consumer study and coffee trade show participation, the PI, Ken Love, met with numerous coffee farmer associations and other individuals in the agriculture and commodity marketing community as well as agriculture journalists.

Wayanad Coffee Farmers Association in Kalpetta India

The PI met with two-dozen members of the Wayanad Coffee Growers Association in Kalpetta India during the first week of June 2009. A PowerPoint on coffee in Hawaii was shown to the growers and a two-hour discussion occurred afterwards. The general consensus is that growers do not fear imported high-end gourmet coffee and see it as a potential source of income for their own marketing activities. They also feel there is a possibility of collaboration with Hawaiian farming groups or cooperatives. This would be both to sell or trade their Robusta coffee for blending and be able to receive Kona coffee for selling and marketing in India.

Interviews with Mr. M.A. Ajith Prasad Jain and Mr. K. Ravindran

Puttur Fruit and Coffee Farmers

The PI addressed more than 100 growers in Putter. Although the area is know for its cashew, cacao and araca nuts, growers came from as far as 10 hours away to hear the PI’s address on coffee and tropical agriculture in Hawaii. Growers and processors from Mangalor and Goa also attended. Questions on coffee growing and the horticultural differences were more prevalent than marketing concerns although some fear of Kona coffee importation was expressed in this rural area. Coffee shops also expressed interest although price is a major factor in preventing Kona export to more rural locations. Some growers expressed interest in a Kona India coffee blend that they could market.

Varanashi Research Foundation

The PI met with Dr., Varanashi Krishna Moorthy at a agriculture research foundation in Adyanadka Karnataka in order to develop channels of communication in the future. The foundation is looking into developing cooperative efforts for an Organic Consumers Association that might include imported items.

Coorg Coffee Farm

The PI and in country consultant spent 2 days at Honey Valley farm, a large Robusta coffee grower in the Kodagu area of Karnataka. This visit at the beginning of this project enabled the project personnel to get a full understanding of coffee systems in India and industry concerns. These large growers are involved in a number of India wide coffee associations that we felt it was essential to have their input, understanding and support for this research project

Organic merchants in Bangalore

H.R. Jayaram

Journalists

Mr. Shree Padre, Editor, Adrike Patrike

Mr. Ganadhalu Srikanta, Reporter, Deccan Herald

Ms. Devina Sengupta, Reporter, Deligent Media

Mr. C. Rajendra Kumar, Bureau Chief, TV 9, Banagalore

Agricultural Scientists

Dr. Chiranjit Parmar

Dr Sonnes

Dr. K.M. Indiresh , Professor of Horticulture, Bangalore

Dr. D.C. Chowta

US Embassy

Dr A. Govinda, Senior Agricultural Specialist

Oliver Flake, Sr. Attaché for Agricultural Affairs

Cafe’ Coffee Day

Mr. A.G. Puttaraj, President

Mr Thomas Mathew Sr. Manager

Mr Rahul Uppal , Manager Operations

Mr. Venu Madhav A, Head Operations

Restaurants and Coffee Shops

Koshy’s restaurant Bangalore, Mr. P. Oommen Koshy

Mr. Samar Gupta (3 shops in Mumbai)

Mr. G.M. Bhaskar, Nilagiri Coffee Stores

Coffee Buyers and Traders

Mr. Ratan Ganapathy, Café d’ Riche

MR. K.G. Venkatesh, Guru Coffee, Banagalore

Mr. A.S.M. Janardhan, Aveon Café, Aaksh Beverages

Mr. R. Srikanth Rao, Ganesh Food Products

Mr. K. Suryakanth Raju, S.L.N. Coffee (P) Ltd.

Mr. Ahmed Nausheer, M/s M.A. & Sons Coffee Dealers

Mr. Sri Umashankar Coffee Works, Bangalore

Mr. Sree Nanjundeswara, Coffee depot, Bangalore

Mr. S. Mathavan B, S. P. G. Ramasamynadar & Sons Trading

Mr. G.N. Uthappa, Ecom Gill Coffee Trading, Mysore

Mr. B.C. Bopanna, Tata Coffee Ltd.

Mr. Mayank B. Shah, ITC Limited, Coffee Trader

Mr. George Wang, Fun Coffees Co. Taiwan

Mr. Biju Joseph, CEO, Brista Coffee, Dubai U.A.E.

TAJ HOTELS

Mr. Arindam Kunar, General Manager

Mr. Vinod Pandey, Food and Beverage Manager

Ms. Divya Prabhakar, Director of Sales

Mr. A Raj, Restaurant Manager

Mr. Ranjit Roy Choudgury, Chef

Mr. Ankur Gulati, Chef

Mr. Anish Rajan , Manager

Coffee Business Consultants

Ms Sunalini Menon, Coffee Lab

Horst W. Jabornigg, Swiss coffee consultant

Mr. Jessie A. Ovian , Indlab Coffee Quality Analysts

Mr. M.M. Rao, Consulatant Coffee Quality

Coffee Board of India

Mr. K. Jayaram, Coffee Quality Specialist

Mr. N.S. Shunmugasundaram, Vice-Chairman

Coffee growers visiting trade show

Elwin Noronham, Coffee Planter

Halekote N. Rammmesh, Sharadamba Estate

Mr. B.M. Guru Basappa, Rasthenabe coffeelab

Mr. Sunil J. Gowda, Urvinkahn Estate

Mr. Shreedev Hulikere, Coffee Planter

Mr. Nishant R. Gurjer, Sethuraman Estate Kaapi Royale

Jain Farms Bangalore

Outreach Report - Kona Coffee to India

Preliminary results of both the consumer surveys and information gathered at the India Coffee show in Bangalore was offered to the 250 members of the Kona Coffee Farmers Association (KCFA) at their annual trade show and seminar held in Kona on January 29^th. The PowerPoint used in the presentation is attached in this report.

Once this final report is accepted, it will be given to the KCFA for addition to their internet site so that members unable to attend the presentation would have access to the information. A few of the KCFA members have been very proactive in response to the initial information on this project they received at it’s inception and have since made their own trips to India to develop contacts. This project was able to assist 1 member in arranging for meetings with coffee buyers and growers. Two Indian coffee farmers have since visited Kona for further discussions with individual growers.

The project PI also gave a presentation to the more than 50 people at the Hawaii Tropical Fruit Growers Association monthly meeting on Nov. 16^th 2009. Additional outreach projects and final report circulation to growers will take place once this report is accepted.

At that time it will be available at www.hawaiifruit.net along with additional photos and accumulated reports.

Appendix 1

Procedure for Import of Goods to India

General Provisions- Import/Export

Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcel or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this Chapter are applicable for imports by sea, air or land, but not as baggage or postal dispatch.

COMPUTERISATION OF CUSTOMS WORK - Work of customs at Delhi airport has been computerized. Work at Mumbai port is also computerized. Whenever the work is computerized, documents like IGM and Bill of Entry have to be filed electronically. Procedure in computerized environment has been specified in CC, New Delhi PN 22/98 dated 8.5.1998. Guidelines for preparing data file for Bill of Entry and shipping bills for Mumbai Customs House has been prescribed vide PN 108/99 dated 30-9-1999 and PN 10/2001 dated 30.1.2001.

ENTRY – ‘Entry’ in relation to goods means an entry made in a Bill of Entry, Shipping Bill or Bill of Export. It includes (a) label or declaration accompanying the goods which contains description, quantity and value of the goods, in case of postal articles u/s 82 (b) Entry to be made in case of goods to be exported (c) Entry in respect of goods imported which are not accompanied by label or declaration made as per provisions of section 84. [section 2(16)].

AMENDMENT TO DOCUMENTS - Importer, exporter or 'Person In charge' have to submit various

documents to customs authorities like Bill of Entry, Import Manifest, Export Manifest etc. Some times, it may become necessary to amend the document due to various reasons like change in classification, clerical mistake in document, change in unloading / loading plan of vessel etc. In such case, permission to amend these documents have to be obtained from customs authorities. [section 149]. Such permission can be given if there are no fraudulent intentions. In case of bill of entry, shipping bill or bill of export, it can be amended after clearance only on the basis of documentary evidence which was in existence at the time the goods were cleared, warehoused or exported, and not on basis of any subsequent document. [proviso to section 149].

Customs Station - Imported goods are permitted to be unloaded only at specified places. Similarly, goods can be exported only from specified area. In view of this, a definition of ‘Customs Station’ is important. Customs area means all area of Customs Station and includes any area where imported goods or export goods are ordinarily kept pending clearance by Customs authorities. Thus, ‘Customs Area’ could include some area even outside the ‘Customs Station’. Customs Station means (a) customs port (b) inland container depot (c) customs airport and (d) land customs station.

Section 7 of Customs Act empowers CBEC (Board) to appoint * Customs ports * Customs airports * Places for inland container depots * Coastal ports. These are appointed by issuing a notification. Section 8 authorizes Commissioner of Customs to approve proper places in any customs port, customs airport or costal port for unloading and loading of goods or for any class of goods and specify the limits of customs area. Thus, the place (city / town / village etc.) is approved by CBEC, while exact location within that city / town / village is approved by Commissioner of Customs.

Import Procedures

Procedures have to be followed by ‘person-in-charge of conveyance’ as well as the importer.

WHO IS 'PERSON IN CHARGE' - As per section 2(31), 'person in charge' means (a) In case of vessel – its master (b) In case of aircraft - its commander or pilot-in-charge (c) In case of train - its conductor or guard and (d) In case of vehicle or other conveyance - its driver or other person in charge.

The significance of this definition is - He is responsible for submitting Import Manifest and Export Manifest He is responsible to ensure that the conveyance comes through approved route and lands at approved place only. He has to ensure that goods are unloaded after written order, at proper place. Loading also has to be only after permission. He has to ensure that conveyance does not leave without written order of Customs authorities. He can be penalized for (a) Giving false declaration and statement (b) shortages or non-accounting of goods in conveyance

Procedure to be followed by the Carrier - The 'person in charge of conveyance' (carrier of goods) has to follow prescribed procedure.

Arrival at customs port/airport only - Section 29 provides that person-in-charge of a vessel or an aircraft entering India shall call or land at customs port or customs airport only. It can land at other place only if compelled by accident, stress of weather or other unavoidable cause. In such case, he should report to nearest police station or Customs Officer. While arriving by land route, the vehicle should come by approved route to ‘land customs station’ only.

Import Manifest / Report- Person-in-charge of vessel, aircraft or vehicle has to submit Import Manifest / Report. [also termed as IGM - Import General Manifest]. (In case of a vessel or aircraft, it is called import manifest, while in case of vehicle, it is called import report.) The import manifest in case of vessel or aircraft is required to be submitted prior to arrival of a vessel or aircraft. Import report (in case of vehicle) has to be submitted within 12 hours of arrival at the customs station. If the report / manifest could not be submitted within prescribed time, person-in-charge or any person specified as responsible by a notification is liable to penalty upto Rs 50,000. Such penalty will not be imposed if the excise officer is satisfied that there was sufficient cause for the delay. [section 30(1)].

IGM can be submitted electronically through floppy where EDI facility is available.

IMPORT MANIFEST IS REQUIRED TO BE SUBMITTED BEFORE ARRIVAL OF AIRCRAFT OR VESSEL - Section 30(1) of Customs Act provides that Import Manifest should be filed before arrival of ship or aircraft. Normally, the Agents submit the Import Manifest before arrival, so that maximum possible formalities are completed before vessel or aircraft arrives. This also enables importers to file ‘Bill of Entry’ in advance.

Grant of Entry Inwards by Customs Officer - Unloading of cargo can start only after Customs Officer grant ‘Entry Inwards’. Such entry inwards can be granted only when berthing accommodation is granted to a vessel. If there is heavy congestion at port, shipping berth may not be available and in such case, ‘Entry Inwards’ cannot be granted. This date is highly relevant for determining rate of customs duty applicable.

Carrier responsible for shortages during unloading - If the goods are short landed, the carrier is liable to pay penalty upto twice the amount of duty payable on such short landed goods. It has been held that tally sheet prepared by Port Trust authorities on unloading of goods is a statutory document and should be accepted in preference to steamer survey - Scindia Steam Navigation v. CC - 1988 (33) ELT (CEGAT) followed in re IndiaSteamship Co. Ltd. - 1992 (57) ELT 510 (GOI).

Procedure by Importer - The importer importing the goods has to follow prescribed procedures for import by ship/air/road. (There is separate procedure for goods imported as a baggage or by post.)

Bill of Entry - This is a very vital and important document which every importer has to submit under section 46. The Bill of Entry should be in prescribed form. The standard size of Bill of Entry is 16" × 13". However, for computerization purposes, 15" × 12" size is permitted. (Mumbai Customs Public Notice No. 142/93 dated 3-11- 93). Bill of Entry should be submitted in quadruplicate – original and duplicate for customs, triplicate for the importer and fourth copy is meant for bank for making remittances. Under EDI system, Bill of Entry is actually printed on computer in triplicate only after ‘out of charge’ order is given. Duplicate copy is given to importer.

Types of Bill of Entry - Bills of Entry should be of one of three types. Out of these, two types are for clearance from customs while third is for clearance from warehouse.

BILL OF ENTRY FOR HOME CONSUMPTION - This form, called ‘Bill of Entry for Home Consumption’, is used when the imported goods are to be cleared on payment of full duty. Home consumption means use within India. It is white colored and hence often called ‘white bill of entry’.

BILL OF ENTRY FOR WAREHOUSING - If the imported goods are not required immediately, importer may like to store the goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. This will enable him to defer payment of customs duty till goods are actually required by him. This Bill of Entry is printed on yellow paper and often called ‘Yellow Bill of Entry’. It is also called ‘Into Bond Bill of Entry’ as bond is executed for transfer of goods in warehouse without payment of duty.

BILL OF ENTRY FOR EX-BOND CLEARANCE - The third type is for Ex-Bond clearance. This is used for clearance from the warehouse on payment of duty and is printed on green paper. The goods are classified and value is assessed at the time of clearance from customs port. Thus, value and classification is not required to be determined in this bill of entry. The columns in this bill of entry are similar to other bills of entry. However, declaration by importer is not required as the goods are already assessed.

RATE OF DUTY FOR CLEARANCE FROM WAREHOUSE - It may be noted that rate of duty applicable is as prevalent on date of removal from warehouse. Thus, if rate has changed after goods are cleared from customs port, customs duty as assessed on yellow bill of entry and as paid on green bill of entry will not be same.

Mention of BIN on Bill of Entry – A BIN (Business Identification Number) is allotted to each importer and exporter w.e.f. 1.4.2001. It is a 15 digit code based on PAN of Income Tax (PAN is a 10 digit code). [Earlier an EC (Import Export code) number issued by DGFT was required to be mentioned on Bill of Entry].

Filing of Bill of Entry - Normally, Bill of Entry is filed by CHA on behalf of the importer. Customs work at some ports has been computerised. In that case, the Bill of Entry has to be filed electronically, i.e. through Customs EDI system through computerisation of work. Procedure for the same has been prescribed vide Bill of Entry (Electronic Declaration) Regulations, 1995.

Documents to be submitted by Importer - Documents required by customs authorities are required to be submitted to enable them to (a) check the goods (b) decide value and classification of goods and (c) to ensure that the import is legally permitted. The documents that are essentially required are : (i) Invoice (ii) Packing List (iii) Bill of Lading / Delivery Order (iv) GATT declaration form duly filled in (v) Importers / CHAs declaration duly signed (vi) Import License or attested photocopy when clearance is under license (vii) Letter of Credit / Bank Draft wherever necessary (vii) Insurance memo or insurance policy (viii) Industrial License if required (ix) Certificate of country of origin, if preferential rate is claimed. (x) Technical literature. (xi) Test report in case of chemicals (xii) Advance License / DEPB in original, where applicable (xiii) Split up of value of spares, components and machinery (xiv) No commission declaration. – A declaration in prescribed form about correctness of information should be submitted. – Chapter 3 Para 6 and 7 of CBE&C’s Customs Manual,

2001. The Noting is now done electronically in large ports, while it is done manually in small ports. Thoka Number (Serial Number) is given while noting the Bill of Entry.

Electronic submission under EDI system – Where EDI system is implemented, formal submission of Bill of Entry is not required, as it is generated in computer system. Importer should submit declaration in electronic format to ‘Service Centre’. A signed paper copy of declaration for non-repudiability should be submitted. Bill of Entry number is generated by system which is endorsed on printed check list. Original documents are to be submitted only at the stage of examination.

Assessment of Duty and Clearance

The documents submitted by importer are checked and assessed by Customs authorities and then goods are cleared. Section 2(2) defines ‘assessment’ as follows – ‘Assessment’ includes provisional assessment, reassessment and any order of assessment in which the duty assessed is Nil. Thus, ‘assessment’ includes ‘Nil’ assessment.

Noting of Bill of Entry - Bill of Entry submitted by importer or Customs House Agent is cross-checked with ‘Import Manifest’ submitted by person in charge of vessel / carrier. It is noted if the description tallies. ‘Noting’ really means taking on record by customs officer. This date is relevant for determining rate of customs duty. Token number (serial number) is given in the import section. Otherwise, it is returned for clarifications. In case of EDI system, noting is done by the system itself which also generates bill of entry number.

Date of presentation of bill of entry is highly relevant and the rate of duty as applicable on this date will be considered for calculating the duty payable. Bill of Entry is accepted only after proper scrutiny vis-a-vis import manifest and various declarations given in bill of entry and attached documents like invoice, bill of lading etc. If such documents are not attached, the authorities can refuse to accept the Bill of Entry, and hence submission of such incomplete Bill of Entry cannot be taken as date of presentation of Bill of Entry - Simla Agencies v. CC - 1993 (63) ELT 248 (CEGAT).

Prior Entry of Bill of Entry - After the goods are unloaded, these have to be cleared within stipulated time - usually three working days. If these are not so removed, demurrage is charged by port trust/airport authorities, which is very high. Hence, importer wants to complete as many formalities as possible before ship arrives. Proviso to Section 46(3) of Customs Act allows importer to present bill of entry upto 30 days before expected date of arrival of vessel. In such case, duty will be payable at the rate applicable on the date on which ‘Entry Inward’ is granted to vessel and not the date of presentation of Bill of Entry, but rate of exchange will be as prevalent on date of submission of bill of entry. - confirmed in CC, New Delhi circular No 64/96 dated 10.12.1996 and CBE&C circular No 22/97-Cus dated 4.7.1997.

Assessment of Customs duty - Section 17 provides that assessment of goods will be made after Bill of Entry is filed. Date stamp of receipt is put on the ‘Bill of Entry’ and then it is sent to appraising department either manually or electronically. There are various Appraising groups for different Chapter headings. Each group is under an Assistant/Deputy Commissioner. Group consists of ‘Examiners’ and ‘Appraisers’.

APPRAISING THE GOODS - Appraiser has to (a) correctly classify the goods (b) decide the Value for purpose of Customs duty (c) find out rate of duty applicable as per any exemption notification and (d) verify that goods are not imported in violation of any law. He can call for any further documents that may be required for assessment. If he is of the opinion that goods have to be examined for appraisal, he will issue an examination order, usually on the reverse of Bill of Entry. If such order is issued, the Bill of Entry is presented to appraising staff at docks / air cargo complexes, where the goods are examined in presence of importer’s representative. Assessment is finalized after getting the report of examination. – Chapter 3 Para 11 and 12 of CBE&C’s Customs Manual, 2001.

VALUATION OF GOODS - As per rule 10 of Customs Valuation Rules, the importer has to file declaration about full 'value' of goods. If the assessing officer has doubts about the truth and accuracy of 'value' as declared, he can ask importer to submit further information, details and documents. If the doubt persists, the assessing officer can reject the value declared by importer. [rule 10A(1) of Customs Valuation Rules]. If the importer requests, the assessing officer has to give reasons for doubting the value declared by importer. [rule 10A(2)]. If the value declared by importer is rejected, the assessing officer can value imported goods on other basis e.g. value of identical goods, value of similar goods etc. as provided in Customs Valuation Rules. [This amendment has been made w.e.f. 19.2.98, as per WTO agreement. However, it has been held that burden of proof of under valuation is on department]. Assessing Officer should not arbitrarily reject the declared value and increase the assessable value. He should follow due process of law and issue appealable order. – MF(DR) circular No. 16/2003-Cus dated 17-3-2003.

APPROVAL OF ASSESSMENT - The assessment has to be approved by Assistant Commissioner, if the value is more than Rs one lakh. (in cases covered under ‘fast track clearance for imports’, appraiser is also authorized to approve valuation). After the approval, duty payable is typed by a “pin-point typewriter” so that it cannot be tampered with. As per CBE&C circular No. 10/98-Cus dated 11-2-1998, Assessing Officer should sign in full in Bill of Entry followed by his name, preferably by rubber stamp.

EDI ASSESSMENT – In the EDI system, the cargo declaration is transferred to assessing officer in the groups electronically. Processing is done on the screen itself. All calculations are done by the system itself. If assessing officer needs clarification, he can raise a query. The query is printed at service centre and importer replies through service centre. Facility of tele-enquiry about status of documents is provided in major customs stations.

Under EDI, normally, documents are inspected only after assessment. After assessment, copy of Bill of Entry is printed at service centre. Final Bill of Entry is printed only after ‘Out of Charge’ order is given by customs officer. – Chapter 3 Para 18 to 22 of CBE&C’s Customs Manual, 2001.

PAYMENT OF CUSTOMS DUTY - After assessment of duty, necessary duty is paid. Regular importers and Custom House Agents keep current account with Customs department. The duty can be debited to such current account, or it can be paid in cash/DD through TR-6 challan in designated banks. After payment of duty, if goods were already examined, delivery of goods can be taken from custodians (port trust) after paying their dues. If goods were not examined before assessment, these have to be submitted for examination in import shed to the examining staff. After shed appraiser gives ‘out of charge’ order, delivery of goods can be taken from custodian.

First and second system of assessment - There are two systems of assessment. Section 17(2) provides for assessment after examination of goods and section 17(4) provides for assessment on basis of documents, followed by inspection and testing of goods.

“First appraisement system” or 'first check procedure' is followed if the appraiser is not able to make

assessment on the basis of documents submitted and deems that inspection is necessary. Goods are examined first and then these are assessed. This method is followed only if assessment is not possible on basis of documents. - - The importer himself may also request 'first check procedure', if he cannot give all required details regarding description / value of goods. He has to make request for first check examination at the time of filing of Bill of Entry or at data entry stage in case of EDI. He has to give reason for seeking first appraisement.

The examination order is recorded on Bill of Entry and then returned to importer / CHA. It is then presented to import shed for examination. The shed appraiser / Dock examiner examines the goods as per examination order and records his findings. If samples are required, they are taken out. In case of EDI system, the report of examination is given in the computer itself. The goods are then assessed to duty by appraiser. - Chapter 3 Para 23 of CBE&C’s Customs Manual, 2001.

In “Second Appraisement System” or 'second check procedure', which is normally followed, assessment is done on basis of documents and then goods are examined. Such examination is not mandatory. It is done on selective basis on the basis of ‘risk assessment’ or specific intelligence report. Section 17(4) of Customs Act specifically provides that if initially assessment is done on basis of documents, re-assessment can be done after examination or testing of goods or otherwise, if it is found subsequent to examination or testing or otherwise, that any statement made on Bill of Entry or any information supplied is not true in respect of matter relevant to assessment of duty.

First appraisement is generally carried out in following cases - * If complete documents are not submitted * Goods are to be tested for correct classification * Goods are re-imported * Goods are damaged or deteriorated and abatement is claimed * Goods are abandoned and remission of duty is applied for * When goods are provisionally assessed * When importer himself requests for examination of goods before payment of duty.

EXAMINATION OF GOODS - Examiners carry out physical examination and quantitative checking like weighing, measuring etc. Selected packages are opened and examined on sample basis in ‘Customs Examination Yard’. Examination report is prepared by the examiner.

Accelerated Clearance of Imports and Exports Scheme (ACS) – Finance Minister, in his budget speech on 28-2- 2003, had announced a ‘self assessment scheme’ for importers and exporters. As per the scheme, importer will himself determine classification of goods including claim for exemption benefits. Computer System will calculate the duty based on his declaration. Physical inspection of imported goods will be done by risk assessment and management techniques on a computer based system and not on the orders of customs examining staff. Audit of import documents will not be by existing system of concurrent audit but will be done by post-clearance audit, as prevalent in developed countries. Subsequently, a Accelerated Clearance of Import and Export Scheme (ACS) has been announced vide MF(DR) circular No. 30/2003-Cus dated 4-4-2003. The scheme is announced through administrative instructions, without making any change in statutory provisions. Hence, the scheme is not same as ‘self removal’ under Central Excise. Presently, the scheme is introduced on trial basis at Air Customs, Sahara Airport (Mumbai), ICD, New Delhi and Chennai Sea Customs.

In case of imports, the scheme will be open to all status holders under EXIM policy, Central and State

Government PSUs and other importers who have been importing for at least two years and have filed at least 25 Bills of Entry in preceding year. - - In case of exports, the scheme will be open to all status holders under EXIM policy, EOU/STP/EHTP units whose goods have been sealed in presence of customs/excise officers, Central and State Government PSUs, manufacturer-exporters who have been exporting for at least two years and have filed at least 25 Shipping Bills in preceding year and bulk exporters. - - Certain sensitive items have been excluded from the provisions. Importer/exporter intending to avail this facility has to make application to Commissioner. The clearances will be subject to post clearance audit.

Provisional Assessment - Section 18 of Customs Act, 1962 provide that provisional assessment can be done in following cases (a) when Customs Officer is satisfied that importer or exporter is unable to produce document or furnish information required for assessment (b) it is deemed necessary to carry out chemical or other tests of goods (c) when importer/exporter has produced all documents, but Customs Officer still deems it necessary to make further enquiry. In such cases, assessment is done on provisional basis. The importer/exporter has to furnish guarantee/security as required by Customs Officer for payment of difference if any. Goods can be cleared after payment of duty provisionally assessed and after providing the security. After final assessment, difference is paid by importer or refunded to him as the case may be. If the imported goods were warehoused after provisional assessment, the Customs Officer may require importer to execute a bond for twice the difference in duty, if duty finally assessed is higher [section 18(2)(a)]. The bond is called as 'P D Bond' (Provisional Duty Bond). The bond is with security or surety. Bank guarantee can also be given as a security.

Checking of duty drawback / license documents - Documents in respect of Duty Entitlement Pass Book (DEPB), advance license, duty drawback etc. will be checked.

Execution of bond and payment of duty - Once the duty is assessed, the bill of entry is returned to importer. The Bill of Entry should be presented to comptist for calculation and pinpointing of the duty. If bond has to be executed, it will be taken in bond section.

Payment of duty - If goods are to be removed to a warehouse, duty payment is not required. The goods can be taken to a warehouse under bond, without payment of duty. However, if goods are to be removed for home consumption, payment of customs duty is required. CHA or the importer can take it for payment of customs duty. Large importers and CHA have P.D. accounts with customs. Duty can be paid either in cash or through P.D. account. P. D. account means provisional duty account. This is a current account, similar to PLA in central excise. The importer or CHA pays lump sum amount in the account and gets credit on the amount paid. He can pay customs duty by debiting the amount in P.D. (Provisional Duty) account. If the importer does not have an account, he can pay duty by cash using TR-6 challan. Of course, payment through PD account is very convenient and quick.

The duty should be paid within five working days (i.e. within five days excluding holidays) after the ‘Bill of Entry’ is returned to the importer for payment of duty. [section 47(2)]. (Till 11-5-2002, the period allowed was only 2 days).

Interest for late payment - If duty is not paid within 5 working days as aforesaid, interest is payable. Such interest can be between 10% to 36% as may be notified by Central Government. [Section 47(2) of Customs Act, 1962.]. - - Interest rate is 15% w.e.f. 13-5-2002. [Notification No. 28/2002-Cus(NT) dated 13-5-2002] Earlier, interest rate was 24% p.a, w.e.f. 1-3-2000, as per notification No. 34/2000-Cus(NT)].

Disposal if goods are not cleared within 30 days - As per section 48 of Customs Act, goods must be cleared within 30 days after unloading. Customs Officer can grant extension. Otherwise, goods can be sold after giving notice to importer. However, animals, perishable goods and hazardous goods can be sold any time - even before 30 days. Arms & ammunition can be sold only with permission of Central Government.

Out of Customs Charge Order - After goods are examined, it is verified that import is not prohibited and after customs duty is paid, Customs Officer will issue ‘Out of Customs Charge’ order under section 47. Goods can be cleared from customs area only on receipt of such order. This is an ‘adjudicating order’ within the meaning of Customs Act, even if it is passed by Appraiser and not by Assistant Commissioner.

Demurrage if goods not cleared - Heavy demurrage is payable if goods are not cleared from port within three days.

Import of software through data communication - Import of software through data communication / telecommunication is permitted. Since such imports are not available for physical verification, proper accountability in books should be maintained. Unit intending to import software through datalink is required to inform estimated annual requirement to Development Commissioner of EOU / Director of STP. This should be approved by him . After import of software through internet, written information should be submitted to Director of STP / Development Commissioner of EOU and importer shall get a certificate. This certificate should be submitted to Assistant / Dy Commissioner of Customs within 48 hours, along with Bill of Entry and certificate from Development Commissioner of EOU / Director of STP. He will issue 'out of charge' order. The documents such as invoice etc. will be routed through bank. - MF(DR) circular No. 58/2000-Cus dated 10-7-2000.

Relevant Date for Rate and Valuation of Customs Duty - Section 15 of Customs Act prescribes that rate of duty and tariff valuation applicable to imported goods shall be the rate and valuation in force at one of the following dates. (a) if the goods are entered for home consumption, the date on which bill of entry is presented (b) in case of warehoused goods, when Bill of Entry for home consumption is presented u/s 68 for clearance from warehouse and (c) in other cases, date of payment of duty.

CONCEPT OF TERRITORIAL WATERS NOT RELEVANT - It may be noted that concept of ‘ date of entering into territorial waters’ is not relevant for purposes of determination of rate of customs duty.

Source for the above information: http://www.nfpl.net/pdf/procedure for import and export.pdf. Narendra Forwarders Pvt. Ltd. (NFPL) is Custom House Agents and Freight Forwarders, a servicing enterprise handling varied activities in the sphere of Imports and Exports based in Mumbai.

SECTION 47. Clearance of Goods for Home Consumption. – [(1)] Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption.

[(2) Where the importer fails to pay the import duty under sub-section (1) [within [five days] excluding holidays] from the date on which the bill of entry is returned to him for payment of duty, he shall pay interest [at such rate, not below [ten per cent] and not exceeding thirty six per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette], on such duty till the date of payment of the said duty :

Provided that where the bill of entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such commencement, the date of return of such bill of entry to him shall be deemed to be the date of such commencement for the purpose of this section.]

[Provided further that if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section.]

Source of the above information : Customs Act 1962, 52 of 1962, Chapter VII, CLEARANCE OF IMPORTED GOODS AND EXPORT GOODS Govt. Of India, http://www.cbec.gov.in/customs/cs-act/cs-act-ch7.htm

Import through Courier

Imports (and export) through couriers are treated as imports or exports as any other mode. It is not treated as 'baggage'. There is no restriction on value of goods that can be brought through courier. The duty payable is normal duty as applicable to all other goods normally imported by ship or air transport. Duty concessions, if any, are also permissible. Courier Imports and exports (Clearance) Regulations, 1998 specify the procedures, which are summarised in Chapter 17 of CBE&C’s Customs Manual, 2001.

The highlights of the Regulations are as follows :

Import through courier –

	Import through courier is permitted by air from Mumbai, Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad, Jaipur and Kolkata or from any land customs station, except two land stations in West Bengal.
	Weight of individual package should not exceed 70 Kgs.
	Goods requiring any specific condition to be fulfilled under any other Act, rule or regulations are not permitted
	Some items like animals or its parts, plants, perishables, publications containing maps depicting incorrect boundaries of India, precious stones, gold, silver and chemicals and chemical products are not permitted to be brought through couriers. However, they can bring life saving drugs.
	‘Authorised Courier’ must be registered with Commissioner of Customs. He should be financially viable for which he has to produce a certificate from Bank. He has to execute bond and furnish security to Commissioner of Customs. His registration can be cancelled for misconduct or failure to comply with regulations.
	Authorised Courier should advise his clients about provisions of Customs Act and exercise due diligence. He should disclose all information to Assessing Officer in connection with the imported goods. He should maintain proper records.
	Registration of courier can be cancelled in case of misconduct or if he fails to comply with the provisions of the ‘Courier Regulations’.
	The goods can be carried by the on-board courier or the person in charge of aircraft or authorised agent of courier service. It is not necessary that goods must be carried by the on board courier himself.
	The courier bags should be kept separately and shall be dealt with only as per directions of Commissioner of Customs.
	Goods like * documents * Free samples and free gifts upto prescribed value limit * Dutiable or commercial goods can be sent through courier. These should be packed separately with appropriate labels. These goods must be accompanied by a declaration by sender in respect of contents of the package and its value.
	Free gifts and samples upto Rs 10,000 (exclusive of freight and insurance) can be imported per consignment.
	Import of gem and jewellery of EOU / SEZ and export of cut and polished diamond, gems and jewellery is permitted if value of each consignment does not exceed Rs 25 lakhs.
	Authorised Courier have to submit declaration in prescribed form. He will present all the imported goods brought by on-board courier or person in charge of aircraft to the customs officer. If goods are not cleared within 30 days, these will be disposed of.
	Authorised Courier also has to file ‘Courier Bill of Entry’ in prescribed form.

Post Parcels

Normal procedures for import by air/ship/road are not possible for imports as ‘baggage’ or import through post. Hence, separate provisions have been made for import/export by post.

Entry for purpose of postal articles - 'Entry' means an Entry made in 'Bill of Entry' in case of imports and 'Shipping Bill' in case of exports. In case of post parcels, Label/declaration accompanying goods which contain description, quantity and value of the goods will be deemed to be an ‘Entry’ for purposes of Customs Act, vide section 82 of Customs Act. Thus, filing of separate Bill of Entry or Shipping Bill is not necessary for import/export through post.

Rate of duty and tariff valuation - As per section 83 of Customs Act, the rate of duty and valuation as on date on which postal authorities submit the list to Customs Officer will be considered. However, if such list is presented before arrival of vessel, the date will be deemed to be date of arrival of the vessel. Similarly, in case of exports, rate and tariff valuation as applicable on date on which goods are handed over to postal authorities will be considered.

Regulations for import / export by Post - Section 84 authorises Board to make regulations for procedures for examination and assessment of duty and transit/transshipment of goods imported by post. Accordingly, CBE and C have made rules.

Post parcels to post office - Post parcels will be allowed to pass from port/airport to Foreign Parcel Department of Government Post Offices without payment of customs duty. Postmaster will hand over to Principal Appraiser, Customs following (a) memo showing total number of parcels from each country of origin (b) Parcel Bills or Senders’ declaration (c) Customs declaration and despatch notes, if any (d) other information that may be required.

Inspection of mail - The mail bag will be opened and scrutinised by Postmaster under supervision of Principal Postal Appraiser of Customs. Packets suspected of containing dutiable goods will be separated and presented to Customs Appraiser with letter mail bill and assessment memos.

Parcel Bill/letter mail Bill - The parcel bill/letter mail bill will show details like (a) Serial number assigned by office of posting (b) Name of office of posting (c) Destination (d) weight (e) local number (f) Contents as ascertained by Customs (g) Declared value in foreign currency (h) Rupee Value (i) Rate of duty (j) Amount of duty and (k) Remarks.

Examination and assessment - Customs Appraiser will mark the parcels which are required to be detained as (a) necessary particulars are not available or (b) mis-declaration or under-valuation is suspected or (c) goods are prohibited for import. Other parcels will be assessed without opening, on the basis of details given in parcel bill or despatch notes. The duty will be assessed and will be entered on parcel bill. These will be audited and returned to Postmaster. Postmaster will hand over parcel to addressee only after collecting the customs duty.

Opening of parcels - Parcels selected by Appraiser for examination will be opened and examined. If required, details will be called from addressee. After inspection, the parcels will be sealed with a distinctive seal. If mis-declaration or under-valuation is noted or goods are prohibited goods for imports, these will be detained and reported to Customs Commissioner. After assessment, these will be handed over to Post Master, who will hand over to addressee on receipt of payment of Customs duty.

Gifts by post - Gifts from abroad upto Rs. 10,000 of goods which are not prohibited goods for import are duty free if sent by post or through courier. The postal charges or air freight will not be taken into account for determining value limit of Rs 10,000. [Notification No. 171/93-Cus dated 16-9-1993 as amended on 6-7-1999]. However, if the value exceeds Rs 10,000, customs duty is payable on whole value even if gift was received unsolicited.

Exemptions to post parcels - Post Parcel where customs duty payable is less than Rs. 100 are fully exempt from duty (this is obviously with a view to ignore small parcels). Post Parcels posted from India but returned un-delivered are also exempt from customs duty, if no export benefit was claimed on these parcels.

Source for the above information: http://www.dateyvs.com/custom04.htm

Additional information on Import procedures and regulations is also available at http://www.indiandata.com/import_procedures.html

APPENDIX - 2

APPENDIX - 39A - THE FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992 No.22.(7th August, 1992)

The following Act of Parliament received the assent of the President on the 7th August, 1992, and is hereby published for general information:-

An Act to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for matters connected therewith or Incidental thereto.

Be it enacted by Parliament in the Forty-third Year of the Republic of India as follows:-

CHAPTER I

PRELIMINARY

Short title and commencement

1. (1) This Act may be called the Foreign Trade (Development and Regulation) Act, 1992.

(2) Sections 11 to 14 shall come into force at once and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of June 1992.

Definitions.

2. In this Act, unless the context otherwise requires:-

(a) "Adjudicating Authority" means the authority specified in, or under, section 13;

(b) "Appellate Authority" means the authority specified in ,or under, sub-section (1) of section 15;

(d) "Director General" means the Director General of Foreign Trade appointed under section 6;

(e) "import" and "export" means respectively bringing into, or taking out of, India any goods by land. sea or air;

(f) "Importer-exporter Code Number" means the Code Number granted under section 7;

(g) "license" means a license to import or export and includes a customs clearance permit and any other permission issued or granted under this Act;

(h) "Order" means any order made by the Central Government under section 3; and

(i) "Prescribed" means prescribed by rules made under this Act.

CHAPTER II

POWER OF CENTRAL GOVERNMENT TO MAKE ORDERS AND ANNOUNCE EXPORT AND IMPORT POLICY

Powers to make provision relating to imports and exports.

3. (1) The Central Government may by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports.

(2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods.

(3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 and all the provisions of that Act shall have effect accordingly.

Continuance of existing orders

4. All Orders made under the Imports and Exports (Control) Act, 1947 and in force immediately before the commencement of this Act shall, so far as they arenot inconsistent with the provisions of this Act, continue to be in force and shall be deemed to have been made under this Act.

Export and import policy.

5. The Central Government may, from time to time, formulate and announce by notification in the Official Gazette, the export and import policy and may also, in the like manner, amend that policy.

Appointment of Director General and his functions.

6. (1) The Central Government may appoint any person to be the Director General of Foreign Trade for the purposes of this Act.

(2) The Director General shall advise the Central Government in the formulation of the export and import policy and shall be responsible for carrying out that policy.

(3) The Central Government may, by Order published in the Official Gazette direct that any power exercisable by it under this Act (other than the powers under sections 3,5,15,16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order.

CHAPTER III

IMPORTER-EXPORTER CODE NUMBER AND LICENSE

Importer-exporter Code Number.

7. No person shall make any import or export except under an Importer-exporter Code Number granted by the Director General or the officer authorized by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General.

Suspension and cancellation of Importer-exporter Code Number.

8. (1) Where :-

(a) any person has contravened any law relating to Central excise or customs or foreign exchange or has committed any other economic offence under any other law for the time being in force as may be specified by the Central Government by notification in the Official Gazette, or

(b) the Director General has reason to believe that any person has made an export or import in a manner gravely prejudicial to the trade relations of India with any foreign country or to the interests of other persons engaged in imports or exports or has brought disrepute to the credit or the goods of the country, the Director General may call for the record or any other information from that person and may, after giving to that person a notice in writing informing him of the grounds on which it is proposed to suspend or cancel the Importer-exporter Code Number and giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice and, if that person so desires, of being heard, suspend for a period, as may be specified in the order, or cancel the importer-exporter Code Number granted to that person

(2) where any Importer-exporter Code Number granted to a person has been suspended or cancelled under sub-section (1), that person shall not be entitled to import or export any goods except under a special license, granted, in such manner and subject to such conditions as may be prescribed, by the Director General to that person.

Issue, suspension and cancellation of license.

9. (1) The Central Government may levy fees, subject to such exceptions, in respect of such person or class of persons making an application for a license or in respect of any license granted or renewed in such manner as may be prescribed.

(2) The Director General or an officer authorized by him may, on an application and after making such inquiry as he may think fit, grant or renew or refuse to grant or renew a license to import or export such class or classes of goods as may be prescribed, after recording in writing his reasons for such refusal.

(3) A license granted or renewed under this section shall -

(a) be in such form as may be prescribed;

(b) be valid for such period as may be specified therein; and

(c) be subject to such terms, conditions and restrictions as may be prescribed or as specified in the license with reference to the terms, conditions and restrictions so prescribed.

(4) The Director General or the officer authorized under sub-section (2) may, subject to such conditions as may be prescribed for good and sufficient reasons, to be recorded in writing suspend or cancel any license granted under this Act:

Provided that no such suspension or cancellation shall be made except after giving the holder of the license a reasonable opportunity of being heard.

(5) An appeal against an order refusing to grant, or renew or suspending or cancelling, a license shall lie in like manner as an appeal against an order would lie under section 15.

CHAPTER IV

SEARCH, SEIZURE, PENALTY AND CONFISCATION

Power relating to search and seizure

10. (1) The Central Government may, by notification in the Official Gazette, authorise any person for the purposes of exercising such powers with respect to entering such premises and searching inspecting and seizing of such goods, documents, things and conveyances subject to such requirements and conditions, as may be prescribed.

(2) The provisions of the Code of Criminal Procedure, 1973 relating to searches and seizures shall, so far as may be, apply to every search and seizure made under this section.

Contravention of provisions of this Act, rules, orders and export and import policy.

11. (1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made there under and the export and import policy for the time being in force.

(2) Where any person makes or abets or attempts to make any export or import in contravention of any provision of this Act or any rules or orders made there under or the export and import policy, he shall be liable to a penalty not exceeding one thousand rupees or five times the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more.

(3) Where any person, on a notice to him by the Adjudicating Authority, admits any contravention, the Adjudicating Authority may, in such class or classes of cases and in such manner as may be prescribed, determine, by way of settlement, an amount to be paid by that person.

(4) A penalty imposed under this Act may, if it is not paid, be recovered as an arrear of land revenue and the Importer-exporter Code Number of the person concerned, may, on failure to pay the penalty by him, be suspended by the Adjudicating Authority till the penalty is paid.

(5) Where any contravention of an provision of this Act or any rules or orders made thereunder or the export and import policy has been, is being or is attempted to be made, the goods together with any package, covering or receptacle and any conveyances shall, subject to such requirements and conditions as may be prescribed, be liable to confiscation by the Adjudicating Authority.

(6) The goods or the conveyance confiscated under sub-section

(5) may be released by the Adjudicating Authority, in such manner and subject to such conditions as may be prescribed, on payment by the person concerned of the redemption charges equivalent to the market value of the goods or conveyance, as the case may be.

Penalty or confiscation not to interfere with other punishments.

12. No penalty imposed or confiscation made under this Act shall prevent the imposition of any other punishment to which the person affected thereby is liable under any other law for the time being in force.

Adjudicating Authority

13. Any penalty may be imposed or any confiscation may be adjudged under this Act by the Director General or, subject to such limits as may be specified, by such other officer as the Central Government may by notification in the Official Gazettte, authorise in this behalf.

Giving of opportunity to the owner of the goods, etc.

14. No order imposing a penalty or of adjudication of confiscationshall be made unless the owner of the goods or conveyance or other person concerned, has been given a notice in writing –

(a) informing him of the grounds on which it is proposed to impose a penalty or to confiscate such goods or conveyance; and

(b) to make a representation in writing within such reasonable time as may be specified in the notice against the imposition of penalty or confiscation mentioned therein, and, if he so desired, of being heard in the matter.

CHAPTER V

APPEAL AND REVISION

15. (1) Any person aggrieved by any decision or order made by the Appeal. Adjudicating Authority under this Act may prefer an appeal:-

(a) where the decision or order has been made by the Director General, to the Central Government,

(b) where the decision or order has been made by an officer subordinate to the Director General, to the Director General or to any officer superior to the Adjudicating Authority authorised by the Director

General to hear the appeal, within a period of forty-five days from the date on which the decision or order is served on such person:

Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the aforesaid period, allow such appeal to be preferred within a further period of thirty days:

Provided further that in the case of an appeal against a decision or order imposing a penalty or redemption charges, no such appeal shall be entertained unless the amount of penalty or redemption charges has been deposited by the appellant;

Provided also that, where the Appellate Authority is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, at its discretion dispense with such deposit either unconditionally or subject to such conditions as it may impose.

(2) The Appellate Authority may, after giving to the appellant a reasonable opportunity of being heard, if he so desires, and after making such further inquiries, if any, as it may consider necessary, make such orders as it thinks fit, confirming, modifying or reversing the decision or order appealed against, or may send back thecase with such directions as it may think fit, for a fresh adjudication or decision, as the case may, be after taking additional evidence if necessary:

Provided that an order enhancing or imposing a penalty or redemption charges or confiscating goods of a greater value shall not be made under this section unless the appellant has been given an opportunity of making a representation, and if he so desires of being heard in his defense.

(3) The order made in appeal by the Appellate Authority shall be final revision.

16. The Central Government in the case of any decision or order, not being a decision or order made in an appeal, made by the Director General, or the Director General in the case of any decision or order made by any officer subordinate to him, may on its or his own motion or otherwise, call for and examine the records of any proceeding in which a decision or an order imposing a penalty or redemption charges or adjudicating confiscation has been made and against which no appeal has been preferred, for the purpose of satisfying itself or himself, as the case may be, as to the correctness, legality or propriety of such decision or order and make such orders thereon as may be deemed fit:

Provided that no decision or order shall be varied under this section so as to prejudicially affect any person unless such

(a) has, within a period of two years from the date of such decision or order, received a notice to show cause why such decision or order shall not be varied, and

(b) has been given a reasonable opportunity of making representation and, if he so desires, of being heard in his defense.

Powers of Adjudicating an other Authorities.

17. (1) Every authority making any adjudication or hearing any appeal or exercising any powers of revision under this Act shall have all the powers of a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:-

(a) summoning and enforcing the attendance of witnesses;

(b) requiring the discovery and production of any document;

(d) receiving evidence on affidavits; and

(e) issuing commissions for the examination of witnesses or documents.

(2) Every authority making any adjudication or hearing any appeal or exercising any powers of revision under this Act shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal

Procedure, 1973.

(3) Every authority making any adjudication or hearing any appeal or exercising any powers of revision under this Act shall have the power to make such orders of an interim nature as it may think fit and may also, for sufficient cause, order the stay of operation of any decision or order.

(4) Clerical or arithmetical mistakes in any decision or order or errors arising therein from any accidental slip or omission may at any time be corrected by the authority by which the decision or order was made, either on its own motion or on the application of any of the parties:

Provide that where ay correction proposed to be made under this sub-section will have the effect of prejudicinally affecting any person, no such correction shall be made except after giving to that person a reasonable opportunity of making a representation in the matter and no such correction shall be made after the expiry of two years from the date on which such decision or order was made.

CHAPTER VI

MISCELLANEOUS

Protection of action taken in good faith

18. No order made or deemed to have been made under this Act shall be called in question in any court, and no suit, prosecution or other legal proceeding shall lie against any person for anything in good faith done or intended to be done under this Act or any order made or deemed to have been made there under.

Power to make rules.

19. (1) The Central Government may, by notification in theOfficial Gazette, make rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-

(a) the manner in which and the conditions subject to which a special license may be issued under sub-section (2) of section 8;

(b) the exceptions subject to which and the person or class of persons in respect of whom fees may be levied and the manner in which a license may be granted or renewed under sub-section (1) of section 9;

(d) the form in which and the terms, conditions and restrictions subject to which license may be granted under sub-section (3) of section 9;

(e) the conditions subject to which a license may be suspended or cancelled under sub-section (4) of section 9;

(f) the premises, goods, documents, things and conveyances in respect of which and the requirements and conditions subject to which power of entry, search, inspection and seizure may be exercised under sub-section (1) of section10;

(g) the class or classes of cases for which and the manner in which an amount by way of settlement, may be determined under sub- section (3) of section 11;

(h) the requirements and conditions subject to which goods and conveyances shall be liable to confiscation under sub-section (5) of section 11;

(i) the manner in which and the conditions subject to which goods and conveyances may be released on payment of redemption charges under sub-section (6) of section 11; and

(j) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be, or may be, made by rules.

(3) Every rule and every Order made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each house of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or the Order or both Houses agree that the rule or the Order should not be made, the rule or the Order, as the case may be, shall thereafter have effect only in such modified form or be of no effect as the case may be; so, however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or the Order.

Repeal and saving

20. (1) The Imports and Exports (Control) Act, 1947 and the Foreign Trade (Development and Regulation) Ordinance, 1992 are hereby repealed.

(2) The repeal of the Imports and Exports (Control) Act, 1947 shall however, not affect -

(a) the previous operation of the Act so repealed or anything duly done or suffered there under; or

(b) any right, privilege, obligation or liability acquired accrued or incurred under the Act so repealed; or

(d) any proceeding or remedy in respect of any such right, privilege obligation, liability, penalty, confiscation or punishment as aforesaid and any such proceeding or remedy may be instituted, continued or enforced and any such penalty, confiscation or punishment may be imposed or made as if that Act had not been repealed.

Ord. 11 of 1992.

(3) Notwithstanding the repeal of the Foreign Trade (Development and Regulation) Ordinance, 1992, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under the corresponding provisions of this Act.

APPENDIX - 39A
-----------------------------------

MINISTRY OF COMMERCE, (Director General of Foreign Trade)

ORDER New Delhi the 31st December,1993

S.O. 1056(E)- in exercise of the powers conferred by section 3, read with section 4, of the Foreign Trade (Development and Regulation) Act,1992 (22 of 1992) and in supersession of the Imports (Control) Order,1955 and the Exports (Control) Order, 1988, except as respects things done or omitted to be done before such supersession, the Central

Government hereby makes the following order, namely:-

1. Short title and commencement.

(1) This Order may be called the Foreign Trade (Exemption from application of Rules in certain cases) Order,1993,

(2) It shall come into force on the date of its publication in the Official Gazette.

2. Definitions.

In this order, unless the context otherwise requires:-

(a) "Act" means the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

(b) "Import Trade Regulations" means the Act and the rules and order made thereunder and the export and import policy;

(d) Words and expressions used in this Order and not defined but defined in the Act shall have the meanings respectively assigned to them in the Act.

3. Exemption from the application of rules.-

(1) Nothing contained in the Rules shall apply to the import of any goods,

(a) by the Central Government or agencies, undertakings owned and controlled by the Central Government for Defense purposes;

(b) by the Central Government or any State Government Statutory Corporation, public body or Government Undertaking run as a joint Stock Company through the agency of the Purchase Organizations of the Ministry of Supply, that is India Supply Mission, London and India Supply Mission, Washington;

(c) by the Central Government, any State Government or any statutory corporation or public body or Government Undertaking run as a joint Stock Company, orders in respect of which are placed through the Directorate General, Supplies and Disposals, New Delhi;

(d) by transshipment or imported and bonded on arrival for re-export as ships stores to any country outside India except Nepal and Bhutan or imported and bonded on arrival for re-export as aforesaid but subsequently released for use of Diplomatic personnel, Consular Officers in India and the officials of the United Nations Organization and its specialized agencies who are exempt from payment of duty under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 3 dated 8th January, 1957 and the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947) respectively;

(e) imported and bonded on arrival for sale at approved duty-free shops, whether to outgoing or incoming passengers, against payments in free foreign exchange;

(f) which are in transit through India by post or otherwise, or are redirected by post or otherwise to a destination outside India, except Nepal and Bhutan provided that such goods while in India are always in the custody of the postal or customs authorities;

(g) for transmission across India by air to Afghanistan or by land, to any other country outside India, except Nepal and Bhutan under claim for exemption from duty or for refund of duty either in whole or in part: Provided that such goods are imported by or on behalf of the Government or a country bordering on India or that the importer undertakes to produce within a specified period evidence that such goods have crossed the borders of India or in default to pay such penalty as the proper officer of customs may deem fit to impose on such goods: provided further that nothing contained in this item will exempt any goods from the Import Trade Regulations;

(h) by the person as passenger baggage to the extent admissible under the Baggage Rules for the time being in force except quinine exceeding five hundred tablets or 1/3 lb powder or one hundred ampoules:

Provided that in the case of imports by a tourist, articles of high value whose re-export is obligatory under rule 7 of the tourist Baggage Rules, 1978 shall be re-exported on his leaving India, failing which such goods shall be deemed to be goods of which the import has been prohibited under the Customs Act, 1962 (52 of 1962);

Provided further that the import of gold in any form including ornaments (but excluding ornaments studded with stones or pearls) will be allowed as part of baggage by passengers of Indian origin or a passenger holding a valid passport issued under the passports Act, 1967 (15 of 1967) subject to the following conditions namely:-

(a) that the passenger importing the gold is coming to India after a period of not less than six months of stay abroad;

(b) the quantity of gold imported shall not exceed 5 kilograms per passenger;

(d) there will be no restriction on sale of such imported gold.

(i) by any person through the post or otherwise for his personal use, or by any institution or hospital for its use except-

(a) vegetable seeds exceeding one lb. in weight

(b) bees;

(d) books, magazines, journals and literature which are not allowed to be imported under the policy for the time being in force;

(e) goods, the import of which is canalized under the Policy;

(f) alcoholic beverages;

(g) fire arms and ammunition;

(h) consumer electronic items (except hearing aids and life saving equipments, apparatus and appliances and parts thereof ) : Provided that the c.i.f value of goods imported as aforesaid at any one time shall not exceed rupees two thousand.

(j) by or on behalf of diplomatic personnel, consular officers and Trade Commissioners in India who are exempted from payment of Customs duty under Notification No. 3 dated the 8th January, 1957 of the Government of India in the Ministry of Finance (Department of Revenue);

(k) from any country, which are exempted from Customs duty on re- importation under section 20 of the Customs Act, 1962 (52 of 1962) or under Customs Notification Nos. 113 dated 16th May, 1957,

103 dated 25th March, 1958, 260 and 261 dated 11th October, 1958, 269,271,273,274,275, and 276 dated 25th October, 1958 and 204 dated 2nd August, 1976, of the Government of India, Ministry of Finance (Department of Revenue), or Notification No. 174 dated the 24th September, 1966 or Notification No. 103 dated the 16th May, 1978, of the Government of India, Ministry of Finance (Department of Revenue and Insurance) or Notification No. 80 dated 29th August, 1970;

(l) of Indian manufacture and foreign made parts of such goods, exported and received back by the manufacture from the consignee for repair and re-export: Provided that

(i) the customs authorities are satisfied that the goods received back by the said manufacturers are the same which were so exported; and

(ii) in the case of goods other than those exempted from customs duty on re-importation under Customs Notification No. 132 dated 9th December, 1961 a bond is executed by the importer with the customs authority at the port concerned to the effect that the goods thus imported will be re-exported after repair within six months;

(m) by officials of the United Nations Organisation and its specialised agencies who are exempted from payment of Customs duty under the United Nations ( Privileges and Immunities) Act, 1947 (46 of 1947);

(n) by the Ford Foundation who are exempt from payment of Customs duty under an Agreement entered into between the Government of India and the Ford Foundation;

(o) being vehicles as defined in Article I of the Customs Convention on the Temporary Importation of Private Road Vehicles or the component parts thereof referred to in Article 4 of the said Convention and which are exempted from payment of customs duty under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 296 dated the 2nd August, 1976:

Provided that

(i) such vehicles or component parts are re-exported within the period specified in the said notification or within such further period as the customs authorities may allow;

(ii) the provisions of the said notification or of the "triptyque or Carnel-De-Passage" permit are not contravened in relation to such vehicle or component parts;

Provided further that nothing contained in this item shall prejudice the application to the said vehicles or component parts of any other prohibition or regulation affecting the import of goods that may be in force at the time of import of such goods;

(p) being goods imported temporarily for displayor use in fairs, exhibitions or similar events specified in Schedule I to the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 157/90/CUSTOMS, dated the 28th March, 1990 against ATA carnets under the Customs Convention on the ATA Carnets for temporary admission of goods (ATA Convention) done at Brussels on the 30th July, 1963;

Provided that

(i) such goods are exported within a period of six months from the date of clearance or such extended periodas the Central Government may allow in each case; and

(ii) the provisions of the said notification or of the ATA convention are not contravened:

Provided further that nothing contained in this item shall prejudice the application to the said goods of any other prohibition or regulation affecting the import of goods that may be in force at the time of import of such goods;

(q) covered by an import license issued by His Majesty's Government of Nepal and the importer furnishes a bond to the proper officer of customs in the form prescribed by such officer with a Scheduled Bank as surety to the effect that he shall pay the duty and pay penalty imposed for contravening Import Trade Regulations in respect of the whole or any portion of the goods which is not proved to have entered the territory of Nepal;

(r) of Indian manufacture or by the central Government or any State Government for repair and re-export to Indian Embassies abroad or to any other office of the Central Government or State Government in a foreign country;

(s) being food grains, by Food Corporation of India: Provided that at the time of clearance, a declaration to the effect that the import in question has been approved by the Central Government, is furnished by the importer to the Customs authorities;

(t) being articles of food and edible material, which are supplied as free gift by the agencies approved by the United Nation Organisation and which are exempted from payment of customs duty under the Notification of Government of India in the Ministry of Finance (Department of Revenue) No. GSR 766 dated 21st June, 1975.

(2) Nothing contained in the Rules shall apply to -

(a) any goods exported by or under the authority of the Central Government;

(b) any goods other than food-stuffs constituting the stores or equipment of any outgoing vessel or conveyance;

(c) any goods constituting the bona fide personal baggage of any person, including a passenger or member of a crew in any vessel or conveyance, going out of India:

Provided that the Wild Life (dead, alive or part thereof or produce there from) shall not be treated as part of such personal baggage;

(d) any goods exported by post or by air under the conditions specified in postal notice issued by the Postal Authorities;

(e) any goods trans-shipped at a port in India after having been manifested for such trans-shipment at the time of dispatch from a port outside India;

(f) any goods imported and bonded on arrival in India for re-export to any country outside India, except Nepal and Bhutan;

(g) any goods in transit through India by post or any goods re- directed by post to a destination outside India except Nepal and Bhutan;

Provided that such goods while in India are always in the custody of the postal authorities;

(h) any goods imported without a valid import license and exported in accordance with an order for the export of such goods made by the proper officer of Customs;

(i)	products approved for manufacture in and export from the respective free Trade Zones/Export Processing Zones and 100 per cent Export Oriented Units except textile item covered by bilateral agreements, exports to Rupee Payment countries under the Annual Trade Protocol and Exports against payment in Indian Rupees to former Rupee payment countries;
	Provided that conditions imposed in the latter of approval/letter of indent on Export Oriented Unit or Export Processing Zone will be binding on such a unit;

(j) export of Blood group Oh (Bombay Phonotype) meant for scientific research or emergency medical treatment as life saving measure on humanitarian grounds by the Director, National Blood Group Reference Laboratory, Bombay on the basis of a certificate issued by him to this effect in each case;

(k) export of samples of lubricating oil additives, Lube Oil, crude oil and other related petroleum products and raw materials used to manufacture Lube Additives by Lubrizols India Limited, Hindustan Petroleum Corporation Limited, and Bharat Petroleum, Corporation Limited, from their installation in India to Lubrizol's Laboratories in the United States of America and the United Kingdom for evaluation and testing purposes.

[File No. 21/11/92-LS]

DR. P. L. SANJEEV REDDY, Director General of Foreign Trade and Ex-Offcio Addl. Secy.

NOTIFICATION

New Delhi, the 31st December, 1993 S.O. 1057(E)- In exercise of the powers conferred by sub- section(1) of section 10 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), the Central government hereby authorizes the officers specified in the Table below to exercise powers with respect to entering such premises and searching, inspecting and seizing of such goods, documents, things and conveyances as are specified in rule 17 of the Foreign Trade (Regulation) Rules, 1993, subject to the requirements prescribed therein.

TABLE

_______________________________________________________

S.No. Designation of officer

_______________________________________________________

1. Director General of Foreign Trade

2. Additional Director General of Foreign Trade

3. Joint Director General of Foreign Trade

4. Deputy Director General of Foreign Trade

5. Assistant Director General of Foreign Trade

6. Controller of Imports and Exports

_____________________________________________________________________

[File No. 21/11/92-LS]

DR. P. L. SANJEEV REDDY, Director General of Foreign Trade and Ex-Offcio Addl. Secy.

NOTIFICATION

New Delhi, the 20th January, 1999

S.O.24(E, In exercise of the powers conferred by section 13 of the Foreign Trade (Development and Regulation)Act, 1992 (22 of 1992) and in supersession of Notification of the Government of India in the Ministry of Commerce No. S.O. 145(E), dated 24^th February 1998 published in Gazette of India(Extraordinary) Part-ii, Section 3, Sub-section (ii) except as respects things done or omitted to be done before such supersession,the Central Government hereby authorises the officers specified in column 2 of the Table below for the purposes of exercising powers under section 13 read with section 11, subject to the limits specified against such officers in the corresponding entry in column 3 of the said Table, namely:-

TABLE

_____________________________________________________________________

Sl.No. Designation of officer Value of the goods in relation

to which the power may be

exercised. ___________________________________________

1.	Additional Director General of foreign Trade	Without limit
2.	Zonal Jt. Director General of Foreign Trade	Upto Rs. 10 crores
3.	Joint Director General of Foreign Trade	Upto Rs. 5 crores
4.	Deputy Director General of Foreign Trade	Upto Rs. 1 crores
5.	Assistant Director General of Foreign Trade	Upto Rs. 10 lakhs
6.	Foreign Trade Development officer	Upto Rs.5 lakhs

File No. 18/9/97/ECA-III]

N.L.Lakhanpal, Director General of Foreign Trade and Ex-Offcio Addl. Secy.

NOTIFICATION, New Delhi,the 6^th March, 2000

S.O.194(E).-- In exercise of the powers conferred by section 13 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), the Central Government hereby authorises the officers specified in the column (2) of the Table below for the purposes of exercising powers under section 13 read with section 11, subject to the limits specified against such officers in the corresponding entry in column (3) of the said Table and makes the following amendments in the notification of the Government of India in the Ministry of Commerce (Director General of Foreign Trade)No.S.O.24(E), dated the 20^th January, 1999, namely :-

In the said notification in the table, after serial number 6 and the entries relating thereto, the following serial number and the entries shall be inserted, namely :-

(1) (2) (3)

“7                     Development Commissioner,          Without limit in respect
                  Special Economic Zones               of Export Oriented Units
                                                                         And units in Special Economic Zones

[F.No. 18/9/97-98/ECA-III/I]
N.L. Lakhanpal,Director General of Foreign Trade & Ex-Officio Addl.Sec, NOTIFICATION New Delhi, the 31st December,1993

S.O. 1059(E), In exercise of the powers conferred by clause(b) of sub-section(1) of section 15 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), the Central Government hereby authorizes the officers specified in column 3 of the Table below to function as Appellate Authority against the orders passed by the Adjudicating Authorities authorised by the Central Government under section 13 of the said Act and specified in column 2 of the said Table.

TABLE

_____________________________________________________________________

S.No. Designation of Adjudicating Appellate
authority authority
_____________________________ ________________________________________

5.     Additional Director General of                             Additional Secretary in
          Foreign Trade                                                      the Ministry of Commerce
                                              aided by two Joint Secretaries
                                                           and a Director of that Ministry.
                                                                                                  ______________________________________________________________________

File No. 21/11/92-LS]

DR. P. L. SANJEEV REDDY, Director General of Foreign Trade and Ex-Offcio Addl. Secy.

NOTIFICATION

New Delhi, the 6^th March, 2000

S.O.193(E).- In exercise of the powers conferred by clause (b) of sub-section(1) of section 15 of the Foreign Trade (Development and regulation) Act,1992 (22 of 1992), the Central Government hereby authorises the officers specified in column (3) of the table below to function as Appellate Authority against the orders passed by the Adjudicating Authorities authorised by the Central Government under section 13 of the said Act and specified in column (2) of the said Table, and makes the following amendments in the notification of the Government of India in the Ministry of Commerce No.S.O.1059(E), dated the 31^st December, 1993, namely :-

In the said notification in the table, after serial number 5 and the entries relating thereto, the following serial number and the entries shall be inserted, namely:-

(1)	(2)	(3)
“6”	Development Commissioner Special Economic Zone	Without limit in respect of export oriented units and units in Special Economic Zones

_______________________________________________________________________

[F.No. 18/9/97-98/ECA-III/I] N.L.Lakhanpal, Director General of Foreign Trade & Ex-Officio Addl.Secretary.

ORDER New Delhi, the 31st December, 1993

S.O. 1060(E), In exercise of the powers conferred by sub-sections (2) and (4) of section 9 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), the Director General authorizes the officers mentioned in the Table below to grant or renew or refuse to grant or renew or to suspend or to cancel a license for the purposes of import or export of goods.

TABLE

_____________________________________________________________________

S.NO. The Designation of the Officers The Territorial areas in

respect of which the juris-

diction is to be exercised

_____________________________________________________________________

1. Additional Director General of Throughout India

Foreign Trade

2. The Export Commissioner Throughout India

3. The Joint Director General of

Foreign Trade:

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade, New Delhi.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

4. The Deputy Director General of

Foreign Trade:

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade, New Delhi

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

5. The Assistant Director General

of Foreign Trade:

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

6. The Controller of Imports and

Exports:

(a) In the Headquarters Office Throughout India

of the Director General

of Foreign Trade.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

7. The Development Commissioner/ Respective territorial

Joint Development Commissioner/ jurisdiction of such

Deputy Development Commissioner/ authority.

Assistant Development Commissioner

of a Special Economic Zones

______________________________________________________________________

[File No. 21/11/92-LS]

DR. P. L. SANJEEV REDDY, Director General of Foreign Trade ORDER New Delhi, the 31st December, 1993S.O. 1061(E), In exercise of the powers conferred by sections 7 ofthe Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992),the Director General authorises the officers mentioned in the Table below to grant importer-exporter Code number in accordance with the provisions of the aforesaid section.

TABLE

______________________________________________________________________

S.No. The Designation of the Officers The Territorial areas in

respect of which the

jurisdiction is to be

exercised

______________________________________________________________________

1. Additional Director General of Throughout India

Foreign Trade

2. The Export Commissioner Throughout India

3. The Joint Director General of

Foreign Trade:

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade, New Delhi.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

4. The Deputy Director General of

Foreign Trade

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade, New Delhi.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

5. The Assistant Director General

of Foreign Trade:

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority

6. The Controller of Imports and

Exports:

(a) In the Headquarters Office Throughout India

of the Director General of

Foreign Trade.

(b) In the Regional Licensing Respective territorial

Authority jurisdiction of such

authority.

7. The Development Commissioner/ Respective territorial

Joint Development Commissioner/ jurisdiction of such

Deputy Development Commissioner/ authority.

Assistant Development Commissioner

of a Free Trade Zone or an Export

Processing Zone.

______________________________________________________________________

[File No. 21/11/92-LS]

DR. P. L. SANJEEV REDDY, Director General of Foreign Trade.

APPENDIX - 39B

MINISTRY OF COMMERCE (Directorate General of Foreign Trade) , NOTIFICATION , New Delhi, the 30th December, 1993

G.S.R. 791(E)- In exercise of the powers conferred by section 19 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), the Central Government hereby makes the following rules, namely. -

1. Short title and commencement,-

(1) These rules may be called the Foreign Trade (Regulation) Rules, 1993.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions-

In these rules unless the context otherwise requires , -

(a) "Act" means the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

(b) "charitable purpose" includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility;

(c) "importer" or "exporter" means a person who imports or exports goods and holds a valid Importer-exporter Code Number granted under section 7;

(d) "licensing authority" means an authority authorized by the Director General under sub-section (2) of section 9 to grant or renew a license under these rules;

(e) "Policy" means the export and import Policy formulated and announced by the Central Government under section 5;

(f) "schedule" means a Schedule appended to these rules;

(g) "section" means a section of the Act;

(h) "special license" means a license granted under sub-section (2) of section 8;

(i) "value" has the meaning assigned to it in clause (41) of section 2 of the Customs Act, 1962 (52 of 1962);

(j) words and expression used in these rules and not defined but defined in the Act shall have the meanings respectively assigned to them in the Act.

3. Grant of special license-

(1) Where the Importer-exporter Code Number granted to any person has been suspended or cancelled under sub-section (1) of section 8, the Director General may, having regard to the following factors, grant to him a special license, namely:-

(1) that the denial of a special license is likely to affect the foreign trade of India adversely; or

(2) that the suspension or cancellation of the Importer- exporter Code Number is likely to lead to non-fulfillment of any obligation by India under any international agreement;

(2) The special license granted to any person under sub-rule (1) shall be non-transferable.

4. Application for grant of license-

A person may make an application for the grant of a license to import or export goods in accordance with the provisions of the Policy or an Order made under section 3.

5. Fee-

(1) Every application for a license to import shall be accompanied by the fee specified in the Schedule.

(2) The mode of deposit of fee shall be as specified in the Schedule.

(3) No fee shall be payable in respect of any application made by:

(a) the Central Government, a State Government or any department or any office of the Government;

(b) any local authority for the bona-fide import of goods required by it for official use;

(c) any institution set up for educational, charitable or missionary purpose, for the import of goods required for its use;

(d) an applicant for the import of any goods (other than a vehicle) if the import of the goods is for his personal use which is not connected with trade or manufacture.

(4) The fee once received will not be refunded except in the following circumstances, namely:-

(i) where the fee has been deposited in excess of the specified scale of fee; or

(ii) where the fee has been deposited but no application has been made; or

(iii) where the fee has been deposited in error but the applicant is exempt from payment of fee.

6. Conditions of license-

(1) It shall be deemed to be a condition of every license for export that:

(i) no person shall transfer or acquire by transfer any license issued by the licensing authority except in accordance with the provisions of the Policy;

(ii) the goods for the export of which the license is granted shall be the property of the licensee at the time of the export.

(2) The licensing authority may issue a license for import subject to one or more of the following conditions, namely:-

(a) that the goods covered by the license shall not be disposed of except in accordance with the provisions of the Policy or in the manner specified by the licensing authority in the license;

(b) that the applicant for a license shall execute a bond for complying with the terms and conditions of the license.

(3) It shall be deemed to be a condition of every license for import that :-

(a) no person shall transfer or acquire by transfer any license issued by the licensing authority except in accordance with the provisions of the Policy;

(b) the goods for the import of which a license is granted shall be the property of the licensee at the time of import and upto the time of clearance through customs;

(d) the goods covered by the license for import shall not be exported without the written permission of the Director General.

(4) Any person importing goods from the United States of America in accordance with the terms of the Indo-US Memorandum of Understanding on Technology Transfer shall also comply with all the conditions and assurances specified in the Import Certificate issued in terms of such Memorandum, and such other assurances given by the person importing those goods to the Government of the United States of America through the Government of India.

7. Refusal of license-

(1) The Director General or the licensing authority may for reasons to be recorded in writing, refuse to grant or renew a license

(a) the applicant has contravened any law relating to customs or foreign exchange;

(b) the application for the license does not substantially conform to any provision of these rules;

(d) it has been decided by the Central Government tocanalize the export or import of goods and distribution thereof, as the case may be, through special or specialized agencies;

(e) any action against the applicant is for the time being pending under the Act or rules and Orders made there under;

(f) the applicant is or was a managing partner in a partnership firm, or is or was a Director of a private limited company, having controlling interest against which any action is for the time being pending under the Act or rules and Orders made there under;

(g) the applicant fails to pay any penalty imposed on him under the Act

(h) the applicant has tampered with a license;

(i) the applicant or any agent or employee of the applicant with his consent has been a party to any corrupt or fraudulent practice for the purposes of obtaining any other license;

(j) the applicant is not eligible for a license in accordance with any provision of the Policy;

(k) the applicant fails to produce any document called for by the Director General or the licensing authority;

(l) in the case of a license for import, no foreign exchange is available for the purpose;

(m) the application has been signed by a person other than a person duly authorised by the applicant under the provisions of the Policy;

(n) the applicant has attempted to obtain or has obtained cash compensatory support, duty drawback, cash assistance benefits allowed to Registered Exporters or any other similar benefits from the Central Governmentor any agency authorized by the Central Government in relation to exports made by him on the basis of anyfalse, fraudulent or misleading statement or any document which is false or fabricated or tampered with.

(2) The refusal of a license under sub-rule(1) shall be without prejudice to any other action that may be taken against an applicant by the licensing authority under the Act

8. Amendment of license

The licensing authority may of its own motion or on an application by the licensee, amend any license in such manner as may be necessary or to rectify any error or omission in the license.

9. Suspension of a license

(1) The Director General or the licensing authority may by order in writing, suspend the operation of a license granted to -

(a) any person, if an order of detention has been made against such person under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 or 1974); or

(b) a partnership firm or a private limited company, if the person referred to in clause (a) is a partner or a whole time director or managing director, as the case may be, of such firm or company; Provided that the order of suspension shall cease to have effect in respect of the aforesaid person or, as the case may be, the partnership firm or company, when the order of detention made against such

(i) being an order of detention to which the provisions of section 9 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) do not apply, has been revoked on the report of Advisory Board under section 8 of that Act or before receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or

(ii) being an order of detention to which the provisions of section 9 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) apply, has been revoked on the report of the Advisory Board under section 8 read with sub-section (2) of section 9 of that Act or before receipt of such report.

(iii)has been set aside by a court of competent jurisdiction.

(2) The Director General or the licensing authority may by an order in writing suspend the operation of any license granted under these rules, where proceedings for cancellation of such license has been initiated under Rule 10.

10. Cancellation of a license-

The Director General or the licensing authority may by an order in writing cancel any license granted under these rules

(a) the license has been obtained by fraud, suppression of facts or misrepresentation; or

(b) the licensee has committed a breach of any of the conditions of the license; or

(d) the licensee has contravened any law relating to customs or foreign exchange or the rules and regulations relating thereto.

11. Declaration as to value and quality of imported goods-

On the importation into, or exportation out of, any customs ports of any goods, whether liable to duty or not, the owner of such goods shall in the Bill of Entry or the Shipping Bill or any other documents prescribed under the Customs Act 1962, state the

value, quality and description of such goods to the best of his knowledge and belief and in case of exportation of goods, certify that the quality and specification of the goods as stated in those documents, are in accordance with the terms of the export contract entered into with the buyer or consignee in pursuance of which the goods are being exported and shall subscribe a declaration of the truth of such statement at the foot of such Bill of Entry or Shipping Bill or any other documents.

12. Declaration as to Importer-exporter Code Number

On the importation into or exportation out of any Customs port of any goods the importer or exporter shall in the Bill of Entry of Shipping Bill or, as the case may be, in any other documents prescribed by rules made under the Act or the Customs Act, 1962 (52 of 1962), state the Importer-exporter Code Number allotted to him by the competent authority.

13. Utilization of imported goods

(1) No person shall use any imported goods allotted to him by the State Trading Corporation of India or any other agency recognized by the Central Government in a manner and for the purpose, otherwise than as declared by him in his application for such allotment or in any document submitted by him in support of such application.

(2) No person shall dispose of any goods imported by him against a license except in accordance with the terms and conditions of such license.

14. Prohibition regarding making, signing of any declaration, statement or

(1) No person shall make, sign or use or cause to be made signed or used any declaration, statement or document for the purposes of obtaining a license or importing any goods knowing or having reason to believe that such declaration, statement or document is false in any material particular.

(2) No person shall employ any corrupt or fraudulent practice for the purposes of obtaining any license or importing or exporting any goods.

15. Power to enter premises and inspect, search and seize goods, documents, things and

(1) Any person authorized by the Central Government under sub-section (1) of section 10 (hereinafter called the authorized person) may, at any reasonable time enter any premises in which-

(i) any imported goods or materials which are liable to confiscation under the provision of the Act; or

(ii) any books of accounts or documents or things which, in his opinion, will be useful for, or relevant to any proceedings under the Act, are suspected to have been kept or concealed and may inspect such goods, materials, books or accounts, documents or things and may take such notes or extracts there from as he may think fit.

(2) If the authorized person has reasons to believe that-

(i) any imported goods or materials liable to confiscation under the Act; or

(ii) any books of accounts or documents or things which, in his opinion, will be useful for, or relevant to, any proceedings under the Act, are secreted in any premises he may enter into and search such premises for such goods, materials, books of accounts, documents or things.

(3) (a) If the authorized person has reason to believe that any imported goods or materials are liable to confiscation under the Act, he may seize such goods or materials together with the package, covering or receptacle, if any, in which such goods or materials are found to have been mixed with any other goods or materials; Provided that where it is not practicable to seize any such goods or materials, the authorized person may serve on the owner of the goods or materials an order that he shall not remove, part with or otherwise deal with the goods or materials except with the previous permission of the authorized person.

(b) Where any goods or materials are seized under clause (a) and no notice in respect thereof is given within six months of the seizure of the goods or materials, the goods or materials shall be returned to the person from whose possession they were seized.

Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Director General for a further period not exceeding six months.

(c) The authorized person may seize any books of accounts or documents or things which in his opinion, will be useful for, or relevant to, any proceedings under the Act.

(d) The person from whose custody any documents are seized under this sub-rule, shall be entitled to make copies thereof or take extracts there from in the presence of the authorized person.

(e) In any person legally entitled to the books of account or other documents or things seized under this sub-rule objects, for any reason, the retention by the authorized person of the books of account or the documents or things, he may move an application to the Central Government stating therein the reasons for such objection, request for the return of the books of account or documents or things.

(f) On receipt of the application under clause (e), the Central Government may, after giving the applicant an opportunity of being heard, pass such order as it may think fit.

(g) Where any document is produced or furnished by any person or has been seized from the custody or control of any person under the Act or has been received from any place outside India in the course of the investigation for any contravention referred to in section 11 by any person and such document is tendered in evidence againstthe person by whom it is produced or from whom it was seized or against such person or any other person who is jointly proceeded against, the Adjudicating Authority, shall, notwithstanding anything to the contrary contained in any other law for the time being in

(i) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person of which the Adjudicating Authority may reasonably assume to have been signed by or to be in the handwriting of any particular person, is under the person's handwriting, and in the case of a document executed or attested, it was executed or attested by the person by whom it purports to have been so executed or attested;

(ii) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence.

(4) The authorized person, may, if he has reason to suspect that any conveyance or animal is being or is about to be used for the transportation of any imported goods or material which are liable to confiscation under the Act, and that by such transportation any provision of the Act has been , is being or is about to be contravened at any time, stop such conveyance or animal or in the case of aircraft compel it to land, and

(a) rummage and search the conveyance any part thereof;

(b) examine and search any goods or material in the conveyance or on the animal;

(c) if it becomes necessary to stop any conveyance or animal, he may use all lawful means for stopping it and where such means fail, the conveyance or animal may be fired upon. And where he is satisfied that it is necessary so to do to prevent the contravention of any provision of the Act or of the rules and orders made there under or the Policy or condition of any license, he may seize such conveyance or animal

Explanation- Any reference in this rule to a conveyance shall, unless the context otherwise requires, be construed as including a reference to an aircraft, vehicle or vessel.

16. Settlement

(1) The Adjudicating Authority may determine the amount of settlement to be paid by the person to whom a notice has been issued and who has opted for settlement and has admitted the contravention specified in the notice, in the following cases, namely:-

(i) where it is of the opinion that the contravention of any provision of the Act or these rules or the Policy has been made without mensrea or without willful mistake or without suppression of facts, or without any collusion, or without fraud and forgery, or without an intent to cause loss of foreign exchange; or

(ii) where the person importing the goods has not met the requirements of the actual user conditions as specified in the Policy and has not mis-utilized the said imported goods; or

(iii)where the person importing the goods has not fulfilled the export obligation and has not mis-utilized the said imported goods.

(2) Where a person has opted for settlement under sub-rule (1) the settlement made by the Adjudicating Authority shall be final.

17. Confiscation and redemption

(1) any imported goods or materials in respect of which

(a) any condition of the license, or letter of authority under which they were imported, relating to their utilization or distribution ; or

(b) any condition, relating to their utilization or distribution, subject to which they were received from or through, an agency recognized by the Central Government; or

(c) any condition imposed under the Policy with regard to the sale or disposal of such goods or materials; has been, is being, or is attempted to be, contravened, shall together with any package, covering or receptacle in which such goods are found, be liable to be confiscated by the Adjudicating Authority, and where such goods or materials are so mixed with any other goods or materials that they cannot be readily separated, such other goods or materials shall also be liable to be so confiscated:

Provided that where it is established to the satisfaction of the Adjudicating Authority that any goods or materials which are liable to confiscation under this rule, had been imported for personal use, an not for any trade or industry, such goods, or materials shall not be ordered to be confiscated.

(2) The Adjudicating Authority may permit the redemption of the confiscated goods or materials upon payment of redemption charges equivalent to the market value of such goods or materials.

18. Confiscation of conveyance-

(1) Any conveyance or animal which has been, is being, or is attempted to be used, for the transport of any goods or materials that are imported and which are liable to confiscation under rule 17, shall be liable to be confiscated by the Adjudicating Authority unless the owner of the conveyance or animal proves that it was, is being, or is about to be so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in-charge of the conveyance or animal and that each of them had taken all reasonable precautions against such use.

(2) The Adjudicating Authority shall permit redemption of the confiscated conveyance or animal used for the transport of goods or passengers for hire upon payment of redemption charges equivalent to the market value of such conveyance or animal.

[File No. 21/11/92-LS] DR. P.L. SANJEEV REDDY. Director General Foreign Trade and Ex-Officio Addl. Secy.

SCHEDULE (See rule 5)

The following fee shall be leviable in respect of the application foreign import license etc

SCALE OF FEE

______________________________________________________________________

Sl.No. Particulars Amount of Fee________________________________________________________________

1 2 3____________________________________________________________

1. Where the value of goods Rupees two hundred

specified in application

does not exceed Rupees

fifty thousand.

2. Where the value of the Rupees two per thousand or

goods specified in the part thereof subject to a

application exceeds Rupees minimum of rupees two

fifty thousand but does not hundred.

exceed Rupees one Crore.

3. Where the value of the Rupees two per thousand or

goods specified in the part thereof subject to a

application exceeds rupees maximum of Rs. one lakh

one crore and fifty thousand

4. Application for grant of Rupees two hundred

duplicate license

5. In case where import Rupees two hundred

license and other

correspondence are required

by Speed Post.

6. Application for issue of an Rupees two hundred

Identity Card.

7. Application for issue of Rupees one hundred

duplicate Identity Card in

the event of loss of

original Card.

8. Extension of the period of Rupees two hundred

shipment of an Import

license

Application for grant Rupees one thousand per

split-up licenses Split up license

Note- The amount of fee payable shall be rupees two hundred in respect of an application for import license by a small scale actual ser or a registered exporter, for the import of raw materials, components and spares where the value of the goods specified in the application does not exceed rupees two lakhs.

APPENDIX 3

The full copy of this report is attached as separate document with the final project report

Appendix 4

The full copy of this report is attached as separate document with the final project report

Appendix 5

The full copy of this report is attached as separate document with the final project report