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Vivek Batra

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Mar 13, 2019
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Location
Chandigarh
Hi FMs

This all started when I thought about importing something (read amplifier) from abroad to India, but had no idea how the import process and above all custom duty and clearance would work. This confusion and no concrete information available even on government sites made it more difficult for me to even think in this direction.

But reality is much easier than you would think. Yesterday from my trip back to India, I stopped at customs office in New Delhi airport and asked all I had to. They were nice to answer each and every thing and cleared the air around custom clearance and import duty. I would like to share it with all of you, since I see many posts related to this subject.

How this works.

If you are carrying it as a checked in luggage

1. Check in your product as an additional language or whatever. You may have to pay extra to the airline if its beyond the baggage allowance in your ticket.

2. If you want to pay the duty, go to red channel and pay 38.05% including all surcharges on the invoice value. You will get 50k free baggage allowance. Custom duty would be charged on invoice value minus 50k, if you do not have any other dutiable goods with you.

3. Pay the duty and walk away.

If you are getting the product shipped from abroad

Many confusions were in this way of importing. Like having a Import Export Code, GSTIN registration, registration with Customs etc any many more. But reality is bit different.

1. The dealer will most likely ship the product using either UPS/FedEx/TNT or any other similar company. They all do the custom clearance on your behalf.

2. No Import Export Code is required for an end user. Its only meant for people who are importing it for commercial purpose and importing in bulk.

3. No GSTIN number is required.

4. No Customs registration is required.


5. Custom officer may call you if he/she feels that either invoice is under valued or the product is not permitted in India or something like that. Otherwise nothing stops the clearance.

6. The courier company would contact you to pay the exact custom duty to be paid to the courier company not to customs. They will pay the duty to customs on your behalf. You will get all the receipts, e.g custom duty, any other charges etc.

7. In this case No free baggage allowance is applicable. Custom duty is calculated on full invoice value.

8. Since the custom officer I talked to was deputed at the airport, he said the custom duty is bit less than at the courier terminal but he was not sure about the exact rate. But not huge difference may be just in fractions or close to 36%. Take the max 38.05%

Apart from this, I do not see any issues in importing but it has downsides like no warranty and may be no local support.

Hope this helps to all who are interested in buying stuff outside India may cables or something that involve less risk than costly equipment.


Regards
Vivek
 

generalxxxstark

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Dec 22, 2018
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130
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It would be helpful to others as well if you dont mind sharing.
Regards
Great Idea. If you can put in your experience and guidance, we can make it a Sticky in the forum for others to refer.
Of course.

There are two ways one could import an item via Courier.

1. Personal as Gift
2. Commercial for resale.

Personal as Gift
When an invoice is marked as Gift/Personal Use Only, it's considered a Gift and attracts a flat 42.5% Customs and Duty including GST, etc.. This sort of import comes under the Courier Mode and is stored in the Courier complex of the Import locations airport. Usually, any courier like FedEx, DHL or India post will do the clearing on your behalf and they will assign a clearance agent from their side who will take care of everything. With my experience, DHL and Aramex are the best and FedEx, USPS the worst, although only with regard to Hyderabad and Bangalore airports.

This is usually the slowest way and there will be warehousing charges, based on the weight of the item and how long its been sitting in the courier warehouse. Apart from this, there will be some brokerage charges and customs advance charges (about 1%). Expect a few days to a week for clearance.

Documents you'll need is either AADHAAR or PAN card. No way around it.

Process ->

When the item reaches the airport for clearance, the Bill of Entry is filed (BE) is filed.

Document verification>>>>>>>Upload in ECCS in Tiff format>>>>>>customs Assessment>>>>> Marked for open exam >>>>> Assessment >>>Duty Payment>>>>>Retrieval >>>>>> X-Ray screening>>>>>Out of Charge >>>>>Gate Pass.

It can be tracked at https://eicimobility.eccs.gov.in/eicimobility/import


Commercial
When an invoice is marked as merchandise, it's considered a commercial import and you need a whole bunch of stuff for clearance. In this mode, the duty will depend on rate set by CBIC. For speakers, it's around 28%.

Documents you'll need for this are IEC code from DGFT, AD code from Bank.

Now, the couriers will usually not clear merchandise as it's usually a lot of work and they prefer not to do it, although they can. DHL, for the most part, does it, FedEx a big No. In such cases, you hire a CHA (Customs House Agent) to do the clearance on your behalf. They take about 3 to 5k plus GST and are usually very good as they have high-level contacts at the airport and can get your shipment cleared in no time.

Under this mode, clearance occurs in Cargo Mode and items are stored in the Cargo Warehouse (Air Cargo Complex). Rules are very strict and the Bill of Entry has to be filed within 24 hours of the plane landing or else its 5000 fine per day. This also has warehousing charges.

The process is more or less the same but everything is automated. If everything is in order, there will be no officers interference and the system will clear your shipment in a day. Again, only speaking of Hyderabad and Bangalore airports.

It can be tracked at https://enquiry.icegate.gov.in/enquiryatices/beTrackIces

More on the process for commercial imports in the attached file.

Coming to the import of Used items. Yes, it's possible through Personal mode as a Gift. Not possible through Commercial route. But be ready to wait more than a week and you need to produce original purchase invoice, bank remittance copy which will then be verified by the DC of customs and then cleared.


If there's any more queries please let me know.

[EDIT: Added File]
 

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generalxxxstark

Active Member
Joined
Dec 22, 2018
Messages
130
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Location
Hyderabad
I had tried to apply for an IEC as an individual but was told that individuals cannot get one. They said one needs a GST number to use an IEC.
Can you share how to go about getting an IEC on a personal account as well as which CHS to use?

I tried using a Clearing agent with this dummy IEC bit but they quote astronomical rates.
That's not true.. I have done so myself without any of that.

And well, for the CHA, based on your location there are plenty in Mumbai. Just google one and look for good reviews on either google or justdial.

To Register for an IEC

Go here - http://dava.gov.in:8080/dgftiec/panSearch.jsp

Enter your PAN and it will ask for and verify some information. You can see on the page itself what all you need for the IEC. There is also a pdf linked with the recent changes to the procedure.

Basically, you will need to register as an Individual Proprietorship, which is an Individual and your full name becomes the Entity.

Once you get through the first step, the registration form will become self-explanatory. The form does have an entry for your GSTIN but it is not mandatory to fill that.

If you have any queries while registering, feel free to post that here.

Once you've submitted your application, you can take a print out of the IEC and start using it immediately, but it takes 3 days max for full verification of the uploaded documents.
 
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Vivek Batra

Well-Known Member
Joined
Mar 13, 2019
Messages
756
Points
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Location
Chandigarh
Dear FMs

This post is for everyone guys who ever thought of or are planning to buy any AV gear from overseas. I would like to share the import process that I followed in my recent import Feb-March 2020. This is going to be the lengthiest post ever from me, but I think this is bare minimum information to be shared with all. I would start with some terms that you have to deal with.

  • Import Export Code (IEC): As the name suggests, this is an import export code issued to individuals who are proprietors of their business or any individual who is not even in any kind of import export business, companies under section 25 of companies act, HUF business etc. This is fully online process and the easiest and quickest possible process. It takes around 3 days to update on ICEGATE from DGFT website and available to customs clearance department.
  • HS Code : Harmonized Commodity description and coding system. Every product being imported falls under some kind of HS code. HS code classify the nature of goods. More on HS code can be read on icegate website. Custom duty is decided based on the HS code.
  • BIS: This is a compliance certification that any electrical product sold in India meets the required standards set by the authority. This is NOT required for importing stuff for personal use. You may be asked to give BIS certification in case you are importing something not as an individual but a business or company.
  • AD Code: Authorized Dealer Code. I was asked to provide one. You can easily ask your bank to provide this code.
  • DGFT : Directorate General of Foreign Trade (https://dgft.gov.in/) You would apply/modify your IEC at this site and check the status. Once you apply the IEC on this web site, you would immediately get your IEC (your PAN would be your IEC) via email. This would be then automatically forwarded to ICEGATE website and user has nothing to do with this procedure. No other registration of IEC is required anywhere else.
  • ICEGATE Web Site: Indian Customs Electronics Gateway.(https://www.icegate.gov.in/) This is Indian Customs web site, that you would need to check the status of your IEC. You may also check the status of your Bill of Entry by IEC and Bill of entry filling date, to know the exact duty paid. Otherwise there is no direct use of this web site to the importer apart from verifying few things like Bill of Entry IEC status etc. Once you see your IEC both on DGFT and ICEGATE websites, you are good to go with import process.
  • GSTIN: GST number issued to businesses, this is NOT required for individual users or for personal use imports. Only meant for business houses.
  • CIF: Cost, Insurance and Freight. This collective amount is used to calculate the custom duty.
  • Bill of Entry: This document is prepared by the shipping carrier; this is submitted to the customs for the clearance of the goods. This document states the invoice value, HS Code, IEC, product description and the custom duty break up.
  • Late Filling of Bill of Entry: If the Bill of Entry is filled beyond 48 hours from the landing of the parcel then you need to pay some kind of charges. There are two kinds of charges that depends upon the way your parcel has arrived.
  • Cargo Mode: In case your parcel has been shipped as a cargo, then the late filing charges are INR 5000/day for first three days and then INR 10,000/per beyond that.
  • Courier Mode: Most likely you are going to use this method if your parcel is coming via DHL/FedEx etc. The later filling charges are very nominal, around Rs. 5/kg/day. This won’t be a huge amount in the end.
I have divided the import in 2 categories.

Category 1 :
Buying from overseas e-commerce web sites, like Amazon and similar ones.

Category 2: Buying from any foreign dealer/distributor/manufacturer.

Let’s talk about the easiest way first.

Category 1: Normally this is the easiest way to buy things online. You have very less to do and not much headache related to shipping, custom duty etc.

How this works

  • You order something from a web site say amazon.com
  • Pay using your debit/credit card including shipping charges if any and custom duty.
  • I know about Amazon, but I am sure other renowned web sites would be doing the same, they collect the custom duty upfront while checking out. This is normally 40% to 42 % of the cost + shipping charges.
  • Your parcel is shipped to you. Please keep in mind that you need KYC document that have the same address as your shipping address. This would be required for custom clearance. For example, Aadhaar Card, Passport, Voter Id etc.
Now when the shipment lands at your nearest international airport.

  • The carrier company (TNT/DHL/FedEx any other) would contact you to submit your KYC document.
  • This is an online process; they would provide you a link where to upload the document and instructions on how to upload.
  • They may ask you to provide a brief description of the product being imported.
  • Normally, the shipping company won’t ask anything else part from the description and the KYC document, they will use their own import export code and relevant HS code for filling the Bill of Entry. You my check about the HS coe being used. If you find any other relevant HS code with lower duty and GST %age, you may try asking to use that HS code instead.
  • Since the custom duty is already paid, so no hassles and your product will be getting the clearance normally sooner the possible, until and unless customs has any doubts or they may ask for some kind of clarification from you. Normally this won’t happen but as a random check this is a possibility.
  • You get the delivery.
  • As per Amazon’s policy, if the actual custom duty paid at the time of clearance is less than the collected duty from you, you will get the refund for the same.


Now the not so easy way to import. In case you are buying from any dealer/distributor/manufacture from abroad then the import process is bit tedious I would say. I will try to explain the steps in chronological order.

Category 2:

  • Import Export Code: As per customs law in India, this is NOT required by the individual importers who import items for personal use. Customs have mentioned a particular IEC that can be used by anyone who is importing as an individual and for personal use. This I found in some notification/circular from customs. Even then I had to apply myself. I would say irrespective of what the law says, must to have one, you can not argue with any one over phone once you are stuck with customs or shipping company.
  • Payment to Seller: At times, foreign dealers’ web sites do not accept international cards, as it happened with me. In this case your options are
  • Bank to Bank transfer: You cannot transfer online from your account to seller’s account as foreign trading by Indian citizens is not allowed legally using net banking. You can transfer money tough, but you need to give a reason to transfer to a foreign account while doing so via net banking, and there is no such reason available like buying goods or something similar. Also, there is a limit on transfer amount via net baking. So, the right and legal way is, go to your bank, fill in a form with buyer, seller details, currency amount etc. Also, you will have to provide copy of Bill of entry of the exact same amount once your goods are cleared from customs and you have the copy of BOE. So do not try to under value the invoice. The bank would charge for the transfer, this can be approx. 2000 bucks.
  • PayPal: Most likely this is the other option you may have. This is bit costly than the bank transfer. PayPal charges 4% of the transfer amount and also their currency conversion rate is higher than the bank.
  • Shipping: Ask your seller to properly pack the goods, take insurance for sure. This could be around 1 to 3 percent of the product value.
  • Parcel Lands: Once the parcel lands at the airport, the shipping company would contact you to provide the following.
  • IEC Be proactive if this is not asked
  • Product description
  • May be AD code as well
  • KYC documents.
  • Checklist: Once you provide all the required documents, the shipping company would prepare a checklist (details of custom duty calculation and under a particular HS Code). You can check if the shipping company has used the right HS code or if there is another HS code with lesser duty percentage. You can ask the shipping company to revise the checklist and use the other HS code instead. HS code can be found by searching import data. There is a lot of data of previous imports in India for similar goods.
  • Bill of Entry: Once you approve the checklist (basically you promise to the shipping company that you will pay the custom duty to them before the delivery of the goods to you). They would file the Bill of Entry, pay the custom duty on your behalf and the parcel is cleared from customs.
  • Duty Calculation: Custom duty is calculated on CIF. If under a particular HS Code, the rate of duty is 10% and GST is 18% then the duty calculation is as under
  • Basic Custom Duty : A = 10% of CIF
  • SW Surcharge: B= 10% of A
  • GST: C = 18% of (CIF + A+B)
  • Total Custom Duty : D = A+ B+ C
  • Custom Clearance: Custom clearance takes place. Goods are handed over the shipping company. Thereafter delivered to you.
  • Payment of Custom Duty: On delivery attempt, the shipping company will present you the invoice, that includes custom duty, their clearance charges, any charges on account of delay in filling Bill of entry and charges of paying duty on your behalf. Which is around 2.5% of the duty amount. You may pay the duty amount online (link shared by the shipping company) or by cash on delivery you also get a chance to inspect the parcel before paying the custom duty if you opt to pay by cash on delivery.


That’s all about the import process. Hope I have covered everything. In case you feel something is missing, please add this to thread. If you have any more questions, I will try to answer and help you.

Hope this helps.

Regards
Vivek
 

kbhuvi

Active Member
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May 17, 2018
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Hi Vivek

Can you please elaborate on column 2 and 3 of the form available on DGFT site when applying for IEC online in individual capacity. Confused by the constitution of business and business activity nomenclature.

Regards
Screenshot_2020-03-24-19-45-22-412_com.android.chrome.png
 

Vivek Batra

Well-Known Member
Joined
Mar 13, 2019
Messages
756
Points
63
Location
Chandigarh
Hi Sir

The selec
Hi Vivek

Can you please elaborate on column 2 and 3 of the form available on DGFT site when applying for IEC online in individual capacity. Confused by the constitution of business and business activity nomenclature.

Regards
View attachment 44804
Hi Sir

The selected options in the 2nd and 3rd field are the one to be selected for individuals.
 
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