Answer 1: INCOTERMS

The Incoterms is called as International Commercial Terms. Incoterms are

abbreviated with 3 letter published by the International Chamber of Commerce (ICC),
which is commonly used in international commercial transactions. Incoterms rules are
generally paying attention on clearly communicate tasks, costs for transporting the
goods including insurance, duties etc. A number of terms of trade on three letters
related to the common contractual sales methods

Incoterms formally define the following aspects of international sales

. The tasks to be performed by the exporter
. The tasks to be performed by the importer
. What activities will be paid by the exporter
. What activities will be paid by the importer
. When the transfer of responsibility takes place

There are thirteen Incoterms in total

1 CIF (Cost, Insurance and Freight)
4
2 FOB (Free on Board)
5
3 DDP (Delivered Duty Paid)
5
4 DDU (Delivered Duty Unpaid)
6
5 EXW (Ex Works)
6
6 CFR (Cost and Freight)
7
7 CPT (Carriage Paid to)
7
8 CIP (Carriage and Insurance Paid to)
8
9 DAF (Delivered at Frontier)
8
10 DES (Delivered EX-ship)
8
11 DEQ (Delivered Ex-quay)
912 FCA (Free Carrier)
9 12

12 FCA (Free Carrier)

13 FAS (Free Alongside Ship)

Assumption: Suppose Nutraberry ltd. is located at Auckland is special for

producing nutraceutical ingredents and functional foods. The company wants to
establish the business in Japan and India by selling the products. Nutraberry works as
a seller or exporter. Auckland port is in Exporter country that is in Newzealand and
Mumbai port is in importer country that is in India. Description of Incoterms
according to the rules is as follow:-

1. EXW (Auckland)

This is the first and easy method for transporting the goods with maximum
responsibility on the buyer and minimum on seller.
Seller has the responsibility to packing the goods and clear custom for buyer.
Buyer is responsible for uploading
EXW means that the seller ready the goods on the agreed date in exporting
country.
Nutraberry ltd has not the responsibility to load the goods on the collection
vehicle and not clear for export.
Buyer pays all transportation costs and also takes the risk of delivery of goods to
their final destination
The buyer is also responsible for handling all other paper works
This term is used for any type of goods and any mode of transportation.

2. FCA (Auckland)

Nutraberry ltd delivers the goods, cleared for export, to the buyers designated
carrier to a named and defined location.
Seller has the responsibility to packing the goods and provides documents for
clear custom for buyer.
One more responsibility is added to seller that is seller must load goods on the
support of buyer.
The document signifying key transfer of responsibility is the receipt by the carrier
to the exporter.
It is used for any mode of transportation.
Its syntax is FCA (Auckland) and it is used for any type of goods.

3. FAS (Auckland Port)

 Nutraberry ltd must place the goods alongside the ship in port.
The seller must clear the goods for export.
Seller has the responsibility to packing the goods and provides documents for
clear custom and seller must load goods on the support of buyer.
One extra duty is added to exporter, deliver the goods where specified by the
importer.
Suitable only for maritime transport but not for multimodal sea in containers

This term is mostly used for any type of goods.

4. FOB (Auckland Port)

Nutraberry ltd must load the goods on board a ship designated by the buyer.
The buyer should ask the seller for information about the ship and the port where
the goods are loaded, and there is no reference to, or the ability to use a carrier or
freight forwarded.
Costs and risks are shared when the goods are actually on board the ship.
Packing of goods, provide documents, deliver goods to port of departure and
pays to loaded on board are the responsibilities of exporter.
The seller must clear the goods for export.
The term applies to maritime and inland waterway transport only but not for
multimodal sea in containers.
This Incoterms is used for any type of goods

5. CFR (Mumbai Port)

Seller arranges international transportation for delivering the goods specified by

the importer.
However, the risk is transferred to the buyer once the goods are loaded on the
ship.
The seller responsibilities are to packing goods, provide documents, clear goods
and deliver at the port of destination.
Insurance for goods is not included in exporter costs.
It is used for any type of goods and ocean transport only.

6. CIF (Mumbai port)

Under this Incoterm the Exporter has arranges and pays the freight cost as well as
pay for insurance
The main duties of the exporter are package of goods, clear the goods for export,
document for clearing customs as well as cost of loading.

The exporter can transport any kind of goods in this term.

The mode of transportation is ocean transportation only.

7. CPT (Mumbai)

This Incoterm is almost same as CFR except for transportation but the duties of
exporter and importer are almost same.
The seller pays for transportation.
Risk transfers to the buyer from the handling of goods to the first carrier at the
place of shipment in the country of export.
This term is used for non ocean and multimodal and any type to goods.

8. CIP (Mumbai)

It is same to CIF Incoterm except for transportation.

It is specialized to non ocean transportation and any type of goods.
Nutraberry ltd pays for carriage and insurance to the point of destination, the risk
passes when the goods are handed over to the first carrier.
Exporter arranges and pay for international transportation of goods and for
insurance.

9. DES (Mumbai port)

When goods are delivered by the seller, the passing of risk does not occur until
the ship arrived at the port of destination.
The seller pays the same freight and insurance costs likely to CIF.
Reading the cost of goods and duties, taxes etc are for the buyer.
A term commonly used to transport bulk commodities such as coal, grain and
where the seller either owns or has charted their own vessel.
It is used for only ocean transportation.

10. DEQ (Mumbai port)

This is similar to DES, but the passing of risks does not occur until the goods
have been unloaded at the destination at the expense of exporter.
Duties of exporter are provide documents of custom clearing, clear goods for
export, arrange and pay for transport.
Seller also pays for unloading goods at port of destination.
It is mostly used for bulk goods and ocean transportation.

11. DAF (place of delivery)

This term can be used only when goods are transported by rail and road.
Goods delivered to the importer at the border between two countries.
The Seller arranges for customs clearance and pays for transportation from the
factory to its border.
This term is used for any type of goods but only for land based transportation.

12. DDU (Mumbai)

This term means that the seller agrees to deliver the goods to the buyer to a
location in the importing country.
A transaction in international trade, where the seller is responsible for the safe
delivery of goods to a named destination.
Seller pays all the costs to transport goods in the city of importing country.
Importer only clear customs in importing country.
Responsibilities of exporter are to provide documents of clear custom, clear goods
and arranges the transportation.
It is used for any type of goods and any transportation.

13. DDP (Mumbai)

The seller is responsible for delivering the goods at the place in the country after
having cleared customs.
Seller pays all costs to bring the goods to the destination.
One more duty is added to seller that is seller also clear customs in importing
country.
Seller is not responsible for unloading.
This term is used for any transportation and any type of goods.

Part 2 Import Procedure

JAPAN
Import clearance: The person who import goods must declare them to the
Director-General of Customs, and should get the import permit after necessary
examination of the goods in question. The first step is to provide import
declaration. Procedures start with the housing of the import declaration and ends
with the issuance of import permit after necessary examination and payment of
customs duties and indirect taxes. In this way, they are taking the necessary

measures to ensure the fulfillment of the requirements for the control of foreign
exchange and other regulations regarding the import of goods

Prohibited items:
Sharp or cutting tools, including tools (but not limited to): knives, box cutter, letter
openers, scissors, tools and dealer, and screwdrivers and arrows
Sporting Goods or club such items including (but not limited to): baseball bats,
gathered cues, golf clubs and lacrosse sticks, ski poles, and brass knuckles and
hammers and seminars and didgeridoos
Lighters, including butane gas and battery powered and lighter Grandma

Restricted items:
All liquids, aerosols, gels or pastes such as water, drinks, creams,
perfumes, sprays, gels, toothpaste, lip gloss and mascara should be in
individual containers no more than 100ML in size
Must be re all containers in a tightly closed plastic transparent bag no
larger than one liter (about 20CM x 20cm or 8 inches 8 inches)
Allows only one bag per passenger
It must be sealed plastic bag and presented separately from other carry-on
baggage screening at the point
It can be packed in containers of liquids more than 100mls in your check in
luggage.

CUSTOMS TARRIF AND TAXES:

Import duty and sale tax:

Country

HS Code

Duty Rate

Sales Tax

Product

Japan

1302 19 120

25.00%

Nil

Blackberry
Current extract

CUSTOMS DOCUMENTS TO BE SUBMITTED:

Commercial Invoice
Bill of lading or Air Waybill
The certificate of origin
Phytosanitary certificate and pre inspection certificate.
Packing lists
Insurance certificates etc

Laws and Regulations Related to Banned Goods

Law on the Protection of Wildlife and Hunting

Firearms and Swords Control Law
Banned toxic and harmful substance
Pharmaceutical Affairs Law
control of fertilizers system
law on the sugar price stabilization
explosives control system
law on the examination and regulation of chemicals in their manufacture, etc.
High Pressure Gas Safety Law

Laws and Regulations Concerning Quarantine

Food Sanitation Law

Plant Quarantine Act
Domestic law infectious animal control
Prevent rabies law

Laws and Regulations Concerning Narcotics

cannabis control system

Activated law to combat drugs
Drug and mental control system
Opium Law
ENVIRONMENTAL PROTECTION AND POLLUTION CONTROL

Water Pollution Control Ordinance

Waste disposal ordinance
Environmental impact assessment ordinance
Dumping at sea ordinance

HEALTH AND SANITATION REQUIREMENTS

Food Sanitation Law

The Food Sanitation Law aims to protect public health, by prescribing necessary
regulations from the standpoint of preventing health hazards that may be caused by the
consumption of foods. Nutraberry who wishes to import food items (including such nonfood items as containers and packages, tableware, and toys for infants) for the purpose of
sale or for other commercial purposes must submit a food import notification to the
quarantine station, on each import occasion.

Plant protection law

Food items that are made from plants, such as vegetables, fruits, and tea, are subject to
plant quarantine. The purpose of plant quarantine is to prevent foreign pests from
spreading and harming valuable plants in Japan

INDIA
IMPORT LICENCE
In India, Import License is issued by the Director General of Foreign Trade. Most
imports into India do not require a license. Provided they fall within the scope of
the Open General License they may be imported freely without restrictions. Before
arrival of goods, the documents should be kept ready which are required for import
clearance. The major documents required are Bill of Lading or Airway bill, commercial
invoice, packing list, Cargo Arrival Notice, Freight certificate, purchase order or LC and
other specific documents for your goods.
IMPORT BAN AND RESTRICTIONS

Prohibited Goods

Wildlife products
Human bone structure
Set sea shells
Drugs and psychotropic substances
Pornographic and obscene material
Counterfeit goods and pirated goods from any violation of intellectual property
rights and an enforceable legal terms
Aero models (such as toy helicopter remote control) that operate on radio waves
high availability because of possible interference with communications networks,
security services aircraft.
Literature and maps of where the Indian external borders incorrectly show, due to
the Government of India.
Chemicals listed in Table 1 to the United Nations Chemical Weapons Convention
in 1993.
Beef tallow, fat / oil of animal origin
Exotic birds with the exception of a few of them specified
Wild animals and their products

Restricted Goods

Medicines and drugs

Firearms and ammunition
Birds and live animals, including pets
Plants and their products such as fruits and seeds
Endangered species of flora and fauna species, whether living or dead.
Any goods for commercial purposes: for profit, profit or commercial use.
Radios is not approved for normal use
Gold, silver, and other ornaments
Currencies exceeds the limits specified
Phone and telephony equipment restricted frequencies
Silk worms and seeds and silk worm pupae
Family planning devices (NOC from the Ministry of Health required)
Vintage products, replicas of artifacts or weapons
Sand and soil
Whole human blood plasma and some products derived from human blood

Sandal wood (excluding handicrafts and oil products)

CUSTOMS DOCUMENTS TO BE SUBMITTED
The documents required to complete import customs procedure are:
Commercial Invoice
Bill of lading or Air Waybill
The certificate of origin
Letter of credit
Material certificate
Insurance policy certificate
Import license
Health and safety certificate
Custom Tarrifs And Taxes:
Import duty and sale tax:
Country

HS Code

Duty Rate

Sales Tax

Product

India

1302 19 19

30%

Nil

Blackberry Current
Extract

LAWS AND REGULATIONS RELATED TO BANNED GOODS

Customs Regulations 1956 : e Foreign Trade (Development and Regulation) Act, 1992
the Customs Act, 1962
Prevention of Food Adulteration Act, 1954 (PFA)
the Food Safety and Standards Authority Act, 2006 (FSSA)
The Livestock Importation Act, 1898
Destructive Insects & Pests Act, 1914, PFS Order, 1989 and Plant Quarantine (Regulation
of Import into India) Order, 2003

ENVIRONMENTAL PROTECTION AND POLLUTION CONTROL

The Environment (Protection) Act, 1986
Water Pollution Act
Air Pollution Act
Forest Conservation Act
Wildlife Protection Act
Biological Diversity Act
Public Liability Insurance Act
Noise pollution Act
Rule relating to Management of Hazardous Substances.

LAWS AND REGULATIONS CONCERNING QUARANTINE

Destructive insects and pests act,1914

Plant Quarantine (Regulation of Import into India) Order, 2003.

International plant protection convention

WTO-SPS agreement
International standard of Phytosanitary measure

LAWS AND REGULATIONS CONCERNING NARCOTICS

PIT NDPS ACT (The prevention of illicit traffic in narcotics drugs and
psychotropic substances act, 1988)
NDPS ACT (The narcotics drugs and psychotropic substances act,1985)
RCS ORDER,1993

Part 3
There are several documents are used in the export procedure. These are the most
commonly used documents for export:
Commercial Invoice:
The commercial invoice is essentially a bill from the exporter to
the importer describing the parties to the agreement, the goods
to be sold, and the terms involved, as agreed between the
exporter and importer.
The mode of payment must be mention on the invoice.
It must follow the requirements of the importing country, where
the commercial invoice used to clear the goods from customs.
Bill of lading:
The bill of lading serves as a receipt of shipment when the goods is delivered to
the predetermined destination.
When goods delivered at the destination then it must be signed by an authorized
representative from the carrier, shipper and receiver.
A bill of lading contains
consignor's and consignee's name
names of the ports of departure and destination
name of the vessel
dates of departure and arrival

itemized list of goods being transported with number of packages and kind
of packaging,
marks and numbers on the packages
weight and/or volume of the cargo
Freight rate and amount

Airway bill:
The airway bill is similar to the bill of lading for the goods send
by the air.
An air waybill is a legal document made out between the shipper
and the air carrier for carriage of goods and is obtained from the
air carrier
It is a non-negotiable transport document.
Certificate of origin:
A document indicates that which country a good was
manufactured.
The certificate origin contain information regarding the product
destination and country of export and is required by many treaty
agreements before being accepted into another nation.
Letter of credit:
LC is open by a bank of a buyer in favour of seller on behalf of
importer
Bank promising to pay an agreed amount of money upon receipt
by the bank of certain documents within a specified time.
In some time when buyer is unable to make payment on the
purchase, the bank will be required to cover the full or remaining
amount of the purchase.
Certificate of inspection:

When the charging of high-value products or when dealing with

customers very conscientious, could be required inspection
certificate.

Provide inspection certificate as evidence that what is shipping

is, what ordred the client, and also of good quality.

INSURANCE POLICY CERTIFICATE

Insurance policy is an insurance policy has been taken out insurance that prove the
goods shipped, and it gives full details of the insurance coverage.

 Insurance certificate attests that the shipment was insured under a specific policy of
openness which is to cover the loss or damage to the goods during transport.

Health and safety certificate:

Some countries require a health or sanitary certificate when animals,

animal products, fish, plants and food products are skilled.
These certificates confirm that the goods are free from disease or pests
(insects), and that products have been prepared in such a way that they
reach prescribed standards.
Normally, these certificates are issued by the Department of Agriculture.