Octroi and Incoterms and EXIM quiz

Question 1

What is Octroi Tax

Answer 1

Octroi is a kind of charge or tax, which is collected by the state government on those goods that have been bought into the city/state for the purpose of personal use and sale.

The charges on the items are generally levied after on the weight, value and total number of goods. The percentage of tax usually varies from state to state and city to city.

Question 2

States Where Octroi Tax is Charged

Answer 2

Currently, there are two states in India, Maharashtra and Gujarat which levy this kind of tax.

Question 3

current condition of it?

Answer 3

abolished after gst

Question 4

Letter of Credit (LC)

Answer 4

a legal document that is issued by the bank that acts as an irrevocable guarantee in making payment to a beneficiary. When an individual fails to perform the required obligations, the bank pays.

Question 5

Types of Letters of Credit

Answer 5

A revocable letter of credit

An irrevocable letter of credit

A standby letter of credit: (SBLC / SLOC) is a guarantee that is made by a bank on behalf of a client, which ensures payment will be made even if their client cannot fulfill the payment. It is a payment of last resort from the bank, and ideally, is never meant to be used.

Revolving letter of credit: implemented when there are regular shipments of the same commodity between the supplier and the customer, implemented when there are regular shipments of the same commodity between the supplier and the customer

Question 6

Letters of Credit Options

Answer 6

Sight: The payment will immediately be made effective by presenting the Bill of Exchange.

Usance: The payment will be effected on the Pre-designated day from the date of acceptance of Bill of Exchange.

Deferred Payment: The payment will be effected in instalments according to the contract/ letter of credit at predetermined intervals.

Acceptance Credit/ Time Credit: This is made available by the acceptance of the draft that is drawn by the exporter nominated bank.

Question 7

Invoice types of invoices

Answer 7

Commercial Invoice: Invoices that are issued in terms of the contract/ Letter of Credit.

Customs Invoice: This is issued in a specific format for exports to the USA and Canada.

Consular Invoice/ Legalised Invoice: This is issued which is certified by the Consulate of the Importing Country.

Question 8

who oversees letters of credit

Answer 8

The International Chamber of Commerce (ICC) Uniform Customs and Practice (UCP) for Documentary Credits oversees letters of credit used in international transactions
(UCP) is a set of rules on the issuance and use of letters of credit

Question 9

Incoterms

Answer 9

the short and snappy way of saying International Commercial Terms. First published way back in 1936, they’re a set of 11 rules defining who’s responsible for what during international transactions.

Question 10

Why are Incoterms so important?

Answer 10

A requirement on every single commercial invoice, they greatly reduce the risk of potentially costly misunderstandings.

Incoterms spell out all the tasks, risks and costs involved during the transaction of goods from seller to buyer..

Question 11

Incoterms

EXW – Ex-Works

Answer 11

Buyer assumes almost all costs and risk throughout the shipping process

Seller’s only job is making sure the buyer can access the goods

Once the buyer has access, it’s all down to them (including loading the goods)

Risk transfers from seller to buyer:
At the seller’s warehouse, offices or wherever the goods are being collected from.

Question 12

Incoterms

DAP – Delivered At Place

Answer 12

Seller covers the costs and risk of transporting goods to an agreed address

Goods are classed as delivered when they’re at the address and ready to be unloaded

Export and import responsibilities are the same as DAT

Risk transfers from seller to buyer:
When goods are ready for unloading at the agreed address

Question 13

Incoterms

DDP – Delivered Duty Paid

Answer 13

Seller takes almost all responsibility throughout the shipping process
They cover all costs and risk of transporting goods to the agreed address
Seller also makes sure goods are ready for unloading, fulfils export and import responsibilities and pays any duties

Question 14

Incoterms

CIP – Carriage And Insurance Paid To

Answer 14

Same seller responsibilities as CPT with one difference: the seller also pays for the carriage and insurance to the named destination.

Seller is obliged to purchase the maximum level of insurance cover under Clause A (Institute Cargo Clauses), for the buyer’s risk.

Question 15

Incoterms

DPU – Delivered At Place Unloaded (previously DAT)

Answer 15

Seller is responsible for the costs and risk of delivering the goods to an agreed place of unloading.

The place of unloading could be any place, whether covered or not.

Seller organises customs clearance and unloads the goods at the place of unloading.

Buyer sorts import clearance and any related duties.

Question 16

Incoterms

FCA – Free Carrier

Answer 16

It’s the seller’s job to get the goods to the buyer’s carrier at an agreed location

Seller is also required to clear goods for export

Question 17

Incoterms

CPT – Carriage Paid To

Answer 17

Same seller responsibilities as FCA with one difference: the seller covers delivery costs

As with FCA, it’s the seller’s responsibility to clear goods for export

Question 18

Incoterms

FAS – Free Alongside Ship

Answer 18

Seller assumes all costs and risk until goods have been delivered next to the ship

Buyer then takes over risk and takes care of export and import clearance

Question 19

Incoterms

FOB – Free On Board

Answer 19

Seller assumes all costs and risk until goods have been delivered on board the ship

They also sort out export clearance

Buyer assumes all responsibilities as soon as the goods are on board

Question 20

Incoterms

CFR – Cost And Freight

Answer 20

Seller has the same responsibilities as FOB but must also pay the cost of bringing the goods to the port

As with FIB, the buyer assumes all responsibilities as soon as the goods are on board

Question 21

Incoterms

CIF – Cost, Insurance And Freight

Answer 21

Seller has the same obligations as CFR but must also cover insurance costs

Seller is obliged to purchase the minimum insurance cover which is 110% of the invoice value, in the currency of that invoice and contract.

If the buyer requires more comprehensive insurance, the seller must arrange the additional cover at the buyer’s cost.

Question 22

The 3 most common Incoterms

Answer 22

EXW – Ex-Works
DAP – Delivered At Place
DDP – Delivered Duty Paid

Question 23

IEC

Answer 23

Import Export Code’,

10 digit number issued by the Director General of Foreign Trade

Question 24

‘Import Export Code

Answer 24

mandatory requirement for all the persons who are engaged in either importing and/ or exporting goods or services from India.

in order to avail the export scheme benefits from DGFT, customs and export promotion council

Question 25

IEC is not mandatory

Answer 25

Import/export of goods for personal use. Such import/export of goods is not connected with trade, manufacture or agriculture.

Import/export by government ministries, departments and notified charitable organizations.

Question 26

Proforma Invoice

Answer 26

a record that contains points of interest with regards to the quality, review, design, mass, weight, and cost of the exported merchandise

Question 27

Import order or Indent:

Answer 27

a documentation in which the importer orders for supply of imperative merchandise to the supplier. The order containing the data, for example, amount and nature of merchandise value, a technique for sending the merchandise, packing process, method of payment and so forth.

Question 28

Shipment counsel:

Answer 28

exporter sends shipment advice to the importer for telling him that the merchandise has been dispatched. It contains invoice number, bill of lading/airway bill number and

Question 29

Bill of lading

Answer 29

It is readied and marked by the captain of the ship recognizing the receipt of merchandise on board. It contains terms and conditions on which the products are to be taken to the destination.

Question 30

Bill of entry

Answer 30

a form provided by the customs office to the importer who filled it at the duration of getting the merchandise. It must be in triplicate and is to be submitted to the customs office.

Question 31

imports and exports are regulated by

Answer 31

Foreign Trade (Development and Regulation) Act, 1992

Question 32

The current provisions relating to exports and imports in India are available under

Answer 32

the Foreign Trade Policy, 2015-20.

Question 33

steps involved in importing of goods

Answer 33

1. Obtain IEC
2. Ensure legal compliance under different trade laws
3. Procure import licenses (whether a license is needed) Indian Trading Clarification based on a Harmonized System of Coding or ITC (HS) classification.
4. File Bill of Entry and other documents

Question 34

BL/AWB

Answer 34

Bill of Lading / Airway bill