1. Import Mechanism

2. For doing business we need to buy/sale many materials from either local market or foreign market. Import dept is dealing foreign purchase. For smooth operation we have to follow the following steps which is essential for Import Dept.

3. For foreign transaction we need to regulations which is as follows :
follow some rules and
regulations which is as follows :

4. a) At first we want to know
(i) Which item we need? and
(ii) From where we will get ?
User confirms us which item we need
We will get the source from internet/ previous reference/business directory/Chamber/ from customs and many other sources.

5. b) After confirmation from user and find out
the appropriate sources our next work should
be how we will buy the material from out side
of Bangladesh? Remember, supplier is out of
Bangladesh and they don’t accept Taka. Supplier will accept foreign currency but we have no permission to pay any amount to the supplier without Govt permission. For purchase the material through payment we have some option which is follows :

6. i) As per international rule, we have a bank in Bangladesh and supplier also have a bank in their exporting country.
So, we need to open bank account with our bank and supplier also need to open bank account with their bank. Both account must be company/ organization named not personal name.

7. ii) Both importer (Buyer) and exporter (seller) need to arrangement with bank for import and export transaction.
iii) In our part we have different type
of option for purchase the material
from abroad. Through Letter of
Credit (L/C), Through TT/DD or
Through LCA

8. iv) For opening L/C, we need Proforma Invoice ( which will be issued by exporter on their business letter head pad) or Contact or In Indent ( who is the agent of supplier and he is in Bangladesh), L/C application form, Letter of Credit Authorization (LCA),IMP form, some other paper’s which depends on bank to bank.

9. v) As per Import Policy every year under one IRC (Import Registration Certificate) we will import maximum US $ but it is difficult to issue TT/DD, Bank want to need approval from Bangladesh Bank. It will take time and generally Bangladesh Bank discourage on this.

10. vi) Through LCA, exporter will send the material by using LCA number which will be use at the time of clearance. But condition is upon received original shipping documents, bank will endorse shipping documents with Insurance cover note and LCA (which LCA number exporter have mentioned on shipping documents). In this case amount must be lower i.e. maximum US $ 2, and not exceeding US $ 25, per year.

11. For L/C mechanism we need to see following thing before opening an L/C :
Find out PR if not then request to user for issuing PR.
Get approval from authority and get consent from VAT dept for company name and also need confirmation from accounts dept. for bank selection.

12. Request to exporter/ Indenter for issuing PI/Indent with minimum quantity/required quantity or container load which one we need.
Request to Insurance Company for issuing Cover note for L/C opening. At the time of request for cover note we must see what type of coverage we need for this consignment and currency rate.

13. Calculate in Tk. and on the basis of Tk and bank we will calculate how much money we need for L/C opening and accordingly we will advice to our accounts dept for necessary fund arrangement.

14. A set of L/C application form we need to fill up
A set of L/C application form we need to fill up . At the time of fill up we must follow the following points
Description of goods must be same as PI/Indent
IRC number
Terms and conditions must be mention on L/C application form
Fill up IMP Form
Importer and Exporter name and their contact details

15. Any additional clause if we/exporter need which will be match our Import Policy and Foreign regulations.
HSC (Harmonize System Code)
Value
Ex-works/FOB/CFR
Whether L/C is differed or not? If yes then add confirmation is required?
Add Confirmation is required or not? If yes then who will bear the cost?
For add confirmation if exporter bear the cost then who will bear local (in Bangladesh) cost?

16. Port of loading and port of destination
In PI we have many other terms i.e. CFR CTG/Air/ICD/Benapole, we must follow the loading and destination port. If any deviation and then must come to the superior or get clarification from exporter.
By Road or By sea or By Air.
Any other regulatory or required terms and conditions must check with superior or get expertise consent .

17. After all of above things we will fill up L/C application and other related documents with covering letter and then apply to our nominated bank for L/C opening.
After opening the L/C we will collect L/C copy or Draft L/C copy and
verify draft with our file and some cases we have send the draft L/C copy to exporter and get their confirmation whether all of terms and conditions are Ok or not and then advice to our bank for transmit the original L/C to our exporter.

18. At the time of original L/c copy received from bank we must ask to bank for L/C opening charges advice with the related L/C .
After received Original L/C copy we must check L/C swift copy and sent it to our exporter/Indenter along with accepted Indent copy.
Also L/C opening charges related advice submit to our related accounts dept and same copy must be kept in related L/C file.

19. After L/C copy we must see whether L/C is under PSI or not
After L/C copy we must see whether L/C is under PSI or not? If yes then we will check with PSI local office and get RFI/BDH number and send the number to exporter/Indenter or exporter’s liaison office. If not then check with bank whether they have sent the request to PSI company or not.

20. Some time we will take request from bank for PSI and submit our self
Some time we will take request from bank for PSI and submit our self. Then immediately we will get RFI/BDS number then inform to exporter/Indentor or exporter’s liaison office.

21. Then we have to follow up with our supplier for collect the shipment schedule.
After getting the schedule, we have to keep it & update to concern Dept.(Some time we failed to get shipment schedule, we should inform this also.)

22. We should collect original shipping document before estimated time of vessel arrival. After receive original shipping documents we must check carefully that documents whether ok as per L/C and PI or not. If we find documents ok then we should send to C&F. If documents not ok then must inform to high management and then take action accordingly.

23. Keep in touch with shipping position & follow up with CNF agent to collect DUTY with smooth delivery. Then done PO & collect MRR, submit the bill.

24. L/C Documentation is very Important for one Organization WHY?

25. Case Study – 01 PSI ITEM BUT SHIPPED WITHOUT PSI: 1
Case Study – 01 PSI ITEM BUT SHIPPED WITHOUT PSI: 1. After receiving original document we did not found any CRF (Clean Report of Findings) 2. We check with Bank and Bank forget to send PSI application to the PSI company 3. We sent the document to C&F and submit to customs. Commissioner of customs fine Tk. 300, and also we have to pay port and shipping demurrage for 15days. 4. We have net loss of Tk. 350, (for example) 5. But if we check and follow up L/C and PSI clause then we save this amount.

26. Case Study – 02 CAPITAL MACHINERY-DESCRIPTION OF GOODS: 1
Case Study – 02 CAPITAL MACHINERY-DESCRIPTION OF GOODS: 1. After receiving original document we found Description of goods mentioned – Capital Machinery –Extruder Plant. 2. We should not mention Machinery Plant or Line in L/C as per C&F for smooth delivery 3. We need to correction the documents from Exporter side and it takes 10days for correction. 4. In the mean time port and shipping documents incur Tk. 350, which is net loss.

27. Case Study – 03 WRONG COMPANY ADDRESS IN L/C: 1
Case Study – 03 WRONG COMPANY ADDRESS IN L/C: 1. We check the draft L/C we found Bank mention wrong company address in L/C and we asked Bank for correction the draft by mail. 2. After receiving Swift L/C we did not check it carefully that Bank did not correction company address. 3. After receiving original documents we found Bank did not to correction company address and exporter prepared original documents accordingly. 4. Then we correction the documents and in the mean time port and shipping documents incur Tk. 700, which is net loss.

28. LEARNING: 1. We need to more careful for L/C documentation 2
LEARNING: 1. We need to more careful for L/C documentation 2. Always need to follow up shipping documents and C&F for avoid demurrage 3. Always need to check L/C terms and condition carefully.

29. CHECK LIST OF OPENING L/C: 1 Company's Name & Address
CHECK LIST OF OPENING L/C: 1 Company's Name & Address? 2 Company's IRC number? 3 Company's TIN number? 4 Company's VAT Registration number? 5 Items name? 6 Items H.S Code? 7 Duty structure against this H.S Code? 8 PSI Option? 9 Beneficiary company name? 10 PI number & date?

30. CHECK LIST OF OPENING L/C: 11 All terms & condition. 12 CFR or FOB
CHECK LIST OF OPENING L/C: 11 All terms & condition? 12 CFR or FOB? 13 Where the Loading port is? 14 Bank name, Address & SWIFT code of the beneficiary company? 15 Beneficiary’s A/C number? 16 Marine cover te number & date? 17 Insurance company name? 18 Last date of shipment? 19 Expiry date of LC? 20 LCA number?

31. CHECK LIST OF OPENING L/C: 21 LC Value. 22 Country of Origin
CHECK LIST OF OPENING L/C: 21 LC Value? 22 Country of Origin? 23 Container detention option (if need with container delivery)? 24 Machine should mention machine in L/C not plant or line

32. THANK YOU