Entering content frameProcess documentation Scenario - Importing from a Third Country Locate the document in its SAP Library structure

Purpose

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Purpose

This scenario describes the processes involved in importing goods into your country from a third country. In this sense, a "third country" is defined as the country of export when no trade agreement exists between your country and the exporter. In this case, you are responsible for compliance with the import laws of your own country.

Reasons for Importing Goods

There are three primary reasons for importing goods.

Trade

There are three main reasons why you may want to import for trade purposes:

  1. Comparative advantage – Some foreign manufacturers can make products more cheaply.
  2. Availability – Some products are only available in foreign markets.
  3. Marketability – A product may be new and you want to market it in your entire country or in a region of your country.

Production

It is sometimes advantageous to import raw or semi-finished materials to be used in a manufacturing process.

Transit

Foreign merchandise with the status "in transit" is exactly that – passing through your country on the way to another. At the plant level in the SAP System, this refers to a goods receipt that immediately becomes a goods issue to a country other than the location of your plant. A carnet TIR (document which allows passage of foreign merchandise through a customs territory) may be required for the transfer of goods under bond in your country.

Prerequisites and Considerations

Duty Payment Requirements

For production and trade purposes, duties may or may not be assessed for goods entering your country. As a rule, no duties are assessed for goods in transit within your country.

Import Quotas

Quotas are sometimes imposed on imported merchandise to protect the local market. Once the quota has been reached or exceeded, the tariff duty rate may be increased or the merchandise may be held in a foreign trade zone or bonded warehouse until the absolute quota is again available. This waiting period may be as long as a year. Therefore, importers should ascertain in advance whether an absolute or tariff rate quota exists on the import goods.

Commodity Codes and Calculation of Duties

Before you can calculate the duties that must be paid on your imported goods, you must correctly classify the product based on its commodity code or import code number (the first six digits are always the same internationally). These codes are found in the Harmonized Commodity Description and Coding System (usually known as the HS or Harmonized System). Once you have determined the code for the goods, you can determine the rate of duty in the harmonized tariff schedule. Tariff schedule rates differ for each country and, in cases involving a quota, these rates are usually higher once the quota has been reached.

See also:

Structure link Loading of Commodity Codes and Import Code Numbers

Import Process

The import process illustrated and described below answers the following questions:

For information about the process of importing merchandise involving a letter of credit, see Scenario - Import Involving a Letter of Credit.

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  1. You (the importer) first request a quote (generally, EXW or CIF) for the merchandise. This may or may not include transportation and insurance costs.
  2. You prepare a purchase order based on the offer (quotation) received from the exporter.
  3. The exporter creates a sales order based on your purchase order and sends it to you.
  4. (Optional) The exporter creates an advanced shipping notification to inform you of the date and quantities to be delivered.
  5. The exporter ships the merchandise.

    Also, at the time of shipment, the exporter provides you with required documentation depending upon the terms of sale and your agreement with the exporter. Documents may include some or all the following:

Note

You can create the documents mentioned above (other than insurance certificates) using the SAP FT application.

Import licensing is generally only necessary for drugs, weapons and alcoholic beverages. Special licensing may be required for countries with trade restrictions. If needed, you can obtain these licenses from the corresponding regulatory agencies of the state or federal government.
  1. You transfer funds to the exporter's bank in accordance with your agreement.
  2. You calculate the duty rates and Structure link create the customs declaration for the import.
  3. You file the declaration with customs within the time frame required by law and pay the customs duties.

See also:

US Customs Entry Process

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