Basic Concepts

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01

What are Incoterms 2010, where and what is it used for?

Incoterms (English Incoterms, International commercial terms) - international rules in dictionary format, providing unambiguous interpretations of the most widely used trade terms in the field of foreign trade of a private nature, primarily regarding free (English free - “clearing”) - the place of transfer of responsibility from seller to buyer.

Basic principles regulated in terms of Incoterms: - distribution between the seller and the buyer of transport costs for the delivery of goods, that is, determining which costs and until when are borne by the seller, and which, from what point, are borne by the buyer. - the moment of transfer from the seller to the buyer of the risks of damage, loss or accidental destruction of the cargo. - the date of delivery of the goods, that is, determining the moment of the actual transfer by the seller of the goods to the disposal of the buyer or his representative - for example, a transport organization - and, therefore, the fulfillment or failure of the former to fulfill its obligations regarding delivery dates.

Incoterms

Scope of Incoterms 2010 terms

Each defined term is a three-letter abbreviation, the first letter indicates the point of transfer of obligations and risks from the seller to the buyer: Group E — shipment, transfer of obligations — at the place of departure (English departure). The seller is obliged to provide the goods to the buyer directly at the manufacturer, his warehouse, the seller does not perform customs clearance of the goods; The seller is not responsible for loading the goods onto the vehicle; EXW. Group F — main carriage unpaid, transfer of obligations at the departure terminals for the main carriage. The seller undertakes to place the goods at the disposal of a carrier, whom the buyer independently hires; FCA, FAS, FOB. Group C — main carriage paid by the seller, transfer of obligations — at the arrival terminals for the main carriage. The seller is obliged to enter into a contract for the carriage of goods, but without taking on the risk of accidental loss or damage to the goods; CFR, CIF, CPT, CIP. Group D — arrival, transfer of obligations from the buyer, full delivery (English arrival). The seller bears all delivery costs and assumes all risks until the goods are delivered to the destination country; DAT, DAP, DDP. Incoterms 2010 defines 11 terms, 7 of them are applicable to any type of transport of the main carriage.

EXW (English ex works, ex-warehouse, ex-factory): the goods are picked up by the buyer from the seller’s warehouse specified in the contract, payment of export duties is the responsibility of the buyer. FCA (English free carrier, free carrier): the goods are delivered to the customer’s main carrier at the departure terminal specified in the contract, export duties are paid by the seller. CPT (English carriage paid to...): the goods are delivered to the main carrier of the customer, the main transportation to the arrival terminal specified in the contract is paid by the seller, insurance costs are borne by the buyer, import customs clearance and delivery from the arrival terminal of the main carrier is carried out by the buyer. CIP (English carriage and insurance paid to...): the same as CPT, but the main carriage is insured by the seller. DAT (English: delivered at terminal): delivery to the import customs terminal specified in the contract has been paid for, that is, export payments and main transportation, including insurance, are paid by the seller, customs clearance for import is carried out by the buyer. DAP (English: delivered at place): delivery to the destination specified in the contract, import duties and local taxes are paid by the buyer. DDP (English: delivered duty paid): the goods are delivered to the customer at the destination specified in the contract, cleared of all customs duties and risks. Incoterms 2010 also defines 4 terms that apply exclusively to maritime transport and transport of territorial waters: FAS (free alongside ship): the goods are delivered to the buyer’s vessel, the contract specifies the port of loading, transshipment and loading are paid by the buyer. FOB (free on board): the goods are shipped to the buyer’s ship, transshipment is paid by the seller. CFR (cost and freight): the goods are delivered to the buyer’s destination port specified in the contract, insurance of the main transportation, unloading and transshipment is paid by the buyer. CIF (Cost, Insurance and Freight): the same as CFR, but the seller insures the main transportation. The content of Incoterms changes in different editions, for example, in Incoterms 2010, in comparison with Incoterms 2000, the term DAP was introduced to replace the excluded DAF (delivered at frontier, delivery to the border), DES (delivered ex ship, delivery on board the vessel at the port of destination) and DDU (delivered, duty unpaid, delivery to a specified place without customs clearance), and instead of DEQ (delivered ex quey, delivery to a port), the more general term DAT was introduced.

Material from the site www.wikipedia.ru

02

What is the Commodity Nomenclature of Foreign Economic Activity of the Customs Union and why is it important to correctly determine the code?

The commodity nomenclature of foreign economic activity of the Eurasian Economic Union (TN FEA EAEU) is a classifier of goods used by customs authorities and participants in foreign economic activity (FEA) for the purpose of carrying out customs operations. The CU FEACN was adopted by the Customs Union Commission, with the assistance of the Federal Customs Service of Russia. The Commodity Nomenclature for Foreign Economic Activity is an expanded Russian version of the Harmonized System (HS), developed by the World Customs Organization and adopted as the basis for commodity classification in the countries of the European Union and others. The CU FEACN presents a system of classification of goods intended for their coding and identification during customs processing, which allows: to carry out customs economic operations (collect customs payments, determine customs value, conduct reporting, planning, etc.); study the commodity structure of foreign trade. Each product is assigned a 10-digit code (for some products a 14-digit code is used), which is subsequently used when performing customs operations, such as declaring or collecting customs duties. Such coding is used to ensure unambiguous identification of goods transported across the customs border of the Customs Union, as well as to simplify the automated processing of customs declarations and other information provided to customs authorities when carrying out foreign economic activity by its participants. The classifier consists of 21 sections and 99 groups (77,98 and 99 groups of the Commodity Nomenclature of Foreign Economic Activity are currently reserved and not used). The 10-digit product code according to the Commodity Nomenclature for Foreign Economic Activity is: — the first 2 digits (for example, 72 — ferrous metals) — the commodity group of the Commodity Nomenclature for Foreign Economic Activity — the first 4 digits (for example, 7201 — pig and mirror cast iron, in ingots, blanks or other primary forms ) - commodity item 6 first digits (for example, 720110 — unalloyed pig iron, containing 0.5% or less phosphorus) — commodity subheading 10 digits, the full product code, which is indicated in the declaration of goods (for example, 7201101900 — unalloyed pig iron , containing more than 1 wt.% silicon) is a commodity subheading. Determining the code of the goods being transported is the responsibility of the declarant, but its correctness is controlled by the customs authorities. The main criteria used for classification: — the material from which the product is made; — the functions that the product performs; — degree of processing (manufacturing). The basic unit of measurement of goods according to the Customs Code of Foreign Economic Activity is weight in kg. The HS code assigned to the transported goods is used to calculate customs duties payable, as well as to apply special measures to it, if any are provided for these goods. What happens if you enter the wrong HS code? Providing inaccurate information about a product may lead to a reduction in customs duties, taxes, or even their complete abolition. If such an offense is detected, the responsible person faces administrative punishment — a fine, the amount of which ranges from half to double the amount of unpaid duties/taxes and/or confiscation of the transported goods.

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