This is a function of hibernate. The file will be executed when hibernate creates your tables.
Where did you find this? I would like to include an import.sql for the SchemaExport, but not sure where to put it.
Do you just place it in the root directory of the par file, and hbm2ddl will locate it automatically?
It reads it from the classloader as a resource, so you can put it anywhere that gets into your classpath. Your par/ejb3 jar makes the most sense to me.