Exports Procedure and Documentation

8/6/2019 Exports Procedure and Documentation

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INTRODUCTION

India has a mission to capture 2% of the global share of trade by 2010, up from the present level of less

than 1%. Export is one of the lucrative business activities in India. The government also provides various

promotional schemes to the exporters for earning valuable foreign exchange for the country and for

meeting their requirements for importing modern technology and essential inputs. Besides, the income

from export business is also exempted to the specified extent under the Income Tax Act, 1961, Refund

of Central Excise and Custom Duty on export is also made under the Duty Drawback Scheme and other

export promotion schemes of the Government.

Exports can be of goods or services which can be moved physically from one country to another or can

be rendered.

Physical Exports: If the goods physically go out of the country or services are rendered outside the

country then it is called as physical export. The Foreign Trade defines exports as taking out of India any

goods by land, sea, air. Although the act does not term them as Physical Exports, we have to put

phrase to distinguish it from Deemed Exports which is sales in India but considered as exports for

limited purpose.

TYPES OF EXPORTERS:

Exporters can be basically classified into two groups

1 Manufacturer Exporter: As the exporter has the facility to manufacturer the product he intends to

export and hence he exports the products manufactured by him.

2 Merchant Exporter: An exporter who does not have the facility to manufacture an item. But, he

procures the same from other manufacturers or from the market and exports the same.

An exporter can be both a manufacturer exporter as well as a merchant exporter, he can export productmanufactured by him or he can export items bought from the market.

Once it is decided to export, it is mandatory on your part to follow certain procedures, rules and

regulations as prescribed by various regulatory authorities such as DGFT, RBI, and Customs. These

procedures, rules and regulations are laid down in the Exim Policy 2004-09, Exchange Control Manual,

Customs Act etc. Accordingly Export documents are required to be prepared keeping in view of the

requirement of the foreign buyers and our regulatory authorities.


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HOW TO SET UP AN EXPORT ORGANISATION

The proper selection of organization depends upon

1 Ability to raise finance.

2 Capacity to bear the risk.

3 Desire to exercise control over the business.

4 Nature of regulatory framework applicable to anyone.

On close evaluation of once capacity with regard to above four variables, export organization cam is set

up as proprietorship business, partnership firm, private limited company or public limited company.

CHOOSING APPROPRIATE MODE OF OPERATIONS:

You can choose any of the following modes of operations

1 Merchant Exporter i.e. buying the goods from the market or from the manufacturer and then selling it

to foreign buyers.

2 Manufacturer Exporter i.e. manufacturing the goods yourself for export.

3 Sales Agent / Commission Agent / Indenting Agent i.e. acting on behalf of the seller and charging the

Commission.

4 Buying Agent i.e. acting on behalf of the buyer and charging Commission.

5 Service provider i.e. providing service from India to another country.

NAMING THE BUSINESS

Whatever form of business organization has been finally decided, naming the business is an essential

task for every exporter. The name and style should be soft, attractive, short and meaningful. Open a

current account in the name of the organisation in whose name you intend to export. It is advisable to

open the account with a bank which is authorised to deal in Foreign Exchange.

STRUCTURE OF AN EXPORT ORGANISATION

1 marketing manager for generating sales

2 Commercial manager for looking activities of the execution of the orders.

3 staff personnel for carrying out the day-to-day activities namely

o Preparation of pre - shipment documents.

o Co-ordinating with clearing agents on the progress of the shipment to be made.

o Co-ordinating with the ware house\C. excise department regarding packing and clearance of the goods

for export.

o Preparation of post shipment documents foe banks.

o Follow-up with the bank on dispatch of documents, receipt of payment, availment of bank loans etc.

4 To look into the requirement of licenses, claiming of export benefits fiiling of documents with the


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Government Authorities in Discharge of Export Obligations, if any, filing of returns to the various

Government Agencies which are mandatory, prepare and keep an information bank of various

transaction of the company, their domestic as well as international competitors.

5 An office boy for doing leg work.

6 A clearing and forwarding agent to handle the documents and the goods in the customs premises\ in

the ports of lading.

Depending upon the size of the business the numbers of personnel under each category may increase.

For example if a company is transacting substantial volume of business in more than one product. Then

it is necessary to have marketing manager for each product so that the person can concentrate on a

particular trade to enhance the business.

REGISTRATION WITH REGIONAL LICENCING AUTHORITIES OBTAINING IMPORTER EXPORTER CODE (IEC)

NUMBER.

The Customs Authorities will now allow the exporter to export or import goods into or from India unless

he holds a valid IEC number. Before applying for IEC number it is necessary to open a bank account in

the name of the company with any commercial bank authorized to deal in foreign exchange. The duly

signed application form should be supported by the following documents.

1 Bank receipt ( in duplicate ) / Demand Draft for payment of the fees of Rs. 1000/-

2 Certificate from the banker of the applicant firm as per Annexure 1 to the form given.

3 One copy of PAN number issued by Income Tax Authorities duty attested by the applicant.

4 One copy of Passport Size photographs of the applicant duly attested by the banker to the applicant.

5 Declaration by the applicant that the proprietor/partners/directors as the case may be of the applicant

company, are not associated as proprietor/partners/directors in any other firm, which has been caution,

listed by the RBI. Where the applicant declares that they are associated as proprietor/partners/directors

in any other firm, which has been caution, listed by the RBI, they will be allotted IEC No. but with an

additional condition that they can export only with RBIs prior approval and they should approach RBI

for the purpose.

6 Each importer/exporter shall be required to file importer/exporter profile once with the licensing

authority shall enter the information furnished in Appendix 2 in their database so as to dispense with

changes in the information given in Appendix-2, importer/exporter shall intimate the same to the

licensing authority.

APPLICATION FOR OBTAINING AN IEC NUMBER

For obtaining IEC number apply in the prescribe form along with the documents listed above to Regional

Licensing Authority (Office of the Regional DGFT). The registered office or the head office may apply for

allotment of IEC No.


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Whenever, there is a change in the name, address or constitution of the holder of IEC No., such change

should be intimated within 30 days to the concern authorities.

IEC certificate will be issued in the form (copy enclosed). A copy of IEC No. is also endorsed to the

concerned banker.

VALIDITY:

The IEC No allotted to a individual/firm/company will be valid for all its branches/divisions

units/factories as indicated in the IEC No. Import/Export of any commodity by that firm/company. There

being no date of expiry, the IEC once allotted is valid till it is revoked. But, if no import or export is

affected in the previous financial year, the same will be made inoperative. However, this can be made

operative by a formal request to the DGFT.

IDENTITY CARD (For conducting transactions with the office of DGFT):

As it is not always possible for the top man or directors, promoters of the company to visit DGFT

frequently. There is a provision of issuance of identity cards to the proprietors/partners/directors and

their authorized representatives. An application of Issuance of an identity card may be made in the form

(Appendix-5) The document/ License/Certificate/Permissions may be delivered to the identity card

holder and officials of the Licensing Authority (DGFT)shall not be responsible for any loss etc. In case of

loss of an identity card a duplicate card may be issued on the basis of an FIR & affidavit. In addition to

obtaining the IEC No. the exporter is also required to obtain Business Identification No(BIN). For this

exporter is required to contact DGFT online on web site. The licensing authority issues BIN in

coordination with customs authorities. This BIN is required to be mentioned on the shipping bills at the

time of customs clearance of the export cargo.

RCMC (Registration-Cum-Membership Certificate) REGISTRATION WITH EXPORT PROMOTION

COUNCILS

In order to enable the exporter to obtain benefits/concessions under the Foreign Trade Policy, the

exporter is required to register himself with an appropriate export promotion agency by obtaining

registration-cum-membership certificate. (RCMC). If the export product is that it is not covered by any

EPC, RCMC in respect thereof may be issued by FIEO. An application for registration should be

accompanied by a self certified copy of the Importer-Exporter Code number issued by the regional

licensing authority concerned and bank certificate in support of the applicants financial soundness. The

RCMC shall be valid for 5 years ending 31st March of the licensing year.

REGISTRATION WITH SALES TAX AUTHORITIES:

Goods that are to be shipped out of the country for export are eligible for exemptions from both Sales

Tax and Central Sales Tax. For this purpose, exporter should get himself registered with the Sale Tax

Authority of is state after following the procedures prescribed under the Sales Tax Act applicable to his

state.


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HOW ONE BEGINS TO DO EXPORT

Before entering into the venture of exports, one must look for the product to be exported and the

market where he intends to export.

In case of a manufacturer, obviously he would like to export the product he manufactures as is or with

possible modification as may be required by the market. However, in case of a merchant exporter or a

trader, one has to identity the product to export. If the exporter is already in the trade in the domestic

market and is familiar with the product it would be an advantage to export the said product of which he

has reasonable knowledge.

Before selecting a product, one must simultaneously made a study and find out the prospective market.

For finding out the market for the selected product, the following methods will help.

Get statistical information as to imports of the product by various countries and their growth

prospects in the respective countries

Approach the chamber of commerce for their guidance to find out the market.

Approach the Export Promotion Council dealing in the product of selection to get more information.

The Preliminary

Once you are ready with the product you wish to export and have found the market for the same, you

are ready to proceed further. Following sequences can be followed:

1 Any one, who wishes to export, must first of all get an Importer Exporter Code Number (IE Code).This

can be obtained by making a formal application to the office of the Regional Directorate General of

Foreign Trade (DGFT).

Get yourself registered with the related Export Promotion Council and become a member. Also

arrange to obtain Registration-Cum-Membership Certificate (RCMC) from the council. This has twin

objectives:

o Under the Foreign Trade Policy, it is mandatory that an exporter gets him registered with the Export

Promotion Council to avail of various export facilities.

o Being a member, you will have access to all the information relating to the product that could be made

available by the council

o Many foreign buyers send their enquiries for the imports to the Export Promotion Council. Hence you

will have few customers interested in your product.

2 If you are a manufacturer, find out the provisions under the EXIM Policy of getting the raw materials

duty free.

3 Get familiar with the excise formalities as goods meant for export can be cleared without payment of

C. Excise duty on the finished product subject to compliance of certain formalities.

4 Understand the local government regulations in relations to the export of the product.


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5 Get information of the governments regulations of the importing country as to restrictions on the

quantity, product specification, packing regulations, customs regulations, requirement of specific

documents/information etc.

6 Availability of Vessels/Airlines, the transport charges, frequency of operation etc.,

7 To look for a Custom House Agent (CHA) (also know as freight forwarders or clearing agents) for

handling the documents/cargo in the customs.

8 If the product is covered under any quota regulation, find out the agency/council who is handling the

quota distribution for the product and the availability of quota for exports.

FINDING A CUSTOMS

Once you have selected the market, the next step is to find a prospective customer. This you can get

1 From the directory of importers of the country you intend to export to

2 By writing to the Embassy of India in that country for assistance

3 By writing to the chamber of commerce of that country

4 By means of participation in a Fair/Exhibition abroad either directly or through the Export Promotion

Council

5 By participating in international fair if organized locally

6 Through the personal contacts in that country. By these processes one can only have the list of

customers. One has to dialogue or correspond with these customers by sending samples, getting

feedback from the customers etc. to ultimately select the customer with whom to deal with. It is

necessary to know the financial standing of the company which can be obtained through the bank

channel or through the office of ECGC.

NEGOTIATING CONTRACT:

Once the prospective customer is found, the business deal has to be concluded. The following aspects

may be considered before entering into a final contract with the buyer.

1 Credit Worthiness of the Customer.

2 Availability of the Steamer/Airlines and the frequency

3 The freight charges

4 The full product specification

5 The quantity, Price

6 Terms of Payment

7 Type of packing and markings on the packages

8 Mode of shipment & Shipment schedule

9 Tolerance of quantity to be shipped

10 Documentation requirement for the customer

11 Documentation requirement of the government of importing country

12 Compliance of the local governmental rules and regulations

Before entering into contract one should take note of the above factors. While these are indicative, the

requirements will vary from country to country, product to product and buyer to buyer.


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EXPORT SALES & CONTRACT TERMS & CONDITIONS

Very often exporters do not enter into any formal contract and finalize the trade deal through the

exchange of letters, cable, telex etc. It is, however, expedient that the parties (exporters & importers)

incorporate all important terms & conditions of their trade deal in a separate document or contract that

will avoid disputes arising out of uncertainty or ambiguity. Export contract may be sent in duplicate

along with the Proforma Invoice to the overseas buyer.

NATURE OF INTERNATIONAL TRADE CONTRACTS:

There are certain, peculiar characteristics of international trade contract which are not present in those

for sales of goods in the domestic market

Whereas the parties to a domestic trace contract normally needs only agree on the elements which are

necessary for their particular trade transactions like price, description, quality and quantity of goods,

delivery terms etc the situation will be quite different when the buyer and the seller to sale/purchase

contract belong to different countries. The parties to all international trade contracts provide all their

relative rights and obligations in several ways

For example, they may agree to adopt either the Law of the country of the buyer or that of the seller.

The traders are normally reluctant to leave the determination of the rights and obligations by

implications under the legal system of eithers country. They prefer to make explicit provisions regarding

the rights and obligations by including a set of detailed and precise terms and conditions in their

contract.

EXPORT OF SAMPLES\GIFTS:

Exports of bonafide trade and technical samples of freely exportable items shall be allowed without any

limit. Goods including edible items of value not exceeding Rs. 100000/- in a licensing year, may be

exported as a gift. However items mentioned as restricted for exports in ITC (HS) shall not be exported

as a gift without a licence/certificate/permission, except in the case of edible items.

STANDARD CONTRACT FORMS:

Notwithstanding the efforts made by various national/international organizations like the United

Nations Commission on the International Trade Law, there is still no perfection or a device which would

give the parties an accurate and complete idea of each others understanding of various trade terms, the

commercial practices and the rights and the obligations vis--vis each other so that the

misunderstandings are practically eliminated.

Nevertheless, the Indian Council of Arbitration published in 1966 a booklet on Standard Contract Forms

and Model Arbitration Clause for use in Foreign Trade Contracts. It was revised and reprinted in 1969

and 1977. It can be referred to by exporter for various clause to be incorporated in the Export Contract.

ENTERING INTO AN EXPORT CONTRACT

In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For

this purpose, export contract should be carefully drafted incorporating comprehensive but in precise

terms, all relevant and important conditions of the trade deal.

There should not be any ambiguity regarding the exact specifications of goods and terms of sale

including export price, mode of payment, storage and distribution methods, type of packaging, port of

shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under:


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Product, Standards and Specifications

Quantity

Inspection

Total Value of Contract

Terms of Delivery

Taxes, Duties and Charges

Period of Delivery/Shipment

Packing, Labeling and Marking

Terms of Payment-- Amount/Mode & Currency

Discounts and Commissions

Licenses and Permits

Insurance

Documentary Requirements

Guarantee

Force Majeure of Excuse for Non-performance of contract

Remedies

Arbitration clause

It will not be out of place to mention here the importance of arbitration clause in an export contract

Court proceedings do not offer a satisfactory method for settlement of commercial disputes, as they

involve inevitable delays, costs and technicalities. On the other hand, arbitration provides an economic,

expeditious and informal remedy for settlement of commercial disputes. Arbitration proceedings are

conducted in privacy and the awards are kept confidential. The Arbitrator is usually an expert in the

subject matter of the dispute. The dates for arbitration meetings are fixed with the convenience of all

concerned. Thus, arbitration is the most suitable way for settlements of commercial disputes and it may

invariably be used by businessmen in their commercial dealings.

ARBITRATION:

Arbitration clause recommended by the Indian Council of Arbitration:All disputes or differences

whatsoever arising between the parties out of / relating to the meaning, construction and operation or

effect of this contract or the breach thereof shall be settled by arbitration in accordance with the rules

of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be

binding on the parties (or any other arbitration clause that may be agreed upon between the parties).

TERMS OF SHIPMENTS INCOTERMS

The INCOTERMS (International Commercial Terms) is a universally recognized set of definition of

international trade terms, such as FOB, CFR & CIF, developed by the International Chamber of

Commerce (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between

buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo

a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial

terms like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight,

cargo insurance and other costs and risks.


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The INCOTERMS was first published in 1936 --- INCOTERMS 1936 --- and it is revised periodically to keep

with changes in the international trade needs. The complete definition of each term is available from

the current publication --- INCOTERMS 2000. Under INCOTERMS 2000, the international commercial

terms are grouped into E, F, C and D, designated by the first letter of the term, relating to the final letter

of the term. E.g. EXWexworks comes under grouped E.

The purpose of Incoterms is to provide a set of international rules for the interpretation of the most

commonly used trade terms in foreign trade. Thus, the uncertainties of different interpretations of such

terms in different countries can be avoided or at least reduced to a considerable degree. The scope of

Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sale

with respect to the delivery of goods. Incoterms deal with the number of identified obligations imposed

on the parties and the distribution of risk between the parties.

In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade

terms that would hold the seller responsible for the import customs clearance and/or payment of

import customs duties and taxes and/or other costs and risks at the buyers end, for example the trade

terms DEO (Delivery Ex Quay) and DDP (Delivered Duty Paid)

Quite often, the charges and expenses at the buyers end may cost more to the seller than anticipated.

To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to

handle the import routines.

Similarly, it would be best for importers not to deal in EXW (Ex Works) which would hold the buyer

responsible for the export customs clearance, payment of export customs charges and taxes, and other

costs and risks at the sellers end

MORE CLARIFICATION ON INCOTERMS

EXW {+the named place}

Ex Works: Ex means from. Works means factory, mill or warehouse, which are the sellers premises.

EXW applies to goods available only at the sellers premises. Buyer is responsible for loading the goods

on truck or container at the sellers premises and for the subsequent costs and risks. In practice, it is not

uncommon that the seller loads sthe goods on truck or container at the sellers pre4mises without

charging loading fee. N the quotation, indicate the named place (sellers premises) after the acronym

EXW for example EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) and export-trader(buyer), and the

export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term

Ex Factory, which means the same as Ex Works.

FCA {+the named point of departure}

Free Carrier: The delivery of goods on truck, rail car or container at the specified point(depot) of

departure, which is usually the sellers premises, or a named railroad station or a named cargo terminal

or into the custody of the carrier, at sellers expense. The point(depot) at origin may or may not be a

customs clearance centre. Buyer is responsible for the main carriage/freight, cargo insurance and other

costs and risks.

In the air shipment, technically speaking, goods placed in the custody of an air carrier are considered as

delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air

shipment. The term FCA is also used in the RO/RO (roll on/roll off) services

In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example


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FCA Hong Kong and FCA Seattle. Some manufacturers may use the former terms FOT (Free on Trucks)

and FOR (Free on Rail) in selling to export-traders.

FAS {+the named port of origin}

Free Alongside Ship: Goods are placed in the dock shed or at the side of the ship, on the dock or lighter,

within reach of its loading equipment so that they can be loaded aboard the ship, at sellers expense.

Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks

In the export quotation, indicate the port of origin(loading)after the acronym FAS, for example FAS New

York and FAS Bremen. The FAS term is popular in the break-bulk shipments and with the importing

countries using their own vessels.

FOB {+the named port of origin)

Free on Board: The delivery of goods on the board the vessel at the named port of origin (Loading) at

sellers expense. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and

risks. In the export quotation, indicate the port of origin (loading) after the acronym FOB, for example

FOB Vancouver and FOB Shanghai.

Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in

practice, many importers and exporters still use the term FOB in the air freight. In North America, the

term FOB has other applications. Many buyers and sellers in Canada and the USA dealing on the open

account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB

destination.

FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination

means the seller is responsible for the freight and other costs and risks until the goods are delivered to

the buyers premises which may include the import custom clearance and payment of import customs

duties and taxes at the buyers country, depending on the agreement between the buyer and seller. In

international trade, avoid using the shipping terms FOB Origin and FOB Destination, which are not part

of the INCOTERMS (International Commercial Terms).

CFR {+the named port of destination}

Cost and Freight: The delivery of goods to the named port of destination (discharge) at the sellers

expenses. Buyer is responsible for the cargo insurance and other costs and risks. The term CFR was

formerly written as C&F. Many importers and exporters worldwide still use the term C&F.

In the export quotation, indicate the port of destination (discharge) after the acronym CFR, for example

CFR Karachi and CFR Alexandria. Under the rules of the INCOTERMS 1990, the term Cost and Freight is

used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still commonly used

in the air freight.

CIF {+named port of destination}

Cost, Insurance and Freight: The cargo insurance and delivery of goods to the named port of destination

(discharge) at the sellers expense. Buyer is responsible for the import customs clearance and other

costs and risks.

In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example

CIF Pusan and CIF Singapore. Under the rules of the INCOTERMS 1990, the term CIFI is used for ocean

freight only. However, in practice, many importers and exporters still use the term CIF in the air freight.

CPT {+the named place of destination}

Carriage Paid To: The delivery of goods to the named port of destination (discharge) at the sellers


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expenses. Buyer assumes the cargo insurance, import custom clearance, payment of custom duties and

taxes, and other costs and risks. In the export quotation, indicate the port of destination (discharge)

after the acronym CPT, for example CPT Los Angeles and CPT Osaka.

CIP {+ the named place of destination)

Carriage and Insurance Paid To: The delivery of goods and the cargo insurance to the named place of

destination (discharge) at sellers expense. Buyer assumes the importer customs clearance, payment of

customs duties and texes, and other costs and risks.

In the export quotation, indicate the place of destination (discharge) after the acronym CIP, for example

CIP Paris and CIP Athens.

DAF {+ the names point at frontier}

Delivered At Frontier: The delivery of goods to the specified point at the frontier at sellers expense.

Buyer is responsible for the import custom clearance, payment of custom duties and taxes, and other

costs and risks.

In the export quotation, indicate the point at frontier (discharge) after the acronym DAF, for example

DAF Buffalo and DAF Welland.

DES {+named port of destination}

Delivered Ex Ship: The delivery of goods on board the vessel at the named port of destination

(discharge) at sellers expense. Buyer assumes the unloading free, import customs clearance, payment of

customs duties and taxes, cargo insurance, and other costs and risks.

In the export quotation, indicate the Port of destination (discharge) after the acronym DES, for example

DES Helsinki and DES Stockholm.

DEQ {+ the named port of destination

Delivered Ex Quay: The delivery of goods to the Quay (the port) at the destination at buyers expense.

Seller is responsible for the importer customs clearance, payment of customs duties and taxes, at the

buyers end. Buyer assumes the cargo insurance and other costs and risks. In the export quotation,

indicate the Port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ

Maputo.

DDU {+ the named point of destination}

Delivered Duty Unpaid: The delivery of goods and the cargo insurance to the final point at destination,

which is often the project site or buyers premises at sellers expense. Buyer assumes the import customs

clearance, payment of customs duties and taxes. The seller may opt not to insure the goods at his/her

own risks.

In the export quotation, indicate the point of destination (discharge) after the acronym DDU for example

DDU La Paz and DDU Ndjamena.

DDP {+ the named point of destination)

Delivered Duty Paid: The seller is responsible for most of the expenses which include the cargo

insurance, import custom clearance, and payment of custom duties, and taxes at the buyers end, and

the delivery of goods to the final point of destination, which is often the project site or buyers premise.

The seller may opt not to insure the goods at his/her own risk. In the export quotation, indicate the

point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.

E-term,F-term, C-term &D-term: Incoterms 2000, like its immediate predecessor, groups the


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term in four categories denoted by the first letter in the three-letter abbreviation.

1 Under the E-TERM (EXW), the seller only makes the goods available to the buyer at the sellers own

premises. It is the only one of that category.

2 Under the F-TERM (FCA, FAS, &FOB), the seller is called upon to deliver the goods to a carrier

appointed by the buyer.

3 Under the C-TERM (CFR, CIF, CPT, & CIP), the seller has to contract for carriage, but without

assuming the risk of loss or damage to the goods or additional cost due to events occurring after

shipment or discharge.

4 Under the D-TERM (DAF, DEQ, DES, DDU & DDP), the seller has to bear all costs and risks needed to

bring the goods to the place of destination.

All terms list the sellers and buyers obligations. The respective obligations of both parties have been

grouped under up to 10 headings where each heading on the sellers side mirrors the equivalent

position of the buyer. Examples are Delivery, Transfer of risks, and Division of costs. This layout helps the

user to compare the parties respective obligations under each Incoterms.

PROCESSING AN EXPORT ORDER

You should not be happy merely on receiving an export order. You should first acknowledge the export

order, and then proceed to examine carefully in respect of

1 Items

2 Specification

3 Pre-shipment inspection

4 Payment conditions

5 Special packaging

6 Labeling and marketing requirements

7 Shipment and delivery date

8 Marine insurance

9 Documentation requirement etc.

If you are satisfied on these aspects, a formal confirmation should be sent to the buyer, otherwise

clarification should be sought from the buyer before confirming the order. After confirmation of the

export order immediate steps should be taken for procurement/manufacture of the export goods. In the

meanwhile, you should proceed to enter into a formal export contract with the overseas buyer.

Before accepting any order necessary homework should have been done as to availability of the

production capacity, raw material e.t.c. It would be in the interest of the exporter to look into entering

into forward contract to safeguard against exchange rate fluctuations. Ensure that the mode of payment


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is also agreed upon. In case of shipment against letter of credit, the buyer should be advised to open the

credit well in advance before effecting the shipment.

FINANCIAL RISKS INVOLVED IN FOREIGN TRADE

As an exporter while selling goods abroad, you encounter various types of risks. The major risks which

you have to undergo are as follows:

10 Credit Risk

11 Currency Risk

12 Carriage Risk

13 Country Risk

You can protect yourself against the above risks by initiating appropriate steps.

Credit Risks :

You can cover your credit risk against the foreign buyer by insisting upon opening a letter of credit in

your favour. Alternatively one can avail of the facility offered by various credit risk agencies. A specific

insurance cover can also be obtained from ECGC (Exports Credit & Guarantee Corporation) to cover your

country risk besides covering credit risk.

Currency Risks:

As regards covering the currency risk, due to the exchange rate fluctuations, you can request your

banker to book a forward contract.

Carriage Risk:

The carriage risk can be covered by taking an appropriate general insurance policy.

Country Risk:

ECGC provides cover to protect the exporter from country risks. A detailed procedure how an exporter

can get himself protected against the above risks are given in separate chapters later.

EXPORT DOCUMENTS

Any export shipment involved various documents required by various authorities such as customs,

excise, RBI, Inspection and according depending upon the requirements, there are categorized into 2

categories, namely commercial documents and regulatory documents.

A. Commercial Documents. : - Commercial documents are required for effecting physical transfer of

goods and their title from the exporter to the importer and the realisation of export sale proceeds. Out

of the 16 commercial documents in the export documentation framework as many as 14 have been

standardised and aligned to one another. These are proforma invoice, commercial invoice, packing list,

shipping instructions, intimation for inspection, certificate, of inspection of quality control, insurance

declaration, certificate' of insurance, mate's receipt, bill of lading or combined transport document,


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application for certificate origin, certificate of origin, shipment advice and letter to the bank for

collection or negotiation of documents. However, shipping order and bill of exchange could not be

brought within the fold of the Aligned Documentation System,

1. Commercial Invoice: Commercial invoice is an important and basic export document. It is also known

as a 'Document of Contents' as it contains all the information required for the preparation of other

documents. It is actually a seller's bill of merchandise. It is prepared by the exporter after the execution

of export order giving details about the goods shipped. It is essential that the invoice is prepared in the

name of the buyer or the consignee mentioned in the letter of credit. It is a prima facie evidence of the

contract of sale or purchase and therefore, must be prepared strictly in accordance with the contract of

sale.

Contents of Commercial Invoice

1 Name and address of the exporter.

2 Name and address of the consignee.

3 Name and the number of Vessel or Flight.

4 Name of the port of loading.

5 Name of the port of discharge and final destination.

6 Invoice number and date.

7 Exporter's reference number.

8 Buyer's reference number and date.

9 Name of the country of origin of goods.

10 Name of the country of final destination.

11 Terms of delivery and payment.

12 Marks and container number.

13 Number and packing description.

14 Description of goods giving details of quantity, rate and total amount in terms of internationally

accepted price quotation.

15 Signature of the exporter with date.

Significance of Commercial Invoice

1 It is the basic document useful in preparation of various other shipping documents.

2 It is used in various export formalities such as quality and pre-Shipment inspection excise and customs

procedures etc.

3 It is also useful in negotiation of documents for collection and claim of incentives.

4 It is useful for accounting purposes to both exporters as well as importers.

5 Inspection Certificate: The certificate is issued by the inspection authority such as the export

inspection agency. This certificate states that the goods have been inspected before shipment, and that

they confirm to accepted quality standards.

6 Marine insurance policy: Goods in transit are subject to risk of loss of goods arising due to fire on ship,

perils of sea, theft etc. marine insurance protects losses incidental to voyages and in land transportation.

Marine insurance policy is one of the most important document used as collateral security because it

protects the interest of all those who have insurable interest at the time of loss. The exporter is bound

to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at

the request of the importer, but the premium payment will be made by the exporter. There are different


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types of policies such as

SPECIFIC POLICY: This policy is taken to cover different risks for a single shipment. For a regular

exporter, this policy is not advisable as he will have to take a separate policy every time a shipment is

made, so this policy is taken when exports are in frequent.

Floating Policy: This is taken to cover all shipments for some months. There is no time limit, but there

is a limit on the value of goods and once this value is crossed by several shipments, then it has to be

renewed.

Open Policy: This policy remains in force until cancelled by either party i.e. insurance company or the

exporter.

Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or

more destinations. The open cover may specify the maximum value of consignment that may be sent

per ship and if the value exceeded, the insurance company must be informed by the exporter.

Insurance Premium: Differs upon product to product and a number of such other factors, such as,

distance of voyage, type and condition of packing, etc. Premium for air consignments are lowered as

compared to consignments by sea.

4. Consular Invoice: Consular invoice is a document required mainly by the Latin American countries like

Kenya, Uganda, Tanzania, Mauritius, New Zealand, Myanmar, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana,

Guinea, Zanzibar, etc. This invoice is the most important document, which needs to be submitted for

certification to the Embassy of the importing country concerned. The main purpose of the consular

invoice is to enable the authorities of the importing country to collect accurate information about the

volume, value, quality, grade, source, etc., of the goods imported for the purpose of assessing import

duties and also for statistical purposes. In order to obtain consular invoice, the exporter is required to

submit three copies of invoice to the Consulate of the importing country concerned. The Consulate of

the importing country certifies them in return for fees. One copy of the invoice is given to the exporter

while the other two are dispatched to the customs office of the importer's country for the calculation of

the import duty. The exporter negotiates a copy of the consular invoice to the importer along with other

shipping documents.

Significance of Consular Invoice for the Exporter

1 It facilitates quick clearance of goods from the customs in exporter's as well as importer's country.

2 Certification' of goods by the Consulate of the importing country indicarer that the importer has

fulfilled all procedural and licensing formalities for import of goods.

3 It also assures the exporter of the payment from the importing country.

Significance of Consular Invoice for the Importer

1 It facilitates quick clearance of goods from the customs at the port destination and therefore, the

importer gets quick delivery of goods.

2 The importer is assured that the goods imported are not banned for imported in his country.

Significance of Consular Invoice for the Customs Office

1 It makes the task of the customs authorities easy.

2 It facilitates quick calculation of duties as the value of goods as determine by the Consulate is

considered for the purpose.

5. Certificate of Origin: The importers in several countries require a certificate of origin without which

clearance to import is refused. The certificate of origin states that the goods exported are originally


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manufactured in the country whose name is mentioned in the certificate. Certificate of origin is required

when:-

1 The goods produced in a particular country are subject to preferential tariff rates in the foreign

market at the time importation.

2 The goods produced in a particular country are banned for import in the foreign market.

Types of the Certificate of Origin

(a) Non-preferential Certificate, of Origin: - Non-preferential certificate of origin is required in general by

all countries for clearance of goods by the importer, on which no preferential tariff is given. It is issued

by:

1 The authorised Chamber of Commerce of the exporting country.

2 Trade Association. Of the exporting country.

(b) Certificate of Origin for availing Concessions under GSP :- Certificate of origin required for availing of

concessions under Generalised System of Preferences (GSP) extended by certain, countries such as

France, Germany, Italy, BENELUX countries, UK, Australia; Japan, USA, etc. This certificate can be

obtained from specialised agencies, namely;

1 Export Inspection Agencies.

2 Jt. Director General of Foreign Trade..

3 Commodity Boards and their regional offices.

4 Development Commissioner, Handicrafts.

5 Textile Committees for textile products.

6 Marine Products Export Development Authority for marine products.

7 Development Commissioners of EPZs

(c) Certificate for availing Concessions under Commonwealth Preferences (CWP): Certificate of origin for

the purpose of Commonwealth Preference is also known as 'Combined Certificate of Origin and Value'. It

is required by two member countries, i.e. Canada and New Zealand of the Commonwealth. For

concession under Commonwealth preferences, the certificates or origin have to be submitted in special

forms obtainable, from the High Commission of the country concerned.

(d) Certificate for availing Concessions under other Systems of Preference:- Certificate of origin is also

required for tariff concessions. under the Global System of Trade Preferences (GSTP), Bangkok

Agreement(BA) and SAARC Preferential Trading Arrangement (SAPTA) under which India grants and

receives tariff concessions On imports and exports. Export Inspection Council (EIC) is the sole authority

to print blank Certificates of Origin under BA, SAARC and SAPTA which can be issued by such agencies as

EPCs, DCs of EPZs, EIC, APEDA, MPEDA, FIEO, etc...

Contents of Certificate of Origin

1 Name and logo of chamber of commerce.


3 Name and address of the consignee.

4 Name and the number of Vessel of Flight


6 Name of the port of discharge and place of delivery.



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8 Packing and container description.

9 Total number of containers and packages.

10 Description of goods in terms of quantity.

11 Signature and initials of the concerned officer of the issuing authority.

12 Seal of the issuing authority.

Significance of the Certificate of Origin

1 Certificate of origin is required for availing of concessions under Generalised System of Preferences

(GSP) as well as under Commonwealth Preferences (CWP).

2 It is to be submitted to the customs for the assessment of duty clearance of goods with concessional

duty.

3 It is required when the goods produced in a particular country are banned for import in the foreign

market.

4 It helps the buyer in adhering to the import regulations of the country.

5 Sometimes, in order to ensures that goods bought from some other country have not been reshipped

by a seller, a certificate of origin IS required.

6. Bill of Lading: The bill of lading is a document issued by the shipping company or its agent

acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like

order and condition as received, to the consignee or his order, provided the freight and other charges as

specified in the bill have been duly paid. It is also a document of title to the goods and as such, is freely

transferable by endorsement and delivery.

Bill of Lading serves three main purposes:

1 As a document of title to the goods;

2 As a receipt from the shipping company; and

3 As a contract for the transportation of goods.

Types of Bill of Lading

1 Clean Bill of Lading: - A bill of lading acknowledging receipt of the goods apparently in good order and

condition and without any qualification is termed as a clean bill of lading.

2 Claused Bill of Lading: - A bill of lading qualified with certain adversere marks such as, "goods

insufficiently packed in accordance with the Carriage of Goods by Sea Act," is termed as a claused bill of

lading.

3 Transhipment or Through Bill of Lading: - When the carrier uses other transport facilities, such as rail,

road, or another steamship company in addition to his own, the carrier issues a through or transhipment

bill of lading.

4 Stale Bill of Lading: - A bill of lading that has been held too long before it is passed on to a bank for

negotiation or to the consignee is called a stale bill of lading.

5 Freight Paid Bill of Lading: - When freight is paid at the time of shipment or in advance, the bill of

landing is marked, freight paid. Such bill of lading is known as freight bill of lading.

6 Freight Collect Bill of lading :- When the freight is not paid and is to be collected from the consignee on

the arrival of the goods, the bill of lading is marked, freight collect and is known as freight collect bill of

lading

Contents of Bill of Lading


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1 Name and logo of the shipping line.

2 Name and address of the shipper.

3 Name and the number of vessel.





8 Total number of containers and packages,


10 Container status and seal number.

11 Gross weight in kg. and volume in terms of cubic meters.

12 Amount of freight paid or payable.

13 Shipping bill number and date.

14 Signature and initials of the Chief Officer. .

Significance of Bill of Lading for Exporters

1 It is a contract between the shipper and the shipping company for carriage of the goods to the port of

destination.

2 It is an acknowledgement indicating that the goods mentioned in the document have been received on

board for the Purpose of shipment.

3 A clean bill of lading certifies that the goods received on board the ship are in order and good

condition.

4 It is useful for claiming incentives offered by the government to exporters

5 The exporter can claim damages from the shipping company if the goods are lost or damaged after the

issue of a clean bill of lading.

Significance of Bill of Lading for Importers

1 It acts as a document of title to goods, which is transferable endorsement and delivery.

2 The exporter sends the bill of lading to the bank of the importer so as to enable him to take the

delivery of goods.

3 The exporter can give an advance intimation to the foreign buyer about the shipment of goods by

sending him a non-negotiable copy of bill of lading

Significance of Bill of Lading for Shipping Company

1 It is useful to the shipping company for collection of transport charges from the importer, if not

collected from the exporter.

7. Airway Bill: An airway bill, also called an air consignment note, is a receipt issued by an airline for the

carriage of goods. As each shipping company has its own bill of lading, so each airline has its own airway

bill. Airway Bill or Air Consignment Note is not treated as a document of title and is not issued in

negotiable form.

Contents of Airway Bill

2 Name of the airport of departure and destination.

3 The names and addresses of the consignor, consignee and the first carrier.




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9 Amount of freight paid or payable.

10 Signature and initials of the issuing carrier or his agent.

Importance of Airway Bill: It is a contract between the airlines or his agent to carry goods to the

destination. It is the document of instructions for the airline handling staff. It acts as a customs

declaration form. Since, it contains details about freight it also represents freight bill.

7. Shipment Advice to Importer:- After the shipment of goods, the exporter intimates the importer

about the shipment of goods giving him details about the date of shipment, the name of the vessel, the

destination, etc. He should also send one copy of non-negotiable bill of lading to the importer.

8. Packing List: The exporter prepares the packing list to facilitate the buyer to check the shipment. It

contains the detailed description of the goods packed in each case, their gross and net weight, etc. The

difference between a packing note and a packing list is that the packing note contains the particulars of

the contents of an individual pack, while the packing list is a consolidated statement of the contents of a

number of cases or packs.

9. Bill of Exchange: The instrument is used in receiving payment from the importer. The importer may

prefer bill of exchange to LC as it does not involve blocking of funds. A bill of exchange is drawn by the

exporter on the importer, to make payment on demand at sight or after a certain period of time.

B/E is a means to collect payment.

B/E is a means to demand payment.

B/E is a means to extent the credit.

B/E is a means to promise the payment.

B/E is an official acknowledgement of receipt of payment.

Financial documents perform the function of obtaining the finance collection of payment etc.

2 sets. Each one bearing the exclusion clause making the other part of the draft invalid.

Sight B/E.

Usance B/E.

It is known as draft.

Immediate payment Sight draft.

There are two copies of draft. Each one bears reference to the other part A&B. when any one of the

draft is paid, the second draft becomes null and void.

Parties to bill of exchange.

1. The drawer: The exporter / person who draws the bill.

2. The drawee: The importer / person on whom the bill is drawn for payment.

3. The payee: The person to whom payment is made, generally, the exporter / supplier of the goods.

B Auxiliary Documents: These documents generally form the basic documents based on which the

commercial and or regulatory documents are prepared. These documents also do not have any fixed

formats and the number of such documents will wary according to individual requirements.

1. Proforma Invoice: The starting point of the export contract is in the form of offer made by the

exporter to the foreign customer. The offer made by the exporter is in the form of a proforma invoice. It

is a quotation given as a reply to an inquiry. It normally forms the basis of all trade transactions.


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Contents of Proforma Invoice

Name and address of the exporter.

Name and address of the importer.

Mode of transportation, such as Sea or Air or Multimodal transport.

Name of the port of loading.

Name of the port of discharge and final destination.

Provisional invoice number and date.

Exporter's reference number.

Buyer's reference number and date.

Name of the country of origin of goods.

Name of the country of final destination.

Marks and container number. .

Number and packing description.

Description of goods giving details of quantity, rate and total amount in terms of internationally

accepted price quotation.

Signature of the exporter with date.

Importance of Proforma Invoice

It forms the basis of all trade transactions.

It may be useful for the importer in obtaining import licence or foreign exchange.

2. Intimation for Inspection: Whenever the consignment requires the pre-shipment inspection,

necessary application is to be made to the concerned inspection agency for conducting the inspection

and issue of certificate thereof.

3. Declaration of Insurance: Where the contract terms require that the insurance to be covered by the

exporter, the shipper has to give details of the shipment to the insurance company for necessary

insurance cover. The detailed declaration will cover:

Name of the shipper \ exporter.

Name & address of buyer.

Details of goods such as packages, quantity, value in foreign currency as well as in Indian Rs. Etc.

Name of the Vessel \ Aircraft.

Value for which insurance to be covered.

4. Application of the Certificate Origin: In case the exporter has to obtain Certificate of Origin from the

concerned authorities, an application has to be made to the concerned authority with required

documents. While the simple invoice copy will do for getting C\O from the chamber of commerce, in

respect of obtained the same from the office of the Textile Committee or Export Promotion Council, the

documents requirement are different.

5. Mate's Receipt: Mate's receipt is a receipt issued by the Commanding Officer of the ship when the

cargo is loaded on the ship. The mate's receipt is a prima facie evidence that goods are loaded in the

vessel. The mate's receipt is first handed over to the Port Trust Authorities. After making payment of all

port dues, the exporter or his agent collects the mate's receipt from the Port Trust Authorities. The

mate's receipt is freely transferable. It must be handed over to the shipping company in order to get the

bill of lading. Bill of lading is prepared on the basis of the mate's receipt.

Types of Mate's Receipts


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Clean Mate's Receipt: - The Commanding Officer of the ship issues a clean mate's receipt, if he is

satisfied that the goods are packed properly and there is no defect in the packing of the cargo or

package.

Qualified Mate's Receipt: - The Commanding Officer of the ship issues qualified mate's receipt, when

the goods are not packed properly and the shipping company does not take any responsibility of

damage. to the goods during transit.

Contents of Mate's Receipt

1 Name and logo of the shipping line.

2 Name and address of the shipper.

3 Name and the number of vessel.








11 Gross weight in kg. and volume in terms of cubic meters.

12 Shipping bill number and date.

13 Signature and initials of the Chief Officer.

Significance of Mate's Receipt

1 It is an acknowledgement of goods received for export on board the ship.

2 It is a transferable document. It must be handed over to the shipping company in order to get the bill

of lading.

3 Bill of lading, which is the title of goods, is prepared on the basis of the mate's receipt.

4 It enables the exporter to clear port trust dues to the Port Trust Authorities.

Obtaining Mate's Receipt

The goods are then loaded on board the ship for which the Mate or the Captain of the ship issues Mate's

Receipt to the Port Superintendent.

6. Shipping order: it is issued by the Shipping/Conference Line intimating the exporter about the

reservation of space for shipment of cargo which the exporter intends to ship. Details of the vessel, poet

of the shipment, and the date on which the goods are to be shipped are mentioned. This order enables

the exporter to make necessary arrangements for customs clearance and loading of the goods.

7. Shipping Instructions: at the pre-shipment stage, when the documents are to sent to the CHA for

customs clearance, necessary instructions are to be give with relevance to

1 The export promotion scheme under which goods are to be exported.

2 Name of the specific vessel on which the goods are to be loaded.

3 If goods are to be FCL or LCL.

4 If freight amount are to be paid / collected.

5 If shipment are covered under A.R.E.-1 procedure.

6 Instructions for obtaining Bill of Lading etc.

8. Bank letter for negotiation of documents: at the post shipment stage, the exporter has to submit the


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documents to a bank for negotiation or discounting or collection for forwarding the same to the

customer and also for realization of export proceeds. The bank letter is the set of instruction for the

bank as to how to handle the documents by them and by the bank at the buyers country which may

include

1 Name and address of the buyer.

2 Details of various documents being sent and the number of the copies thereof.

3 Name and address of the buyers bank if available.

4 If the documents are sent L/C or on open terms.

5 If the proceeds are to adjusted against any pre-shipment packing credit loan.

6 If the bill amount is to be adjusted against any forward exchange cover.

7 In case of credit bill who has to bear the interest, either exporter or if the same is to be collected from

the buyer.

8 Instructions in case non-acceptance/non-payment by the buyer.

C. Regulatory Document: Regulatory pre-shipment export documents are prescribed by the different

government departments and bodies in order to comply with various rules and regulations under the

relevant laws governing export trade such as export inspection, foreign exchange regulation, ex port

trade control, customs, etc. Out of 9 regulatory documents four have been standardised and aligned.

These are shipping bill or bill of export, exchange control declaration (GR from), export application dock

challan or port trust copy of shipping bill and receipt for payment of port charges.

1. Shipping Bill: Shipping bill is the main customs document, required by the customs authorities for

granting permission for the shipment of goods. The cargo is moved inside the dock area only after the

shipping bill is duly stamped, i.e. certified by the customs. Shipping bill is normally prepared in five

copies :-

1 Customs copy.

2 Drawback copy.

3 Export promotion copy.

4 Port trust copy.

5 Exporter's copy.

Types of Shipping Bill

Based on the incentives offered by the government, customs authorities have introduced three types of

shipping bills:-

1 Drawback Shipping Bill: - Drawback shipping bill is useful for claiming the customs drawback against

goods exported.

2 Dutiable Shipping Bill: - Dutiable shipping bill is required for goods which are subject to export duty.

3 Duty-free Shipping Bill: - Duty-free shipping bill is useful for exporting goods on which there is no

export duty.

In order to facilitate easy recognition and quick processing, following colours have been provided to

different kinds of shipping bills :

Types of goods By Sea By Air

Drawback shipping bill Green Green

Dutiable shipping bill Yellow Pink


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Duty-Free shipping bill White Pink

Contents of Shipping Bill


2 Name and address of the importer.

3 Name of the vessel, master or agents and flag.

4 Name of the port at which goods are to be discharged.

5 Country of final destination.

6 Details about packages, description of goods, marks and numbers, quantity and details of each case.

7 FOB price and real value of goods as defined in the Sea Customs Act.

8 Whether Indian or foreign merchandise to be re-exported

9 Total number of packages with total weight and value.

Significance of Shipping Bill

a) Shipping bill is the main customs document, required by the customs authorities for granting

permission for the shipment of goods.

b) The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e. certified by

the customs.

c) Duly endorsed shipping bill is also necessary for the collection of export incentives offered by the

government.

d) It is useful to the Customs Appraiser while determining the actual value of goods exported.

2. A.R.E. 1 form (Central excise): this form ARE-1 is prescribed under Central Excise rules for export of

goods. In case goods meant for export are cleared directly from the premises of a manufacturer, the

exporter can avail the facility of exemption from payment of terminal excise duty. The goods may be

cleared for export either under claim for rebate of duty paid or under bond without payment of duty. In

both the events the goods are to be cleared under form A.R.E-1 which will show the details of the goods

being exported, the relevant duty involved and if the duty is paid or goods being cleared under bond,

details of goods being sealed either by the exporter or Central Excise officials etc.

3. Exchange Control declaration Form (GR/PP/SOFTEX): under the exchange control regulations all

exporters must declare the details of shipment for monitoring by the Reserve Bank of India. For this

purpose, RBI has prescribed different forms for different types of shipments like GRI, PP forms etc.

These declaration forms must be presented to the customs officials at the time of passing of export

documentation. Under the EDI processing of shipping bill in the customs, these forms have been

dispensed with and a new form SDF has to be submitted to the customs in the place of above forms.

4. Export Application: this is the application to be made to the customs officials before shipment of

goods. The prescribed form of the application is the Shipping Bill/Bill of Export. Different types are

required for shipment like ex-bond, duty free goods, and dutiable goods and for export under different

export promotion schemes such as claims for duty drawback etc.

5. Vehicle Ticket/Cart Ticket/Gate Pass etc.: before the goods are being taken inside the port for loading,

necessary permission has to be obtained for moving the vehicle into the customs area. This permission

is granted by the Port Trust Authority. This document will contain the detail of the export cargo, name

and address of the shippers, lorry number, marks and number of the packages, drivers licence details

etc.

6. Bank Certificate of Realisation: this is the form prescribed under the Foreign Trade Policy, wherein the


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negotiating bank declares the fob value of exports and for the date of realisation of the export proceeds.

This certificate is required fore obtaining the benefit under various schemes and this value of fob is

reckoned as fob value of exports.

D. Other Document:

1 Black List Certificate: it certifies that the ship/aircraft carrying the cargo has not touched the particular

country on its journey or that the goods are not from the particular country. This is required by certain

nations who have strained political and economical relations with the so called Black Listed Countries.

2 Language Certificate: Importers in the European Community require a language certificate along with

the GSP certificate in respect of handloom cotton fabrics classifiable under NAMEX code 55.09.

Generally four copies of language certificate are prepared by the concerned authority who issues GSP

certificate. Three copies are handed over to the exporter. A copy is sent along with the other documents

for realisation of export proceeds.

3 Freight Payment Certificate: in most of the cases, the B/L or AWB will mention the transportation and

other related charges. However if the exporter does not want these details to be disclosed to the buyer,

the shipping company may issue a separate certificate for payment of the freight charges instead of

declaring on the main transport documents. This document showing the freight payment is called the

freight certificate.

4 Insurance Premium Certificate: this is the certificate issued by the Insurance Company as

acknowledgement of the amount of premium paid for the insurance cover. This certificate is required by

the bank for arriving at the fob value of the goods to be declared in the bank certificate of realisation.

5 Combined Certificate of Origin and Value: this certificate is required by the Commonwealth Countries.

This certificate is printed in a special way by the Commonwealth Countries. This certificate should

contain special details as to the origin and value of goods, which are useful for determining import duty.

All other details are generally the same as that of Commercial Invoice, such as name of the exporter and

the importer, quality and quantity of the goods etc.

6 Customs Invoice: this is required by the countries like Canada, USA for imposing preferential tariff

rates.

7 Legalized Invoice: this is required by the certain Latin American Countries like Mexico. It is just like

consular invoice, which requires certification from Consulate or authorised mission, stationed in the

exporters country.

Special Provision under Uniform Customs and practice for Documentary Credit UCP-500, for Commercial

Invoice:

1 Article-37: Commercial Invoice

2 Must appear on their face to be issued by the beneficiary named in the credit.

3 Must be made out in the name of the applicant.

4 Need not be signed

5 Banks may refuse Commercial Invoice issued for amounts in excess of the amount permitted by the

credit except otherwise stated.

6 The description of the goods in the commercial invoice must correspond with the description of the

credit. In all other documents the goods may be described in the General in general terms not

inconsistent with description in the credit. In all documents goods may be described in general terms

not inconsistent with the Description of the goods in the credit.


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Pre-Shipment Documents:

1 Shipping bill.

2 Export order/Sales contract/Purchase order.

3 Letter of Credit

4 Commercial invoice.

5 Packing list.

6 Certificate of origin.

7 Guaranteed Remittance (G.R/SDF/PP/SOFTEX),or SDF.

8 Certificate of Inspection.

9 Various declarations required as per custom procedure.

Exchange Control Declaration Form: all exports to which the requirement of declaration apply must be

declared on appropriate forms as indicated below unless the consignment is of samples and of No

Commercial Value

1 GR FORM: to be completed in duplicate for exports otherwise than by post including export of

software in physical form i.e. magnetic tape/discs and paper media.

2 SDF FORM: to be completed in duplicate and appended to the Shipping Bill for export declare to the

customs offices notified by the Central Government which have introduced EDI system for processing

Shipping Bill.

3 PP FORM: to be completed in duplicate for export by post.

4 SOFTX: to be completed in triplicate for export of software otherwise than in the physical form i.e.

magnetic tapes/discs and paper media.

These forms are available for sale in Reserve Bank of India

Export declaration forms have utmost importance and are binding on the exporters. It is, therefore,

necessary that enough care is taken while declaring exports on these forms, with special reference on

the following points.

1 Name and address of the authorised dealer through whom proceeds of exports have been or will be

realized should be specified in the relevant column of the form.

2 Details of commission and discount due to foreign agent or buyer should be correctly declared

otherwise difficulties may arise at the time of remittance of such commission.

3 It should be clearly indicated in the form whether the export is on outright sale basis or on

consignment basis and irrelevant clauses must be stuck out

4 Under the term analysis of full export value a break up of full export value of goods under F.O.B

value, freight and insurance should be furnished in all cases, irrespective of the terms of contract.

5 All documents relating to the export of goods from India must pass through the medium of an

authorised dealer in foreign exchange in India within 21 days of shipment.

6 The amount representing the full export value of goods must be realized within six months from date

of shipment.

Disposal of Copies of Export Documentation Form

1 GR forms covering export of goods other than jewellery should be completed by the exporter in

duplicate and both the copies should be submitted to customs at the port of Shipment. Customs will

give their running serial number on both the copies of the GR forms after verifying the particulars and


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admitting the corresponding shipping bill. The value declared by the exporter will also be verified by the

customs and they will also record the assessed value. Duplicate copy will be returned to the exporter

and the original will be remained by the customs for onward submission to the Reserve Bank. Duplicate

form of the GR form will again be presented to the customs at the time of actual shipment. After

examination of goods and certifying the quantity passed for shipment the duplicate copy will again be

returned to exporter for submission to an authorised dealer. However, an exception to submission of GR

forms to the Customs authorities have been made in case of deep sea fishing.

2 (a) PP forms are to be first presented to an authorised dealer for countersignature. The form will be

countersigned by the authorised dealer only if the post parcel is addressed to his branch or

correspondent bank in the country or import. The concerned overseas branch or correspondent is to be

instructed to deliver the post parcel against payment or acceptance of relevant bill, as the case may be.

(b) For post parcel addressed directly to the consignee, the authorised dealer will countersign the form,

provided

(i) an irrevocable letter of credit for the full value of export has been opened in favour of exporter and

has been advised through authorised dealer concerned; or

(ii) the full value of shipment has been received in advance by the exporter through an authorised

dealer; or

(iii) On receipt of full value of shipment declared on this form the authorised dealer will forward to RBI

the duplicate copy along with the certified copy of shippers invoice.

(iv) The authorised is satisfied on the basis of standing and track record of the exporter and

arrangements made for realisation of the export proceed that he cold do so. If the authorised dealer is

not satisfied about standing etc. of the exporter, the application is rejected. No reference is entertained

by the Reserve Bank in such cases.

(c) The original PP form countersignature will be returned to the exporter by the authorised dealer and

the duplicate will be retained by him. Original PP form should then be submitted to the post office along

with the parcel. The post office through the goods have been dispatched will forward the original to RBI.

The export of computer software may be undertaken in physical form i.e. software prepared on

magnetic tape and paper media as well as in non-physical form by direct data transmission through

dedicated earth stations/satellite links. The export of computer software in physical form is subject to

normal declaration on GR/PP form and regulations applicable there to will also be applicable to such

exports. However, export of non-physical form should be declared on SOFTEX Form. Besides computer

software, export of video / T.V. Software and all other types of software products / packages should also

be declared on the SOFTEX forms. Since export of software is fraught with many risks and special

guidelines have been framed for handling such exports.


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OCTROI

1 Octroi is the local tax levied by the civic body on goods entering into the city.

2 There are three procedures for clearing goods which are meant for export.

Procedure 1, Export on payment of octroi duty and refund thereof after export.

Pay the Octroi Duty and apply for refund of payment made.

1 At Octroi Naka form B is issued with cash receipt for the payment of Octroi Duty.

2 Cargo is moved to the docks.

3 At Docks Octroi officer prepares formC & endorses Shipping Bill Number & Steamers Name.

4 After shipment exporter prepares claim for refund by submitting following documents:

5 Covering Letter for refund of Octroi Duty.

6 Original receipt of Octroi paid.

7 Original Form B.

8 Original Form C.

9 Invoice under which material was bought to the city.

10 Export invoice issued by the Exporter to the importer.

11 Export Promotion Copy of Shipping Bill Photo Copy.

12 Bill of Lading or Airway Bill Copy.

Procedure 2, Export without payment of Octroi Duty.

N Form Procedure.

1 Prepares form N in 3 copies.

2 Checking of documents Shipping Bill, Carting order, Export Invoice by Octroi officer.

3 Under taking that the goods will be cleared for export within 7 days of clearance through the octroi

post.


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4 Octroi officer at Docks will endorse the Shipping Bill number & shipment details on N form.

5 Proof of export... N form with above endorsement to be submitted to the Head Office along with

copies of Shipping Bill, Bill of Lading, Export Invoice etc.

Procedure 3

E.P (Export Promotion) Form:

1 Registration form + IEC / RCMC + CA Certificate.

2 Number will be allotted.

3 Fees Rs. 500/-

Documents Checked

1 Factory Challan cum Invoice.

2 ARE 1.

3 EP forms 3 copies.

4 Export order.

5 Shipping Bill.

Consignment Removed to Docks and Proof of Export to be given to Octroi authorities.

1 Companys Letter.

2 EP form.

3 EPC.

4 Bill of Lading.

5 Shipping Bill 6.25% Service charge.

Bar Coding

1 It is the endeavor of the Central Government to enhance export competitiveness of the Indian

products and to promote substantially.

2 Compliance with prevalent international best practices.

3 National task force has recommended adoption of Bar-coding for all Indian products within five years.

4 Bar coding, using International Symbologies / Numbering, systems would enable timely and accurate

capture of product information and its communication across the supply chain ahead of physical

product flow.

5 With the ultimate objective of facilitating adoption of Bar-coding for all products using international

Symbologies numbering systems all exports of finished and packaged items meant for retail sale shall

incorporate barcodes from a date to be notified by DGFT.

MARINE INSURANCE POLICY

Goods in transit are subject to risks of loss of goods arising due to fire on the ship, perils of sea, thefts

etc. Marine insurance protects losses incidental to voyages and in land transportation.

Marine Insurance Policy is one of the most important document used as collateral security because it

protects the interest of all those who have insurable interest at the time of loss. The exporter is bound

to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at

the request of the importer, but the premium payment will be made by the exporter.

There are different types of policies such as

Specific Policy: This policy is taken to cover different risks for a single shipment. For a regular exporter,

this policy is not advisable as he will have to take a separate policy every time the shipment is made, so

this policy is taken when exports are infrequent.


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Floating Policy: This policy is taken to cover all shipments for same months. There is no time limit, but

there is a limit on the value of goods and once this value is crossed by several shipments, then it has to

be renewed.

Open Policy: This policy remains in force until cancelled by either party, i.e. insurance company or the

exporter.

Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or all

destinations. The open cover may specify the maximum value of consignment that may be sent pre ship

and if the value exceeded, the insurance company must be informed by the exporter.

Insurance Premium: Differs upon from product to product and a number of other such factors, such as,

distance of voyage, type and condition of packing etc. Premium for air consignments are lower as

compared to consignments by sea.