FEXM Documentation Process

8/10/2019 FEXM Documentation Process

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Documentation of a Garment

Export house

Submitted to:

Prof. I Chakrapani

Submitted by:

Chahat Jain (06)

Nikita Jain (23)

Jayveer Deo (18)

Karishma Manghnani (20)

Parul Nagpal (24)

Shraavya Sukumar (32)


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Export Documentation

Once the goods are ready the exporter has to prepare and execute various documents

of different tags of sending the shipment of goods to the importer

The various documents are vital to the exporter and bank which is a media of payment

The documentary requirements are both regulatory and operational in nature and have

to comply with the rules and regulation with the Indian government as well as the

importing countries for different type of products.

These requirement are different for different type of products

Accuracy and completeness are the prime necessities in documents covering export

shipments

Importance of Export document

As an evidence of shipment and title of goods

For obtaining payments

Transportation of the goods

Custom clearance of the goods

And many other purposes

Export document cost

Export documentation work constitutes a heavy charge in exports activity

Its costly, complex and cumbersome

Minor discrepancies of any kind either in the date itself or any typing error in the

document which looks harmless might proves costly


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Maximum tolerance is 1 mm

Specifications

The captions inside the boxes should be printed in 6 points sans serif face and should be

located as near on the top left corner of the boxes as possible

Documents need to generated mechanically

Paper should be found in stable form 50-60% relative humidity

Documentation practice in India

In India, on an average about 25 documents are associated with the pre-shipment

stages to export transaction

These documents are classified in to two categories:

commercial

regulatory


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Export Documents: An export trade transaction distinguishes itself from a domestictrade transaction in more than one way. One of the most significant variations between the

two arises on account of the much more intensive documentation work. The documents

mentioned in the pre & post shipment procedure are discussed below:

1. Invoice: An invoice or bill is a commercial document issued by a seller to the buyer,indicating the products, quantities, and agreed prices for products or services the seller has

provided the buyer. An invoice indicates the buyer must pay the seller, according to the

payment terms. The buyer has a maximum amount of days to pay these goods and are

sometimes offered a discount if paid before.


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In the rental industry, an invoice must include a specific reference to the duration of the time

being billed, so rather than quantity, price and discount the invoicing amount is based on

quantity, price, discount and duration. Generally speaking each line of a rental invoice will refer

to the actual hours, days, weeks, months, etc being billed.

From the point of view of a seller, an invoice is a sales invoice. From the point of view of a

buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the

term invoice indicates money is owed or owing. In English, the context of the term invoice is

usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or

"We received an invoice from them" (we owe them money).

Invoices are of 4 types:

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

an exporter to the foreign customer. The offer made by an exporter is in the form of a Proforma

invoice. It is a quotation given as a reply to an enquiry. The importance of a Proforma invoice is

that it forms the basis of all trade transaction and it may be useful for an importer to obtain the

import license or foreign exchange


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b. Commercial invoice: A commercial invoice is a document used in foreign trade. It is used as a

customs declaration provided by the person or corporation that is exporting an item across

international borders. Although there is no standard format, the document must include a few

specific pieces of information such as the parties involved in the shipping transaction, the goods

being transported, the country of manufacture, and the Harmonized System codes for those

goods.

A commercial invoice must also include a statement certifying that the invoice is true, and a

signature. A commercial invoice is used to calculate tariffs, international commercial terms (like

the Cost in a CIF) and is commonly used for customs purposes. Normally, the invoice is

prepared first, & several other documents are then prepared by deriving information from the

invoice


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c. Consular invoice: It is certification by a consul or Government official covering an

international shipment of goods. It ensures that exporters trade papers are in order & the

goods being shipped do not violate any law or trade restrictions.


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d. Customs invoice: It is an invoice made on specified format for the Custom officials to

determine the value etc. as prescribed by the authorities of the importing country.


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2. Packing list:A shipping list, packing list, waybill, packing slip (also known as a bill of parcel,

unpacking note, packaging slip, (delivery) docket, delivery list, manifest or customer receipt, is a

shipping document that accompanies delivery packages, usually inside an attached shipping

pouch or inside the package itself.


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It commonly includes an itemized detail of the package contents and does not include customer

pricing. It serves to inform all parties, including transport agencies, government authorities, and

customers, about the contents of the package. It helps them deal with the package accordingly.

It shows the details of goods contained in each parcel / shipment. Considerably more detailed

and informative than a standard domestic packing list, it itemizes the material in each individual

package and indicates the type of package, such as a box, crate, drum or carton. Both

commercial stationers and freight forwarders carry packing list forms.

3. Certificate of Inspection: Pre-shipment inspection, also called pre shipment inspection or

PSI, is an important and reliable quality Control method for checking goods' quality while clients

buy from the suppliers.

After ordering a number of articles, the buyer lets a third party control the ordered goods

before they are dispatched to him. Normally an independent inspection company is assigned

with the task of the PSI, as it is in the interest of the buyer that somebody not connected with

the deal in any way verifies the amount and quality. This way the buyer makes sure, he gets the

goods he paid for.

Although increasing numbers of clients would like to collect suppliers' information from the

Internet, this contains high risks because it is not a face-to-face transaction, and Internet

phishing and fraud can corrupt it. Pre-shipment inspection can greatly avoid this risk and ensure

clients get quality products from suppliers.

The pre-shipment inspection is normally agreed between a buyer, a supplier, and a bank, and it

can be used to initiate payment for a letter of credit. A PSI can be performed at different stages:

Checking the total amount of goods and packing

Controlling the quality and/or consistency of goods

Verifying compliance with the standards of the destination country (e.g. ASME or CE mark)

The transport company often performs the first stage, but for the latter two stages a proper

inspection company is needed. Similarly, if between the buyer and seller money transfer via a


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letter of credit is agreed upon, it is necessary to assign a reputable inspection company. In case

of the letter of credit, after inspection of the goods, an inspection certificate is sent to the bank

issuing the letter of credit and the buyer, initiating the money transfer. Inspection companies

are classified in two classes.


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Free-market companies:These are privately owned companies, which sell their services to the

market. Danger with these might be, especially if it is a smaller company that they might be

paid as well by the manufacturer thus working in his interest.

State owned inspection companies: Only very few companies operating on the market are

state-owned or partly state-owned. The shareholding of governmental institutions guarantees

the independence and objectivity.

A higher form of the PSI is called expediting; in this the dates of delivery and the production are

controlled as well.

Some countries, like Botswana require PSIs for all goods entering the country in order to fight

corruption. In these cases the company designated by the country must perform the PSI.

4. Certificate of Origin: - A Certificate of Origin (often abbreviated to CO or COO) is a document

used in international trade. It traditionally states from what country the shipped goods

originate, but "originate" in a CO does not mean the country the goods are shipped from, but

the country where the goods are actually made. This raises a definition problem in cases where

less than 100% of the raw materials and processes and added value are not all from one

country. An often used practice is that if more than 50% of the cost of producing the goods

originate from one country, that country is acceptable as the country of origin (then the

"national content" is more than 50%). In various international agreements, other percentages

of national content are acceptable. This document has a dedicated equivalent for the

(international) trade in the economic service of electricity called Guarantee of origin.

When countries unite in trading agreements, they may allow Certificate of Origin to state the

trading bloc as origin, rather than the specific country.

The document may be issued by the exporter or be confirmed by another party in the exporting

country, such as a notary, a chamber of commerce, or a local consulate of the destination

country. In many cases specific government-issued documents are required, such as for

shipments under the North American Free Trade Agreement, or for preferential customs

treatment in importing countries for shipments of processed/manufactured goods from less


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developed countries to developed ones (often referred to as the green CO form "A", or GSP

(Generalized System of Preferences) Form A CO).


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The CO is primarily important for classifying the goods in the customs regulations of the

importing country, thus defining how much duty shall be paid. But it may also be important for

import quota purposes and for statistical purposes, and especially for food shipments, it may

also be important for health regulations.

Before concluding a transaction, the exporter and importer should always clarify whether a CO

is required, and if so, agree on exactly the form and content of the CO.

A preferential certificate of origin is a document attesting that goods in a particular shipment

are of a certain origin under the definitions of a particular bilateral or multilateral free trade

agreement (FTA). A countrys customs authority in deciding whether the imports should benefit

from preferential treatment in accordance with special trading areas or customs unions such as

the European Union or the North American Free Trade Agreement (NAFTA) or before anti-

dumping taxes are enforced requires this certificate.

The definition of "Country of Origin" and "Preferential Origin" are different. The European

Union for example generally determines the (non-preferential) origin country by the location of

which the last major manufacturing stage took place in the products production (in legal terms:

"last substantial transformation").

Whether a product has preferential origin depends on the rules of any particular FTA being

applied, these rules can be value based or tariff shift based. The FTA rules are commonly called

"Origin Protocols".

The Origin Protocols of any given FTA will determine a rule for each manufactured product,

based on its HTS (Harmonized Tariff Schedule) code. Each and every rule will provide several

options to calculate whether the product has preferential origin or not. Each rule is also

accompanied by an exclusion rule that defines in which cases the product cannot obtain

preferential status at all.

A typical value based rule might read: raw materials, imported from countries that are not

members of this FTA, used in production do not make up for more than 25% of the Ex- Works

value of the finished product.


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A typical tariff shift rule might read: none of the raw materials, imported from countries that

are not members of this FTA, used in production may have the same HTS code as the finished

product.

The certificate of origin must be signed by the exporter, and, for a small number of countries,

also validated by a Chamber of Commerce or local consulate of the destination country and

notarized.

Chambers of Commerce offer certificate of origin services, but another person, such as a notary

public, still only legalizes their letterhead certificate. Companies may consult the WCN Chamber

of Commerce Directory to find their nearest chamber who may offer this service.

Certificate of origin is required when: -

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

foreign market at the time importation.

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

5. GSP: -The Generalized System of Preferences, or GSP, is a formal system of exemption from

the more general rules of the World Trade Organization (WTO), (formerly, the General

Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most

favored nation principle (MFN) that obliges WTO member countries to treat the imports of all

other WTO member countries no worse than they treat the imports of their "most favored"

trading partner. In essence, MFN requires WTO member countries to treat imports coming

from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc.

GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least

developed countries (without also doing so for rich countries). The idea of tariff preferences for

developing countries was the subject of considerable discussion within UNCTAD in the 1960s.

Among other concerns, developing countries claimed that MFN was creating a disincentive for

richer countries to reduce and eliminate tariffs and other trade restrictions with enough speed

to benefit developing countries.


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In 1971, the GATT followed the lead of UNCTAD and enacted two waivers to the MFN which

permitted tariff preferences to be granted to developing country goods. Both these waivers

were limited in time to ten years. In 1979, the GATT established a permanent exemption to the

MFN obligation by way of the enabling clause. This exemption allowed contracting parties to

the GATT (the equivalent of today's WTO members) to establish systems of trade preferences

for other countries, with the caveat that these systems had to be "generalized,

nondiscriminatory and nonreciprocal' with respect to the countries they benefited (so-called

"beneficiary" countries) Countries were not supposed to set up GSP programs that benefited

just a few of their "friends.'

From the perspective of developing countries as a group, GSP programs have been a mixed

success. On one hand, most rich countries have complied with the obligation to generalize their

programs by offering benefits to a large swath of beneficiaries, generally including nearly every

non-OECD member state. Certainly, every GSP program imposes some restrictions. The United

States, for instance, has excluded countries from GSP coverage for reasons such as being

communist (Vietnam), being placed on the U.S. State Department's list of countries that

support terrorism (Libya), and failing to respect U.S. intellectual property laws.

But more significant is that most GSP programs are not completely generalized with respect to

products. That is, they don't cover products of greatest export interest to low- income

developing countries lacking natural resources. And this is by design. In the United States and

many other rich countries, domestic producers of "simple" manufactures, such as textiles,

leather goods, ceramics, glass and steel, have long claimed that they could not compete with

large quantities of imports. Thus, such products have been categorically excluded from GSP

coverage under the U.S. and many other GSP programs. Unfortunately, these excluded

products are precisely the kinds of manufactures that most developing countries are able to

export. (Most developing countries cannot efficiently produce things like locomotives or

telecommunications satellites, but they can make shirts.)

Even in the face of its limitations, it would not be accurate to conclude that GSP has failed to

benefit developing countries. Rather, it is the case that GSP has benefited some developing


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countries a lot and others very little. Specifically, for most of its history, GSP has benefited

"richer developing" countries - in early years Mexico, Taiwan, Hong Kong, Singapore, and

Malaysia, more recently Brazil and India - while providing virtually no assistance to the world's

least developed countries, such as Haiti, Nepal, and most countries in sub-Saharan Africa. The

U.S., however, has closed some of these gaps through supplemental preference programs like

the African Growth and Opportunity Act and a newer program for Haiti, and Europe has done

the same with Everything But Arms.

More generally, since the early 1990s a historic change affecting developing countries has

occurred within the WTO. Namely, WTO rules have been extended to cover both textiles and

agricultural products. For nearly all of the WTO's (and GATT's) existence, which started in 1948,

textiles and agricultural products were excluded from WTO/GATT coverage because they were

so sensitive to GATT's primary promoters, the United States and Europe. But now that situation

has changed. Under new WTO rules, many textiles tariffs and quotas already have been

eliminated, and liberalization of trade policy also is occurring on the complex agricultural front.

Given that textiles and agricultural products - especially processed agricultural products, such

as flour as opposed to wheat - are the main products that many of the world's least developed

countries are able to export competitively and lucratively, these and similar changes at the

WTO may someday mean that the limitations of GSP programs will be resolved - outside of the

rubric of GSP itself. It certifies that the goods being exported have originated/ been

manufactured in a particular country. It is mainly useful for taking advantage of preferential

duty concession, if available. It is applicable in countries forming European Union.

6. IEC Certificate:It is an Import-Export Code Certificate issued by DGFT, Ministry of Commerce,

Government of India. It is a 10 digit code number. No exports or imports will be affected

without the IEC code. It is mandatory for every exporter.


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7. Wearing Apparel Sheet:It is like a checklist, which gives the detail regarding the content &

design of the garment packed.


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8. Bill Of Lading:A bill of lading (BL - sometimes referred to as BOL or B/L) is a document issued

by a carrier to a shipper, acknowledging that non-specified goods have been received on board

as cargo for conveyance to a named place for delivery to the consignee who is usually

identified. A through bill of lading involves the use of at least two different modes of transport

from road, rail, air, and sea. The term derives from the verb "to lade" which means to load a

cargo onto a ship or other form of transportation.

A bill of lading can be used as a traded object. The standard short form bill of lading is evidence

of the contract of carriage of goods and it serves a number of purposes:

It is evidence that a valid contract of carriage, or a chartering contract, exists, and it may

incorporate the full terms of the contract between the consignor and the carrier by reference

(i.e. the short form simply refers to the main contract as an existing document, whereas the

long form of a bill of lading (connaissement integral) issued by the carrier sets out all the terms

of the contract of carriage;

It is a receipt signed by the carrier confirming whether goods matching the contract

description have been received in good condition (a bill will be described as clean if the goods

have been received on board in apparent good condition and stowed ready for transport); and

It is also a document of transfer, being freely transferable but not a negotiable instrument in

the legal sense, i.e. it governs all the legal aspects of physical carriage, and, like a cheque or

other negotiable instrument, it may be endorsed affecting ownership of the goods actually

being carried. This matches everyday experience in that the contract a person might make with

a commercial carrier like FedEx for mostly airway parcels, is separate from any contract for the

sale of the goods to be carried; however, it binds the carrier to its terms, irrespectively of who

the actual holder of the B/L, and owner of the goods, may be at a specific moment.


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The BL must contain the following information:

Name of the shipping company;

Flag of nationality;

Shipper's name;

Order and notify party;

Description of goods;

Gross/net/tare weight; and

Freight rate/measurements and weight of goods/total freight

While an airway bill (AWB) must have the name and address of the consignee, a BL may be

consigned to the order of the shipper. Where the word order appears in the consignee box, the

shipper may endorse it in blank or to a named transferee. A BL endorsed in blank is transferable

by delivery. Once the goods arrive at the destination they will be released to the bearer or the

endorsee of the original bill of lading. The carrier's duty is to deliver goods to the first person

who presents any one of the original BL. The carrier need not require all originals to be

submitted before delivery. It is therefore essential that the exporter retains control over the full

set of the originals until payment is effected or a bill of exchange is accepted or some other

assurance for payment has been made to him. In general, the importer's name is not shown as

consignee. The bill of lading has also provision for incorporating notify party. This is the person

whom the shipping company will notify on arrival of the goods at destination. The BL also

contains other details such as the name of the carrying vessel and its flag of nationality, the

marks and numbers on the packages in which the goods are packed, a brief description of the

goods, the number of packages, their weight and measurement, whether freight costs have

been paid or whether payment of freight is due on arrival at the destination. The particulars of

the container in which goods are stuffed are also mentioned in case of containerized cargo. The

document is dated and signed by the carrier or its agent. The date of the BL is deemed to be the


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date of shipment. If the date on which the goods are loaded on board is different from the date

of the bill of lading then the actual date of loading on board will be evidenced by a notation the

BL. In certain cases a carrier may issue a separate on board certificate to the shipper.

9. Airway Bill:The Air Waybill (AWB) is the most important document issued by a carrier either

directly or through its authorized agent. It is a non-negotiable transport document. It covers

transport of cargo from airport to airport. By accepting a shipment an IATA cargo agent is acting

on behalf of the carrier whose air waybill is issued. AWBs have eleven digit numbers, which can

be used to make bookings, check the status of delivery, and current position of the shipment.

The number consists of:

1. The first three digits are the airline prefix. Each airline has been assigned a 3-digit number by

IATA, so from the prefix we know which airline has issued the document.

2. The next seven digits are the running number/s - one number for each consignment

3. The last digit is what is called the check digit. It is arrived at in the following manner.

The seven digit running numbers are divided by 7, by using a long division calculation. The

remainder becomes the check digit. That is why no AWB number ends with a figure greater

than 6. Air waybills are issued in sets of different colours. The first three copies are classified as

originals. The first original, blue in color, is the shippers copy. The issuing carrier retains the

second, colored blue. The third, colored orange, is the consignees copy. A yellow copy acts as

the delivery receipt, or proof of delivery*. The other copies are all white.

There are several purposes that an air waybill serves, but its main functions are:

*Contract of Carriage

Behind every original of the AWB are conditions of contract for carriage

*Evidence of Receipt of Goods


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When the shipper delivers goods to be forwarded, he will get a receipt. The receipt is proof that

the shipment was handed over in good order and condition and also that the shipping

instructions, as contained in the Shipper's Letter of Instructions, are acceptable. After

completion, an original copy of the air waybill is given to the shipper as evidence of the

acceptance of goods and as proof of contract of carriage

*Freight Bill

The air waybill may be used as a bill or invoice together with supporting documents since it may

indicate charges to be paid by the consignee, charges due to the agent or the carrier. An

original copy of the air waybill is used for the carrier's accounting

*Certificate of Insurance

The air waybill may also serve as evidence if the carrier is in a position to insure the shipment

and is requested to do so by the shipper

*Customs Declaration

Although customs authorities require various documents like a commercial invoice, packing list,

etc. the air waybill too is proof of the freight amount billed for the goods carried and may be

needed to be presented for customs clearance The format of the air waybill has been designed

by IATA and these can be used for both domestic as well as international transportation. These

are available in two forms, viz. the airline logo equipped air waybill and the neutral air waybill.

Usually, airline air waybills are distributed to IATA cargo agents by IATA airlines.

The air waybills show:

Carriersname

Head office address

Logo

Pre printed eleven digit air waybill number


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It is also possible to complete an air waybill through a computerized system. Agents all over the

world are now using their own in-house computer systems to issue airlines' and freight

forwarders' own air waybills. IATA cargo agents usually hold air waybills of several carriers.

However, it gradually became difficult to accommodate these pre- numbered air waybills with

the printed identification in the computer system. Therefore a neutral air waybill was created.

Both types of air waybills have the same format and layout. However, the neutral air waybill

does not bear any pre-printed individual name, head office address, logo and serial number.

10. 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.


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11. 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.


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Shipping bill is normally prepared in five copies:

Customs copy

Drawback copy

Export promotion copy

Port trust copy.

Exporter's copy

12. Letter of Credit: This method of payment has become the most popular form in recent

times; it is more secured as company to other methods of payment (other than advance

payment).

A letter of credit can be defined as an undertaking by importers bank stating that payment

will be made to the exporter if the required documents are presented to the bank within the

variety of the L/C.


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