EXPORT PROCEDURE

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: 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. If you are a manufacturer, find out the provisions under the EXIM Policy of getting the raw materials duty free. 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.

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

Availability of Vessels/Airlines, the transport charges, frequency of operation etc., To look for a Custom House Agent (CHA) (also know as freight forwarders or clearing agents) for handling the documents/cargo in the customs. If the product is covered under any quota regulation, find out the agency/council who are 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 From the directory of importers of the country By writing to the Embassy of India in that country for assistance By writing to the chamber of commerce of that country By means of participation in a Fair/Exhibition abroad either directly or through the Export Promotion Council By participating in international fair if organized locally 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. Credit Worthiness of the Customer. Availability of the Steamer/Airlines and the frequency The freight charges The full product specification The quantity, Price Terms of Payment Type of packing and markings on the packages Mode of shipment & Shipment schedule Tolerance of quantity to be shipped

Documentation requirement for the customer Documentation requirement of the government of importing country 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.

Delivered 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 term in four categories denoted by the first letter in the three-letter abbreviation. 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. Under the F-TERM (FCA, FAS, &FOB), the seller is called upon to deliver the goods to a carrier appointed by the buyer. 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. 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.

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, 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 Name and address of the exporter. Name and address of the consignee. Name and the number of Vessel or Flight. Name of the port of loading. Name of the port of discharge and final destination. 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. Terms of delivery and payment.

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. Significance of Commercial Invoice

It is the basic document useful in preparation of various other shipping documents. It is used in various export formalities such as quality and pre-Shipment inspection excise and customs procedures etc. It is also useful in negotiation of documents for collection and claim of incentives. It is useful for accounting purposes to both exporters as well as importers. 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.

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 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 It facilitates quick clearance of goods from the customs in exporter's as well as importer's country. 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. It also assures the exporter of the payment from the importing country.

Significance of Consular Invoice for the Importer It facilitates quick clearance of goods from the customs at the port destination and therefore, the importer gets quick delivery of goods. The importer is assured that the goods imported are not banned for imported in his country.

Significance of Consular Invoice for the Customs Office It makes the task of the customs authorities easy. 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 manufactured in the country whose name is mentioned in the certificate. 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.

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: The authorised Chamber of Commerce of the exporting country. 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; (c) Export Inspection Agencies. Jt. Director General of Foreign Trade.. Commodity Boards and their regional offices. Development Commissioner, Handicrafts. Textile Committees for textile products. Marine Products Export Development Authority for marine products. Development Commissioners of EPZs 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 Name and logo of chamber of commerce. Name and address of the exporter. Name and address of the consignee. Name and the number of Vessel of Flight Name of the port of loading. Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and packages. Description of goods in terms of quantity. Signature and initials of the concerned officer of the issuing authority. Seal of the issuing authority.

Significance of the Certificate of Origin Certificate of origin is required for availing of concessions under Generalised System of Preferences (GSP) as well as under Commonwealth Preferences (CWP). It is to be submitted to the customs for the assessment of duty clearance of goods with concessional duty. It is required when the goods produced in a particular country are banned for import in the foreign market. It helps the buyer in adhering to the import regulations of the country. 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:

As a document of title to the goods; As a receipt from the shipping company; and As a contract for the transportation of goods.

Types of Bill of Lading 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. 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. 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. 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. 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. 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 Name and logo of the shipping line. Name and address of the shipper. Name and the number of vessel. Name of the port of loading. Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and packages, Description of goods in terms of quantity. Container status and seal number. Gross weight in kg. and volume in terms of cubic meters. Amount of freight paid or payable. Shipping bill number and date.

Signature and initials of the Chief Officer. .

Significance of Bill of Lading for Exporters It is a contract between the shipper and the shipping company for carriage of the goods to the port of destination. It is an acknowledgement indicating that the goods mentioned in the document have been received on board for the Purpose of shipment. A clean bill of lading certifies that the goods received on board the ship are in order and good condition. It is useful for claiming incentives offered by the government to exporters 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 It acts as a document of title to goods, which is transferable endorsement and delivery. The exporter sends the bill of lading to the bank of the importer so as to enable him to take the delivery of goods. 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 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 Name of the airport of departure and destination. The names and addresses of the consignor, consignee and the first carrier. Marks and container number. Packing and container description. Total number of containers and packages.

Description of goods in terms of quantity. Container status and seal number. Amount of freight paid or payable. 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. 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 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 Name and logo of the shipping line. Name and address of the shipper. Name and the number of vessel. Name of the port of loading.

Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and packages. Description of goods in terms of quantity. Container status and seal number. Gross weight in kg. and volume in terms of cubic meters. Shipping bill number and date. Signature and initials of the Chief Officer.

Significance of Mate's Receipt It is an acknowledgement of goods received for export on board the ship. It is a transferable document. It must be handed over to the shipping company in order to get the bill of lading. Bill of lading, which is the title of goods, is prepared on the basis of the mate's receipt. 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 The export promotion scheme under which goods are to be exported. Name of the specific vessel on which the goods are to be loaded. If goods are to be FCL or LCL. If freight amount are to be paid / collected. If shipment are covered under A.R.E.-1 procedure. 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 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 Name and address of the buyer. Details of various documents being sent and the number of the copies thereof. Name and address of the buyers bank if available. If the documents are sent L/C or on open terms. If the proceeds are to adjusted against any pre-shipment packing credit loan. If the bill amount is to be adjusted against any forward exchange cover. In case of credit bill who has to bear the interest, either exporter or if the same is to be collected from the buyer. 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 : Customs copy. Drawback copy. Export promotion copy. Port trust copy. Exporter's copy.

Types of Shipping Bill Based on the incentives offered by the government, customs authorities have introduced three types of shipping bills: Drawback Shipping Bill: - Drawback shipping bill is useful for claiming the customs drawback against goods exported. Dutiable Shipping Bill: - Dutiable shipping bill is required for goods which are subject to export duty. 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 Drawback shipping bill Dutiable shipping bill Duty-Free shipping bill Contents of Shipping Bill Name and address of the exporter. Name and address of the importer. Name of the vessel, master or agents and flag. Name of the port at which goods are to be discharged. Country of final destination. Details about packages, description of goods, marks and numbers, quantity and details of each case. FOB price and real value of goods as defined in the Sea Customs Act. Whether Indian or foreign merchandise to be re-exported Total number of packages with total weight and value. By Sea Green Yellow White By Air Green Pink Pink

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 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: 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. 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. 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. 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. 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. Customs Invoice: this is required by the countries like Canada, USA for imposing preferential tariff rates. 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 Commercial Invoice. Article-37: Commercial Invoice o Must appear on their face to be issued by the beneficiary named in the credit. UCP-500, for

o Must be made out in the name of the applicant. o Need not be signed Banks may refuse Commercial Invoice issued for amounts in excess of the amount permitted by the credit except otherwise stated. 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. Pre-Shipment Documents: Shipping bill. Export order/Sales contract/Purchase order. Letter of Credit Commercial invoice. Packing list. Certificate of origin. Guaranteed Remittance (G.R/SDF/PP/SOFTEX),or SDF. Certificate of Inspection. 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 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. 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. PP FORM: to be completed in duplicate for export by post. 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. 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. 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. 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 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. 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. 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 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 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. (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.

PREPARATION AND SUBMISSION OF DOCUMENTS FOR BANK NEGOTTIATION /PURCHASE

Document against exports should normally be realized through an authorized dealer foreign exchange. However payment of export can be received directly from the overseas buyer in the form of bank draft, pay order, bankers cheque, personal cheque foreign currency notes, foreign currency travelers cheque, etc. Without any monetary limit provided the exporters track record is good, he is a customer of the authorized dealers through whom documents are to be negotiated and prima facie the instrument of payment represents export proceeds realization. Take care to submit various documents in a proper manner and within the prescribed time schedule. Apply to the Reserve Bank for extension of time in case you feel there is likely to be a delay in realizing export proceeds. The following are the steps in realizing export proceeds: Approaching a Bank: After dispatch of the goods, either by sea, or by air, the exporter should approach his bank (authorized dealer) with a formal request to realize sale proceeds from the foreign buyer. It is obligatory to submit the shipping documents to an authorized dealer within 21 days of the date of shipment (subject to certain exceptions). In India, the exporters have to realize the full value of exports within 180 days from the date of shipment, (unless the payment terms offered are deferred payment terms). Where it is not possible to realize the sale proceeds within the prescribed period, the exporter should apply for extension in prescribed form ETX (in duplicate) to RBI. Submission of Documents to the Bank: The exporter should submit the following documents o Bill of Exchange o Full set of Bill of Lading o Commercial Invoice Copies o Certificate of Origin o Insurance Policy o Inspection Certificate o Packing List o GR (duplicate copy to forward it to RBI) o Bank Certificate o Other relevant documents. The above documents need to be submitted in two complete sets, because it is customary to dispatch two sets of documents, one after the other. This is because, if one set is misplaced or delayed in transit, the importer can get at least the other set and clear the goods.

Verification of Documents: The bank will verify the documents to find o Whether the required documents are in order. o Whether the required documents are attested by customs and other authorities.

Letter of Indemnity: If the exporter wants immediate payment from his bankers, then his bankers may provide advance payment only when the exporter signs an indemnity letter. The implications of an indemnity letter is that in the event of refusal of payment by the issuing bank in respect of LC, then the negotiating bank can ask the exporter to pay back the money advanced along with necessary charges. Common Document Discrepancies o Credit Expired o Late shipment o Presented after permitted time from date of issue of shipping documents o Short Shipment o Credit Amount Exceeded o Underinsured o Description of goods on invoice differ from that of credit o Mark and numbers differ between documents o Bill of lading, Insurance documents, Bill of Exchange not endorsed correctly o Absence of Documents called for under credit. o Insurance certificate submitted instead of policy. o Weight in different document differs. o Class of Bill of lading no acceptable-charter party or House B/L. o Insurance cover expressed in currency other than that of credit. o Absence of signature, where required on documents. o Bill of exchange not drawn as per tenor stated in credit. o Bill of exchange drawn on wrong party. o Insurance risks covered not being those specified in credit. o Absence of freight paid statement on B/L in CFR of CIF shipment. o Bill of lading doses not carry shipped on broad stamp. o Amount shown on invoice and bill of exchange differ. o Shipment not make to port specified. o Transshipment/part shipment undertaken where expressly forbidden.

Discounting of bills: the bank may discount or negotiate the bills drawn against LC, and make immediate payment to the exporter, if so required.

Dispatch of documents: before the submission of documents for negotiation/collection, the bank examines them thoroughly with reference to the terms and conditions of the buyers order. Letter of credit and the laws relating to foreign exchange control. If any scrutiny, the documents are in order, the bank dispatches them to its overseas branch/correspondent branch as early as possible. The overseas branch of the bank then submits the document to the importers bank, and the importers bank hands it over to the importer.

Standby Letter of Credit, Irrevocable Standby Letter of Credit

A standby Letter of Credit includes a guarantee of payment. However, a standby Letter of Credit serves a somewhat different function than a Documentary Letter of Credit. A commercial or Documentary L/C serves as the primary payment mechanism for a transaction. A standby L/C is a secondary payment mechanism. A bank will issue a standby Letter of Credit on behalf of a customer to provide assurances of its ability to pay a creditor. Normally, neither the seller nor the buyer expects that a standby Letter of Credit will be drawn upon. A standby L/C includes a promise by a bank or financial institution to pay the debt owed to the buyer in the event that the customer / buyer defaults on payment. The seller/beneficiary is able to draw under a standby L/C by presenting a draft, and other documentation indicating that the customer has not performed its obligation. Standby L/Cs are issued to:

Stand behind monetary obligations, To insure the refund of advance payment Funds given by the buyer of goods to the seller prior to shipment, often just a percentage of the value of the goods with the remainder paid after shipment, To support performance and bid obligations, and To insure the completion of a sales contract.

A standby letter of credit is often used to guarantee payment performance of a customer. If payment is made in accordance with the suppliers' terms, the letter of credit would not be drawn on. Under these provisions, the bank is given until the close of the third banking day after receipt of the documents to honor the draft. One final comment: Letters of Credit of any kind are not used frequently in domestic sales transactions for one basic reason: A customer can usually find a less expensive and less complicated alternative such as open account terms rather than having to deal with the complexities associated with arranging for a Letter of Credit to be issued.

Executive Summary

It is said that practice makes a man perfect. In order to achieve excellence and success theoretical knowledge supplement with practical knowledge and practical work.

Among numerous interesting things concerned with enhancing the understanding of the management student this practical training for 2 months plays an important role in development of management student. Moreover in todays competitive age practical knowledge is more significant the theoretical knowledge.

The main objective of this is to find out who the export process is done by Cargosol Cargo Solution, the student by imparting knowledge about freight forwarding services as per International Business Practicals.

I want through a vocational training in Cargosol Cargo Solution and I got nice experience about freight forwarding services and business practices.

ANNEXURE I to Form TCS 1 (Item 1 of Form TCS 1) Information on the Exporter

(a) (b) (c) (d) Name Registered Office Branch Offices Constitution (i) Public Limited Company (ii) Private Limited Company (iii) Partnership firm (iv) Proprietory concern (a) (b) (c) (d) (i) (ii) (iii) (iv) (e) (f) (g) (h) (i) Years (j) (i) (ii) (iii) (iv)

(e) (f) (g) (h)

Code No. Location of factories, if any Name/s of the Proprietor/Partners/Directors Year of establishment/incorporation and commencement of operation (i) Main line of activities (give details of range of activities, fields of range of activities, fields of specialization) (j) Details of operations for the last three years :

(i) (ii) (iii) (iv)

job on hand

No. of consultancy/technical jobs executed Sales turnover Of which export turnover Of which consultancy turnover (k)

(k) No. and value of consultancy/technical etc. services (i) (ii)

Overseas Domestic

(i) (ii) (l) Turnover

(l) Financial Position (for 3 years) Financial Results (As of ) Paid-up Capital Tangible Networth

Profit Before Tax

Profit

After Tax

(years) (i) (ii) (iii)

(m) (m) Please furnish the following (i) (i) Particulars of consultancy/technical service jobs completed and under execution both in India and abroad. The particulars should, inter alia, show date of contract, value of contract, name and address of the buyer, description and scope of work, date or expected date of completion, percentage of work completed, whether contract ended/will end in profit/loss, amount of foreign exchange repatriated to India (year-wise), profit generated in India, extent of loss, if any, and the amount of remittance allowed from India to meet the loss. Particulars of outstanding tenders/offers, relating to consultancy/technical services contract. (ii)

(ii)

ANNEXURE II to Form TCS 1 (Item XIII and XXIII (f)(i) of Form TCS 1) Cost and Profitability Statement
Details Rupee Costs 1 (a) (b) (c) 2 3 4 5 6 7 (a) (b) (c) 8 9 10 Foreign Currency Costs Local Currency Costs Total

1.

Materials (a) Indigenous (b) Imported into India (including canalized items) (c) Direct into importing country (CIF Value) 2. Know-How/Technical Assistance 3. Salary and Wages of Technical and Other Personnel 4. Description of Equipment at Site 5. Overheads (Accommodation etc.) 6. Air Travel 7. Taxes and Duties (%) (a) Excise Duties (b) Import Duties (c) Taxes (please specify) 8. Royalty on Exports 9. Agents Commission/Fee (%) 10. Finance Charges (Including pre/post shipment interest, guarantee commission etc.) 11. ECGC Premium 12. Miscellaneous Costs (Please specify) 13. Contingencies and Provisions (a) Cost escalation @ (b) Negotiating Margin % (c) Contingency % (d) Others (please specify ) % 14. Freight Outwards 15. Insurance 16. Total Cost 17. Contract Receipts (Currency wise) 18. Profit (17-16) 19. Export Incentives (a) Duty Drawback (b) Others 20. Net Profit (18 + 19) %

11 12 13 (a) (b) (c) (d) 14 15 16 17 18 19 (a) (b) 20

@ as % of Contract Value

Conversion Rates : US $ = Rs.

= Rs.

DM = Rs.

ANNEXURE III toForm TCS 1 ( Item No.XIV and Item No. XXIII(g) of Form TCS 1) Details of Foreign Contractor To be completed where the Indian exporter is a sub-supplier to/joint bidder with a foreign prime contractor. (Please furnish the details on the foreign prime contractor, joint bidder/s or a consortium members, as applicable) (a) Name and address (b) Nature of goods and services relating to each member (c) Approximate value of offer by each member (d) Whether payment terms are on back-to-back basis (Yes/No) (e) Mode of receipt of payment (f) Details of banking arrangements made for the offer (g) Past experience of foreign prime contractor/consortium
member/joint bidder

(h) Whether bankers report furnished on each member (Yes/No) (i) Details of past dealings of exporter with each consortium
member/joint bidder

(j) Details of inter se arrangements among consortium members

Annexure IV to Form TCS 1

(Item XVI and XXIII(h) of Form TCS 1)

Details of Main Sub-contractors for Services

Contractors Name

Brief Description/ Specification of Services

Approx. Value of Subcontract

Firm Offer (Yes/No)

Date till which valid

Details of Warranty/Bank Guarantee (if any)

A. Indian Sub-total (A)

B. Local Sub-total (B)

C. Third Country Sub-total (C)

TCS 2
(Paragraph C.5 (iii) of PEM) Bankers comments on the application in Form TCS 1 Submitted by the exporter for export of Managerial / Technical / Consultancy services contract (To be furnished to Exim Bank in 6 copies) I. Comments on the Exporter :

(1) Management (2) Export Performance

(1) (2)

(3) (3) Financial Position (Operational/Financial indicators based on past three years financial statements to be furnished, with brief comments thereon)

(4) Past experience, if any, relating to consultancy/technical

services exports II. Comments on the Contract:

(4)

(1) The Buyer (Status reports to be obtained on non- (1)

Government buyers)

(2) (2) Brief comments (qualitative) may be furnished covering,

inter alia, the following aspects

(a) (b) (c) (d) (e) (f)

(a) Scope of work (b) Payment terms (c) Currency of payment (d) Whether any surplus is envisaged out of local
currency component

(e) Security for payments (f) Foreign exchange outgo/cash inflow comparison
(for deferred payment offers)

(g) (h) (i)

(g) Exchange Risk (h) Provision for cost escalation, arbitration, liquidated
damages, etc.

(i) Restrictions, if any regarding repatriation of profit and salaries.

I. Sub-Suppliers :
Brief comments to be given on the major sub- suppliers covering their past experience, standing and value and scope of work of each sub-contract. IV. Profitability of the Export Contract (comments on the cost and profitability computation to be furnished)

V. Banking Facilities Required :

(i) Comments on the requirements of credit / guarantee

facilities stated in form TCS 1 (ii) Participation arrangements : Whether participation of Exim Bank/other commercial banks in the various facilities is required, and if so, the extent thereof. The major terms and conditions which the bank would like to stipulate may also be indicated. VI. Any other relevant information

(i)

(ii)

We recommend the proposal for approval and agree to extend the facilities sought by the exporter in form TCS 1.

STAMP
.. (Signature of Authorised Official) Name :. Designation :.. Name and Address :. Of Authorised Dealer :.. Date : .