Professional Documents
Culture Documents
Agenda
Documentation: Overview Commercial and Regulatory documents Understanding - Invoice, Packing List, Inspection Certificate, Certificate of Origin, Shipping Bill, ARE-1, Mate Receipt, GR/SDF, Bill of exchange, Bank Realisation Certificate, Bill of Lading and Airway Bill, Bill of Entry etc. Incoterms Terms of payment Letter of credits - Concept, Types of L/C, Parties to L/C, L/C mechanism.
Agenda
Export Procedures Import Procedure Export Promotion Schemes under Foreign Trade Policy
Overview of Documentation
Significance of Documentation
Documents are important for the following reasons:
(a) as an evidence of shipment and title of goods; (b) for obtaining payment; (c) to provide a specific and complete description of the goods; (d) for assessment of correct Duty for clearance purpose; (e) for obtaining Export Licences; (f) for obtaining export finance;
Pre-shipment Documents
Documents at pre-shipment stage are those documents, which are required to be made, till the consignment is presented to the customs department for clearance. The following documents can, therefore, be treated as pre-shipment documents: Proforma Invoice Confirmed order or contract Letter of Credit Pre-shipment Inspection Certificate Packing list Shipping Bill Export Declaration Forms (GR/SDF) ARE
Post-shipment Documents
Documents at Post-shipment stage are naturally those which are prepared after the shipment. These documents include the following: Mate Receipt Bill of Lading Airway Bill Roadway/Railway Bill Post Parcel/ Courier Receipt Invoices Certificate of Origin Insurance Certificate or Policy Bill of Exchange
Contd.
Import Documentation
Important DocumentsImports
Invoice Packing list Bill of Lading or Delivery Order/Airway Bill GATT declaration form duly filled in Importers/CHAs declaration Licence/Authorisations in original wherever necessary Letter of Credit/Bank Draft/wherever necessary Insurance document Import license Industrial License, if required Test report in case of chemicals Catalogue, Technical write up, Literature in case of machineries, spares or chemicals as may be applicable Certificate of Origin No Commission declaration
Understanding Documents
Understanding Documents
All documents whether it is for export or import transaction generally contain following information
Name and address of the exporter and importer Document No. and date. Order No. and date Port of discharge Port of destination Country of origin Description of Goods Marks and nos., model nos. [if any] Weight HS Code No. Value Currency Terms of payment Terms of shipment etc.
Understanding Documents
However, depending upon the nature of the document, specific information is to be mentioned. For e.g. apart from the above details, Shipping Bill will include what export benefit is being claimed against that particular shipment, etc. Similarly, Packing List will give information about how goods are packed. Let us now study each document in depth.
Invoice
It is itemized statement prepared and issued by a seller at the time of dispatching the goods to the buyer. It helps the Customs Authorities to:
ensure that goods shipped are permitted by the export policy. compute the customs duty, if any, payable on the export or the import. check the quantity of goods. They generally open a few packages at random and check the veracity of details in the invoice. check if there is any over-invoicing or under-invoicing (that may be resorted to by the importer to reduce the import duty payable).
Invoice
Invoices are often called bills. Various types of invoices used in International Trade are
Proforma Invoice Commercial Invoice Leagalized Invoice Customs Invoice
Packing List
It is a consolidated statement in a prescribed format detailing how goods are packed, marked and numbered including weight and dimensions of each package. It is useful for customs at the time of examination and warehouse keeper of buyer to maintain inventory record and to effect delivery. It have many details common from invoice but it does not indicate unit rate value of goods. The exporter or his/her agent, the customs broker or the freight forwarder, reserves the shipping space based on the gross weight or the measurement shown in the packing list.
Packing List
Customs uses it as a check-list to verify:
the outgoing cargo (in exporting) and the incoming cargo (in importing).
Inspection Certificate
Certificate of Inspection is issued by the Inspection Agency concerned certifying that the consignment has been inspected before shipment as per the requirements of the Exports (Quality Control and Inspection) Act, 1963. It satisfies the conditions relating to quality control and inspection as applicable to it and is certified export worthy.
Inspection Certificate
Inspection can be done by Inspection Agency appointed by the Government of India, i.e. Export Inspection Agency, Textile Committee, Central Silk Board etc. Inspection Agency may also be nominated by importing countries Government
Sometimes buyer himself appoints an independent private inspector to inspect the goods.
If an inspection is a part of transaction, then exporter is required to arrange for necessary inspection. It can be a certificate of quality, weight, analysis, or the like.
It helps the importer to take an advantage in duty concession, if any. For e.g. goods imported under FTA.
Shipping bill
Shipping Bill is an important document required to seek permission of customs to export goods by Sea/Air. It is prepared by the exporter and submitted to the Customs. The exporter of any goods has to file a SHIPPING BILL as an entry for the purpose of export by air or sea and a BILL OF EXPORT in respect of export by land. Cargo will be allowed to be carted to Dock/Port sheds only after stamping and passing of the shipping bill by customs authorities. The exporter has to sign a declaration in the Shipping Bill regarding the truth of its contents.
Shipping bill
Shipping Bill normally contains:
the name and address of the importer/consignee and exporter, invoice number and date, name of vessel carrying the goods, name of master or agents, port at which goods are to be discharged, country of final destination, description of goods, quantity details of each case, value of the goods as defined in the Sea Customs Act, number of packages with total weight,
Shipping bill
Types of Shipping Bills: FREE SHIPPING BILL: Used for export of goods which neither attract any Export duty nor entitled to any Duty Drawback DUTIABLE SHIPPING BILL: Used when export goods are subject to Export Duty Duty is charged either on quantity basis (Fixed amount per kg. or per Metric tonne) or on certain percentage of assessable value. DRAWBACK SHIPPING BILL: Used when Duty Drawback is to be claimed. SHIPPING BILL FOR SHIPMENT EX-BOND: Used when the goods are to be exported which have been imported earlier and kept in bond prior to re-export.
Shipping bill
Types of Shipping Bills:
DEPB SHIPPING BILL: When DEPB benefit is to be claimed. DEEC SHIPPING BILL: This shipping bill is used for export of goods under Advance Authorisation (Duty exemption scheme).
DEEC CUM DRAWBACK SHIPPING BILL: This shipping bill is used for export of goods where both the schemes Duty Exemption as well as Drawback are to be taken into account.
Shipping bill
Shipping bill is required to be submitted in quadruplicate. If Drawback/DEPB claim is to be made, one additional copy should be submitted. Copies of Shipping Bill are as under:
Customs Copy: For record of Customs Exporters Copy: For record of Exporters/ Exporter may forward it to shipping company. Export Promotion Copy: For office of DGFT. This copy is the most important document for claiming duty Neutralisation/Exemption benefits plus export incentives wherever applicable. Exchange Control Copy: For negotiating the export documents in bank. It is Proof of export for exchange purposes. DEPB Copy: For use in the import cell of customs for registration of licence.
ARE
ARE stands for application for removal of excisable goods for exports by Air/Sea/ Post/Land. Goods which are sold overseas are exempted from payment of excise duty or entitled for Rebate of Excise Duty, if excise paid goods are exported. Under both these circumstances, the document to be used is ARE. When goods are removed without payment of duty for the purpose of export, they will get covered under the provisions of Rule 19 of the Central Excise Rules.
ARE
ARE is prepared before clearance of goods from the factory gate. ARE will specify whether goods are exported under Rule 19 or under Rule 18. There are three types of ARE: a) ARE 1: is used for physical export of goods. b) ARE 2: is used when goods are removed for manufacture and packing of the goods to be exported. c) ARE 3: is used when goods are supplied as deemed exports.
Mate Receipt
Mates receipt is a receipt issued by the Master or Mate of the vessel stating that certain goods have been received on board his vessel. It is prima-facie evidence that the goods are loaded in the vessel. It contains: the name of shipping line and vessel, port of loading, port of discharge and place of delivery, number and kind of packages, gross weight, description of goods, container status/seal number, shipping bill number and date and condition of cargo at the time of its receipt on board the vessel. It is serially numbered.
Mate Receipt
Port authorities recover port dues from exporter on production of this receipt. On payment of Dock dues, the exporter or his agent collects the receipt from the Port-Trust authorities and hands over to shipping company for preparing Bill of Lading. Bill of Lading is prepared on the basis of Mates Receipt. It is of a transferable nature. In case of ascertaining the exact date of shipment, the mates receipt date is also very important. Normally, the date of Export is regarded as the date of Mate Receipt or the date of Bill of Lading, whichever is later.
SDF Form
After verifying and authenticating the declaration in form SDF, the Commissioner of Customs will hand over to the exporter, one copy of the shipping bill marked Exchange Control Copy in which form SDF has been appended for being submitted to the bank within 21 days from the date of export.
The manner of disposal of EC copy of shipping Bill (and form SDF appended) is the same as that for GR forms.
Bill of Exchange
Bill of Exchange [BE] is a document drawn and is an order by the exporter to the buyer to pay the money in specified exchange. It is also known as a draft. A bill of exchange is accompanied by commercial documents which are presented by a bank and released to the buyer either against payment (at sight) or against a signature for payment on a specified future date. It is an unconditional written order.
Bill of Exchange
It is prepared either in an international currency or Indian rupees depending on the terms of the contract. Accordingly, the bill is known by the name of currency in which it is drawn. e.g. a bill drawn in US dollars is known as a Dollar Bill and when drawn in Rupees, it is termed as Rupees Bill.
Bill of Exchange
The most common versions of a bill of exchange are: A) Sight Draft When the drawer (exporter) expects the drawee (importer) to make payment immediately upon the draft being presented to him. Unless and until the Draft is received, the Negotiating/ Collecting Bank does not hand over the Shipping documents and the buyer cannot take delivery of goods.
Bill of Exchange
B) Usance Draft When draft is drawn for payment at a date later than the date of presentation. It may be a fixed future (specific) date or determinable date according to the period of credit viz. 30 days, 60 days or 90 days etc. It is presented to the drawee (importer) who will retire the documents by accepting the draft by putting his signature and date.
Bill of Exchange
When the payment is received in advance no Bill of Exchange is required to be drawn. Parties to a bill of exchange i. Drawer who makes the order for making payment. ii. Drawee whom the order to pay is made. iii. Payee whom the payment is to be made.
Bill of Exchange
Features of a Bill of Exchange: A bill must be in writing, duly signed by its drawer, accepted by its drawee and properly stamped. It must contain an order to pay. Words like please pay US $ 5,000 on demand and oblige are not used. The sum payable mentioned must be certain The parties to a bill must be certain.
It is prepared as per Form No.1, given in Appendix 22A of Handbook of procedures 2004-09 (Vol. I).
To prepare this certificate, the date of realisation is most essential, as the exporters have to apply for the export benefits, incentives, etc. within six months following the month/quarter of the realization month.
It is a document of title to the goods and, as such, is freely transferable by endorsement and delivery.
It serves as a receipt for goods and an evidence of the contract of carriage, but it is not a document of title to the goods. Hence, the AWB is non-negotiable. It contains the following details: number of packages dimensions or volume gross weight
The goods in the air consignment are consigned directly to the consignee.
Airway bill can be comprised in two parts: MAWB (Master Airway bill) shipments sent on a direct basis, not consolidated.
HAWB (House Airway bill) shipments sent on a consolidation basis whereby grouping together various clients consignments under one MAWB being issued by the freight forwarder.
Bill of Entry
The document on the strength of which clearance of imported goods can be affected is known as Bill Entry, the form of which has been standardized by the Central Board of Excise and Customs.
Every importer has to submit it under section 46 of the Customs Act, 1962.
Under EDI system, Bill of Entry is actually printed on computer in triplicate only after out of charge order is given. Duplicate copy is given to importer.
Bill of Entry
Salient features of a Bill of Entry which is to be presented for clearance of goods for home consumption are mentioned below:
Origin & Vessels Particulars Particulars of the Goods Value Duties Leviable Code Declaration of Importers/Clearing Agents
Bill of Entry
BILL OF ENTRY FOR HOME CONSUMPTION - When the imported goods are to be cleared on payment of full duty. Home consumption means use within India. BILL OF ENTRY FOR WAREHOUSING - If the imported goods are not required immediately, importer may like to store the goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. This will enable him to defer payment of customs duty till goods are actually required by him. It is also called Into Bond Bill of Entry as bond is executed for transfer of goods in warehouse without payment of duty. BILL OF ENTRY FOR EX-BOND CLEARANCE - It is used for clearance from the warehouse on payment of duty.
Bill of Entry
Documents required by customs authorities are required to be submitted to enable them to (a) check the goods (b) decide value and classification of goods and (c) to ensure that the import is legally permitted. Documents presented to customs along with the Bill of Entry generally include:
Invoice, Packing List, Bill of Lading or Delivery Order, Import Licence(s) / Customs Clearance Permit, Letter of Credit / Bank Draft wherever necessary Insurance Policy, Certificate of Origin etc. GATT declaration form duly filled in Importers / CHAs declaration duly signed
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