Professional Documents
Culture Documents
Batch: 2017-19
April 2019
2
SUBMITTED BY:
C RIPU MURDHAN
Enrolment No: 5717380008
Batch: 2017-19
April 2019
3
COLLEGE CERTIFICATE
This is to certify that this project titled “A Study On Export Procedure &
Documentation At Exim India Bangalore “is based on an original project study conducted by
This research project report is original and not submitted earlier for the award of any
Place: Bangalore
Date:
4
This is to certify that the project work titled “A Study On Export Procedure &
Documentation At Exim India Bangalore “is a bonafide work of
C RIPU MURDHAN
Signature:
Place: Bangalore
Date:
STUDENT’S DECLARATION
I, C RIPU MURDHAN hereby declare that the project work titled “A Study On Export
Procedure & Documentation At Exim India Bangalore” is the original work done by
me and submitted as a part of MBA Twinning Pondicherry University in partial fulfilment of
requirements for the award of Masters in Business Administration in INTERNATIONAL
BUSINESS.
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COMPANY LETTER
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ACKNOWLEDGEMENT
It is the matter of great pleasure and privilege to be able to present this project report
on “A Study on Export Procedure & Documentation At Exim India Bangalore”
the compilation of the project is a milestone in the life of the management student and
its execution is inevitable with the co-operation of the project guide. i wish to record a deep
sense of respect and gratitude to my project guide, PROF. DAYALAN for her
encouragement to course of my work. it is due to the enduring effort and guidance of my
guide that ultimately made it success.
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TABLE OF CONTENTS
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CHAPTER 1
INTRODUCTION
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INTRODUCTION
The present study is a comprehensive study of EXPORT DOCUMENTATION AND PROCEDURE . The
research work is done in collaboration with LUCKY EXPORT to assess the overall export procedure &
Objective
The main objective of the study is to formulate the overall procedure of export orders say ‘how to export’,
Research Methodology
Research comprises defining and redefining problems. Research purpose is to discover answer to question
through the procedure of scientific procedure. Interviews and discussion with the supervisors and officials
to get the root of the pre-determined objective and in order to outline the ‘a to z’ steps of processing export
order.
On the execution of the objective of study, it might be conclude that processing of export order can be a
tedious and costly activity. A careful planning and implementation of appropriate procedure can reduce
time and cost drastically. A fair documentation not only reduces the threats of frauds, bottlenecks and risks
but also enhances the business relationship between Exporters, Importers & Governments in the whole
world.
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STATEMENT OF OBJECTIVES
The complexity of business operations greatly accentuate as businessmen cross the national
boundaries. A lot of formalities and modalities of several organizations have to be compiled to and as error
can create bottle necks in the free flow of goods, documents, information and payments.
Documentation is definitely one of the prime specialized functions of international business. The
documents safeguard the interests of Exporter, Importer, Banks, Governments, Transport Agencies,
The main objective of the training was to study the systematic export procedure & documentation of a
reputed export house say LUCKY EXPORT to overcome any kind of error, bottleneck, frauds and mistake
for the awareness and implementation of standardized rule-regulations & documentation to contribute the
To study the department wise functions & sequential documentation for various operations
To identify the incentives, discounts & duty drawbacks to exporters by the Government.
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The focus of the study was the formulation the multifunction procedure of an export unit named
LUCKY EXPORT. The focus of the study was on identifying the activities of different divisions and
departments of LUCKY EXPORT having an impact on the export procedure of this unit. Focus was to
outline the standard modes of payment for export houses. Researcher analyzed the pre-export formalities
and necessities for exportation. The project is an attempt to formulate the ‘how to export’ concept finally
India has a mission to capture 2% of the global share of trade by 20010, up from
the present level of less than 1%. Export is one of the lucrative business activities in India. The
government also provides various promotional schemes to the exporters for earning valuable
foreign exchange for the country and for meeting their requirements for importing modern
technology and essential inputs. Besides, the income from export business is also exempted to the
specified extent under the Income Tax Act, 1961, Refund of Central Excise and Custom Duty on
export is also made under the Duty Drawback Scheme of the Government. There is no Sales Tax
on products meant for exports.
Exports can be of goods which can be moved physically from one country to
another or can be of service rendered. Detailed list of services are given in the Foreign Trade Policy
covering more than 160 items e.g. Insurance, Hospital, Postal and Telecommunication etc.
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Physical Exports: If the goods physically go out of the country or services are
rendered outside the country then it is called as physical export. Deemed Exports: Where the goods
do not go out of the country physically they can be termed as deemed exports. This will be subject
to certain conditions as prescribed by the DGFT. Under Deemed Exports, the goods may be
supplied to the manufacturer exporter who ultimately export a finished product of which this
supply forms a part and ultimately go out of the country. E.g. Supply of fabrics to the garment
exporter who exports the garments made out of the said fabric.
The government may announce from time to time the types of supplies that may be
considered as deemed export. The Foreign Trade Policy gives the list of supplies considered under
the Deemed Export Category. The policies and procedures are different for Physical Exports and
Deemed Exports as also the benefits available. In a nutshell, Deemed Exports do not enjoy all the
benefits that are available under Physical Export. The Foreign Trade defines exports as taking out
of India any goods by land, sea, air. Although the act does not term them as “Physical Exports”,
we have to put phrase to distinguish it from “Deemed Exports” which is sales in India but
considered as exports for limited purpose
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TYPES OF EXPORTERS:
Manufacturer Exporter: As the exporter has the facility to manufacturer the product he
intends to export and hence he exports the products manufactured by him.
Merchant Exporter: An exporter who does not have the facility to manufacture an item.
But, he procures the same from other manufacturers or from the market and exports the
same.
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CHAPTER 2
RESEARCH DESIGN
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RESEARCH METHODOLOGY
Research in a common parlance refers to a search for knowledge. Research can also be defined as
scientific and systematic search for pertinent information on the specific topic. So research means careful
investigation on inquiry especially through search for new fact in branch of knowledge. Research is an
academic activity and as such as term should be used in a technical sense. “Research comprises defining
and redefining problem, formulation hypothesis or suggested solution, collection, organizing and evaluating
data, make deduction and research conclusion and careful testing the conclusion to determine whether they
fit or not ”. Research purpose is to discover answer to question through the procedure of scientific
procedure.
As in live studies on LUCKY EXPORT. The LUCKY EXPORT did the research work manually
and intents to assess the overall potential and performance of this unit and desire. Research has helped to
portray accurately the characteristic of a particular unit. Research helped to find out the problem faced by
the unit, unit strength where they have competitive edge over the other competitors, unit weakness where
the unit has to improve how they need to turn them into the opportunities.
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The main objective of the research methodology of this in-house training project is to evaluate the Export
Procedure and Documentation Operations of an Export Oriented Company. The assessment of potential,
procedures, documentation and the analysis of LUCKY EXPORT demands a lot of time to be spent on
observation of various activities and the process, the unit engage into, interviews and discussion with the
supervisors and officials to get to the root of problem and in order to suggest corrective measure to LUCKY
EXPORT . The research design utilized for this specific study has been explained as follows….
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RESEARCH DESIGN
Descriptive Study:
Descriptive studies are utilized when the researcher attempts to describe the state of affairs without
controlling the variables causing change. This study includes the survey and fact finding inquires
of different kind. The major purpose of descriptive research was description of the state of affairs
that exists in LUCKY EXPORT, the functional activities and procedure adopted and the working
of LUCKY EXPORT. Interviews were taken of the executive and various kinds of facts were
sought by this.
Empirical Studies:
An empirical research relies on experience or observation alone often without due regard for
system and theory. It is the data research coming up with the conclusion which is capable being
verified by observation and experiment. As in case of, the observation was done to find the export
procedure & documentation problem and the weakness. In this, help of various departments was
taken to observe the working and to deduce conclusion to suggest course of action to . In this the
fact were taken into hand from LUCKY EXPORT at their source and is then utilized to infer
desired information.
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Collection of Data
The study has utilized both primary as well as secondary data for analyzing export performance,
Primary Data: The primary data was collected through the interview techniques & personnel
meeting where the Heads of different functional departments, various executive are interviewed
and pretended information were collected pertaining to various aspects of export activities.
Secondary Data: It was collected through scanning, searching and disseminating information
through company research profile and company maintained data also in search information for
export procedure and export market related data was collected through the data compiled by
Government Manual, Export Import policy of DGFT, customs and excise manuals, RBI exchange
control Manual and other organization that compile data for various export oriented activities and
documentation.
Analysis Pattern
The nature of the project is of the subjective nature so for the analysis of the available data, the use
various statistical and mathematical and graphical techniques was not required. There were no
additional statistical and technical tool were considered for suitability of the procedure & problem
in order to achieve the desire objective. The study was of the qualitative aspect not the quantitative.
All the data was collected through interviews a secondary data so not tool were used.
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It is no secret today that the growth and opportunity of international business in India has grown
manifold than it was a decade back. Our government is taking several steps to boost the growth
of manufacturing sector as well. Different policies have been adopted by the government which
will help in domestic as well as international trade from the country. What’s more, it will not
only encourage young entrepreneurs but will also help in creating job opportunities for those
residing in India.
A crucial part of setting up your own export business ideas in India is the thorough
understanding of different products that have a prospective international market with good
opportunity. As an entrepreneur, you will need to have a clear idea of the market where you
intend to sell your products. Instead of trying out all the market on the go, you can aim at
different market at a time and try to find out which products are in great demand and whether
there can be any growth in the business with the products you are willing to offer. This will
eliminate the chances of incurring losses with wrong selection of products or market. You should
make a move towards different markets on priority basis to know the pattern of sales and
demands in those areas. Not only that, you need to have a clear picture of different export laws
that applies to that particular region, state and country so that you don’t face any legal difficulties
while conducting your business.
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Review of Literature
The present study is undertaken with different adjectives related to various aspect of foreign
exchange in Indian economy. There is great significance of foreign currency to develop \n6ian
economy. A country can generate foreign exchange by exporting ifs goods & services to other
countries . Therefore it is necessary to study the need of foreign exchange in developing Indian
economy. Since Govt, of India has established the Exim Bank for provoking financial assistance
to exporters and importers, arxi for functioning as the principal institution for coordinating the
working of institutions engaged in financing export and imports of goods & serves with a view to
promote country's intimations trade, it is a pleasant duty of the researcher to study tie role of EXIM
Bank in generating fumbling exchange through export promotion. It Is a very important tool in the
hands of researchers to take the review of literature to conduct any research. The past studies on
the particular topic always provoke vital information and give some dues to conduct further
research studies. The past research work creates path for the future research work. It always
provides some jnr^x>rant data and guidelines to conduct further research. The conclusions and
findings of Ihe past research always help to the researcher to make certain generalizations. The
review of literature helps to find the gaps in the past research studies arx) to fMI up those gaps in
the present research study. So the review of literature cannot be evoked in conducting any research
study. It is a platform, wok proves stand to the researcher and guides for further research. It plays
a role of pathfinder in the darkness for the researcher and helps to find out correct path to coproduct
research. So the kowtowing review of literature is taken which has given many guidelines for
conducting present •as research. It has also helped to proceed in the present research. The
objectives of the Review of Literature are achieved through this Review of Literature
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All the findings are based on the information from Seller/Exporter side only.
Export Rules, Regulations & Compliances are too wide to cover thoroughly in short term
project.
Primary data is analyzed though interview of executives and they may not be available
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CHAPTER 3
COMPANY PROFILE
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The special feature of all these daily editions of EXIM is that it is mainly dedicated in publishing
up-to-date shipping schedules of all major ports in India along with the news on exports and
imports.
:: News, views and analysis related to shipping, ports, maritime trade, etc.
:: Forward Sailing Schedules of all Major ports in India
:: Indian Products for World Market
:: Overseas Trade Enquiries
:: Foreign Exchange Rates
:: Customs Exchange Rates for Import & Export
:: Customs, JCCIE & EPC notices and Public notices (Notice to consignee)
Besides, EXIM INDIA also brings out regular Special Issues on all Major Ports in India.
The other publications of EXIM INDIA include Port Specials, and exclusive 'World Route
Maps' for the use of Importers-Exporters, Shipping lines, Freight forwarders and other Logistics
sector players. Besides, EXIM INDIA also brings out regular Special Issues on all Major Ports in
India!
Our offering, Exim India Yearbook, has been compiled with the
objective of serving as a ready reference source of consolidated
information, encompassing the entire shipping, ports, cargo and related
ancillary industries in India.
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The EXIM Group is also a prominent organiser of conferences, exhibitions and other events. We
have organised many successful events throughout India over more than a decade, amongst them
being
EXIM INDIA has its head office in Mumbai, with experienced and skilled man power. We are
fully equipped with the latest communication and IT systems. In addition, we have a network of
branches with full infrastructure at Delhi, Kolkata, Cochin, Chennai, Bangalore, Tuticorin,
Kandla, Ahmedabad, Vizag and associates all over India.
Thus, EXIM INDIA today covers all important cargo centers as also major industrial cities all
over India. With a vast readership base spread all over India, we have been able to establish and
develop excellent business relationships.
VISION:
To become respected global trading company that provides best of business solution delivered by
best-in-class people.
MISSION:
Our mission is to cater to the specific scrap metal needs of our customers and, at the same time,
to expand our sourcing points by creating strategic alliances with our key suppliers to best create
value for our clients.
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CHAPTER 4
ANALYSES
&
INTERPRETATION
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Exports are key to the economic survival of a nation. Exports not only help a country earn
foreign exchange, they help create jobs, peace, prosperity, and the power to influence.
To be successful in exporting and importing, it helps to know why so many export and import
businesses do not succeed. Success cannot be rushed by high hopes. Rather, it comes
incrementally.
The success of an export business is often attributed to luck. Work harder and there will be more
luck. The export success of Taiwan, China, Japan, South Korea, Germany and other countries
(areas) is not a miracle, it is the result of hard work. The business miracle will not happen without
working hard. However, success cannot be rushed by hard work.
The events in a large number of export offices worldwide are comparable to the events in a football
game. It is not unusual to see colleagues kicking responsibilities back and forth, just like football
players do the ball. It is important that employees' responsibilities are clearly spelled out and that
systems of operation are flexible in order to accommodate the rapidly changing needs of world
markets.
The trade surplus and deficit is analogous to one person's fortune is another person's misfortune.
The danger is imminent in either situation. A country with a record trade surplus is often threatened
with sanctions and trade barriers from a deficit-ridden importing country. A country with a record
trade deficit is usually faced with the internal social upheaval.
The imposition of trade barriers, such as import quotas and higher duties, is not a solution to
meeting the international challenge. The trade barrier will be confronted with a trade retaliation.
A trade retaliation will be faced with a counter-retaliation. The conflict will not end if an agreement
is not reached. The remedy to beat the trade imbalance is to understand foreign cultures and
business practices, and to provide competitive products and services.
It is a good practice to diversify export markets. Concentrating exports to only a few markets poses
imminent danger to an exporting country. Too much export concentration in a market usually
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invites protectionist trade laws from the importing country. In case the importing country imposes
sanctions, the effect to the economy of the exporting country and the livelihood of its people can
be devastating.
The world markets have changed enormously in the past decade. New markets have been opened
with the end of cold war. New economic blocks have been formed. New trading alliances are
shaping. Inevitably, a new way of thinking and approach to doing business is necessary in order
to survive in the fast changing economy.
Exports are key to the economic survival of a nation. A nation that exports more will grow stronger.
The stronger a nation is, the more recognition and respect it will earn.
There can be no growth without competition. As the world population grows, which is
estimated at a rate of 1.7% annually, more products and services are needed. Business
people worldwide are keenly competing to fill these needs. World trade grew in volume at
an average of 5% annually over the past 25 years. With the end of cold war, more resources
worldwide are geared towards exporting. The export business has become more
competitive. Exporting becomes more challenging with continued population growth and
the addition of new exporters.
Any form of instability in a country can ruin its economy and may place its international
trade in disarray. With the end of cold war, the earth has become a more peaceful place to
live. However, an alarming occurrence is the growing number of permanent lower class in
numerous countries, including in developed nations. The adverse effect of social upheaval
is paramount. It can undermine the economic progress of a nation. There is an urgent need
to stop the growing number of the lower class. The task requires a concerted effort from the
government and people. The task is not easily done.
The effect of recession is immense, businesses sink, dreams of a lifetime shatter, and the
lower class increases. Vigorous export promotions, increase in exports, and diversification
of export markets can help reduce the number of the lower class.
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The use of terminology differs from country to country. The term salesperson is easy to
decipher as the salesman or saleswoman, but it is a term that is unheard of in some
countries. The account manager is the sales representative, the buyer is the purchaser, the
accounting assistant is the bookkeeper, the human resources department is the
personnel department, the flat is the apartment, the chop is the stamp, the motor carrier
is the trucking company, and the letter carrier is the postman.
Export-traders play a crucial role in international trade. Prior to the 1970's when export
product quality was a common problem in many less developed countries, foreign buyers
relied on export-traders for product sourcing and pre-shipment inspections. The nature of
the order then normally was fewer items and more volume, that is, the number of items
was few and the quantity of each item was large. At that time, many manufacturers did not
know how to export, thus they relied upon export-traders for exporting, known as indirect
exporting.
There were far fewer exporters worldwide before the 1970's. The foreign buyers then did
not have many export sources from which to compare an offer. The export business was
lucrative due to much less competition. As time progressed, competition built. The
manufacturers competed on providing better quality products and lowering prices. The
price war made the traditional practice of single source of supply difficult for export-traders
to maintain. The export-traders changing the source of supply of similar products from one
manufacturer to the other became inevitable. The manufacturers needed to survive and
direct exporting was the solution. Many manufacturers started exporting directly in the
mid-1970's.
Export product quality in general improved markedly in the late 1970's. However, the
problem of quality remains a nightmare to some importers. During the oil crisis of the late
1970's, there was a significant increase in the number of manufacturers who export directly.
Many foreign buyers deal directly with the manufacturers to save commission or fees
and/or markups of export-traders.
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The telecommunication technology 'explosion' in the past decade has changed the way
people interact around the world. With new technology on hand, some of our prime tools
of export communication, for example telex (teletype exchange or teleprinter and
exchange), have become obsolete.
The telex, like a fax (facsimile) or an e-mail (electronic mail), uses a telephone line in
transmitting the messages. Telex was the 'e-mail of yesteryear'. But instead of a computer
screen, you have a roll of paper, which may come in duplicate, triplicate or quadruplicate,
either carbonless or the much older type having a carbon paper in between the sheets, where
the outgoing and incoming messages appeared, that is, where the messages are typed. And
instead of saving the typed message in a computer disk or hard drive, each alphanumeric
character that was keyed (typed) in a telex, aside from appearing on the paper roll, is
simultaneously translated and stored in a paper tape in coded form in a series of punched
holes. Keying a wrong character may mean retyping the message from the beginning. The
'final' tape is rerun to send the message out or make additional copies of the message. The
advantage of having a 'final' tape is to save the transmission time and cost. Or, you can
send the message directly. Each character that was keyed (typed) will instantly appear at
the receiver's end. Therefore, as long as the line is 'on', the sender and the receiver can 'talk'
over the telex, that is, exchange messages over the telex while the line is 'on'.Although the
e-mail is popular nowadays, the fax remains as an important tool of export communication
in many countries.
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In exporting, it is not a prerequisite for a business to sell to its domestic market before selling
abroad. There are many successful export-traders and export-manufacturers, notably in Asia, who
have been selling their products entirely to the foreign markets.
Exporting is not for large companies only. Contrary to a belief that only large companies can
export, in fact there are more small and medium-sized companies than large companies in the
world that are engaged in exporting. The size of a company is not static. Most large companies at
one time were small companies. Not to mention, small and medium-sized companies are the
leading source of job creation in many countries.
Export Phobia
Fear comes naturally to anyone new to exporting. Fear of the unknown, or lack of
information, is one of the reasons that many businesses that are doing well nationally are
reluctant to engage in exporting.
Export Mindset
The business ground is a battleground. Exporting, like any other business, involves risks.
It is necessary to prepare for the challenges and the consequences. Engaging in exporting
is akin to engaging in a war. It is a war of price, quality, delivery and service. It is a battle
for the business orders. It is a fight for the company's survival---profits and growth. In
practice, rough strategies are often used by some exporters in order to win contracts.
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Export businesses are mainly classified into export-traders, export-manufacturers and service-
exporters.
The export-traders include the export companies known as trading houses, trading
companies, buying offices, buying agents, purchasing agents, resident buyers, sourcing
agents, export representatives, export distributors, export agents, export management
companies (EMCs), and manufacturers' representatives.
Export-Manufacturers
Service-Exporters
Service-exporters include the banks, ocean shipping (steamship) companies, air cargo
companies or airlines, trucking companies, rail carriers, insurance companies, freight
forwarders or consolidators, consulting firms, and miscellaneous service companies.
Service-exporters provide services to export-traders and export-manufacturers.
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PRE-EXPORT ACTIVITIES
The planned group work for export order processing can greatly facilitate subsequent operations
and avoid the hassles associated with the process. The pre-export activities can be divided into the
C. Registration
International trade is governed by a plethora of rules and regulations of various government bodies
of exporter and importer. A careful study of these as a pre-requisite of exports while the rules
governing exports will vary with commodity and importer country’s regulation, as a broad frame
work the most important Acts/Publications which must be consulted by an exporter in connection
b) Customs act,1962
d) Foreign exchange regulations act, 1973 (now being replaced by FEMA and Money
Laundering Bills)
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Exports involve coordinated effects of a large numbers of interdependent organizations. The main
The Exporter
Besides these, other parties may also be associated depending on the nature of commodity and
rules guiding the export of the same. Examples of these bodies can be Inspection Agencies, Export
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C) Registration
For stepping in the field of an export business, it is compulsory for a company to get registered
with Export Promotion Council related to the main product line with which they are dealing.
The main function of EPC is to promote and develop the export of the related product line
for enhancing the export. They organize Trade Fairs with in India and Abroad. They encourage
the members registered with them to participate in Trade Fairs and advertise their products in
whole world. The main role of the EPC is to Project India’s image abroad as a reliable supplier of
high quality goods. The EPC keeps abreast of the trends and opportunities in the foreign markets
Every person / firm / company engaged in export business in India is required to obtain Import-
Export Code(IEC) No. from the Regional Licensing Authority concerned (Director General of
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Foreign Trade). Custom authorities shall not allow clearance of goods to an importer or exporter
who does not posses IEC No. It is compulsory quote this Code Number in the relevant Bill of Entry
/ Shipping Bill.
Application form
Certificate from the banker of the applicant in the format given in the application form.
Two copies of passport size photograph of applicant duly attested by the banker of
applicant.
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The exporter scrutinizes the export order with reference to the term & conditions
of the contract. According to section 4(1) of the Sale of Goods Act, 1930,” A contract of sale of
goods is a contract whereby the seller transfer or agree to transfer the property in goods to the
buyer for a price,” therefore, this Act includes both a ‘Sale’ and an ‘Agreement to sell’.
This is the most crucial stage. All subsequent actions and reactions will depend on
the terms and conditions of the export contract. It should be ensured that the contract has been
entered into in accordance with the prevalent export promotion policies of the country and the
foreign exchange regulations. The export order must specify the mode of the payment in
unmistakable terms such as letter of Credit, Documents of Payment, Documents against
Acceptance, etc. The specifications stipulated by the importer in the export order and the L/C
such as delivery schedule, packing, inspection, marking, etc., must be strictly adhered to. The
documents required by the foreign buyer must be prepared and submitted to the negotiating bank
in the exact specified form and manner.
An export contract, as described above, should be as clear as possible. The various elements of it
should clearly define the duties and responsibilities of the parties; determine the exact point at
which the title and/or risk change from seller to buyer. The various elements of an export contract
are as follow:
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2. Quantity
3. Inspection
12. Insurance
14. Guarantee
16. Remedies.
17. Arbitration.
Besides these main elements, an export contract may contain other elements desired
by the parties to the contract. Export order should be confirmed by the exporter only after the terms
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Upon confirmations of the export order preparations for the dispatch of goods are started. A
‘Delivery Note’ (in duplicate) or ‘Production Order’ is sent to the Work Manager or the Factory
manager. This note should contain the description of the goods as has been given in the export
order, along with a copy of the instructions given by the importer. The date by which the goods
must be manufactured, the date by which the necessary formalities must be completed, the
requisite time margins to be given and the shipment must be clearly intimated to Works manager.
This is what the manufacturers. The specifications and instructions to be intimated to the supplier
of export goods shall, however, remain the same. While sourcing the goods from suppliers,
merchant exporter has to lay down clear cut specifications of quality norms because the ultimate
accountability to the buyer is of the exporter only. In case of poor quality, the exporter may not be
in position to get repeat order from the foreign customers who have wide choice of the exporters
system. Merchandiser finals the export contract with his correspondent buyer and receives an
export order via fax, e-mail or courier. After receiving the export order, merchandiser orders a
production order to Production Manager in written form. This production order contains the
following entities:
P.O. Number
Invoice Number
Product Name
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Quantity
Dispatch Date
of production samples in accordance with order sample. Produced quantity is delivered to Packing
Stage-3rd Dispatching
As the Production unit delivers the goods to Packing Department, the following
1) Packing
The Packing Incharge receives the importer’s instructions for packing from the Merchandiser
2) Labeling
Specific marketing and labeling is used on report shipping cartons & containers to:
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In overseas buyer usually specifies export marks that should appear on the cargo
for easy identification by receivers. Many markings may be needed for shipment. Exporters
Shipper’s mark
Country of origin
Port of entry
3) Inspection
After packing and labeling, goods are inspected by the inspection agent or buying agent on
behalf of importer. That means importer sends his own agency to inspect the goods. The
inspector has right to open any of the carton or bale to verify the goods in accordance with
If he finds any defect he can send these goods for processing again, otherwise, he issues
Inspection Certificate. If buyer demands handloom certificate then exporter ask textile
committee to inspect the consignment and provide them handloom inspection certificate. This
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certificate can be helpful to suit against importer in case of disputers or undue rejection of
goods by importer.
4) Containerization
A container is an article of transport equipment, strong enough for the repeated use, to facilitate
i) 20 ft. 26 cbm
LUCKY EXPORTS makes use of container of 20 & 40 ft. il.(according to the goods to be
dispatched).
5) Locking of Containers
Before locking the container, excise authorities select 10% of rolls as samples and inspect
them. The samples are sent for further sub-mission to customs. After examination of cargo, the
excise seal along with the seal of shipping line on the container and endorse the excise invoice,
AR-2 form, gate-pass etc. The main check point in the excise documents are:-
Destination
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Quantity
For additional security of goods, in transit, the doors of container are locked with the iron
rods with seals. In case of any shortage reported by the buyer and when a claim is required to
The singed with the buyer defines the specification of the goods to the supplied. On the basis of
this contract, invoice instructions are given the packing department packs the rolls depending on
these instructions, the validation of above instructions are done by pre-shipment department. On
linking the bales by packing department, the pre-shipment documents are generated, which
primarily includes shipment advice from, invoice, packing includes shipment advice from,
invoice, packing list etc.
1) Shipment Advice Form: It is a sort of covering letter, showing the list of documents enclosed
with it. It also contains some other details like Lorry Receipt No., RBI Code No. B/L particulars
etc. The shipping advice is particularly important in short-sea trades, for example within the
Asian countries where the goods may arrive at the port of destination before the shipping
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documents, and in the ports of destination where theft and pilferage of the imported goods is
rampant.
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financial institution, used primarily in trade finance, which usually provides an irrevocable
payment undertaking. The letter of credit can also be source of payment for a transaction,
meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used
primarily in international trade transactions of significant value, for deals between a supplier
in one country and a customer in another. They are also used in the land development process
to ensure that approved public facilities (streets, sidewalks, storm water ponds, etc.) will be
built. The parties to a letter of credit are usually a beneficiary who is to receive the money, the
issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary
is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled
without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any.
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TO UVW Exports
88 Prosperity Street East, Suite 707
Export-City and Postal Code
Dear Sirs:
to advise that they have opened with us their irrevocable documentary credit
number SB-87654
in your favor for the amount of not exceeding Twenty Five Thousand U.S. Dollars
(US$25,000.00)
3. Full set 3/3 clean on board ocean bill of lading, plus two (2) non-negotiable copies,
issued to order of The Sun Bank, Sunlight City, Import-Country, notify the above
accountee, marked "freight Prepaid", dated latest March 19, 2001, and showing
documentary credit number.
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4. Insurance policy in duplicate for 110% CIF value covering Institute Cargo Clauses (A),
Institute War and Strike Clauses, evidencing that claims are payable in Import-Country.
Shipment
Moonbeam Port, Export-Country to Sunny Port, Import-Country
from
Partial
Prohibited
shipment
Transshipme
Permitted
nt
Special conditions:
1. All documents indicating the Import License No. IP/123456 dated January 18, 2001.
Documents must be presented for payment within 15 days after the date of shipment.
We confirm this credit and hereby undertake that all drafts drawn under and in conformity with
the
terms of this credit will be duly honored upon delivery of documents as specified, if presented
at
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Authorized Signature
Unless otherwise expressly stated, this Credit is subject to the Uniform Customs and Practice
for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No.
500.
The latest negotiation date is the last day of the period of time allowed by the letter of
credit (L/C) for the presentation of documents and/or draft(s) to the bank. The latest
negotiation date is not necessarily the L/C expiry date. In the sample letter of credit the
latest negotiation date can be March 26, 2001 or 15 days after the date of shipment,
whichever comes first.
In case the L/C does not stipulate the latest negotiation, it is within 21 days after the date
of issuance of the transport documents, but on or before the L/C expiry date.
The expiry date and place is the last day of validity of the credit and the place allowed
by the letter of credit (L/C) for the presentation of documents and/or draft(s) for payment,
acceptance or negotiation. In the sample letter of credit the expiry date is March 26,
2001 and the place for presentation of document is Export-City, which is the
beneficiary's city.
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In case the validity of an L/C is stated in a period of time, for example "this credit is valid
for three months" or "this credit is available for two months" or "this credit is good for
one month", but does not specify the date from which the time is to run, its validity starts
from the issuance date of L/C by the issuing bank. The bank normally discourages stating
the L/C validity in a period of time.
In case the expiry date and/or the latest negotiation date falls on a day on which the bank
is closed for reasons not including the acts of God, strikes, riots, civil commotions,
lockouts, insurrections, wars or any other causes beyond the bank's control, the expiry
date and/or the latest negotiation date is extended to the succeeding first day on which the
bank is opened. Such extension, however, does not extend the latest date of shipment.
c) Draft(s) Drawn On
The draft(s) drawn on answers the question "Which bank or who is the drawee (the
payer) of the draft?" The draft is most often drawn on the confirming bank or the issuing
bank. In some cases, the draft is drawn on the applicant. In the sample letter of credit the
draft is drawn on the confirming bank, which is The Moon Bank.
d) Draft(s) Drawn At
The draft(s) drawn at answers the question "The draft is drawn at what terms?" It can be
a sight draft (i.e., payment on demand or on presentation) or a term draft (i.e., payment at
a fixed or determinable future time). In the sample letter of credit the draft is drawn at
sight.
The draft(s) drawn under answers the question "The draft is drawn under which credit
and the credit is of which bank?" In the sample letter of credit, the L/C requires that the
draft(s) be marked "Drawn under documentary credit No. SB-87654 of The Sun Bank,
Sunlight City, Import-Country, dated January 26, 2001" (please see the completed sample
draft).
f) Latest Shipment
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The latest shipment---latest date of shipment or last date for shipment---is the last
day of the period of time allowed by the letter of credit (L/C) for shipment, dispatch or
taking in charge. In the sample letter of credit the latest shipment date is March 19, 2001.
The port or point of origin is the port or place of loading, dispatch or taking in charge.
The port or point of destination is the port or place of discharge or delivery. Some of
the expressions that may appear in the letter of credit (L/C) indicating the origin and the
destination are:
In the sample letter of credit the origin is Moonbeam Port, Export-Country and the
destination is Sunny Port, Import-Country.
the exporter and the importer. Invoice is a bill for itemized goods or services. The pre-shipment
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It is one of the most important documents prepared and signed by exporter with
whose help other documents are prepared. The description of merchandise as given in the
commercial invoice must correspond to the description in the L/C and other documents must
Certain importing countries may require that the commercial invoice and the packing list
be made out in, or translated to, the language of the importing country, for example, in
French for shipment to France, in Italian to Italy, and in Spanish to Mexico and Venezuela.
The declaration on the commercial invoice for some countries must be in a specified
wording. The exporter may check the wording with the customs broker, the government
external trade department, or the foreign government trade office concerned in the
exporting country.
The content of a typical declaration includes a sworn statement from the exporter indicating
that the goods in question are manufactured in the exporting country, and that the amount
shown in the invoice is the true and correct value.
The letter of credit (L/C) from certain importing countries, in particular from the Middle
East, requires the certification and/or legalization of the commercial invoice.
The certification, which usually is performed by the local Chamber of Commerce of the
exporting country, is to confirm that the invoice and declaration (in the invoice) are correct.
The legalization, which is done by The Consulate or The Commercial Section of the
Embassy of the importing country, is to verify that the invoice is correct.
The certification and legalization are most often satisfied with a stamp or a seal on the
invoice and payment of a fee. The processing time may take one week
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The commercial invoice and packing list need not be signed, unless otherwise stipulated in
the letter of credit (L/C). In practice, the original and the copy of the commercial invoice
and packing list are often signed.
Description of Goods
The description of the goods in the commercial invoice must correspond with the
description in the letter of credit (L/C). In all other documents, the description can be in
general terms provided it is not inconsistent with the description in the L/C.
Quantity
If the letter of credit (L/C) does not stipulate the quantity in a stated number of units (i.e.,
it does not state in units such as piece, set, box, dozen, or gross), or unless the L/C stipulates
that the quantity of the goods specified must not be exceeded or reduced, a tolerance of 5%
more or 5% less quantity is permitted, provided the total amount does not exceed the
amount of the L/C.
In the sample L/C the stated quantity is 100 Sets, thus the quantity in the invoice must be
100 Sets. If such sample L/C does not state the quantity, the UVW Exports can ship
between 95 sets and 100 sets of pneumatic tools, but not over 100 sets as the total amount
will exceed the L/C amount of US$25,000. If such L/C does not state the quantity and the
L/C amount is US$26,250 or more, the exporter may ship between 95 and 105 sets.
If the L/C quantity is indicated using the words "about", "approximately", "circa" or similar
expressions, the quantity in the invoice cannot exceed 10% more or 10% less than the
quantity indicated in the L/C. For example, if the L/C quantity is "about 100 sets", the
quantity in the invoice can be any quantity between 90 sets and 110 sets, provided the total
amount does not exceed the amount of the L/C.
Unit Price
If the letter of credit (L/C) unit price is indicated using the words "about", "approximately",
"circa" or similar expressions, the unit price in the invoice cannot exceed 10% more or
10% less than the unit price indicated in the L/C. For example, if the L/C unit price is
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"about US$250", the unit price in the invoice can be any unit price between US$225 and
US$275, provided the total amount does not exceed the amount of the L/C.
Amount
Unless otherwise stipulated in the letter of credit (L/C), the amount must not exceed the
amount permitted by the L/C. If the L/C amount is indicated using the words "about",
"approximately", "circa" or similar expressions, the amount of the invoice cannot exceed
10% more or 10% less than the amount indicated in the L/C. For example, if the L/C
amount is "approximately US$10,000", the amount of invoice can be any amount between
US$9,000 and US$11,000.
Explanations:
Fields in the Preamble of the Commercial Invoice
" Letter of Credit No. " , " Date " and " Issuing Bank "
Referring to the sample L/C, enter "SB-87654", "January 26, 2001" and "The Sun
Bank" in the respective fields in the documents. The sample L/C does not stipulate
indicating this information in the documents except the draft(s), thus UVW Exports may
choose not to enter it in the documents, but there is no harm if it is entered in the
documents.
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Referring to the sample L/C, enter "IP/123456" and "January 18, 2001" in the
commercial invoice and all other documents, including bill of lading and insurance
policy.
" Buyer's P.O. or Contract No. " and " Date "
The letter of credit may require the documents to show the purchase order (P.O.) or
contract number. Referring to the sample L/C, enter "DEF-101" and "January 10, 2001"
in the respective fields in the documents.
The department or store number is often required when dealing with the chain stores. It
is the identification number of the store or branch of a chain store. The store number is
used in the routing of goods by the chain store. It identifies the store that places the order
or to which branch (of the chain store) the goods will be delivered.
Shipment on or about is the ETD (estimated time of departure) or the ETS (estimated
time of sailing). In practice, the date of loading on board, dispatch or taking in charge is
often regarded as the ETD.
" From (Port of Loading) " and " To (Port of Discharge) "
The port of loading is the port or point of origin and the port of discharge is the port or
point of destination. Referring to the sample L/C, enter "Moonbeam Port, Export-
Country" as the origin and "Sunny Port, Import-Country" as the destination in the
fields.
The via (tranship at) refers to the transhipping port or point in a transhipment. For
example, if a consignment destined for landlocked Afghanistan has to tranship at Karachi,
Pakistan, enter "Karachi, Pakistan" in the field.
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For transhipment to is the final destination in the onward routing or carriage, which is
often the consignee's place (city).
4) Packing List: It is a document showing the details of goods contained in individual packages,
which helps customs authorities and receives in identifying the contents of specific package.
It contains almost all the information provided in invoice along with details of
packing like:
Gross weight
Net weight
Dimensions etc.
For the purpose of explaining other fields in the packing list, it is assumed that the pneumatic
tools in the sample L/C contain the following data:
Each set is in an inner box and there are two boxes in an export master
carton, or a total of 50 cartons for the 100 sets
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The entries preferably arranged in sequence from the lowest number to the highest, that is,
from package No. 1 and up. From the sample L/C, enter "C/No. 1-50" or the like in the
field (Package No.), provided it is not inconsistent with the marks and numbers on the
master cartons.
The description of the goods in the packing list can be in general terms, provided it is not
inconsistent with the description in the L/C. From the sample L/C and data of the pneumatic
tools above, entering "A380" and "'ABC' Brand Pneumatic Tools" in the fields will
satisfy the requirements.
It shows the total quantity within a stated range of the package number and the breakdown
in each package. The stated range is C/No. 1-50, enter:
100 Sets
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2 Sets/Ctn.
or
100 Sets
2 Sets @ Ctn.
or the like in the field. The / and @ used here stands for per or each.
It shows the total weight within a stated range of the package number and the weight of
each package. The stated range is C/No. 1-50, enter:
1,150 Kgs.
23 Kgs./Ctn.
or
1,150 Kgs.
23 Kgs. @ Ctn.
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Ocean shipments are most often charged by the cubic meter (CBM or cbm). Enter:
5.65 CBM
0.113 CBM/Ctn.
5.65 CBM
0.113 CBM/Ctn.
@ 61 x 61 x 30.5 Cms.
The @ stands for at or each.
Some carriers may calculate the freight on a cubic feet (cft. or cu. ft.) basis. In the case of
an irregular shaped cargo, take the three widest dimensions that describe the smallest cubic
space enclosing the cargo to determine the measurement.
The packing list and commercial invoice need not be signed, unless otherwise stipulated in
the letter of credit (L/C). In practice, the original and the copy of the packing list and
commercial invoice are often signed.
For example a consignment where the range of the carton number is as follows:
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Total Quantity
If a consignment consists of different units, preferably show all the units used in the
summary of totals. For example, a shipment includes:
If the net weight and gross weight are used in the breakdown, the summary must show the
total net weight and the total gross weight. If kgs., lbs., CBM and cft. are used in the
breakdown, the summary must show the total of kgs., lbs., CBM and cft..
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weight and measurement of each carton. Simply entering the total weight and the total
measurement of the consignment in the summary row would satisfy the export
requirements.
5) ARE-1 Form: This document is prepared by exporter & it acts as a excise document. This
Description of package
Gross weight
Net weight
Value
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6) Bill of Exchange: A bill of exchange is also known as draft, which contains an order from the
exporter LUCKY EXPORTS to the importer to pay a specified amount to a person. To whom
When the goods are shipped by Sea, the bills are drawn in sets and two mailed to
the foreign correspondent through an authorized dealer for presentation to the importer. A bill
a) Sight Bill: When the importer makes the payment immediately after the draft presented
b) Usance Bill: When the exporter (LUCKY EXPORTS) has agreed to give credit to the
foreign buyer, he draws a bill, which is called usance bill. A usance bill is drawn for
payment at a date later than the date of presentation. There is no aligned document for
draft; the same can be prepared by the exporter in the usual format.
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In the sample L/C the draft is drawn on the confirming bank, which is The Moon Bank.
The UVW Exports may issue a draft drawn on The Moon Bank as follows:
The "No." (number) in the above sample draft may be used for the exporter's reference
number. Blank drafts are available at the paying bank.
In practice, it is not uncommon that two drafts are drawn on the drawee bank in a letter of
credit (L/C) to ensure that at least one draft reaches the drawee when they are dispatched
separately. The issuance of more than one draft in a letter of credit follows the same logic
as in the issuance of bill of lading in more than one original. At times even three drafts may
be drawn on the drawee bank, this practice was not uncommon before in certain countries.
In contrast, normally one draft (sola bill) is issued in a documentary collection where the
draft is drawn on the importer.
The sample draft shown above is the first draft, marked "First of Exchange (Second
Unpaid)" and the number "1". In the second draft, if any is issued, is marked "Second of
Exchange (First Unpaid)" and the number "2". Some drafts may not be numbered "1" or
"2".
In certain exporting countries, the government levy a heavy tax on drafts. In such a
circumstance, the exporter may request the importer to specify in his/her letter of credit
(L/C) application that "No drafts be issued". When the documents are presented to the
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negotiating bank, the bank issues a letter of undertaking indicating when and where the
money will be paid, instead of accepting a draft drawn by the exporter.
The word "aval" in French means endorsement. A term draft accepted by the importer does
not guarantee payment on maturity, hence it is not readily accepted for discounting or as
collateral in a loan. The exporter may arrange to have the accepted draft to be 'availed' by
the importer's bank---the bank adds its endorsement as guarantee of payment. The 'availed'
term draft can be readily discounted, thus providing the exporter with immediate funds.
Drawer
The drawer is the party who issues the draft and to whom the payment is made. The drawer
is the seller (the exporter) and the payee of the draft. The payee could be another party
rather than the exporter, or could be the bona fide holder (the bearer) of the draft.
Drawee
The drawee is the party who owes the money or agrees to make the payment and to whom
the draft is addressed (made out). The drawee is the buyer (the importer), the acceptor and
the payer of the draft in a documentary collection. In a letter of credit the drawee most
often is the confirming bank or the issuing bank, which is the acceptor and the payer of the
draft.
Remitting Bank
The exporter's bank to whom the exporter sends the draft, shipping documents and
documentary collection instructions, and who subsequently relays them to the collecting
bank in a documentary collection is called the remitting bank.
The term remitting bank as used under a letter of credit may refer to a nominated bank
from whom the issuing bank or the confirming bank, if any, receives the shipping
documents.
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The bank in the importer's country (the importer's bank usually) involved in processing the
collection---presents the draft to the importer for payment or acceptance, and thereafter
releases the shipping documents to the importer in accordance with the instructions of the
exporter---is called the collecting bank or the presenting bank.
7) Certificates of Origin
The certificate of origin is a document certifying the country in which the product was
manufactured, and in certain cases may include such information as the local material and labor
contents of the product.
Some importing countries require a certificate of origin to establish whether or not a preferential
duty rate is applicable. A popular example of the certificate of origin is the Form A, which is often
called the GSP Form A.
The certificate of origin (C/O)is an alternative to the declaration or the certification and/or
legalization of the commercial invoice. The C/O is based on the rules of the country of origin.
The country of origin is the country where the goods are grown, produced or manufactured. The
manufactured goods must have been substantially transformed in the exporting country as the
country of origin, to their present form ready for export. Certain operations such as packaging,
splitting and sorting may not be considered as sufficient operations to confer origin.
The certificate of origin includes the Form A, Chamber of Commerce Certificate of Origin,
Exporter's Certificate of Origin, and Free Trade Market Certificate of Origin. The trade agreement,
import practice, and letter of credit (L/C) stipulation determine the type of C/O needed.
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The North American Free Tree Agreement (NAFTA) Certificate of Origin is used within
the NAFTA countries (i.e., Canada, USA and Mexico). The form is available at the customs
office. It is self-certified by the exporter.
EC Certificate of Origin
The European Community (EC) Certificate of Origin, as its name implies, is used in the
European Community. It is issued by the Chamber of Commerce of the exporting country,
usually with payment of a fee.
Movement Certificates
Different Movement Certificates are being used in the European Union (EU)---EC
(European Community) and EFTA (European Free Trade Association) countries. The
certificates require endorsement by the customs of the exporting country.
EFTA countries consist of Austria, Finland, Iceland, Norway, Sweden, Switzerland, and
Liechtenstein.
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The receipt issued by an airline or its agent for the carriage of goods is called airway bill or air
consignment note. It is issued in terms and conditions of the contract of carriage of goods. It is
not a document of title and it is not issued in a negotiable form.
Generally AWB is issued in three copies, viz; for the carrier, for the consignee and for the
consignor.
Like the AWB, the PPR evidence merely the receipt of the goods to be exported to the buyer
and is not a document of title.
A Bill of Lading is the most important document in Foreign Trade. It is generally issued by a
shipping company. It services as a receipt from the shipping company who undertakes to
deliver the goods at agreed destination on payment of freight in a prearranged manner and also
a document of title to the goods. B/L is generally made out in the sets of two or three
originals. All the originals are duly signed by the master of ship or the agent of the steamship
company and all the originals are equally valid for taking the delivery of goods and once one
original copy is utilized the other originals become full and void.
Please see the sample Ocean Bill of Lading below. The bill of lading (B/L) serves as a receipt for
goods, an evidence of the contract of carriage, and a document of title to the goods. The carrier
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issues the B/L according to the information in a dock receipt, or in some cases according to a
completed working copy of the B/L supplied by the customs broker.
The B/L must indicate that the goods have been loaded on board or shipped on a named vessel,
and it must be signed or authenticated by the carrier or the master, or the agent on behalf of the
carrier or the master. The signature or authentication must be identified as carrier or master, and
in the case of agent signing or authenticating, the name and capacity of the carrier or the master
on whose behalf such agent signs or authenticates must be indicated.
Unless otherwise stipulated in the letter of credit (L/C), a bill of lading containing an indication
that it is subject to a charter party and/or that the vessel is propelled by sail only is not acceptable.
Sample Document:
Ocean Bill of Lading
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INSURANCE DOCUMENTS
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Letter of insurance.
This is analogous to cover note issued by the broker. It is stated that particular subject are placed
under insurance and certificate/policy of insurance will be issued later on.
Broker’s Certificate
This is also not acceptable as broker issues the same, as broker acts for the insured and cannot
compel insurer to accept the proposal of insurance.
Insurance Certificate
The insurance on “open cover” or “floating” policy covering all shipment on certain terms and
subjects to conditions laid down. Unless the insurance certificate gives details of the conditions
of cover it is not so much value to third party who negotiate the shipping documents.
Insurance Policy
This is a basic legal document-evidencing contract of insurance between the insurer and
insured. It gives full details of all the risks covered. Marine or transit insurance policies can
be assigned by the insured merely by endorsement and delivery. Insurance policies are issued
in different forms like floating policy, open policy or cover, specific policy etc…
A floating policy is a contract of insurance for covering a number of shipments, the details of
which are not finalized when the contract of insurance is conclude. The relevant details like
name of the vessel, destination, description of cargo etc. is therefore required to be declared
subsequently and endorse in the policy.
An open cover /policy is valid for a given period of time or permanently open. As per this
policy the insurer undertakes to insure all the shipments for which the details are already
intimated to the insurer.
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A specific policy covers specific shipments and such policy is readily available for submitting
with the export documents.
The coverage of risks is classified into categories like A, B, C etc. and the insurance policies
are issued accordingly.
1) Marketing Department
2) Pre-shipment
3) Warehouse
4) Excise department
The above documents along with cargo are sent to ICD by road. The ICD used by may be
Parparganj, tuglakabad or any other, depending on the contract with the importer.
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Custom House Agent (CHA) and freight forwarders, who are known as clearing
and forwarding agents, generally act on behalf of importance and exporters for handling their
They handle all documentation work through the customs & port authorities and other
regulatory agencies
1) Shipping Bill: Shipping bill is the main document required by customs authority for allowing
shipment. The exporter (LUCKY EXPORT) has to submit some documents for shipping bill
Four copies of packing list giving contents, quantity gross and net weight of each
package
Four copies of invoice indicating all relevant particulars such as number of packages,
quantity, unit rate, total FOB/CIF value, correct and full description of goods etc
Inspection certificat
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i) Free (White in colour): Used in cases where exported goods do not get any export
benefits.
ii) Drawback (Green in colour): Used in cases where the exported goods attract the benefit
iii) Dutiable (Yellow in colour): Used where the exported goods are manufactured in bond
(EOU Goods). Such type of shipping bill is not used in LUCKY EXPORTS, because
iv) Bond (Pink in colour): Used where the exported goods are manufactured in bond (EOU
goods). Such type of shipping bill is not used in LUCKY EXPORTS, because the
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2) GR/SDF Form: GR/SDF form is filled and submitted by the exporter. The exporter give this
form to his shipping agent to get it stamped from the customs office after clearance of goods
from custom. GR/SDF form is prepared in duplicate. The original copy remains with
authorities and they submit it to the Reserve Bank of India. Duplicate copy is submitted to
Negotiating Bank, after mentioning the date of receipt of payment on GR/SDF form they also
send it to RBI.
Contents of GR Form:
v)
3) Bill of Lading: The bill of lading is a document issued by the shipping company or its agent
acknowledging the receipts of the goods mentioned in the bill for shipment on board and
undertaking to deliver the goods in who like order and condition as received to the consignee or
his order provided the freight and other charges specified in the bill of lading require will depend
CONTAINERISATION
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Modern ship building technology has brought forth dry cargo bulk carriers and tankers to reduce
per unit cost of transportation in tramp shipping. Likewise the container technology has
brought in the cellular ships to carry general cargo in containers to reduce cargo-handling cost
and promote faster movements.
The container system of transportation involves bulking of the break-bulk cargoes by putting
them in containers of standard sizes shown below: -
10’ X 8’ X 8’
20’ X 8’ X 8’-81/2’-9’-91/2’
30’ X 8’ X 8’
40’ X 8’ X 8’
From port to port (Pier to Pier)- the carriage of containers is confined to the scalage of
journey.
From Inland Container Depot (ICD) in one country to ICD in another country- the
movement of containers is extended to the interior parts of the country and
Door to Door-the movement of containers is further extended right to the factory gates
of the manufacturer/exporter to the door of the importer’s warehouse in a foreign
country.
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When shipping lightweight and bulky packages, use the following formula to help you
determine their volumetric weight:
Multiply the width by the length by depth of your shipment and divide the total by 6000.
For example
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transaction. The seller generates this after the shipment is done. It is the statement of account of
sale rendered by the seller to the buyer and is prepared in a specific format. The invoice is usually
made out for the full realization amount of goods. It is one of the documents required for
negotiation.
The post-shipment department is done for preparing this invoice, the bill of lading-
number and date, shipping bill number and date, GR number and date, freight details, quota details
This invoice is actually a commercial invoice. The major difference between pre
The pre-shipment invoice is used for customs clearance while the other one is sent to
the L/C opener/buyer for getting the realization through the bank.
The post shipment invoice may contain the discount or partial advance payment, if
Once the goods have been shipped and the necessary documents are dispatched to the importer,
the next step is to collect the payment from the importer. It is obligatory for the exporter to submit
the shipping documents to your bank with in 21 days of the shipment of goods for onwards dispatch
to the overseas correspondent bank. Who will arrange the payment of the same to your bank
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Additional Documents:
Certificate of Origin:
There are certain countries that require their importers to obtain certificate of origin
few other European countries. Under the GSP manufacturers and semi-
When the documents are submitted to the bank, it is a request to the bank to negotiate the
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a) The bank examined all the terms and conditions are according to the original order and
b) The set of all these documents is sent to the importer bank by the first airmail. After that
the second set is also sent by the second airmail for the confirmation of first set.
d) The original copy of the bank certificate as applied for by exporter along with attested
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RECEIPT OF INQUIRY
FROM BUYER
UNDERSTANDING THE
ACCEPTENCE
FOR SAMPLING
SAMPLING
PREPARATION
REVIEW
SAMPLE BUYER’S
NO
APPROVED BY
BUYER
EXPORT CONTRACT
P.O. TO PRODUCTION
INCHARGE
SOURCING
(DYING, CUTTING, STITCHING,
LABELING FINISHING OF PRODUCTS)
DISPATCHING
(TAGGING, FOLDING, PACKING,
INSPECTION & TRANSPORTATION)
PREPARATION OF PRE-SHIPMENT
DOCUMENTS
(PACKING LIST, COMMERCIAL INVOICE, AR-2
FORM, BILL OF EXCHANGE ETC)
CUSTOM CLEARANCE & SHIPPING
(SHIPPING BILL, BILL OF LADING ETC)
FEEDBACK
MODES OF PAYMENT
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Managerial functions tend to become more and more complicated as the operations of a
company cross the boundaries of the nation in which it is operating. Exports finance is no exception
to this generalization. The risk dimension accentuates significantly as soon as the goods are sold
to a buyer outside the country. Some of the risk factors are inadequate personal knowledge about
the foreign buyers, possible restrictions on transfer of funds from importer’s country, fluctuations
in rates of exchange, obstacles to payments for reasons such as wars, political disturbances
payment delays and a lot of other socio political factors. It may be appreciated that these risk
factors originate out of one common reason i.e. the business operations are done in different of
business environment.
The final indicator of success any business is its financial viability and in exports
the inflow of funds is from across the borders. So, an export transaction is deemed to be complete
only after the final payment has been received. The payment is influenced by several factors such
as government rules and practices, bankers, Om Policies, importer’s financial position and the
prevailing trade practices in the industry. The payment can influence other factors of marketing
mix, price being the most significantly affected. The exports managers must take the following
a) The institutional aspect – the operations of the mechanism and credit facibilities.
b) Foreign exchange and its relation to export terms and receipt of the export proceeds.
d) Other factors.
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v)
Due to the significance of risks in exports payments, the methods of payment can be classified into
Payment in Advance.
Open Account.
Documentary Bills.
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Benefits for Export House/Trading House/Star Trading House/Super Star Trading House:
f) Import of cars as one time facility once in five years against their valid status.
Duty Drawback
The duties suffered on the raw material used in the final export product, whether imported or
procured indigenously, are refunded to the exporter through duty drawback scheme.
The cost/duty figures supplied by all industries are used arrive at duty drawback rates,
which are published as all industry rates. In case exporter is not satisfied with this rate, he has an
option of getting a special band rate. The current scheme does not allow drawback, if the exporter
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I. DEEC.
II. DEPB
I. Duty Exemption Entitlement Certificate (DEEC): Under this scheme, exporter is given
license to import raw material without payment of duty. This license is called an Advance
License. The transaction under the license as to be logged by customs in a book called DEEC
book. This book has two separate parts for exports and imports. The exporter has to undertake
an export obligation in terms of value and quantity. The licensing authority, Director General
The exporter has twelve months time to fulfill export obligation. Non-fulfillment of
the obligation attracts the duty waired easier on the imports of raw material plus interest plus
penalties.
This scheme shall apply only for the export of the product where standard input-output
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The export goods shall not be eligible for drawbacks on the inputs for which credit
Pass book will be valid for a period of two years from the date of issue.
In pass book scheme exporter have to first export the goods and get the credit in
The scheme allows import of new capital goods as well as computer software systems at 5%
customs duty subject to export obligation equivalent to 5 times CIF value of capital goods to be
fulfilled over a periods of 8 years reckoned from the date of issuance of license over a period of 8
years. However, in export of EPCG license for Rs.100 crore or over, the same export obligation
shall be required to be fulfilled over a period of 12 years. The capital goods shall include jigs,
fixtures, dies and molded spares may also be imported under the scheme up to 20% of CIF value
of capital goods.
A person holding an EPCG license may source the capital goods from domestic
manufacturers supplying capital goods to EPCG license holders shall be eligible for deemed export
benefit.
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However, the export obligation of particular block of year may be set off by the excess
In respect of license of Rs.100 crore or more, the export obligation shall be fulfilled over a
Of license obligation
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The licensee holder shall submit a yearly report on progress made in fulfillment of export
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PROCEDURE:
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1. Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit
(documentary credit).
2. Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of
Seller (beneficiary).
3. Issuing bank requests another bank, usually a correspondent bank in Seller's country, to
advise, and usually to confirm, the credit.
4. Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about
the terms and conditions of credit.
5. If credit terms and conditions conform to sales contract, Seller prepares goods and
documentation, and arranges delivery of goods to carrier.
6. Seller presents documents evidencing the shipment and draft (bill of exchange) to paying,
accepting or negotiating bank named in the credit (the advising bank usually), or any bank
willing to negotiate under the terms of credit.
7. Bank examines the documents and draft for compliance with credit terms. If complied with,
bank will pay, accept or negotiate.
8. Bank, if other than the issuing bank, sends the documents and draft to the issuing bank.
9. Bank examines the documents and draft for compliance with credit terms. If complied with,
Seller's draft is honored.
10. Documents release to Buyer after payment, or on other terms agreed between the bank and
Buyer.
11. Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods
or the delivery order.
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Brokerage fees
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Export levies
Insurance premiums
Air freight
Insurance premiums
Ocean freight
Lighterage
10
Lighter age
11
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Unloading fees
Warehousing
Demurrage
Wharf age
12
13
14
Warehousing
Interest charges
Advertising
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EXW Ex Works
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Incoterms or international commercial terms are a series of international sales terms, published
by International Chamber of Commerce (ICC) and widely used in international commercial
transactions. They are used to divide transaction costs and responsibilities between buyer and seller
and reflect state-of-the-art transportation practices
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representing a direct cost for the importer since they will be recovered against the sales on
the local (domestic) market.
SUMMARY OF INCOTERMS
For a given term, "Yes" indicates that the seller has the responsibility to provide the service
included in the price. "No" indicates it is the buyer's responsibility. If insurance is not included
in the term (for example, CFR) then insurance for transport is the responsibility of the buyer or the
seller depending on who owns the cargo at time of transport. In the case of CFR terms, it would
be the buyer while in the case of DDU or DDP terms, it would be the seller.
Unlo Unload
Landin Entr
ad Landi onto
Transp Transp g Entry - y -
Loa Expor from ng trucks Transpo
ort to ort to charges Custo Duti
Incoter d to t- duty truck charg from rt to Insura
export import at ms es
ms truc paym at the es at the destinat nce
er's er's import clearan and
k ent origi origin import ion
port port er's ce Taxe
n's 's port ers'
port s
port port
EXW No No No No No No No No No No No No
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DDU Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No
DDP Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes
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CHAPTER 5
FINDINGS, SUGGESTIONS
&
CONCLUSION
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1. Commercial invoice
2. Bill of lading
3. Consular invoice
4. Certificate of origin
5. Inspection certification
8. Insurance certificate
9. Export license
STEP1: Enquiry :
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After studying the enquiry in detail, the exporter - be it Manufacturer Exporter or Merchant Exporter - will provide a Proform
Invoice to the Buyer.
If the offer is acceptable to the Buyer in terms of price, delivery and payment terms, the Buyer will then place an order on th
Exporter, giving as much data as possible in terms of specifications, Part No. Quantity etc. (No standard format is required fo
such a purchase order)
It is advisable that the Exporter immediately acknowledges receipt of the order, giving a schedule for the delivery committed
Once the goods are ready duly packed in Export worthy cases/cartons (depending upon the mode of despatch), the Invoice is
prepared by the Exporter.
If the number of packages is more than one, a packing list is a must.
Even If the goods to be exported are excisable, no excise duty need be charged at the time of Export, as export goods are
exempt from Central Excise, but the AR4 procedure is to be followed for claiming such an exemption.
Similarly, no Sales Tax also is payable for export of goods.
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There are different procedures for removing Export consignments to the Port, following the AR4 procedure, but it would be
advisable to get the consignment sealed by the Central Excise authorities at the factory premises itself, so that open inspecti
by Customs authorities at the Port can be avoided.
If export consignments are removed from the factory of manufacture, following the AR4 procedure, claiming exemption of
excise duty, there is an obligation cast on the exporter to provide proof of export to the Central Excise authorities
The Exporter is expected to provide the following documents to the Clearing & Forwarding Agents, who are entrusted with t
task of shipping the consignments, either by air or by sea.
Invoice
Packing List
Declaration in Form SDF (to meet the requirements as per FERA) in duplicate.
AR4 - first and the second copy
Any other declarations, as required by Customs
On account of the introduction of Electronic Data Interchange (EDI) system for processing shipping bills electronically at mos
the locations - both for air or sea consignments - the C&F Agents are required to file with Customs the shipping documents,
through a particular format, which will vary depending on the nature of the shipment. Broad categories of export shipments
are:
Under claim of Drawback of duty
Without claim of Drawback
Export by a 100% EOU
Under DEPB Scheme
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After assessment of the shipping bill and examination of the cargo by Customs (where required), the export consignments ar
permitted by Customs for ultimate Export. This is what the concerned Customs officials call the ‘LET EXPORT’ endorsement o
the shipping bill.
After completing the shipment formalities, the C & F Agents are expected to forward to the Exporter the following document
Customs signed Export Invoice & Packing List
Duplicate of Form SDF
Exchange control copy of the Shipping Bill, processed electronically
AR4 (original duplicate) duly endorsed by Customs for having effected the Export
Bill of Lading or Airway bill, as the case may be.
With these authenticated shipping documents, the Exporter will have to negotiate the relevant export bill through authorize
dealers of Reserve Bank, viz., Banks.
Under the Generalized System of Preference, imports from developing countries enjoy certain duty concessions, for which th
exporters in the developing countries are expected to furnish the GSP Certificate of Origin to the Bankers, along with other
shipping documents.
Broadly, payment terms can be:
DP Terms
DA Terms
Letter of Credit, payable at sight or payable at... days.
The negotiating Bank will scrutinize the shipping documents and forward them to the Banker of the importer, to enable him
clear the consignment.
It is expected of such authorized dealers of Reserve Bank to ensure receipt of export proceeds, which factor has to be intima
to the Reserve Bank by means of periodical Returns.
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As indicated above, Exporters are also expected to provide proof of export to the Central Excise authorities, on the basis of t
Customs endorsements made on the reverse of AR4s and get their obligation, on this score, discharged.
Authorized dealers will issue Bank Certificates to the exporter, once the payment is received and only with the issuance of th
Bank Certificate, the export transaction becomes complete.
It is mandatory on the part of the Exporters to negotiate the shipping documents only through authorized dealers of Reserve
Bank, as only through such a system Reserve Bank can ensure receipt of export proceeds for goods shipped out of this
country.
CONCLUSION
It is clear from the above study that the complexity of international import-export business can be
overcome easily by a systematic export procedure & fair documentation. This is only the
Transport Agencies, Insurance Agencies and Inspection Agencies. Thus the whole study concludes
in brief …
To survive & grow in today’s international market for any export house, the systematic
To overcome any kind of error, bottleneck, fraud and mistake; the awareness and
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The final indicator of success any business is its financial viability and in exports the
inflow of funds is from across the borders. Thus mode of payment must be decided on
the basis of best business suitability according to the Govt. & RBI policies.
Also the Government of India has instituted many support programmes with a view to
give thrust to our sectors. These programmes have been made to facilitate the exporters
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BIBLIOGRAPHY
Reference Site
Reference book
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Malhotra, Naresh K., Marketing Research, An Applied Orientation, Fourth Edition, Pearson
Prentice Hall, 2005, Part II, pp. 71-340.
Reference Newspaper
Annexure
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Annexure
Interview Questions
What role the different departments play for the completion of the export order?
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Annexure-20
The following manufacturers shall follow regular procedure of ARE.1 and bond/letter of
undertaking for exports:
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(i) Those who are availing facility of credit under CENVAT Credit Rules, 2001
(ii) Those who are claiming rebate of duty paid on materials under Rule 18 of the Central
Excise (No.2) Rules, 2001 read with notification 41/2001-Central Excise (N.T.) dated
26.6.2001, and/or
(iii) Those who are engaged in the manufacture of export goods under bond under Rule
19 (2) of the Central Excise (No.2) Rules, 2001 read with notification 44/2001-Central
Excise (N.T.) dated 26.6.2001
Proforma of Running Bond Account in respect of B-1 Bond 4. Consolidated B-1 Bond
No. & Amount of Bond. 5. Whether with Surety of Security. 6. Name of Surety & his
complete address. Date Particulars Credit Rs. Debit Rs. Balanc e Remarks Signature of
Exporter Opening Balance Cr..........
Note: -
1. Debit & Credit entries should be entered in separate lines.
2. Opening Balance is the amount of Bond as soon as it is executed and accepted.
3. Debit entry shall be made on Block Transfer, while issuing certificate of Provisional
debit or exports.
4. Credit entry shall be made in the manner specified in the instructions.
**************************************** PROFORMA OF DEMAND IN
RESPECT OF SHORT SHIPMENT OF EXPORTS CLEARED WITHOUT PAYMENT
OF CENTRAL EXCISE DUTY UNDER BOND
From ____________________________ ____________________________
To _____________________________ _____________________________
Subject: Demand in respect of short shipment of exports cleared without payment of C.
Ex. Duty under bond.
Kindly refer to ARE.1 No. .............. under which (qty.) of .............. (description of goods)
were taken clearance without payment of Central Excise duty on your execution of Bond
No. .......... On scrutiny of the documents submitted by you as proof of export, it is
observed that only ........... Qty. of .......... (Description of goods) have been shipped under
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S.Bo. No./Bill of export No. ............ dated .............. from ........... (Name of port/ airport
/ICD/LCS). The quantity short shipped is ................. (qty.) of ............ (description of
goods) on which Central Excise duty payable works out to be Rs............. (as detailed in
annexure). You are hereby called upon to deposit the difference within 10 days failing
which it should be explained to (Name of officer to be given) as to why action shall not
be taken for recovery in terms of the Bond executed and other provisions of Central
Excise Law. (You are further required to state as to why penal actions shall not be taken
against you for contravention of C.E. Rules. (Relevant rules to be cited).
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