Terms & Condition for Buying the Online Soft Copy (PDF Format)

of Assignment Solution Guides (Solved Assignment)

based on IGNOU
 The User must read & Accept the Terms and Conditions (T&C) carefully before clicking on the accept
option for Buying the Online Soft Copy (PDF Format) of Assignment Solution Guides based on IGNOU
 Under this Particular Facility you may buy only the Online Soft Copy (PDF Format) of Assignment
Solution Guides based on IGNOU, no Hard Copy or Printed Copy shall be provided under this facility.
 In this Assignment Solution Guide, Solutions of Only the Selected Questions are provided, the answers
of all the Questions are not Provided.
 In these Sample solutions of the Assignments only the “Minimum Requirement” of the Assignments
Questions have been answered, Like if 5 Questions are give and it has been asked that Answer any 3 out
of them, them only 3 selected question’s answers shall be given, each & every question shall not been
answered.
 This is a Chargeable Facility / Provision to Buy the Online Soft Copy (PDF Format) of Assignment
Solution Guides based on IGNOU available online through our Website Which a Subscriber / Buyer
may download on his or her Computer.
 The Sample Assignments and their answer given in these Assignment Solution Guide provides you just
the approximate pattern of the actual Answer. However, the actual Assignments might somewhat vary
in its contents, distribution of marks and their level of difficulty.
 These Sample Answers/Solutions are prepared by the author for the help, guidance and reference of the
student to get an idea of how he/she can answer the questions. Sample answers may be Seen as the
Guide/Reference Material only. The publisher does not Claims the Accuracy of these solution /
Answers. Any Omission or Error is highly regretted though every care has been taken while preparing
these Sample Answers/Solutions. Please consult your Teacher/Tutor or refer to the prescribed &
recommended study material of the university if you have any doubts or confusions before you appear in
the exam or Prepare your Assignments before submitting to the University.
 Good Marks Publications (www.estudymart.com) shall remain the custodian of the Contents right /
Copy Right of the Content of these Assignment Solution Guides based on IGNOU
 The User agrees not to reproduce, duplicate, copy, sell, resell or exploit for any commercial purposes,
any portion of the Service, use of the Service, or access to the Service.
 The Price of these Assignment Solution Guides may be Revised / Changed without any Prior Notice.
 All material prewritten or custom written is intended for the sole purpose of research and exemplary
purposes only. We encourage you to use our material as a research and study aid only. Plagiarism is a
crime, and we condone such behavior. Please use our material responsibly.
 In any Dispute What so ever Maximum Anyone can Claim is the Cost of a particular Assignment
Solution Guide which he had paid to Good Marks Publications (www.estudymart.com).
 All the Terms, Matters & Disputes are Subjected to “Delhi” Jurisdiction Only.
1
 I.B.O.-4
Export-Import Procedures and Documentation
Disclaimer/Special Note: These are just the sample of the Answers/Solutions to some of the Questions given in the
Assignments. These Sample Answers/Solutions are prepared by Private Teacher/Tutors/Authors for the help and guidance
of the student to get an idea of how he/she can answer the Questions given the Assignments. We do not claim 100%
accuracy of these sample answers as these are based on the knowledge and capability of Private Teacher/Tutor. Sample
answers may be seen as the Guide/Help for the reference to prepare the answers of the Questions given in the assignment.
As these solutions and answers are prepared by the private Teacher/Tutor so the chances of error or mistake cannot be

g
denied. Any Omission or Error is highly regretted though every care has been taken while preparing these Sample Answers/

n
Solutions. Please consult your own Teacher/Tutor before you prepare a Particular Answer and for up-to-date and exact

i
information, data and solution. Student should must read and refer the official study material provided by the university.
Attempt all the questions.

a d
Q. 1. (a) “Electronic Data Interchange (EDI) can not work without standardization”. Give your arguments
and discuss the EDI standardization.

Re
Ans. EDI STANDARDS: Standards in Electronic Data Interchange is a necessity due to the enmoerity of the

e
use of EDI systems by different group of people. Seeking different information at the same time. Some EDI Standards

in ks
have been established to meet sectoral and national require-ments.

l
Since there is more than on syntax upon which EDI messages are built, the syntax comprises rules that define

n oo
how a message is assembled for exchange. Three Syntax’s dominate the world of EDI.

O b
ANSI ASC X. 121 often called ANSI X 12
UNTD 12
EDIFACT 3

or -
f E
EDIFACT is the international Syntax Since 1985 as merger between UNTD 1 and ANSI X 12. United Nation has

d
introduced a common standard called UN/EDIFACT.

b n
EDIFACT defines the Syntax rules for transmission of messages in international trade.

u a
EDIFACT covers standardisation in five main areas:

H
(a) Data Elements: Data elements can consists of details relating to buyer, seller, goods description and value.

e
(b) Syntax Rules: It is the grainmet for writing messages in a structured manner.

h
(c) Message: A set of information stored in predefined format along with the precise function. Messages are

T
equivalent to documents.
(d) Segment: Segment is immediate unit of information in a message which equates to sentence in a passage.
(e) Codes: Codes are used as abbreviations. The EDIFACT codes are built on existing ISO codes.
International Trade involved long distance in different geographical locations served by different modes of
transport, where sending the proper documents involved long time uncertainities of the postal system and huge
costs, whereas as Electronic Data Interchange is instant delivery, paperless and low costs of operation does not
involves papers and their upkeep.
Speed is the essence of international trade earlier couriers such as UPS/DHL and FEDEX provided fast services
by carrying papers and documents related to international trade but these services limited to selected few air connected
locations and very costly hence the EDI become instant success in the area of international trade.

2
 EDI still has certain unresolved legal issues like authentification of documents, which are neither signed nor
sealed, however of the facility of signature and message secure. EDI systems provided by introduction various
VANS have made EDI a necessity for international trade.
EDI is fast, exact and perfect and not proove to human errors and the messages are delivered on computer to
computer basis as per the accepted message system which has been made secure and any ambiguity can be clarified
by revesting the query electronically and get it clarified at an early time. EDI helps the international trade on all
spheres except the physical delivery of goods even the payments can be made electronicallly through secured system
of various banking channels.
EDIFACT is only International Syntax Standard used for interchange of electronic messages.
EDIFACT-Electronic Data Interchange For Administration, Commerce and Transport was born in 1985, by
merging the best features of UNTDI and ANSI X 12
EDIFACT defines the Syntax rules for the transmission of message and can be used across global boundaries,
EDIFACT message standard are used for international trade and have been endorsed by the United Nations.

n g
i
EDIFACT covers standardisation in the following areas:

d
Data Elements

a
Syntax Rules

e
Message

R
Segment

e
Codes

in ks
EDI Standards Comprises the:

l
Syntax

n oo
The message designed rules
Directories

O b
The messages and directories are designed by technical experts in consultation with the users. Maintenance

r -
providers help in making out the directories for national or international use.

o
f E
EDI standards cover data elements in unit of data for which the field specifications are defined.

d
Syntax rules: It is the grammer for writing messages.

b n
Message–a set of information stored in a predefined format.

u a
Segment: It is the immediate unit of information in a message

H
Codes: Codes are with upon the ISO codes.

e
(b) What is Electronic Data Interchange? Describe the benefits of Electronic Data Interchange for the

h
Export-Import Organization.

T
Ans. Electronics Data Interchange was introduced in North America and Europe in about 1980 and since than has
made very big strides in technology and with more efficient satelite and optical fibre cable networks and undersea
cables being used very widely. Electronic Data Interchange has become a tool of effciency and time saving. In every
trade transactions and information is exchanged on papers and creating paper documents is very time consuming and
involves lot of cost on creation, delivery and storage. Even where computers are being employed in re-entering the data
from one computer to another computer allows lot of handling and involves a large volume of paperwork. Increasing
cost in International trade has made electronic data interchange a prefered choice for all kind of transactions. Electronic
Data Interchange (EDI) is a solution which can be implemented at the core of business operations which can deal with
complete process from receiving of order to supply of raw-material to the distribution of the finished goods.

3
 Electronic Data Interchange (EDI) eliminates the process of sending and receiving documents through postal or
courier system. The transfer basis and does not require re-entry or re-key. EDI applications have been developed in
many new areas of computing for finance, banking insurance, administration for trading of information as data.
DEFINITION
The internationally accepted definition of Electronic Data Interchange is “the transfer of structured data by
commonly agreed message standards from computer to computer by electronic means”.
Electronic Data Interchange (EDI) is defined as the direct transfer of business information between two computer
systems in different organisations using widely agreed standards to structure the transaction or message data.’standard
data’ is a precise, recognised and accepted method of assembling data.
The definition emphasise the two terms on which the whole EDI system operates and these are the ‘structured
data’ and by ‘agreed message standards’ and ‘computer to computer’ and “structured data” is a precise, recognised
and accepted method of assembling data.

g
“By agreed message standards” implies that such discrepancies between invoices will be minimised by providing

n
i
a fixed and agreed method of specifying and presenting the data.

d
“Computer to Computer” implies the interchange is between two computers through structured data and by

a
agreed message standards.

e
Electronics means that the data has been interchanged through a system established for this purpose.

R
Electronic Data Interchange is not a technology, it is a solution operating through electronic transmission

e
technology. Over the years the electronic interchange of data has become very fast with the advent of internet and

in ks
dedicated websites and electronic mail and other advancement in hardware and software.

l
Export houses draw the following strategic advantages through EDI:

n oo
1. Less Paperwork
2. Documentation made easy

O b
3. Sales contracts through EDI for repeat business.
4. Immediate receipt of documents

or -
f E
5. Customs declaration and documents can now be submitted using EDI

d
6. Electronic fund transfers are instant.

b
7. Enhanced effecacy of operations

u a
8. Reduction in costs of operations.
n
H
9. Not much negligible paper record keeping

e
10. Trading information obtained from historical data built up from EDI transactions help in further market

h
research and strategic planning.

T
11. Closer working relationships with business partners.
12. Faster trading cycle.
13. Terms of trade affected by bargaining power
14. Need to respond to highly competitive market entrants.
15. Access to new markets and customers
16. Reduction in money tied up in stocks
17. Paper and postage bills reduced
18. More secure and efficient system
19. Enhanced image

4
 20. Effective supply chain management
21. Better enterprise resource planning.
22. Better vendor development and management.
Q. 2. What are the regulatory frameworks of import finance? Explain various methods of import finance
available to Indian importers.
Ans. Every country exports its surplus production to another country who imports this surplus productions and
this involves lot of money for a long period, which the importer cannot manage on its own and hence he looks for
finance.
The Import financing is necessary for keeping the flow of imports at an even level as the imports reflect the
living standards of its people. Import financing in India is done by the Commercial Banks, the EXIM Bank and the
government of India through the foreign aid and credits received by it. The most important method of Importing
financing is the establishment of letter of credit by the exporter, which allow a indirect finance to the Importer. The

g
Importer finance is available as under:

i n
(i) Through a Letter of Credit by the exporter

d
(ii) Through Documents against Acceptance

a
(iii) Through Documents at Deferred Payment Terms

e
(iv) Through Trust Receipt for goods imported on consignment basis

R
(v) Through Government of India Letter of Commitment
(vi) Through Government of India Letter of Reimbursement.

e
(vii) Through International financial Institutions.

in ks
Regulatory Framework related to Import Financing

l
Imports into India are regulated to an extent though all Indians are allowed to Import the goods covered by Open

n oo
General Licence without an import Licence but such imports are regulated by the following regulatory framework:

O b
1. Foreign Trade (Development and Regulation) Act, 1993.

r -
This act regulates the imports, its payments and entry and is administered by the Director General of Foreign

o E
Trade.

f
2. Foreign Exchange Management Act, 1999

b d
This act regulates the foreign exchange, its inflow and outflow and is administered by the Department of Economic

u a n
Affairs, Ministry of Finance and the Reserve Bank of India.

H
3. Indian Customs and Excise Act.
It relates to the entry of imported goods, the Customs duties payable at the port of entry and is administered by

e
Central Board of Excise and Customs.

h
The rules and operational procedures and changes relating to imports are framed by the Foreign Exchange

T
Dealers Association of India (FEDAI) in line with the policies formulated for Uniform Customs and Practice for
Documentary credit by the International Chamber of Commerce, Paris.
India’s import policy confirms to framework of obligations of the membership of the World Trade Organisation
(WTO). All restrictions on import are in line with the WTO regime. Physical control over imports is exercised by
DGFT and the RBI. India has a negative list of certain import items which can be imported into India by obtaining an
Import Licence.
Methods of Import Finance
(a) Financing Import under Letter of Credit.
(b) Financing against Bill Under Collection.

5
 (c) Financing Import against Deferred Payment.
(d) Financing under Foreign Credit.
(e) Financing Loans of Export-Import Bank of India.
(a) Financing Import under Letter of Credit: Letter of credit is an instrument whereby a bank makes a
commitment to pay to the seller of goods a certain amount of money subject to fulfilment of certain stipulated
conditions and presentation of specific documents to the title of goods.
(b) Financing against Bill Under Collection: After affecting the export by shipping the goods, the exporter
forwards the Bill of Exchange alongwith related documents for collection of proceeds from the importer on presentation
of documents or the delivery of the documents to the importer once he accepts the documents and agrees to pay the
due amount on a given date.
(c) Financing Imports against Deferred Payment: Many a time an exporter allows a clean credit for the goods
being imported beyond six months and thus a sort of financing Imports against deferred payment.

g
(d) Financing under Foreign Credit: India gets or takes lot of grants or loans to finance imports from various

i n
International Institutions, these foreign funds are used to finance imports, especially for development project.

d
Import Loans by Export-Import Bank of India

a
The Export-Import Bank of India finance the bulk imports of consumable inputs required for manufacture of

e
export goods and provides refinance to the commercial bank extending credit to the importer for over rupees one

R
crore.
The EXIM Bank finance imports by Indian exporters in case of projects in third world countries Procedure of

e
Financing Imports under Letter of Credit:

in ks
Procedure of financing imports under the letter of credit starts with the opening of letter of credit by an issuing

l
bank on receipt of an application by an importer providing the very precise conditions of the import along with the

n oo
list of documents and time limit within which the imports have to be completed.

O b
Then the letter of credit issued by the issuing bank to a bank in the suppliers country with a request to deliver the

r -
same to the supplier. If the supplier who is the beneficiary of the L/C is satisfied with the terms of LC, he ships the

o E
goods, obtain the required documents and submits them to bank for forwarding the documents to the importer for

f
collection of payments on receipts of the documents the issuing bank scrutinise the documents and if found valid

b d
asks the importer to make the due payment and if in the view of the bank importer is good customer it may handover

u a n
the documents on stamped letter of trust whereby the importer agrees to deposit sales proceeds on realisation within

H
the stipulated period.
Letter of credit is an instrument which ensure safety of the issuing bank confirming bank and negotiating banks

e
and also the supplier and the importer of goods against easy finance.

h
Q. 3. Explain the procedures of customs clearance of export cargo by sea and by air along with the

T
documentation formalities.
Ans. Customs Clearance Formalities: The Law in India mandiates that no overseas carrier can load the cargo
on an Indian port without the express permission of the Customs Authorities under section 40 of the Indian Customs
Act. The permission is granted to the exporter or his Clearing and Forwarding Agent by following the procedures
and formalities as required under the law.
Legal Framework
Section 50 of the Indian Customs Act requires the exporter to file a declaration in a prescribed form and submit
supporting documents to enable the customs authorities to check declarations made by the exporter the objectives of
the customs control are:

6
 (i) To ensure that nothing goes out of the country against the laws of the land and that prohibetions and
restrictions regarding outward cargo are duly enforced by the customs authorities.
(ii) To ensure authenticity of the value of outward cargo according to the customs vauation rules to check over
and under invoicing.
(iii) To assess and realise export duty/cess/charge according to the Customs Tarrif Act and other fiscal legislation.
(iv) To check that all the relevant regulatory provisions enforced by various authorities in the country have
been duly complied within respect of export.
(v) To provide export data through the Customs returns.
Customs Clearance Stages
The following are the four stages of Customs clearance:
1. Processing of documents at Custom House i.e. main office. This stage involves the following:
(a) Checking up of documents to ensure that all relevant documents have been submitted.
(b) Verification of quantity and value of goods.

n g
i
(c) Verification and determination of rate of duty and collection of the duty amount.

d
(d) Direction for the customs officer in the docks for physical examination of goods.

a
(e) Physical examination of goods in the docks in accordance with the examination order given at the Customs

e
House.

R
(f) Supervision of loading by the customs preventive officer.

e
(g) Post-shipment endorsement by the Customs Preventive officer.

in ks
Documentary Requirements

l
Export is possible only with the help of documents for movement of goods by air or sea the customs permission

n oo
for Shipment is given on a prescribed document know as Shipping Bill. In other cases like Rail/Road the document
is known as Bill of Export. There are four types of Shipping Bill as under:

O b
1. Dutiable Shipping Bill / Bill of Export: This is for those goods which attract the payment of duty/cess for
exports.

or -
f E
2. Drawback Shipping Bill/Bill of Export: It applies to those goods which are entitled to the Duty Drawback

d
Scheme.

b n
3. Free Shipping Bill/Bill of Export: These are those goods which do not attract Export Duty and are not
eligible for Duty Drawback.
u a
H
4. Ex-Bond Shipping Bill/Bill of Export: This applies to these goods which are shipped from the customs

e
bonded warehouses.

h
The exporter or his CFA has to submit the following documents to the Customs Department for Customs clearance:

T
1. Shipping Bill in duplicate, triplicate, quadriplicate duly filled, in signed and stamped
2. Declaration regarding truth of statement made in the Shipping Bill.
3. Invoice copy
4. GR Form
5. Export Licence, if required
6. Quality Control Inspection Certificate
7. Original contract of export or correspondence leading to the contract
8. Contract registration certificate
9. Letter of Credit if applicable

7
 10. Packing List
11. AR4/AR5 forms original and duplicate
12. Any other relevant documents
Procedural Formalities
(a) The Shipping Bill and the other documents are submitted to the custom house as soon as the Rotation
Number has been given to the carrier.
(b) As soon as the documents are filed in the Customs House the receiving clerk will stamp the shipping bills
with date and time and number them according to their category.
(c) The Shipping Bill involving Foreign Exchange will be sent to the Appraisment section where they are
allotted to appraisers and examiners for scruting and giving examination order.
(d) While the Appraiser will examine the Dutiable and Drawback Shipping Bills.

g
(e) Free Shipping Bill will be examined by the Examiners.

n
(f) The verification of the Shipping Bill will be carried out with reference to value and quantity of goods

di
export licence/quota/permit compliance with statutory requirements, rate and amount of export duty etc.
(g) After verification of Shipping bill the customs Appraiser/Examiner will give an “examination order” on

e a
the Duplicate Shipping Bill. This order will enable the customs officer to carry out physical examination
of goods in the docks. The “examination order” will also be counter-endorsed by the principal Appraiser.

R
(h) After completion of formalities at the Appraisement Section, the documents are given to the GR form clerk

e
who puts the Shipping Bill Number on the GR form and detaches the original to be sent to RBI.

in ks
(i) Further where export duty is to be paid, the documents are given to the exporter/CFA to pay it at the cash

l
and accounts department. After payment of duty, Shipping Bill (Original) is detached and the other documents

n oo
are given to the exporter/CFA. In other cases Shipping Bill (original) is retained at Customs House and

O b
other documents are given to the exporter/Agent for bringing the goods to the shipment shed and make

r -
Shipment arrangement.

o E
The second stage of Customs formalities is to carry-out physical examination of goods in the shed. The goods

f
can be brought into the shed only afttier completing port formalities once the goods have been brought in the

b d
exporter CFA will present the Shipping bill to the custom shed Appraiser / Examiner along with the following

n
u a
documents:

H
(i) Invoice
(ii) Packing List
(iii) AR4/AR5 Forms

h e
(iv) Agmak Certificate, if applicable.

T
The shed Appraiser/Examiner would carryout physical examination according to the “examination order” given
in Shipping Bill (Duplicate).
Once this activity is over the Examiner will give ‘Let Export’ order on the Shipping Bill (duplicate) which
constitutes the physical examination report.
After the physical examination report, the customs preventive officer at the docks gives permission for Shipment
on the Shipping Bill (Duplicate) in the form of ‘Let Ship’ order.
This copy is presented to the master of the carrier who then in consultation with the concerned customs preventive
officer, commences loading operations.

8
 The master of the carrier, after receiving consignments on board issues ‘Mate’s Receipt’ which is obtained by
the exporter or his CFA through the shed Superintendent after paying port dues.
The Mate’s Receipt provide the basis for certification of the ‘Fact of Shipment’ on those documents where it is
needed for claim of export incentives. These documents are AR4/AR5 Form, Export Promotion Copy of Shipping
Bill, GR (Duplicate) and Commercial Invoice.
PORT PROCEDURES
Export Cargo can be brought into the port only after the Ship has been allotted a berth and declared for loading.
Some port authorities in India require the Shippers to pay port charges and have their Shipping bills passed by the
Customs House before bringing goods in the docks.
Before bringing the Cargo to the Shipment shed the Shipper has to obtain carting permission from the shed
superintendent and also the ship’s agent on the prescribed document.
This document is known differently at different ports e g. Dock challan at Kolkatta, Port Trust copy of the
shipping bill at Mumbai and Export Application at other ports in India.

n g
i
When goods are brought at the deck gate, the shipper has to present the port document and the Vehicle Ticket (in

d
duplicate) to the Gate Inspector.

a
At the gate, the documents are compared and checked to ensure that such goods as have been permitted are

e
brought to the docks for shipment. The packages bundles, cases in each vehicle are counted to see that their number

R
tallies with the number mentioned in the respective vehicle tickets. Vehicles are then allowed to move to the concerned

e
shipment shed and particulars of cargo passed through the gate recorded in a register maintained at this point.

in ks
Conciding with the arrival of the vehicles in the shipment shed, the shipper submits the Vehicle Tickets duly

l
endorsed by the Gate Inspector, Export Application/Dock Challan/ Port Trust copy of shipping bill, duly passed by

n oo
the customs and a receipt in lieu of payment of port charges, where necessary, to the shed superintendent. As cargo
is unloaded in the shipments shed, details of the cargo received are entered in the ‘Shed Export Cargo Register’
which is maintained shipper-wise and shipwise.
O b
r -
The shipper approaches the customs Appraiser and customs preventive officer for physical examination of the

o
f E
goods and obtains “Let Export/Let Ship” endorsement in Port Trust Documents also. The cargo is then allowed to be

d
shipped on completion of shipment, details of cargo actually shipped are recorded in the “Shed Cargo Export Register”

b n
from the “Shipping Tally Sheets” which are maintained by the Port Trust and also the Shiping lines.

u a
On receipt of the cargo on board the Master of the vessel issues a document called the “Mate’s Receipt” in

H
respect of every shipment taken in board at some ports the issuance of Mate’s Receipt is preceded by another

e
document which has to be exchanged for the Mate’s Receipt. The Mate’s Receipt is subject to the terms and conditions

h
stated in the shipping company’s regular Bill of Lading. At most ports in India the port authorities collect the Mate’s

T
Receipt from the Master or the Chief officer of the vessel and pass them on to the respective shippers only after
ensuring receipt of all port dues. The port authorities receipt no claused Mate’s Receipt, unless authorised by the
Shipper.
After collecting the Mate’s Receipt, the Shipper (exporter or CFA) prepares the Bill of Lading on blank forms
supplied to him by the Shipping Company. He presents 2/3 originals and some non-negotiable copies of the document
at the sipping company’s office for signature of the authorised officer along with the Mate’s Receipt. The Mate’s
Recipt is an important document because it is required to be exchanged for the Bill of Lading. The Shipper must,
therefore, collect his document from the shed superintendent immediately after it has been received by the letter to
avoid delayed and problems which might follow if this is not collected in time.

9
 Bill of Lading may be marked ‘Freight Paid’ or ‘Freight to Pay’. If the freight is prepaid i.e. paid by the exporter
the Bill of Lading is marked or stamped to that effect and where freight is not pre-paid the Bill of Lading is marked
‘Freight to Pay’ or “Freight Collect”.
The Shipping Company retains the Mate’s Receipt before signing and parting with the Bills of Lading, the
shipping company ensures that all the clauses appearing in the Mate’s Receipt are reproduced on the Bill of Lading
also.
Q. 4. Comment on the following statements.
(i) Contract is not a legal concept.
Ans. Nature of Export Sales Contract Contract is a legal document which gives in details the condition of
sales including the duties of exporter and the importer, terms of payment, mode of transport, payment of taxes and
levies and the mechanism for the redressal of disputes. In India, there is law of contract known as Indian Contract
Act, 1872, section 2 (1) of this act defines the sales contract. Contracts are of universal nature and are honoured

g
the world over. A contract is formed when both the parties agree to the terms of agreement or contract and put

n
i
their signatures to it which signify the acceptance of the terms of contract and all contractual obligations have to

d
be met, if any condition is not adhered to then it is termed as a contravention of the act.

a
FRUSTRATION OF CONTRACTS

e
Sometimes it may not be possible for either parties to fulfil contractual obligations as per the terms of contract

R
owing towards civil disturbances, floods, earth quakes, fire at the factory or strike at ports.

e
In the Common Law Countries such as UK and Commonwealth Countries such situations are termed as ‘frustration

in ks
of contracts’ the similar concept is known as ‘force majeure’ in the civil law countries principally the western

l
Europe while it is called ‘relief’ in Russia and CIS countries. If due to such reason the party concerned can not do

n oo
what he is supposed to do under the contract the contract can be terminated and the party will not be liable to pay
damage to the other party.

O b
(ii) Commercial invoice is not a seller’s bill given to the buyer.

r -
Ans. Commercial Invoice: It is one of the most basic and important document for exporting the goods as the

o
f E
invoice gives out the complete details of the goods in quality, quantity, mark and labels, packing, price per unit,

d
number of units and the total value, the port of despatch, the port of destination, details of insurance, payment of

b n
costs, duties levies. It is prepared at pre-shipment and post-shipping stage.

u a
The details given in the Commercial invoice must be exactly similar in nomeclature and spellings as given in the
sales contract.
H
e
The Commercial invoice is given to the banker with other relevant documents for collection of payment from

h
overseas.

T
This invoice is also necessary claiming any export incentive and hence it is of upmost importance.
It has been rightly said that the exports starts with commercial invoice and end in the commercial invoice.
(iii) Constructive total loss is a physical loss.
Ans. Constructive Total Loss: It is not a physical loss and is not absolute. It is a type of loss where the cost of
saving, repairing or reconditioning of the insured goods is more than the value of goods. The claim for constructive
total loss can be claimed only after abandoning the interest in the insured cargo in favour of the insurance company.
Particular loss is of two types:
(a) General Average
(b) Particular Average

10
 General Average is defined as an extraordinary sacrifice or expenditure intentionally and reasonably for the
common safety of the cargo. As an accepted principle of maritime law governing GA is that all those who expose
their property to maritime perils are in it together and should share in any misfortune on an equal basis. GA sacrifice
expenditure refers to some cargo is thrown into the sea to reduce the weight of the Ship.
Water is poured on cargo to extingursh fire and like situation in during the timing of the ship to safe waters.
Particular average is a partial loss or damage caused accidentally by a peril insured against when such a loss take
place, there is no contribution from other interest in journey.
Generally the losses are covered according to coverage and Institute Cargo Clause, it may clause A, which is the
highest and covers most of the risk or clause. which covers the least losses. Some exclusion clauses also are applied
to the insurance policies. The perils and losses which are not covered under the cargo insurance contract are covered
under the exclusion clauses which are General Exclusion clauses, Wars Exclusion clauses and unseaworthness

g
clauses.

n
(iv) There are no privileges for the Star Export Houses.
Ans. International Services Export House

di
(a) Average foreign exchange earning during the preceding three licensing years is Rs. 20 crore. Or

e a
(b) Free Foreign Exchange earning during the preceding licensing year is Rs. 30 crore. OR
(c) Average Net Foreign Exchange Earning made during the preceding three licensing year is Rs. 15 crore. OR

R
(d) Net Foreign Exchange earned during the preceding licensing year is Rs. 25 crore.

e
International Super Star Service Export House

in ks
(a) Average Free Foreign Exchange earning during the preceding three licensing years is Rs. 300 crore.

l
(b) Free Foreign Exchange earing during the preceding licensing year is Rs. 450 crore.

n oo
(c) Average Net Foreign Exchange earned during the preceding licensing year is Rs. 925 crore.

O b
(d) Net Foreign Exchange earned during the preceding licensing year is Rs. 375 crore.

r -
Q. 5. Write notes on the following :

o E
(i) Rationale of export-import documents

f
Ans. Rationale of Documents: The single largest rationale of documents is that human memory is short and the

b d
humans tend to interpret things according to their own prospective, interests and understanding based on his

n
u a
convenience. This documents provide a positive proof of what was agreed upon and what needs to be done and what

H
should have been done by both the parties to the agreement to transact business of export and import. Stipulated
terms required by law, customs, convention and mutual agreement.

h e
Every country has some or the other surplus production which cannot be consumed in the domestic market at a
remunerative price so it tries to find a market to which the same can be sold through exports. The imports are

T
necessitated by the demand and need for certain goods which the importing nation has in short supply and all such
transactions need to be well documented.
(ii) Role of Export-Import Bank of India
Ans. EXIM Bank for Long-term Credit: Export Import Bank of India has been established with a view to
provide a Long-term Credit to such exports which are usually done on deferred payment basis, these exports include:
Turnkey Jobs abroad involving design, build, construct, and maintenance Commission Construction Jobs involving
infrastructure. All projects receiving funding from the UN plans.

11
 EXIM Bank also provide finance to import capital goods into India and also for establishing joint ventures in
overseas.
(iii) Stages of customs clearance of import cargo
Ans. Stages of Customs clearance are as under:
1. Presentation of Bill of Entry, along with relevant documents to the import department of Custom House
i.e. the concerned group.
2. Checking of the Bill of Entry and the IGM submitted by the Carrier by concerned official of the custom
and it is notified.
3. Secrutiny and checking of document and the information provided.
4. Marking of the Bill of Entry to the concerned Appraiser for appraisement and assessment.
5. The Appraiser makes an examination of the goods and makes an appraisal and assessments on the basis of

g
information provided and issues on Examination order.

i n
6. Return of the Bill of Entry to the importer after making an assessment for deposit of duty levied within a

d
period of 7 days.

a
7. The importer deposits due amount of duty with the cash department which detaches the original copy of

e
Bill of Entry and keeps it for purpose of record.

R
8. The documents are given to the importer/CHA for presentation to the Dock Superintendent for physical

e
examination of goods as per Examination order.

in ks
9. The Dock Superintendent marks the documents to one of the Examiner / Inspector for physical examination.

l
10. The examiner after examination writes his report and signs on the reverse of the Bill of Entry and send it

n oo
back to the Superintendent for counter signature and the ‘Out of charge’ order is given.

O b
11. The Importer/CHA presents the documents to the Port Manager who ensures about any charges/demurrage

r -
if any to be paid by the importer. The same is deposited with the cash department. Thereafter the Port

o E
Manager issues release order on the basis of which goods are taken out of the Customs Area.

f
(iv) Export Promotion Councils and Commodity Boards

b d
Ans. At present there are 20 export promotion councils and 7 Commodities Boards, which are the key institutions

n
u a
in the institutional frame work for export promotion. These councils and boards have been entrusted with the lack of

H
promoting exports of specific products from India. The Export Promotion Councils perform the following main

e
functions:

h
1. Marketing Assistance: These export promotion councils and Commodities Boards provide marketing assistance

T
to the exporters by providing marketing intelligence, guidance, assistance and advice individual corporate units in
their export plans and efforts, market- wise as well as product-wise. The assistance includes market opportunities
identifying prispective importer trade and tarrif policies of importing countries, product designs and specifications,
agents and the distribution channels, warehousing, Publicity and promotion, processing, packaging Shipping and
transportation, buying practices, competition.
2. Continuous Feedback of Market Information: Export Councils and Commodities Boards have afflitate
offices the world over to collect information in intelligence and trade datas, and the knowledge of the various laws
in particular countries most of the information is published for the use of importers and exporters. These authorities

12
also provide individualised information. These bodies carry out market surveys sponsor delegations, hold exhibitions
for exporters and importers and organise Indian festivals in major importing countries. These organisations provide
regular feedback on various questions relating to exports and imports.
3. Mouth-piece of Industry: These Export Promotion Councils and Commodities Boards act as the mouth
piece of the trade and industry in advising as well as seeking appropriate changes in government policies influencing
export effort of their specific areas of interest.
4. Product/Industry Coverage: These Councils and Commodities Boards are Statutory bodies responsible for:
(a) Development of Cultivation
(b) Increased productivity
(c) Processing
(d) Research and development

g
(e) Marketing

i n
At present there are seven commodities boards for the promotion of export trade of their commodities as under:

d
1. Tea Board for promotion of Indian Tea

a
2. Coffee Board for promotion of Indian Coffee

e
3. Tobacco Board for promotion of Indian Tobbaco

R
4. Rubber Board

e
5. Coir Board

in ks
6. Spice Board

l
7. Silk Board

n oo
These boards are the designated registering authority and issue Registration cum Membership certificate which

O b
is necessary for claiming duty drawback.

or -
f E
b n d
u a
H
h e
T

13