TUTOR MARKED ASSIGNMENT

Course Code : AED-01

Course Title : Export Procedures & Documentation
Assignment Code : AED-01/TMA/2020-21
Coverage : All Blocks
Maximum Marks: 100
Attempt all the questions.

Q.1 You are a manager in the Export firm and planning to export your (4+16)
products. In this connection, state various commercial documents required
for the export. Explain the features of each commercial document.

Q.2 (i) What are the basic principles of operation of ECGC? Describe the (5+5)
procedure for taking a policy from ECGC.

(ii) Explain the procedure for making claim from ECGC along with the (10)
documentation formalities.

Q.3 Do you think that containerization has become a predominant form of (6+7+7)
unitized transport? Discuss and explain the features of Liner and Tramp
Shipping Services.

Q.4 Comment on the following statements : (4X5)

(i) Litigation is better than arbitration for settlement of international

trade disputes.
(ii) Standard policies of ECGC cover losses due to all types of risks.

(iii) There are no reasons for securing insurance cover by the exporter.
(iv) Export houses are not entitled to get any special benefits.

Q.5 Write notes on the following? (4X5)

(i) General conditions in export contracts

(ii) Deferred credit facilities
(iii) War perils
(iv) Procedure for claiming duty drawback
Q.1 You are a manager in the Export firm and planning to export your products.
In this connection, state various commercial documents required for the export.
Explain the features of each commercial document.
Ans-

Proper documentation is an integral part of the life cycle of an export business and to keep track of various export transactions.
At every stage of setting up and running an export business, you will have to apply, submit, obtain and produce documents
along the way. Be it the partnership deed of your export firm, your PAN Card , current account documents, the IEC Code or the
RCMC, you will have to wade your way through a pile of documents and paperwork to become export ready. Also don’t forget
the documents that you will need every time you accept an export order.

Export Documents Checklist Required for Export Shipment from India

[As per Foreign Trade Policy (FTP) 2015 - 2021]

✓ Bill of Lading/Airway Bill/Lorry Receipt/Railway Receipt/Postal Receipt

✓ Commercial Invoice cum Packing List (As per the Central Board of Excise and Customs circular under the Customs Act,
separate commercial invoice and packing list are acceptable)

✓ Shipping Bill /Bill of Export/Postal Bill of Export

However, besides these core three, there are other documents which you may require when you try to ship overseas. A list of
the paperwork typically required in the export of goods is given below.

Other list of Documents required for Export Shipping

Preformat Invoice
The first document in many cases is the preformat invoice, which will give the buyer all the information about the item, price,
delivery, payment terms. etc.

Export Order/Purchase Order

Based on the preformat invoice, the buyer places the order with the exporter, specifying their details and requirements, in the
Purchase Order.

Commercial Invoice
Once the goods are packed and ready, a Commercial Invoice is prepared by the exporter. The Customs counter signs it before
shipping.

Packing List
If there is more than one item to be exported, a packing list, listing the various items to be shipped, is mandatory.

Certificate of Origin
Certificate of Origin is a notarized affidavit which indicates the place where the goods are manufactured.

Bill of exchange
This is an internal document that is generated by the exporter which instructs the importer to pay the amount mentioned to
the exporter or the payee bank.

Letter of Credit
Although not part of the shipment process, a Letter of Credit is an essential document generated while honoring a buyer’s
purchase order. It is issued by the buyer’s bank, which undertakes to pay you at the end of the credit period on behalf of the
buyer. However, it is not required if the payment is in the Documents against Payments or Documents against Acceptance
modes.
Inspection/Quality check
An importer can insist on inspection or QC of the goods before shipping to verify quality, as well as check for adherence to
proper packing parameters. The exporter should keep documents verifying such fulfilment ready as well.

Photo-sanitary certificates and fumigation certificates

These certificates can be demanded by the buyer, with the latter being even mandatory in many countries. These quality and
goodness tests may be named differently depending on product and country but are essentially documentation proving
adherence to international quality standards and norms. Exporters must ensure they keep them ready before packaging.

Marine Insurance policy

This is required for the safety coverage of the goods dispatched overseas.

Mate’s Receipt
With documents like a Certificate of Origin, Commercial Invoice, Export Order, Letter of credit, Certificate of Inspection and
Marine Insurance Policy in place, the cargo can enter the port and onto the dock. Once the shipment is loaded into the carrier,
the Mate’s Receipt is issued, confirming the same.

Airway Bill (AWB) or Bill of Lading (BL)

An AWB or BL is issued by the carrier of the goods, after the C&F (Cost and Freight) agent hands over the Mate’s Receipt to the
carrier, who analyses it against the cargo. A master AWB/BL is issued by the main carrier of the goods while a House AWB/BL is
issued by the freight forwarder.

FEMA Declaration for exporters

This declaration is a requirement which replaced the erstwhile Self-Declaration Form, as per the notifications of Indian customs,
indicating the exporter’s agreement to adhere to the tenets of the Foreign Exchange Management Act (FEMA) , 1999.

Shipping bill
This is a customs document which can be generated from the dedicated portal electronically. All exporters must submit this
document to acquire clearance for exports from Customs.

Let Export Order

The LEO is issued by the customs officer after the completion of export customs clearance procedures . It is proof that all export
customs formalities have been completed.

Export General Manifest

The Manifest is filed by the shipping carrier after the movement of goods from the exporting country. It is registered with
Customs and initiates the generation of the official proof of export, i.e. the export promotion copy of the shipping bill.

Export Documentation Process

Once the Manifest is generated and the goods have left the shipping port, the C&F agent forwards the three mandatory
documents listed above to you, after getting them cleared by customs . You need to share these documents with your bank,
which will then scrutinize and forward them to the importer’s bank. The authorized dealers of the Reserve Bank of India are
also involved in this exercise. Simultaneously the exporter also must provide proof of export to the Central Excise authorities,
based on the Customs endorsements. On the receipt of payment from the importer, an eBRC or Electronic Bank Realization
Certificate is issued by the exporter’s banker, with which the export transaction concludes.

Important Note: It must be noted that these document requirements may evolve over time, depending on the prevalent
statutes and amendments therein. Exporters can voice their opinion on these requirements to their respective Export
Promotion Councils and FIEO, who in turn can pass on these comments and feedback to the government. Although there are
no established routes for exporters to ‘influence’ or reach out to policymakers, these bodies act as a bridge between the
government and exporters, and their lines of communication are always open for exporters in the form of websites and
physical offices.
Q.2 (i) What are the basic principles of operation of ECGC? Describe the procedure for
taking a policy from ECGC.

Ans:-

BASIC PRINCIPLES OF ECGC OPERATIONS

There are two basic principles on which ECGC (Export Credit Guarantee Corporation of India Limited)
works:

1. The spread of Risk: An exporter is required to insure all the shipments that may be made by him during
the next two years. To avoid undue difficulty to the exporters, exceptions have been made in respect of
transactions made against

(I) advance payment or

(II) irrevocable letter of credit confirmed by banks in India.

Shipments made to agents and associates may also be excluded. Where the exporter deals in different
types of goods, he may exclude those items which are not of an allied nature, The basic idea is that the
exporter is not allowed to pick and choose bad risks only for insurance. This is also necessary to reduce
Premier in general. It is open for the exporter to take political cover for transactions under this Para.

2. An exporter is a co-insurer: ECGC normally pays 90 percent of the losses on account of political or
commercial risks. In the event of loss due to a repudiation of contractual obligations by the buyer, ECGC
indemnifies the exporter up to 90 percent of the loss. In this situation, a final and enforceable decree against
the overseas buyer is obtained in a competent court of law in the buyer’s country. The Corporation, at its
discretion, may waive such legal action where it is satisfied that such legal action is not worthwhile. In such
cases, losses are indemnified up to 90 percent.

The insured will have to bear the rest of the loss. This is necessary to ensure that

✓ the exporter also takes necessary precaution in selecting the parties to which he may
decide to export,
✓ he may not overextend credit and
✓ he may take all possible care to minimize the risk.
In addition to these two basic principles of ECGC operation,

ECGC being in insurance business also follows three basic principles of insurance.

They are ECGC contracts are contracts of good faith which mean that non-disclosure of a material fact will
render the contract void. In other words, the exporter is bound to disclose every material fact within his
knowledge to the ECGC which may adversely affect the ECGC. Again, any material alteration of the risk
arising from the date of the proposal and the issue of the policy must be disclosed to the ECGC.

1) The insured is duty bound to minimize the loss. He should conduct his business with
ordinary prudence and diligence and act as an uninsured. The action that needs to be taken
depends upon the facts and circumstances of the case.
2) Under the principles of subrogation, ECGC steps into the shoes of the exporter. If
recoveries are made after the payment of the claim by ECGC, they are shared with the ECGC in the
same proportion in which the loss was borne.
The procedure for taking a policy from ECGC.

An intending exporter should fill in a proposal form (no. 12 1) available with all ECGC offices and submit it
to the nearest office. After examining the proposal, ECGC would send him an acceptance letter stating
the. Terms of its cover and premium rates. The policy will be issued after the exporter conveys his
consent to the premium rates and pays a non-refundable policy fee. The premium rates are closely
related to the risks involved and depend upon (i) length of the credit, (ii) terms of payment, (iii) credit
worthiness of the buyer and his country and (iv) the past record of the exporter.

ECGC normally fixes a maximum limit of its liability for shipments in each of the policy years. It is
therefore, advisable for exporters to estimate the maximum outstanding payment due from overseas
buyers at any time during the policy period and to obtain the policy with Maximum Liability for such
value. The Maximum Liability fixed under the Policy can be enhanced subsequently, if necessary.

Obligations of the Policy Holders:

Following are the obligations of the policy holders: Declaration of Shipments: An exporter who has taken
a Shipments Policy has to send, by the fifteenth of each month, a declaration of shipments made in the
previous month, in the prescribed form (No.203). An exporter who obtains a contracts policy has to
send a declaration of all outstanding contracts inanimately after the policy is issued. Thereafter he shall
send a monthly declaration of contracts agreed and shipments made by him during the previous month.
Premium has to be paid along with the declaration at rates shown in the schedule attached to the
policy.

2) Fixation of credit limit on each Buyer: Commercial risks are covered by ECGC subject to approval of a
credit limit on each buyer. Credit limit is the limit upto which claim can be paid under the policy for
losses on account of commercial risks. As commercial risks are not covered in the absence of a credit
limit, exporters would be well advised to apply to ECGC for approval of credit limit on buyer in the
prescribed form (No.144) before making shipment. If con ~ plate information regarding the buyer and
his banker is given in the credit limit application, it will facilitate receipt of credit information expedition
~! sly. ECGC obtains credit information on overseas buyers through banks and credit information
agencies. On the basis of credit information and its own experience, ECGC fixes suitable credit limits on
overseas buyers. In case an exporter has already received a credit report on the buyer or is in possession
of Other information that can help ECGC in fixing credit limit, the same may be furnished along with
credit limit application to facilitate quick decision. If the exporter needs an enhancement in limit, he
may apply in the prescribed form (No.144A) giving his past experience with the buyer.

3) Reporting Defaults: In the event of non-payment of any bill, policy holders are required to take
prompt and effective steps to prevent or minimize loss. A monthly declaration of all bills which remain
unpaid for more than 30 days should be submitted to ECGC in the Prescribed form (No.205) indicating
action taken in each case. Granting extension of time for payment, converting bills from D.P. to D.A
terms or resale of unaccepted goods at a lower price require prior approval of ECGC.
(ii) Explain the procedure for making claim from ECGC along with the
documentation formalities.

Ans-

PROCEDURE FOR MAKING A CLAIM FROM ECGC

A claim will arise when any of the risks insured under the policy materializes. If an overseas
buyer goes insolvent, the exporter becomes eligible for a claim one month after his loss is
admitted to rank against the insolvent's estate or after four months for the due date, whichever
is earlier. In case of protracted default, claim is payable after four months from the due date.
Claims in respect of additional handling, transport or insurance charges incurred by the exporter
because of interruption or diversion of voyage outside India are payable after
proof of loss is furnished. In all other cases, claim is payable after four months from the date of
the event causing loss. However, in case of-exports to countries where long transfer delays are
experienced, ECGC may extend the waiting period and claims for such shipments are payable
after the expiry of such extended period. Sometimes the buyer does not accept goods or pay for
then1 because of differences over fulfillment of the terms of contract by the exporter, counter
claims 01. Set-off. In such cases, ECGC considers claims after the dispute between the parties
is resolved and the amount payable is established by obtaining a decree in a court of law in the
country of buyer. This condition is waived in cases where the Corporation is satisfied that the
exporter is not at fault and that no useful purpose would be served by proceeding against the
buyer.
Procedural Formalities
The ECGC has three types of claim forms: (i) Form No.501 for claims arising due to
nonpayment for goods accepted by the buyer, ( ii ) Form No.502 for claims arising because of
the non-acceptance of goods/ documents by the buyer, and (iii) Form No.503 for clines on
account of delay in transfer of funds to India. Claims due to the above causes should be filed in
the respective prescribed forms. Other types of claims can be filed by means of a letter, giving
full particulars of the cause and extent of loss. The claims have to be submitted to the ECGC
office that issued the policy. Again, the claim forms should be sent through the bank which
handled the export bill concerned. No claim will be entertained by the ECGC if it is not filed
within a period of 24 months frorn the due date of the concerned bills.
Documents in Support of Claims
Every claim has to be supported by documentary evidence. Important documents that should
accompany the claim forms are the following:
a) Certified copy of the export order
b) Certified copies of invoices
c) Certified copies of bills of lading
d) Copies of the correspondence with the buyer
e) In case of insolvency of the buyer, copy of the letter from the official receiver and liquidator
admitting the claim.
f) In case of protracted default, (i) protect note, (ii) original of unpaid bills, (iii) advice of non-
payment received from the bank, and (iv) copy of the plaintiff if a suit has been filed.
g) In case of transfer delays, certified copy of payment advice received from the collecting
banker indicating the date on which payment was made by the buyer in local currency. This
should also certify that all exchange control formalities necessary for transfer of funds to India
have been complied with by the buyer. All claims are paid in Indian rupees through the Bank
which handled the bills concerned.

Q.3 Do you think that containerization has become a predominant

form of unitized transport? Discuss and explain the features of Liner
and Tramp Shipping Services.

Ans-
Today, the size of ships and the variety of cargo handled has gone up so much, that to be able to
handle such large volumes efficiently, the cargo needs to be kept in a methodical and well
planned manner. Unitization comes to our aid in such situations. Unitization is essentially grouped
or bundled cargo, wrapped into packages and loaded onto or inside a bigger unit. These bigger
units can then be handled by machines such as forklifts and cranes. Because of the bigger
size, the number of individual units to be loaded on the ships reduces; saving time and effort,
increasing efficiency and lowering the chances of late deliveries. A new method called pre-
slinging came into existence to transfer cargoes like large pipes and steel cables. The entire
cargo is shipped, along with slings as slung from the port of origin. At the port of delivery, the
cargo can be directly offloaded without the hassle of lifting it manually to get the sling pass
underneath. The focus of unitization was standardization of the shipment as it would make the
work of mechanical machinery more efficient and frugal.
Some of the benefits of unitization are as follows:
✓ The efficiency of cargo handling increases as heavier units can combine many
smaller packages into one large package.
✓ The safety of cargo increases as cranes are used to lift the load vertically upwards
using slings. The slings can be made strong enough to withstand loads several
times more than the load being lifted. Previously the cargo had to be carried
manually by individuals or lifted up using pulley and rope; many a times this resulted
in cargo getting damaged.
✓ The labor required is reduced drastically, thus resulting in cost saving.
✓ The loading and unloading time reduces. Ships, trucks, railway wagons have to wait
idle for lesser duration. The time spent by ships at ports is reduced to a great extent,
making voyages shorter.
The disadvantage is that many unskilled and semi-skilled labors lose their job. The working
environment changes and earlier employees and their work become vague.
The most common form of unitization is palletization. The forklifts and cranes are designed to
handle certain dimensions of package. The pallet is made to this dimension and acts as a
platform for cartons and boxes to be stacked on top of it. The entire pallet then becomes a single
unit with the cargo secured tightly onto the pallet base. The materials for pallets can be hard
wood, soft wood, steel, plastic and even fibber board depending on the voyage, type of safety
required and reusability.
The features of Liner and Tramp Shipping Services.
Let’s dig deeper into knowing the particular characteristics of Liner vs Tramp
services, so it might become easier for you to choose what kind of service you need.
Liner Service
The liner ship is formed to transport a variety
of goods with great room for parcels, bales,
bundles, etc. It also has the space to carry
refrigerated items. The number of the
compartments and decks may also be
different in the Liner ships than that of the
Tampers as they are designed to take a
variety of loads that can be placed in the
container or compartment complimenting its
characteristics.
The handling equipment may differ owing to
the requirement of loading and unloading
the cargo in a shorter time.
It has a pre-determined and fixed route,
schedule, and destination.
Tramp Service
They are designed in such a way
that it becomes suitable for them
to carry a simple, identical, and
uniform cargo in large quantities.
So, it is very appropriate for
transporting a specific type of
cargo.
For handling a specific type of
cargo, the equipment to handle it
will be quite simpler than those
used in the Liner Service. The
equipment may include
mechanical elevators and pumps,
etc.
As the ships don’t have a fixed
schedule, route, and destination, it
cuts the cost of the Tramp service.
Besides that, these less expensive
equipment are often fit in the ships
with lesser speed.

For speedy loading and unloading, the ships
are equipped with highly advanced moving
machines.c
The loading and unloading in the
case of the Tramp shipping are
limited to a smaller number of
ports as the tramper transports the
cargo of one or two shippers.

The services have a predetermined set of

rules and conditions that define the
There is no fixed route or
responsibilities of the ship-owners and the
predetermined schedule.
terms related to the carriage and delivery of
the cargo.c

They have fixed freight rates. The rates are negotiable.

Q.4 Comment on the following statements :

(i) Litigation is better than arbitration for settlement of international

trade disputes.

Ans-

Many business owners and construction industry entities prefer, as a matter of course,
that construction disputes be submitted to binding arbitration. Others maintain that,
because arbitration lacks facets of the procedural and legal structure of court litigation,
only traditional litigation will ensure an outcome that is truly premised on the facts and
law. These opinions often are influenced by favorable, or more likely, unfavorable,
experiences in either forum.
There are potential advantages and disadvantages to either forum, depending upon the
nature of the dispute. The following factors are suggested for consideration in
determining whether to proceed in either arbitration or court or to include a mandatory
arbitration clause in an agreement.
1. Time. Arbitration typically provides a speedier resolution than proceeding in
court. The limited right to appeal arbitration awards typically eliminates an appeal
process that can delay finality of the adjudication.
2. Flexibility. Court litigation is largely controlled by statutory and procedural rules.
Through provisions set forth in a construction agreement or upon mutual agreement of
the parties once arbitration has commenced, the parties have the opportunity to
establish rules and limits for pre-hearing exchange of documents or interrogation of
witnesses, the manner in which an arbitration hearing will be conducted and the level of
detail to be included in an arbitration award.

2. Cost. Arbitration often is less costly than court litigation, primarily due to the
compressed schedule for the completion of discovery and trial. In court litigation,
significant expenses are devoted to pre-trial discovery processes, such as written
interrogatories and depositions of witnesses. However, the discovery process that is
prevalent in litigation increasingly has become a regular part of arbitration as well, thus
increasing costs.
3. Arbitrator / Judge. The soundness of any adjudication is largely dependent
upon the quality of the arbitrator or trial judge. In the arbitration process, the parties
select the arbitrator(s). Any pre-hearing disputes between the parties are decided by
the same arbitrator(s) that ultimately decide the case. In contrast, in many courts, no
individual judge is assigned to a case and, therefore, multiple judges may be involved in
adjudicating pre-trial disputes. The judge is assigned by the court without input from the
parties. Thus, arbitration affords the parties the ability to select the decider, whereas
court litigation does not.
4. Expertise. Arbitrators are selected from a pool of professionals, typically with
experience in the construction industry and, therefore, may provide a greater level of
expertise than a judge. Such persons should have a greater capability to comprehend
project issues and documents and to scrutinize liability and damages claims common to
the construction industry than most trial judges.
5. Rules of Law and Evidence. When in court, judge’s decisions are constrained
by statutory and case law and the conduct of the trial is governed by established rules
of evidence. In contrast, an arbitrator has considerable flexibility to consider any
evidence he/she deems relevant and may issue an award based upon perceptions of
fairness or equity and not necessarily on the evidence or rules of law.

(ii) Standard policies of ECGC cover losses due to all types of risks.
Ans-
This policy is issued for a period of 12 months and its coverage is 95% where the loss is
due to commercial risks and 100%, if the loss is caused by any of the political risks and
the waiting period for claims is four months from the due date of payment.

1. Commercial disputes including the quality disputes raised by the buyer, unless the
exporter obtains a decree from a competent court in the importer’s country in his favor;

2. Causes inherent in the nature of the goods;

3. Buyer’s failure to obtain import license or exchange authorization in his country;

4. Insolvency or default of an agent of the exporter or the collecting banks;

5. Losses or damages which can be covered by commercial insurers; and

6. Foreign Exchange fluctuations.

ECGC does not cover those risks that are covered by the commercial insurers. Exporter
can take comprehensive policy that covers both commercial and political risks. If the
exporter wants, he can take only policy that covers political risks, depending on the
requirements. However, it is important to note ECGC does not issue the policy covering
only commercial risks.

If the goods are confiscated by the customs on charges of smuggling, then insurance
does not cover.

(iii) There are no reasons for securing insurance cover by the

exporter.
Ans-

Exporter may suffer financial loss if goods are damaged during transportation from the
port of dispatch to the point of destination. To protect from loss, exporter may have to take
insurance policy to protect him from physical damage to the goods. Here is the
importance of ‘cargo Insurance’. In case, goods are shipped by sea, the insurance is
known as Marine Insurance’. The term cargo insurance is used in case of air shipment.
However, in practice, both the terms are interchangeably used and their regulations are
common.

The need for insurance is mainly for two reasons, Legal and Commercial. Legal liability
of the intermediaries is Limited. Intermediaries include clearing and forwarding agents,
carriers port and customs authorities etc. that handle the goods at various stages. They
do not incur any liability, if the damage is due to circumstances beyond their control or if
the loss caused despite their reasonable care taken by them. In case of sea shipment,
their legal liability is limited to 100 pounds per package at present and in case of air
shipment, the liability of airlines is limited to $16 per kg at present which is amended time
to time. It is quite normal such amount of compensation does cover the loss totally
sustained by the exporter.

As and when post-shipment finance is made, banks also insist for insurance coverage to
protect their financial interests.

Insurance is required even on commercial considerations. Once goods are damaged,

importer may not accept the bill of exchange, in case of D/A bill. He may not make
payment in case of D/P bill. When loss occurs, such loss may not be just shipment of
goods, but also loss of profits too.

I have explained about the reasons to insure export import goods in international
business. Do you wish to add more reasons to insure goods under export import trade? I
know, you would have experienced the importance of Insurance in international business
during your career in Import Export trade. Share your experience about the importance of
insuring export import cargo under international business.

(iv) Export houses are not entitled to get any special benefits.
Ans-
Star export house is an Indian exporter who has excelled in international trade and
successfully achieved certain minimum amount of export performance in two out of three
financial years. To obtain star export house status, the exporter involved in export of
goods or service must have a valid import export code (IE Code). On being recognised
as a star export house, the exporter enjoys various benefits and privileges as under:

✓ Authorisation and customs clearance for both imports and exports may be allowed
on self-declaration basis.

✓ Exemption from furnishing of bank guarantee for Schemes under Foreign Trade
Promotion, unless specified otherwise.

✓ Input-output norms maybe fixed on priority within 60 days by the Norms

Committee.

✓ Exemption from compulsory negotiation of documents through banks. Remittance

or receipts, should however be received through banking channels.

✓ Two star and above export houses are permitted to establish export warehouses
as per Department of Revenue guidelines.

✓ Three star and above export houses are permitted to get benefits of Accredited
Clients Programme, as per the guidelines of Central Board of Excise and
Customs.

✓ Status holders would be entitled to preferential and priority treatment while

handling of consignments by concerned agencies.

✓ Status holders are eligible to export freely exportable items on free of cost basis for
export promotion subject to an annual limit of Rs.10 lakhs or 2% of average annual
export realisation during preceding three licensing years, whichever is higher.

✓ Exporters involved in manufacturing would be eligible to self-certify their goods as

origination from India.

Q.5 Write notes on the folfollowin?

(i) General conditions in export contracts.
There are, however, minimum general requirements for an export contract, outlined
below:
• Name and addresses of the parties. State clearly and fully the parties to the contract.

• Product, standards and specifications. State the product name, as well as technical
names (if any); sizes in which the product is to be supplied (if relevant); applicable
national or international standards and specifications; specific buyer requirements; and
sample specifications.

• Quantity. Specify units of measure in both figures and words.

• Inspection. State the nature, manner and focus of the envisaged inspection, as well as
the inspection agency. A number of goods are now subject to pre-shipment inspection
by designated agencies, and foreign buyers may stipulate their own inspection agencies
and conditions for inspection.

• Total value. State the total contract value in words and figures, and specify the
currency.

(ii) Deferred credit facilities.

Ans-
A deferred credit is money that is received by a company but not immediately reported
as income because it has not yet been earned. Under the accrual accounting method,
revenues can only be recognized as earned when the product or service paid for by a
customer has been delivered to him or her and the proceeds can be matched with a
related expense.
Deferred credit, also known as deferred revenue, deferred income or unearned income,
is recorded on the balance sheet as a liability. Items that fall under this category include
consulting fees, subscription fees, and any other revenue stream that is intricately tied
to future promises.

(iii) War perils.

Ans-
“War Perils” refer to perils that are caused by hostile acts by authorities using political or
executive powers. Since “War Perils” can embrace many forms of loss, all insurance
contracts covering war risk will specify the perils covered and incorporate exclusion
clauses to ensure the cover can be clearly understood.

A policy insuring against war perils is called War Risk Insurance and is usually issued
as a companion to a Marine Cargo Insurance policy. Such companion policies generally
cover specified “War Perils” as illustrated below:

1.1 War, civil war, revolution, rebellion, insurrection, or civil strife arising therefrom, or
any hostile act by or against a belligerent power
1.2 Capture, seizure, arrest, restraint or detainment, arising from risks covered under
1.1 above, and the consequences thereof or any attempt thereat
1.3 Derelict, mines, torpedoes, bombs or other derelict weapons of war
It also covers general salvage charges incurred to avoid loss from a risk covered under
these clauses.

However, perils such as terrorist activities, riots or civil commotions are not included
within the term “War Perils”.

To safeguard shipments from risks such as war, civil wars and rebellion, etc. it is
recommended to take out War Risk Insurance as most Marine Cargo Insurance policies
do not cover goods against these perils. War Risk Insurance usually comes with a
separate premium charge which is determined by the political situation of the final
destination and therefore may vary shipment by shipment.

(iv) Procedure for claiming duty drawback.

Ans-

No amendments have been made to the drawback provisions (Section 74 or Section 75)
under Customs Act 1962 in the GST regime. Hence, the drawback scheme will continue
in terms of both section 74 and section 75. Option of All Industry Rate (AIR) as well as
Brand Rate under Section 75 shall also continue.

Drawback under Section 74 will refund Customs duties as well as Integrated Tax and
Compensation Cess paid on imported goods which are re-exported.

At present Duty Drawback Scheme under Section 75 neutralises Customs duty, Central
excise duty and Service Tax chargeable on any imported materials or excisable materials
used or taxable services used as input services in the manufacture of export goods.
Under GST regime, Drawback under Section 75 shall be limited to Customs duties on
imported inputs and Central Excise duty on items specified in Fourth Schedule to Central
Excise Act 1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for
captive power generation.