Unit II

INCOTERMS AND EXIM DOCUMENTATION

B.COM-IB_III

1.Aligned Documentation System

The Aligned Documentation System (ADS), based on the UN layout key, is a methodology of
creating information on a set of standardized forms printed on paper of the same size and in
such a way that items of identical information occupy the same position on each form.

Under Aligned Documentation System, different forms used in the International trade
transaction are printed on the paper of the same size and in such way that the common items
of information are given the same relative slots in each of the documents.

2.Commercial Invoice https://cleartax.in/s/commercial-invoice

In simple words, a commercial invoice is an export document that serves as legal evidence of
a sale transaction between the buyer and the seller. It is mainly used for clearance purposes
with regard to customs and helps in the determination and assessment of duties and taxes
payable. It contains the full description of goods sold, their quantities, and value as previously
agreed upon by the parties.
The importance of a commercial invoice can be seen in the following manner-
Helps in maintaining records
Commercial invoices are a mandatory document in the import and export procedures and
constitute an important part of the paper trail for transactions relating to exports and
imports.
Proof of sale

Since a commercial invoice contains all the transaction details, including the details of the
buyer, seller, and description and value of goods, it constitutes an essential part of the
evidence that the sale transaction has taken place.
Guarantees payment
A commercial invoice is a legal document evidencing a sale transaction and therefore plays a
vital role in ensuring payment for the same.
Assistance in verification
The description of goods in terms of quality, quantity and price enables the importer to cross-
check and verify the contents of the shipment to see if they correspond to the contents
mentioned in the commercial invoice.
Can serve as a notice for payment due
The commercial invoice contains all the details of a regular invoice and can be used as a
reminder for payments due. It is an efficient tool to maintain customer relationships.
Ensures no one gets fleeced
Since the commercial invoice is relatively detailed and can be used as proof, there is no way
the buyer can escape payment of the same.
Indian Laws on Commercial Invoices
The CBIC requires certain mandatory documents to be submitted as part of the import or
export procedures. One among them is the commercial invoice. As per Circular No. 01/15-
Customs,
If submitted, a commercial invoice cum packing list would fulfil the criteria required by the
Customs authorities for proper import or export procedures since both documents were
found to have similar fields.
As per the Foreign Trade Policy, to carry out import and export activities, the following
documents are mandatory:-
 Airway bill/bill of lading
 Commercial invoice cum packing list
 Shipping bill
Time Limit for Raising a Commercial Invoice Under Indian Law
As per the GST laws, a registered taxable person who supplies goods subject to taxes must
mandatorily issue an invoice depicting the nature, quantity, and value of goods, the tax
chargeable on those goods, and additional information may be necessary.

If the supply involves the movement of goods, the invoice has to be raised on or before the
removal of goods for supply from the location of the supplier to the buyer. In other words,
the invoice shall be issued on or before the dispatch date of such goods.
Contents of a Commercial Invoice
A commercial invoice does not carry the title or ownership of the goods. It merely functions
as a proof of sale between the buyer and the seller. A commercial invoice contains the
following information-
Information regarding the buyer and seller
Name, address, tax information, and contact details of the buyer
Name, address, tax information, and contact details of the seller
Information regarding the transaction
Date of the invoice
Invoice number
Order number
Description of the goods
Quantity and value of the goods
Mode of payment and related instructions
IEC Code and GSTIN
Country of origin
Shipping related information
Freight charges
Export route
Date of shipment
Gross weight
Number of packages
Insurance charges
Sample Format of a Commercial Invoice
3.Shipping Bill
A Shipping Bill is an important document required by the customs authorities for the
clearance of goods.

An exporter, while sending goods from one country to another has to go through various
formalities including submitting various applications, acquiring licenses, paying duties and so
on. To acquire a clearance for export, from the Customs, an exporter will have to submit an
application called the ‘shipping bill’. One cannot load the goods unless the exporter files the
shipping bill. The export may be by air, vehicle, or vessel.

The goods can only be taken on board if the goods are accompanied by certain documents as
described below:

 At seaport/ airport Shipping bill

 At land customs station Bill of export
 For goods transhipment Bill of transhipment.
A shipping bill is to be submitted electronically. However, the Principal Commissioner or the
Commissioner may grant an exemption and accept a physical application, where an electronic
submission is not feasible. A shipping bill has various forms which are differentiated by colour.
The colour schemes denote the following:
Sr. No. Form Name Colour
1. Dutiable Goods Yellow
2. Duty-free goods White
3. Goods with drawback claims Green
4. Goods allowed to be exported as duty-free ex-bond Pink
5. Export goods under DEPB Scheme Blue
How does the shipping bill process work?
A shipping bill can be filed after the particular vessel/ship, etc., is granted with entry outwards
that allows it to move out of the country.
Once the bill is submitted, it is physically verified and the value of the goods intended for
export are assessed by the customs authorities.
The customs authorities verify these bills and endorse the copy with ‘LET EXPORT ORDER’ and
‘LET SHIP ORDER.’
Procedure for generation of shipping bill

 The exporter gets registered with the Customs with their IEC Code No. or Customs
House Agents (CHA) license No. and Authorised Dealer Code No. of the bank through
which the export proceeds will be realised.
 A declaration in a specific format signed by the exporter or his authorised CHA is to be
submitted at the service centre along with a copy of the invoice and the packing list.
 After the data entry is completed, a checklist will be generated and the same is handed
over to the exporter.
 The exporter verifies the data and intimates the service centre.
 Once the data is verified and corrected, it automatically gets processed.
 It will be assessed by the Assistant Commissioner (export) when the value of such
goods is more than Rs.10 lakhs, or it contains free samples worth more than Rs.20,000
or if the drawback amount exceeds 1 lakh.
 After the processing is done, the exporter can check the status of the bill with the
service centre.
 Sometimes, queries might be raised to an exporter, who will have to file his reply
through the service centres.
 At the docks, all the original documents such as invoice, packing list etc. are to be
submitted by the exporter/CHA along with a checklist.
 If everything is in order, ‘Let Export Order’ will be issued by the proper officer.
 Once the ‘Let Export Order’ is issued, the print out of the shipping bill gets generated.
Format of shipping bill

The format of shipping bill is as follows: The form above should be accompanied with the
documents enlisted below: a. Invoice b. Packing list c. Export license d. Indent e. Acceptance
of Contract f. Letter of Credit g. QC Certificate h. Port Trust Document i. Any other (as
specified)
4.Certificate of Origin https://cleartax.in/s/certificate-of-origin/?ref=articles-search

What is Certificate of Origin

 Certificate of Origin is mainly needed to check whether the goods being
exported/imported are legal and whether such export or import is subject to duties.
 A Certificate of Origin is a certificate that is used to identify the country of
manufacturing of any goods or commodity.
 The Certificate of Origin carries many other points of information such as what the
product is, its destination and the countries of export.
 It is a necessary instrument for export or cross-border trades, as agreed upon by trade
agreements and treaties by nations.

Who Issues a Certificate of Origin?

 A Certificate of Origin is issued by both the Indian Chamber of Commerce as well as
Trade Promotion Council of India.
 This certificate issued by these two bodies is essential for exporters in India to prove
that the commodities being exported are of Indian origin.
 It also proves that the commodity exported is wholly obtained, manufactured or
produced in India.
 Millions of Certificates of Origins are issued around the world to facilitate trade and
commerce worldwide.

A Certificate of Origin must be signed by the exporter with a permanent indemnity bond on a
non-judicial stamp paper of Rs 10, duly notarised (format for Indemnity Bond is available with
the Certificate of Origin Dept). The certificate must also be signed and stamped by the
Chamber of Commerce or any other authority with such qualification. It is the most commonly
used document to prove the origin of goods.

Importance of Certificate of Origin

 The main requirement for a Certificate of Origin is for clearing customs.
 If the goods, exported/imported do not come with a Certificate of Origin, the Customs
officer tasked with checking the goods will not allow the goods to leave the
warehouse.
 The Certificate of Origin is used by the Customs officer to determine the duties that
have to be paid and to check whether the goods being exported/imported are illegal.

Types of Certificate of Origin

There are two kinds of Certificate of Origin that Chambers of Commerce may issue:
Non-preferential Certificate of Origin:
This type of Certificate of Origin states that the goods being exported/imported are not given
any preferential tariff treatment and the due duties must be levied upon the goods that are
being moved.
Preferential Certificate of Origin:
This type of Certificate of Origin is given towards goods that are subject to preferential tariff
treatment in the payment of duties. These duties may be a reduction of the normal tariff, or
it also may be a complete exemption of the tariffs. Such a situation arises when two or more
nations reach a trade agreement entailing such exemptions when goods are exported or
imported between these nations.

These are the following schemes under which India receives tariff preferences:
Generalised System of Preference (GSP):
This system is implemented to support developing countries by giving them preference in
trade tariffs from industrialised and developed countries. It is a non-contractual instrument
that is unilateral and is based on a non-reciprocity extension of tariff concessions.
Global System of Trade Preference (GSTP):
This system extends tariff concessions between developing countries who are parties to an
agreement. Export Inspection Council (EIC) has the sole authority to issue Certificate of Origin
under GSTP.
SAARC Preferential Trading Agreement (SAPTA):
Tariff concession extends only to countries in SAARC.
Asia-Pacific Trade Agreement (APTA):
Presently, India, China, South Korea, Sri Lanka and Bangladesh exchange tariff concession
under APTA. APTA offers liberalisation of tariff and non-tariff barriers in order to expand trade
in goods in the Economic and Social Commission for Asia and Pacific (ESCAP) region.
India-Sri Lanka Free Trade Agreement (ISLFTA):
This agreement is a free trade agreement between India and Sri Lanka. Under this agreement,
EIC has the sole authority to issue Certificate of Origin.
Indo-Thailand Free Trade Agreement:
This agreement between India and Thailand is to implement the Early Harvest Scheme where
products under this protocol are given tariff preference.
Early Harvest Scheme under India-Thailand Free Trade Agreement offers tariff preferences
for imports on items, which satisfy Rules of Origin criteria notified by the Department of
Revenue, Ministry of Finance vide notification no. 101/2004-Customs dated 31.08.2004.
Export Inspection Council is the sole agency to issue Certificate of Origin under this protocol.
India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA):
This is an agreement between India and Malaysia and the EIC has the sole authority to issue
Certificate of Origin.
India-Korea Comprehensive Economic Partnership Agreement (CEPA):
India and South Korea (Republic of Korea) signed the Comprehensive Economic Partnership
Agreement (CEPA) to expand the business and commercial opportunities between these two
countries. EIC has the sole authority to issue Certificate of Origin under this agreement.
India-Japan Comprehensive Economic Partnership Agreement (IJCEPA):
This agreement is between India and Japan to improve and protect investments made
between the two countries. Under this agreement, the EIC has the sole authority to issue
Certificate of Origin.
ASEAN-India Free Trade Agreement:
This agreement is between India and Japan to improve and protect investments made
between the two countries. Under this agreement, the EIC has the sole authority to issue
Certificate of Origin.
How to Get a Certificate of Origin
 Depending upon which country one is exporting to and whether preferential tariff
rates are available when exporting to certain countries, one has to approach different
agencies to procure a Certificate of Origin.
 The list of qualified agencies is given in the Hand Book Procedures Vol.1. For procuring
a non-preferential Certificate of Origin, one must approach any agency that has been
listed under Appendix 4C of the Hand Book Procedures Vol.1.
 For preferential Certificate of Origin, one must approach agencies listed under
appendix 4A of the Hand Book Procedures Vol.1.

In addition, agencies authorised to issue Preferential Certificate of Origin under Hand Book
Vol. 1 are also authorised to issue Non-Preferential Certificate of Origin.

They must submit the following documents when applying for a Certificate of Origin:

 A cover letter for the issue of Certificate of Origin.

 Details of the product that is being exported (amount, origin etc.).
 Packing list in duplicate for the concerned invoice.
 One copy of the invoice with the following declaration: “We hereby declare that the
goods mentioned in this invoice are of Indian Origin and manufacture.”
 Nine copies of the Certificate of Origin.
 Fee that is applicable per certificate.
 Procedure for Issuing Certificates of Origin
 To know the procedure for issuing a Certificate of Origin, please visit the Federation
of Indian Export Organisations (FIEO) website.

5. Consular Invoice https://cleartax.in/s/consular-invoice

Import and export transactions often require different documents for varied purposes such
as verification, calculation of duties, etc. A consular invoice is one of the essential documents
in these transactions.

Meaning of a consular invoice and its uses

A consular invoice is a document containing details regarding the shipment of goods certified
by the consulate of the importing country. The destination country’s consulate affixes their
stamp, thus authorising the shipment for clearance with the customs officials.

A consular invoice is an important document for the following reasons-

 Helps the customs officials in the calculation of import duty.

 Ensures the prevention of dumping.
 Enables the customs officials to identify the contents of the shipment
 Helps in the quick clearance from customs in both countries
 Format and contents of a consular invoice
A consular invoice may contain the following details –
 Names of the importer and exporter with their relevant details
 Ports of Origin and destination
 Description of the goods
 Additional charges (packing, insurance, etc.)
 Total value of the shipment
 Name of the certifier
 Identification marks and numbers

6. Mate's Receipt: https://howtoexportimport.com/Mate-Receipt-4586.aspx

Mate's receipt is a receipt issued by the Commanding Officer of the ship when the cargo is
loaded on the ship. It is a prima facie evidence that goods are loaded in the vessel.
Mate's receipt is first handed over to the Port Trust Authorities. After making payment of all
port dues, the exporter or his agent collects the mate's receipt from the Port Trust Authorities.

Mate's receipt is freely transferable. It must be handed over to the shipping company in order
to get the bill of lading. Bill of lading is prepared on the basis of the mate's receipt.

Mate's receipt is not a document of title of goods. It is merely a receipt of goods. However, it
is an important document as without it, the exporter will not be able to obtain the title
document of goods, i.e., the bill of lading.
Types of Mate's Receipts:
(a) Clean Mate's Receipt:
The Commanding Officer of the ship issues a clean mates receipt, if he is satisfied that goods
are packed properly and there is no defect in the packing of the cargo or package.
(b) Qualified Mate's Receipt:
A qualified mate's receipt is issued when the Commanding Officer of the ship is not satisfied
with the packing of the goods and the shipping company does not take any responsibility of
damage in transit.
Contents of Mate's Receipt:
(a) Name and logo of the shipping line.
(b) Name and address of the shipper.
(c) Name and the number of vessel.
(d) Name of the port of loading.
(e) Name of the port of discharge and place of delivery.
(f) Marks and container number.
(g) Packing and container description.
(h) Total number of containers and packages.

(I) Description of goods in terms of quantity.

(i) Container status and seal number.
(k) Gross weight in kg. and volume in terms of cubic metres.
(I) Shipping bill number and date.
(m) Signature and initials of the Chief Officer.
Significance of Mate's Receipt:
(a) It is an acknowledgement of goods received for export on board the ship.
(b) It is a transferable document. It must be handed over to the shipping company in order
to get the bill of lading.
(c) Bill of lading, which is the title of goods, is prepared on the basis of the mate’s receipt.
(d) it enables the exporter to clear port trust dues to the Port Trust Authorities.
7. BILL OF LADDING https://blog.ipleaders.in/mate-receipt-v-bill-lading-contemporary-
practice/#Bill_of_lading

Bill of lading is paperwork that has been granted status under the law. It registers all the
information about the goods that are to be transported. Given by the transporting company
to the supplying company, it ensures a hassle-free shipment process.

For example, you own a company called Surma Co. in India. You want to buy cotton t-shirts
from a supplying company named Blaze Clothes Co. in Zimbabwe. Blaze Clothes Co. delivers
the goods to the transporter you have chosen.
After that, they will receive a receipt (bill of lading) for the goods. The goods are now ready
to be delivered. When the supplying company has received the payment for the goods, they
will give you the receipt. Then, you will possess ownership of those goods.
Title for goods
Title for goods relates to their ownership. Once the bill of lading is transferred by the supplier
to the buyer, ownership of goods rests with the buyer.
Receipt for shipment
It implies that goods are loaded on the ship and are ready for delivery at the appointed
station.
Legal document
Since the bill of lading is an agreement enforceable by law, parties are bound to fulfill
obligations on their part. If either of them fails to do so, the aggrieved party may claim legal
remedy for the same.

The subject of a bill of lading

 The subject of the bill of lading is as follows:
 Details of supplying company;
 Details of the buyer;
 Date of picking up of goods;
 General description of goods;
 Clarity on delivery of hazardous goods if involved;
 Signature of respective parties;
 Other essential instructions.
Types of bills of lading
Mentioned below are the 11 primary types of bills of lading:
Clean bill of lading
If the goods are in a satisfactory state, the bill furnished is known as the clean bill of lading.
Claused bill of lading
When the goods are impaired, the bill furnished is called the claused bill of lading. For
example, when there is leakage in oil tankers.
Received before the shipment bill of lading
When the goods are not yet delivered, that is although received but not loaded in the vessel,
received before the shipment bill of lading is furnished.

Bearer bill of lading

As per this type of bill, delivery of the goods will be direct to the bill bearer. A bearer bill is
negotiable by physical delivery.

Container bill of lading

Bill furnished when the goods are delivered, stored in containers, is called the container bill
of lading.
Multi-modal Transport/Combined Transport bill of lading
This type of bill is furnished when the delivery involves two or more kinds of transportation
modes.
Through bill of lading
It allows the transporting company to deliver the goods through the mode of delivery so
specified. There is a division of this bill into the following:
Ocean bill of lading
Bill furnished to deliver goods across the country, is known as the ocean bill of lading.
Inland bill of lading
Bill furnished to deliver goods within the country, is known as the inland bill of lading.
House bill of lading
This bill operates between the buyer and the supplying company, even though furnished by
the freight forwarder (ships goods on supplier’s behalf).
Master bill of lading
This bill operates between the carrier and the supplying company. However the latter will
receive it only if they are working or connected with the freight forwarder.
Order bill of lading
It is a negotiable bill of lading since it confers upon the buyer the right to give up the goods to
any other person. There is a division of this bill into the following:

To order Blank Endorsement

To order blank endorsement means that the supplying company has not mentioned the buyer
of the goods. If the supplying company does not have a buyer at the time of delivery, they can
signify ‘to order’ in the buyer section.
To order Bank
This type of order bill of lading usually involves the bank as a guardian of the goods. It
furnishes a document called Letter of credit, which specifies instructions that the supplying
company must follow. After that, the bank signs the bill of lading and makes payment to the
bank representing the supplying company.

Straight bill of lading

When the buyer pays for the goods in advance, the bill furnished is called the straight bill of
lading. The buyer then becomes entitled to receive the goods directly. However, they cannot
give up the goods to any other person. It is, for this reason, this bill is also called the non-
negotiable bill of lading.
Other types of bills of lading include:
Switch bill of lading
It is a copy of the bill issued earlier for the goods in question. Furnished on the buyer’s request,
it ensures that the new buyer does not know about the supplier of those goods.
Surrender bill of lading
As per this bill, the supplying company surrenders the ownership of goods and confers it upon
the buyer.

Charter party bill of lading

This bill involves the hiring of a vessel by a supplying company to ship the goods. It means
that the use of the same will be made only by that particular company.

Short-form/Blank back bill of lading

These bills do not specify the terms and conditions of the shipment process.

Stale bill of lading

Bill furnished after three weeks from the date of shipment for negotiation is called the stale
bill of lading.

Electronic bill of lading

This bill performs functions similar to that of a conventional bill of lading, but it uses the
electronic medium rather than paper.

Sea waybill vs bill of lading

Also called the Express release bill of lading, a Sea waybill is the same as a bill of lading. The
only difference between the two is the title of goods. While the latter functions as the title of
goods, the former does not.
Thus, a sea waybill is non-negotiable, and in situations where the title of goods holds little or
no importance, it may replace the original bill of lading. The subject of a sea waybill is the
same as the subject of a bill of lading.
One of the benefits of a sea waybill over an original bill of lading is its flexibility and easy
utilisation. Buyers can clear the goods from the customs without presenting at least one
original copy of the receipt.
8. Guaranteed Remittance (GR) Form https://howtoexportimport.com/GR-Guaranteed-
Remittance-4591.aspx
GR Form is an exchange control document required by the Reserve Bank of India (RBI). As per
the exchange control regulations, an exporter has to realise export proceeds within 180 days
of the shipment of goods from India. In order to ensure this, the RBI has introduced the GR
procedure.

GR form is to be submitted in duplicate to the Customs at the port of shipment along with a
copy of shipping bill.

Customs gives their running serial number on both the copies after admitting the customs
shipping bill.
Customs authorities then certify the value declared by the exporter on both the copies of GR
form at the space earmarked and also record the assessed value of the goods.
Then, they return the duplicate copy of the GR form to the exporter and retain the original
for transmission to the RBI.
The exporter is required to lodge the duplicate copy of GR form along with the relative
shipping documents with the authorised dealer named in the GR form for negotiation of
export bills within 21 days from the shipment of goods.
After the documents have been negotiated, the authorized dealer will report the transaction
to the RBI.
The duplicate copy of GR form together with copy of invoice will be retained by the authorize
dealer till full export proceeds have been realised and thereafter submitted to the RBI.
On account of introduction of Electronic Data interchange (EDI) System at certain customs
offices where shipping bills are processed electronically, the existing declaration in GR from
has been replaced by a declaration in form statutory declaration form (SDF).
9. Marine Insurance https://blog.ipleaders.in/types-marine-insurance-policies-india/

Before diving deep into the sea of marine insurance, it is imperative to understand the
meaning of ‘insurance’.

The dictionary suggests that the word “Insurance” means, coverage by contract whereby one
party undertakes to indemnify or guarantee another against loss by a specified contingency
or peril.

Marine insurance, therefore, is a type of insurance that covers the losses or the damages
caused to the cargo of any ship, or the ships, cargo vessels, terminals, or any marine transport
in which goods are carried from the point of origin to the final destination.
It also covers the risks faced by various intermediaries. It provides comprehensive coverage
for all the probable risks faced by a vessel at the sea.
Marine transport faces a relatively higher degree of threat as compared to the other modes
of transport, such as road, rail, and air.
The range of perils offered by the sea is very wide, ranging from weather or natural hazards
to cross-border conflicts to pirate attacks.
It not only becomes essential for all the people associated with a particular ship (the ship-
owner, the cargo owners, the intermediaries, etc.) to avail a marine insurance policy, the law
mandates all the vessels engaged in commercial transport to have a suitable marine insurance
policy to mitigate the potential risks.

The Marine Insurance Act, 1963, which is on the lines of its predecessor, The English Marine
Insurance Act, 1906, regulates the principles and law of marine insurance in India.
Types of Marine Insurance in India
Due to a very wide ambit of marine insurance, different categories of it are classified based
on different factors.
Broadly, the classification of marine insurance in India depends on two factors –

 The coverage area of the insurance policy, and

 The structure of the insurance contract.
Each of the two categories is further sub-categorized, based on the different needs and
suitability of the person entering into the insurance contract.
Types of Marine Insurance – based on coverage area
The coverage area of an insurance policy is the geographical area or the protected area in
which the benefits of an insurance policy apply.
The following types of marine insurance are classified, based on the coverage area of the
insurance policy –
Hull & machinery insurance –
Hull is the most noticeable part of any ship. It is the watertight body of a ship or a boat that
protects the cargo inside the ship from being damaged.
Hull and Machinery Insurance, therefore, covers the loss or the damage caused to the body
of the ship or any machinery or equipment in it, used for the functioning of the ship.
It mostly covers accidents caused due to collisions, or the damages caused by earthquakes
and explosions. This type of insurance is generally taken by the owners of the ship.
Marine cargo insurance –

Marine cargo insurance is a type of property insurance that covers the cargo owners against
any loss or damage caused to their cargo during its transit.
It has extensive coverage, but also has certain limitations, for instance, the cargo owners lose
their claims if the packaging of the cargo was defective.
It also comes with a third-party liability, which covers the damages caused to the port, or a
ship, or a railway track due to the presence of defective cargo.
Liability insurance –

Liability insurance covers the financial liability of the person who is insured. It covers primarily
the liabilities which arise due to the damages or injuries caused to the third party, for instance,
the death or personal injury caused to any third party traveling in the ship.
Freight insurance –

Freight insurance covers the liability of the shipping company or the logistics provider for the
damage or loss caused to the shipment during transit due to events outside the control of the
company.
Types of Marine Insurance policies – based on the structure of the contract
A ‘policy is a document that embodies the terms and conditions of the contract of insurance.
It essentially is a written form of agreement between the insurance company and the person
insured.
It generally contains the provisions regarding the coverage area, the limitations of insurance
policies, etc. Thus the different types of policies available under marine insurance are –
Open policy –
An open policy, also called a floating policy, provides coverage for an indefinite number of
transit journeys during the subsistence of the policy.

This is especially beneficial for the companies which are involved in high-volume trade, as
they are saved from taking an insurance policy on each transit journey.

It covers all the transit journeys of the insured until the policy is cancelled or until the last of
the payment is realized, whichever is earlier.
Voyage policy –
A voyage policy works on the same lines as the marine cargo insurance.

Under this policy, the insurance company agrees to cover the losses or damages caused to
the cargo during a specific voyage.

It expires when the vessel reaches its destination, irrespective of the time it takes to reach
there. Usually, it is bought by small exporters who ship their goods by sea only on some
occasions.
Time policy –
A time policy, as the name suggests, is issued for a fixed period of time. The vessel may make
any number of voyages during this period. Generally, the insurance company issues this policy
for one year, however, the period may vary depending on the agreement between both
parties.
Mixed policy –
A mixed policy is a combination or a mix of voyage and time policies. The insurance company,
while issuing this policy, agrees to cover the loss or damage to the ship for a particular voyage
till a particular period of time.
Single vessel policy –
A single vessel policy insures only a single ship of the insured.
Fleet policy –
The person insured has an option of either insuring a single ship by a policy, or of insuring
several ships under one policy.

If he chooses the latter option, he undertakes a ‘Fleet Policy’, under which a fleet of ships is
insured under a single policy.
Unvalued policy –
Every insurance policy is either an unvalued or a valued policy. Under an unvalued policy, the
insurance company does not assign a value to the thing insured (the vessel or the cargo), at
the time of underwriting the policy.
The valuation of the property is done only after the claim of insurance has been filed.
However, for a successful claim, the true value of the property has to be proved by the insured
by way of invoices or estimates, before the valuation.
Valued policy –
In a valued policy, the insured property is given a specific value when the policy is issued, and
before any claims are made.
When the claim is made by the insured, a pre-estimated or the specified amount is given,
which does not depend on the amount of loss incurred by the insured.

The depreciation of the property also does not affect the amount of claim, under a valued
policy.
Block policy –
A block policy is an all risks policy. Unless a contrary intention is expressed by the insurer, it
essentially covers all the risks to which the goods are exposed when they are in transit,
bailment, and on the premises of the third party.
There are two popular types of block policy – furrier’s block policy, and jeweller’s block policy
since fur and jewellery are two high-value commodities that are exposed to a greater threat
of theft.
Port-risk policy –
A port-risk policy covers ships that are either docked or are undergoing repair works at the
port. It is an all-risk policy that covers all the risks unless otherwise agreed between the
parties.

It provides coverage for physical damages to the vessel as well as protection and indemnity
but excludes any liability arising on account of the crew and cargo.
Named policy –
A named policy is one in which the name or names of the ships is mentioned in the contract
of insurance.
Wager policy –
A wager policy protects from loss of the property of which the insured does not have legal
proof of possession.
This means, when the insured is not able to prove an insurable interest in the property, the
insurance company may issue a wager policy to him.
Under it, the whole claim of the insured is subject to the discretion of the insurer and the
merits of the claim made. It is not a written policy as it is issued in contravention of the law.

10. Import Documents https://www.managementstudyguide.com/imports-

documentation-in-customs-clearance.htm
In effecting Imports as well as Exports, documentation plays a very important role.

Especially in case of imports, the availability of right documents, the correctness of the
information available in the documents as well as the timeliness in submitting the documents
and filing the necessary applications for the Customs Clearance determines the efficiency of
the Customs Clearance process.

Any delay in filing or non-availability of documents can delay the process and thereby
importer stands not only to incur demurrage on the imported cargo but also stand to lose
business opportunities.

Customs Clearance process requires set of documents to be submitted by the Importer, By

the airline, shipping line or concerned Freight Forwarder as well as the Customs
documentation prepared and submitted by Clearing Agent on behalf of the Importer.

Some of the documents required from Importer from his end are:

Commercial Invoice –

This is the most important document that certifies the sale as well as gives the description of
the items as well as reflects the pricing or the value of the cargo.
Customs valuation is based on the value reflected on the Commercial Invoice.

Customs also verifies the rates charged in the commercial invoice and can question the rates
applied in case it has sufficient cause to believe that the rates charged as not as per
international market rates or the invoice is undervalued to avoid duties.

Packing List –

It is mandatory to put the shipping marks on all the cargo covering each and every individual
piece or parcel.

The details of the number of parcels in the consignment, their dimension, the shipping marks,
the gross and net weights of each of the parcels along with the number of units contained in
each parcel is catalogued in the form of packing list.

Packing List is used to identify the parcels as belonging to the particular consignment under
the said Invoice.

Certificate of Origin –

Certain bilateral agreements and multi-lateral agreements would enjoy favourable tariffs for
import duties.

In such cases when the consignments are exported from such member countries, the
designated Export Agency issues Certificate of Origin to the importer for submission to
Customs.

Based on this certificate the Customs Department of the Importing Country classifies the
cargo under specific schedule.

Certificate of Origin also helps to avoid third party countries from routing imports through
member countries and effecting third party exports to avoid duty, quantity or license
restrictions.

Bill of Lading or Airway Bill –

Bill of Lading is a negotiable multi modal transport document issued by the Shipping Line
certifying carriage of the said cargo under the specific invoice on behalf of the exporter or
importer depending upon the terms of sale.

An ‘On Board Bill of Lading’ is usually considered to be the apt Bill of Lading that signifies that
the cargo has been loaded ‘On Board’ the vessel or the ship. This is one of the documents
required for negotiations of payment from importer to the exporter.

Air way Bill is the negotiable transport document issued by an Airline or a Freight Forwarder
who consolidates the airfreight cargo.

In case of Road Carriage, the Transporter issues a negotiate Way Bill covering the shipment.
Depending upon the mode of transport, one of these documents would be required to be
submitted along with the commercial invoice and packing list to the Customs for clearance.

Import procedures and documentation are required for any good that crosses the
international borders and enters the country. This can range from mere gifts to big
shipments. https://www.vedantu.com/commerce/import-procedures-and-documentations
Steps for the Process of Import Procedure

The following steps can adequately explain the process of import procedure and
documentation:

1. First and foremost, before anything can enter the country, a comprehensive list of
what item is being imported and for what purpose needs to be updated and
registered. Data like this can be obtained from trade associations and trade
organisations.

2. The EXIM Policy is then consulted by the Importer to make sure that all rules and
regulations are followed and standards are met.

3. Then the request of the instalment of foreign cash takes place which includes the
trading of Indian Currency into foreign notes. In this matter, The Exchange Control
Department of the Reserve Bank of India (RBI) manages foreign trade exchange in
India.

4. The importer then puts in an import request with the exporter for the supply of
merchandise.

5. Once the payments are settled between the importer and the seller, a letter of credit
is issued to the importer.

6. The importer arranges for the payment of the advance money on arrival of the goods
at the port. This saves the importer from the high penalties.

7. The overseas supplier after in-loading the merchandise on the ship dispatches the
“Shipment Advice” to the importer to give information with respect to the shipment
of goods.

8. Dock charges are also paid out by the importer once the goods are received and all
inspections are completed.

In India, the procedure of imports usually follows this outline, unless the goods are otherwise
specified as hazardous or are specially requested by the government of the country. A number
of documents are required to make sure that this process takes place seamlessly, which is
important for the importer to have quick access to.

These Documentations Include

 All invoices, packing lists, certificates specifying the origins of the product and its
description, GATT declaration, IET documents and any other document that the
government specifies.
  Catalogue, Technical Write ups – required for import of machinery and equipment.

 Chemical Composition, Test bond required by the respective customs – all are needed
in case of Chemical Import.

 Phytosanitary Certificate with Fumigation, Certificate of Origin – required for un-

processed food, plant products, wood imprints, fruits and seeds import.

 Test Report and Composition – for processed food product import.

 Azo Dye Inspection Certificate – in Import of Fabric.

 PLAT T essential for valuation – In case of import of Plastic Granules.

 Registered EPCG License, Panelised Undertaking by Importer, Bond com BG Bank

Covering Letter, Signature Attestation from Bank, Copy of Board of Regulation,
Particles of Memorandum, and Detail of Previous License – Import under EPCG license.

 Form necessary from Supplier for customs duty advantage – Import of Ceramic Tiles.

 Test Certificate – Import of Wine and Whiskey.

Explain Import Procedure

Import procedure means all the steps involved in purchase of goods from any foreign country.
The procedural steps involved in import trade differ from country to country in respect of
their import policy, statutory requirements.

In majority of the countries import trade is being controlled by the government. The objective
of empowering the government in the import trade is to keep a strict restriction policy in
regards of foreign exchange, protection of Indigenous industries etc.

For importing goods, a specified and regulated procedure is to be followed. The procedure is
summed into quick steps as below:

1. Trade Enquiry

2. Procurement of Import License and Quota

3. Obtaining Foreign Exchange

4. Placing the Order

5. Dispatching a letter of Credit

6. Obtaining Necessary Documents

7. Customs Formalities and Clearing of Goods

 8. Making the Payment

9. Closing the transactions

10. Transport Documents

http://www.globalnegotiator.com/files/Transport-Documents-Used-In-International-
Trade.pdf

Transport documents lies at the heart of international trade transactions. These documents
are issued by the shipping line, airline, international trucking company, railroad, freight-
forwarder or Logistics Company.

To the shipping company and freight forwarder transport documents provide an accounting
record of the transaction, instructions on where and how to ship the goods and a statement
giving instructions for handling the shipment.

There is a Type of Transport Document for each mode of transport (CMR for road transport,
Bill of Lading for shipping, etc.). Those goods carried in multimodal transport units (mainly
containers) use a document called FIATA multimodal Bill of Lading (FBL). The responsibility
for the management and processing of shipping documents will depend on the sale
conditions (Incoterms) agreed between de parties.

CMR DOCUMENT

The CMR transport document is an international consignment note used by drivers,

operators and forwarders alike that governs the responsibilities and liabilities of the parties
to a contract for the carriage of goods by road internationally.
The carrier usually completes the form, but the sender - in other words the exporter - is
responsible for the accuracy of the information and must sign the form when the goods are
collected.
The consignee will also sign the form on delivery, which is essential for the carrier to be able
to confirm the delivery of the goods and to justify the payment for its services.
The CMR transport document is not a document of title and is therefore non-negotiable.
This document is prepared by the exporter and the freight forwarder and is addressed to
the importer and the carrier.
Download model of CMR with instructions for completing the document

BILL OF LADING B/L

A Bill of Lading B/L is a document issued by the agent of a carrier to a shipper, signed by the
captain, agent, or owner of a vessel, furnishing written evidence regarding receipt of the
goods (cargo), the conditions on which transportation is made (contract of carriage), and
the engagement to deliver goods at the prescribed port of destination to the lawful holder
of the bill of lading.

A Bill of Lading is, therefore, both a receipt for merchandise and a contract to deliver it as
freight. There are a number of different types of bills of lading and a number of regulations
that relate to them as a group of transport documents.

Since this is a negotiable instrument, the Bill of Lading may be endorsed and transferred to
a third party while the goods are in transit.

This document is prepared by the shipping and addressed to the exporter, the shipping
company through the agent, and the importer.

Download model of Bill of Lading B/L with instructions for completing the document

AIR WAYBILL AWB

An Air Waybill AWB is a non-negotiable transport document covering transport of cargo

from airport to airport.
The Air Waybill must name a consignee (who can be the buyer), and it should not be
required to be issued “to order” and/or “to be endorsed” as it is not a title of property of
the merchandise. Since it is not negotiable, and it does not evidence title to the goods, in
order to maintain some control of goods not paid for by cash in advance, sellers often
consign air shipments to their sales agents, or freight forwarders’ agents in the buyer’s
country.

The Air Waybill is not a negotiable document. It indicates only acceptance of goods for
carriage.

This document is prepared by the IATA Transport Agent or the airline itself and is addressed
to the exporter, the airline and the importer.
Download model of Air Waybill with instructions for completing the document

MULTIMODAL BILL OF LADING FBL

A Multimodal Bill of Lading FBL is a type of international transport documents covering two
or more modes of transport, such as shipping by road and by sea.
It is also used as a carriage contract and receipt that the goods have been received.
When it is issued "to the order", the Multimodal Bill of Lading is title of ownership of the
goods and can therefore be negotiated.
As a rule, Multimodal Bills of Lading are not negotiable documents.

Only authorized forwarders integrated into FIATA (International Federation of Freight

Forwarders Associations) can issued this document. It is addressed to the exporter,
Multimodal Transport Operator on destination country, and the importer.
Download model of Multimodal Bill of Lading with instructions for completing the document

CARGO INSURANCE CERTIFICATE

The Cargo Insurance Certificate is a document indicating the type and amount of insurance
coverage in force on a particular shipment. It includes the name of the insurance company
and conditions of coverage.

The original copy of the Cargo Insurance Certificate is required in the filing of a claim. Copies
of documents necessary to support an insurance claim include the insurance policy or
certificate, bill of lading, invoice, packing list, and a survey report (usually prepared by a
claims agent).

In addition to these transport documents prepared and managed transportation companies,

it should also mention three other documents prepared by the exporter which accompany
the goods during transportation: international commercial invoice, packing list and delivery
note.
Download model of Cargo Insurance Certificate with instructions for completing de
document

INTERNATIONAL COMMERCIAL INVOICE

The International Commercial Invoice is an administrative document which contains all the
information about the international sale. The item, quantity, price for the products/services
sold, delivery and payment conditions, as well as the taxes and other expenses that might
be included in the sale, are detailed in an International Commercial Invoice.

The importer, with the original of the International Commercial Invoice, declares to the tax
authority of his country the amount that it must pay, to who it is going to pay and the agreed
means of payment. For the exporter, this document means a documentary evidence of the
sales that it has made in foreign markets.

In operations with third countries, the International Commercial Invoice is part of the
customs declaration, upon which, the taxes and tariff rights applied, must be paid at the
moment at which the products enter the country. In operations with EC countries, this
document is used as a declaration of the transaction and tax exemption to comply with the
basic tax settlement conditions.

This document is prepared by the exporter and addressed to the importer and the import
customs clearance.
Download model of International Commercial Invoice with instructions for completing the
document

PACKING LIST

The Packing List is a more detailed version of the commercial invoice but without price
information. It must include, inter alia, the following: invoice number, quantity and
description of the goods, weight of the goods, number of packages, and shipping marks and
numbers.
A copy of the Packing List is often attached to the shipment itself and another copy is sent
directly to the consignee to assist in checking the shipment when received.

Although not required in all transactions, it is required by some countries and some buyers.
This document is prepared by the exporter and addressed to the importer, the carrier and
the import customs clearance.
Download model of Packing List with instructions for completing the document
DELIVERY NOTE

A Delivery Note is one of the transport documents accompanying the shipment of goods
that list de description and quantity of goods delivered. A copy of the Delivery Note, signed
by the buyer or consignee is returned to the seller or consignor as a proof of delivery.

Delivery Notes have a dual function for the exporter: justify the removal of the products
from its store and proof credit delivery to the importer and therefore it is important that de
importer sign the copy provided by the carrier. For the importer, Delivery Notes serve to
verify that the goods received match those listed on the purchase order or contract. For the
carrier is the document used as a proof of delivery of the goods.
Download model of Delivery Note with instructions for completing the document

11. Bill of Entry https://howtoexportimport.com/Bill-of-Entry-under-Imports-in-India-

4381.aspx
Bill of Entry under Imports in India Bill of Entry is a declaration form made by the importer
or his clearing agent in the prescribed form under Bill of Entry Regulations, 1971 on the
strength of which clearance of imported goods can be made.
When goods are imported into a country, customs duty has to be paid by the import
importer prepares the Bill of Entry declaring the value of goods, quantity' and description.
This is prepared in triplicate. Customs authorities may ask the importer produce the invoice
of the exporter, broker's note and insurance policy to satisfy about the correctness of value
of goods declared.

For the purpose giving information, goods are classified into three categories,

(1) Free Goods: These goods are not subjected to any customs duty.

(2) Goods for Home Consumption: These goods are imported for self-consumption.

(3) Bonded Goods: Where goods are subject to customs duty, till duty is paid, goods are kept
in Bond.

Contents of Bill of Entry

1. Name and address of importer.

2. Name and address of exporter.
3. Import license number.
4. Name of port where goods are to be cleared.
5. Description of goods.
6. Value of goods.
7. Rate and value of import duty payable.

12. Certificate of Inspection https://efinancemanagement.com/international-financial-

management/inspection-certificate
An Inspection certificate is a document that one would come across in case of international
trade. This document basically specifies the fitness or condition of the items to be shipped.
The document signifies that the items have been inspected and conform (or do not conform)
to the terms of the sales agreement.

The document certifies that the items were in good condition at the time of the inspection.
Moreover, it certifies that the inspection work was carried out by a competent authority, and
whether or not the items conform to the quality, quantity, import, tariffs, and other
specifications.
Usually, the inspection takes place immediately before the shipment. This certificate is known
by several names like Certificate of Inspection, Inspection Report or Report on the findings of
the Inspection, etc.
A point to note is that inspection requirement is usually for specific items, such as perishable
items, meat, and more.
Also, some countries mandate pre-shipment inspection for all the goods (or some specific
items) entering the country.
Some of these countries are Malawi, Mali, Mauritania, Cambodia, Cameroon, Kuwait, Liberia,
Bangladesh, Burkina Faso, Uzbekistan, and more.
Also, the certificate may be a mandatory document in the case of the LOC (letter of credit). In
such a case, it is crucial to provide the name and details of the party providing the inspection
certificate and their credentials.
Who Issues Inspection Certificate?

There are specific companies that carry out an inspection at the ports, such as the Swiss SGS,
French Bureau Veritas, Cotecna, and Intertek. Big inspection companies usually have offices
in big exporting nations. Moreover, there are also inspection companies that cater to specific
countries.
The inspectors working for independent inspection companies (like above) issue the
certificate. The inspection inspector must issue the certificate on the inspection company’s
official letterhead.
Nowadays, most inspection companies publish inspection reports or certificates online. This
makes it easy for the buyer and other concerned parties to access the certificate.

Substitutes of Inspection Certificate

There are many other documents that can work in place of the certificate of inspection,
depending on the laws of specific countries.

For instance, in the case of agricultural products, the document could be a federal
phytosanitary inspection certificate. This document certifies that the U.S. shipment of
agricultural products does not have any toxic chemicals, and is fit for humans and animals.

The U.S. Agricultural Department (USDA) issues such a certificate.

Another similar certificate is the Certificate of Quality and Condition. The USDA’s Processed
Product Branch issues this certificate. Such a certificate usually concerns frozen and
dehydrated fruits, canned fruits, vegetables, and more.

Types of Inspection Certificates

Inspection Certificates or Reports are usually of two types:
Official Inspection Certificate
In some nations, the customs authorities require such a certificate so as to clear the shipment.
Such a certificate allows the authorities to check if the goods meet the specifications of the
sales agreement or not. As well as the goods meet the specific requirements of the exporting
and importing countries.
Commercial Inspection Certificate
It is a pre-shipment inspection that is done prior to the completion of the production or
shipment of a lot of cargo. The report or certificate of this inspection is sent to the buyer to
determine if the items match the specifications of the sales agreement and other regulations.
And if so, the shipment or production may continue.

Details in Inspection Certificate

Usually, an inspection certificate carries the following details:
1. Date of issue;
2. Date and place of inspection;
3. Description of the goods;
4. Details of the applicant;
5. Country of origin;
6. The number of packages;
7. Insurance policy number;
8. Date of the pro forma invoice;
9. Gross weight;
10. Port of discharge;
11. Details of the supplier;
12. Type of packing;
13. Insurance policy number;
14. Name and Signature of the authorized person or inspector, etc.

Benefits of Inspection Certificate

The Inspection Certificate has several benefits. A few of them are listed below:
 For importers, the benefit is that it lowers the chances of receiving cargo that does
not meet the set standards and specifications.
 Regular inspection allows exporters to ensure the production is going as per the sales
agreement. It also allows exporters to take corrective actions before the completion
of production, if there is a need. This will avoid unnecessary issues with regard to
rejection, return and costs and time involved in all that process.
 Inspection also gives exporters and importers a good idea of the production timelines.
 Most importantly, an inspection certificate assists in removing worries over the quality
of the cargo. If the importer gets low quality items despite a positive inspection report,
then the importer can claim damages from the inspection company.

13. Certificate of Measurement https://howtoexportimport.com/Certificate-of-

Measurement-under-exports-4593.aspx

Certificate of measurement is used for the calculation of freight. Freight can be calculated
either on the basis of weight or measurement.

When it is charged on the basis weight, the weight declared by the overseas supplier is
accepted for the calculation of freight.
http://www.effective-business-letters.com/certificate-of-measurement.html
Freight can be charged either on the basis of weight or measurement. When it is charged on
weight basis, the weight declared by exporter is accepted.

However, certificate of measurement from the approved organisation may be obtained by

the exporter and given to the shipping company for calculation of necessary freight.

This certificate contains the name of vessel, the port of destination, description of goods,
quantity, length, breadth, depth etc. of packages.
14. Freight Declaration