Export and Import Documentation (Study Material) : Sri Vidya Mandir Arts and Science College (Autonomous)

Sri Vidya Mandir Arts and Science College
(Autonomous)
Katteri – 636 902, Uthangarai, Krishnagiri District, Tamil Nadu
(An Autonomous College Affiliated to Periyar University, Salem)
(Recognized under Status 2(f) & 12(B) of the UGC Act 1956)
(Accredited by NAAC with ‘A’ Grade [3.27/4.00])
Department of Management Studies
Export and Import Documentation

(Study Material)
Prepared by
Dr.N.Ramesh Kumar
Assistant Professor
Department of Management Studies
DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

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MANAGEMENT STUDIES, SVM ARTS AND SCIENCE COLLEGE
SBEC – IV Course Code: 20UBX4S03
Export and Import Documentation
UNIT – I
Export & Import-Meaning and Definition- Pre–Shipment; Inspection and Procedures -EXIM
Documentation – Types of Documents – Instruments and Methods of Financing Exports.
UNIT – II
Foreign Exchange Regulations and Formalities – Role of Clearing and Forwarding Agents. RBI
Guidelines of Foreign Trade Regulations. Credit and Collections.
UNIT – III
Custom Clearance of Export and Import Cargo – Regulatory Documents – Bill of Lading
Methods of Bill of Lading – Export License – Bill of Exchange – Types of bill of exchange.
UNIT – IV
Processing of an Export Order, World Shipping, Structure, Liners and Tramps –
Containerization.
UNIT – V
Import Documentation – Import Procedure, Guidelines, Key Documents used in Importing –
Import Licensing and Other Incentives.
Text Books
1. Francis Cherunilam: International Trade and Export Management Mumbai, Himalaya

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UNIT – I
Export & Import-Meaning and Definition- Pre–Shipment- Inspection and Procedures -
EXIM Documentation – Types of Documents – Instruments and Methods of Financing
Exports.
What is an Export?
Definition: An export is the shipping of domestic goods or services to a foreign country, where
the products will be processed, used, sold or re-exported.
What is an Import?
Definition: Import represents the bringing of foreign goods or services in another country, where
the products will be processed, used, sold or exported.
Definition for EXIM:
The term export is derived from the conceptual meaning as ship the goods and services out of the
port of a country. The seller of such goods and services is referred to as an "exporter" who is
based in the country of export whereas the overseas based buyer is referred to as an "importer".
In International Trade, "exports" refer to selling goods and services produced in the home
country to other markets. Any good or commodity is transported from one country to another
country. Export goods or services are provided to foreign consumers by domestic producers.
Export of commercial quantities of goods normally requires the involvement of the customs
authorities in both the country of export and the country of import.
Pre-Shipment Procedure
The pre-shipment stage consists of the following steps:
1. Approaching Foreign Buyers: In order to secure an export order, a new exporter can make
use of one or more of the techniques, such as, advertising in international media, sales
promotion, public relation, personal selling, publicity and participation in trade fairs and
exhibitions.
2. Enquiry and Offer: An Enquiry is a request from a prospective importer about description
of goods, their standard or grade, size, weight or quantity, terms of payments, etc. On getting
an inquiry, the exporter must process it App immediately by making an offer in the form of a
proforma invoice.
3. Confirmation of Order: Once the negotiations are completed and the terms and conditions
are finalised, the exporter sends three copies of proforma pre invoice to the importer for the
confirmation of order. The importer signs these copies and sends back two copies to the
exporter.
4. Opening Letter of Credit: The documentary credit or letter of credit is the most appropriate
and secured method of payment adopted to settle international transactions. On finalization
of the export contract, the importer opens a letter of credit in favor of the exporter, if agreed
upon in the contract.

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5. Arrangement of Pre-shipment Finance: On securing the letter of credit, the exporter'
Procures a pro-shipment finance from his bank for procuring raw materials and other
components, processing and packing of goods an transfer of goods to the port of shipment
6. Production or Procurement of Goods: On securing the pre-shipment finance from the
bank, the exporter either arranges for the production of the required goods or procures thorn
from the domestic market as per the specifications of the importer.
7. Packing and Marking: Then the goods should be properly packed and marked with
necessary details such as port of shipment and destination, country of origin, gross and net
weight, etc. If required, assistance can be taken from the Indian Institute of Packing (IIP).
8. Pre-shipment Inspection: If the goods to be exported are subject to compulsory quality
control and pre-shipment inspection then the exporter should contact the concerned Export
Inspection Agency (EIA) for obtaining an inspection certificate.
9. Central Excise Clearance: Exportable goods are completely exempted from the central
excise duty. Such exemption can be sought in one of the following ways:
a. Export under Rebate.
b. Export under Bond.
10. Obtaining Insurance Cover: The exporter must take appropriate policies in order to insure
risks:
a. ECGE policy in order to cover credit risks.
b. Marine policy, if the price quotation agreed upon is CIF.
11. Appointment of C&F Agent: Since exporting is a complex and time-Consuming process,
the exporter should appoint a Clearing and Forwarding (C&F) agent for the smooth clearance
of goods from the customs and preparation and submission of various export documents.
What is a Pre-Shipment Inspection?

A pre-shipment inspection is a step taken by trade operators (buyers, suppliers, agencies) to
inspect newly manufactured products before they are shipped for export/import.
The purposes of a pre-shipment inspection are to:

 Check the quantity and quality of the merchandise
 Check products for any defects
 Ensure products meet the safety requirements of the destination market
 Issue report for import and billing
 Pre-shipment inspections were officially introduced in 1994 as an agreement to improve
international trade standards under the General Agreement on Tariffs and Trade (GATT),
which was later replaced by the World Trade Organisation (WTO).
A number of obligations were included in the “Agreement on Pre-Shipment Inspection,” stating

that pre-shipment investigations should be applied according to the following principles:
 Non-discrimination
 Transparency
 Protection of confidential business information
 Avoidance of delays

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 Price verification based on the price of identical or similar goods in the country of
exportation, in which the exporter has the opportunity to explain the price charged.
 Inspection agencies establish appeals procedures, the findings of which are made
available to other exporters
Importance of a Pre-shipment Inspection

A pre-shipment inspection helps secure the quality of products to increase customer satisfaction
and retention. It is performed to ensure the following:
 Comply with business product designs and requirements;
 Reduce risks for importing or exporting low-quality goods;
 Rectify damaged goods immediately;
 Prevent product delays due to overlooked items;
 Protect business confidentiality; and
 Foster proper communication for improvement needs.
Pre-Shipment Inspection Procedure

A pre-shipment inspection is a crucial task that aims to improve international trade standards.
It is performed by quality assurance inspectors to evaluate product compliance with agreed
specifications. Inconsistent pre-shipment inspection due to overlooked processes can lead to
product return, business reputation damage or worse business closure. To avoid unnecessary
incidents, here are 7 simple steps to effectively perform pre-shipment inspections:
Factory visits
You can start the pre-shipment inspection when production reaches 80% of the target. This will
give enough room to fix any defects and damages found during the inspection.
 Quantity checks: Check the timeline and validate customer specifications if you are
reaching deadlines. Record the number of packages or products and ensure it matches on
customer’s order forms.
 Selection of samples: Follow the ANSI/ASQ Z1.4 (ISO 2859-1) for a statistical
sampling procedure. Select random samples from finished goods and assess depending on
inspection levels.
 Visual inspections: Assess the overall visual appearance of a product using the naked
eye and check for visual defects or damages. Evaluate if the number of defects in a batch
is beyond the Acceptance Quality Limit (AQL) before you reject the product.
 Safety tests: Test product functionality and ensure it is operational and in good working
condition. Evaluate if it passes product safety standards including constructional
specifications, performance, and approved laboratory testing.
 Compliance checks: Verify if deliverables met the standards set out in your quality
plans. Check if finished goods correspond to customer’s requirements including package,
labels, tags, manual, and quantity.
 Barcode Verification: Granted, the barcode is seemingly a tiny piece of the puzzle when
it comes to shipping, but it can cause significant delays and problems if inaccurate. When
scanned, the barcode should reveal the correct information about the product and its
destination. As such, it should be precisely placed on the box and legible. Similarly, it
should be of good print quality to withstand the rigors of international shipping and
handling.
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 Check Packaging, Labelling: As mentioned, pre-shipment inspection occurs when
100% of your products have been manufactured and they are about 80% packed.
Unfortunately, even perfectly manufactured goods can arrive damaged due to insufficient
packaging.
 Utilize pre-shipment inspection checklist: A pre-shipment inspection checklist is a tool
used to guide quality assurance inspectors in documenting their analysis and observations
about the products. It helps in gathering results if the business meets customer quality
requirements and specifications.
EXIM Documentation
Exim has a set of documentation released with it. A text file of the main documentation is
released as part of the Exim tar archive. Additionally, postscript and texinfo forms of the
documentation are available in separate tar archives on the ftp sites.
Commercial documents are written records of commercial transactions describing various
aspects of those transactions.
Types of Documents
 Documents for Exports
 Documents for Imports
A. Documents for Exports
1. Bill of Lading: The most important document in the shipping process for exporters. A
bill of lading (lading is the act of putting cargo on a ship) is a legal document that must
be signed by the exporter, the shipping line and the importer. For smooth transportation
of goods from origin to destination, the exporter must obtain a correct and complete bill
of lading from the shipping line/freight forwarder and send it to the importer.
This bill includes details such as:
a. Description, quantity, weight of goods
b. Name and address of recipient
c. Terms of sale
2. Commercial Invoice cum Packing List: A commercial invoice is a contract of sale
issued by the exporter to the importer. It helps customs determine the value of the goods
to assess the duties and taxes due on them. A commercial invoice carries details such as:
a. Name, address of seller (exporter)
b. Name, address of buyer (importer)
c. Value, quantity of goods
A packing list is an itemized list with details of the goods. It helps facilitate their
examination and accurate tallying during clearance. It contains:
a. Description of the goods
b. Quantity and weight (gross and net) of the goods
c. Number of packages
d. Type of packaging (pallet, box, crate, drum, etc.)

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e. Marks and numbers (symbols/numbers placed on each piece of cargo in a
shipment to identify them)
f. Carrier’s (ship) name
g. Date of export
h. Export licence number
i. Letter of credit number
Before the rules were changed, the commercial invoice and packing list were separate
documents with identical data fields.
3. Shipping Bill/Bill of Export: A shipping bill or bill of export is a document submitted
by the exporter in the form of an application to obtain clearance from customs. It informs
customs of whether the exporter has availed of government incentives, such as:
a. Exemptions/rebates/refunds on various taxes, duties
b. Benefits under various government export schemes
c. Read our detailed list of benefits under India’s export promotion schemes here
If the goods are a re-export of previously imported goods, then these details must also be
included.
4. Certificate of Manufacturer: This is a notarized document certifying that the goods
have been produced by the manufacturer, fulfills the general product requirements and is
ready for shipment.
5. Certificate of Origin: This document is prepared by the manufacturer and is certified by
a government entity or chamber of commerce. It’s used to identify the country of the
manufacturer where the goods were made. For example, the U.S. Food & Drug
Administration requires a certificate of origin for every product imported.
B. Documents for Imports

1. Bill of Lading: This is the most important document not only for exporters but for
importers too. The exporter must share the bill of lading with the importer, who cannot
receive the goods at his end without it.
2. Commercial Invoice cum Packing List: Again, the importer needs this document just as
much as the exporter. This is because the commercial invoice cum packing list comes
into play at the all-important time of customs clearance.
3. Bill of Entry: The third must-have document for importers is a bill of entry. It is a
declaration by the importer on the basis of which customs authorities at the port of entry
inspect and clear the goods. The information in this bill is tallied with the sales invoice or
insurance policy. The information includes:
a. Type of cargo
b. Value of the goods
c. Quantity of the goods
Significance / Importance of Export Documents:

Export documentation is the use of various documents in the export trade. Several documents
encompass the enter gamut of export from the stage when the exporter receives an export order
up to the final stage when he gets the refund of duty and the cash assistance and other incentives
offered by the government export documentation serve two purpose namely
 Regulation of trade.
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 Facilitation of export operation
1. Export License: An export license has to be obtained for controlled commodities
2. Inspection Certificate: Indian government has enacted pre-Shipment and quality control
impactions of a number of export goods, in order to build up an image of Indian goods
abroad. A number of importing countries requires a list of documents to meet the regulatory
provision the important among which are the following.
3. Consumer Invoice: Some countries require that their provision in the exporting countries
should certify the good being exported and give consult invoice certificate.
4. Certificate of Origin: Some countries especially the common wealth countries and
advanced countries of the world which have offered concession under the generalized system
of preference (GSP) require that the exporter must submit a certificate of Origin.
5. Defects in Documentation: The bank making payment on behalf of its foreign
correspondent must verify that all documents and drafts conform precisely to the terms and
conditions of the letter of credit. The requirement of credit cannot be waived or altered by the
paying bank without specific authority from the issuing bank to avoid payment delays, the
beneficiary should prepare and examine all documents carefully before presenting them to
the paying bank. Paying banks that the following discrepancies between the documents and
letter of credit occur most frequently.
o Drafts are presented after letter of credit has expired of after time for shipment has
expired
o Changes included in the invoice are not authorized in the letter of credit.
o Amount of insurance coverage in inadequate or coverage does not included risk
required by letter of credit
6. Facilities of Operation: Export document are required for operational purpose. The customs
authorities are entrusted with the responsibility of verifying that all the requirements of the
regulation in force in the country have been complied with by the exporter.
7. The Shipping Bill: The customs authorities negotiate the shipping bill and without it no
shipping company accept the Cargo.
8. Bill of Lading: Bill of lading is the acknowledgment by the shipping company that the goods
to be exported have been shipped on board.
9. Airways Bill: In the case of shipment by air the document in place of Bill of Lading is
known as airways Bill.
Instruments and Methods of Financing Exports

1. Pre –shipment Finance: Pre –shipment finance given by a bank is also known as packing
credit (PC). As the advance is given before the shipment it is called pr-shipment finance.
This is the working capital of an exporter for execution of shipment. Packing credit may be
defined as any loan given by an exporter against firm sale contract or a letter of credit for the
purpose of exports in order to purchase the goods, process the goods, process the goods and
pack the goods.
The packing credit is given on the strength of letter of credit (L/C) opened in favor of
exported by the foreign buyer or an export order received by him.
The interest payable on pre-shipment finance is lower than the usual rate provided the credit
is extinguished by loading the export bills on remittances from Abroad.
Procedure of packing credit loan:

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The procedure relating to the packing credit loan can be considered from the following
aspects.
a. Firm order or letter of credit
b. Partnership deed in case of partnership firms
c. Memorandum of association, articles of association, certified of incorporation,
certificate of commencement of business etc. in case of registered companies.
d. Audited final financial statement for the past 3 to 5 years.
e. Copies of income tax assessment orders for the past 2 to 3 years in respect of sole
proprietary and partnership firms.
The bank giving the export credit should obtain a credit report from the foreign
correspondent bank/branch if the export is not covered by an irrevocable letter of credit.
Reserve bank of India (RBI) has introduced in march 1992 a scheme titled ‘pre-shipment
credit running account facility’
2. Post-shipment Finance: Post-shipment finance means any loan or advance or advance
granted or any other credit provided by an institution to an exporter of goods from India from
the date of extending the credit after shipment of goods to the date of realization of export
proceeds in consideration of or the security of any drawback or any drawback or any cash
payment by way of incentive from the marketing development assistance (MDA) or any
other relevant source.
Thus, post-shipment finance is given Against
a. Export bills Drawn on foreign buyers an
b. Export cash incentives to be received by the exporter.
Procedure for extending the post-shipment finance depends on the terms of payment settled
between the procedures for extending the post-shipment finance depts. On the terms of
payment settled between the exporters and their foreign buyers. The credit is given against
the bills of exchange drawn by the exporter on the foreign buyer either by the way of
purchase / discount of such bills or through an advance against bills accepted for collection.
In the banking parlance these methods of financing are known as negotiation and collection
of bills payable aboard. We shall now discuss them briefly.
 Negotiation or purchase or discounting of bills: Bills of exchange drawn either in
India rupees or foreign currencies under a letter of credit or otherwise are offered to
banks for negotiation that is for sale or discount. The bills drawn against a letter of
credit are accepted without any hesitation as the bank is fully satisfied about the credit
are accepted without any hesitation as the bank do not have any risk.
 Collection of bills: The sight as well as ‘usage’ bills can be offered to the banks on
collection basis the banks send such bills to their foreign Branch/correspondent for
collection of payment. The amount of such bills is not credit to exporters account till
necessary advice of receipt of payment is received from abroad.
 Cent per cent advance: If rupee bill of exchange has been drawn and received by the
bank for discount with instructions from the drawer that in addition to face amount of
the bill, the drawee has to pay interest, collocation charges, foreign bill stamps if it is
a séance bill of exchange and all other charges, the bank may discount the bill of
exchange, by advancing the full-face value of bill to the Drawer.
 Financing of export Incentives: Post –shipment finance includes any loan or
advance granted to an exporter in consideration of, or on the security of any drawback

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or any cash payment by way of incentive by the government. As these payments
usually take time, the banks have evolved schemes to advance loans against them so
that exporter’s funds are not blocked.

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UNIT – II
Foreign Exchange Regulations and Formalities – Role of Clearing and Forwarding Agents.
RBI Guidelines of Foreign Trade Regulations. Credit and Collections.
Foreign Exchange
Every nation has its own currency and a single currency is not acceptable in all the countries.
When the trading is done at international level, a mechanism is needed to make proper
arrangement for the settlements of commitments of both the parties. As rupees are not an
international means of exchange so foreign exchange market or mechanism is needed to deal
with currencies of other nations, in order to make the international business transactions
dynamic.
What is Foreign Exchange?

Foreign exchange (Forex or FX) is the conversion of one currency into another at a specific rate
known as the foreign exchange rate. The conversion rates for almost all currencies are constantly
floating as they are driven by the market forces of supply and demand.
Definition
According to Paul Einzing: “Foreign exchange is the system or process of converting one
national currency into another and transferring money from one country to another”.
Foreign exchange market

A foreign exchange market refers to buying foreign currencies with domestic currencies and
selling foreign currencies for domestic currencies. Thus, it is a market in which the claims to
foreign moneys are bought and sold for domestic currency. Exporters sell foreign currencies for
domestic currencies and importers buy foreign currencies with domestic currencies.
The genesis Foreign Exchange (FE) market can be traced to the need for foreign currencies
arising from:
a) International Trade.
b) Foreign Investment.
c) c. Lending to and borrowing from foreigners
Definition
According to Ellsworth, "A Foreign Exchange Market comprises of all those institutions and
individuals who buy and sell foreign exchange which may be defined as foreign money or any
liquid claim on foreign money".
Functions of Foreign Exchange Market
The various functions of the Foreign Exchange Market are as follows:
a) Transfer Function: The basic and the most obvious function of the foreign exchange
market is to transfer the funds or the foreign currencies from one country to another for
settling their payments. The market basically converts one’s currency to another.

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b) Credit Function: The FOREX provides short-term credit to the importers in order to
facilitate the smooth flow of goods and services from various countries. The importer can
use his own credit to finance foreign purchases.
c) Hedging Function: The third function of a foreign exchange market is to hedge the
foreign exchange risks. The parties in the foreign exchange are often afraid of the
fluctuations in the exchange rates, which means the price of one currency in terms of
another currency. This might result in a gain or loss to the party concerned.
Participants in Foreign Exchange Market

1. Authorized Dealers: are those persons who have license from the RBI to deal in foreign
exchange. There are 84 authorized banks. Public has to conduct the foreign transaction
through AD’s. ADs formed an organization called FEDAI Hedgers Central Banks
Speculators (Foreign Exchange Dealers Association of India).
2. Financial Institutions: such as IDBI, ICICI, IFCI etc. They are Authorized dealers also.
3. Exchange Brokers: who are specialists in matching supply and demands of banks and who
work for a commission. They facilitate deals between banks. In the absence of a broker,
banks have to contract each other for quests.
4. Central banks: like RBI in India, intervene in order to maintain or to influence the
exchange rate of their currency within a certain range and also to execute the orders of govt.
The currencies traded by RBI on its own behalf or on the behalf of the govt.
5. Hedgers: are interested in reducing transferring the risk. Hedging is done to make the
outcome more certain, but it does not necessarily, improve the outcome.
6. Speculators: wish to take risk and advantage of position in the market. They buy and sell
the currency when they expect movement in the exchange rate in particular direction. They
bet for the price up or down. They are market makers.
7. Arbitrageurs: They take advantages of exchange rate differential arbitrage involves
locking in a riskless profit by entering simultaneously into transactions into two or more
markets. Arbitrageurs buy currency at lower rate from one market and sell at higher rate in
another market, the varying rate are the source of their income.
8. Business firm/corporate: The business houses, international investors, MNC’s may operate
in the market to meet their genuine trade or investment requirements.
9. Commercial Banks: They buy and sell currencies for their clients.
Foreign Exchange Transactions
Sales and purchase transactions Spot and forward Transaction
 Sales and purchase Transactions: Viewed from the angel of a banker, foreign exchange
transaction may be either a sale transaction or a purchase transaction. It the banker sells foreign
currency for home currency, converts home currency into foreign currency, it is a sale
transaction. On the other hand, it the banker purchases foreign exchange and pays home currency.
Converts foreign currency into home currency, it is a purchase transaction.
 Sale (spot) and forward Transaction:

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 Spot Transactions: A spot transaction is one where delivery is one where delivery or the foreign
exchange will take place immediately after the deal. The foreign currency will be delivered
against the home currency or any the convertible foreign currency immediately. But in practice,
the spot delivery does not mean immediate delivery but delivery after tow clear working days.
 Forward Transactions: A forward transaction is an agreement between two parties whereby one
party agrees to pay a specified amount of foreign currency on a specified date in future against
the payment of domestic currency by the other party.
Relationship between spot and forward rates:
 At Par: If the forward rate quotes is exactly the same or equivalent to the spot rate at the time of
entering into the contract the forward exchange rate is said to be at par. In simple words, spot
rates and forward rates are the same.
 At a premium: When forward exchanges rate is more rate is more than the spot rate, the rates is
said to be at a premium.
 At a discount: When the forward exchange rate is less than the spot rate the rate is said to be at a
discount.
Foreign Exchange Regulation and Formalities
Export of goods is the most important foreign exchange earner for the country and the law
provides that foreign exchange in payment of exported goods must be realised in full and with
utmost promptness. Expediters are required to give a declaration for almost all exports to realise
export proceeds within the prescribed period. The amended FERA (Foreign Exchange and
Regulation Act, 1993) allows import and export of gold and silver under the provisions of export
- import policy of the Government of India.
Exchange control procedures envisage to ensure that no foreign exchange arising out of exports
from India is lost. The important provisions include declaration of exports on prescribed forms,
realisation of export proceeds in permitted methods, permitted currencies prescribed period and
prescribed manner. Let us discuss them in detail.
1. Prohibition of Export: Export of all goods either directly or indirectly to any place outside
India other than Nepal and Bhutan is prohibited unless the exporter furnishes to the
prescribed authority a declaration in the prescribed form. It should be supported by such
evidences as may be prescribed or so specified and true in all material particulars.
2. Export Declaration: 'Every exporter must make a true declaration in the prescribed form.
The declaration is mandatory and include:
a. the full export value of the goods; or
b. if the full export value of the goods is not ascertainable at the time of export, the
value which the exporter, having regard to the prevailing market conditions, expects
to receive on the sale of goods in the overseas market.
The declaration should be supported by an affirmation by the exporters to realise the required
export proceeds. Exporter's affirmation has been made. mandatory that the full export value
declared is the same as contracted with the foreign importer. Any other invoicing or over
invoicing may attract penal provisions under the FERA act.
3. Permitted Methods: Export payment must be received in a currency appropriate to the
country of final place of destination of the goods as declared on GR. etc., forms. Reserve
bank has granted permission for receiving payments for exports directly by exporters from
their buyers in certain conditions.

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4. Permitted Currencies: The payment in foreign trade may be received or made in a foreign
currency which is freely convertible. A freely convertible currency IS permitted by the rules
and regulations of the country concerned to be converted into major reserve currencies like
U.S Dollar, Pound Sterling and for which a fairly active market exists for dealings against the
major currencies.
5. Prescribed Period: The amount representing the full export value of the goods exported
shall be realised and be paid to the authorised dealer when it is due. The amount should be
realised either on the due date for the payment or within six months from the date of
shipment of the goods whichever is earlier.
6. Prescribed Manner: The manner in which the export proceeds are to be realised include:
a. Payment should be received through an authorised dealer except in cases were
general
b. specific permission has been granted by Reserve Bank to receive the payment
directly.
c. Payment should be received in permitted currency.
d. Payment should be received as per approved methods of payment.
Clearing and Forwarding Agent

Clearing and forwarding (C&F) agents are experts when it comes to getting the goods cleared
through customs formalities, coordinating with the carrier and taking care of all shipping and
delivery related activities. The presence of a C&F agent allows the exporter to concentrate on
their core business activities.
Role of Clearing and Forwarding Agents

Export-import procedures are very complex and time-consuming. Therefore, every exporter
should avail the services of Clearing and Forwarding (C&F) agent who are expert and well
versed with the customs and shipment procedures. For smooth and timely shipment of goods, the
exporter must appoint a competent C&F agent who is able to, inter alia, provide the following
services:
Essential Services:
o Transportation of goods to docks and arrangement of warehousing at port.
o Warehousing facilities before the goods are transported to docks.
o Booking of shipping space or air freighting and advice on relative cost of sending goods by
sea and air.
o Arrangement for loading of goods on board.
o Equipped with information on shipping lines and freight to different destinations, and various
charges payable by exporters.
o Obtaining marine insurance policies.
o Preparation and processing of shipping documents, Bills of Lading, Dock Receipt, Export
Declarations, Consular Invoice, Certificate of Origin, etc.
o Forwarding of banking collection papers.
Role of clearing and forwarding agents in export assignment

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1. Customs Formalities: Goods can be shipped out of India only after obtaining the customs
clearance. To obtain the customs clearance, the clearing and forwarding agent should submit
a shipping bill in the prescribed form. The shipping bill is to be prepared in quadruplicate.
The shipping bills should be accompanied by the following documents.
a. Contract with the overseas buyer in original.
b. Invoice for the goods.
c. Packing list.
d. GR-1 form or EP forms prescribed by the Exchange Control under the Foreign
Exchange Regulation Rules.
e. AR 4 or AR 4A forms in original and duplicate.
f. A proforma showing details of drawback of duty if any claimed.
g. In case deferred payment, a copy of the approval of the RBI.
h. Copy of the L/C if any.
2. Obtaining of the Carting Order: The export cargo lying in the Harbor Transit Shed should
then be moved inside the port area and subsequently loaded on board the assigned ship.
Permission should be obtained from the Superintendent of the Port Trust, in charge of the
shed for moving the goods into the concerned shed of the port. The order issued by him is
known as carting order.
3. Customs Examination of Cargo at Docks: The main purpose of the customs examination at
the dock is to verify whether the goods packed and kept ready for shipment are the same as
those mentioned in the shipping bill. The customs ‘appraiser, if necessary, may physically
examine the goods packed inside. He shall make an endorsement on the shipping bill thus
certifying that the goods have been examined. Once the endorsement is made, the goods are
deemed to be “Out of Charge” of the customs.
4. Let Ship Order: The preventive officer of the customs department shall supervise the
loading of the cargo on board the vessel nominated for export. Before the goods are actually
loaded, permission from the preventive officer should be obtained. The permission is known
as “Let Ship Order”. The let ship order is given as an endorsement on the duplicate copy of
the shipping bill. It is in fact an authorization given by the customs department to the
shipping company to accept the cargo on board of the vessel.
5. Mate Receipt: As soon as the goods are loaded on board the vessel, the captain or master of
the ship shall issue a document known as Mate Receipt direct to the port trust superintendent,
in charge of the shed.

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UNIT – III
Custom Clearance of Export and Import Cargo – Regulatory Documents – Bill of Lading
Methods of Bill of Lading – Export License – Bill of Exchange – Types of a bill of exchange.
Cargo introduction
Every shipment runs the risk of a long and dreary list of hazards, viz.. Storm, collision,
theft, leakage, explosion, spoilage, etc. it is possible to transfer the financial losses resulting from
perils of and in transit to professional risk-bearers known as underwriters. As most goods are
transported by marine transport, we will discuss here the details of marine insurance. Every
exporter should have an elementary knowledge of marine insurance so that he knows whether he
is getting the protection he needs at the minimum cost.
Cargo refers to goods that are transported from one location to another via various mediums of
transportation like air, water, and land. From food to oil to large pieces of equipment, goods are
transported worldwide through shipping now.
The different types of cargo that are transported through shipping.
1. Container Cargo: As the name suggests, Container cargo are cargo that is transported in
containers making use of intermodal transportation. The capacity of these containers is
massive; hence huge amount of goods can be transported easily. The container cargo
usually consists of goods like electronics, clothing, toys, and items similar to that.
Container cargo is usually loaded/unloaded on ships with the help of machinery.
The size of the containers used in transporting the cargo is usually fixed, which comes
with its own convenience perks.
2. Liquid Bulk: Just like container cargo, the name of this cargo speaks for itself. Liquid
bulk cargo contains goods that are liquid in nature and shipped in bulk. Usually
transported by ships, liquid bulk is an important cargo type; the main reason is that most
liquid bulk cargo has crucial economic and domestic significance. Liquid bulk cargo
usually contains fuels and other crucial oils. Crude oil, vegetable oil, alcoholic beverages,
petrol, and even unprocessed beverages make up a liquid bulk cargo. Shipping is the ideal
and preferred method of transportation for liquid bulk.
Since liquid cargo is highly unstable and risky, the entire cargo hold is double-shelled
and has a double bottom to prevent cargo leakage in case of any collision.
3. Dry Bulk: Materials important for construction purposes like sand and cement and other
important materials like grains, iron ores, coals, and even edible stuff like salt and sugar
make up dry bulk cargo. Dry bulk cargo are not packaged and are usually transported in
large quantities. They are loaded/unloaded in and from the hold of a ship. Wagons and
Lorries also play an important role in their transportation. The food and infrastructure
industry, both of them are highly dependent on this cargo type for smooth functionality.
4. Breakbulk: Breakbulk cargo stands for goods that cannot fit in standard-sized shipping
containers or cargo bins. Instead, the load is transported in bags, boxes, crates, barrels,
and other handling equipment. Cargo like wood, paper, unprocessed metallic materials,
steel rolls, etc. make up the breakbulk cargo. They are mostly packed in crates or racks
which makes them easier to move around while loading and unloading. Breakbulk cargo
is rather easy to deal with in most cases. The convenient part about breakbulk cargo is
that we rarely face any issues while transporting the goods.
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5. Livestock: Livestock cargo contains livestock that includes alive animals. Livestock and
animals are some of the most commonly transported cargo between many countries.
Intensive care has to be taken when transporting livestock cargo as they need ample
maintenance during the whole process.
6. Ro-ro: Ro-ro stands for roll-on/roll-off. In terms of significance, it won’t be wrong to say
that this is one of the most important types of cargo. Ro-ro cargo is basically cargo that
contains goods that can be loaded/unloaded with the help of the principle of rolling.
7. Refrigerated cargo: Packaged and frozen foods are perishable in nature, making them
one of the riskiest and most difficult goods to transport. Due to the short life and high
possibility of decay, refrigerated ships, also known as reefer vessels, are used to transport
such food items. The reefer ships have specially built temperature controlling features to
help the cargo last longer, which keeps the goods safe and intact.
Introduction: Custom Clearance Procedure

Custom clearance procedure works include the formation and submission of documentation
needed to help export procedures or imports into the country, describing the client while customs
examination, evaluation, payment of duty, and taking delivery of cargo from customs after
clearance with documents.
The documents included in customs clearance are:

Exports Documentation custom clearance
 Buy order from Buyer
 Sales Invoice
 Packing List
 Shipping bill
 Bill of Lading or air waybill
 Certificate of Origin
Any other special documentation as defined by the buyer, or as needed by financial institutions
or LC terms, or as per importing country laws.
Imports Documentation
 Purchase Order from Buyer,
 Sales Invoice of the supplier
 Bill of Entry
 Bill of Lading or Airway bill
 Packing List
 Certificate of Origin
Any other particular documentation needed by the purchaser, or financial institution or the
importing country law.

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List of Documentation Needed In Export Business
An obvious question arises is: why is documentation needed in export business? Answer to this
question lies in the nature of the business relations between the exporter and the importer
operating from two countries. One knows, unlike the domestic business, the commercial
practices and legal systems are different in the two countries the exporter and importer are
operating from.
Therefore, in order to protect the respective interests of the exporter and the importer involved in
export business, certain documentary formalities become essential. Such documentation
facilitates the smooth flow of goods and payments thereof across national frontiers.
Export documents based on the functions performed by them are broadly classified into
four types:
1. Commercial Documents
2. Regulatory Documents
3. Export Assistance Documents
4. Documents required by Importing Countries.
Let us now discuss the specific documents and functions performed by them under each
category.
1. Commercial Documents:
a. Commercial Invoice: This is the first basic and the only complete document in an export
transaction. It is, in fact, a document of contents containing information about goods.
Harmonized System Nomenclature (HSN), the price charged, the terms of shipment and
marks and numbers on the packages containing the merchandise.
The exporter needs this document for other purposes also such as:
a. Obtaining an export inspection certificate
b. Getting excise clearance
c. Getting customs clearance and
d. Securing such incentives as cash compensatory support (CCS) and import license.
This document is prepared at both the pre-shipment and post-shipment stages.
b. Bill of Lading: Bill of lading (B/L) is a document hatch is issued by the shipping
company acknowledging that the goods mentioned therein are either being shipped or
have been shipped. This is also an undertaking that the goods in like order and condition
as received will be delivered to the consignee, provided that the freight specified therein
has been duly paid.
c. Bill of lading serves three distinct functions:
a. It is an evidence of the contract of affreightment (transport).
b. It is a receipt given by the shipping company for cargo received by it.
c. It is a document of title to the goods shipped.
The bill of lading gives the details about the exporter, carrying vessel, goods shipped,
port of shipment, destination, consignee and the party to be notified on arrival of the
goods at destination. Bill of ladings is made the sets.
d. Airway Bill: In air carriage, the transport document is known as the airway bill. This
document performs three functions of a forwarding note for the goods, receipt for the
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goods tendered, and authority to obtain delivery of goods. Since it is non-negotiable, so it
does not carry the same validity as a bill of lading for sea transport carries.
e. Bill of Exchange (B/E): Bill of exchange is an instrument or draft used for the payment
in international / export business. It is an instrument in writing containing an
unconditional order, signed by the maker, directing a certain person to pay a certain sum
of money only to or to the order of a person or to the bearer of the instrument. The person
to whom the bill of exchange is addressed is to pay either on-demand or at a fixed or a
determinable future.
f. There are three parties involved in a bill of exchange:
a. The Drawer (Exporter): The person who makes and executes the B/E or say, the
person to whom payment is due.
b. The Drawee (Importer): The person on whom the B/E is drawn and who is
required to meet the terms of the document.
c. The Payee (Exporter or Exporter’s Bank): The party to receive the payment.
g. Letter of Credit: It is a written instrument issued by the buyer’s (importer’s) bank,
Authorising the seller (exporter) to draw in accordance with certain terms and stipulating
in a legal form that all such bills (drafts) will be honored. LA letter of credit provides the
exporter with more security than open accounts or bills of exchange.
h. A commercial letter of credit involves the following three parties:
a. The opener or importer – the buyer who opens the credit
b. The issuer – the bank that issues the letter of credit.
c. The beneficiary – the seller in whose favor the credit is opened.
i. Based on differing conditions, letters of credit may be of the following types:
a. Revocable and Irrevocable: In the case of a revocable letter of credit, the buyer
or issuer can cancel or change an obligation at any time prior to payment without
prior notice to the exporter or seller. When the letter is irrevocable, the buyer
cannot cancel or change the obligation without the exporter’s permission.
b. Confirmed and Unconfirmed: In case of a confirmed letter of credit, the
payment is guaranteed by the issuing bank. When the letter is unconfirmed, no
such guarantee is given by the bank.
c. With and Without Recourse: With recourse means if the buyer fails to pay the
bank after a specified period, the bank can have recourse on the exporter. There is
no such provision in the letter of credit without recourse.
2. Regulatory Documents:
a. Legal Documents for Export from India:
There are two types of regulatory documents:
A. Documents needed for registration, and
B. Documents needed for shipment.
A. Documents needed for registration
a. Code number from the Reserve Bank of India (RBI),
b. Importers and exporters’ code numbers from the Chief Controller of Imports and
Exports,
c. Registration-cum-membership certificate Documents needed for registration), etc.
B. Documents needed for shipment

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a) GR Form: It is required to be filled in duplicate for all exports other than by post.
Both of the copies have to be submitted to the customs authorities at the port of
shipment. They will retain the original copy to be sent to the Reserve Bank of
India directly. They will return the duplicate copy which is submitted to the
negotiating bank along with other documents after the shipment of goods. The
negotiating bank sends the duplicate copy to the RBI after the export proceeds
have been realized.
b) PP Form: Exports to all countries by parcel post (PP), except when made on a
‘value payable’ or ‘cash on delivery basis should be declared on PP forms.
c) VP/COD Form: It is required to be filled in one copy for exports to all countries
by post parcel under arrangements to realize proceeds through postal channels on a
‘value payable’ or ‘cash on delivery basis.
d) EP Form: Shipment to Afghanistan and Pakistan other than by post should be
declared on EP forms.
e) SOFTEX Form: It is required to be prepared in triplicate for the export of
computer software in non-physical form.
f) Shipping Bill: The shipping bill is the main document on the basis of which the
custom’s permission for export is given. Post parcel consignment requires a
customs declaration form to be filled in. There are three types of shipping bills
available with the customs authorities.
These are:
g) Free Shipping Bill: It is used for the export of goods for which there is no export
duty.
h) Dutiable Shipping Bill: Printed on yellow paper, it is used in case of goods thatch
are subject to export duty/chess.
i) Drawback Shipping Bill: It is usually printed on green paper and is used for the
export of goods entitled to duty drawback.
j) Marine Insurance Policy: It is the basic instrument in marine insurance. A marine
policy is a contract and a legal doc that which serves as evidence of the agreement
between the insurer and the assured. The policy must be produced to press a claim
in a court of law. An exporter must also put up the marine insurance policy as
collateral security when he gets an advance against his bank Credit.
3. Exports Assistance Documents: For availing of a number of incentives and assistance, an
exporter is required to fill in a number of documents.
Some of the important ones of these are discussed here:
a. Application Form for Registration: Exporters desirous of availing themselves of the
benefits of the import policy are required to register themselves with the appropriate
registering authority such as Export Promotion Councils (EPC), Commodity Boards and
Chief Controller of Imports and Exports (CCIE), New Delhi.
b. Allotment of Indigenous Raw Materials on Priority Basis: Manufacturer- exporters
may apply to the Director of Export Promotion, Ministry of Commerce, for
replenishment of the indigenous materials used in the manufacture of goods for export.
c. Duty Drawback: For claiming this incentive, the main document is the customs attested
drawback copy of shipping bill. This is to be accompanied by other documents such as

20
drawback payment order, final commercial invoice and a copy of bill of lading or airway
bill, as the case may be.
d. REP License and CCS: For claiming REP license and cash compensatory support
(CCS), the exporter is required to prepare and file a number of documents.
The main documents in this regard are:
a. Application in the prescribed form
b. Acknowledgement slip
c. Bank challan issued by the treasury for the application fee paid.
d. Advance receipt for cash assistance amount
e. A duly certified copy of the shipping bill.
f. Non-negotiable copy of bill of lading/airway bill.
4. Documents required by importing Countries: In the case of export business, the
importing countries need some documents because of the legal necessity. These
documents are obtained by the exporter and are sent to the importer.
Some of the well-known documents are as follows:
a. Consular Invoice: It is usually issued on the specified form by the consulate of the
importing country situated in the exporting country. It gives a declaration about the true
value of goods shipped. The customs authorities of importing company charge Valorem
based on the value mentioned on the consular invoice.
b. Certificate of Origin: This certificate is issued by independent bodies like the chamber
of commerce or the export promotion council in the exporting country. This is a
certification that the goods being exported were actually produced in that particular
country.
c. GSP Certificate of Origin: Goods that get the benefit of preferential import-duty
treatment in countries that implement the Generalised System of Preferences (GSP)
should be accompanied by the GSP certificate of origin. This certificate is given on the
forms prescribed by the importing countries.
d. Customs Invoices: It is also made out on a specified form prescribed by the customs
authority of the importing country. The details given on the document will enable the
customs authority of the importing country to levy and charge import duty.
e. Certified Invoice: This is the self-certified invoice by the exporter about the origin of the
goods.
Introduction to Bill of Lading

What is a Bill of Lading in Shipping?
The term ‘Bill of Lading’ (BOL) is of ancient English origin and literally means ‘list of cargo’. It
is one of the essential legal documents generated during the shipping of overseas bound cargo
and acts both as a contract as well as a receipt between the shipper and the carrier.
Definition: Bill of Lading is an important document, required to ship goods from one point to
another. The carrier generates and issues a bill of lading to the shipper of the goods,
acknowledging the receipt of goods for shipment in acceptable condition.
A bill of lading is a freight shipping document that summarizes all the information for a
particular shipment:

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a. Who is sending the shipment (the Shipper), who is receiving the shipment (the
‘Consignee’), and who is carrying the shipment (the Carrier).
b. The origin and destination of the shipment.
c. The description of goods contained in the shipment, along with relevant tracking or
purchase order information (such as order reference numbers).
Contents of Bill of Lading

a. Names and Addresses: In this section, the full names and addresses of both the shipper
and the receiver should be mentioned so that it would be very easy to locate the
document.
b. Purchase Orders or Special Reference Number: These numbers are considered
important to the business in terms of freight that has to be released for pickup or accepted
at delivery.
c. Special Instruction: Under this section, all the instructions for the carriers that are not for
extra service requests like a lift gate or delivery notification are taken down.
d. Date: The pickup date will be mentioned here that will be used as a reference to track the
freight when shipping invoices are composed.
e. Description of Items: All shippers have to note the number of shipping units, the
dimensions and weight, and the description of the material and its makeup.
f. Packaging Type: Items such as cartons, crates, pallets, and drums that are used when
shipping have to be noted.
g. NMFC Freight Class: Freight classes impacts the cost of the shipment. In general,
freight shipments are broken down into 18 classes based on weight, dimensions, density,
and storage capability, ease of handling, value, and liability.
h. Department of Transportation hazardous Material Designation: Hazardous
shipments have to be clearly mentioned and special rules and requirements are applicable
while shipping.
Types of Bill of Lading

The bill of lading can be classified on the basis of “how it is executed” and “Method of
operation”-
1. On the basis of execution:

a. Straight bill of lading: reveals that the goods are consigned to a specified person and it
is not negotiable free from existing equities. It means any endorsee acquires no better
rights than those held by the endorser. This type of bill is also known as a non-negotiable
bill of lading, and from the banker’s point of view, this type of bill of lading is not safe.
This type of bill is prominently used for military cargo.
b. Open bill of lading: This is a negotiable bill of lading where the name of the Consignee
can be changed with the consignees’ signature and thus transferred. This can be
transferred multiple times. Switch bill of lading is a type of open bill of lading.

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c. Bearer bill of lading is a bill that states that delivery shall be made to whosoever holds
the bill. Such bill may be created explicitly or it is an order bill that fails to nominate the
consignee whether in its original form or through an endorsement in blank. A bearer bill
can be negotiated by physical delivery. They are used for bulk cargo that is turned over in
small amounts.
d. Order bill of lading is the bill uses express words to make the bill negotiable. This
means that delivery is to be made to the further order of the consignee using words such
as “delivery to A Ltd. or to order or assigns. The cargo is only delivered to the bonafide
holder of the bill of lading, and it has to be verified by an agent who issues delivery order
and the verified bill of lading.
2. On the basis of Method of Operation:
a. Received for shipment bill of lading: This bill is sent from agent /charterer to shipper.
The endorsement of this bill ensures that the carrier has received goods but does not
confirm it is onboard of the assigned vessel
b. Shipped B/L: This bill of lading is issued when cargo is loaded on board. It binds the
ship-owner and the shipper directly
c. A clean bill of lading: is one which states that the cargo has been loaded on board the
ship in apparent good order and condition. Such a bill of lading will not bear a clause or
notation which expressively declares a defective condition of goods and/or the packaging.
The opposite term is a soiled bill of lading. It reflects that the goods were received by the
carrier in anything but good condition.
d. Through B/L: This bill of lading is a legal document that allows for direct delivery of
cargo from point A to point B. The bill allows transportation of goods both within
domestic borders and through international shipment as it serves as a receipt of the cargo,
a contract of carriage, and sometimes title for the products as well
e. Combined transport B/L: This bill gives information about cargo being transported in
large containers by sea and land, i.e. through multi-model transport
f. Dirty bill of lading: If the ship-owner raises an objection about “the condition of the
cargo is in good order”, he/she can include a clause thereby causing the bill of lading to
be “clause or dirty” along with the remarks as per the finding of the cargo condition. E.g.
torn packing, broken cargo, shortage in the quantity of the goods etc.
Bill of lading can be broken down into the following sections:

1. Shipper Information: shipper’s name, address, and email & phone number.
2. Consignee Information: consignee’s name, address, and email & phone number.
3. Shipment Tracking Information: trailer number, seal number, standard carrier alpha
code (SCAC), and pro numbers are all used to track shipments in the freight industry.
4. Customer Order Information: all the information related to the shipper’s items that are
being handled by the carrier, including the order number, number of packages, weight,
and whether a pallet is included in the shipment.
5. Carrier Information: all the information related to the shipment relevant to the carrier,
including quantity and type of handling units and packages, weight, and a general
description of the product.
6. COD Amount: the amount payable to the carrier for transporting the shipment, either by
the consignee (Collect) or by the shipper (Prepaid).
7. Signatures: Both the shipper and the carrier sign the BOL since it’s a contract of carriage.
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Meaning of Bill of Exchange
According to the Negotiable Instruments Act 1881, a bill of exchange is defined as “an
instrument in writing containing an unconditional order, signed by the maker, directing a certain
person to pay a certain sum of money only to, or to the order of a certain person or to the bearer
of the instrument”.
Features of Bill of Exchange

1. It is important to have a bill of exchange in writing
2. It must contain a confirm order to make a payment and not just the request
3. The order should not have any condition
4. The bill of exchange amount should be definite
5. Fixed date for the amount to be paid
6. The bill must be signed by both the drawee and the drawer
7. The amount stated on the bill should be paid on-demand or on the expiry of a fixed time
8. The amount is paid to the beneficiary of the bill, a specific person, or against a definite
order
Types of Bill of exchange

1. Documentary Bill- In this, the bill of exchange is supported by the relevant documents
that confirm the genuineness of the sale or transaction that took place between the seller
and buyer.
2. Demand Bill- This bill is payable when it is demanded. The bill does not have a fixed
date of payment, therefore, the bill has to be cleared whenever presented.
3. Usance Bill- It is a time-bound bill which means the payment has to be made within the
given time period and time.
4. Inland Bill- An Inland bill is payable only in one country and not in any other foreign
country. This bill is the opposite of the foreign bill.
5. Clean Bill- This bill does not have any proof of a document, so the interest is
comparatively higher than the other bills.
6. Foreign Bill- A bill that can be paid outside India is termed as a foreign bill. Two
examples of a foreign bill are an export bill and import bill.

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7. Accommodation Bill- A bill that is sponsored, drawn, accepted without any condition is
known as an accommodation bill.
8. Trade Bill- This kind of bill is specially related only to trade.
9. Supply Bill- The bill that is withdrawn by the supplier or contractor from the government
department is known as the supply bill.
Advantages of bill of exchange

1. Legal Document- It is a legal document, and if the drawee fails to make the payment, it
will be easier for the drawer to recover the amount legally.
2. Discounting Facility- In cases where the drawer is in immediate need of money, the bill
can be converted into cash by discounting it from a bank by paying some nominal
charges.
3. Endorsement Possible- This bill of exchange can be exchanged from one individual to
another for the adjustment of the debt.
Parties of Bill of Exchange

A bill of exchange has three parties:
1. Drawer:
a. The drawer is the maker of a bill of exchange.
b. The bill is signed by Drawer.
c. A creditor who is entitled to receive payment from the debtor can draw a bill of
exchange.
2. Drawee:
a. Drawee is the person upon whom the bill of exchange is drawn.
b. Drawee is the debtor who has to pay the money to the drawer.
c. He is also known as ‘Acceptor’.
3. Payee:
a. The payee is the person to whom payment has to be made.
b. The payee may be the drawer himself or a third party.
Important Terms
1. Stamp − Amount in excess of certain limit should be paid and signed on affixed revenue
stamp according to above specimen. In these days, threshold limit is INR 5,000/.
2. Amount − Amount of bill must be written in figure as well as in words as shown in
above specimen.
3. Date − Date on bill will be written on face of it as above.
4. Value and Terms − Both are essential part of it and must be written as shown above.

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UNIT – IV
Processing of an Export Order, World Shipping- Structure, Liners and Tramps –
Containerization
Introduction: Export Order
“Export” here conveys the meaning of transporting or carrying away the goods from one place to
another or may be one country to another.
Export trade starts from the receipt of an export order. In this, there is an agreement between the
importer and the exporter agreeing to the terms and conditions or the licenses as per mentioned
in the document. After the documentation work is done, exporter starts producing or procuring
goods for shipment.
What is Export Order?
An Export order is a document conveying the choice of foreign purchaser to buy goods from the
exporter. It would obviously show the exporters Pro forma invoice or quotation number and its
date, including item, amount, delivery authorizeping marks, insurance etc., before acceptance the
export order ought to examine in all angles.

26
Elements of Processing of an Export Order
 Checking commercial terms and conditions

 Export control compliance
 Documentation requirements
 Transportation and associated costs
 Method of payment
 Trade compliance
 After sales support
Steps Involved in the Processing of an Export Order

In reality, an export exercise is concluded successfully only after the exporter has been able to
deliver the consignment in accordance with the export contract and receive payment for the
goods.
Therefore, it seems pertinent now to make you learn the various steps involved in the processing
of an export order.
1. Having an Export Order: Processing of an export order starts with the receipt of an
export order. An export order, simply stated, means that there should be an agreement in
the form of a document, between the exporter and importer before the exporter actually
starts producing or procuring goods for shipment. Generally an export order may take the
form of Proforma invoice or purchase order or letter of credit. You have already learnt
these just in the preceding section.
2. Examination and Confirmation of Order: Having received an export order, the
exporter should examine it with reference to the terms and conditions of the contract. In
fact, this is the most crucial stage as all subsequent actions and reactions depend on the
terms and conditions of the export order.
The examination of an export order, therefore, includes items like:

a. Product description,
b. Terms of payment,
c. Terms of shipment,
d. Inspection and insurance requirement,
e. Documents realizing the payment, and
f. The last date of negotiation of documents with the bank.
3. Manufacturing or Procuring Goods: The Reserve Bank of India (RBI), under the
export credit (interest subsidy) scheme, extends pre-shipment credit to exporters to
finance working capital needs for the purchase of raw materials, processing them, and
converting them into finished goods for the purpose of exports. The exporter approaches
the bank on the basis of laid down procedures for the pre-shipment credit. Having
received credit, the exporter starts to manufacture/procure and pack the goods for
shipment overseas.
4. Clearance from Central Excise: As soon as goods have been manufactured/ procured,
the process for obtaining clearance from central excise duty starts. The Central Excise
and Sale Act of India and the related rules provide the refund of excise duty paid. There

27
are two alternative schemes whereby a 100 percent rebate on duty is given to export
products on the submission of the proof of shipment.
5. Pre-Shipment Inspection: There is a number of goods whose export requires quality
certification as per the Government of India’s notification. Consequently, the Indian
custom authorities will require the submission of an inspection certificate issued by the
competent and designated authority before permitting the shipment of goods takes place.
Inspection of export goods may be conducted under:
a. Consignment-wise Inspection
b. In-process Quality Control, and
c. Self-Certification.
The Inspection Certificate is issued in triplicate. The original copy is for customs
verification. The second copy of the certificate is sent to the importer and the third copy
remains with the exporter for his reference purpose.
6. Appointment of Clearing and Forwarding Agents: On completion of the process of
obtaining the Inspection Certificate from the custom agencies, the exporter appoints
clearing and forwarding agents who perform a number of functions on behalf of the
exporter. The main functions performed by these agents include packing, marking and
labeling of consignment, arrangement for transport to the port arrangement for shipment
overseas, customs clearance of cargo, procurement of transport and other documents.
In order to facilitate the exporter in discharging his duties, the following documents are
submitted to the agent:
a. Commercial invoice in 8-10 copies
b. Customs Declaration Form in triplicate
c. Packing list
d. Letter of Credit (original)
e. Inspection Certificate (original)
f. G.R. Form (in original and duplicate)
g. AR4/ AR4A (in original and duplicate)
h. GP-l/GP-2 (original)
i. Railway Receipt/Lorry Way Bill, as the case may be
7. Goods to Port of Shipment: After the excise clearance and pre-shipment inspection
formalities are completed, the goods to be exported are packed, marked and labeled.
Proper marking, labeling and packing help quick and safe transportation of goods. The
export department takes steps to reserve space on the ship through which goods are to be
sent to the importer.
The following documents are submitted to the booking railway yard/station:
a. Forwarding Note (A Railway Document)
b. Shipping Order
c. Wagon Registration Fee Receipt
8. Port Formalities and Customs Clearance: Having received the documents from the
export department, the clearing and forwarding agent takes delivery of the cargo from the
railway station or the road transport company and stores it in the warehouse. He also
obtains customs clearance and permission from the port authorities to bring the cargo into
the shipment shed.

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The clearing and forwarding agent is required to submit the following documents with
the Customs House for obtaining customs clearance and permission:
a. Shipping Bill
b. Contract Form
c. Letter of Credit, if applicable
d. Commercial Invoice
e. GR Form
f. Inspection Certificate
g. AR4/AR4A Form
h. Packing List, if needed
9. Dispatch of Documents by Forwarding Agent to the Exporter: After obtaining the
Bill of Lading from the Shipping Company, the clearing and forwarding agent dispatches
all the documents to his / her exporter.
These documents include:
a. Commercial Invoice (attested by the customs)
b. Export Promotion Copy
c. Drawback Copy
d. Clean on Board Bill of Lading
e. Letter of Credit
f. AR4/ AR4A and Gate Pass
g. GR Form (in duplicate)
10. Certificate of Origin: On receipt of above documents from the forwarding agent, the
exporter now applies to the Chamber of Commerce for a Certificate of Origin and obtains
it. If the goods are exported to countries offering GSP concessions, the exporter needs to
procure the GSP Certificate of Origin from the concerned authority like Export
Inspection Agency.
11. Dispatch of Shipment Advice to the Importer: At last, the exporter sends ‘Shipment
Advice’ to the importer intimating the date of shipment of the consignment by a named
vessel and its expected time of arrival at the destination port of the importer.
The following documents are also sent to the importer to facilitate him for taking
delivery of the’ consignment:
a. Bill of Lading (non-negotiable copy)
b. Commercial Invoice
c. Packing List
d. Customs Invoice
12. Submission of Documents to Bank: At the end of the process, the exporter presents the
following documents to his bank for realisation of his amount due to the importer:
a. Commercial Invoice’
b. Certificate of Origin
c. Packing List
d. Letter of Credit
e. Marine Insurance Policy
f. GR Form
g. Bill of Lading
h. Bill of Exchange

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i. Bank Certification
j. Commercial Invoice
World Shipping- Structure
Introduction
Transportation is one of the most visible elements of logistics operations. It provides two major
functions: product movement and product storage. The various modes of transport Water is the
oldest mode of transportation. The original sailing vessels were replaced by steamboats in the
early 1800’s and by diesel power in the 1920’s.The main advantage of water transportation is the
capacity to move extremely large shipments.
Structure of World Shipping

The major components of the industry can be divided into three sections
 Ship interests
 Cargo interests
 Ancillary services
1. Ship interests
a. Ship-owner
b. Ship manager
c. Shipping line
d. Carrier
a. Ship-owner: A ship owner employs the captain and crew, and he also is civilly liable
for obligations arising from the operation of the ship. The ship-owner mainly deals
with service business activities. He is responsible for issues such as the carriage of
cargo and passengers and their baggage. The ship-owner is also liable for damages
caused by the ship’s crew, as well as for damage caused to third parties. He also takes
part in any shipping accident.
b. Ship manager: Ship managers are companies who accepting the commission of the
ship owners or charterers and the ship operator engaged in ship management this
include the narrow technical management of ships, registration of vessels, operations,
service, technical maintenance, as well as management of crew, among other.
c. Shipping line: A company which operates a ship or ships between advertised ports
on a regular basis and offers space for goods in return for freight based on a tariff of
rates.
d. Carrier: The ship owner or charterer or whoever enters into a contract with the
shipper for the transportation of merchandise.
2. Cargo interest
a. Shipper
b. Charterer
c. Freight forwarder
a. Shipper: A person or company who enters into a contract with a liner conference,
shipping line, or ship owner for the carriage of goods. The shipper could be the seller
of the cargo, the buyer of the cargo or some third party that solely arranges the
transportation of the cargo.

30
b. Charterer: A person or organization that contracts to acquire a vessel, for a voyage
or a period of time, to carry his cargo.
c. Freight forwarder: Many of the larger exporting companies maintain an in-house
shipping and distribution department that negotiates contracts of affreightment or
carriage of goods for the company with the shipping line that trades to the area of the
world where the company’s goods are destined. However, there could probably be a
lack of knowledge of exporting procedures, and a lack of expertise for negotiating, in
a smaller company that exports.
3. Ancillary services:
a. Brokers
b. Insurers
c. Surveyors
a. Brokers: Shipbrokers, who can be further divided into:
i. Sale and purchase brokers: who buy and sell ships for clients (principals) or
arrange contracts for building new ships.
ii. Ship owner’s brokers: who act for the ship owner with a ship to charter for a
voyage, he is approached by the ship owner with a view to finding cargo to
carry.
iii. Loading broker/liner brokers: who represent the ship owner or shipping line
at the port of loading? He advertises the date of sailing in shipping
publications, obtains cargo and co-ordinates the arrangements for delivery to
the ship and loading. It can also be this broker’s business to sign the bill of
lading on behalf of the master and issue it to the shipper (cargo owner) or his
agent in exchange for freight, if freight is to be paid in advance.
b. Insurers: Insurance brokers, who act as the intermediary between the ship/cargo
owner and the underwriters when marine insurance is negotiated. This form of broker
could be an individual but more likely it will be part of a large organisation providing
a global service of insurance, consultancy, risk management, and information.
c. Surveyors: Surveyors is a general term used by anybody wanting to inspect the ship
or its

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Liners and Tramps
The Liners
The name liners have been derived from the word ‘Line Voyages’ that means a voyage or trip
that follows a set schedule and route. The ships that move shipments across the routes are called
liners, following strict routes, schedules and delivering on time under all circumstances unless
there is a delay caused by natural events.
These liner ships not only carry shipment through containers, but provide other services also
from RORO services, bulk cargo service to break bulk service.
Example : The UK/NWC continent container service of MSC which has a fixed weekly schedule
calling the South African ports of Durban, Cape Town and Port Elizabeth and carrying cargo to
the UK/NWC ports of Felixstowe, Antwerp, Hamburg, Le Havre and Rotterdam
Types of liner service

 Independent service
 Conference service
 Consortia service
 Alliance service
Tramp Service
A tramp service, also called a tramper is a service that is even available at a short notice, so it
does not follow any strict schedule or routes. With tramp service, goods can be on and off loaded
at any port. Trampers are also used to carry bulk cargo, apart from usual cargoes.

32
Example: A ship that arrives at Durban from Korea to discharge cargo might carry some other
cargo from Durban to Oakland on the West Coast of USA which is in an entirely different
direction. From Oakland, it could carry some cargo to Bremerhaven.
Difference between Liner and Tramp Service

Liner Service Tramp Service
The liner ship is formed to transport a variety of They are designed in such a way
goods with great room for parcels, bales, bundles, that it becomes suitable for them to
etc. It also has the space to carry refrigerated items. carry a simple, identical, and
The number of the compartments and decks may uniform cargo in large quantities.
also be different in the Liner ships than that of the So, it is very appropriate for
Trampers as they are designed to take a variety of transporting a specific type of
loads that can be placed in the container or cargo.
compartment complimenting its characteristics.
The handling equipment may differ owing to the For handling a specific type of
requirement of loading and unloading the cargo in a cargo, the equipment to handle it
shorter time. will be quite simpler than those
used in the Liner Service. The
equipment may include mechanical
elevators and pumps, etc.
It has a pre-determined and fixed route, schedule, As the ships don’t have a fixed
and destination. 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 The loading and unloading in the
equipped with highly advanced moving machines. 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 There is no fixed route or
conditions that define the responsibilities of the ship predetermined schedule.
owners and the terms related to the carriage and
delivery of the cargo.

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They have fixed freight rates. The rates are negotiable.
What is meant by Containerization?

Containerization is the practice of carrying goods in containers of uniform shape and size for
shipping. Almost anything can be stored in a container, but they are particularly useful for the
transport of manufactured goods. It is a method of distribution of goods using containers. The
use of containers has, indeed, facilitated carriage of goods. Exporters need not go to the seaport
for export of goods. Instead, the goods can be sent to Inland Container Depot/Container Freight
Station for sending goods to the destination.
Process of Containerization
The process of containerization involves:
 Packing containers at the place of production rather than at the quayside;
 Moving containers to the port by lorry or rail and
 Using quayside cranes to lift the containers onto and off the ship.
Advantages and Drawbacks of Containerization
Even if containerization conveys numerous advantages to freight distribution, it does not come
without challenges. The main advantages of containerization are:
 Standardization. The container is a standard transport product that can be handled
anywhere in the world (ISO standard) through specialized modes (ships, trucks, barges,
and wagons), equipment, and terminals. Each container has a unique identification
number and a size type code allowing to be a unique transport unit that can be managed
as such.
 Flexibility. Containers can be used to carry a wide variety of goods such as commodities
(coal, wheat), manufactured goods, cars, and refrigerated (perishable) goods. There are
adapted containers for dry cargo, liquids (oil and chemical products), and refrigerated
cargo. Discarded containers can be recycled and reused for other purposes.
 Costs. Container transportation offers lower transport costs due to the advantages of
standardization. Moving the same amount of break-bulk freight in a container is about 20
times less expensive than conventional means. Containers enable economies of scale at
modes and terminals that were not possible through standard break-bulk handling. The
main cost advantages of containerization are derived from lower intermodal transport
costs.
 Velocity. Transshipment operations are minimal and rapid, and ship port turnaround
times have been reduced from 3 weeks to about 24 hours. Because of this transshipment
advantage, transport chains involved containers are faster. Container shipping networks
are well connected and offer a wide range of shipping options. Containerships are also
faster than regular cargo ships and offering a frequency of port calls allowing a constant
velocity.
 Warehousing. The container is its own warehouse, protecting the cargo it contains. This
implies simpler and less expensive packaging for containerized cargoes, particularly
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consumption goods. The stacking capacity on ships, trains (double-stacking), and on the
ground (container yards) is a net advantage of containerization. With the proper
equipment, a container yard can increase its stacking density.
 Security and safety. The container contents are unknown to carriers since it can only be
opened at the origin (seller/shipper), at customs, and the destination (buyer). This implies
reduced spoilage and losses (theft).
The main drawbacks of containerization are:

 Site constraints. Containers are a large consumer of terminal space (mostly for storage),
implying that many intermodal terminals have been relocated to the urban periphery.
Draft issues at the port are emerging with the introduction of larger containerships,
particularly those of the post-Panamax class. A large post-Panamax containership
requires a draft of at least 13 meters.
 Capital intensiveness. Container handling infrastructures and equipment (giant cranes,
warehousing facilities, inland road, rail access) are important capital investments that
require large pools of available capital. This requires the resources of large corporations
or financial institutions. Further, the push towards automation is increasing the capital
intensiveness of intermodal terminals.
 Stacking. The complexity of the arrangement of containers, both on the ground and
modes (containerships and double-stack trains), requires frequent restacking, which
incurs additional costs and time for terminal operators. The larger the load unit or the
yard, the more complex its operational management.
 Repositioning. Because of trade imbalances, many containers are moved empty (20% of
all flows). However, either full or empty, a container takes the same amount of space.
The observed divergence between production and consumption at the global level
requires the repositioning of containerized assets over long distances (transoceanic).
 Theft and losses. High-value goods and a load unit that can forcefully be opened or
carried away (on a truck) implied a level of cargo vulnerability between a terminal and
the final destination. About 1,500 containers are lost at sea each year (fall overboard),
mainly because of bad weather.
 Illicit trade. The container is an instrument used in the illicit trade of goods, drugs, and
weapons, as well as for illegal immigration (rare).
Types of containers
 Dry storage container
 Flat rack container
 Open top container
 Open side storage container
 Refrigerated ISO containers
 ISO Tanks
 Half height containers
 Special purpose containers

35
1. Dry storage container: Dry storage containers are the most common containers used in the
shipping industry. They come in lengths of 20, 40 and 45 feet, and they are designed to
transport dry goods. These containers do not allow for temperature controls, so they are not
suited for moving food or chemicals that require refrigeration.
2. Flat rack container: A flat rack container has no top and only two sides. This makes room
for heavy loads to be set the rack from above or from the side. Most flat rack containers are
either 20 or 40 feet long, and they are made from steel for strength and durability.
3. Open top container: This type of container is basically a Dry Storage type but without a top.
This allows for easy loading of bulk cargo. There is a roof structure, plastic, that can be
secured to the container with ropes, and that provides protection against rain and other forms
of precipitation.
4. Open side storage container: An open side container has one long side that can be
completely open. This is beneficial for wide merchandise that may be difficult to get through
36
the end of a tunnel container or dry storage container. The side swings open as if it was made
of two large doors, but it can still be secured to protect the merchandise inside.
5. Refrigerated ISO containers: A refrigerated container or reefer is an intermodal container

used in intermodal freight transport that is refrigerated for the transportation of temperature-
sensitive cargo. While a reefer will have an integral refrigeration unit, they rely on external
power, from electrical power points (“reefer points”) at a land-based site, a container ship or
on quay.
6. ISO Tanks: Tanks are storage containers designed to hold liquids. They are usually
constructed out of anti-corrosive materials because of the chemicals they are used to carry.
Tanks may also be used to store dry goods like sugar, but they are most often used
exclusively for liquids.
7. Half height containers: Made mostly of steel, these containers are half the height of full-
sized containers. Used especially for good like coal, stones etc. which need easy loading and
unloading. This type of container is being used more and more for Containerized Bulk cargo.

37
8. Special purpose containers: Special purpose containers can be made in nearly any shape or
dimension. They are used to transport items that require a custom container to be made for
them. Most shipping companies avoid the use of special purpose containers as much as
possible because they are costly to create and transport.

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UNIT – V
Import Documentation – Import Procedure, Guidelines, Key Documents used in Importing
– Import Licensing and Other Incentives.
Import Documentation
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:
1. 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.
2. 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.
3. Certificate of Origin - Certain bilateral agreements and multilateral agreements would enjoy
favorable 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.
4. 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.
Import Procedure
Import procedure varies from country to country depending upon the foreign trade policy of a
country. Government of India has framed rules and regulations for the import. The import

39
procedures has been clearly spelt out of Government of India. Following are the procedures
of import trade.

1. Obtaining Import License: Importer has to secure Import and Export Code (IEC) from
the Director General of Foreign Trade or its Regional Authority. The Indian Institute
classification (ITC)–Harmonized System (HS) classified the goods into three
categories, namely Restricted, Canalised and Prohibited. Goods not specified in the above
categories can be freely imported without any restrictions. Import license is not
required to import the goods not mentioned in the above classification. An import
license is valid for 24 months for capital goods and 18 months for other goods.
Importer has to submit the copy of IEC to customs authorities at the time of clearance of
goods. The second copy of IEC is used to obtain foreign exchange from RBI.
2. Trade Enquiry: Having obtained IEC, the intending importer has to make enquiry from
exporter or his agents. Importer makes request by e-mail or postal mail to supply the
details given below.
a. Specification of goods like size, design, quality etc.,
b. Quantity goods available
c. Price per unit
d. Terms of shipping
e. Terms of payments i.e. Letter of credit Documents against Acceptance (D/A)or
Documents against Payment (D/P)
f. Probable delivery time
g. Validity of offer period
h. Importer responds to enquiry by sending Proforma invoice
3. Obtaining Foreign Exchange: Since importer has to settle import bills in foreign
currency, he has to obtain foreign exchange. Importer has to provide IEC code in the
form supplied by authorized dealer to get foreign exchange.. The importer has to submit
an application along with necessary documents to the Exchange Control Department of

40
RBI. After scrutinizing the said application, the Reserve Bank of India will sanction the
release of foreign exchange.
4. Placing an Indent Order: Importer places an order either directly or through an
indent houses. The indent contains the details like type of goods, design of goods, price,
quantity, grade, packing instructions, insurance, delivery mode, desired delivery period,
mode of period, mode of shipment, etc.,
5. Opening Letter of Credit (L/C): Where foreign exporter does not know Indian
importer, he may like to ensure the creditworthiness of the unknown importer. In such a
case, exporter may advise the importer to arrange for letter of credit in his favour. Letter
of credit is a document under which issuing bank undertakes to make payment on behalf
of the importer or to the order of importer in exchange for specified documents from
exporters bank. The letter of credit is issued only for financially sound importer.
Exporter’s bank eventually sends the document to issuing bank which releases the
payment.
6. Receiving Shipping Document: The importer collects shipping documents along with
the advice note of shipment of goods from the exporters. Advice note contains a written
message through which exporter informs the importer about the dispatch of goods and
advise him to make agreement for taking delivery of goods on arrival of goods at the port
of destination. The captain of the ship informs the dock authorities about the arrival of
goods on a document called Import General Manifest. The customs authorities in turn
inform the importer concerned about the arrival of goods at the port.
7. Appointment of Clearing Agents: There are lot of formalities involved in clearing the
goods imported from the port. Normally importer does not feel comfortable with
completing the formalities by himself. In this case he may delegate the task of clearing
the imported goods from the port of discharge to clearing agent who is well-versed in this
job. The latter performs the job for a fee. The importer sends all the documents to the
clearing agent to enable him to take delivery of goods after fulfilling the customs
formalities prescribed in this regard.
8. Fulfillment of Customs Formalities: Clearing agent engaged by the importer performs
the following activities in connection with taking delivery of goods from the port.
a. Getting Endorsement for Delivery: The clearing agent gets bill of lading endorsed
by importer in his favour to enable him to take delivery of goods and approaches the
shipping company. Where the freight is not paid, the clearing agent pays it. The
shipping company may give a separate delivery order after collecting the freight
charges or it may simply endorse on the bill of lading by the importer or by his agent
itself as a proof payment of freight charges.
b. Payment of Dock Dues: The clearing agent submits two copies of filled in
Application form to “Landing and Shipping Dues Office. This office levies charges
on all the imported goods. The clearing agent has to pay Dock charges by Dock
challan. After paying dock charges ‘Landing and Shipping Due Office stamps on the
application form itself with wordings like Dock charges paid’ or it may issue a
separate receipt called Post Trust Dues Receipt.
c. Preparation of Bill of Entry: Bill of Entry is prepared in triplicate in order to pay
custom duty. This document contains the details like name and address of importer,
the name of the ship, full description of the goods, number of packages, importer and

41
exporter code (IEC) name of the exporting country and custom duty payable. Bill of
Entry is issued in three colours. The black form is meant for non-dutiable goods while
the blue form is meant for the goods within the country and the violet is intended for
re-export. Import duty is calculated on the basis of details given in the bill of entry by
customs authorities. Where the importer / clearing agent does not know the exact /and
full details about goods imported, he will prepare a bill of sight.
d. Payment of Import Duty: The clearing agent / importer submits the bill of entry and
other required documents to the customs authorities. He pays import duty in the case
of dutiable goods to the customs authorities.
e. Release Order from Dock: After payment of customs duty, the bill of entry has to be
marked by the dock. Superintendent and an examiner are instructed to physically
examine the goods. He gives his report on the bill of entry. Then the bill is passed
over to the port authority. He would issue release order.
f. Getting Delivery from The Dock: The clearing agent takes delivery of goods from
the dock after submitting the documents like, Port Trust Dues Receipt, Bill of Entry
and Bill of Lading. If the goods are imported for re-export, the agent / importer will
deposit them in a bonded warehouse and receives Dock Warrant.
g. Dispatching Goods to the Importer: The agent dispatches the goods to the importer
by the rail/ road. He gets Railway Receipt (R/R) or Lorry Receipt (L/R) from the
transporter.
h. Sending Advice to the Importer: Clearing agent informs the dispatch of goods to
the importer and sends Railway Receipt / Lorry Receipt with the statements of
expenses incurred by him and the commission payable to him for his service.
9. Taking Delivery of Goods: Importer takes delivery of goods from the Railway /Carrier
after producing the Railway Receipt or Lorry Receipt.
10. Settlement of Import Bill: The importer settles the import bill in the following ways.
a. Importer collects shipping document after payment
b. Importer gets shipping documents after payment of bills of exchange in the case
of Documents against payments (D/P)
c. Importer gets shipping documents after giving acceptance on bills of exchange in
the case of Documents against Acceptance(D/A)
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Key Documents used in import trade
1. Import License: Import license may be general licenses and special license. The general
license are open license to import specified goods from all the countries except South Africa ,
South West, Africa and Rhodesia special license are issued to import specific goods from the
specified countries.
2. Indent: An indent is an order placed by an importer with the exporter for the supply of
certain goods. It is usually prepared in duplicate or triplicate. The indent may be of several
types like open indent, closed indent and confirmatory indent.
An indent contains the following information:
a. Quantity of goods to be imported
b. Quality of goods
c. Method of forwarding the goods
d. Nature of packing
e. Mode of setting payment
f. Price to be charged
g. Sale of delivery
3. Terms of Payment: The importer has to manage the payments as per the terms and
condition of payment. He may send documentary credits is arranged with a bank to pay or
accept bill of exchange on behalf of the importer. The bank will pay the sight bill at
presentation of the bill at the expiry of the due date.
4. Customer’s Formalities: The importer complies with the customs formalities before taking
the delivery of the goods. The endorsement on bill of lading filling of bill of entry and bill of
sight application to import deposits systems and customs duties. The importer pays the
freight if not paid already and sign endorsement at the back of the bill of lading which is
submitted to the port authority for receiving the delivery of goods.
5. Clearing Arrangements: The unloading and clearing formalities will be permitted only
when the customs duties are fully paid. There are export clearing agents who perform the
clearing formalities in effective manner. They can complete the customs formalities, pay
import duties and dock charges take the physical possession of the goods, taking
compensation from the insurance company if there is any damage and dispatch the goods to
the importer.
Guidelines Key Documents Used in Importing

From taking a decision to import to getting the imported goods placed in the godowns and
completion of connected formalities an import transaction passes through a number of stages.
1. Determining the Requirements: The first decision to be taken is identification of the
material required by the organisation. Then it has to decide whether the required material
can be manufactured in house or sourced from domestic market or imported.
2. Supplier Scanning: After taking a decision as to what to import, the next step in to
identify all potential suppliers so as to make selection of the best
3. In text survey advertising may be placed inviting interested suppliers to notify the
importer of their availability for future supplier of specific goods
a. Business direction and yellow page
b. Trade journals and commercial periodicals

43
c. Computer data bases and interest
d. Industrial and commercial association
e. Trade exhibitions
f. Commercial representations of foreign countries posted in importers country
g. Trade promotion organisation
h. Market enquires
4. Supplier Evaluation: The potential suppliers have to be evaluated on the basis of their
technical competence adequate of production facilities financial strength and managerial
competence.
5. Supplier Selection: Supplier evaluation helps in short listing the suppliers where the
company has continues imports of a variety of items, the suppliers list can be kept
classified on the basis of item and value of imports.
6. Negotiation: Once the suppliers is identified, he should be asked to furnish his quotation
or Proforma invoice along with his terms and conditions before the offer is family
accepted there may be a negotiation between the supplier and the importer on the legal
responsibilities of the importer and the supplier and other contractual terms.
7. Import Order: After the terms and conditions are agreed to the mutual satisfaction of the
parties a formal impost order or purchase order may be executed. In many cases, the
Proforma invoice itself may be signed and returned by the importer as evidence of his
acceptance of the conditions.
Import Licensing and Other Incentives

What Is Import Licence?
When an exporter wants to trade in foreign goods, he needs authorization from proper authority
i.e. DGFT. When DGFT approves an exporter such a license it is known as Import License.
Import licenses are considered to be non-tax barriers to traders when used as a way to
discriminate against another country's goods in order to protect a domestic industry from foreign
competition. All goods, import of which is permitted only with an Authorization / Permission /
License or in accordance with the import procedure prescribed in a notification/public notice are
‘Restricted’ goods.
Meaning
Wherever export incentives are available the required from should be prepared and claim made
with the appropriate authorities within the dates prescribed under the respective scheme.
1. Duty Drawback: For product exported from India, the manufacturer would have paid
duties as under
a. Import duties on raw material and components imported and
b. Excise duty on the items manufactured in India
The customers and central excise duty drawback rules, 1971 provide for refund of such
duties to the exporter as the export being completed.
Duty drawback is allowed only in respect of all items where in such raw materials and
components have been used on which duty either of customers or excise has been paid.
There are two types of i) all industry rates and ii) brand rate.
2. Excise Rebate: Finished goods which are subject to excise duty for some consumption
are exempt from the duty when they are exported. The scheme is also applicable where

44
the exported goods contain excisable goods in their manufacture. The exporter can avail
of this facility in either of the following methods where finished goods are excisable.
a. Export under bond: under this method, the export has to execute a board in a
favour of central excise authorities.
b. Refund of duty: if the duty is already paid, after export is made, the exporter
should make a claim with the central excise authorities.
3. Advance license: An advance license enables the exporter to import inputs for his export
commodity free of customs duty. Three types of advance license are issued. Advance
license for physical exports is granted to a manufacture – exporter or a merchant –
exporter for the import of inputs required for the manufacture of goods. Advance
intermediate license is granted to a manufacture- exporter of the import of inputs required
in the manufacture of goods to be supplied to the ultimate exporter holding an advance
license. Advance license for deemed export is granted to the manufacture – exporter for
import of inputs required for manufacture of goods for deemed exports.
4. Duty entitlement _ pass book (DEPB): Under this scheme and exporter is eligible to
claim credit as a specified percentage of FOB value of exporters of specified
commodities made in freely convertible currency. The credit thus earned can be used to
import any freely importable commodity without payment of customs duty.
5. Duly Free Replacement Certificate (DFRC): DFRC is issued to exporter for the
importer of inputs used in the manufacture of goods without payment of customs duty;
the certificate is issued against exports already made. It is valid for a period of 24 months.
DFRC and the material imported against it are freely transferable.
6. Served from India scheme: The objective is to collect the growth is export of services
so as to create a powerful and unique served from India brand instantly recognized and
respected the world over. All services provide who have a total foreign exchange earning
of at least RS. 10 lakhs.
7. Target plus scheme: The objective of the scheme is to acceptance growth in export by
rewarding star export houses who have achieved a quantum growth in exports. High
performing star exports houses shall be entitled for a duty credit based on investment
exports substantially higher than the general annual export target fixed.

45

Export and Import Documentation (Study Material) : Sri Vidya Mandir Arts and Science College (Autonomous)

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Sri Vidya Mandir Arts and Science College

Department of Management Studies

Export and Import Documentation

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

What is a Pre-Shipment Inspection?

The purposes of a pre-shipment inspection are to:

A number of obligations were included in the “Agreement on Pre-Shipment Inspection,” stating

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Importance of a Pre-shipment Inspection

Pre-Shipment Inspection Procedure

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

B. Documents for Imports

Significance / Importance of Export Documents:

Instruments and Methods of Financing Exports

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

What is Foreign Exchange?

Foreign exchange market

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Participants in Foreign Exchange Market

Foreign Exchange Transactions

Sales and purchase transactions Spot and forward Transaction

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Clearing and Forwarding Agent

Role of Clearing and Forwarding Agents

Role of clearing and forwarding agents in export assignment

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Introduction: Custom Clearance Procedure

The documents included in customs clearance are:

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Introduction to Bill of Lading

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Contents of Bill of Lading

Types of Bill of Lading

1. On the basis of execution:

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Bill of lading can be broken down into the following sections:

Features of Bill of Exchange

Types of Bill of exchange

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Advantages of bill of exchange

Parties of Bill of Exchange

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

 Checking commercial terms and conditions

Steps Involved in the Processing of an Export Order

The examination of an export order, therefore, includes items like:

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

World Shipping- Structure

Structure of World Shipping

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF

Types of liner service

DR.N.RAMESH KUMAR MBA., PH.D., ASSISTANT PROFESSOR, DEPARTMENT OF