Export Import Procedures and Documentation

December 2022 Examination

Q1. You have joined one export organization as Export Executive. You need to register the
organization with various government agencies/organizations. Give a write up to the
Management giving the procedure of various registrations. (10 Marks)

ANS 1.
INTRODUCTION:

Globalization has resulted in the opening of the world market for all nations. Now, every nation
benefits from trading with all the various other countries internationally. When we say trade, it
suggests importing and exporting products & services throughout the boundaries. It is not only
about the interaction between the heads of various countries. However, it indicates exchanging
products & services among the nations across borders. To have a governing structure over the
imports and exports, the Indian government has developed particular authorities where one must
register its company for having legal transportation of goods & services throughout the borders.

GOVERNMENT AUTHORITIES FOR REGISTRATION OF THE COMPANY:

The companies in India have to register themselves with the following authorities to have an
authorized circulation of the goods & services across the boundaries.

1. DGFT (Director General of Foreign Trade): the department of DGFT comes directly under
the Ministry of Business, Government of India. Every newbie merchant needs to obtain
themselves signed up with the DGFT. DGFT will, after that, provide the exporters with a serial
number called the IEC number. It is a unique ten-digit code that is vital for exports and imports.
That export will be prohibited if any merchant exports some item without this IEC number.
Some nations have been spared from this IEC number for exports. Mean the goods are exported
to nations like Nepal or Myanmar using the Indo-Myanmar boundary or China using Indo- the
China border through Namgaya, Gunji, Shipkhila, or Nathula ports. In that case, those goods do
not necessarily require an IEC number for their exports. It is subject to the condition that every
consignment should not exceed a quantity of 25000 INR.

2. RBI (Reserve Bank of India): The function of RBI becomes essential since all exports bring
foreign exchange reserve to the nation, which is to be administered by RBI. RBI was utilized to
play a considerable function before 1996. Before 1996, it was important for every single
company to obtain the IEC number issued from the Reserve Bank of India before taking part in
any type of exporting activity. Now, this task has been offered to DGFT, which comes under the
ministry of commerce of the government of India.

3. Community Boards: Commodity boards are another agency under the Ministry of
Commerce, Government of India. It is there for Export promotion and is located in India and
international nations. The critical work of these community boards is the responsibility for
manufacturing, developing, and exporting tea, coffee, rubber, seasonings, and cigarettes.
Currently, these community boards are situated in 5 countries abroad. The objective of having
them foreign nationals is to assist the Indian companies situated abroad in obtaining the export
certification.

4. Export Promotion Council: The export promotion council is signed up under the Companies
Act 2013. It is a non-profit company. Its primary objective is to promote different items exported
from India worldwide. It closely associates with the Ministry of Business of the Government of
India. It primarily serves as a conciliator or interaction between the exporting company and the
Government of India. It becomes essential for the exporter to obtain a registration orgasm
membership certification from the export promotion council, called RCMC. An application of
registration needs to be given along with a self-certified duplicate of the IEC number issued by
DGFT under the ministry of business. The RCMC would stand for five years from 1st April of
the licensing year to 31st March. This time structure is subject to specific standards on the
contrary.
5. Income Tax Authorities: It is also necessary for the exporting company to register itself with
the Income Tax Authorities because the goods of exports are exempted from the value-added and
central sales tax. So, until and unless the company obtains itself signed up, it cannot gain from
the exception from the Income-tax authorities.

The application for signing up at DGFT must be submitted to the local and regional authorities of
DGFT. The application form is called 'Aayat Niryat Kind- ANF2A'. It can also be submitted
online on the website of DGFT. A quantity of 1000 is to be sent as an application fee.

Conclusion:

As an export exec, my role is to look after the export plans of the company or company. Hence, I
would suggest the company register before the above-stated government firms or companies
which would aid the company in complying with all the conformities and, therefore, smoothly
continuing its export organization. The appropriate companies are:

a) DGFT.
b) Export Promotion Council.
c) Income Tax Authorities.
d) Community Board.
e) RBI (Reserve Bank of India or Central Bank).

Q2. You are working with a freight forwarding company. You have handled one export of
a consignment of 20’ container by sea for one of your clients. You have to complete the
process of export by obtaining Mate Receipt to proceed further .How will you proceed to
obtain Mate Receipt (10 Marks)
ANS 2.
INTRODUCTION:

It is not just about the interaction between the heads of various countries; it means trading goods
& services amongst the nations across different boundaries. It means importing and exporting
goods & services across the boundaries when we claim trade. To have a governing framework
over the imports and exports, the Indian government has developed particular authorities where
one needs to register its company for having a legal transport of products & services across the
boundaries. Globalization has resulted in the opening of the global market for all countries.
Currently, every country gains from trading with all the other nations globally.

MATE RECEIPT:

The division of DGFT comes straight under the Ministry of Business, Government of India. The
application for registration at DGFT is to be submitted to the closest regional authority of DGFT.
The application form is called 'Aayat Niryat Kind- ANF2A'. It can likewise be sent online on the
website of DGFT. An amount of 1000 is to be submitted as application charges.

There are two main settings through which the export and import of products happen: sea or air.
By sea, certain obligations are provided to the head of the container; similarly, by air, obligations
are given to the person concerned for air transport. When the consignment is packed by ship, this
mate receipt is one such obligation offered.

This mate receipt is one such duty when the consignment is loaded by ship. When the freight is
being filled, it is a kind of receipt issued by the powerful officer of the ship. It consists of all the
appropriate information concerning the vessel's name, berth, date of shipment, description of
packages, numbers, and marks, the problem of the cargo at the time of the load, and so on. It
includes all that information that is required either to confirm the consignment or to avoid any
type of obligation that may develop if the importer charges the merchant for any type of
disruption with the delivery.
Anybody importing some consignment by ship can take the mate receipt by adhering to
treatment. Mate receipt is evidence or evidence that the goods have been packed on the vessel.
Currently, the other celebration cannot go ahead and get success in any obstacle regarding the
discharging of the goods on the ship.

a. Mate receipt is first handed to the Port depending on authorities.

b. After making all the repayment of all port dues, either the merchant or its agents shall gather
the mate's receipt from the Port trust authorities.

C. This mate receipt is easily transferable.

D. The mate receipt is to be handed over to the shipping firm if one wishes to get the bill of
lading. Because the bill of lading is prepared based on the mate receipt just, it is so.

A Bill of lading is a document that refers to the title over the goods. It becomes an essential
document because, without it, the exporter will not be able to acquire the title of the makeup of
the goods. Hence, it has to be noted that mate receipt is not a document for the ceramic tile of the
goods; nevertheless, it is simply a receipt of the goods.

The mate receipt must, even more, include the following components:

a. Name and the logo of the shipping line

b. Name and the address of the shipper.

C. Name and the number of the vessel.

D. Name of the Port of loading

E. Name of the Port of discharge and area of delivery.

F. Marks and container number

G. Packing and the description of the container.

H. the Overall number of packages and containers,

I. The date of shipping and the costs regarding it.

J. The signature and the initials of the chief officer.

K. There has to be a description of goods in terms of quantity.

Conclusion:

Globalization has brought about the opening of the global market for all countries. Currently,
every nation gains from trading with all the other countries around the world. Hence, in the
immediate case, the importer should get the mate receipt from the commanding officer of the
cargo while the freight is loaded on the ship. They must also see whether the ticket includes all
the important contents. If it does, the mate receipt is up to the mark; nevertheless, if it does not,
the exporter might have an issue in obtaining the document concerning the ceramic tile over the
goods. Also, the exporter would go to harm without having a mate receipt because he won't be
able to clear the Port trust dues to the Port trust authorities, which is an essential requirement.

Q3. You have placed an order for electronic goods with a company located in Singapore.
This is the first order being placed by your company. You are a new customer to this
Singapore organization. During negotiation on payment terms, the Singapore organization
asks you to open LC as terms of payment as it is the first business with them. They are not
willing to give any credit for this shipment. Your company does not know much about
Letter of Credit and also worried about the reliability of the company. Hence our company
asks you to explain the following to understand the Letter of credit system better. Kindly
explain the following to them;

a. What is Letter of credit and its usefulness (5 Marks)

ANS 3A.
INTRODUCTION:

A letter of credit is a document that guarantees that the customer has made the payment to the
seller. It will be entirely related to the conditions of the document, which were agreed upon
during the contract between the seller and the buyer. In the import-export company, a credit
report letter is a kind of assurance that the purchaser's bank gives to the vendor that a particular
quantity will be moved to the seller's bank on maturation. In India, the procedure of letter of
credit is Handel's according to the guidelines of the consistent custom-mades and practice of
documentary credit scores of the international chamber of business (UCP 600).

USE OF LETTER OF CREDIT:

We know that there has to be the settlement of the cash concerned in any type of sale-purchase
contract. In the export-import service, the amount to be paid to the vendor is enormous, and
often, the importer cannot make the settlement by a single method to the seller. So, because
instance, there is a requirement that there must be some assurance from the importer to the
merchant that the settlement will be made. They get into a legal contract for a letter of the credit
report. A much better credit rating acts as an assurance for the price of funds upon fulfilling the
terms of the trade arrangement. This is just how the customer depicts or photos his
creditworthiness and negotiates longer payment terms by having a bank that will back the
professional transaction.
Certain features of a letter of credit are:

A. Negotiability: a letter of credit is a liberal bargain wherein the events are cost-free to agree on
details conditions. They can make their terms, the assurance of payment upon need or at a
particular time.

B. Revocability: a letter of credit can be both revocable and irrevocable. The latter's benefit is
that the purchaser or the importer cannot revoke its task to pay the funds at any moment. All the
celebrations hold power, and they cannot be changed/ changed. To change or alter them,
approval is required from all other individuals worried.

Conclusion:

This letter of credit score can be understood in simple terms as a kind of repayment via
instalment methods from the importer to the exporter. Because there has to be a details assurance
to the exporter that the importer will not surrender his funds at some later point in time, it is
necessary.

b. Procedure to open LC and parties involved (5 Marks)

ANS 3B.
INTRODUCTION:

A letter of credit is a document that assures the purchaser has made the payment to the vendor. In
the import-export service, a letter of credit is an assurance that the buyer's bank gives the seller
that a certain amount shall be moved to the vendor's bank on maturity.
PROCESS FOR ISSUANCE OF LETTER OF CREDIT:

The process involved in the issuance of a letter of credit is as follows:

A. As soon as the parties involved in the trade agreement make use of a letter of credit in their
contract, the importer has to apply to the issuing bank to issue such a letter of credit in favor of
the merchant.

B. Once the merchant receives the letter of credit, the exporter has to verify the ingredients of the
letter of credit to acquire even more complete satisfaction. Then he has to start the goods
delivery process.

C. After the goods are delivered, the exporter, either on his own or with any of his
representatives, has to offer the documents to the bank that have encouraged or confirmed the
issuance of a letter of credit to the parties.

D. The recommended bank sends it to the providing bank, confirming whether the amount has
been paid, accepted, or worked out between the parties.

E. Now, the providing bank has to verify all the documents and gets the settlement of the goods
from such an importer. And afterward, the importer is offered the belongings of such products
and to use them to get control of the shipped items.

PARTIES INVOLVED IN LETTER OF CREDIT:

The parties involved in the letter of credit are:

A. Applicant: He is the one that demands his bank to issue a letter of credit for the exporter or
the beneficiary.
B. Beneficiary: He is the seller, who has delivered the goods, and the hereafter process gets
over; he is the one that receives the settlement.

C. Issuing bank: it is likewise called the opening bank. It is liable from the applicant's side to
release the letter of credit at the buyer's demand.

D. Advising bank: this bank is in charge of transferring the documents given by the exporter to
the providing bank. The importer will then use those documents to get possession of the cargo.

Conclusion:

The letter of credit will be concerning the terms and conditions of the document, which were
agreed upon throughout the contract between the vendor and the buyer. In India, the procedure of
letter of credit is Handel's according to the standards of the consistent, customized technique of
documentary credit report of the global chamber of commerce (UCP 600).