SUMMER TRAINING PROJECT REPORT
INDO ALUSYS INDUSTRIES LIMITED
Submitted in partial fulfillment of the requirement for the award of the degree of
MASTER OF INTERNATIONAL BUSINESS
By Abid Husain Roll no 09-MIB-02 Enrollment no- 06-3162
CENTER FOR MANAGEMENT STUDIES
JAMIA MILLIA ISLAMIA, NEW DELHI- 110025
I, ABID HUSAIN, a bonafide student of MIB(full time) programme at the centre for management studies, jamia millia islamia, new delhi, hereby declare that I have undergone the summer training at Indo Alusys industries limited under the supervision of Mr. M.C. Gupta(DGMMrktng) on and from 1st june 2011 to 15th july 2011. I also declare that the present project report is based on the above summer training and is my original work. The content of this project report has not been submitted to any other university or institute either in part or in full for the award of any degree, diploma or fellowship. Further, I assign the right to the university, subject to the permission from organization concerned, use the information and contents of this project to develop cases, caselets, case leads and papers for publication and/or for use in teaching.
Signature of student Place:new delhi Date: Name of student Roll no
I am very thankful to all those involved who have enabled me to successfully complete my project on ‘Export Procedure &
Documentation’. It was a great opportunity for me to work at indo alusys industries limited, a reputed aluminium products exporter. During my training I was exposed to a variety of fields which are unique to this industry. At the same time what mattered the most were the people around me without whom support neither would have this project been possible nor would have my stay at the organization for these 7 weeks been so productive. It was indeed a great experience for me to be associated with this organization which has contributed to a great extent in enriching me as an individual. Since I had the opportunity to work in many departments of this organization, I could meet a host of amiable people each of whom helped me to learn a lot and in this process I have made life long contacts. Specially, I am grateful to Mr. S. veeramani and Mr. syed mohd wajid ali, whose valuable support and inspiration to go ahead has motivated me. I would like to thank Mr. M.C.GUPTA who provides me guidance and co-operation for this project.
. 13. 01.Regards Abid Husain S. b)types of documents. 02.No . 11. Stage 4th – Pre Shipment Operations v.
08. 04. Profile of the company Procedure Of Exports and Its Documentation 1. Processing Of Export Order i. Stage 1st -. 2 4 5 6 7 13 17 24 28 28 30 31 34 61 66 69 70 72 76 88 89 90
06. Pre-Export Activities 2. 09. Stage 5th – Custom Clearance vi. 10. Stage 3rd – Dispatching iv. 07. 05. Stage 2nd – Sourcing of Export Order iii. Stage 6th – Post Shipment Operations 3. 12. Work Flow Chart of Company Modes Of Payment Government Incentives For Exports Summary Conclusion Limitations of the Study Bibliography Particulars Page No. Acknowledgement Executive Summary Statement Of Objective Focus Of The Study Export management a)need for export mngt.Confirmation of Export Contract ii. 03.
The executive summary of the study describes.
Findings & Recommendations
On the execution of the objective of study. the maximum information is summed up sequentially. Interviews and discussion with the supervisors and officials to get the root of the pre-determined objective and in order to outline the ‘a to z’ steps of processing export order.. On concentrating the objective of project.
The main objective of the study is to formulate the overall procedure of export orders say ‘how to export’. bottlenecks and risks but also enhances the
. documentation. Research purpose is to discover answer to question through the procedure of scientific procedure. The research work is done in collaboration with INDO ALUSYS INDUSTRIES LIMITED to assess the overall export procedure & documentation. it might be conclude that processing of export order can be a tedious and costly activity.. A fair documentation not only reduces the threats of frauds. for Indo alusys industries limited
Research comprises defining and redefining problems. A careful planning and implementation of appropriate procedure can reduce time and cost drastically. modes of payment & incentives from Govt.The
DOCUMENTATION AND PROCEDURE .
Importers & Governments in the whole world.business relationship between Exporters.
STATEMENT OF OBJECTIVES
The documents safeguard the interests of Exporter. Insurance Agencies and Inspection Agencies.
Main Objective of the Study
The main objective of the training was to study the systematic export procedure & documentation of a reputed export house say INDO ALUSYS INDUSTRIES LIMITED to overcome any kind of error. documents.
Sub Objectives of the Study
The sub objectives of the study were: • To study the department wise functions & sequential
documentation for various operations in export orders adopted by INDO ALUSYS INDUSTRIES LIMITED. Governments. Importer. Documentation is definitely one of the prime specialized
functions of international business. • To study the standard modes of payment in export-import. information and payments. Banks.
businessmen cross the national boundaries. frauds and mistake for the awareness and implementation of standardized rule-regulations & documentation to contribute the integration of International Business up to any extent. A lot of formalities and modalities of several organizations have to be compiled to and as error can create bottle necks in the free flow of goods.
To identify the incentives. The focus of the
. discounts & duty drawbacks to
exporters by the Government.
FOCUS OF THE STUDY
The focus of the study was the formulation the multifunction procedure of an export unit named INDO ALUSYS.
Focus was to outline the standard modes of payment for export houses. The project is an attempt to formulate the ‘how to export’ concept finally to contribute to national and international economy & business relationship
.study was on identifying the activities of different divisions and departments of INDO ALUSYS having an impact on the export procedure of this unit. Researcher analyzed the pre-export formalities and necessities for exportation.
Export documents are the result of requirements imposed by the exporting government. Exporting is the process of earning money by selling products or services in foreign markets. or requires as few as. Cateora and Graham say that ‘the each export shipment involves many documents to satisfy government regulations controlling exporting as well as to meet requirements for international commercial payment transactions’. and inspection certificates for agricultural products are often necessary. complex as the number of documents to be filled-in is large so able is the number of concerned authorities to whom the relevant documents are to be submitted. the documentation pertaining to the commercial aspect of the export business. of the supporting import documents required by the importing government. Export documentation is. fines and even confiscation of goods as results of errors in some of these documents. export licences.Export documents play a vital role in international marketing as it facilitates the smooth flow of goods and payment there of across national frontiers. There are 125 different documents in regular or special use in more then 1000 different forms. It is in serving these customers successfully that the enterprise grows and prospers. The most frequently required documents are export declarations. In some countries. Cateora and Graham opine that ‘incomplete or improperly prepared documents leads to delay in shipment. “selling” and “marketing” applies to a product that the market needs. and in some cases. These procedures also involve considerable documentation requirements. Besides.
. Additional documents such as import licences. They further writes that ‘the paper work involved in successfully completing a transaction is considered by mean to be the greatest of all non-tariff trade barriers. consular invoices or certificate of origin. there are documentation requirements of a regularly nature like excise clearance.’ It shows that the exporting activity involves several commercial and regulatory procedures. It is finding customer and enterprise which can serve better than these customer’s current suppliers. of requirements set by the commercial procedures established in foreign trade. An exporter should have the complete knowledge of these documents and he should be well familiar with complete export procedure. these are penalties. At this point. and insurance certificates. packing lists. These documents must be properly and correctly filled. A single shipment may require over 50 document and involve as many as 28 different parties and government agencies. foreign exchange regulations etc. however. simultaneously increasing direct and indirect employment. bills of lading. commercial invoices.
Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. In economics. The advent of small trades over the internet such as through Amazon and e-Bay have largely bypassed the involvement of Customs in many countries because of the low individual values of these trades. The seller of such goods and services is referred to an "exporter" who is based in the country of export whereas the overseas based buyers referred to as an "importer".The need to export of a country to others countries is to boost the economy of the country from where the export is made. Nonetheless. An export's counterpart is an import. The definition of Export is when you trade something out of the country. an export is any good or commodity. transported from one country to another country in a legitimate fashion. an export is any good or commodity. "exports" refers to selling goods and services produced in home country to other markets. It is thus. 2) To ensure timely shipment of goods as per prescribed norms of quality and other specifications including terms and conditions agreed to between the exporter and the importer. of the country formulate export policies so declared by the government the exporting industries needs export management to streamline their export activities. EXPORT The term "export" is derived from the conceptual meaning as to ship the goods and services out of the port of a country. concerned with securing export orders and achieving their successful completion in time as per the requirements specified by the foreign buyers. typically for use in trade. It is a form of management which is required to bring about coordination and integration of all those involved in an export business. In International Trade. In economics. For this very purpose of the govt. Export goods or services are provided to foreign consumers by domestic producers. Export management is the application of managerial process to the functional area of exports.
. these small exports are still subject to legal restrictions applied by the country of export. The main objectives of export management are1) To secure export orders.
An exporter usually resides far from the end consumer and often enlists various intermediaries to manage marketing activities. outsource. the usual return on export sales may not be tremendous. typically for use in trade. The most common foreign trade barriers are government-imposed measures and policies that restrict. or sell it. companies that have low levels of ownership advantages either do not enter foreign markets. As you might expect. In other words. Internationalization advantages are the benefits of retaining a core competence within the company and threading it though the value chain rather than obtain to license. In relation to the Eclectic paradigm.
Advantages of exporting
Ownership advantages are the firm's specific assets. Exporting allows managers to exercise operation control but does not provide them the option to exercise as much marketing control. regulations.
Barriers to Export
Trade barriers are generally defined as government laws. policy. or impede the international exchange of goods and services.transported from one country to another country in a legitimate fashion. or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products. While restrictive business practices sometimes have a similar effect. they are not usually regarded as trade barriers. such as FDI.
. If the company and its products are equipped with ownership advantage and internalization advantage. international experience. the lower risk of export typically results in a lower rate of return on sales than possible though other modes of international business. Exporting requires significantly lower level of investment than other modes of international expansion. The locational advantages of a particular market are a combination of market potential and investment risk. prevent. they enter through low-risk modes such as exporting. but neither is the risk. and the ability to develop either low-cost or differentiated products within the contacts of its value chain.
but nearly two-third of them sells in only to one foreign market.
The term "import" is derived from the conceptual meaning as to bring in the goods and services into the port of a country. typically for use in trade. The vendor is in duty to follow the real-time demand and to submit all transaction details.g. The following assumption shows the main disadvantages: • Financial management effort: To minimize the risk of exchangerate fluctuation and transactions processes of export activity the financial management needs more capacity to cope the major effort. Thus an import is any good (e. The lack of knowledge for trade regulations. Import goods or services are provided to domestic consumers by foreign producers. Customer demand: International customers demand more services from their vendor like installation and startup of equipment. An import in the receiving country is an export to the sending country.
. The buyer of such goods and services is refered to an "importer" who is based in the country of import whereas the overseas based seller is refered to as an "exporter". Management mistakes: The management might tap in some of the organizational pitfalls. cultural differences. Indeed there are some SME's which are exporting. maintenance or more delivery services. a commodity) or service brought in from one country to another country in a legitimate fashion. It is a good that is brought in from another country for sale.Disadvantages of exporting
For Small-and-Medium Enterprises (SME) with less than 250 employees. like poor selection of overseas agents or distributors or chaotic global organization. Communication technologies improvement: The improvement of communication technologies in recent years enable the customer to interact with more suppliers while receiving more information and cheaper communications cost at the same time like 20 years ago. This leads to more transparency. selling goods and services to foreign markets seems to be more difficult than serving the domestic market. different languages and foreign-exchange situations as well as the strain of resources and staff interact like a block for exporting.
The major commercial documents are as follows: (a) Commercial invoices (b) Bill of exchange. Regulatory documents are the documents which are required for complying with the rules and regulations governing export trade transactions. (d) Marine insurance policy. The macroeconomic variable usually stands for the value of these imports over a given period of time.Imports.
On the basis of above discussion. those documents are involved which are required for claming assistance under the various export assistance measures. (c) Bill of lading. usually one year. The major regulatory documents are as follows: (a) Foreign exchange regulations. form the basis of international trade. "Imports" also means the economic value of all goods and services that are imported. (b) Customs formalities. Import of goods normally requires involvement of the customs authorities in both the country of import and the country of export and are often subject to import quotas. (c) Export inspections etc. Commercial documents are those documents by which physical transfer of good and its ownership is transfer to importer and the procedure of export sales is performed. Documentation required by importing countries are: (a) Certificates of origin. export documents may be divided on the following four categories: (i) Commercial documents (ii) Regulatory documents (iii) Export assistance documents (iv) Documentation required by importing countries. Main documents used in export transactions: used in an export transaction are as follows: The main documents
. along with exports. tariffs and trade agreements. In export assistance documents. (c) Quality control certificate etc. (b) Consular invoice. When the "imports" are the set of goods and services imported.
The price includes the cost of goods and delivery. and delivery and payment terms. This documents often serves several purposes. or at a named vessel and port of export. quote is more meaningful to the overseas buyer because it includes the costs of goods.I.F. the exporter has necessarily to use the form prescribed by the importing country. at a named port of exportation. According to Cateora and Graham. to say he will pay all expenses and give delivery of goods on the board of the ship. the invoice may be of the following types. B. The exporter may design his own form. that is. ‘every international transaction requires a commercial invoice.” There is no set format of this invoice. the marks and numbers on the packages containing the merchandise. price charged. Commercial invoice may be prepared according to mutual agreement between the buyer and seller. a bill or statement for the goods sold. Commercial Invoice: This is the basic document in an export transaction.I. that is. thus.): C.F. some countries require a copy of customes clearance. and must pay for freight.C.B. All other charges are the buyer’s concern. “A commercial invoice is a bill for the goods from the buyer to seller. The commercial invoice gives the description of following things: Invoice Number date of dispatch. quotation. insurance. (A) Free on board or F. • date. goods description. a document of contents. According the Price.F. name and address of both seller and buyer. • Port of debarkation. to a named overseas port of import. and it is one of the financial document which contains all the information which are required for the preparation of all other documents. : Free on board at a named inland point of origin. prescribe their own forms. Insurance and Freight (C. O. A. insurance and all subsequent expenses. It is. It contains a description of goods. under F. The buyer must take responsibility from then on. and • • • • • •
. (B) Cost. the terms of shipments.I.1. In such case. however. the exporter will deliver the goods free on board a ship as per contract as the port named. the address of buyer and seller. In simple words. • Name of the shipping vessel. Some countries.O. Many governments use this form to assess duties.
A. In those countries where ad valorem duties are charged. The price includes cost of goods and charges for delivery of the goods alongside the shipping vessel. The price includes the cost of goods and transportation costs to the named place of debarkation. The buyer is responsible for the cost of loading onto the vessel. (e) Ex. The exporter is required to pay a prescribed fee for obtaining this invoice. price and delivery if the goods are actually shipped.A.S. the document called ‘Consular invoice’. the exporter can issue a commercial invoice is simply a temporary commercial invoice which is sent by the exporter to importer. An importer may require it for the following two reasons: (a) It helps him to obtain an import license. This invoice has to sent by the exporter who fills in a special form and gets it duly certified by the counsal of the importing country stationed in the exporting country. it is in the interest of the importer to present to the custom authorities to the importing country. The cost of insurance is borne by the buyer. The exporter has to submit four copies of the commercial invoice to the mission of the importing country with the requisite amount of fee. (b)It helps in opening a letter to credit in the favour of exporter. transportation and insurance. (named point of Origin): The price quoted concerns costs only at the point of origin. All other charges the buyer’s concern.) F. If the importer like the terms and conditions.all transaction and miscellaneous charges to the named place of debarkation. from the exporter to the importer outlining the selling terms. on arrival at the port of destination. At that point. This covers contemplated shipment which may or may not be made in future. (d) Free Along Side (F. he will send purchase order and arrange for payment..S. custom duties etc. Performa Invoice: ‘A Performa invoice is an invoice. to a named U S port of export. The buyer responsible for loss or damage after the goods are delivered to the shipowner and must pay all expenses. Consular Invoice: Some countries require consular invoice. Government can use the consular invoice to monitor prices of imports and to generate revenue for the embassies that issue the consular invoice. (c) Cost and Frieight (C&F): C & F to a named overseas port. A consular invoice sometimes is required by countries as a means of monitoring imports.
. in order to save time and trouble while taking the delivery of the goods. like a letter of intent.
Letter of Credit:. The exporter should carefully examine the terms and conditions of the letter of credit to ensure should carefully examine the terms and conditions of the letter of credit to ensure: (a) that he can meet them. It is prepared in duplicate and it submitted to the custom authorities at the port of shipment. Cateore and Graham. under certain conditions and upto certain amounts. 3.intimation.” The letter of credit is an assurance that the bill will be paid by the bank if it is a sight bill or accepted by the bank if it is a time bill. Opines that “letter of credit shift the buyer’s credit risk to the bank issuing the letter of credit. This authority verifies if (value declared by the exporter) and send one copy of Reserve Bank of India and second copy of exporter. therefore. A letter of credit it of two types: irrevocable and revocable. The exporter does not favour this letter of credit as it is liable to bring him into trouble on any time. Insurance of letter of credit by a bank in favour of an exporter substitutes the credit of the individual importer by its own credit and thereby gives the exporter guarantee assurance of payment. It forms the basis of very large amount of world trade. It is a popular method of securing payment and most important single document in international trade. the buyer can not alter it in any way without permission of the seller. a revocable letter of credit may be cancelled at any time by banker without giving pre. When a letter of credit is employed. an irrevocable letter of credit can not be cancelled by the bank without giving prior notice and is.R. safer than the revocable letter from the point of view of exporter. G. letters of credit afford the greatest degree for protection for the seller. and (b) That they confirm to the basic contract he has entered into with the importer If there are any differences.2. On the other.Form : This form has been prescribed by the Reserve Bank of India under FERA to ensure that the foreign exchange receipts in respect of exports are impatriated to India. provided that the beneficiary fulfills the stipulated conditions.“A letter of credit is a document containing the guarantee of a bank to honour drafts drawn on its by an exporter. In other words. Except for cash in advance. Some of
. he should get in touch with the bank and the Importer to arrange for an amendment. the seller ordinarily can draw a draft against the bank issuing the credit and receive dollars by presenting proper shipping documents. An irrevocable letter or credit means that once that seller has accepted the credit.
(iv)Invoice defects. such as inadequate coverage. (i) Insurance defects. such as an expired letter or one that is exceeded by the invoice figure. no endorsement.the discrepancies found in documents that can delay in honoring drafts or letter of credit including the following. such as the bill lacking ‘on-board’ endorsement or signature of carrier. it is known as a foreign draft or bill of exchange. The documents required are principally the same as for letter of credit. or counter signature. the credit of one or more banks is involved. such as missing signatures or failure to designate terms of shipment as stipulated in the letter of credit. Cateora and Graham say that ‘in letter or credit. There are the following important types of bill of exchange: (i) Sight Bill of Exchange: A sight bill is one which is required to be paid by the drawee immediately on presentation of the bill. a sight bill requires acceptance and payment on presentation of the bill and often before arrival of the goods. the format of this bill is given below: 1550 P ark Street Stamp London J uly 15. or failing to specify prepaid freight. the bank forwards it with the necessary documents to a correspondent bank in the buyer’s country. Here. The typical procedure is for the seller to draw a draft on the buyer and present this with the necessary documents to the seller’s bank for collection.2003 Sixty (60) days after sight of this First Bill of Exchange
. On receipt of draft. (ii) Bill of lading defect. It is also method of extending credit. (iii) Letter of credit defects. and a dating other than the bill of lading. thus a means of collecting payment from the foreign buyer through the banking channel. Bill Of Exchange: When a draft is drawn on a foreign bank. but in the use of bill of exchange. the buyer is then presented with the draft for acceptance and immediate or later payment with acceptance of the draft. 4. A bill of exchange is. the buyer receives the properly endorsed bill of lading that is used to acquire the goods from the carrier. the seller assures all risks until the actual dollars are received. In order words. missing an endorsement.
5. the name of the vessel. value received. (iii) Date Bill: A date bill has an exact date for payment and in no way is affected by the movement of the goods. In fact.(Second and third of this same tenor and date unpaid). Shipping Bill : This is a custom documents. To Messers Hiralal Motilal 81. master or agents. Time designations may be placed on sight and arrival bills to stipulate a fixed number of days after acceptance when the obligation must be paid. the exporter sends the documents through his bank to be delivered to the importer against the importer’s acceptance or payment of an accompanying bill of exchange. (iv) Documentary Bill of Exchange: Under this agreement. the country of final destination. Kalba Devi Road Martin & Co. the port at which goods are to be discharged. Here a format of shipping bill is given below:
. or the shipping bill must be prepared according to the category of the export goods. the exporter’s name and address etc. The shipping bill contains particulars of the goods. Mumbai
(ii) Arrival Bill: An arrival bill requires payment be made on arrival of the goods. The following three forms of the shipping bill are available with the customs authorities: (a) Shipping bill for free goods. pay to the Punjab National Bank or order the sum of one thousand five hundred Pounds Sterling only. (b)Dutiable shipping bill for gods for which there is export duty. for which there is no export duty. (c) Duty drawback shipping bill which is required for claming the customes drawback against goods exported. This bill may be a D/P or D/A bill of exchange. The exporter is required to fill in three copies of shipping bills. it is the main documents on the basis of which the custom’s permission for export is given. flag.
the method of payment or term of sale require insurance of the goods. (7) Bill of Lading: It is a document which is issued by the shipping company acknowledging that the goods mentioned therein have been placed on board the ship and an undertaking that the goods in like order and conditions as received will be delivered to the consignee.6. Marine Insurance Policy: The goods that are exported may be subject to certain maritime perils. and a document of title. war.’ A policy is a contract and a legal document. (b) Four Bill of Lading : A foul bill of lading means the shipment was received in damaged conditions and the damage is noted on the bill of lading. Each shipping company has its own bill of lading. Cateora and Graham Write that the ‘bill of lading is the most important document required for establishing legal ownership and facilitating financial transactions. provided that the freight specified therein has been duly paid. a contract for the services rendered by the carrier. In other words. a clean bill of lading is one which bears no super-imposed clause or statement declaring a defective condition of goods or of the packaging or of some other aspect of consignment. Cateora and Graham feel that ‘the risk of shipment due to political or economic unrest is some countries. Typically. or riots. and (iii) As certificate of ownership or title to the goods. An exporter must put up the marine insurance policy as a collateral security when he gets an advance against his bank credit. In other words. The exporter prepares the bill of lading in the forms obtained from the shipping
. ‘a bill of lading is a receipt for goods delivered to the common carrier for transportation. (ii) as a receipt from the carrier for shipment. so few export shipment are uninsured. It serves the following purposes: (i) as a contract for shipment between the carrier and shipper. The risks of such perils may be covered under marine insurance policy. make it absolutely necessary to have adequate insurance covering loss due to damage. and the possibility of damage from see and weather. Bill of lading frequently are referred to as either clean or foul: (a) Clean Bill of Lading : A clean bill of lading means the items presented to the carrier for shipment are properly packaged and clear of apparent damage when received.
Bill of lading contains the following information: • • • • • • • • • Date and place of shipment The name of consigner. where there is no direct shipping link between the buyer’s port and the seller’s port. Unless specifically authorized in the credit. when freight is paid at the time of shipment or in advance. The number of packages.
As said earlier that each shipping company has its own bill of lading. bill of lading of the following nature will be rejected: (a) Bills of lading issued by forwarding agents. It is transferable by endorsement and delivery. Name and destination of the vessel.company or from the agents of the shipping company. The invoice number and the date of export. In such a case. A possessor of this documents becomes the owner of goods. arrangement should be made for the goods to be transferred to a second ship at another port. if the freight is not paid and is to be collected from the consignee on the arrival of the goods. It is a semi-negotiable instrument. the bill of lading is marked. quality and destination of the goods. It is a document of title to goods. The marks and numbers. it is necessary for the exporter to obtain a though bill of lading covering the whole voyage. ‘freight paid’. A bill of lading that has been held too long before it is passed on to a bank or the Consignee. The amount of freight. (c) Bills of lading covering shipment by sailing vessels. The description. the bill of lading is marked ‘ freight collect’. is called a state bill of lading. (b) Bills of lading which are issued under and are subjects to the conditions of a charter party. The gross weight and net weight. Functions of bill of lading are as follows: (i) (ii) (iii) (iv) (v) It denotes the contract of carriage of goods entered in by the exporter and the importer It entitles the importer to take the delivery of goods.
. This receipt is called the ‘Male Receipt’. Steam and all and every other Dangers and Accidents of the Seas. Fire. the one of which three Bills being accomplished. V. the format of Bill of Lading is given below: BILL OF LADING SHIPPED on good order and condition by M/s Rathore Brothers & Co. IN WITNESS where of the Master of the said ship hath affirmed to three bills of Lading jail of this Tenor and Date. rivers and Steam Navigation of whatever nature and kind expected) into John Abbot & Sons. Boilers. Machinery. the other two are to stand void. Antewerp Rules. the Enemies of the Country. Lading Charges and Freight for the said goods paid with Average as per York. 1924 and charges as accustomed. Ltd.
555 J. Black Value and Contents unknown Master This bill is issued subject to the contents of 14 and 15 Geo. The mate issues a receipt after examining a packing and counting of the packages. 1000 Bales of Cotton Marks.C. 2 8. Black and now riding at anchor in Mumbai and bound for London. who is his assistant. In and upon the “STEAMSHIP JALUSHA” where of is Master for Present voyage Mr.A London being marked and numbered as stated to be delivered in the like good order and well conditioned at the aforesaid Port of London (the Act of God.Here. Dated at Mumbai 30th October. 2003 J. Mate’s Receipt: This document is got from the caption of the ship or the mate. or to their Assigns. and who can not allow the shipping of the goods unless the shipper presents to either of them a copy of the shipping bill and the shipping order.
. Marking numbers. The shipper or freight forwarder. name and address of the importer. and sometimes custom officials. Shipment for S/S bill of lading number and date. The exporter must take proper care in packing his goods so as to avoid this remark on the Mate’s receipt without any bad remark is termed as a claim Mate’s receipt. a remark to that affect is made on the receipt. Contents of the goods in terms of quantity and weight. 10. This certificate has also to be produced country may require this procedure. such as the charter of commerce. This remark is transferred to the bill of lading when the exporter gets it in exchange for the Mate’s receipt. 9. • • • • • • • • • • • A packing note include the following things: Packing not number. Case number to which the note relates. A receipt with this remark thereon is regarded as dirty or foul receipt. name and address of the exporter. In other words. It helps countries determine the specific tariff schedule for import. The difference between a packing not and a packing list is that the packing note refers to the particulars of the contents of an individual pack. Certificate of origin: A certificate of origin indicates where the products originate and usually is validated by an external source. the date of packing. while the packing list is consolidated statement of the content of a number of cases of packs. use the packing list to determine the nature of the cargo and whether the correct cargo is being shipped.If the mate is not satisfied with the packing of the goods. Packing Note and List: An export packing list indicates that the type of package itemises the material in each individual package indicates the type of package. and it attached to the outside of the package. This certificate is necessity where a country offers a preferential tariff to India and the former is to ensure that only goods of Indian origin benefit from concession. Order number Date. a certificate of origin is a certificate which specifies the country of the production of the goods.
For this purpose. Other documents: (a) Certificate of inspection: It is a certificate issued by the Export inspection Agency.P. (iii) Invoice (iv) GR from. 1963. Usually Export Promotion Council does the pre-shipment inspection. (ix) Letter of credit. the number of packages.It should be noted here that no particular form has been prescribed for the packing Note and packing list. and the number of the vehicle. the following documents should be presented by the exporter to the custom authorities: (i) (ii) Shipping bill. (v) Export license (wherever required). and satisfies the conditions relating to quality control and inspection as applicable to it. Emphasis is on quality control and not on inspection for export. ten copies of the packing note/list is prepared in which the first is sent with the shipping documents. This agency certifies that the consignment has been inspected as require under the Export (quality control and inspection) Act. (vi) Quality control inspection certificate. Normally. wherever available or correspondence leading to contract. EIC gives an inspection certificate in triplicate to the exporter. (xi) AR-4 from
. (x) Packing list. the shipping bill number. (c) Cart Ticket: A cart ticket is prepared by the exporter and includes details of the export cargo in terms of the shipper’s name. one to the shipping agent and the remaining are retained by the exporter. (vii) Original contract. Declaration regarding truth or statement made in the shipping bill. two copies in advance to the buyer. (viii) Contract registration certificate. the port of destination.Forms: A GP form is a gatepass for the removal of excisable goods from a factory or warehouse. (b) G. 11. and is certified export worthy. carrying the cargo. (d) Custom formalities: Goods may be shipped out of India only after customs clearance has been obtained. Form GP 1 is used for the removal of excisable goods or payment of duty and form GP 2 is used for the removal of excisable goods without payment of duty.
(g) Indent or order: An exporter gives a quotation or an offer for sale to the foreign buyer or importer. When a proforma invoice is accepted by the buyer. The indent contains all important particular of the transaction. it becomes a confirmed order. There may be a formal sale contract also. (f) Shipper’s export declaration: A shipper’s export declaration is used by the exporter’s government to monitor exports and to compile trade statistics. (h) Principal export documents: There are eight principal export documents which the exporter is required to send to the importer. It may be in the form of a proforma invoice. Wherever a commodity requires an export license.(xii) Any other documents. where import licenses are required by the country of entry. These documents are: (i) (ii) (iii) (iv) (v) (vi) (vii) Commercial invoice Packing list Bill of lading Combined Transport Document Certificate of Inspection/Quality Control Insurance policy of certificate Certificate of Origin
. An exporter is usually treated as confirmed order when letter of credit is established if favour of the exporter. a copy of license of license number is usually required to obtain a consular invoice. at first receives the order or indent from the importer or his agent. Hence. it must be obtained before an export. In those cases. The exporter. and offer to sell but given in the form of an invoice. a foreign order is called an indent. (e) License: Export import licenses are additional documents frequently required in export trade.
Introduction about the company
Indo alusys industries limited (formerly mahavir aluminium limited) is promoted by the jain group of industries in the year 1979 with the main objective to manufacture sophisticated quality aluminum extrusions in India. In a short span of time, the company geared up to multi dimentional activities with world class aluminium extrusion products, aluminium extrusion window, aluminium architectural products and alloy ingots. The manufacturing facilities of indo alusys industries limited is located in the highly developed industrial area of bhiwadi, in alwar district of rajasthan, which is about 70 kms from the national capital, new delhi. The company has an installed capacity of 14000 mt/ year of aluminium extrusions, alloy ingot capacity of 10000 mt/year, powder coating and finishing capacity of 2400 MT and anodizing/ electro- coloring capacity of 2000 MT per annum. We also have a fabrication capacity of 1000000 sq.mtrs/year for doors and windows, structural glazing, curtain wall, aluminium cladding, skylights, frameless glazing. The company has german aluminium extrusion press and Italian know how of anodizing, electro-coloring and powder coating. Export has been thrust area of our company. The quality range of our products has been internationally accepted by European and middle east for their persistent reliability and competitive edge. Future outlook With a view to boom in building construction industry, real estate/ infrastructures in India, the company has been consistently developing a large team of dedicated technical manpower, designers, planners etc and resources to meet future requirements. To meet ever-growing demand in the auto ancillary industry, the company has future plans to manufacture the aluminum casting components and assemblies thereafter. We also have growth plan for fabricated extrusion products to be used in industrial applications.
On a diversification spree, real estate/ infrastructural projects are under planning. With a view to future, company ushers with host of ideas and innovations for greener and healthier environment.
INDO CABLE Ultra modern manufacturing unit of indo alusys industries limited with the state of the art laboratory and testing facility is located at bhiwadi, rajasthan state which is approximately 60 kms from the capital, new delhi. Corporate office and sales divison is centrally located at connaught place, new delhi. INDO CABLE products meet the highest quality standards. Our range of world- class lt cables includes single and multi core armoured and un armoured cables cables, control cables, instrumentation cables and also lsf, frls, lsoh and custom cables to meet the requirement of a broad spectrum of applications ranging from power distribution, industrial, petrochemical, oil and gas, aeronautical, construction, instrumentation, hospitals, hotels and security etc. With a management team of professionals who have more than 30 years experience in the http://www.indoalusys.com/ industry, the company has ventured in to cable and conductor industry. All the departments of the INDO CABLE are managed by vastly experienced and highly qualified professionals from large cable industry. INDO CABLE is committed to the development of products and provides competitive prices and quality products and services required by our esteemed clients. Company has plans to open sales offices at all the metropolitan cities and other major cities in the country for better services of our customers. INDO CABLE is in the process of registering with major organizations in the public sector and private sector, EPC’s, transmission and distribution companies, consultants etc. OUR VISION To ensure that through our product offering, we attain leadership in our industry in quality and performance, exceeding expectation of our customers. OUR MISSION
To continuously strive for excellence in all aspects of our business through the integration of sustainable business development and innovations, enhancing shareholder value and outstanding customer service. Values and principles Build sustainable growth through innovation Transparency in all our actions Promoting and environment of open communication for all. Integrity driven accountability Continued integration of world class quality management. Safety is not compromised Responsible corporate citizenship in compliance to environment norms Source high quality raw material from most reliable and established sources
QUALITY ASSURANCE Quality Policy Quality assurance is a way of life at indo alusys industries ltd safety and reliability of its products is of paramount importance. It is driven by central philosophy based up on three key issues- partnership, innovation and quality. Quality policy statement Indo alusys industries ltd for fulfilling and surpassing expectations of its customers and other stakeholders, related to performance and reliability of the products and services on continuous basis. This is achieved through effectively implementing and continually improving the quality management system with employee participation and empowerment. Standard product Tee Bars Tubes Angles Channels Architectural building profiles
The company has an installed capacity of 11. alloy ingots of 10000 MT.Doors Windows Curtain wall Structural glazing Partitions Architectural hardware Door handle Hinges Tower bolts Aldrops/latch Misc Industrial applications heat sink exchangers conveyer sections air conditioning equipments/cable wrap motor body profile electrical bus bars water filters auto components expanded metal profiles/grills lighting visi cooler misc
Transport H/F an windows sextions Mouldings Structural profiles Flooring
Miscellaneous electronic/ telecom
PRODUCTION The manufacturing facilities of indo alusys industries limited is located in the developed industrial area of bhiwadi. powder coating and finishing
. which is about 70 kms from the national capital. in alwar district rajasthan. new delhi.000 MT of aluminium extrusions.
The plant has a most foundry having facilities to melt and cast aluminium alloy billets of very high quality applying direct chilled vertical casting process. the plant of the company is equipped with latest and most advanced plant and machinery and other supported/balancing equipment mostly imported. The plant also have sophisticated extrusion handling systems/equipments which includes an extrusions puller and other related equipments to avoid manual handling to produce a scratch free material suitable for subsequent surface treatments like anodizing. The plant also has in house facility for surface treatment of aluminium profiles such as anodizing. The plant has coveted with ISO 9001-2000 certificate there in house facility for checking other parameters in our quality control lab as per Bs-1474:1987 and as per Is: 733. to manufacture extrusions of high precision and quality compared to the best in the world. electro coloring and powder coating. the technologies are updated with latest know-how available in the world to give its products an edge over its competitors. electro coloring and powder coating. 6477. Extrusions dies which form the heart of an extrusion press are manufactured in house. close tolerance and smooth surface finish for its extruded profiles and sections. 1285.capacity of 2400 MT and anodizing/electro-coloring apacity of 2000 MT per annum. Further. 3965. The above presses are capable of producing extruded sections with a circumscribing circle of 6. The most modern die shop is equipped with computerized edm wire cut machine. extrudehone die polishing machine and other most modern equipments with highly skilled die makers and technicians to achieve a very high degree of dimensional accuracy. The operations of both the presses are controlled by micro processor based technology and programmable logic control(PLC) systems.5 inches dia from container size upto 8 inches dia. spark-erosion-cum-electrial discharge mahines. The alloy composition of the billets is controlled by a computerized spectrometer at the stage of melting and subsequent casting.
. The company has two oil hydraulic extrusion presses of 1650 UST capacity designed by schloeman of germany and manufactured by Sutton usa and 1250 ust capacity designed and manufactured by ferrel.
With its international quality and vested interest in ensuring that its products are not only well designed but also successfully installed and high performance standards. aluminium doors. partitions. curtain walls. great ideas can be swiftly converted into great products to the direct benefits of architects. The success of this division is due to the fact that it sells its own systems manufactured in their extrusion plant. which enable to provide flexible design solutions and speed up problem solving.Aluminium architectural division The architectural products division of the company is engaged in providing and fixing architectural door hardware. The new generation aluminium architectural systems saves wood and thus protecting the environment. Products: windows. solar control. With substantial resources devoted to using the most advanced CAD technology. originality. once in place it continue to operate at peak level to the satisfaction of the clients. curtain wall systems and structural glazing for various constructions needs in the country. doors. DESIGN With the use of the latest CAD technology. toughened glass. accessories. Through its constant research and development. aluminium fabricator and ultimately to the clients. structured glazing. thermal insulation. ideas can be swiftly converted into great products. insulated glass.
Products and services
Product excellence is not the end of indo alusys industries architectural products story. sound suppression and over all economy. Thus help its clients with combined qualities of aesthetic appearance.
. with the changing focus of customers from traditional wooden material to light metals to light metals like aluminium and with versatility available for its design. glass. indo alusys industries maintain a leading position in the Indian architectural aluminium systems. windows. colored glass. Indo alusys industries work harmoniously with its clients providing them full design service right from the planning stage to the implementation of the project on a time bound schedule with quality finish and high performance products.
from start to finish. on schedule. hence its follow. Because of the above qualities renounced architects and builder are appreciating the design. flexibility and reliability of indo alusys industries products. MAINTENANCE Indo alusys industries take interest not only in completion of a project but also in the performance of its systems/products installed. quality aluminium frames. low surface temperature and easy maintenance. Aluminium Ingots Division Indo alusys industries limited has ventured into alloy ingots production which can meet the stringent national and international standards like IS/BS/DIN/ASTM or as per customer specification. who are familiar with the products and the technique of its installation are instrumental for the speedy and timely completion of the projects. The techniques for high performance cladding using synthetic rubbers. out of date building are rejuvenated externally with new life and internal benefits of new structure like less noise. The refurbishment ensures that old.000 tons per annum. REFURBISHMENT Indo alusys industries product range has also been designed to offer a wide choice for those who are seeking major refurbishment. Aluminium alloy
.Manufacturing Indo alusys industries products are engineered to highest quality with its research. INSTALLATION Indo alusys industries design and manufacturing capabilities are backed by a team of highly qualifies and experienced engineers and technicians and skilled fitters. which ensure that its products retain the state of art sophistication and leading role in the modern building technology. development and testing programme. repair and refurbishment of its products to ensure its products are in excellent repair. The highly trained and skilled team. glass and other accessories using by indo alusys industries are resistant of whole climatic conditions. which give guarantee to a job that is well done.up facilities include a comprehensive maintenance. air infiltration and extreme surface temperature. The proposed manufacturing capacity is 12.
IAIL is in a position to honor its commitment to its customers with reference to high quality of product. intake manifold. requirement of alloy ingots is growing manifold as India is turning out to be a manufacturing hub and out sourcing centre for automobiles and auto components for the whole world. Based on the concept of total quality management hub and out sourcing centre for automobiles and auto components for the whole world. gear box hosing etc. timely delivery and customer satisfaction. axle hosing. timely delivery and customer satisfaction. Based on the concept of total quality management. cylinder head cover.ingots are consumed in automobile sector extent for manufacturing pressure die casting components namely: Alloy wheels. The plant and equipments available for the above manufacturing facility is as under. Rotary furnaces coupled with rotary caster Tilting furnances coupled with conveyorised caster Universal testing machine for checking the tensile strength Spectrometer for instant analysis of the chemical composition Fork lift for handling of scrap and finished ingots Quality and testing equipments to meet quality standards at each level of production. we are following strict quality norms at every stage of manufacturing process namely: raw material inspection segregation and sorting of scrap melting and casting testing and analysis and finally packing
every lot is checked for chemical composition and also grain structure.
In process inspection is carried out as per following method: Proper Proper Proper Proper segregation and sorting out of raw material temperature control de gassing and fluxing testing of chemical components
. cylinder head. gas content and other physical properties. IAIL is in a position to honor its commitment to its customers with reference to high quality of product.
Proper grain refinement Micro structure/grain structure test Pourcity test Financial performance Year 2007-2008 Particulars 2007-2008 2006-2007 Gross 16522.67 Less: 127.82 for 431.23 Profit 505.71)
.29 deferred 46.44 sales 11325.02 after interest 524.44 128.69 less(1.78 less35.81 before 652. year tax after tax tax
net 346.96 Profit 875.06 taxation (0. For prev.42 92.60 the year before taxation but before depreciation depreciation interest and depreciation interest
Less: provision for current 150.16 fringe 8.12 Profit 632.11 benefit 7.20 profit 322.50 tax 102.65) adjust.79 Less: 243.
Nevertheless . coupled with an increased share of value added products.63 balance 1567.87 profit 977.22 crores during the year as against Rs 113. Profit : the company has registered higher profit of Rs 505.88%.80 add: 1254.
PROCEDURE OF EXECUTION OF AN EXPORT ORDER
Stage-1sT Confirmation of Export Contract
.11%.26 crores during the previous year with an increase of 45.60 lacs in the previous year with a growth of 17. the company is making continous concerted efforts to sustain its existing markets and at the same time widen the horizon its products in new overseas markets by becoming internationally competitive by its expertise and cutting costs all the operational levels without compromising on the quality of the products. Cost pressure on account of input price escalation was contained in some measures through cost reduction programmes initiated earlier. The aluminium business delivered outstanding results with tremendous growth business grew due to expanded volumes for better asset utilization and optimal load distribution.profit 312.43 OPERATIONS
after 276. Export: with the emergence of indigenous overseas markets. Performance overview: during the year under review.44 lacs as compared to Rs 431. the company has recorded year of impressive performance with highest ever top and bottom lines.76 carried 1254.63 to brought balance
tax forward sheet
Turnover: the company has recorded turnover of rs 165. expert globally have become very competitive.
etc. this Act includes both a ‘Sale’ and an ‘Agreement to sell’. Documents against Acceptance. Standards and Specifications 2. All subsequent actions and reactions will depend on the terms and conditions of the export contract. This is the most crucial stage.The exporter scrutinizes the export order with reference to the term & conditions of the contract. inspection. The export order must specify the mode of the payment in unmistakable terms such as letter of Credit. should be as clear as possible. etc. must be strictly adhered to.” A contract of sale of goods is a contract whereby the seller transfer or agree to transfer the property in goods to the buyer for a price.. Product. determine the exact point at which the title and/or risk change from seller to buyer. 1930. packing. The specifications stipulated by the importer in the export order and the L/C such as delivery schedule. According to section 4(1) of the Sale of Goods Act.” therefore. Documents of Payment. The various elements of an export contract are as follow:
1. Quantity 3.
ELEMENTS OF EXPORT CONTRACT
An export contract. The documents required by the foreign buyer must be prepared and submitted to the negotiating bank in the exact specified form and manner. The various elements of it should clearly define the duties and responsibilities of the parties. Inspection
. It should be ensured that the contract has been entered into in accordance with the prevalent export promotion policies of the country and the foreign exchange regulations. as described above. marking.
Taxes. 15. Discounts and Commissions Licenses and Permits Insurance Documentary Requirement Guarantee Force Majeure or Excuse for Non-Performance of
Contract 16. Remedies. Export order should be confirmed by the exporter only after the terms and conditions of the L/C have been found to be in order.4.
Besides these main elements. Mode & Currency 10. 12. Terms of Payment-Amount. 14. 13. 11. Period of Delivery Shipment/Part Shipment etc 8. Packing Labeling and Marking 9.
. Duties and Charges 7. Total Value of the Contract 5. 17. Arbitration. Terms of Delivery/Commercial Terms 6. an export contract may contain other elements desired by the parties to the contract.
the exporter may not be in position to get repeat order from the foreign customers who have wide choice of the exporters in the world market. While sourcing the goods from suppliers. The specifications and instructions to be intimated to the supplier of export goods shall. remain the same.Stage-2nd
Sourcing of Export Order
Upon confirmations of the export order preparations for the dispatch of goods are started. the requisite time margins to be given and the shipment must be clearly intimated to Works manager. This note should contain the description of the goods as has been given in the export order. In case of poor quality. along with a copy of the instructions given by the importer. The date by which the goods must be manufactured. Sourcing of export order in INDO ALUSYS INDUSTRIES LIMITED is based upon quality production system. This is what the manufacturers. the date by which the necessary formalities must be completed. however. Merchandiser finals
. merchant exporter has to lay down clear cut specifications of quality norms because the ultimate accountability to the buyer is of the exporter only. A ‘Delivery Note’ (in duplicate) or ‘Production Order’ is sent to the Work Manager or the Factory manager.
size.the export contract with his correspondent buyer and receives an export order via fax. merchandiser orders a production order to Production Manager in written form. weight etc) Quantity Instructions(stitching. Produced quantity is delivered to Packing Department for dispatching operations. After receiving the export order.
As the Production unit delivers the goods to Packing Department.O. the following procedures are to be followed in order to dispatch the goods:-
. Number Invoice Number Product Name Product Specifications ( colour . This production order contains the following entities: P. e-mail or courier. labeling etc) Dispatch Date
Required quantity is produced in fully by production unit after the recommendation of production samples in accordance with order sample.
bale or pair-packing)
Specific marketing and labeling is used on report shipping cartons & containers to: i) Meet shipping regulations ii) Ensure proper handling iii) Conceal the identity of contents iv) Help receivers identify shipments In overseas buyer usually specifies export marks that should appear on the cargo for easy identification by receivers.1) Packing
The Packing Incharge receives the importer’s instructions for packing from the Merchandiser and covers the following operations: i) Final finishing of the goods(final passing. of packages & size of cases
. Many markings may be needed for shipment. Exporters need to put the following markings on cartons to be shipped: Shipper’s mark Country of origin Weight marking(in Lbs or Kgs) No. clipping etc) ii) Tagging & Folding(according to importer’s instructions) iii) Packing(Cartoon.
If buyer demands handloom certificate then exporter ask textile committee to inspect the consignment and provide them handloom inspection certificate.
A container is an article of transport equipment. goods are inspected by the inspection agent or buying agent on behalf of importer. This certificate can be helpful to suit against importer in case of disputers or undue rejection of goods by importer.
. to facilitate handling and carriage of goods by one or other modes of transport. The inspector has right to open any of the carton or bale to verify the goods in accordance with invoice. Cautionary markings such as ‘this side up hooks’
’ or ‘use no
(In English and in language of country of destination) Port of entry
After packing and labeling. If he finds any defect he can send these goods for processing again. That means importer sends his own agency to inspect the goods. otherwise. strong enough for the repeated use. packing list and desired quality scale. he issues Inspection Certificate.
Locking of Containers
Before locking the container. 26 cbm ii) 40 ft.to --) Container no. & Truck no.(according to the goods to be dispatched). After examination of cargo.Normally containers having following dimensions are used in handloom field:i) 20 ft. il. AR-2 form. gate-pass etc. The samples are sent for further submission to customs. the excise seal along with the seal of shipping line on the container and endorse the excise invoice. The main check point in the excise documents are: Name & Address of Consignee Destination Description of goods & Specifications FOB value of goods Quantity Movements of goods(from -. 60 cbm (high cube) INDO ALUSYS makes use of container of 20 & 40 ft. excise authorities select 10% of rolls as samples and inspect them. 54 cbm iii) 30 ft.
packing includes shipment advice from. invoice instructions are given the packing department packs the rolls depending on these instructions. The shipping advice is particularly important in short-sea trades. in transit. the validation of above instructions are done by preshipment department. which primarily includes shipment advice from. Identification marks & Excise no. excise endorsed documents play extremely crucial role. On the basis of this contract. invoice. the pre-shipment documents are generated. packing list etc. invoice. the doors of container are locked with the iron rods with seals.
Stage-4th Pre-Shipment Operations Documents used for Pre-Shipment
The singed with the buyer defines the specification of the goods to the supplied.
Shipment Advice Form:
It is a sort of covering letter. RBI Code No. On linking the bales by packing department. It also contains some other details like Lorry Receipt No. for example within the Asian countries where the goods may arrive at the port of destination before the shipping
showing the list of documents enclosed with it. B/L particulars etc. In case of any shortage reported by the buyer and when a claim is required to be filled. For additional security of goods.
.documents. commercial letter of credit is
a document issued mostly by a financial institution.
Letter of credit:
A standard. and in the ports of destination where theft and pilferage of the imported goods is rampant.
meaning that redeeming the letter of credit will pay an exporter. The parties to a letter of credit are usually a beneficiary who is to receive the money. cannot be amended or canceled without prior agreement of the beneficiary.e. The letter of credit can also be source of payment for a transaction.. if any.in trade finance. etc. for deals between a supplier in one country and a customer in another. Almost all letters of credit are irrevocable.) will be built. sidewalks. storm water ponds. the issuing bank of whom the applicant is a client. and the advising bank of whom the beneficiary is a client.
Sample document LC:
. the issuing bank and the confirming bank. which usually provides an irrevocable payment undertaking. They are also used in the land development process to ensure that approved public facilities (streets. i. Letters of credit are used primarily in international trade transactions of significant value.
ImportCountry to advise that they have opened with us their irrevocable documentary credit number SB-87654 for account of DEF Imports.. & DATE SBRE-777 January 26. Import-Country in your favor for the amount of not exceeding Twenty Five Thousand U. NO.THE MOON BANK INTERNATIONAL OPERATIONS 5 MOONLIGHT BLVD. 2001
UVW Exports 88 Prosperity Street East.00)
available by your draft(s) drawn on at for full invoice value
accompanied by the following documents: 1.S. 7 Sunshine Street. MB-5432
ISSUING BANK REF. Sunlight City. Sunlight City. EXPORT-CITY AND POSTAL CODE EXPORT-COUNTRY
OUR ADVICE NO. Suite 707 Export-City and Postal Code
Dear Sirs: We have been requested by The Sun Bank. Signed commercial invoice in five (5) copies indicating the
. Dollars (US$25.000.
2. IP/123456 dated January 18.
Documents must be presented for payment within days after the date of shipment. and showing documentary credit number. All charges outside the Import-Country are on beneficiary's account. 2. Export-Country Port. 2001. Sunlight City. evidencing that claims are payable in Import-Country. Packing list in five (5) copies.buyer's Purchase Order No. Full set 3/3 clean on board ocean bill of lading.
100 Sets 'ABC' Brand Pneumatic Tools. Import-Country
Partial Prohibited shipment Transshipment Permitted Special conditions: 1. Insurance policy in duplicate for 110% CIF value covering Institute Cargo Clauses (A). issued to order of The Sun Bank. plus two (2) non-negotiable copies. 4. DEF-101 dated January 10. marked "freight Prepaid". CIF Sunny Port
Moonbeam Port. notify the above accountee. 2001. 3. Institute War and Strike Clauses. 2001. 1/2" drive. dated latest March 19. Import-Country.
. All documents indicating the Import License No. complete with hose and quick couplings.
Sunlight City. In case the L/C does not stipulate the latest negotiation. but on or before the L/C expiry date. it is within 21 days after the date of issuance of the transport documents. if presented at this office on or before March 26. 2001 or 15 days after the date of shipment.
Letter of Credit Particulars: a) Latest Negotiation Date The latest negotiation date is the last day of the period of time allowed by the letter of credit (L/C) for the presentation of documents and/or draft(s) to the bank. In the sample letter of credit the latest negotiation date can be March 26.
Unless otherwise expressly stated. 2001 We confirm this credit and hereby undertake that all drafts drawn under and in conformity with the terms of this credit will be duly honored upon delivery of documents as specified. dated January 26.Draft(s) drawn under this credit must be marked Drawn under documentary credit No. The latest negotiation date is not necessarily the L/C expiry date. International Chamber of Commerce Publication No. SB-87654 of The Sun Bank. 2001 Very truly yours. b) Expiry Date and Place The expiry date and place is the last day of validity of the credit and the place allowed by the letter of credit (L/C) for the
. 500. this Credit is subject to the Uniform Customs and Practice for Documentary Credits. 1993 Revision. Import-Country. whichever comes first.
riots. In the sample letter of credit the expiry date is March 26. civil commotions.presentation of documents and/or draft(s) for payment. In the sample letter of credit the draft is drawn on the confirming bank. does not extend the latest date of shipment. e) Draft(s) Drawn Under The draft(s) drawn under answers the question "The draft is drawn under which credit and the credit is of which bank?" In the sample letter of credit. lockouts. however.. the L/C requires that the draft(s) be
. acceptance or negotiation. which is The Moon Bank. strikes.. which is the beneficiary's city. c) Draft(s) Drawn On The draft(s) drawn on answers the question "Which bank or who is the drawee (the payer) of the draft?" The draft is most often drawn on the confirming bank or the issuing bank. Such extension.e. In the sample letter of credit the draft is drawn at sight. The bank normally discourages stating the L/C validity in a period of time.e. but does not specify the date from which the time is to run. wars or any other causes beyond the bank's control. insurrections. for example "this credit is valid for three months" or "this credit is available for two months" or "this credit is good for one month". payment on demand or on presentation) or a term draft (i. In case the expiry date and/or the latest negotiation date falls on a day on which the bank is closed for reasons not including the acts of God. In some cases. In case the validity of an L/C is stated in a period of time. 2001 and the place for presentation of document is Export-City. its validity starts from the issuance date of L/C by the issuing bank. d) Draft(s) Drawn At The draft(s) drawn at answers the question "The draft is drawn at what terms?" It can be a sight draft (i. the expiry date and/or the latest negotiation date is extended to the succeeding first day on which the bank is opened. the draft is drawn on the applicant. payment at a fixed or determinable future time).
f) Latest Shipment The latest shipment---latest date of shipment or last date for shipment---is the last day of the period of time allowed by the letter of credit (L/C) for shipment.. In the sample letter of credit the latest shipment date is March 19... Some of the expressions that may appear in the letter of credit (L/C) indicating the origin and the destination are: "shipment from .." "taken in charge at . 2001. 2001" (please see the completed sample draft)....
." "forward from .. SB-87654 of The Sun Bank. dispatch or taking in charge. dated January 26.." "dispatch from ... dispatch or taking in charge...marked "Drawn under documentary credit No. Import-Country. The port or point of destination is the port or place of discharge or delivery.." "carriage from . Export-Country and the destination is Sunny Port.. to . to . for transportation to . to .... to ." "delivery from ..."
In the sample letter of credit the origin is Moonbeam Port. ImportCountry. g) Port or Point of Origin and Port or Point of Destination The port or point of origin is the port or place of loading.. Sunlight City.. to ...
The content of a typical declaration includes a sworn statement from the exporter indicating that the goods in question are manufactured in the exporting country. the government external trade department. or translated to. the language of the importing country. in French for shipment to France. Invoice is a bill for itemized goods or services. in Italian to Italy.
. or the foreign government trade office concerned in the exporting country.3)
Commercial Invoice: The commercial
invoice is a record
or evidence of transaction between the exporter and the importer. The description of merchandise as given in the commercial invoice must correspond to the description in the L/C and other documents must contain the similar description are: Specific Language Requirements in the Commercial Invoice Certain importing countries may require that the commercial invoice and the packing list be made out in. Declaration on Commercial Invoice The declaration on the commercial invoice for some countries must be in a specified wording. The pre-shipment invoice is a shipment detailing the transaction. and in Spanish to Mexico and Venezuela. and that the amount shown in the invoice is the true and correct value. It is one of the most important documents prepared and signed by exporter with whose help other documents are prepared. The exporter may check the wording with the customs broker. for example.
is to verify that the invoice is correct. Shipping Marks & Numbers • Quantity If the letter of credit (L/C) does not stipulate the quantity in a stated number of units (i. thus the quantity in the invoice must be 100 Sets.Certification and/or Legalization of Commercial Invoice The letter of credit (L/C) from certain importing countries.. the original and the copy of the commercial invoice and packing list are often signed. The legalization. or gross). In all other documents. requires the certification and/or legalization of the commercial invoice. box. in particular from the Middle East. the description can be in general terms provided it is not inconsistent with the description in the L/C. it does not state in units such as piece. dozen. which is done by The Consulate or The Commercial Section of the Embassy of the importing country.e. is to confirm that the invoice and declaration (in the invoice) are correct. The certification. or unless the L/C stipulates that the quantity of the goods specified must not be exceeded or reduced. a tolerance of 5% more or 5% less quantity is permitted. If such sample L/C does
. provided the total amount does not exceed the amount of the L/C. unless otherwise stipulated in the letter of credit (L/C). In the sample L/C the stated quantity is 100 Sets. The certification and legalization are most often satisfied with a stamp or a seal on the invoice and payment of a fee. set. The processing time may take one week Signature and/or stamp The commercial invoice and packing list need not be signed. Description of Goods The description of the goods in the commercial invoice must correspond with the description in the letter of credit (L/C). which usually is performed by the local Chamber of Commerce of the exporting country. In practice.
"approximately".000 and US$11. provided the total amount does not exceed the amount of the L/C. the quantity in the invoice cannot exceed 10% more or 10% less than the quantity indicated in the L/C. "circa" or similar expressions. If the L/C amount is indicated using the words "about".
Explanations: Fields in the Preamble of the Commercial Invoice " For account and risk of Messrs. "
. If such L/C does not state the quantity and the L/C amount is US$26.000. "circa" or similar expressions. the quantity in the invoice can be any quantity between 90 sets and 110 sets. For example. provided the total amount does not exceed the amount of the L/C. the amount of invoice can be any amount between US$9. if the L/C unit price is "about US$250". if the L/C amount is "approximately US$10.
Amount Unless otherwise stipulated in the letter of credit (L/C). the unit price in the invoice can be any unit price between US$225 and US$275. If the L/C quantity is indicated using the words "about".not state the quantity.000.250 or more.000". "approximately". the unit price in the invoice cannot exceed 10% more or 10% less than the unit price indicated in the L/C. For example. • Unit Price If the letter of credit (L/C) unit price is indicated using the words "about". but not over 100 sets as the total amount will exceed the L/C amount of US$25. For example. "circa" or similar expressions. "approximately". the amount of the invoice cannot exceed 10% more or 10% less than the amount indicated in the L/C. the UVW Exports can ship between 95 sets and 100 sets of pneumatic tools. the exporter may ship between 95 and 105 sets. if the L/C quantity is "about 100 sets". the amount must not exceed the amount permitted by the L/C.
The store number is used in the routing of goods by the chain store. Mrs. " Date " and " Issuing Bank "
Referring to the sample L/C. It identifies the store that places the order or to which branch (of the chain store) the goods will be delivered. " Letter of Credit No.) or contract number. It is the identification number of the store or branch of a chain store. 2001" in the respective fields in the documents. " Buyer's P. " The department or store number is often required when dealing with the chain stores. The title Messrs. the same way the title Mr. but there is no harm if it is entered in the documents. Referring to the sample L/C.Enter the complete name and address of the importer (the consignee) in the field (For account and risk of Messrs. stands for Messieurs in French meaning gentlemen.O. The sample L/C does not stipulate indicating this information in the documents except the draft(s).. " From (Port of Loading) " and " To (Port of Discharge) "
. 2001" and "The Sun Bank" in the respective fields in the documents. or Miss is used to address a person.). enter "IP/123456" and "January 18. " and " Date "
The letter of credit may require the documents to show the purchase order (P. " and " Date "
Referring to the sample L/C.O. 2001" in the commercial invoice and all other documents. dispatch or taking in charge is often regarded as the ETD. " . enter "DEF-101" and "January 10. " Shipment on or about " Shipment on or about is the ETD (estimated time of departure) or the ETS (estimated time of sailing). " Buyer's Department / Store No. It is used to address a business firm in a formal manner. or Contract No. " Import Permit/License No. enter "SB-87654". including bill of lading and insurance policy. the date of loading on board. In practice. "January 26. thus UVW Exports may choose not to enter it in the documents.
Pakistan" in the field.
It is a document showing the details of goods
contained in individual packages. Referring to the sample L/C. which is often the consignee's place (city). " For Transhipment To " For transhipment to is the final destination in the onward routing or carriage.The port of loading is the port or point of origin and the port of discharge is the port or point of destination. For example. Pakistan. enter "Moonbeam Port. Export-Country" as the origin and "Sunny Port. if a consignment destined for landlocked Afghanistan has to tranship at Karachi. " Via (Tranship At) " The via (tranship at) refers to the transhipping port or point in a transhipment.
. which helps customs authorities and receives in identifying the contents of specific package. Import-Country" as the destination in the fields. enter "Karachi.
113 CBM (4 cft.) Gross Weight (G..It contains almost all the information provided in invoice along with details of packing like: No.) 0. "
" Description of Goods "
.1 lbs. (2' x 2' x 1')
" Package No. 1 and up. or a total of 50 cartons for the 100 sets Each master carton: Net Weight (N. .... 1-50" or the like in the field (Package No.. it is assumed that the pneumatic tools in the sample L/C contain the following data: The catalogue or item number of the pneumatic tools is A380 Each set is in an inner box and there are two boxes in an export master carton... 20 kgs. enter "C/No. .) 23 kgs.. x 30. For the purpose of explaining other fields in the packing list.) Measurement (Meas.W. From the sample L/C.5 cms.).. " The entries preferably arranged in sequence from the lowest number to the highest.. x 61 cms. from package No.) 61 cms. provided it is not inconsistent with the marks and numbers on the master cartons. (50.7 lbs.
" Item No. of bales or cartons Gross weight Net weight Dimensions etc..W.) . (44. that is..
As far as the carrier is concerned. or 100 Sets 2 Sets @ Ctn. 1. provided it is not inconsistent with the description in the L/C. or the like in the field. " Weight " It shows the total weight within a stated range of the package number and the weight of each package. it is necessary to show the net weight and gross weight in the packing list. 1. the gross weight or measurement of a consignment is needed to calculate the freight./Ctn. The entry may appear as: N. 23 Kgs.The description of the goods in the packing list can be in general terms.
. " Quantity " It shows the total quantity within a stated range of the package number and the breakdown in each package.150 Kgs. In case the goods are assessed in the importing country or exported on the net weight basis. or the like in the field and put a notation "Gross Weight".150 Kgs. 1-50. 1-50.W. G. From the sample L/C and data of the pneumatic tools above. The stated range is C/No. entering "A380" and "'ABC' Brand Pneumatic Tools" in the fields will satisfy the requirements.150 Kgs. The / and @ used here stands for per or each. enter: 100 Sets 2 Sets/Ctn. @ Ctn. 23 Kgs.W.000 Kgs. or 1. The stated range is C/No. enter: 1.
113 CBM/Ctn. The entry may appear as: 5. Some carriers may calculate the freight on a cubic feet (cft. ft. In the case of an irregular shaped cargo." Measurement " Ocean shipments are most often charged by the cubic meter (CBM or cbm). @ 61 x 61 x 30. in the field (Measurement). The @ stands for at or each. Sometimes.113 CBM/Ctn. C/No. unless otherwise stipulated in the letter of credit (L/C).
Summary of Totals in a Consignment
Total Number of Packages For example a consignment where the range of the carton number is as follows: C/No. " Signature and/or Stamp " The packing list and commercial invoice need not be signed. take the three widest dimensions that describe the smallest cubic space enclosing the cargo to determine the measurement.65 CBM 0. C/No. the original and the copy of the packing list and commercial invoice are often signed. Enter: 5. C/No. it is necessary to include the size or dimensions (length-width-height) of the master package. C/No.5 Cms. or cu. 1-89-1718-2324-3031-4243-50 Product A Product B Product C Product D Product E Product F
.) basis.65 CBM 0. In practice. C/No.
put a summary "Total 50 Cartons" in a succeeding row after the "C/No. There is no need to show the breakdown of the weight and measurement of each carton... If kgs. 43-50". Total Weight and Total Measurement If the net weight and gross weight are used in the breakdown.. such as in a consignment consisting of a few master cartons where each carton contains several small items of different sizes. Under certain circumtances. it is necessary to show the breakdown of the quantity of each item. CBM and cft..
. Simply entering the total weight and the total measurement of the consignment in the summary row would satisfy the export requirements.. the summary must show the total of kgs. the summary must show the total net weight and the total gross weight. lbs. preferably show all the units used in the summary of totals. CBM and cft. For example. are used in the breakdown. a shipment includes: 100 dozen 200 dozen 300 boxes 400 boxes Product A Product B Product C Product D
as such the total shows "300 Dozen and 700 Boxes". lbs.
Total Quantity If a consignment consists of different units.
This document contains details like Description of package Marks and number on packages Gross weight Net weight Description of finished goods Value Invoice number and date Amount of rebate claimed under rule 18.
6 copies of this document are prepared which are as follows:
(1)Original (White) (2)Duplicate (Buff) (3)Triplicate (Pink) after proof (4)Quadruplicate (Green) (5) Quintuplicate (Blue) record
is sent with container is sent with container to excise authority
shipment is obtained kept for office
This document is prepared by exporter & it acts
as a excise document.
When the goods are shipped by Sea. It is called a sight bill. which is called usance bill. he draws a bill. Drafts Drawn On the Bank
. A usance bill is drawn for payment at a date later than the date of presentation. the bills are drawn in sets and two mailed to the foreign correspondent through an authorized dealer for presentation to the importer. There is no aligned document for draft.
b) Usance Bill: When the exporter (INDO ALUSYS) has agreed to give credit to the foreign buyer. A bill of exchange is to two types:a) Sight Bill: When the importer makes the payment immediately after the draft presented to him.(6) Sixtuplicate (Yellow) excise authority
Bill of Exchange:
A bill of exchange is also known as draft. the same can be prepared by the exporter in the usual format.
which contains an order from the exporter INDO ALUSYS to the importer to pay a specified amount to a person. To whom it is directed to pay is called maker of a bill means exporter (INDO ALUSYS).
In the sample L/C the draft is drawn on the confirming bank. is marked "Second of Exchange (First Unpaid)" and the number "2". The sample draft shown above is the first draft. Some drafts may not be numbered "1" or "2". normally one draft is issued in a documentary collection where the draft is drawn on the importer. The issuance of more than one draft in a letter of credit follows the same logic as in the issuance of bill of lading in more than one original. marked "First of Exchange (Second Unpaid)" and the number "1". In contrast. Sample Instrument: Draft
The Letters of Undertaking Instead of the Drafts
. Blank drafts are available at the paying bank. At times even three drafts may be drawn on the drawee bank. First of Exchange (Second Unpaid) and Second of Exchange (First Unpaid) In practice." (number) in the above sample draft may be used for the exporter's reference number. In the second draft. if any is issued. this practice was not uncommon before in certain countries. it is not uncommon that two drafts are drawn on the drawee bank in a letter of credit (L/C) to ensure that at least one draft reaches the drawee when they are dispatched separately.
the government levy a heavy tax on drafts. The 'availed' term draft can be readily discounted. The payee could be another party rather than the exporter.
'Availed' Term Drafts The word "aval" in French means endorsement. the exporter may request the importer to specify in his/her letter of credit (L/C) application that "No drafts be issued".In certain exporting countries. The exporter may arrange to have the accepted draft to be 'availed' by the importer's bank---the bank adds its endorsement as guarantee of payment. thus providing the exporter with immediate funds. The drawee is the buyer (the importer). hence it is not readily accepted for discounting or as collateral in a loan.
. When the documents are presented to the negotiating bank. The drawer is the seller (the exporter) and the payee of the draft. In a letter of credit the drawee most often is the confirming bank or the issuing bank. which is the acceptor and the payer of the draft. • Drawee The drawee is the party who owes the money or agrees to make the payment and to whom the draft is addressed (made out). or could be the bona fide holder (the bearer) of the draft. instead of accepting a draft drawn by the exporter. the acceptor and the payer of the draft in a documentary collection. In such a circumstance. the bank issues a letter of undertaking indicating when and where the money will be paid.
The Parties in the Collection of Drafts
• Drawer The drawer is the party who issues the draft and to whom the payment is made. A term draft accepted by the importer does not guarantee payment on maturity.
The C/O is based on the rules of the country of origin. The manufactured goods must have been substantially transformed in the exporting country as the country of origin.
Collecting Bank (Presenting Bank)
The bank in the importer's country (the importer's bank usually) involved in processing the collection---presents the draft to the importer for payment or acceptance. which is often called the GSP Form A. and in certain cases may include such information as the local material and labor contents of the product. Some importing countries require a certificate of origin to establish whether or not a preferential duty rate is applicable. Certain operations such
Remitting Bank The exporter's bank to whom the exporter sends the draft. The certificate of origin (C/O)is an alternative to the declaration or the certification and/or legalization of the commercial invoice. produced or manufactured. and who subsequently relays them to the collecting bank in a documentary collection is called the remitting bank. A popular example of the certificate of origin is the Form A. receives the shipping documents. if any. shipping documents and documentary collection instructions. to their present form ready for export. and thereafter releases the shipping documents to the importer in accordance with the instructions of the exporter---is called the collecting bank or the presenting bank. The term remitting bank as used under a letter of credit may refer to a nominated bank from whom the issuing bank or the confirming bank.
7) Certificates of Origin The certificate of origin is a document certifying the country in which the product was manufactured. The country of origin is the country where the goods are grown.
The trade agreement. import practice. and letter of credit (L/C) stipulation determine the type of C/O needed.as packaging. and Free Trade Market Certificate of Origin. splitting and sorting may not be considered as sufficient operations to confer origin. The certificate of origin includes the Form A. Exporter's Certificate of Origin. Chamber of Commerce Certificate of Origin.
Sample Form: Form A
Greece. Norway.Free Trade Market Certificates of Origin
NAFTA Certificate of Origin The North American Free Tree Agreement (NAFTA) Certificate of Origin is used within the NAFTA countries (i. Canada. Iceland. Germany.. Portugal. Netherlands. Spain. France. Ireland. is used in the European Community. and United Kingdom. Denmark.
EC Certificate of Origin The European Community (EC) Certificate of Origin. Sweden. EC countries consist of Belgium.
Movement Certificates Different Movement Certificates are being used in the European Union (EU)---EC (European Community) and EFTA (European Free Trade Association) countries. as its name implies. The form is available at the customs office. It is selfcertified by the exporter. It is issued by the Chamber of Commerce of the exporting country. Italy.
. USA and Mexico).e. and Liechtenstein. The certificates require endorsement by the customs of the exporting country. usually with payment of a fee. Finland. Luxembourg. EFTA countries consist of Austria. Switzerland.
It is not a document of title and it is not issued in a negotiable form. B/L is nor a negotiable instrument in terms of Negotiable instrument Act. It services as a receipt from the shipping company who undertakes to deliver the goods at agreed destination on payment of freight in a prearranged manner and also a document of title to the goods. • Postal Parcel Receipt (PPR).
The receipt issued by an airline or its agent for the carriage of goods is called airway bill or air consignment note. It is issued in terms and conditions of the contract of carriage of goods. B/L is generally made out in the sets of two or three originals.
A Bill of Lading is the most important document in Foreign Trade.DOCUMENT CONNECTED WITH TRANSPORTATION OF GOODS
• Air Way Bill (AWB) Air consignment Note. it is a practice to call the original copies as negotiable copies. viz. for the consignee and for the consignor.
. It is generally issued by a shipping company.
Like the AWB. Generally AWB is issued in three copies. However. the PPR evidence merely the receipt of the goods to be exported to the buyer and is not a document of title. for the carrier. All the originals are duly signed by the master of ship or the agent of the steamship company and all the originals are equally valid for taking the delivery of goods and once one original copy is utilized the other originals become full and void. • Bill of Lading (B/L).
The signature or authentication must be identified as carrier or master. rail or sea transport).
. road.Ocean (Marine) Bills of Lading
The bill of lading (in ocean transport). and receipt (in postal or courier delivery) are collectively known as the transport documents. The carrier issues the B/L according to the information in a dock receipt. and it must be signed or authenticated by the carrier or the master. Please see the sample Ocean Bill of Lading below. waybill or consignment note (in air. and a document of title to the goods. or in some cases according to a completed working copy of the B/L supplied by the customs broker. Unless otherwise stipulated in the letter of credit (L/C). The B/L must indicate that the goods have been loaded on board or shipped on a named vessel. a bill of lading containing an indication that it is subject to a charter party and/or that the vessel is propelled by sail only is not acceptable. the name and capacity of the carrier or the master on whose behalf such agent signs or authenticates must be indicated. an evidence of the contract of carriage. and in the case of agent signing or authenticating. or the agent on behalf of the carrier or the master. The bill of lading (B/L) serves as a receipt for goods.
Sample Document: Ocean Bill of Lading
Marine or transit insurance policies can be assigned by the insured merely by endorsement and delivery. Unless the insurance certificate gives details of the conditions of cover it is not so much value to third party who negotiate the shipping documents. specific policy etc… A floating policy is a contract of insurance for covering a number of shipments. As per this policy the insurer undertakes to insure all the shipments for which the details are already intimated to the insurer. • Insurance Certificate
The insurance on “open cover” or “floating” policy covering all shipment on certain terms and subjects to conditions laid down. open policy or cover. • Broker’s Certificate
This is also not acceptable as broker issues the same. the details of which are not finalized when the contract of insurance is conclude. description of cargo etc.
This is analogous to cover note issued by the broker. It gives full details of all the risks covered.
. B. and the insurance policies are issued accordingly. is therefore required to be declared subsequently and endorse in the policy. An open cover /policy is valid for a given period of time or permanently open. The relevant details like name of the vessel. C etc.•
Letter of insurance. • Insurance Policy
This is a basic legal document-evidencing contract of insurance between the insurer and insured. as broker acts for the insured and cannot compel insurer to accept the proposal of insurance. It is stated that particular subject are placed under insurance and certificate/policy of insurance will be issued later on. A specific policy covers specific shipments and such policy is readily available for submitting with the export documents. destination. The coverage of risks is classified into categories like A. Insurance policies are issued in different forms like floating policy.
Parties involved in Pre-Shipment: 1) Marketing Department 2) Pre-shipment 3) Warehouse 4) Excise department 5) Clearing and forwarding agent 6) Inland Container Depot
They handle all documentation work through the customs & port authorities and other regulatory agencies
Documents required for customs clearance:
1) Shipping Bill: Shipping bill is the main document required by
customs authority for allowing shipment. The exporter (INDO ALUSYS) has to submit some documents for shipping bill which are as follows: SDF (GR Form) in duplicate for shipment. generally act on behalf of importance and exporters for handling their export shipments or clearing their import consignments. who are known as clearing and forwarding agents.
Custom House Agent (CHA) and freight forwarders.
Four copies of packing list giving contents. total FOB/CIF value. quantity.
Types of Shipping Bills:
i) Free (White in colour): Used in cases where exported goods do not get any export benefits.
. quantity gross and net weight of each package
Four copies of invoice indicating all relevant particulars such as number of packages. unit rate. Letter of Credit Inspection certificate
Each shipping bill set consist of following copies”i) Original ii) Duplicate iii) Triplicate iv) Quadruplicate v) Quintuplicate vi) Sixtuplicate Retained by customs Exporter’s certificate Drawback copy/DEEC copy
to excise department Export Promotion Copy Exchange Control Copy
* Exchange control copy is also called GR Form/SDF Form. correct and full description of goods etc Purchase Order.
ii) Drawback (Green in colour): Used in cases where the exported goods attract the benefit under drawback rules.
Contents of GR Form:
i) Name of advising bank (if exports is under L/C arrangement) ii) Name of bank through which payment is to be realized. The exporter give this form to his shipping agent to get it stamped from the customs office after clearance of goods from custom. Duplicate copy is submitted to Negotiating Bank. iii) Dutiable (Yellow in colour): Used where the exported goods are manufactured in bond (EOU Goods). after mentioning the date of receipt of payment on GR/SDF form they also send it to RBI. The original copy remains with authorities and they submit it to the Reserve Bank of India. iii) Customs assessable value.
2) GR/SDF Form: GR/SDF form is filled and submitted by the
exporter. iv) Quantity of goods.
. iv) Bond (Pink in colour): Used where the exported goods are manufactured in bond (EOU goods). GR/SDF form is prepared in duplicate.
Likewise the container technology has brought in the cellular ships to carry general cargo in containers to reduce cargo-handling cost and promote faster movements. The container system of transportation involves bulking of the break-bulk cargoes by putting them in containers of standard sizes shown below: Length Streadth Height 10’ 20’ 30’ 40’ X X X X 8’ 8’ 8’ 8’ X X X X 8’ 8’-81/2’-9’-91/2’ 8’ 8’
.3) Bill of Lading:
The bill of lading is a document issued
by the shipping company or its agent acknowledging the receipts of the goods mentioned in the bill for shipment on board and undertaking to deliver the goods in who like order and condition as received to the consignee or his order provided the freight and other charges specified in the bill of lading require will depend upon the terms of better of credit.
Modern ship building technology has brought forth dry cargo bulk carriers and tankers to reduce per unit cost of transportation in tramp shipping.
. Simplification of documents & procedures. The system aims at: • • • • • • • • Faster and reliable delivery of goods. Physical separation of dirty cargoes. Ensuring original quality of goods.the carriage of containers is confined to the scalage of journey. Thus the container transportation system through effective coordination of international movements operates on a much wider scale and endeavors to provide maximum convenience to cargo owners.
For example If the width is 50cm. • From Inland Container Depot (ICD) in one country to ICD in another country.
Volumetric Calculation of Weight for charging: When shipping lightweight and bulky packages. Reduction in the Packing cost of the cargo. Reduction in cargo handling cost & ship’s time at ports. use the following formula to help you determine their volumetric weight: Multiply the width by the length by depth of your shipment and divide the total by 6000. Better protection of fragile & containable cargoes. Reduction in pilferage.the movement of containers is extended to the interior parts of the country and • Door to Door-the movement of containers is further extended right to the factory gates of the manufacturer/exporter to the door of the importer’s warehouse in a foreign country. length 40cm and the depth 30cm.The movement of containers would progress in the following phases: • From port to port (Pier to Pier).
It is one of the documents required for negotiation.Vol. is widely
used in commercial transaction. = 50cm x 40cm x 30cm = 10 Kgs 6000
. The invoice is usually made out for the full realization amount of goods. also called as commercial invoice. The seller generates this after the shipment is done. It is the statement of account of sale rendered by the seller to the buyer and is prepared in a specific format. Wt.
if any. It is obligatory for the exporter to submit the shipping documents to your bank with in 21 days of the shipment of goods for onwards dispatch to the overseas correspondent bank.The post-shipment department is done for preparing this invoice. shipping bill number and date. quota details and letter of credit or contract copy is required.
Negotiation / Collection through Bank
Once the goods have been shipped and the necessary documents are dispatched to the importer. GR number and date.
. the bill of lading-number and date. Who will arrange the payment of the same to your bank describing the documents enclosed with it. This invoice is actually a commercial invoice. thereby reducing the bill amount compared to the pre-shipment. The post shipment invoice may contain the discount or partial advance payment. the next step is to collect the payment from the importer. freight details. The major difference between pre and post invoices are as follow: The pre-shipment invoice is used for customs clearance while the other one is sent to the L/C opener/buyer for getting the realization through the bank.
1) Documents sent to the Bank: The exporter presents the following documents to the bank for negotiation: Commercial Invoice No. Under the GSP manufacturers and semi-manufacturers
. + 4 copies 1 copy 10 orig. without which clearance of goods is not allowed.
Generalized System of Performance (GSP Certificate): It is a document which is a special requirement of EEC member countries and a few other European countries. + 3 copies 10 orig. Packing list Bill of Lading Customs Invoice No.+ 1 copy
Certificate of Origin: There are certain countries that require their importers to obtain certificate of origin from the exporter. Single Entry Declaration Weight List Original copy of Letter of Credit 5 copies 7 copies 2 orig.
c) A duplicate copy of GR form is transmitted to the exchange control department of payment from abroad. b) The set of all these documents is sent to the importer bank by the first airmail. it is a request to the bank to negotiate the documents if the same are drawn under the letter of credit.from developing countries including India are entitled to a cocsessional rate of import duty. d) The original copy of the bank certificate as applied for by exporter along with attested copies of commercial invoice is returned to the exporter. When the documents are submitted to the bank.
The bank examines all the documents in a process which is as follows:
a) The bank examined all the terms and conditions are according to the original order and also that of letter of credit. Reserve bank of India on receipt of
2) Documents sent to the Party: Bill of Lading 3 Copies
. After that the second set is also sent by the second airmail for the confirmation of first set.
Commercial Invoice Packing list Special Customs Invoice Single Entry Declaration Weight List
5 Copies 5 Copies 5 Copies 2 Copies 2 Copies
FLOW CHART OF EXPORT PROCEDURE
COMMERCIAL INVOICE.RECEIPT OF INQUIRY FROM BUYER
UNDERSTANDING THE REQUIREMENT & ACCESSING THE CAPABILITIES & CAPACITIES
ACCEPTENCE FOR SAMPLING SAMPLING PREPARATION SAMPLE APPROVED BY BUYER ORDER RECIVING & EXPORT CONTRACT FINALALIZING P. BILL OF EXCHANGE ETC)
CUSTOM CLEARANCE & SHIPPING
(SHIPPING BILL. COLLECTION OF PAYMENTS THROUGH BANKS)
MODES OF PAYMENT
.O. TO PRODUCTION INCHARGE SOURCING
(DYING. PACKING. BILL OF LADING ETC)
POST SHIPMENT OPERATIONS
(NEGOTIATING DOCUMENTS. FOLDING. AR-2 FORM. CUTTING. LABELING FINISHING OF PRODUCTS) REVIEW BUYER’S COMMENT NO
(TAGGING. STITCHING. INSPECTION & TRANSPORTATION)
PREPARATION OF PRE-SHIPMENT DOCUMENTS
political disturbances payment delays and a lot of other socio political factors. It may be appreciated that these risk factors originate out of one common reason i. The exports managers must take the following factors into account while evolving their payment policies. So. The payment can influence other factors of marketing mix.
. possible restrictions on transfer of funds from importer’s country.Managerial
complicated as the operations of a company cross the boundaries of the nation in which it is operating. importer’s financial position and the prevailing trade practices in the industry. The risk dimension accentuates significantly as soon as the goods are sold to a buyer outside the country. fluctuations in rates of exchange. Exports finance is no exception to this generalization. The payment is influenced by several factors such as government rules and practices. bankers. obstacles to payments for reasons such as wars. Some of the risk factors are inadequate personal knowledge about the foreign buyers. Policies. an export transaction is deemed to be complete only after the final payment has been received. The final indicator of success any business is its financial viability and in exports the inflow of funds is from across the borders. the business operations are done in different of business environment. price being the most significantly affected.e.
c) The methods of receiving payments. iii) Security of payment and risk factors. d) Other factors.a) The institutional aspect – the operations of the mechanism and credit facibilities.
. Shipment on Consignment Basis. i) Exporter’s knowledge of the buyer. Open Account. the methods of payment can be classified into following categories depending upon the risks associated: Payment in Advance. iv) Time taken for payment
Methods of Payment in Exports
Due to the significance of risks in exports payments. Documentary Bills. ii) Buyer’s financial position. b) Foreign exchange and its relation to export terms and receipt of the export proceeds. Documentary Credit under Letter of Credit.
scheme with legal undertaking instead of B/G (Bank Guarantee).C. b) Membership of Policymaking open bodies and business delegations. f) Import of cars as one time facility once in five years against their valid status. c) Self declared pass scheme.P.GOVERNMENT INCENTIVES FOR EXPORTS
Benefits for Export House/Trading House/Star Trading House/Super Star Trading House: a) Off shore trading /merchanting with advance payment to suppliers. g) No prior approval required for opening offices abroad.G. e) E. d) Duty exemption scheme with legal undertaking instead of B/C.
i) Marketing development assistance through FIEO.
Duly Exemption Scheme
I. he has an option of getting a special band rate. The transaction under the license as to be logged by customs
(DEEC): Under this scheme. The cost/duty figures supplied by all industries are used arrive at duty drawback rates. In case exporter is not satisfied with this rate. I.
The duties suffered on the raw material used in the final export product. II. which are published as all industry rates. This license is called an Advance License. k) EEFC funds utilization for setting up offices abroad. j) Higher Entitlements for foreign exchange for foreign travel. are refunded to the exporter through duty drawback scheme.h) Foreign equity can be raised up to 51%.The current scheme does not allow drawback. whether imported or procured indigenously. exporter is given license to import raw
material without payment of duty. DEEC. if the exporter has already audited MODVAT credit.
in a book called DEEC book. This book has two separate parts for exports and imports. The export goods shall not be eligible for drawbacks
on the inputs for which credit is taken in pass book.
This scheme shall apply only for the export of the product where standard input-output norms have been published in hand book of procedures. The licensing authority.
. Pass book shall be issued quantity based only.
II. Non-fulfillment of the obligation attracts the duty waired easier on the imports of raw material plus interest plus penalties. Duty Entitlement Pass Book Scheme (DEPB):
A manufacturerexporter or an exporter granted an
EH/TH/STH/SSTH certificate shall be eligible to avail the benefits of this scheme. Director General of Foreign Trade. The exporter has to undertake an export obligation in terms of value and quantity. monitors the export obligation. The license could be two types: Quantity based Advance License Value based Advance License The exporter has twelve months time to fulfill export obligation.
The scheme allows import of new capital goods as well as computer software systems at 5% customs duty subject to export obligation equivalent to 5 times CIF value of capital goods to be fulfilled over a periods of 8 years reckoned from the date of issuance of license over a period of 8 years. fixtures. In pass book scheme exporter have to first export
the goods and get the credit in pass book then one can import utilizing the credit. dies and molded spares may also be imported under the scheme up to 20% of CIF value of capital goods. However. the same export obligation shall be required to be fulfilled over a period of 12 years.
. in export of EPCG license for Rs. A person holding an EPCG license may source the capital goods from domestic manufacturers supplying capital goods to EPCG license holders shall be eligible for deemed export benefit. The capital goods shall include jigs.100 crore or over.
Pass book will be valid for a period of two years from
the date of issue.
the export obligation shall be fulfilled over a period of 12 years in the following proportions:-
Period from the date of issue total export Of license 1) Block of 1st & 5th year 2) Block of 6th & 8th year 3) Block of 9th & 10th year 4) Block of 11th & 12th year
obligation Nil 15% 35% 50%. In respect of license of Rs. the export obligation of particular block of year may be set off by the excess exports made in the proceeding block of the year.
.100 crore or more.Period from the date of export Issuance of license 1) Block of 1st & 2nd year 2) Block of 3rd & 4th year 3) Block of 5th & 6th year 4) Block of 7th & 8th year
obligation Nil 15% 35% 50%.
duly certified by Chartered Accountant to the concerned licensing authority. The licensee holder shall submit a yearly report on progress made in fulfillment of export obligation in Appendix 9A & 9B of Handbook of procedures.An application for grant of an EPCG license shall be made in APPENDIX 9 of the Handbook of procedure along with documents prescribed there in.
SUMMARY OF EXPORT PROCEDURE
Buyer applies to his issuing bank. with method of
payment usually by letter of credit (documentary credit). usually a correspondent
bank in Seller's country.
. forwards letter of
credit to Seller informing about the terms and conditions of credit. Advising bank.PROCEDURE:
1. and usually to confirm.
4. Issuing bank requests another bank. usually in Buyer's country. Seller and Buyer conclude a sales contract. to advise. the credit. usually in Seller's country.
letter of credit in favor of Seller (beneficiary).
Bank. sends the documents and
draft to the issuing bank. If credit terms and conditions conform to sales contract.
8. Bank examines the documents and draft for compliance with
Documents release to Buyer after payment. If complied with.
. If complied with. or on other terms agreed between the bank and Buyer. Seller
prepares goods and documentation. and arranges delivery of goods to carrier.
Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order. if other than the issuing bank. bank will pay.
10. accepting or negotiating bank named in the credit (the advising bank usually).
7. accept or negotiate. Seller's draft is honored.5. Bank examines the documents and draft for compliance with
11. Seller presents documents evidencing the shipment and draft
(bill of exchange) to paying. or any bank willing to negotiate under the terms of credit.
COST FACTOR OF EXPORT-IMPORT GOODS
COST FACTORS GOODS
labor and overhead Custom packagings Inspection fees Licensing fees Royalties
Buying agent's commissions Trader's markups
• • • • • • • • •
Bank charges and commissions Overseas agent's commissions Freight forwarder's charges Documentation charges Insurance premiums Export license fees Certification fees Consular fees Advertising
• • • • • •
Road freight (cartage.1
• • • • •
Materials. drayage) and/or rail freight Routing costs (canal and inland waterway links) Uninsured damages Theft and pilferages Handling charges Demurrage
Insurance premiums Air freight
• • • • • • •
Theft and pilferages Overtime charges Handling charges Warehousing Loading fees Demurrage Wharfage
• • •
Insurance premiums Ocean freight Lighterage
Uninsured damages (e.g. war and acts of God) Pilferages
• • • • •
Theft and pilferages Quarantine charges Overtime charges Handling charges Unloading fees
drayage) and/or rail freight Routing costs (canal and inland waterway links) Theft and pilferages Uninsured damages Handling charges Demurrage
• • •
Warehousing Interest charges Advertising
.• • •
Warehousing Demurrage Wharf age
• • • •
Import duties and taxes Bank charges and commissions Import license fees Brokerage fees
• • • • • •
Road freight (cartage.
INTERNATIONAL COMMERCIAL TERMS (INCOTERMS)
Insurance and Freight Carriage and Insurance Paid To Carriage Paid To
.INTERNATIONAL COMMERCIAL TERMS
Ex Works EXW Free Alongside Ship FAS Free Carrier FCA Free On Board FOB CFR CIF CIP CPT Delivered At Frontier DAF Delivered Duty Paid DDP Delivered Duty Unpaid DDU Delivered Ex Quay DEQ Cost and Freight (The former acronym of Cost and Freight was C&F) Cost.
Delivered Ex Ship DES Incoterms or international commercial terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices
Group F – Main carriage unpaid
FCA – Free Carrier (named place) The seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerized / multi-modal transport. FAS – free alongside Ship (named loading port) The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for maritime transport only. FOB – Free on board (named loading port) The seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export. Maritime transport only. It also includes Air transport when the seller is not able to export the goods on the schedule time mentioned in the letter of credit. In this case the seller allows a deduction of sum equivalent to the carriage by ship from the air carriage.
Group C – Main carriage paid
CFR or CNF – Cost and Freight (named destination port) Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail. Maritime transport only. CIF – Cost, Insurance and Freight (named destination port)
Exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only. CPT – Carriage Paid To (named place of destination) The general/containerized/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier. CIP – Carriage and Insurance Paid (To) (named place of destination) The containerised transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.
Group D – Arrival
DAF – Delivered At Frontier (named place) This term can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier. DES – Delivered Ex Ship (named port) Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties, taxes, etc are for the Buyer. A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals - - and where the seller either owns or has chartered, their own vessel. DEQ – Delivered Ex Quay (named port) This is similar to DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination. DDU – Delivered Duty Unpaid (named destination place) This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The goods are not cleared for import or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery beyond the place of destination. However, if the buyer wishes the seller to bear cost and risks associated with the import clearance, duty, unloading and subsequent delivery
beyond the place of destination, then this all needs to be explicitly agreed upon in the contract of sale. DDP – Delivered Duty Paid (named destination place) This term means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty. Also used interchangeably with the term "Free Domicile".The most comprehensive term for the buyer. In most of the importing countries, taxes such as (but not limited to) VAT and excises should not be considered prepaid being handled as a "refundable" tax. Therefore VAT and excises usually are not representing a direct cost for the importer since they will be recovered against the sales on the local (domestic) market.
It is clear from the above study that the complexity of international import-export business can be overcome easily by a systematic export procedure & fair documentation. This is only the documentation which safeguards the interests of Exporter, Importer, Banks, Governments, Transport Agencies, Insurance Agencies and Inspection Agencies. Thus the whole study concludes in brief …
To survive & grow in today’s international market for any export house, the systematic export procedure is compulsory.
bottleneck. These programmes have been made to facilitate the exporters in their exports efforts at various stages of export process. & RBI policies. No direct knowledge of the operations of Forwarding Agents.
LIMITATIONS OF THE STUDY
Also the Government of India has instituted many support programmes with a view to give thrust to our sectors.
The final indicator of success any business is its financial viability and in exports the inflow of funds is from across the borders. the awareness and implementation of standardized ruleregulations & documentation is necessary. Thus mode of payment must be decided on the basis of best business suitability according to the Govt. fraud and mistake.
To overcome any kind of error.
. Less sufficient response of executives & supervisors in respect to information related to securities & weakness matter of unit. Regulations & Compliances are too wide to cover thoroughly in short term project. All the findings are based on the information from Seller/Exporter side only. Export Rules. Primary data is analyzed though interview of executives and they may not be available and may not be part of research.
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