Learning Session on

Imports Process

US Denim Mills
Procurement Section

Presenter: Amir Zulfiqar

Dec 2019

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 Imports Defined
An import is a good or service brought into one country from
another. The word "import" derives from the word "port"
since goods are often shipped via boat to foreign countries.
Along with exports, imports form the backbone
of international trade.

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Imports Process Flow

9.EIF & GD
10.Duties &
1.Incoterms Taxes
5.Shipment
2.Payment Commitment Payment Payment
Schedule
Method 11.Local
6.Shipping
3.Proforma Freight
4.LC / TT / Documents 7.Acceptance
Invoice Contract of Docs Receipt
8.Remittance and
Inquiry Shipment by Bank
Clearance

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 Inquiry

Inquiry Stage
The 2 documents commonly used at this stage are Indent and
Proforma Invoice
Indent:
Order for goods (placed often through a local agent of a foreign
supplier) under specified conditions of sale, the acceptance of which
by the supplier (or the agent) constitutes a contract of sale.
Pro Forma Invoice:
A pro forma invoice is a preliminary bill of sale sent to buyers in
advance of a shipment or delivery of goods. The invoice will typically
describe the purchased items and other important information such
as the shipping weight and transport charges. This is primarily used
where payment mode is LC.

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Inquiry

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Local Inquiry
Agent

Buyer
Foreign
Seller

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 Inquiry

Incoterms
The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by
the International Chamber of Commerce (ICC) relating to international commercial law.

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 Inquiry

Incoterms History:

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 Inquiry

Ex-Works
 This term represents the seller's minimum obligation, since he only has to place
the goods at the disposal of the buyer. The buyer must carry out all tasks of
export & import clearance. Carriage & insurance is to be arranged by the buyer.

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 Inquiry

FCA - Free Carrier and On-Board Bills of Lading

 This term means that the seller delivers the goods, cleared for export, to the
carrier nominated by the buyer at the named place. Seller pays for carriage to
the named place.

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 Inquiry

FAS - Free Alongside:

 This term means that the seller delivers when the goods are placed alongside
the vessel at the named port of shipment. The seller is required to clear the
goods for export. The buyer has to bear all costs & risks of loss or damage to the
goods from that moment. This term can be used for ocean transport only.

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 Inquiry

FOB - Free On Board:

 This term means that the seller delivers when the goods pass the ship's rail at
the named port of shipment. This means the buyer has to bear all costs & risks
to the goods from that point. The seller must clear the goods for export. This
term can only be used for ocean transport.

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 Inquiry

CFR - Cost and Freight:

 This term means the seller delivers when the goods pass the ship's rail in the port
of shipment. Seller must pay the costs & freight necessary to bring the goods to the
named port of destination, BUT the risk of loss or damage, as well as any additional
costs due to events occurring after the time of delivery are transferred from seller
to buyer. Seller must clear goods for export. This term can only be used for
ocean transport.

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 Inquiry

CIF - Cost, Insurance, Freight:

 The seller delivers when the goods pass the ship's rail in the port of shipment.
Seller must pay the cost & freight necessary to bring goods to named port of
destination. Risk of loss & damage same as CFR. Seller also has to procure
marine insurance against buyer's risk of loss/damage during the carriage. Seller
must clear the goods for export. This term can only be used for ocean transport.

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 Inquiry

CIP - Carriage and Insurance Paid:

 This term is the same as CPT with the exception that the seller also has to
procure insurance against the buyer's risk of loss or damage to the goods
during the carriage. This term may be used for any mode of transportation.

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 Inquiry

CPT - Carriage Paid To:

 This term means that the seller delivers the goods to the carrier nominated by
him but the seller must in addition pay the cost of carriage necessary to bring the
goods to the named destination. The buyer bears all costs occurring after the
goods have been so delivered. The seller must clear the goods for export. This
term may be used irrespective of the mode of transport (including multimodal).

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DDP - Delivered Duty Paid:

 This term represents maximum obligation to the seller. This term should not be
used if the seller is unable to directly or indirectly to obtain the import license.
The terms means the same as the DDU term with the exception that the seller
also will bear all costs & risks of carrying out customs formalities including the
payment of duties, taxes & customs fees.

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DPU – Delivered at Port Unloaded:

 Seller pays for carriage to the terminal, except for costs related to import
clearance, and assumes all risks up to the point that the goods are unloaded at
the terminal.

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DAP - Delivered At Place (named place of destination)

 Seller pays for carriage to the named place, except for costs related to import
clearance, and assumes all risks prior to the point that the goods are ready for
unloading by the buyer.

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Most Relevant Incoterms

EXW
Some Unifi yarn shipments have been lifted by us on
EXW basis. This has resulted in cost saving
FOB
In certain cases, where we are able to get better freight
pricing, we get the cargo on FBO basis
CFR / CPT
Most of US Denim’s shipments are on CFR/CPT basis

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 2

Payment Terms

Letter of Credit

D/P Basis

Cash-in-Advance (Pre-Payment)

Open Account

Down Payment

Consignment Purchase
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Letter of Credit (LC)

 A letter issued by a bank to another bank (especially one in a different country)
to serve as a guarantee for payments made to a specified person under specified
conditions.

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Types of LC’s:

Confirmed
Revocable
and
and
Unconfirmed
Irrevocable
)

Red Clause
Transfer and
and Green
Back to Back
Clause

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D.A.P or D/P basis - Documents against Payments

 Seller sends documents to buyer’s bank after making shipment
 These documents are delivered to buyer/importer only after collection of payment of
goods by buyer’s bank
 Bank then remits payment to seller

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Cash-in-Advance (Pre-Payment)

Approved Shipment Custom Local

Payment
PI Receipt Clearance Transport

 Cash in Advance is a pre-payment method in which, importer makes

payment in advance, prior to the shipment of goods.
 This mode of payment carries a lot of risk for the importers. The
importer must trust that the supplier will ship the product on time
and that the goods will be as advertised.
 Such payments are made via the following methods:
 TT
 SWIFT

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Telegraphic Transfer
 Telegraphic Transfer or telex transfer, often abbreviated to TT, is a term used
to refer to an electronic means of transferring funds. A transfer charge is often
charged by the sending bank and in some cases by the receiving bank.
 This is a generic terminology used in the older system of funds transfer

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SWIFT
Society for Worldwide Interbank Financial Telecommunication

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Open Account

Custom Local
Approved Shipmen
Clearanc Transpor Payment
PI t Receipt
e t

In case of an open account, an importer takes the delivery of good and ensures the
supplier to make the payment at some specific date in the future.

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Down Payment

Partial Custom Local

Approve Shipmen Remaining
Advance Clearanc Transpor
d PI t Payment
Payment e t

In the method of down payment, an importer pays a fraction of the total amount of
the items to be imported in advance.

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Consignment Purchase

Payment
Approve Custom Local Shipmen or
Shipment
d PI Clearance Transport t Sold Shipmen
t Return

Consignment purchase terms can be the most beneficial method of payment for
the importer. In this method of purchase, importer makes the payment only once
the goods or imported items are sold to the end user.

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Shipment Documents & Acceptance 4

Commercial Invoice

Packing list

Bill of Lading (BL) or AWB

Vessel Certificate

Shipping line certificate

FTA (if applicable)

Shipping Guarantee (if needed)

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Documents Required for Custom Clearance

Shipment documents

EIF (Electronic Imports Form)

Copy of the Letter of Credit or Contract

Copy of the Sales Tax Registration Certificate as

an importer

Copy of the National Tax Number.

Copy of the most recent sales tax return

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Custom Clearance Process

Import
Goods
General Custom Duty
Declaration
Manifest & Taxes Shipment Local
(GD) by
(IGM) by Payments by Clearance Transport
clearing
shipping line consignee
agent
agent

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Import General Manifest

The filing of such details of
cargo is called IGM filing
(Import General
Manifest filing). The
procedures to file IGM
(Import General
Manifest) are done by the
carrier of goods or his
agent. Normally IGM is filed
on the basis of Bill of
Lading or Airway bill,
issued by the carrier.

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Goods Declaration (GD)
It is a custom online
declaration
form which uses to
mention complete
details (i.e. Quantity,
Unit Price, Payment
Terms etc.) of Goods
that we want
to import or export
from Pakistan. 

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 Thank You!!!
Any Questions?

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