exp doc _ pro

Export documentation and Procedure • Export documentation plays an vital role in international marketing as it facilitates the smooth flow of goods and payments thereof across national frontiers. • On the basis of the functions to be performed export documents can be classified under four categories: 1) Commercial Documents – These include commercial invoices,bills of lading,letters of credit, marine insurance policy and certificates. 2) Regulatory Documents – These are the documents which are required for complying with the rules and regulations governing export trade transactions such as foreign exchange regulations, customs formalities,export inspection, etc. 3) Export Assistance Documents – These are the documents which are required for claiming assistance under various export assistance measures as may be in operation from time to time. 4) Documentation required by Importing Countries such as certificates of origin,consular invoice, quality control certificate. • Export document could be classified into two categories depending upon the specific requirements satisfied by them: 1) Regulatory requirements 2) Operational requirements * Some of the important documents are: 1) Commercial Invoice – It gives the description of the goods,Harmonised System Nomenclature (HSN),price charged,the terms of shipment. a) Some of the invoices prescribed by the importing countries are: * Combined Certificate of Origin and Value – required by commonwealth countries * Consular invoice – is to be certified by authorized missions of the importing countries stationed in the exporting countries.A prescribed fee should be paid by the exporter. * Legalised invoice * Customs invoice – This invoice is primarily required by the countries for their anti-dumping action. 2) GR form – This form has been prescribed by the RBI under FERA to ensure that the foreign exchange receipts in respect of exports are repatriated to India. 3) Letter of Credit – popularly known as L/C is an arrangement by which a Bank(issuing bank) acting at the request of and acting in accordance with the instructions of a customer(applicant) is to - i) pay to or to the order of third party(beneficiary) or ii) pay,accept or negotiate bills of exchange (drafts drawn by the beneficiary) or iii) Authorize such payments to be paid or such drafts to be paid,accepted or negotiated by another bank against stipulated documents provided the terms and conditions of the L/C. 4) Bill of exchange i) when a draft is drawn on a foreign bank, it is known as foreign draft or bill of exchange. ii) It is a means of collecting payment from the foreign buyer through the banking channel iii) The bill of exchange under the documentary credit must be drawn strictly in accordance with the terms of the credit. 5) Shipping Bill - This is a customs document.There are three types of forms of shipping bills namely: i) Shipping bill for free goods ii) Dutiable shipping bill iii) Duty Drawback Shipping bill. 6) Marine Insurance Policy • The exporter should ensure that – i) the currency and the total value of the policy are as per terms of L/C ii) details of the transport documents are specific therein and iii) risks of transshipment or deck shipment are covered • He should also ensure that i) the policy is in the name of the beneficiary and is duly endorsed in blank ii) The policy does not contain any adverse clauses and iii) Policy is duly stamped 7) Bill of Lading (B/L) – It‟s a document issued by the shipping company having following main functions : i) It is a document of title to the goods shipped ii) It is a receipts for goods and iii) It is an evidence of the contract of affreightment. 8) The shipped or an on board bill – acknowledges that the goods have been loaded on board. 9) Airway Bill. 10) Combined Transport Document – It is a document of carriage relating to multimodal transport. 11) Clean B/L – It‟s the one which bears no superimposed clause or statement declaring a defective condition of goods or of the packaging or of some other aspect of consignment. Common defects in the documentation : 1. Drafts are presented after letter of credit has expired or after time for shipment has expired. 2. Invoice value or draft exceeds amount available under letter of credit. 3. Charges included in the invoice are not authorized in the letter of credit. 4. Amount of insurance coverage is inadequate ir coverage does not include risks required by L/C. 5. Insurance document is not endorsed and/or countersigned. 6. Date of insurance policy or certificate is later than the date on bill of lading. 7. Bills of lading are not “clean” – that is, they bear notations that qualify good order and condition of merchandise or its packing 8. Bills of lading are not marked “on board” when so required by letter of credit. 9. “On board” endorsement or changes on bills of landing are not signed by carrier or its agent or initialed by party who signed bills of lading. 10. “On board” endorsement is not dated. 11. Bills of lading are not endorsed. 12. Bills of lading are made out “ to order” where letter of credit stipulates “straight” bill of lading or vice versa. 13. Bills of lading will not indicate “ freight prepaid” as stipulated in the letter of credit. 14.Bills of lading are not marked “freight prepaid” when freight charges are included in invoice. 15. Descriptions, marks & numbers of merchandise are not the same on all documents presented or are not as required by the letter of credit . 16. Not all documents required by the letter of credit are presented 17. Invoice states “used”, “second hand” or “rebuilt” merchandise when such condition is not authorized by the letter of credit. 18. Invoice does not specify shipment terms as stated in letter of credit 19. Invoice is not signed as letter of credit requires. PROCESSING OF AN EXPORT ORDER  Why an export order has to be processed? - It has to be processed to meet the requirements of materials required by the importers.  Parties, Acts and Publications Involved :  The most important Acts/Publications which must be consulted by an exporter in connection with the processing of an export order are: * Foreign Trade Act, 1992 * Customs Act,1962 * Carriage of Goods by Sea Act,1924 * Foreign Exchange Regulation Act,1973 * Schedule of Charges of Goods in respect of the Port of Shipment * Handbook of Export Promotion * Export Import Policy and Handbook of Procedures • Before processing an export order some of the important steps required to enable a businessman to undertake export business are : 1) Registration with Export Promotion Councils and 2) Obtaining the Importer/Exporter Code Number. FIRST STAGE: 1) The exporter should scrutinize the export order with reference to the terms and conditions of the contract. 2) The export order must specify the mode of payment in unmistakable terms such as letter of Credit, Documents on Payment, Documents against Acceptance, etc. 3) The essential terms and conditions of the export order must tally with those of L/C The most important documents which are usually demanded by the importer are in this stage are: 1) 2) 3) 4) 5) 6) Bill of Exchange Commercial Invoice On-board Clean Bill of Lading Marine Insurance Policy Packing List and Certificate of Origin SECOND STAGE: i) Preparations for the dispatch of goods are started. ii) A „delivery note‟ is sent to the Works Manager or the Factory Manager THIRD STAGE: * As soon as the goods have been manufactured or procured, the following procedures are to be followed: 1) The clearance of the Excise Authorities has to be obtained. 2) AR-4 form is to be prepared in sixtuplicate. 3) The other authority which is to be approached immediately at this stage is the Export Inspection Agency for conducting quality control and pre-shipment inspection. 4) If the goods are despatched to the port of shipment by railway, Railway Receipt is obtained. FOURTH STAGE: 1) After the goods have been despatched to the port town, the Works Manager sends a „dispatch advice‟ to the Export Department. 2) Soon after, an application is sent to the insurance company for marine insurance cover. The insurance policy is obtained in duplicate. FIFTH STAGE: The clearing and forwarding agent takes delivery of the consignment from the railways and arranges its storage in the warehouse. Thereafter he prepares the requisite copies of the shipping bill. SIXTH STAGE: i)After the shipping is passed by the customs a Dock Challan is prepared ii) Dock Challan consists of the following details: - Consignees name and address - Vessels name - Port of destination - Exporters name - Marks and Number of packages - Gross weight - Measurement in cubic metres & weight in metric tons - Port charges payable iii) Dock Challan is processed in the following manner: - Place in Receiving box - The clerk calculates & checks the port commissioners shipping charges. - Deposit with cash clerk - Sheet writer - Distributing clerk releases the Dock Challan to the clearing and forwarding agent after debiting the exporters account with the port commissioners. SEVENTH STAGE: - The passed Shipping Bill including the Dock Challan,where submitted,Cart Ticket or Boat Note, - In case of overside cargo, are carried by the Authorised Licensed Sircar accompanying the goods for making the cargo ready for shipment. -The processing in this stage is as follows: i) Gate warder checks the documents,registers and permits entry of cargo into Dock. ii) Export Shed Writer accepts Dock Challan and Cart Ticket iii) Receiving Clerk issues unloading slip for cargo from lorry afetr checking its condition. iv) The Supercargo arranges unloading cargo from lorry. v) The writer registers Dock challan in manifest and sends it to the Customs Prevention Officer for endorsement. vi) The prevention officer examines & checks the contents,weight etc of goods and Dock challan is finally signed by the Customs Divisional Officer vii) The port Commissioner writes in Shed register the details and releases the Dock Challan. viii) The Supercargo takes over control of the cargo for shipment EIGHT STAGE: i) The ships export clerk calls for cargo from shed or boat and after loading prepares the Mates Receipt. ii) The mates receipt is signed by the ships Captain or his agent.It is the delivered to Ports Commissioners Shed. iii) The clearing and forwarding Agent pays the port charges and takes delivery of the Mates receipt. iv) This Mates receipt is presented to the shipping company and requisite copies of the Bill of Lading are obtained by the clearing and forwarding agent. NINTH SATGE: * The clearing and forwarding agent forwards the following documents to the exporter: i) Full set of Bill of Lading,Clean,on Board,together with the required number of non-negotiable copies ii) Export Promotion copy of the Shipping Bill iii) Copies of Customs-attested Invoice iv) AR-4 form(Duplicate copy) v) Original Export order vi) Original Letter of Credit and vii) Railway Concession form, duly attested by the customs. TENTH STAGE: * As soon as the exporter receives the documents he files a claim with the Maritime Commissioner of Central Excise or Assistant Commissioner in the Port town for rebate of central excise duty. * Side by side shipment advice is sent to the importer which contains the following documents: i) A non-negotiable copy of the Bill of Lading ii) Customs Invoice iii) Commercial Invoice iv) Packing list. ELEVENTH STAGE: * The following documents are presented to the negotiating bank: 1) GR form(duplicate copy) 2) Bill of Exchange 3) Full set of Clean-on-board Bill of Lading 4) Original Letter of Credit 5) Commercial Invoice 6) Customs invoices 7) Certificate of Origin 8) Packing list(four copies) 9) Marine Insurance Policy(two copies) 10) Bank Certificate 11) Commercial Invoice copy 12) Consular Invoice if necessary TWELTH STAGE: * The processing is done at the negotiating bank. All the documents are scrutinized with reference to the terms and conditions of the original Letter of credit. * Thereafter a set of the following documents are transmitted to the banker of the importer: 1) Bill of Exchange 2) Negotiable Bill of Lading 3) Commercial Invoice 4) Customs Invoice 5) Insurance Policy 6) Certificate of Origin 7) Consular Invoice 8) Packing List * The negotiating bank transmits the duplicate copy of the GR form to the Exchange Control Department of the Reserve Bank of India. * The original copy of the Bank Certificate along with attested copies of Commercial Invoice, is returned to the exporter. * The duplicate copy of the Bank certificate is forwarded to the office of DGFT. A Typical International Transaction 1. Importer Orders Goods 2. Exporter Agrees to Fill Order 3. Importer Arranges for LOC American Exporter 10 and 11 Exporter Sells Draft to Bank 7. Exporter Presents Draft to Bank 14. B of NY Presents Matured Draft and Gets Payment French Importer 6. Goods Shipped to France 12. Bank Tells Importer Documents Arrive 13. Importer Pays Bank Bank of New York 5. B of NY Informs Exporter of LOC 8. B of NY Presents Draft to Bank of Paris 9. Bank of Paris Returns Accepted Draft 4. Bank of Paris Sends LOC to B of NY Bank of Paris