DR. BHUPINDER P S CHAHAL

Export-Import Documentation in India

Role of Export Documentation

Export documentation plays a vital role in international marketing as it facilitates the smooth flow of goods and payments thereof across national frontiers.

Exporters are required to follow certain formalities and procedures, using a number of documents.

Each of these documents serves a specific purpose and hence carries its own significance.

A clear understanding of all documents and their purpose, how to prepare these, number of copies required, when and where to file, is a must for all export professionals.

Export Documentation in India

Export Documentation in India has evolved a great deal of interest since 1990.

Prior to 1990, documentation was manual and it lacked proper co-ordination.

The result was lot of delays and mistakes, rendering the task very clumsy, tiresome, repetitive, and truly frustrating.

India adopted the ADS (Aligned Documentation System) in 1991 which is the Internationally accepted documentation system

Export Documentation in India

Export documentation is complex in nature as the number of documents to be filled-in is very large, so also is the number of the concerned authorities to whom the relevant documents to be submitted.

It is, therefore, advisable to take the help of shipping and forwarding agents who will obtain and fill out the documents correctly as well as arrange for transportation.

Parties: Interested in export documentation in India

Parties interested in the documentation of exports in India are:1. Buyers and exporters, 2. Buying agents, 3. RBI, 4. Authorized dealers (where the exporter has his bank Account), 5. Buyer’s bank (foreign bank), 6. DGFT, 7. Customs and Port Authorities, 8. VAT and Excise Authorities, 9. EPC’s, 10. Insurance Companies, 11. Inspection Agencies, 12. Clearing and Forwarding Agents, 13. Shipping Companies/Airlines and Inland Carriers etc

Export Documentation in India

Proper Documentation will ensure smooth sailing with the requirements of the above agencies and the resulting transaction will be a successful one.

Inaccurate or incomplete documentation will result in serious financial and goodwill losses.

Such losses can be completely avoided by understanding clearly the documentation requirements of all concerned parties and then meticulously planning to get the right documents in the right numbers, at the right places and at the right time.

Classification of Export Documents

Export Documents can be classified into following four categories:

(1) Commercial Documents(2) Regulatory Documents(3) Export Assistance Documents(4) Documents Required by Importing Countries

(1) Commercial Documents: These documents are used by exporters/importers to discharge their respective legal and other incidental responsibilities under sales contract.

Classification of Export Documents

Commercial documents can be further sub-divided into:

(i) Principal Commercial Documents(ii) Auxiliary Commercial Documents (i) Principal Commercial Documents:

These documents serves the following purposes:

(a) To effect physical transfer of goods and title of the goods from exporter to the buyer.

(b) To realize export sales proceeds.

Classification of Export Documents

Principal Documents include:Commercial Invoice (and the invoice

prescribed by the importer)Packing listCertificate of InspectionCertificate of Insurance/Insurance PolicyBill of Lading/Airway bill/Combined Transport

DocumentsCertificate of OriginBill of ExchangeShipment Advice

Classification of Export Documents

(ii) Auxiliary Commercial Documents: These Documents are required to prepare /procure the principal commercial documents and include:

Proforma InvoiceShipping InstructionsInsurance DeclarationIntimation for InspectionShipping OrderMates ReceiptApplication for Certificate of OriginLetter to bank for negotiation /collection of

documents

Classification of Export Documents

(2) Regulatory Documents: These are prescribed by various Government Departments/Bodies for compliance of formalities under relevant laws governing export transactions. These include:

(i) Exchange Control Declaration Form-GR Form(ii) Freight Payment Certificate(iii) Insurance Premium Payment Certificate(iv) ARE I/ARE II Forms(v) Shipping Bill/Bill of Export(vi) Port Trust Copy of Shipping Bill/Export

Application/Dock Challan(vii) Receipt of Payment of Port Charges(viii) Vehicle Ticket.

Classification of Export Documents

(3) Export Assistance Documents: These are the documents which are required for claiming assistance under the various export assistance measures as may be in operation from to time. Currently, these refer to drawbacks of central excise and customs duties, packing credit facilities etc

(4) Documentation required by Importing Countries: These are the documents which are required by the importer in order to satisfy the requirements of his Government. These include certificates of origin, consular invoice, quality control certificate etc.

Commercial Documents

(1) Commercial Invoice: It is the basic and most important document in an export transaction and

extreme care has to be taken by the exporter to prepare this document. This document requires the exporter to submit details such as 1. his own details, 2. Invoice number with date, 3. details of the consignee and buyer (if the buyer is other than consignee), 4. buyer’s order number with date, 5. country of origin of the goods, 6. country of final destination, 7. terms of payment and delivery, 8. pre-carriage details (Road/Rail), 9. vessel/flight number, 10. port of loading, 11. port of discharge, 12. final destination, 13. container number, 14. number and kind of packaging, 15. detailed description of goods, 16. quantity, 17. rate and 18. total amount chargeable etc

Commercial Documents

Therefore, a Commercial Invoice contains the complete details of the export order.

Normally, the trade practice is to raise and send a Proforma Invoice to the buyer for his approval, once the order has been finalized.

On receipt of the approved Proforma Invoice, the exporter can use it as a part of the export contract.

The Commercial Invoice then becomes easier to prepare on the basis of the approved Proforma Invoice.

Commercial Documents

(2) Packing List: This document provides the details of number of

packages; quantity packed in each of them; the weight and measurement of each of the package and the net and gross weight of the total consignment.

Net weight refers to the actual weight of the items and the gross weight means the weight of the items plus the weight of the packing material.

The packing list serves a useful purpose of the exporter while dispatching the consignment as a cross check of goods sent.

Commercial Documents

For the port personnel, it comes handy while planning the loading and offloading of cargo.

It is also an essential document for the customs authorities as they as they can carry out the physical examination of the cargo and conduct checks on the weight and measurements of the goods smoothly against the declarations made by the exporter in the packing list.

(3) Certificate of Inspection: This is the Certificate issued by the Export Inspection Agency after it has conducted the pre-shipment inspection of goods for export provided the goods fall under the notified category of goods requiring compulsory shipment of inspection.

Commercial Documents

(4) Certificate of Insurance/Insurance Policy: Insurance is an important area in the export

business as the stakes are usually very high. Protection needs to be taken in the form of

insurance cover for the duration of transit of goods from the exporter to the importer.

(5) Bill of Lading: This is issued when the goods are shipped using

ocean (marine) transport. When the exporter finally hand over the goods to

the shipping company for loading on board the ship for transport to their final destination, the shipping company issues a set of Bills of Lading to the exporter.

Commercial Documents

(6) Airway Bill: Airway Bill is a bill of lading when the goods

are shipped using air transport. It is also known as air consignment note or

airway bill of lading. (7) Combined Transport Document: This is also known as Multi-modal Transport

Document. Ever since containers have become popular,

the concept of Combined Transport Document has gained solid ground.

Commercial Documents

(8) Certificate Of Origin:This document serves as a proof of the country of

origin of goods for the importer in his country.Imported countries usually require this to be

produced at the time customs clearance of import cargo.

It also plays an important part in computing the liability and the rate of import duty in the country of import.

This certificate declares the details of goods to be shipped and the country where these goods are grown, manufactured or produced.

Such goods needs to have substantial value addition so as to become eligible to certification of this nature.

Commercial Documents

(9) Bill of Exchange: Also known as Draft, this is an instruments for

payment realization. It is a written unconditional order for payment

from a drawer to a drawee, directing the drawee to pay a specified amount of money in a given currency to the drawer or a named payee at a fixed or determinable future date.

The exporter is the drawer and he draws (prepares and signs) this unconditional order in writing upon the importer (drawee) asking him to pay a certain sum of money either to himself or his nominee (endorsee).

Commercial Documents

This order could be made for payment on demand, called a bill of exchange at sight or payment at a future date, called a usance bill of exchange.

(10) Shipping Advice: The exporter sends this document , called

shipping advice, to the buyer soon after the shipment is made to provide him all the shipment details.

This serves as an advance intimation of the shipment and allows the importer to arrange for delivery of the same.

Suggested Readings

(1) International Marketing Management-an Indian perspective by R.L Varshney and B.Bhattacharya, Sixth Edition, 2006 published by Sultan Chand and Sons, New Delhi.

(2) International Business Law and its Environment by Richard Schaffer, Beverley and Filiberto Augsti, Sixth Edition, 2005 published by Thomson South-Western United States.

(3) Manual on Export Documentation published by Commercial Law Publishers (India) Private Limited, NREW Delhi, 2006.

(4) International Business Law, Text, Cases and Readings, Fourth Edition, 2004. Published by Prentice Hall, U.S.A

(5) International Marketing by Philips R.Cateora and John L. Graham published by Tata McGraw Hill

(6) International Business by Charles W.L Hill and Arun K.Jain published by Tata McGraw-Hill Publishing Company Limited, New Delhi.

(7) Export and import Management by Aseem Kumar published by Excel Books, 2007