PROCESSING OF AN EXPORT ORDER WITH REFERENCE TO

READYMADE GARMENTS

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ACKNOWLEDGEMENT

IT IS THE MATTER OF GREAT PLEASURE AND PRIVILEGE TO BE ABLE TO PRESENT THIS

PROJECT REPORT ON PROCESSING OF AN EXPORT ORDER WITH REFERENCE TO

READYMADE GARMENTS.

THE COMPILATION OF THE PROJECT IS A MILESTONE IN THE LIFE OF THE

MANAGEMENT STUDENT AND ITS EXECUTION IS INEVITABLE WITH THE CO-OPERATION

OF THE PROJECT GUIDE. I WISH TO RECORD A DEEP SENSE OF RESPECT AND GRATITUDE

TO MY PROJECT GUIDE FOR HER ENCOURAGEMENT TO COURSE OF MY WORK. IT IS

DUE TO THE ENDURING EFFORT AND GUIDANCE OF MY GUIDE THAT ULTIMATELY

MADE IT SUCCESS.

I ALSO TAKE THIS OPPORTUNITY TO EXPRESS MY DEEP REGARDS AND

GRATITUDE TO THE DR.A.N. SARKAR AND WOULD LIKE TO THANK TO HIM WHO GAVE

US GUIDANCE TO TAKE UP AND PURSUE THE PROJECT

I CANNOT JUST CONDONE THE VALUABLE OPPORTUNITY GIVE TO ME BY THE

ASIA PACIFIC INSTITUTE OF MANAGEMENT FOR COMPILING AND SUBMITTING THE

PROJECT, WHICH I FEEL IS AN OPPORTUNITY TO EXPRESS MY VIEWS ABOUT EXPORT

PROCEDURE AND DOCUMENTATION.

I ACKNOWLEDGE MY INDEBTNESS TO VARIOUS AUTHORS FOR MAKING USE OF

VALUABLE INFORMATION LIBERALLY.

IT IS MY PROUD PRIVILEGE TO EXPRESS MY DEEP SENSE OF APPRECIATION AND

GRATITUDE TO MR.ANIKET MIGLANI, MR.DEEPAK PARASHAR AND ALL EMPLOYEES OF

ORIENT CRAFT, MR. JAGMOHAN CHIBBER, EXPORT MANAGER OF SPL INDUSTRIES FOR

THEIR SUPPORT AND CO-OPERATION IN THE COURSE OF THE PROJECT EITHER DIRECTLY

OR INDIRECTLY INVOLVED IN TIME WITH THEIR VALUABLE CONTRIBUTION.

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Table of Contents

Abstract................................................................ ................................ .....................................5

Chapter 1 Introduction to the problem task undertaken................................ ................................... …6 Significance of the problem……………………………………………………………………6Objectives Of the Study………………………………………………………………………..6Rationale of the study................................................................ ................................ ................7

Scope of the study................................ ................................ ................................ .....................8

Chapter 2 Methodology................................ ................................ ...............................................................9

Chapter 3 Objective of the project................................................................ .......................................... ..11Specific points to be examined while confirming the receipt of an export order……….............11 Different stages and processing of documents for pre-shipment and post-shipment formalities………………………………………………………..........................................19 Documentary requirements for obtaining excise and custom clearance of export cargo...... .......24Formalities for claiming major export incentives………………………………………………..30 Documents required by the bank................................ ................................ .................................60

Bibliography................................ ................................ .............................................................. 88

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Abstract

In this project an attempt has been made to understand the processing of an export order with

reference to readymade garments. In terms of exporting the readymade garments,

India is considered to be a favorably good player. After meeting with experts in college and

Industry, data were collected in order to verify the objectives of the project. While doing this

project it has been noticed that the company is supposed to focus on the quality, taste and

preferences & make their strategies as per the country i.e. adaptive or standard. Strategies of the

company play a vital role in the successful exports & future and consecutive orders.

The objective of the current study was to understand the processing of an export order, different

formalities for claiming major export incentives, documents required from pre-shipment to post-

shipment and by the bank.

While talking about figures of export of readymade garments from India, statistics tell us that

Export of worth $7626.46 million was done in 2007 which increased to $7844.17 million in 2008

And in 2009 it reached to $8244.58 million.

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Chapter – 1 Introduction of the Problem

I want to start the export business but I am not aware of the complex structure of export

Once I tried to know about the export marketing, procedure and documentation but I did not get the proper sequence of all these issues.

I also want to know about the promotional schemes to the exporters and how I can get the refund of central excise, duty draw back and Custom Duty on export

( put it in proper form, the above lines should be written almost in the similar way an objective is written)

Significance of the problem :

India has a mission to capture 15% of the global share of trade in readymade garments by 2020,

up from the present level of less than 7%. Export is one of the lucrative business activities in

India. The government also provides various promotional schemes to the exporters for earning

valuable foreign exchange for the country and for meeting their requirements for importing

modern technology and essential inputs. Besides, the income from export business is also

exempted to the specified extent under the Income Tax Act, 1961, Refund of Central Excise and

Custom Duty on export is also made under the Duty Drawback Scheme of the Government.

There is no Sales Tax on products meant for exports.

Objective of the study

1) To explain specific points which are to be examined while confirming the receipt of an

export order.

2) To study the different stages and processing of documents for pre-shipment and post-

shipment formalities.

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3) To study the documentary requirements for obtaining excise and custom clearance of

export cargo.

4) To describe formalities for claiming major export incentives.

5) To describe documents required by the bank.

.

Rationale behind doing the project

Export in simple words means selling goods abroad or Export refers to outflow of goods and

services and inflow of foreign exchange. Each country has its own rules and regulations

regarding the foreign trade. For the fulfillment of all the rules and regulations of different

countries an exporting company has to maintain and fulfill different documentation

requirements. The documentation procedure depends on the type of goods, process of

manufacturing, type of industry and the country to which goods is to be exported. In order to

complete an order for Knitted garment, many activities like communication between different

departments, the process of outsourcing raw material, payment process, quality control, packing

and shipment of goods etc. are undertaken. Different departments work in synchronicity &

various documents are prepared in the process. Hence, a single mistake or lack of proper

planning can lead to the rejection of the whole order or increase the cost. Today’s world is the

global village in which each country is trading with other countries in the form of export or

import. This field has a great scope because today each company whether it is small or big wants

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to engage in foreign trade.

So, it is very important to study the export procedure and documents involved in it.

Hence, selecting this project is a judicious decision.

Scope of the study

If you want to start the export business in readymade garments in India then you can start after

reading it.

It covers the all issues of the export marketing except marketing research.

It covers the whole procedure and all important commercial and regulated documentation which are needed for export

Chapter - 2 Methodology

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Our primary objective of doing this project is to get the first hand knowledge of functioning of

an export house. Since we are not comparing two different entities on the basis of their financial

results, rather we are learning the export procedure. Hence Exploratory research design is the

need of the hour.

Further there are few reasons which made me to use Exploratory Qualitative research:

It is not always desirable or possible to use fully structured or formal methods to obtain information from respondents.

People may be unable & unwilling to answer certain questions or unable to give truthful answers.

People may be unable to provide accurate answer to question that tap their sub consciousness.

Thus, project research methodology is as follows:

In Primary data,

Qualitative research through In-Depth Interviews has been adopted. For interviews non–structured open-ended questions were used.

In Secondary data,

both internal & external research was done. For internal research Ready to use documents available with the organization were used. For external research Internet website & published books were consulted.

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Limitations of the Methodology

1. Concern about the validity: the issue arises from the fact that qualitative research does

not rely on tests for reliability & credibility that are external to data collection & analysis.

2. Labour intensive data collection: it can be extremely time consuming. Data collection

is the labour intensive process the researcher immerses himself or herself to build an

understanding of the organization, through contact with the employees, exposure to the

norms & familiarity with their practices.

3. Conclusion & interpretation of qualitative research: they are primarily communicated

in the form of case studies. The case study is written after an extensive process of data

collection through interviewing & participant observation.

4. Need for training in qualitative research: There is a need of training in qualitative

research methodology. Persons having low knowledge in this field don’t go for such

methodology.

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Chapter - 3 Objectives

3.1) To explain specific points which are to be examined while confirming the receipt of

an export order.

3.2) To study the different stages and processing of documents for pre-shipment and post-

shipment formalities.

3.3) To study the documentary requirements for obtaining excise and custom clearance of

export cargo.

3.4) To describe formalities for claiming major export incentives.

3.5) To describe documents required by the bank.

3.1) To explain specific points which are to be examined while confirming the receipt

of an export order.

Export order must confirm to the terms of contract and then sent to the overseas buyer.

But before its confirmation, it must be scrutinized with regards to products and their

specifications, terms of payment, price, delivery schedule etc. The immediate task of

exporter is to acknowledge the export order which is different from its acceptance .

Then he should proceed to examine the export order with respect to following parameters

1. Nature :

Export order is a document, communicating the decision of foreign buyer to purchase

items from exporter. It would clearly indicate the exporter’s pro-forma invoice/quotation

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number and its date, including item, quantity, price, delivery date, shipping marks,

insurance, payment terms, documents required etc.

Before acceptance, the export order should be scrutinized in all aspects.

2. Acknowledgement :

The exporter should write a simple letter to overseas buyer thanking him for the export

order and stating that the confirmation of the same would be sent soon.

3. Scrutiny :

The export order should be carefully scrutinized in terms of pro forma invoice/contract

sent to the foreign buyer, on the following aspects:

The order has been received for same products for which quotation/offer was sent.

Size and specifications are also as per quotation/offer. Unit measurement needs to

be specified as well. It could be numbers, volume, or weight.

Ordered quantity both in words and figures. This is essential to leave out any

room for confusion.

Pre-shipment inspection is as per agreed in pro forma invoice. Pre-shipment

inspection can be done by-

Exporter

Inspection by exporter nominated agency

Inspection by importer nominated agency

Export Inspection Agency (EIA) GOI authorized agency

The inspection agency has to be agreed upon in pro forma invoice

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Payment conditions are same as stipulated.

The order must provide all the details relating to kind of packaging required including the labels and the marks to be put up. The instructions have to be explicit specifying requirements in full details as there could be separate labels for the articles and for packaging.

Shipment and delivery date is in conformity with the exporters production plan.

Documents required are in conformity with those mentioned in pro forma invoice. Generally following documents are required:

– Bill of Exchange

– Bill of Lading

– Certificate of Origin

– Packing List

– Insurance Policy/Certificate

4. Confirmation :

If the exporter is satisfied on various aspects mentioned in the export order he should

send a formal confirmation to the overseas buyer.

5. Clarification :

If the exporter is not completely satisfied with the terms of export order, clarification should be sought from the buyer before its confirmation.

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The clarification could be in terms of :

Quantity

\

Delivery schedule

Terms of payment

INCO terms etc.

The delivery period should be specific and not in terms like “immediate delivery,”

or “as soon as possible.”

Contents of Export Contract

1. Product description and Specifications

It Includes products name, technical name, quality specifications and grade, details

as to standards, sizes, reference to samples and their specifications.

2. Quantity

Ordered quantity both in words and figures. This is essential to leave out any room for

confusion. Unit measurement needs to be specified as well. It could be numbers, volume,

or weight.

In addition care should be taken while stating the unit of measurement in international or

country specific terms, for example, Metric Ton is 1000 kgs. whereas the US Short Ton is

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907 kgs. and the British Long Ton is 1016 kgs.

3. Packaging Labeling and Marking

The order must provide all the details relating to kind of packaging required including the

labels and the marks to be put up. The instructions have to be explicit specifying

requirements in full details as there could be separate labels for the articles and for

packaging.

In each case of marking, information that has to be indicated on each package should be

in easily readable ink, giving the name of the consignee, contents of the package

including name of the product, net and sometimes also the gross weight, country of origin

etc.

4. INCO terms, Price and Value

The total value of order needs to be clearly stated both in numbers and words in the

decided currency. Price would of course depend upon terms of delivery and for this

generally INCO terms are used.

5. Taxes, Duties & Other Charges

Who would bear which tax depends very much on how the prices are quoted and herein

INCO terms become relevant.

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6. Delivery Period

It is important that contract do clearly indicate stipulations with regard to delivery period.

The delivery period should be specific and not in terms like “immediate delivery,” or “as

soon as possible.”

In case of late deliveries the importer can insist upon the payment to be made by the

exporter by way of liquidated damages, a sum equal to certain % of the contract price for

every week of delay.

7. Consignee Detail

If the consignee is different from the buyer, his complete name and address is required.

8. Transfer of Risk

INCO terms define the point at which risk passes on from exporter to importer.

Unless other wise agreed between the parties, the risk passes from the exporter when the

goods are handed over to the first carrier for transmission to the importer.

9. Mode of Payment

The contract should clearly indicate the mode of payment- whether it is L/C, or

Documentary Collection D/C, or Document on Acceptance D/A.

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10. Inspection Clause

If a buyer wants a pre-shipment inspection carried out, it must be mentioned in the

contract. The details of the inspection agency must also be given.

11. Test Certificate

At times, the importer may ask the exporter to conduct certain test son the material, for

example, a colour bleed test on fabric, and submit a test report by a prescribed agency.

This must form a part of the contract.

12. Commission/Discounts

In case exporter is required to pay any kind of commission or offer any discount to the

buyer or his agent, the export order must provide details of the same.

13. Insurance

The contract must clearly provide insurance instructions for the exporter, if he is to

arrange insurance. In case the buyer is responsible for insurance, the order must say so.

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14. Documents Required

The export contract must specify all documents required to be submitted by the exporter

to the importer. The exporter then has to comply with all the documentation required

very religiously. Generally following documents are required:

Shipping Advice

Commercial Invoice

Bill of Exchange

Bill of Lading

Certificate of Origin

Packing List

Insurance Policy/Certificate

15. ‘Force Majeure’ clause

Force Majeure literally means “greater-force”. This clause excuses a party from liability

if some unforeseen event beyond the control of that party prevents it from performing its

obligation under contract.

Typically force majeure clauses cover natural disasters or “Acts of God”, war etc.

It is important to remember that force majeure clauses are intended to excuse a party only

if the failure to perform could not be avoided by the exercise of due care by that party.

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International Chambers of Commerce via ICC Publication No. 421 has enumerated the

following circumstances as the one in which the force majeure clause will be applicable :

War, civil war, riots and revolutions, acts of piracy

Natural disasters such as violent storms, cyclones, earthquakes, tidal

waves, floods, destruction by lightning.

Explosions, fires, destruction of machines of factories and of any kind of

installations.

Boycotts, strikes and lockouts off all kinds, go-slows, occupation of

factories and premises and work stoppages which occur in the enterprise

of the party seeking relief.

16. Arbitration Clause

For settlement of disputes two options are available-

– Either go to Court of Law

– Or may chose to resort to arbitration

In international trading transactions, parties normally do not like to go to courts

and instead decide to go to Arbitration.

The fact that the disputes are to be settled by resorting to Arbitration should be

clearly stated in the export contract, also mentioning therein whether Arbitration

will be in accordance with International Chamber of Commerce rules or the rules

set out by UN Commission on International Trade Law will be applicable.

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3.2) To study the different stages and processing of documents for pre-shipment and

post-shipment formalities.

It is essential that a person engaged in international trade be aware of the various

procedures involved. The business of exports is heavily document-oriented & one must

get acquainted with the entire procedure. Failure to comply with documentary

requirement may lead to financial loss.

3.2.1) Pre-Shipment Formalities

On receiving the requisition & purchase order from merchant, documentation

department issues an invoice. Two invoices are prepared i.e. commercial invoice &

custom invoice. Commercial invoice is prepared for the buyer & Custom invoice is

prepared for the Custom authorities of both the countries.

Packing list is prepared which details the goods being shipped.

GSP certificate is prepared if the consignment is exported to EU or countries

mentioned in the GSP list.

Buying house inspects the goods & issues an inspection certificate. Certificate of

origin is also issued and attached, if required.

Following documents are given to Customs for their reference:

Custom Invoice

Packing list

IEC certificate

Purchase Order or L/C, if required.

Custom annexure

On receipt of above documents, customs will issue clearance certificate.

After custom clearance a set of documents with custom clearance receipt are sent

along with the consignment to the forwarder. Forwarder books the shipment & as per

the size of the cartons calculates CBM & decides which container to be used.

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Following documents are sent to buying house for their reference, as per buyer’s

requirement:

Invoice

Packing List

GSP (if exports to Europe)

Certificate of Origin (if required)

Wearing Apparel sheet

A copy of FCR/ Airway Bill/ Bill of Lading

Buying house then intimates the buyer about the shipment & gives the details

regarding it. Buying house will send a set of these documents to the buyer.

Buyer collects the consignment from the destination port by showing the following

documents:

Invoice

Packing List

Bill of lading/ FCR/ Airway Bill

On shipment of goods, exporter will send the documents to the importer’s bank.

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3.2.2) Post-Shipment Formalities

A foreign buyer will make the payment in two ways:

TT ( telegraphic transfer) i.e. Wire Transfer – (Advance payment, as per the

clause – 50% advance & remaining 50% on shipment)

Letter of Credit

If the payment terms are a confirmed L/C then the payment will be made by the

foreign bank on receiving the following documents:

Invoice

Packing list

B/L

Any other required by the buyer or the country of import.

The payment terms can be:

o At Sight

o Within 15 days from Bill of Lading or Airway Bill date.

o Within 30 days from Bill of Lading or Airway Bill date

o Within 60 days from Bill of Lading or Airway Bill date.

o Within 90 days from Bill of Lading or Airway Bill date.

After shipment, exporter sends the documents to the buyer’s bank for payment. As the

buyer’s bank receive the documents it will confirm with the buyer for release of

payment. On confirmation, it will make the payment in the foreign currency. The

transaction will be Bank to Bank.

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The domestic branch will credit the exporter’s account, as against the respective

purchase order or invoice, in Indian rupees by converting the foreign currency as per

the current bank rate.

If the payment is through wire transfer, the payment will be made as per the terms

agreed by the exporter (Advance payment, as per the clause – 50% advance &

remaining 50% on shipment)

3.3) To study the documentary requirements for obtaining excise and custom clearance of export cargo.

Step1 Reservation of Shipping space

Arrangement of Internal Transportation up to the port of shipment

Dispatch of goods to the gateway port for shipment by road or Rail and requisite

application to be made to the insurance company for obtaining insurance cover for

various risks.

Completion of formalities relevant to certificate of origin, ECGC cover, consular

invoice, export license etc. wherever required.

Step2 Forwarding of shipment documents to C&F /CHA agent, along with requisite

instructions including booking of space with sea-carrier whose sailing schedule and

ports of call suits the exporter’s delivery commitment. The documents required by

C&F agent for processing prior to shipment are: -

Letter of Credit along with export contract or export order

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Commercial In-voice (2 copies)

Certificate of Origin.

GR Form (Original & Duplicate)

ARE-I Form.

Certificate of Inspection

Marine Inspection Policy

Step3       The C&F agent takes delivery of the goods from the rail or road carrier and

arranges for storage in a warehouse, till carting order is received from port authorities. In

the meantime prepares the shipping bill with requisite details for customs clearance.

Shipping bill along with other documents mentioned above is submitted to the export

department of the Customs House, for examination.

SHIPPING AND CUSTOMS FORMALITIES

(As per the Prevailing Law i.e., ICA 62)

The shipment of export cargo has to be made with prior permission of, and under the

close supervision of the custom authorities. The goods cannot be loaded on board the ship

unless a formal permission is obtained from the custom authorities. The custom

authorities grant this permission only when it is being satisfied that the goods being

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exported are of the same type and value as have been declared by the exporter or his C&F

agent, and that the duty has been properly determined and paid, if any.

The custom procedure can be briefly explained as follows:

Submission of Documents: The exporter or his agent submits the necessary

documents along with the shipping bill to the Custom House. The documents include:

o ARE-1 (Original and duplicate)

o Excise gate pass (Original and duplicate transporters’ copy

o Proforma Invoice

o Packing List

o GRI form (Original and duplicate)

o Customs Invoice (where required in the importing country)

o Original letter of credit/contract

o Declaration form in triplicate

o Quality Certificate

o Purchase memo

o Labels

o License (if any required) including advance license copy

o Railway receipt/lorry way bill

o Inspection Certificate by Export Inspection Agency

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Verification of Documents: The Customs Appraiser verifies the documents and

appraises the value of goods. He then makes an endorsement of “Examination Order” on

the duplicate copy of shipping bill regarding the extent of physical examination of the

goods at the docks. All documents are returned back to the agent or exporter, except

o Original Copy of GR to be forwarded to RBI

o Original copy of shipping bill

o One copy of commercial invoice

Carting Order: The exporter’s agent has to obtain the carting order from the Port Trust

Authorities. Carting Order is the permission to bring the goods inside the docks. The

carting order is issued by the superintendent of Port Trust. Carting Order is issued only

after verifying the endorsement on the duplicate copy of shipping bill. The Carting Order

enables the exporter’s agent to cart goods inside the docks and store them in proper

sheds.

Storing the Goods in the Sheds: After securing the carting order, the goods are moved

inside the docks. The goods are then stored in the sheds at the docks.

Examination of Goods: The exporter’s agent then approaches the customs examiner to

examine the goods. The customs examiner examines the cargo and records his report on

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the duplicate copy of the shipping bill. The customs examiner then sings the “Let Export

Order”

Let Export Order: The Let Export Order is then shown to the Customs Preventive

Officer, along with other documents. The CPO is in charge of supervision of loading

operations on the vessel. If CPO finds everything in order, he endorses the duplicate copy

of shipping bill with the “Let Ship Order” This order helps the exporter/shipper to load

the goods on the ship.

Loading Goods: The goods are then loaded on the ship. The CPO supervises the loading

operations. After loading is completed, the Chief Mate (Cargo Officer) of the ship issues

the “Mate’s Receipt”. The Mate’s Receipt is sent to the Port Trust Office. The C&F agent

pays the port trust dues and collects the mate’s receipt. The C&F agent then approaches

the CPO and gets the certification of shipment of goods on AR Forms and other

documents.

Obtaining Bill of Lading: The Mate’s Receipt is then handed over to the shipping

company (on whose vessel the goods are loaded). The shipping company issues bill of

lading. The Bill of Lading is issued in:

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o 3 negotiable copies of Bill of Lading

o 10 to 12 Non-negotiable copies of Bill of Lading.

The negotiable copies have title to goods; whereas non-negotiable copies do not have title to

goods but are used for record purpose.

Step1.             The Mate Receipt is presented usually to the Agent of the shipping company

for obtaining requisite number of originals and copies of the Bill of Lading.

Step2. The C&F agent then forwards to the exporter the following documents: -

1. Full set of Bill of lading

2. Export Promotion copy of the shipping bill.

3. Copies of customs invoice.

4. Duplicate copy of AR-4A/AR-4 form.

5. Duplicate copy of GR /SDF form (where necessary).

6. Copies of commercial invoice duly attested by customs.

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7. Original export order.

8.     Original L/C.

Step3. On receipt of these documents, the exporter sends to the importer the

shipment advice and forward the following documents: -

                   1.                   Non-negotiable copy of the Bill of Lading.

                   2.                   Customs invoice.

                    3.                   Commercial invoice.

                   4.                   Packing list.

3.4) To describe formalities for claiming major export incentives.

Different Export Promotion schemes are as:

It is brought to the notice of all exporters, importers, CHAs, Trade and General Public that the

computerized processing of Shipping Bills under the Indian Customs EDI (Electronic Data

Interchange) System – (Exports), will commence w.e.f.1`5-09-2004. The computerized

processing of shipping bills would be in respect of the following categories:

Duty Free white shipping bills

Dutiable shipping bills (Cess)

DEEC Shipping Bills

EPCG Shipping Bills

DEPB Shipping Bills

DFRC Shipping Bills

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100% EOU Shipping Bills

Re export, Jobbing Shipping Bills

Drawback Shipping Bills

Other NFEI Shipping Bills

The procedure to be followed in respect of filing of shipping bills under the Indian customs

EDI System-Exports at CFS-Mulund shall be as follows:

2. DATA ENTRY FOR SHIPPING BILLS

2.1 Exporters/CHAs are required to register their IE codes, CHAs Licence Nos, and

the Bank A/C No.(for credit of Drawback amount) in the Customs Computer

Systems before an EDI Shipping Bill is filed.

2.2 Exporters/CHAs would be required to submit at the SERVICE CENTRE the

following documents.

A declaration in the specified format

SDF declaration

Quota/Inspection Certificate

Drawback/DEEC/DFRC/DEPB Declarations etc., as applicable

2.3 The formats should be duly completed in all respects and should be signed by the

exporter or his authorized CHA . Forms, which are incomplete or unsigned will

not be accepted for data entry

2.4 Initially, data entry for Shipping Bills will be allowed to be made only at the

Service centre. After the exporters/CHAs become conversant with the EDI

procedures, the option of Remote EDI System would also be made available. In

the Remote EDI system (RES) Exporters/CHAs can electronically file their

shipping bills from their offices.

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2.5 The schedule of charges to be levied for data entry at the Service Centre is as

follows:

Charges for S/Bills having up to five items ... Rs.60/-

Charges for additional block of five items ... Rs.10/-

Amendment fees (for a block of five items) ... Rs.10/-

Printing of a S/Bill for Remote EDI System ... Rs.20/-

2.6 The Service Centre operators shall carefully enter the data on the basis of

declarations made by the CHAs/Exporters. After completion of data entry, the

checklist will be printed by the Data Entry Operator and shall be handed over to

the Exporters/CHAs for confirmation of the correctness. Thereafter, the

CHA/Exporters will make corrections, if any, in the checklist and return the same

to the operator duly signed. The operator shall make the corresponding

corrections in the date and shall submit the shipping bill. The operator shall not

make any amendment after generation of the checklist and before submission in

the system unless the corrections made by the CHAs/Exporters are clearly

indicated on the checklist against the respective fields and duly authenticated by

CHA/Exporters signature.

2.7 The system automatically generates the S/Bill Number. The operator shall

endorse the same on the checklist in clear and bold figures. It should be noted that

no copy of the S/Bill would be available at this stage.

2.8 The declarations would be accepted at the service centre from 10.00 hrs to 16.30

hrs. Declarations received up to 16.30 hrs will be entered in the computer system

on the same day.

2.9 The validity of the S/Bill in EDI System is fifteen days only. After expiry of

fifteen days from the date of filing of shipping bill, the exporter has to file the

declaration afresh.

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3 PROCEDURE FOR GR-1

3.1 Under the revised EDI procedure there would be no GR-1 Procedure. Exporters

(including CHAs) would be required to file a declaration in the form SDF. It

would be filed at the stage of “goods arrival” One copy of the declaration would

be attached to the original copy of the S/Bill generated by the system and retained

by the customs. The second copy would be attached to the duplicate S/B (the

exchange control copy) and surrendered by the exporter to the authorized dealer

for collection/negotiations.

3.2 The exporters are required to obtain a certificate from the bank through which

they would be realizing the export proceeds. If the exporter wishes to operate

through different banks for the purpose, a certificate would have to be obtained

from each of the banks. The certificates would be submitted to customs and

registered in the system. These would have to be submitted once a year for

confirmation or whenever the bank is changed.

3.3 In the declaration form to be filled by the exporters for the electronic processing

of export documents, the exporters would need to mention the name of the bank

and the branch code as mentioned in the certificate from the bank. The customs

will verify the details in the declaration with the information captured in the

system through the certificates registered earlier.

3.4 In the case of S/Bs processed manually, the existing arrangement of filing GR-1

forms would continue.

OCTROI PROCEDURES, QUOTA ALLOCATION AND OTHER

CERTIFICATION.

The processing of S/Bs involving allocation of ready-made garments quota by the Apparel

Export Promotion Council (AEPC) will change with the introduction of the system. The quota

allocation label will be pasted on the export invoice instead of S/B. Allocation number of AEPC

would be entered in the system at the time of S/B data entry. The quota certification on export

31

invoice should be submitted to Customs along with other original documents at the time of

examination of export cargo.

As a transitional measure, AEPC certification even on S/B form would be accepted. However, in

these cases, S/B number should be indicated on the invoice when goods are presented for

examination. This transitional facilitation measure will be available for a period of two months

i.e., upto 30th November 2004.

For determining the validity date of the quota, the relevant date would be the date on which the

full consignment is presented for examination and the date to recorded in the system.

The certificate of other agencies, such as, the Cotton Textiles Export Promotion Council; the

Wildlife Inspection Agency under CITES; the Engineering Export Promotion Council; the

Agricultural Produce Export Development Agency (APEDA), the Central Silk Board and the All

India Handicraft Board should also be obtained on the invoice. Similarly, the no objection of the

Asst. Drug Controller and of the Archaeological of Survey India would be obtained on the

Invoice.

The transitional arrangements would be the same as in the case of AEPC certification.

The exporters would have to make use of export invoice or such other documents as required by

the Octroi Authorities for the purpose of octroi exemption.

2. ARRIVAL OF GOODS AT EXPORT EXAMINATION SHEDS IN CFS

The existing procedure of permitting entry of goods, brought for the purpose of examination (and

subsequent: “Let export” Order) in the CFS on the strength of S/B shall be discontinued. The

CONCOR will permit entry of the goods on the strength of the checklist, the date entry form and

the declaration. The CONCOR would endorse the quantity of goods entering the CFS on the

reverse of the checklist

The goods should be brought for examination within 15 days of filing of declaration in the

Centre. In case of delay, a fresh declaration would need to be filed

If at any stage subsequent to the entry of goods in CFS it is noticed that the declaration has not

been registered in the system, the exporters and CHAs will be responsible for the delay in

32

shipment of goods and any damage, deterioration or pilferage, without prejudice to any other

action that may be taken.

3. PROCESSING OF SHIPPING BILLS

The S/B shall be processed by the system on the basis of declaration made by the exporter.

However, the following S/B shall require clearance of the Assistant Commissioner/Dy.

Commissioner (AC/DC Exports):

Duty free S/B for FOB value above Rs.10 lakh

Free Trade Sample S/B for FOB value above Rs.25,000

Drawback S/B where the drawback exceeds Rs. One lakh

Subject to the provisions of para 20.3 of this PN the following categories of S/Bills shall be

processed buy the Appraiser (Export Assessment) first and then by the Asstt/Dy. Commissioner:

DEEC

DEPB

DFRC

EOU

EPCG

Apart from verifying the value and other particulars for assessment, the AO / AC / DC may call

for the sample s for confirming the declared value or the checking classification under the

drawback schedule / DEEC / DEPB / DFRC / EOU etc., He may also give special instruction for

examination of goods.

If the S/B falls in the categories indicted in para 6.1 above, the exporter should check up with the

query counter at the Centre, whether the S/B has been cleared by Asstt. Commissioner /Dy.

commissioner, before the goods are taken for examination. In case AC / DC raise any query, it

should be replied through the Service Centre or, in case of EDI connectivity, through terminals

33

of the Exporter / CHA. After all the queries have been satisfactorily replied to, AC / DC will pass

the S/B

4. CUSTOMS EXAMINATION OF EXPORT CARGO

On receipt of the goods in the Export Shed in the CFS, the exporter will contact the system

examining officer (SEO) and present the checklist with the endorsement of CONCOR on the

declaration, along with all original documents such as Invoice, Packing List, ARE-1(AR-4)etc.

He will also present additional particulars in the prescribed form.

SEO will verify the quantity of the goods actually received against that entered in the system. He

will enter the particulars in the system. The system would identify the Examining Officer (if

more than one are available) who would be carrying out physical examination of goods. The

system would also indicate the packages (the quantity and the serial numbers) to be subjected to

examination. SEO would write this information on the checklist and hand it over to the exporter.

He would hand over the original documents to the Examining Officer. No examination order

shall be given unless the goods have been physically received in the Export Shed. It may,

however, be clarified that Customs may examine all the packages/goods in case of any

discrepancy.

The Examining Officer may inspect and/or examine the shipment, as per instructions contained

in the checklist and enter the examination report in the system. There will be no written

examination report. He will then mark the Electronic S/B and forward the checklist along with

the original documents to the Appraiser/Supdt. In Charge. If the Appraiser/Supdt. Is satisfied

that the particulars entered in the system conform to the description given in the original

documents (including AEPC quota and other certifications) and the; physical examination, he

will proceed to give “: Let Export” order for the shipment and inform the exporter. The

Appraiser/Supdt. Would retain the checklist, the declaration and all original documents with him.

In case of any variation between the declaration in S/B and the documents or physical

examination report, the Appraiser/Supdt. Will mark the electronic S/B to AC/DC Exports. He

will also forward the documents to AC/DC and advice the exporters to meet the AC/DC for

further action regarding settlement of dispute. In case the Exporter agrees with the views of the

34

Department, the S/B would be processed finally. Where the exporter disputes the views of the

Department, the case would be adjudicated following the principles of natural justice.

5. GENERATION OF SHIPPING BILLS

As soon as the Shed Appraiser/Supdt.gives “Let Export” order, the system would print 6 copies

of the S/B in case of Free and scheme S/B. In case of DEPB there are 7 S/B. If the S/B (DEPB)

is assessed provisionally, then EP copy will be generated only after AC/DC finalizes the

assessment. On the examination report the Appraiser/Shed Supt.will sign. On all the copies, the

Appraiser/Shed Supdt., Examination Offer as well as exporter’s representative/CHA will sign.

Name and ID card number of the Exporters representative/CHA should be clearly mentioned

below his signature.

The distribution of S/Bills is as follows:

DEPB Scheme S/Bills Other Scheme S/Bills

1. Exporter’s copy 1. Exporters copy

2. Custom’s Copy 2. Customs copy

3. Exchange Control Copy 3. Exchange Control Copy

4. Scheme Bill Copy 4. E.P.Copy

5. E.P.Copy 5. TR-1. TR-2 Copies

6. TR-1, TR-2 Copies

The original AEPC quota and other certificates will be retained with the S/Bills and recorded in

the Export Shed.

6. PAYMENT OF MERCHANT OVERTIME (MOT)

For the time being the present manual system for payment of Merchant Overtime (MOT) charges

will continue.

35

MOT charges will be required to be paid by exporter when the goods are examined by Customs

for allowing “Let Export” beyond the normal office hours. No charges would be required to be

paid on normal working days when the examination itself is being done for “Let Export” upto

05.oo PM. In addition, no charges would be required to be paid if the exporter wants the goods

to be entered in CONCOR (CFS) only for meeting the quota deadlines.

7. DRAWAL OF SAMPLES

Where the Appraiser of Customs orders for samples to be drawn and tested, the Examining

Officers will proceed to draw two samples from the consignment and enter the particulars thereof

along with name of the testing agency in the system. No registers will be maintained for

recording dates of samples drawn. Three copies of the test memo will be prepared and signed by

the Examining Officer, the Appraiser and Exporter. The disposal of the three copies would be as

follows:

Original to be sent along with the sample to the testing agency

Duplicate copy to be retained with the second sample

Triplicate to be handed over to the exporter.

AC/DC may, if he deems necessary, order for sample to be drawn for purposes other than testing

such as visual inspection and verification of description, market value enquiry etc.

11 QUERIES

With the discontinuation of the assessment of S/B in the Export Department, there should not be

any queries. The exporter, during examination, can clarify doubts, if any. In case where the need

arises for the detailed answer from the exporter, a query can be raised in the system buy the

Appraiser, but would need prior approval of AC/DC (Exports) The S/B will remain pending and

cannot be printed till the exporter replies to the query to the satisfaction of the Assistant

Commissioner/Dy. Commissioner

36

12 AMENDMENTS:

Corrections/amendments in the checklist can be made at the service centre provided the system

has not generated the S/B number. Where corrections are required to be made after the

generation of the S/B No. or, after the goods have been brought in the docks/CFS, amendments

will be carried out in the following manner.

If the goods have not yet been allowed “Let Export”, Assistant Commissioner/Dy.

Commissioner may allow the amendment.

Where the “Let Export” order has been given, the Addl./Joint Commissioner

(Exports) would allow the amendments

In both the cases, after the permission for amendments has been granted, the Asstt./Dy.

Commissioner(Exports) will approve the amendments on the system. Where the print

out of the S/B has already been granted, the exporter will surrender all copies of the

S/Bill to the Appraiser for cancellation before amendment is approved in the system.

13. SHORT SHIPMENTS, SHUT OUT, CANCELLATION AND BACK TO

TOWN PERMISSIONS.

AC/DE (Export) will give permission for issue of short shipment certificate, shut out or

cancellation of S/B, on the basis of an application made by the exporter. The S/B particulars

would need to be cancelled /modified in the system before granting such permission. AC/DC

should check the status of the goods, before granting permission.

14. AMENDMENT OF FREIGHT AMOUNT

14.1 If the freight/insurance amount undergoes a change before “Let Exports” is given,

corresponding changes would also need to be made in the S/B with the approval

of AC/DC Exports. But if the change has taken place after the “Let Exports”

Order, approval of Additional/Jt.Commissioner would be required. Non-

intimation of such changes would amount to mis-declaration and may attract

penal action under Customs Act 1962.

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15. RECONSTRUCTION OF LOST DOCUMENTS:

15.1 Duplicate print out of EDI S/B cannot be allowed to be generated if it is lost,

since extra copies of S/B are liable to be misused. However, a certificate can be

issued by the Customs stating that “Let Exports” order has been passed in the

system to enable the goods to be accepted by the Shipping Line, for export.

Drawback will be sanctioned on the basis of the “Let Export” order already

recorded on the system.

16 RE-PRINT OF SHIPPING BILL:

16.1 Similarly, reprints can be allowed where there is a system failure, as a result of

which the print out(after the “Let Export” order) has not been generated or there is

a misprint. Permission of AC/DC (exports) would be necessary for the purpose.

The misprint copy shall be cancelled before such permission is granted

17 EXPORT OF GOODS UNDER CESS

17.1 For export items, which are subject to export cess the corresponding serial

number of the Cess Schedule should be clearly mentioned. A printed challan

generated by the system would be handed over to the exporter. The cess amount

indicated should be paid in the Bank of India, Extension Branch of CFS, under a

receipt.

18. EXPORT OF GOODS UNDER CLAIM FOR DRAWBACK

18.1 The scheme of computerized processing of drawback claims under the Indian

Customs EDI system-Exports will be applicable for all exports through CFS.

18.2 In respect of goods to be exported under claim for drawback, the exporters will

file declaration in the form. The declaration in the form would also be required to

be filed when the export goods are presented at the Export Shed for examination

& “Let Export”

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18.3 The exporters who intend to export the goods through CFS under claim for

drawback are advised to open their account with the Bank of India branch situated

at CFS-Mulund. This is required to be done to enable direct credit of the

drawback amount to the exporters account, obviating the need for issue of

separate cheque by post. The exporters are required to indicate their account

number opened with the Bank of India branch at CFS-Mulund. It would not be

possible to accept any shipment for export under claim for drawback in case the

account number of the exporter in the bank is not indicated in the declaration

form.

18.4 The exporters are also required to give their account number along with the

details of the bank through which the export proceeds are to be realized.

18.5 Export declarations involving a drawback amount of more than rupees one lakh

will be processed on screen by the AC/DC before the goods can be brought for

examination and for allowing “Let Export”:

18.6 The drawback claims are sanctioned subject to the provisions of the Customs Act

1962, the Customs and Central Excise duties drawback rules 1995 and conditions

prescribed under different sub-headings of the All Industry rates as per

notification number 26/2003-Cus(NT) dated 1.4.2003 as amended by notification

number 12/2004-Cus(NT) dated 29-01-04.

18.7 After actual export of the goods, the drawback claims will be processed through

EDI system by the officers of drawback branch on first come first serve basis.

There is no need for filing separate drawback claim. The claims will be processed,

based on the Train Summary/Inward way bill, submitted by CONCOR. The

status of the S/Bill and sanction of drawback claim can be ascertained from the

“query counter” set up at the service centre. If any query has been raised or

deficiency noticed, the same will be shown on the terminal and a printout of the

query/deficiency may be obtained by the authorized person or the exporter from

the service centre. The exporters are advised to reply to such queries

expeditiously and such replies shall be got entered in the EDI system at the

39

service centre. The claim comes in queue of the EDI system after reply to

queries/deficiencies is entered by the service centre.

18.8 Shipping Bills in respect of goods under claim for drawback against brand rates

would also be processed in the same manner, except that drawback would be

sanctioned only after the original band rate letter is produced before the

designated customs officer in the office of Asstt/Dy. Commissioner (Export) and

is entered in the system. The exporter should specify the SS No. of drawback as

98.01 for provisional drawback.

18.9 All the claims sanctioned in a particular day will be enumerated in a scroll and

transferred to the Bank through EDI. The bank will credit the drawback amount in

the Account of the exporter on the next day and will handle accounts of the

exporters as per their instructions. Bank will also send a fortnightly statement to

the exporters about the payments of their drawback claims.

19. EXPORT OF GOODS UNDER DEPB

While filing information as per the format, exporters are required to ensure that correct Group

Code No. of the goods being exported and the item No. of relevant Group is clearly mentioned

(item-wise details). The exporters/CHAs are advised to fill Item No, in the same manner as given

in the Public Notices issued by DGFT.

DEPB Credit in respect of items like formulations, injections etc. of group code No.62

(Chemicals) are at a specific percentage of credit rates for the relevant bulk drug. For proper

calculations of DEPB rate, exporters/CHAs are advised to claim export under the specific Sl.No.

if they are exporting injections and thereafter mention Sl.No. of Group Code 62 of the bulk drug

of which such injections have been made. The system will calculate the said specific percentage

of the DEPB rate of such bulk drugs, formulations of which are being exported.

All the DEPB S/Bills having FOB value less than Rs.5 lakhs and/or DEPB rates less than 20%

will be assessed by Appraiser/Supdt. (DEPB Cell) However, the S/Bill having FOB value more

than Rs.5 lakhs and/or credit rate 20% or more will be assessed by AC/DC (Export) . Any query

40

at the time assessing by Appraiser (DEPB cell) or AC/DC (Export) may be obtained from the

service centre and reply to the query has to be furnished through service centre.

If the group code No., Item No. and FOB value declared is accepted by the Appraiser/Supdt

(DEPB Cell) or Asstt./Dy. Commissioner(Export), goods may be brought and entered in the

system. The examining officer will feed the examination report and “Let Export” order will be

given by Appraiser/Supdt. in the EDI system. Seven copies of S/Bill will be printed for the

purposes mentioned against each as under :

Customs Copy For record of Customs

Exporter’s copy For record of Exporters

E.P.Copy For office of DGFT

DPB copy For use in the import cell of ICD Bangalore for registration of licence.

Exchange Control Copy For negotiating the export documents in bank

TR-1TR-2 copies

There is a provision for changing the Group Code No./Item No./Value for DEPB credit purposes

and such changes will be reflected in the print out of the S/Bill. Such charges may be done by

Appraiser/Supdt. (DEPB Cell) AC/DC(Export) as well as by Appraiser/Supdt.(Exam.) The credit

will be allowed by the DGFT at the rate/value (for credit purposes only) as approved by

Customs. The EP copy of the shipping bill shall be used by the Exporters to obtain DEPB licence

from DGFT.

In case, for credit purposes, the exporter accepts the lower value as determined by customs, such

lower value will be entered by Appraiser (DEPB Cell) AC/DC (Export) or by Appraiser (Exam)

for each item(s) Printout of S/Bill at item level will indicate for FOB value as well value for

DEPB credit purposes. Exporters are required to apply for the DEPB Licence at the B value

accepted by Customs and not the value declared by them. However, as DEPB is issued on the

basis of exchange rate applicable on the date of Let Export, exporters are advised to apply for

DEPB Licence at the value accepted by Customs at the time of export multiplied by exchange

rate on the date of Let Export(LEO) (As per para 4.43 of EXIM Policy 2003 edition)

In case the exporter does not accept the value determined by the customs, the exports will be

allowed provisionally after taking samples ‘for market enquiry. The words “NOT VALID FOR

41

DEPB” will be printed on all the copies of S/Bill and the exporters will be not be eligible for

DEPB licence against provisionally assessed S/Bills. In such cases, EP copy of S/Bill will not be

printed and only 6 copies will be printed. However, market enquiries about value will be

conducted in such cases and either after issue of the Show Cause Notice the market value will be

determined or may be accepted by the Exporters on his own. In such cases where samples are

drawn subject to market enquiry the copy of the S/Bill for claiming DEPB will be generated after

determination of value on the basis of market enquiry and handed over to the exporters duly

signed by Appraiser/Supdt. of Customs. In such cases wherever market value has been found to

be less than twice the credit claimed, the market value will be mentioned in the EP copy of S/Bill

as under :

“Market value of the goods is Rs………..and credit not to exceed 50% of the

market value”

Sample may also be drawn for the other purposes such as Chemical test,. DEPB

entitlement etc. The procedure of Provisional Assessment shall be applicable

mutates mutandis to above cases as well and the cases will be finalized after

necessary reports etc. arte received and unprinted copy of S/Bill meant for DEPB

Licence shall be released thereafter for printing.

Registration of DEPB Licence:

The DEPB Licence in respect of exports made from this customs station will be

required to be registered at the same station. Before registration, the concerned

officer will verify the S/Bill(s) in the Licence from the computer ensure that

exports have been affected and value mentioned is as determined by customs at

the time of export. In cases of S/Bills assessed provisionally, the verification will

not be possible because S/Bill will not be in the verification queue. The exporters

are advised to obtain licences for the items exported un DEPB scheme and not for

non-DEPB items. If the lower value for credit purposes has been accepted at the

time of export, the licenses shall be obtained only for such lower value and not for

FOB value declared in S/Bill or as per Bank realisation certificate. Similarly in

42

cases where market value of the goods is less than twice the credit availed, the

licence shall be obtained for 50% of the present market value of the goods. The

computer at the time of registration of licence will calculate admissible credit on

the basis of exchange rate on the date of realisation of export proceeds (as per

bank realisation certificate) for DEPB items only and at customs approved value

at the time of export. If the amount of licence is more than the amount of credit

calculated by the system, it will not be possible to register a licence and reference

will be made to DGFT for correction of amount of credit. If the amount of credit

as per customs computer matches with the credit as per DEPB licence, computer

will generate printout regarding verification of the exports giving details like

S/Bill No. date , rate of credit, FOB value as approved by customs and amount of

credit etc. DEPB licence will be registered on the basis of printout of verification

report duly signed by AC/DC (Export). If a DEPB Licence is having S/Bills

exported from other ports in the same city the exporters can get the licence

registered at any of the ports from where he intends to import the goods in the city

after verification about exports from other ports from where exports were

affected. The same procedure will be followed for DFRC Licences also.

20. EXPORT OF GOODS UNDER 100% EOU SCHEME

20.1 The exporters can get the export goods examined by Central

Excise/Customs Officer at the factory even prior to filling of S/Bill. Self sealing

facility is also available. He shall obtain the examination report in the form to this

Public Notice duty signed and stamped by the examining officer and supervision

officer at the factory. The export invoice shall also be signed and stamped by both

the officers at the factory. Thereafter the goods shall be brought to the concerned

customs warehouse for the purpose of clearance and subsequent “Let Export”.

The exporters/CHA shall present the goods for registration along with

Examination Report, ARE-1, Export Invoice duly signed by the Examining

Officer and supervising officer at the factory, check list, declaration in form and

other documents such as document of transportation, ARE-1, etc., to the examiner

in the concerned shed. After registration of goods, the shipping bill will be

43

marked to an examiner for verification of documents and seal. If seal is found

intact the S/Bill will be recommended for LEO, which will be given by the shed

appraiser. However if seal is not found intact, the goods will be marked for

examination and LEO will be given if the goods are found in order.

21. EXPORT OF GOODS UNDER EPCG SCHEME

21.1 All the exporters intending to file shipping bills under the EPCG scheme should first get

their EPCG licence registered with the Export section. For registration of EPCG licence, the

exporter/CHA shall produce the Xerox copy of EPCG licence to the service centre for data entry.

A printout of the relevant particulars entered will be given to the exporter/CHA for his

confirmation. After verifying the correctness of the particulars entered, the said printout will be

signed by the exporter. Thereafter, the original EPCG licence along with the attested copy of the

licence and the signed printout of the particulars shall be presented to the Appraiser/Supt (EPCG

Cell)The Appraiser/Supdt. (EPCG Cell) would verify the particulars entered in the computer

with original licence and register the same in EDI system. The registration number of the EPCG

Licence would be furnished to the exporters/CHA, who shall note the same carefully for future

reference. The said registration number would need to be mentioned against respective item on

the declaration form filed for data entry of the s/bill, at the time of export of goods. All the

EPCG S/Bill would be processed on screen by the Appraiser/Supdt.(EPCG Cell) and the AC/DC

(Export). After processing of the EPCG S/Bill by the Appraiser EPCG Cell and AC/DC Export,

the goods can be presented at the Customs warehouse for registration, examination and “Let

Export” as in the case of other export goods. After train summary is submitted to CONCOR, the

S/Bill will be put to Appraiser queue for logging/printing of ledger. After logging/printing of

ledger, the EPCG bill will be moved to history tables.

22 EXPORT OF GOODS UNDER THE DEEC SCHEME

22.1 Only shipping bills pertaining to DEEC books issued on or after 1.4.95 will be processed

on the EDI system.

44

22.2 All the exporters intending to file s/bills under the DEEC scheme including those under

the claim for drawback should first get their DEEC Book registered with the CFS Mulund. The

registration can be done in the service centre.

The original DEEC book would need to be produced at the service centre for data entry. A print

out of the relevant particulars entered will be given to the exporter/CHA. The DEEC Book would

need to be presented to the Appraiser/Supdt., DEEC Cell, who would verify the particulars

entered in the computer with the original DEEC and register the same in the EDI system. The

registration No. of the DEEC Book would be furnished to the exporter/CHA, which would need

to be mentioned on the declaration forms at the CFS for export of goods It would not be

necessary thereafter for the exporter/CHA to produce the original DEEC book for processing of

the export declarations

22.3 Each book will be allotted a Registration No. should be indicated on the shipping bills in

the relevant columns.

22.4 Exporters/CHAs that will be filling S/Bills for export of goods under the DEEC Scheme

would be required to file additional declarations regarding availment/non-availment of

MODVAT or regarding observance/non-observance of specified procedures prescribed in

the Central Excise 1944 in the form. The declaration should be supported by necessary

certificates (ARE-1 or for non-availment of MODVAT) issued by the jurisdiction Central

Excise authorities. “Let Export” would be allowed only after verification of all these

certificates at the time of examination of goods. The fact that the prescribed DEEC

declaration is being made should be clearly stated at the appropriate place in the

declaration being filled in the service centre or through RES-Mode.

22.5 All the export declarations for DEEC would be processed on screen by the

Appraiser/Supdt., Export Department and the AC/DC Exports. The said processing

would be akin to the processing of Bill of Entry on the EDI System with provisions for

query/reply. After the declarations have been so processed and accepted, the goods can

be presented at the Export Shed along with DEEC Books registered in the4 EDI System

so that the export declarations are processed expeditiously.

45

22.6 Further, exporters availing of DEEC benefits in terms of various notifications should file

the relevant declarations.

22.7 It is further clarified as follows:

While giving details relating to DEEC operations in the form the exporters/CHAs should

indicate the S.No. of the goods being exported in the column titled “ITEM S.NO.IN

DEEC BOOK PART E”

If inputs mentioned in DEEC Import book only have been used in the manufacture of the

goods under export, in column titled “Item Sr.No. in DEEC Book Part C” the

exporters/CHAs are required to give S.No. of inputs in Part-C of the DEEC Book and

Exporters need not fill up column titled “DESCRIPTION OF RAW MATERIALS”

If some inputs which are not in Part-C of the DEEC Book have been used in the

manufacture of the goods under export and the exporter wants to declare such inputs, he

shall give the description of such inputs in column titled “DESCRIPTION OF RAW

MATERIALS”

In the Col. “IND/IMP”, the exporters are required to write “N”, if the inputs used are

indigenous and “M”. if the inputs used are imported.

In column titled “Cess Schedule Sl.No.” the relevant Sl.No. of the Schedule relating to

Cess should be mentioned.

23. EXPORT OF GOODS UNDER DFRC SCHEME:

The details pertaining to export products i.e. input materials utilized as per SION should be

clearly mentioned in the declaration mentioned at Annexure A at the time of filing.

24. EXPORT GENERAL MANIFEST:

All the steamer agents shall furnish the Export General Manifest, House Bill of Landing wise, t

the Customs electronically. In the beginning, the steamer agents are required to enter the

manifest in the Customs Computer System through the Service Centre on payment of the

prescribed fee. (In due course, arrangements will be made for the electronic delivery of Export

46

General Manifest through EDI Service Providers. Till such time, all the EGMs will have to be

entered at the Customs Computer System only.)

25. GRIEVANCE HANDLING

The Asstt. Commissioner/ Dy. Commissioner of Customs, CFS-Mulund may be approached by

exporters or their CHAs for settlement of any problems faced at any stage of the export

clearance.

THE ECGC COVER

The abbreviated form for Export Credit and Guarantee Corporation is ECGC. As the name

indicates this is a sort of guarantee or a sort of cover for the exporter. Let us now see what this is

all about.

Needless to say that an exporter before entering into a contract with the overseas buyer for

making any supply, takes care to ensure that the customer with whom he is dealing have some

credit worthiness. This he may be able to do either through the local agent who is in a better

position to know about the customer or through a bank or through any of the exporter’s

associates if happens to be in the area of the customer etc., But, in a business things may change.

The financial status of a customer may take drastic turn and an established customer may go

bankrupt within a short period of time.

Moreover, the buyer may be willing to make the payment, but there are other environment which

prevents him from effecting the transfer of funds through the bank. For e.g., there could be

break out of war, the balance of payment position of the country may become unfavourable,

there may be some coup of the government etc., and all transactions could be sealed.

47

These are the risk factors for the exporters. What is the guarantee that he will get paid for the

supplies he has made?

With a view to provide support to Indian exporters, the Govt. of India set up the Export Risk

Insurance Corporation (ERIC) in 1957. This was transformed into Export Credit & Guarantee

Corporation Ltd. in 1964. In order to give the Indian identity a sharper focus the name was again

changed to Export Credit & Guarantee Corporation of India Ltd., in 1983. This is a company

wholly owned by the Govt. of India and functions under the administrative control of the

Ministry of Commerce and managed by the Board of Directors representing Government,

Banking, Insurance, Trade, Industry etc.

Though one may insist for a Letter of Credit, still there could be some elements of risk which we

will study later here. Except getting an advance payment for the full value of the supplies, any

other mode of payment will have some risk.

Take the case of an exporter who has made supplies and before the payment is received the

buyer goes bankrupt or there comes some new provision or policy of Government of the

importing country preventing repatriation of the funds to other countries what recourse the

exporter has to recover his dues. The litigation procedure might be time consuming and the

exporter can never be sure of getting his full payment. An ECGC cover a safeguard his interest to

a great extent.

An exporter can either agree for sight payment or can made shipment on credit terms for say 60

days, 90 days etc., In project exports the period of payment may extend to some years. Longer

the period of credit given to the customer, more will be the risk factor for the exporter.

In respect of sight bill, there is almost no risk because the customer has to make payment first

before he retires the documents. Therefore, before the title of the goods is passed on to the

customer, the importer makes the payment. However, in respect of issuance bill (credit bills) the

buyer retires the documents by accepting the usance draft and takes delivery of the goods. In

case the customer goes bankrupt or become insolvent, before the due date of payment, the

exporter is totally at a loss. While big units may be able to absorb the one time loss, small

exporters will get broke even with one such transaction. Here the ECGC comes into picture. It

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takes up the responsibility of paying the funds to the exporter and makes all efforts including

legal proceedings to recover the dues from the customer, provided the exporter has taken an

ECGC cover.

WHAT ECGC OFFERS FOR PROTECTION OF EXPORTER’S INTEREST?

ECGC offers various types of insurance cover to protect the exporter’s interest. For each type of

cover an exporter has to take Policy specific to the respective requirements. The Policy that is

most commonly taken by the exporters is the Standard Policy or otherwise called the Shipments

(Comprehensive Risks) Policy.

SHIPMENTS (COMPREHENSIVE RISKS) POLICY also called STANDARD POLICY

For exporters with an annual export turnover in excess of Rs.50 lakhs, the Shipments

(Comprehensive Risks) Policy is the one intended for covering shipments on cash basis or on

short-term credit basis. (Credits not exceeding 180 days)

The risks covered this Policy is as follows effective from the date of shipment.

Commercial Risks

Insolvency of the buyer

Failure of the buyer to make payment within a specified period.

Buyer’s failure to accept the goods subject to certain conditions.

Political Risks

Imposition of restrictions by the Govt. of the buyer’s country or any government

action which may block or delay the transfer of payment made by the buyer.

War, civil war, revolution or civil disturbances in the buyer’s country

New import restrictions or cancellation of a valid import licence

Interruption or diversion of voyage outside India resulting in payment of additional

freight or insurance charges which cannot be recovered from the buyer.

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Any other cause of loss neither occurring outside India nor normally insured by

general insurers and beyond the control of both the e porters and the buyer.

Risks not covered under the Policy

The Standard Policy does not cover losses on account of following risks:

Commercial disputes including quality disputes raised by the buyer unless the

exporter obtains a decree from a competent court of law in the buyer’s country in

his favour

Causes inherent in the nature of the goods

Buyer’s failure to obtain necessary import or exchange control clearance from

authorities concerned

Insolvency or default of the agent of the exporter or of the collecting bank

Loss or damage to goods which can be covered by general insurers.

Exchange rate fluctuations

Failure of the exporter to fulfill the terms of the export contract or negligence on his

part.

Shipments Covered

The Standard Policy is meant to cover all the shipments that may be made by an exporter during

a period of 24 months ahead. The policy cannot be issued for selected shipments, selected buyer

or selected markets. For specific requirements an exporter can opt for different policy from the

various services offered by the corporation

Exclusions:

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Shipments made against advance payments received or shipments against confirmed letters of

credit which has the confirmation from the bank in India may be excluded.

However, shipments against confirmed L/C may be covered for political risks only. The

premium for cover under political risks will be less than that under the comprehensive policy.

ECGC may also agree to exclude certain items if the exporter is dealing in different distinct

products.

Shipments to Associates:

Shipments to buyers i.e. the foreign buyers in whose business the exporter has financial interest,

are normally excluded from the Policy. However such shipments can be covered against political

risks.

Shipments on Consignment basis:

Shipments on consignment basis can be covered only against political risks.

Shipments by Air

Since the buyer is able to take delivery of the goods even without retiring the bank documents,

shipments by air are not covered under the policy. However, the exporter may cover such

shipments for payments under open terms. The exporter can have cover for such shipments, if he

has obtained Credit Limit on such buyers on open delivery terms and also pays the premium at

rates applicable to open delivery terms.

HOW TO GET ECGC COVER

Step 1.Open Policy:

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An exporter desiring to get the ECGC cover has to approach the office of the ECGC making a

Proposal. He must make his home work and be clear as to what will be his total turnover during

a year ad what will be the maximum amount he expects to be outstanding from various buyers at

a given point of time. Once this is clear he can apply for an Open Policy for the maximum

amount that he expects to be outstanding at a given point of time. Suppose, he expects that at

any given time his outstanding will be say Rs.50/- lakhs then he can apply for a policy for this

amount. After verification of the details of the exporter, the ECGC may issue a open

policy for Rs.50 lakhs with a validity of say 2 years. This is the first step.

Step 2.- Credit Limit on Individual Buyer

Once the open policy is taken, as a next step the exporter must make out the list of the

customers to whom he expects to make shipment. For each and every customer he has to apply

to the ECGC to have a limit of liability fixed. That is to say, he has to declare the maximum

amount of bills he expects to be outstanding from each customer at a given point of time. Based

on the value of business dealing, suppose the exporter expects that from customer A the

outstanding may be Rs.10 lakhs. Then the exporter has to apply to ECGC in the prescribed form

for getting limit fixed for the customer. On receipt of the application, ECGC will check for the

credit worthiness of the customer either through their own net work of offices globally, or

through the customer’s bank or through some reputed independent agency. Based on the credit

report, ECGC will determine the limit that can be fixed for the customer. If it feels that a limit of

Rs.10 lakhs is in order, it will advise the exporter of the same. Similarly, the exporter can have

the limit fixed to all his customers.

Once the limit is taken from ECGC, the exporter is free to make his shipments to the various

customers. If shipment for any customer is made before getting the limit fixed by ECGC, no risk

will be covered for that shipment.

Step 3 – Payment of Premium and filing of monthly returns

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For the risk the ECGC takes, it charges a premium on the value of the shipments actually made.

This is calculated as per the table to be supplied by ECGC which shows the premium per Rs.100

of exports.

This table which gives the premium amount payable is framed based on the following.

The various countries around the globe are divided into different groups and are classified as

A1, A2, B1, B2, C1,C2 & D. The countries are grouped according to their economic

standard. For e.g. USA. Canada, UK are grouped in category A. The premium amount will be

less for group A countries and will be increased gradually to group B, C & D countries.

The premium for group D countries will be more because they are all economically weaker

countries and payment risks are high

Again the premium table is based on the period of credit. The slab is for credits up to 90 days,

120 days, 180 days etc. Longer the credit period greater is the premium.

Thus, the premium will be least for group A countries and for the shorter credit period and

will be maximum for group D countries and for maximum credit period

FILING OF MONTHLY RETURNS:

The exporter has to send a monthly return in the prescribed form to ECGC declaring the list of

various shipments made and the amount of premium payable as per the premium table. The

exporter has to work out the total premium applicable on the shipment effected and make

payment to the ECGC

The exporter is also expected to file a Monthly Return in a separate form listing all the Bills

which are not paid on due date, if any, so that ECGC is periodically aware of the defaulters.

In case of any eventuality when the buyer goes bankrupt, he may prefer a claim with ECGC for

payment.

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The policy that is issued for shipment not covered under L/C is called Comprehensive Policy

meaning that the policy will cover both the commercial and political risks. While commercial

risk is that of the buyer going bankrupt, the political risk relates to the country’s policies which

may prevent the repatriation of funds or there could be outbreak of war preventing financial

transactions etc.

All the above relates to shipments not covered under L/C. However, an exporter can have a

separate ECGC Policy for shipments under L/C. Here the exporter will have the policy covering

only the political risk since under L/C, the bank stands as a guarantor and there is no commercial

risk.

An exporter must cover all his exports under ECGC, including bills on sight basis, and are NOT

under L/C. He cannot be selective to certain countries or certain buyer. The cover is on whole

turnover basis.

For all shipments under L/C, the buyer may take a separate policy to cover the political risks.

The premium for L/C shipments will be relatively less than that on comprehensive policy.

Note: ECGC cover is not for non-payment on account of dispute on quality, damages to the

goods, theft, pilferage etc.

The cover is only when the party goes insolvent or there are some political risk due to which the

exporter is not in a position to get the payment immediately or on due date. This cover must be

distinguished from the general insurance.

Incentives packages offered to the Exporter

Duty Drawback(DBK)

Exemption from Excise Duty

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Exemption from Octroi Duty

SALES TAX EXEMPTION

Claim of duty Drawback:

To apply 2 Months in Advance with following Documents to the concerned Customs

House:- copy of export contract or LOC- packing list- ARE-I Form- Insurance

Certificate- ‘Special Brand Rate’ for the claimed Drawback

EXCISE DUTY REFUND

Export under Rebate: Initially pay the Excise Duty & subsequently claim back Central

Excise Department after shipment of goods

Export under Bond: Execute a Bond in favour of Excise Authority for a sum equivalent

to amount of excise chargeable on such goods, together with bank guarantee to safeguard

excise department’s financial interest against non-sanctioning of Excise refund

OCTROI

Octroi is the local tax levied by the civic body on goods entering into the city.

There are three procedures for clearing goods which are meant for export.

Procedure – 1, Export on payment of octroi duty and refund thereof after export.

Pay the Octroi Duty and apply for refund of payment made.

At Octroi Naka form B is issued with cash receipt for the payment of Octroi Duty.

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Cargo is moved to the docks.

At Docks Octroi officer prepares form”C” & endorses Shipping Bill Number

& Steamers Name.

After shipment exporter prepares claim for refund by submitting following

documents:

Covering Letter for refund of Octroi Duty.

Original receipt of Octroi paid.

Original Form B.

Original Form C.

Invoice under which material was bought to the city.

Export invoice issued by the Exporter to the importer.

Export Promotion Copy of Shipping Bill – Photo Copy.

Bill of Lading or Airway Bill Copy.

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Procedure – 2, Export without payment of Octroi Duty.

N Form Procedure.

Prepares form N in 3 copies.

Checking of documents Shipping Bill, Carting order, Export Invoice by Octroi

officer.

Under taking that the goods will be cleared for export within 7 days of

clearance through the octroi post.

Octroi officer at Docks will endorse the Shipping Bill number & shipment

details on N form.

Proof of export... N form with above endorsement to be submitted to the Head

Office along with copies of Shipping Bill, Bill of Lading, Export Invoice etc.

Procedure – 3

E.P (Export Promotion) Form.

Registration form + IEC / RCMC + CA Certificate.

Number will be allotted.

Fees Rs. 500/-

Documents Checked

Factory Challan cum Invoice.

ARE –1.

EP forms 3 copies.

Export order.

Shipping Bill.

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SALES TAX EXEMPTION

• After getting Sales Tax Registration No. the Exporter is entitled to for Sales Tax

Exemption, for which he should apply to STO in H Form. The procedure then

follows the following steps:

Obtaining ‘H’ Form

Processing of H Form

Sales Tax Claim

Step5. The exporter secures payment for the value of the export consignment on

presentation and processing of the following documents to the negotiating bank.

1.                   Duplicate copy G.R/SDF form.

2.                   Bill of exchange, first and second exchange.

3.                  Full set of Bill of Lading, all negotiable copies and one non-

negotiable copy.

4.                   Original copy of L/C.

5.                   Two copies of commercial invoice.

6.                   Two copies of customs invoice, if necessary.

7.                   Two copies of Certificates of Origin.

8.                   Two copies of Packing list.

9.                   Two copies of Marine Insurance Policy.

10.               Four copies of bank certificate.

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11.               Additional copies of commercial invoice to be certified by the

bank and returned to the exporter.

12.               Consular invoice, where necessary.

step6. The negotiating bank transmits/sent the following documents to the banker of the

importer by first air mail/express courier followed by a second set of these documents by the

second air mail/courier to ensure receipt of at least one set, if the other is lost in transit or

delayed. (Now a day Messages through SWIFT are authorized).

                   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, Export certificate. Where necessary.

.                   8.                   Packing list.

 

Step7.  The negotiating bank transmits/send the duplicate copy of

GR/SDF form to the Exchange Control Department of R.B.I. The original copy of

bank certificate, along with attested copies of commercial invoice are returned to the

exporter, and the duplicate copy of the bank certificate is forwarded to the Jt. DGFT,

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Import & Exports of the area on repatriation/ receipt of the bill payment.

3.5) To describe documents required by the bank.

Prior to 1990,the Forms of Documents and related Formalities (viz, quotations & invoices, regulatory documents etc.) were aimed to suit India’s unique requirements with little regard to interrelationship of different documents and their impact on total documentation burden in an export transaction. These were highly prone to errors & discrepancies, making documentation extremely complicated & overlapping.The Aligned Documentation System (ADS) is a methodology of creating information on a set of Standard Forms, printed on a paper of same size, in such a way that that the items of identical specification occupy the same position on each form.

OBJECTVES OF ADS

ADS simplifies and prioritizes information required by various commercial interests and Government Agencies and aligns it in a Standard FormatADS achieves economy of Time and efforts involved in the prevailing methodology of Export Documentation

FORMATING OF ADS ADS requires preparation of only one ‘Master Document’ containing

information common to all documents, included in the aligned series The system is mainly based on Master Document-I for preparing

commercial Documents & Master Document-II for preparing Regulatory Documents.

The Commercial Documents under ADS are prepared on a uniform and standard A4-size paper ( 210 mm x 297 mm); while Regulatory Documents are prepared in a Full-scape paper ( 34.5 cm x 21,5 cm).: all the Documents are aligned to one another in such a way that common items of information are given in the same relative slots in each document included in ADS.

Based on the UN Layout Key, the ADS provides an effective alternative to repetitive dilatory and unproductive method of preparation of Export Documents. Sweden was the first to introduce Ads followed by Denmark, Finland & Norway.

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Function of export documentation

Export documentation may serve any or all of the following functions:

An attestation of facts, such as a certificate of origin Evidence of of the terms and conditions of a contract if carriage, such as in the case of an

airwaybill

Evidence of ownership or title to goods, such as in the case of a bill of lading

A promissory note; that is, a promise to pay

A demand for payment, as with a bill of exchange

A decalaration of liability, such as with a customs bill of entry

A receipt for goods received.

PRINCIPLE LAWS & ACTS GOVERNING EXPORT-IMPORT TRANSACTIONS

Foreign Trade (Development & Regulation) Act,1994Export-Import Policy & Handbook of Procedures, published by DGTDCustoms Act, 1962Foreign Exchange Management Act, 1999,Export (Quality Control & Inspection) Act, 1963Insurance Act, 1938Marne Insurance Act,1963Central Excise Act, 1944Uniform Customs & Practices and Laws for Documentary Credit (UCPDC),1993Carriage of Goods by Sea Act, 1924International Commercial Terms, Guidelines: 2000

CLASSIFICATION OF EXPORT DOCUMENTATION Any export shipment involved various documents required by various authorities such as

customs; excise, RBI, Inspection and according depending upon the requirements, there are categorized into 2 categories, namely

I. Commercial documents andII. Regulatory documents

I. Commercial Documents.

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Introduction

Commercial documents are required for effecting physical transfer of goods and their

title from the exporter to the importer and the realization of export sale proceeds. Out of

the 16 commercial documents in the export documentation framework as many as 14

have been standardized and aligned to one another. These are proforma invoice,

commercial invoice, packing list, shipping instructions, intimation for inspection,

certificate, of inspection of quality control, insurance declaration, certificate' of insurance,

mate's receipt, bill of lading or combined transport document, application for certificate

origin, certificate of origin, shipment advice and letter to the bank for collection or

negotiation of documents. However, shipping order and bill of exchange could not be

brought within the fold of the Aligned Documentation System.

1. Commercial Invoice: Commercial invoice is an important and basic export

document. It is also known as a 'Document of Contents' as it contains all the information

required for the preparation of other documents. It is actually a seller's bill of merchandise.

It is prepared by the exporter after the execution of export order giving details about the

goods shipped. It is essential that the invoice is prepared in the name of the buyer or the

consignee mentioned in the letter of credit. It is a prima facie evidence of the contract of

sale or purchase and therefore, must be prepared strictly in accordance with the contract of

sale.

Contents of Commercial Invoice

Name and address of the exporter.

Name and address of the consignee.

Name and the number of Vessel or Flight.

Name of the port of loading.

Name of the port of discharge and final destination.

Invoice number and date.

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Exporter's reference number.

Buyer's reference number and date.

Name of the country of origin of goods.

Name of the country of final destination.

Terms of delivery and payment.

Marks and container number.

Number and packing description.

Description of goods giving details of quantity, rate and total amount in terms of

internationally accepted price quotation.

Signature of the exporter with date.

Significance of Commercial Invoice

It is the basic document useful in preparation of various other shipping documents.

It is used in various export formalities such as quality and pre-Shipment inspection excise

and customs procedures etc.

It is also useful in negotiation of documents for collection and claim of incentives.

It is useful for accounting purposes to both exporters as well as importers.

2) Inspection Certificate: The certificate is issued by the inspection authority such as the export

inspection agency. This certificate states that the goods have been inspected before shipment,

and that they confirm to accepted quality standards.

3) Insurance forms

Introduction

Insurance is a crucial consideration in the export process. The purpose of any insurance is to protect you from loss as a result of actions outside of your control (such as your customer not paying you, or the ship containing your cargo sinking). There are various types of export-related

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insurance that you may wish to take out. Perhaps the most common is marine insurance. The purpose of marine insurance is to insure your cargo from various transport-related risks while it is being shipped to the importer (note that it is called marine insurance even if you send the cargo by air). Other types of insurance include export credit insurance (to protect you from the risk of non-payment on the part of the importer) and political risk insurance (to protect you should the importing country take some action that results in your non-payment).

To obtain insurance, you would approach a specialist insurance firm; a marine insurance company in the case of cargo or marine insurance, or a credit insurance firm, such as Credit Guarantee. As far as marine insurance is concerned, your freight forwarder can help you in this regard and will either put you in touch with an insurance provider or obtain the insurance on your behalf.

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WHAT IS A MARINE INSURANCE?

• Marine Insurance is a Contract under which the insurer undertakes to indemnity the

insured against losses, caused due to perils of the sea; that may include:

o Sinking of ship

o Damage to the ship and cargo due to dashing of the waves

o Dashing of the ship on the rock

o Fire hazards or explosion on the ship

o Spoilage of the cargo due to sea water, oil spills etc

o Destruction of the ship and cargo due to natural calamities, hitting the ice-berg, tornado,

espionage/ piracy and other risk factors.

MARINE INSURANCE ACT, 1963

• Section 3 of the MARINE CONTRACT ACT, 1963 defines a Contract of Marine

Insurance as an Insurance Cover for Marine Cargo, Air Cargo and Overseas Post Parcels.

• Thus, Marine Insurance is used to cover transportation by any of the following Modes of

Transport , singly or Jointly:

Sea, Air or Land

Inland Water Voyages

Rail/ Road

Air

Post

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Marine Insurance Act provides insurance or protection to goods ‘in transit’, as also

extends to storage of goods provided such storage is incidental to transportation

TYPES OF MARINE INSURANCE POLICY

TIME POLICY: Under this policy, the subject matter of insurance, i.e. ship and/ or

cargo ,is insured for a specified period of time. It is taken in case of hull insurance of the

ship

VOYAGE POLICY: This type of policy is taken for a definite voyage for one

destination to another (e.g. Mumbai to Singapore via Hong Kong). This is allowed for

Cargo Insurance

MIXED POLICY: This type of Policy is taken for a specified period or for a definite

voyage. For example, a policy can be taken for two months for the voyage starting on 15

th August, 2007 from Mumbai to Shanghai

VALUED POLICY: In this case the value of subject matter is agreed upon between the

insurer and the insured at the time of taking out the Policy. This facilitates easy

settlement of claims in the event of loss.

UNVALUED POLICY: In this case, the value of Subject matter is not agreed upon at the

time of taking out policy. It is determined only in the event of loss. Hence, it is also

called ‘Open Policy’.

. FLEET POLICY: This Policy is taken for the Fleet of Ships or Vessels belonging to the

same company. It is suitable for those companies which own a large number of Vessels.

FLOATING POLICY: This policy is taken to cover all shipments for some months.

There is a limit on the value of goods to be exported; and once its limit is crossed, the

policy needs to be renewed/ revalidated.

SPECIFIC COVER POLICY: This policy is taken to cover different risks for a single

shipment. This policy is not available for a regular exporter, as he will have to take a

separate policy every time he exports.

OPEN COVER POLICY: This policy is generally issued for a period of 12 months and

covers all the shipments to one or more destinations during the period. However, there is

a maximum limit on the value of the consignment. If the value exceeds the limit, the

insurance company must inform the Insurer by the Exporter.

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PROCEDURE TO OBTAIN MARINE INSURANCE POLICY

A. SELECTING AN INSURANCE COMPANY: GIC, LIC, ICICI, Oriental

Insurance Co, Royal Insurance Co etc. are generally preferred by the Exporting

Company.

B. DECIDING ON THE APPROPRIATE TYPE OF POLICY: Out of the several

Insurance Policies described exporter should take such a policy which minimizes his risk

at an optimal cost.

C. APPLICATION TO INSURANCE COMPANY: When goods are ready for

dispatch, exporter should apply to Insurer in the prescribed “Declaration Form” giving

the following details:

o Address of the Exporter & Importer

o Description of the Goods

o Marks, Numbers, and kind of packages with labeling

o Value of Packages

o Transportation details from the warehouse to its final destination

o Risks to be covered for Insurance

Any other information that the Exporter may intend to specify within prescribed norms

D. PAYMENT OF PREMIUM:

Premium, payable quarterly, half-yearly, annually etc varies from country to country; also

its rates vary on the nature and type and duration of policy as also in currency to be paid.

While handling shipping documents against exports contracted on f.o.b. or c & f or any

other terms under which the liability on account of marine insurance on the shipment

rests with the overseas buyers but exporters have taken the insurance cover on non-

resident party’s account , authorized dealers should verify that the actual premium has

been added on the invoice for being recovered from buyers.

E. ISSUE OF THE INSURANCE POLICY: After completion of all the formalities,

the exporter has to produce the bill of lading and the name of the ship to the Insurance

company. On that besides, the insurance company issues the insurance certificate (in

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Triplicate) as per the declaration given by the Exporter. The Policy contains the

following details:

Name and address of the Exporter

Type of Policy and description of the risks covered

Description of the goods insured

Amount of sum assured and premium paid

Date of Issue and the period of Policy

Special conditions and warranties

Special instructions regarding the procedure to be followed in the event of loss.

PROCEDURE FOR FILING INSURANCE CLAIMS

• A. INTIMATION OF LOSS: In the event of claim arising, the Marine Insurance

Company or its nearest office or its overseas agents as mentioned in the policy, should be

intimated about the loss without delay. The claim on carriers, customs and bailees should

be filed within the prescribed time limit.

• B. APPOINTMENT OF SURVEYER: On receiving the intimation, the insurer appoint

s a surveyor to determine the cause and extent of loss. The following details are necessary

in the survey Report:

Whether packing was sufficient; and if not

What improvements are recommended?

How claim could have been minimized?

Was there failure of the Insured to protect interest by not taking measures to avoid or

minimize loss or not protecting the rights of recovery from port/ carriers etc.?

• The Insured should submit the following documents to the Insurance Company to finalize

the claims:

Claim Bill, in duplicate

Original Insurance Policy, duly discharged

Original Invoice

Copy of Bill of Lading

Copy of Packaging Lists, showing weight specification

Ship survey report

Port Trust Landing Remarks Certificate

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Copy of claim lodged with carriers, customs and bailees

Reply received from carriers or Port Trust Authorities

Any other documents required by the Insurance company

• Finalization of the claim: the claim is settled as per insurance policy

Overseas Protection & Indemnity Club (OPIC)

Authorized dealers may allow remittance towards membership subscriptions of

Overseas Protection & Indemnity Clubs (OPIC) on behalf of Shipping

Companies who are their constituents , on production by the shipping company

concerned the approval granted by Govt. of India under General Insurance

Business (Nationalization) Act, 1972.

Where Indian Ships are involved in collusion with foreign ships, OPIC clubs

provide guarantee for payment towards claims made by the foreign ship-owners.

4) Consular Invoice:

Introduction

Consular invoice is a document required mainly by the Latin American countries like Kenya,

Uganda, Tanzania, Mauritius, New Zealand, Myanmar, Iraq, Australia, Fiji, Cyprus, Nigeria,

Ghana, Guinea, Zanzibar, etc. This invoice is the most important document, which needs to be

submitted for certification to the Embassy of the importing country concerned.

Significance of Consular Invoice for the Exporter

It facilitates quick clearance of goods from the customs in exporter's as well as

importer's country.

Certification' of goods by the Consulate of the importing country indicate that the

importer has fulfilled all procedural and licensing formalities for import of goods.

It also assures the exporter of the payment from the importing country.

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Significance of Consular Invoice for the Importer

It facilitates quick clearance of goods from the customs at the port destination and

therefore, the importer gets quick delivery of goods.

The importer is assured that the goods imported are not banned for imported in his

country.

Significance of Consular Invoice for the Customs Office

It makes the task of the customs authorities easy.

It facilitates quick calculation of duties as the value of goods as determine by the

Consulate is considered for the purpose.

5) Certificate of Origin:

introduction

The importers in several countries require a certificate of origin without which clearance to

import is refused. The certificate of origin states that the goods exported are originally

manufactured in the country whose name is mentioned in the certificate. Certificate of origin is

required when:-

The goods produced in a particular country are subject to’ preferential tariff rates in the

foreign market at the time importation.

The goods produced in a particular country are banned for import in the foreign market.

Types of the Certificate of Origin

There are two categories of Certificate of Origin viz. (1) Preferential and (2) Non preferential.

Amongst the Preferential Certificate of Origin are the :

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1. Generalised System of Preferences ( GSP) is a non contractual instrument by which industrialised (developed) countries unilaterally and on the basis of non reciprocity extend tariff concessions to developing countries. The following countries extend tariff preferences under their GSP Scheme.

United States, European Union, Canada, Australia (only to LDCs)

New Zealand

Japan Norway Switzerland

Bulgaria Poland

Hungary Belarus

Slovakia Russia Czech Republic

GSP schemes of these countries details the sectors/ products and tariff lines under which

these benefits are available, besides the conditions and the procedures governing the

benefits. These schemes are renewed and modified from time to time. Normally the

Customs of GSP offering countries require information in Form 'A' (prescribed for GSP

Rules Of Origin) duly filled by the exporters of the beneficiary countries and certified by

authorised agencies. The List of agencies authorised to issue GSP Certificate of Origin is

given in Appendix-35 of the Exim Policy and This certificate can be obtained from

specialised agencies, namely;

Export Inspection Agencies.

Jt. Director General of Foreign Trade..

Commodity Boards and their regional offices.

Development Commissioner, Handicrafts.

Textile Committees for textile products.

Marine Products Export Development Authority for marine products.

Development Commissioners of EPZ

2. Global System of Trade Preference (GSTP): In the GSTP trade concessions are exchanged among developing countries, who have signed the agreement. Presently, there are 46 member

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countries of GSTP and India has exchanged tariff concessions with 12 countries on a limited number of products. Export Inspection Council (EIC) is the sole agency authorised to issue Certificate of Origin under GSTP.

3. The Agreement establishing SAPTA was signed by the seven SAARC countries namely India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka and Maldives. The list of agencies, which are authorised to issue Certificate of Origin under SAPTA are notified under Appendix - 35A of the Handbook of Procedures (Vol 1) .

4. The Bangkok agreement is a preferential trading arrangement designed to liberalise and expand trade in goods progressively in the Economic and Social Commission for Asia and Pacific (ESCAP) region through such measures as the relaxation of tariff and non tariff barriers and use of other negotiating techniques. The agencies authorised to issue Certificate of Origin under Bangkok agreement are listed in Appendix - 35A of the Handbook of Procedures (Vol 1) .

5. A Free Trade Agreement (FTA) between India and Sri Lanka was signed on 20th December, 1998. The agreement was operationalised in March, 2000 following notification of the required Customs tariff concessions by the Government of Sri Lanka and India in February, and March, 2000 respectively. Export Inspection Council is the sole agency to issue the Certificate of Origin under ISLFTA.

(b) Non-preferential Certificate, of Origin: -

Non-preferential certificate of origin is required in general by all countries for clearance of

goods by the importer, on which no preferential tariff is given. It is issued by: ¬

The authorised Chamber of Commerce of the exporting country.

Trade Association. Of the exporting country.

Contents of Certificate of Origin

Name and logo of chamber of commerce.

Name and address of the exporter.

Name and address of the consignee.

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Name and the number of Vessel of Flight

Name of the port of loading.

Name of the port of discharge and place of delivery.

Marks and container number.

Packing and container description.

Total number of containers and packages.

Description of goods in terms of quantity.

Signature and initials of the concerned officer of the issuing authority.

Seal of the issuing authority.

Significance of the Certificate of Origin

Certificate of origin is required for availing of concessions under Generalised System of

Preferences (GSP) as well as under Commonwealth Preferences (CWP).

It is to be submitted to the customs for the assessment of duty clearance of goods with

concessional duty.

It is required when the goods produced in a particular country are banned for import in

the foreign market.

It helps the buyer in adhering to the import regulations of the country.

Sometimes, in order to ensures that goods bought from some other country have not been

reshipped by a seller, a certificate of origin IS required.

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6) .Bill of Lading

The bill of lading is a document issued by the shipping company or its agent acknowledging the

receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and

condition as received, to the consignee or his order, provided the freight and other charges as

specified in the bill have been duly paid. It is also a document of title to the goods and as such, is

freely

transferable by endorsement and delivery.

Bill of Lading serves three main purposes:

As a document of title to the goods;

As a receipt from the shipping company; and

As a contract for the transportation of goods.

Types of Bill of Lading

Clean Bill of Lading: - A bill of lading acknowledging receipt of the goods apparently in

good order and condition and without any qualification is termed as a clean bill of lading.

Claused Bill of Lading: - A bill of lading qualified with certain adversere marks such as,

"goods insufficiently packed in accordance with the Carriage of Goods by Sea Act," is

termed as a claused bill of lading.

Transhipment or Through Bill of Lading: - When the carrier uses other transport

facilities, such as rail, road, or another steamship company in addition to his own, the

carrier issues a through or transhipment bill of lading.

Stale Bill of Lading: - A bill of lading that has been held too long before it is passed on to

a bank for negotiation or to the consignee is called a stale bill of lading.

Freight Paid Bill of Lading: - When freight is paid at the time of shipment or in advance,

the bill of landing is marked, freight paid. Such bill of lading is known as freight bill of

lading.

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Freight Collect Bill of lading :- When the freight is not paid and is to be collected from

the consignee on the arrival of the goods, the bill of lading is marked, freight collect and

is known as freight collect bill of lading

Contents of Bill of Lading

Name and logo of the shipping line.

Name and address of the shipper.

Name and the number of vessel.

Name of the port of loading.

Name of the port of discharge and place of delivery.

Marks and container number.

Packing and container description.

Total number of containers and packages,

Description of goods in terms of quantity.

Container status and seal number.

Gross weight in kg. and volume in terms of cubic meters.

Amount of freight paid or payable.

Shipping bill number and date.

Signature and initials of the Chief Officer. .

Significance of Bill of Lading for Exporters

It is a contract between the shipper and the shipping company for carriage of the goods to

the port of destination.

It is an acknowledgement indicating that the goods mentioned in the document have been

received on board for the Purpose of shipment.

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A clean bill of lading certifies that the goods received on board the ship are in order and

good condition.

It is useful for claiming incentives offered by the government to exporters

The exporter can claim damages from the shipping company if the goods are lost or

damaged after the issue of a clean bill of lading.

Significance of Bill of Lading for Importers

It acts as a document of title to goods, which is transferable endorsement and delivery.

The exporter sends the bill of lading to the bank of the importer so as to enable him to

take the delivery of goods.

The exporter can give an advance intimation to the foreign buyer about the shipment of

goods by sending him a non-negotiable copy of bill of lading

Significance of Bill of Lading for Shipping Company

It is useful to the shipping company for collection of transport charges from the importer,

if not collected from the exporter.

7) Airway Bill:

An airway bill, also called an air consignment note, is a receipt issued by an airline for the

carriage of goods. As each shipping company has its own bill of lading, so each airline has its

own airway bill. Airway Bill or Air Consignment Note is not treated as a document of title and is

not issued in negotiable form.

Contents of Airway Bill

Name of the airport of departure and destination.

The names and addresses of the consignor, consignee and the first carrier.

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Marks and container number.

Packing and container description.

Total number of containers and packages.

Description of goods in terms of quantity.

Container status and seal number.

Amount of freight paid or payable.

Signature and initials of the issuing carrier or his agent.

Importance of Airway Bill : It is a contract between the airlines or his agent to carry

goods to the destination. It is the document of instructions for the airline handling staff. It

acts as a customs declaration form. Since, it contains details about freight it also represents

freight bill.

8).Shipment Advice to Importer

After the shipment of goods, the exporter intimates the importer about the shipment of goods

giving him details about the date of shipment, the name of the vessel, the destination, etc. He

should also send one copy of non-negotiable bill of lading to the importer.

9) Packing list

Introduction

When you prepare your goods for shipment, you may be required to prepare a detailed export packing list. This is a formal document that itemizes quite a number of details about the cargo such as:

The name of the exporter (referred to as the shipper) and their contact details (tel, fax, cell, e-mail), including physical (not postal) address

The name of the importer (referred to as the consignee, meaning the person or firm to whom the goods are to be sent) and their contact details (tel, fax, cell, e-mail), including physical (not postal) address

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The gross (i.e. the weight of the product and packaging - that is, the total weight), tare (i.e. the weight of the packaging without any contents) and net (i.e. the weight of the product only) weights of the cargo

The nature, quality and specifications of the product being shipped

The type of package (such as pallet, box, crate, drum, carton, etc.)

The measurements/dimensions of each package

The number of pallets/boxes/crates/drums, etc.

The contents of each pallet or box (or other container)

The package markings, if any, as well as shipper's and buyer's reference numbers

Reference to the associated commercial invoice such as the invoice number and date

A purchase order number or similar reference to correspondence between the supplier and importer

An indication of who the carrier is (airline, shipping line or road hauler)

Reference to the Bill of Lading or Air Waybill number

It is also important that the details on the packing list (such as shipper's/importer's details, number of items involved, etc.), match exactly what is stipulated on the commercial invoice and bill of lading/airway bill. You can imagine that if there is a mismatch between the packing list and the other transport/export documents that this may lead to closer scrutiny of the cargo and may ultimately result in delays in the cargo arriving at its destination! Note that pricing information is not required on the packing list.

 

The purpose of the packing list

The packing list should be attached to the outside of a package in a waterproof envelope or plastic sheath marked "Packing list enclosed". The list is used by the shipper or forwarding agent to determine

(1) the total shipment weight and volume and

(2) whether the correct cargo is being shipped. In addition, customs officials (both local and foreign) may use the list to check the cargo. Packing lists come in fairly standard forms and can be obtained from your freight forwarder.

10. Bill of Exchange

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The instrument is used in receiving payment from the importer. The importer may prefer Bill of

Exchange to LC as it does not involve blocking of funds. A bill of exchange is drawn by the

exporter on the importer, to make payment on demand at sight or after a certain period of time.

B/E is a means to collect payment.

B/E is a means to demand payment.

B/E is a means to extent the credit.

B/E is a means to promise the payment.

B/E is an official acknowledgement of receipt of payment.

Financial documents perform the function of obtaining the finance collection of

payment etc.

2 sets. Each one bearing the exclusion clause making the other part of the draft

invalid.

Sight B/E.

Usance B/E.

It is known as draft.

Immediate payment – Sight draft.

There are two copies of draft. Each one bears reference to the other part A&B.

when any one of the draft is paid, the second draft becomes null and void.

Parties to bill of exchange.

1. The drawer: The exporter / person who draws the bill.

2. The drawee: The importer / person on whom the bill is drawn for payment.

3. The payee: The person to whom payment is made, generally, the exporter /

supplier of the goods.

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Auxiliary Documents: These documents generally form the basic documents based on which

the commercial and or regulatory documents are prepared. These documents also do not have

any fixed formats and the number of such documents will wary according to individual

requirements.

The Quotation

Introduction

Hopefully, having put a lot of effort into marketing your product abroad, you will receive an enquiry from a potential foreign customer - the importer. The importer will almost certainly ask you to quote on a particular order which he/she will describe in some way (describing the the product in question, the number of units required, the destination, and providing other relevant information). Nevertheless, it is often the case that this information is insufficient for you to put together a complete quotation and you may need to go back to your potential customer to obtain all the information you need to compile a quotation. Once you have this information, you will then put together the quotation (or proforma invoice - see below) and send this back to the importer. If your offer is acceptable, the importer will come back to you with an order. More likely, however, is that the importer will come back to you asking for better terms and you will then go through a negotiation process before you come to some sort of agreement. Once this agreement has been reached and the importer accepts your final offer, you will supply him/her with a final quotation/proforma invoice hwich he/she will accept in writting or by issuing a letter of credit.

What is the difference between a proforma invoice and a quotation?

In reality, there is very little difference in function between the two and the proforma invoice is really a quotation in invoice form; in other words. the difference really comes about in terms of the structure and layout of the proforma invoice/quotation. A quotation appears more like a business letter describing a written offer, while a proforma invoice appears exactly the same as a invoice (except with the words "proforma invoice" written on the document). The proforma invoice essentially serves as a 'quotation' that sets the road to further negotiations. Some exporters choose to prepare an 'official' quotation, while others prefer to use the proforma invoice as their quotation. In fact, the quotation can contain the same information as a proforma invoice. We recommend that you consider using a proforma invoice as your official quotation, unless otherwise instructed by the importer.

The proforma invoice

Introduction

The starting point of the export contract is in the form of offer made by the exporter to

the foreign customer. The offer made by the exporter is in the form of a proforma

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invoice. It is a quotation given as a reply to an inquiry. It normally forms the basis of all

trade transactions.

A proforma invoice is little more than a preadvice of what will stand in the commercial invoice once negotiations have been completed. Indeed, the proforma invoice and the commercial invoice often look exactly the same, except that it should state clearly "proforma invoice" on this document, whereas the commercial invoice will state "invoice" or "commercial invoice". The proforma invoice serves as a negotiating instrument. The initial proforma invoice often sets the stage for the first round of negotiations if the exporter and importer have not yet had any real discussions.

The role of the proforma invoice in the negoiation process

Assuming that an importer e-mails you - an exporter - asking you to submit a proforma invoice (or a quotation) for the supply of 100 pumps according to a set standard. You would then prepare and submit a proforma invoice to the potential importer outlining a desciption of the product, what the price is, what the delivery terms will be, what the payment terms will be, as well as any other information that may be pertinent to the sale. The importer will most likely reply to your proforma invoice requesting/negotiating different requirements such as a lower price, longer terms of payment, different methods of payment, a different delivery schedule and may even request changes to the product specifications. Based on these requests from the importer, you may choose to comply or to refer back to the importer (probably via telephone, fax or e-mail) to discuss or negotiate compromises to these requirements. When you and the importer finally come to an agreement, a second (sometimes even third or fourth) proforma invoice will be exchanged between the two parties. This final proforma invoice - accepted by the importer - sets the stage for the further processing of the order. You should be aware that the importer may use the proforma invoice to request foreign exchange within his/her country if his/her currency is not freely convertible. The proforma-invoice can also help the importer apply for a letter of credit at his/her bank.

In other instances where the exporter and importer have met before and have already discussed and thrashed out an agreement perhaps in a face-to-face meeting, only one final proforma invoice is necessary to confirm that the two parties are indeed in agreement. Every proforma invoice should be as precise and as explicit as possible to ensure that both parties understand each other. If the importer is satisfied with this final proforma invoice, he/she will request their bank to issue an L/C on the strength of information stipulated in the proforma invoice. For this reason, it is essential that the proforma invoice be extremely accurate, clear and concise. Any errors or misunderstandings will be transferred to the L/C and will cause problems, frustrations and delays down the line. What is more, the proforma invoice is also important to the importer for the purpose of obtaining an import permit and foreign exchange allocation within his country. At the same time, the exporter may use the proforma invoice and acceptance of the order from the importer to obtain funding to pay for the manufacturer of the goods concerned.

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Details pertinent to the proforma invoice

The following details are pertinent to the setting up of the proforma invoice and need careful attention:

Name and address of the exporter.

Name and address of the importer.

Mode of transportation, such as Sea or Air or Multimodal transport.

Name of the port of loading.

Name of the port of discharge and final destination.

Provisional invoice number and date.

Exporter's reference number.

Buyer's reference number and date.

Name of the country of origin of goods.

Name of the country of final destination.

Marks and container number. .

Number and packing description.

Description of goods giving details of quantity, rate and total amount in terms of

internationally accepted price quotation.

Signature of the exporter with date.

Importance of Proforma Invoice

It forms the basis of all trade transactions.

It may be useful for the importer in obtaining import licence or foreign exchange.

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2) Intimation for Inspection: Whenever the consignment requires the pre-shipment inspection,

necessary application is to be made to the concerned inspection agency for conducting the

inspection and issue of certificate thereof.

3) Declaration of Insurance: Where the contract terms require that the insurance to be covered

by the exporter, the shipper has to give details of the shipment to the insurance company for

necessary insurance cover. The detailed declaration will cover:

Name of the shipper \ exporter.

Name & address of buyer.

Details of goods such as packages, quantity, value in foreign currency

as well as in Indian Rs. Etc.

Name of the Vessel \ Aircraft.

Value for which insurance to be covered.

4 )Application of the Certificate Origin: In case the exporter has to obtain Certificate of Origin

from the concerned authorities, an application has to be made to the concerned authority with

required documents. While the simple invoice copy will do for getting C\O from the chamber of

commerce, in respect of obtained the same from the office of the Textile Committee or Export

Promotion Council, the documents requirement are different.

5) Mate’s Receipt

introduction

Mate's receipt is a receipt issued by the Commanding Officer of the ship when the cargo

is loaded on the ship. The mate's receipt is a prima facie evidence that goods are loaded in

the vessel. The mate's receipt is first handed over to the Port Trust Authorities. After

making payment of all port dues, the exporter or his agent collects the mate's receipt from

the Port Trust Authorities. The mate's receipt is freely transferable. It must be handed

over to the shipping company in order to get the bill of lading. Bill of lading is prepared

on the basis of the mate's receipt.

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Types of Mate's Receipts

Clean Mate's Receipt: - The Commanding Officer of the ship issues a clean mate's

receipt, if he is satisfied that the goods are packed properly and there is no defect in

the packing of the cargo or package.

Qualified Mate's Receipt: - The Commanding Officer of the ship issues qualified

mate's receipt, when the goods are not packed properly and the shipping company

does not take any responsibility of damage. to the goods during transit.

Contents of Mate's Receipt

Name and logo of the shipping line.

Name and address of the shipper.

Name and the number of vessel.

Name of the port of loading.

Name of the port of discharge and place of delivery.

Marks and container number.

Packing and container description.

Total number of containers and packages.

Description of goods in terms of quantity.

Container status and seal number.

Gross weight in kg. and volume in terms of cubic meters.

Shipping bill number and date.

Signature and initials of the Chief Officer.

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6) Shipping order:

it is issued by the Shipping/Conference Line intimating the exporter about the reservation of

space for shipment of cargo which the exporter intends to ship. Details of the vessel, poet of the

shipment, and the date on which the goods are to be shipped are mentioned. This order enables

the exporter to make necessary arrangements for customs clearance and loading of the goods.

7)Shipping Instructions: at the pre-shipment stage, when the documents are to sent to the CHA

for customs clearance, necessary instructions are to be give with relevance to

The export promotion scheme under which goods are to be exported.

Name of the specific vessel on which the goods are to be loaded.

If goods are to be FCL or LCL.

If freight amount are to be paid / collected.

If shipment are covered under A.R.E.-1 procedure.

Instructions for obtaining Bill of Lading etc.

8) Bank letter for negotiation of documents: at the post shipment stage, the exporter has to

submit the documents to a bank for negotiation or discounting or collection for forwarding the

same to the customer and also for realization of export proceeds. The bank letter is the set of

instruction for the bank as to how to handle the documents by them and by the bank at the

buyer’s country which may include

Name and address of the buyer.

Details of various documents being sent and the number of the copies

thereof.

Name and address of the buyer’s bank if available.

If the documents are sent L/C or on open terms.

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If the proceeds are to adjusted against any pre-shipment packing credit

loan.

If the bill amount is to be adjusted against any forward exchange cover.

In case of credit bill who has to bear the interest, either exporter or if

the same is to be collected from the buyer.

Instructions in case non-acceptance/non-payment by the buyer.

. Regulatory Document: Regulatory pre-shipment export documents are prescribed by the

different government departments and bodies in order to comply with various rules and

regulations under the relevant laws governing export trade such as export inspection, foreign

exchange regulation, ex port trade control, customs, etc. Out of 9 regulatory documents four

have been standardised and aligned. These are shipping bill or bill of export, exchange

control declaration (GR from), export application dock challan or port trust copy of shipping

bill and receipt for payment of port charges.

1. Shipping Bill: Shipping bill is the main customs document, required by the customs

authorities for granting permission for the shipment of goods. The cargo is moved

inside the dock area only after the shipping bill is duly stamped, i.e. certified by the

customs. Shipping bill is normally prepared in five copies :-

Customs copy.

Drawback copy.

Export promotion copy.

Port trust copy.

Exporter's copy.

Types of Shipping Bill

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Based on the incentives offered by the government, customs authorities have introduced three

types of shipping bills:-

Drawback Shipping Bill: - Drawback shipping bill is useful for claiming the customs

drawback against goods exported.

Dutiable Shipping Bill: - Dutiable shipping bill is required for goods which are subject

to export duty.

Duty-free Shipping Bill: - Duty-free shipping bill is useful for exporting goods on which

there is no export duty.

In order to facilitate easy recognition and quick processing, following colours have been provided to

different kinds of shipping bills :

Types of goods By Sea By Air

Drawback shipping bill Green Green

Dutiable shipping bill Yellow Pink

Duty-Free shipping bill White Pink

Contents of Shipping Bill

Name and address of the exporter.

Name and address of the importer.

Name of the vessel, master or agents and flag.

Name of the port at which goods are to be discharged.

Country of final destination.

Details about packages, description of goods, marks and numbers, quantity and details of

each case.

FOB price and real value of goods as defined in the Sea Customs Act.

Whether Indian or foreign merchandise to be re-exported

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Total number of packages with total weight and value.

Significance of Shipping Bill

a) Shipping bill is the main customs document, required by the customs authorities

for granting permission for the shipment of goods.

b) The cargo is moved inside the dock area only after the shipping bill is duly

stamped, i.e. certified by the customs.

c) Duly endorsed shipping bill is also necessary for the collection of export

incentives offered by the government.

d) It is useful to the Customs Appraiser while determining the actual value of goods

exported.

2. A.R.E. 1 form (Central excise): this form ARE-1 is prescribed under Central Excise

rules for export of goods. In case goods meant for export are cleared directly from the

premises of a manufacturer, the exporter can avail the facility of exemption from

payment of terminal excise duty. The goods may be cleared for export either under

claim for rebate of duty paid or under bond without payment of duty. In both the

events the goods are to be cleared under form A.R.E-1 which will show the details of

the goods being exported, the relevant duty involved and if the duty is paid or goods

being cleared under bond, details of goods being sealed either by the exporter or

Central Excise officials etc.

3. Exchange Control declaration Form (GR/PP/SOFTEX): under the exchange

control regulations all exporters must declare the details of shipment for monitoring

by the Reserve Bank of India. For this purpose, RBI has prescribed different forms

for different types of shipments like GRI, PP forms etc. These declaration forms must

be presented to the customs officials at the time of passing of export documentation.

Under the EDI processing of shipping bill in the customs, these forms have been

dispensed with and a new form SDF has to be submitted to the customs in the place

of above forms.

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4. Export Application: this is the application to be made to the customs officials before

shipment of goods. The prescribed form of the application is the Shipping Bill/Bill of

Export. Different types are required for shipment like ex-bond, duty free goods, and

dutiable goods and for export under different export promotion schemes such as

claims for duty drawback etc.

5. Vehicle Ticket/Cart Ticket/Gate Pass etc.: before the goods are being taken inside

the port for loading, necessary permission has to be obtained for moving the vehicle

into the customs area. This permission is granted by the Port Trust Authority. This

document will contain the detail of the export cargo, name and address of the

shippers, lorry number, marks and number of the packages, driver’s licence details

etc.

6. Bank Certificate of Realisation: this is the form prescribed under the Foreign Trade

Policy, wherein the negotiating bank declares the fob value of exports and for the date

of realisation of the export proceeds. This certificate is required fore obtaining the

benefit under various schemes and this value of fob is reckoned as fob value of

exports.

D. Other Document:

Black List Certificate: it certifies that the ship/aircraft carrying the cargo has not touched the

particular country on its journey or that the goods are not from the particular country. This is

required by certain nations who have strained political and economical relations with the so

called “Black Listed Countries”.

Language Certificate: Importers in the European Community require a language certificate

along with the GSP certificate in respect of handloom cotton fabrics classifiable under NAMEX

code 55.09. Generally four copies of language certificate are prepared by the concerned authority

who issues GSP certificate. Three copies are handed over to the exporter. A copy is sent along

with the other documents for realisation of export proceeds.

Freight Payment Certificate: in most of the cases, the B/L or AWB will mention the

transportation and other related charges. However if the exporter does not want these details to

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be disclosed to the buyer, the shipping company may issue a separate certificate for payment of

the freight charges instead of declaring on the main transport documents. This document

showing the freight payment is called the freight certificate.

Insurance Premium Certificate: this is the certificate issued by the Insurance Company as

acknowledgement of the amount of premium paid for the insurance cover. This certificate is

required by the bank for arriving at the fob value of the goods to be declared in the bank

certificate of realization.

Combined Certificate of Origin and Value: this certificate is required by the Commonwealth

Countries. This certificate is printed in a special way by the Commonwealth Countries. This

certificate should contain special details as to the origin and value of goods, which are useful for

determining import duty. All other details are generally the same as that of Commercial Invoice,

such as name of the exporter and the importer, quality and quantity of the goods etc.

Customs Invoice: this is required by the countries like Canada, USA for imposing preferential

tariff rates.

Legalized Invoice: this is required by the certain Latin American Countries like Mexico. It is

just like consular invoice, which requires certification from Consulate or authorised mission,

stationed in the exporter’s country.

Special Provision under Uniform Customs and practice for Documentary Credit UCP-500, for Commercial Invoice.

Article-37: Commercial Invoice

o Must appear on their face to be issued by the beneficiary named in the

credit.

o Must be made out in the name of the applicant.

o Need not be signed

Banks may refuse Commercial Invoice issued for amounts in excess of the

amount permitted by the credit except otherwise stated.

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The description of the goods in the commercial invoice must correspond with the description of the credit. In all other documents the goods may be described in the General in general terms not inconsistent with description in the credit. In all documents goods may be described in general terms not inconsistent with the Description of the goods in the credit.

Bibliography

Reference sites

www.exporthelp.org

www.export911.org

www.infodriveindia.com

www.orientknits.com

www.spllimited.com

Reference books

Puri, V. K., Exporters’ Guidelines, A Basic Book on How to Export as per Govt. Policy & Procedures, 2nd Edition, JBA Publishers, 2008-09.

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