Export procedure

            Any export procedure concluded successfully after the exporter has been able to deliver the consignment in accordance with the export contract and receive payment for the goods. If the goods have not been delivered as per the Contract and if you are an exporter, you should not expect the payments from the importer. Even if the goods have been shipped out and delivered as per the export contracts and the exporter has not received the payment, the export procedure is not completed.

            Now  we are going to discuss the various steps involved in the processing of an export order at different stages and then we will discuss about claiming of export incentives from the Government of India. The Government of different countries have provision of different kind of export incentives, so we will discuss about few export incentives given by the government of India.

Let’s have a look at the sequence of export order processing and this sequence goes like this—-

  1.  First, we need to study the nature and the format of export order
  2. Then it is confirmed to be ok after examining properly.
  3. Once the export order is confirmed manufacturing or procurement of goods is taken up.
  4. Then we need to obtain clearance from Central Excise which is very important. So Central Excise clearance is done.
  5. Now there will be a pre-shipment inspection.
  6. Then CFA (Clearing and forwarding agent) is appointed who takes care of most of the jobs in export order processing. So the appointment of CFA is over.
  7. Then the goods transported to the port of shipment.
  8. Then after port formalities and Customs clearance, the CFA dispatches the documents to the exporter.
  9. So these documents are presented to the bank for claiming export incentives.

For initiating and export we need to have an export order right or I can say that processing of an export order starts with the receipt of an export order. This export order may also be in the form of export sales contract, a document in agreement between the exporter and importer before the exporter can start making arrangements for production or procurement of goods and their shipment.

Generally, an export order is in three different forms and these three different forms are like…

1. Proforma invoice: This proforma invoice is accepted and signed by the importer.

2. Purchase order: This purchase order is accepted and signed by the exporter because this purchase order is issued by the importer.

3. Letter of credit:  Letter of credit is opened by the importer in favor of the exporter here I am talking about this letter of credit we talk about the proforma invoice. This proforma invoice is prepared and sent by the exporter to the importer where the terms and conditions are mentioned. The proforma invoice is accepted by the importer with out editing or editing somethings. The imported returns a copy of the invoice to the exported which confirms that. They may write I have accepted the terms and conditions mentioned in the proforma invoice.

This export contract may require a purchase order. At this purchase order have to be sent by the importer to the exporter. If the exporter finds that purchase order is in accordance with the terms and conditions of the contract, they accept it. The export business is more complicated than domestic business. If I am an exporter and if I find some very good orders of a company located somewhere in New Zealand or Australia or the USA or South Africa or China or from any corner of the world and this exporterer is not known to me even if I don’t have any information of the background of the exporter, just by looking at the price or lucrative offer, I might get tempted to export my products to them. But at the same time, I need to ensure that my payment is secured and I am not a victim of fraud.

 The question is how to ensure that my payment is secured. Here the letter of credit comes into the picture. Basically, LC means the letter of credit. It is an instrument of payment, but the major terms and conditions of shipment are mentioned in it. And it enables the exporter to start the processing of the export order. So even LC can be treated as an export order.

Examination and confirmation of export order:  The exporter acknowledges the receipt of the export order and the important information can be sent by phone or fax or email. Acknowledgment of export order is not a legal requirement but it certainly helps in creating business Goodwill for the exporter. The exporter must carefully examine the contents of the order to see that there is no discrepancy between the export order and the export contract which has been agreed upon earlier. This export contact could be formal or maybe in written form. So they accepts proforma invoice, buyers purchase order or the letter of credit . These three different forms of export contract must be examined and special attention has to be paid to ensure that these items are in line with the export contacts.

1.Product description: It including the specification given by the importer, all the style and the color of the goods, packing conditions etc.

2. Marking and labeling: Check marking and labeling requirements if there is any.

3. Terms of payment: Terms of payment include the currency nature of LC. LC could be revocable, Irrevocable, confirmed LC, unconfirmed LC, restricted LC or unrestricted LC. There are different kinds of LC 

Due to frequent usage within the international collaboration, the names of LC types are given in English as well

  • a. Irrevocable LC. This LC cannot be canceled or modified without the consent of the beneficiary (Seller). This LC reflects the absolute liability of the Bank (issuer) to the other party.
  • b. Revocable LC. This LC type can be canceled or modified by the Bank (issuer) at the customer’s instructions without the prior agreement of the beneficiary (Seller). The Bank will not have any liabilities to the beneficiary after the revocation of the LC.
  • c. Stand-by LC. This LC is closer to the bank guarantee and gives more flexible collaboration opportunities to Seller and Buyer. The Bank will honor the LC when the Buyer fails to fulfill payment liabilities to Seller.
  • d. Confirmed LC. In addition to the Bank guarantee of the LC issuer, this LC type is confirmed by the Seller’s bank or any other bank. Irrespective to the payment by the Bank issuing the LC (issuer), the Bank confirming the LC is liable for the performance of obligations.
  • e. Unconfirmed LC. Only the Bank issuing the LC will be liable for payment of this LC.
  • f. Transferable LC. This LC enables the Seller to assign part of the letter of credit to other parties. This LC is especially beneficial in those cases when the Seller is not a sole manufacturer of the goods and he purchases some parts from other parties, as it eliminates the necessity of opening several LC’s for other parties.
  • g. Back-to-Back LC. This LC type considers issuing the second LC on the basis of the first letter of credit. LC is opened in favor of intermediary as per the Buyer’s instructions and on the basis of this LC and instructions of the intermediary, a new LC is opened in favor of the Seller of the goods.
  • h. Payment at Sight LC. According to this LC, payment is made to the seller immediately (maximum within 7 days) after the required documents have been submitted.
  • i. Deferred Payment LC. According to this LC, the payment to the seller is not made when the documents are submitted, but instead at a later period defined in the letter of credit. In most cases, the payment in favor of Seller under this LC is made upon receipt of goods by the Buyer.
  • j. Red Clause LC. The seller can request an advance for an agreed amount of the LC before shipment of goods and submittal of required documents. This red clause is so termed because it is usually printed in red on the document to draw attention to the “advance payment” term of the credit.

4. Credit period: If there is any credit period then it has to be clearly mentioned in the document

5. Terms of shipment: Terms of shipment include the choice of the carrier if there is any.

6. Mode of carries: It could be by Sea or by air or by land in the place of delivery. The date of shipment and the port of shipment are all mentioned.

7.Inspection requirement: There could be some specific instructions of a particular type of inspection. And there could be some choice of the inspection agency.

8. Insurance requirements: Insurance requirements could be about the risk being covered. who is going to cover, how much risk has been covered and what is the value of insurance are all mentioned clearly in the insurance requirements.

Documents required for realizing payment: It includes…

  • The number and nature of invoices.
  • The certificate of origin.
  • The certificate of inspection.
  • The certificate of value
  • Bill of exchange
  • Insurance policy.
  • The transport documents.
  • The document of title.
  • The last one is the last date of negotiation of the document with the bank it’s very very important because if you are an exporter and if you find that there is any discrepancy in the export order, you must inform the importer immediately for necessary amendment and then the amended order has been received by you.

Documentary confirmation: It is always wise to confirm the order by sending a documentary confirmation. But in fact, in certain contracts, it may also be the legal requirement that you need to confirm the order once this export order is examined and confirm that the export order is ok and in accordance with the contract.

The next step is manufacturing and procurement of goods: This is basically an internal process. They send a delivery note we call it as DN. DN is sent to the production department preferably in duplicate. The marketing department might send a purchase order to the production department which is responsible for producing the goods. The delivery note or the Purchase orders have details like:

  • Details about the product specification
  • Quantity required
  • Specification of packing marking and leveling
  • Excise clearance requirement

Intimation sent to the transport department: Then the intimation sent to the transport department. All information should be available to the production department for undertaking production and transport activities. Very importantly the time period within which these activities are to be completed. The production department should retain one copy of the DN/ purchase order and confirm the delivery on the duplicate copy. In order to promote export activities, the commercial banks provide this credit facility at different stages of export for different activities

Central excise clearance: There is an act called the central excise and salt act of India. And the rules related to this act provided for refund of any duty of Excise. There is also a provision of rebate in excise duty which exempts from the payment of such duty on final production for export. The final production for export as well as on the imports used in the manufacturing of export products. So there are two documents which are:

  • Invoice
  • AR4 or AR5 form. Click here to see how AR4/AR5 form look like?

As soon as the goods are ready for dispatch to the port for shipment, the production department of the export company applies to the central excise for excise clearance of the goods. The exporters require 6 copies of this form which has to be prepared and exporters are not allowed to remove the goods for export on their own without getting the goods examined or after the examination by the central excise officer:

There could be two different cases, one is without examination by customs. so in that case of without examination, the exporters submit:

  1. 4 copies of AR4/AR5 form to the superintendent of Central Excise who has jurisdiction over the premise of the exporter at these. Forms have to be submitted within 24 hours of the removal of the consignment. The superintendent examines this form of AR4/AR5 and if they are satisfied, they sign the form and return it to the concerned person.
  2. Sometimes, there could be a case that the exporter might be having the desire to prevent this examination of goods from custom authorities. In that case, there is a provision that the central excise officers will examine the good. They will seal the goods and it can be shipped without examination by the customs authority. In such cases, the exporter has to submit 6 copies of AR4/AR5 forms to the superintendent of Central Excise. Then the superintendent may depute an Inspector of Central Excise or if possible then he may himself go for the ceiling and examination of export cargo. After he satisfied he allows the clearance of cargo. So these forms are examined by central excise officers. Thereafter examination and being satisfied they seal the good and clearance of cargo is allowed.

Pre-shipment inspection: The government of India notified from time to time that Indian customs authorities will require an inspection certificate like some specific product like gold. This inspection certificate is issued by some designated agencies before permitting the shipment to take place. Basically, this inspection is done based on the importer specification but there are few cases where the safety is involved or the health hazard issues are involved. And there is a minimum requirement of maintaining minimum standards in those cases. It is mandatory to go for pre-shipment inspection. So inspection of export goods may be conducted under:

  • Consignment-wise inspection
  • In process quality control or there could be a self-certification.

Consignment wise Inspection: Before the exercise authority seal packs the product, the pre-shipment inspection must be completed. It is very obvious that once it is sealed you cannot do any pre-shipment inspection. The production department has to apply to the export inspection agency. There are different EIA available in different locations and they will nominate some Inspector and those inspectors will conduct the examination of the export goods.

This application has to be made on a prescribed form. This form is known as a notice of inspection. So this notice of inspection has to be submitted to the export inspection agency who charges something as the inspection fee You need to pay the inspection fee to the export inspection agency accompanied by some documents. These documents are:

  • Copy of the commercial invoice
  • Copy of export contract.
  • Importers technical specifications or if they have got an approved sample, it has to be submitted.

And after the Inspector has completed inspection of the export, the inspection agency will issue the inspection certificate in triplicate. The original copies for the customs verification So it will send to the customs authority. And this original copy is submitted to the customs authority along with other documents before permission is granted for shipping the Goods. The second copy is sent to the buyer and the third copy is for the exporter’s record.

Appointment of CFA: Appointment of Clearing and forwarding agent we call them as CFA or we also call them as freight forwarders. CFA performs very important activities. They perform a number of functions on behalf of the exporter. CFA will take care of these activities against some fees. They provide specialized help in the exporter’s warehouse to the importer’s warehouse by undertaking different documentary formalities or different procedural formalities etc. They help in :

  • Packing
  • Marking & labeling for Transport.
  • Arrangement for shipment Overseas
  • Customs clearance of cargo procurement of transport and other documents
  • But the main function of CFA is to obtain customs clearance of goods.
  • They ship the Goods and processed the relevant transport document it’s basically the BL i.e bill of lading or the airway bill.

Performing this desired function the exporter is required to give some kind of instructions to this agent after completion of the process of clearance by the exercise authorities as well as obtaining the inspection certificate. The production department dispatches the consignment to the port of shipment and it can be dispatched either by the road or by rail and this information is sent to the export department by signing the delivery note. So one delivery notice sent to the export department. They prepared dispatch advice and there are some other documents that are attached along with this DN. They send the railway received the LR copy or we call it as lorry way bill invoice, then AR4/AR5 form. These forms are sent original as well as duplicate. And on receipt of these documents, the export department will appoint a CFA and there is a document that is signed. this is called a shipping instructions sheet. Sometimes it also called as shipping instructions and this document contains full details of instructions of the exporter as well as details of the consignments to be shipped. And along with this shipping instruction sheet or the shipping instructions, there are some other documents that have to be sent to the CFA agent. these are—

  • Commercial invoice. we send 8 to 10 copies.
  • Customs declaration form it has to be submitted in triplicate.  
  • Customs declaration form, It’s a legal requirement whereby the exporter state that the declaration made to the customs authorities by his agent on behalf of him are true. So it’s a declaration by the exporter to the customs authorities,
  • Packing list 
  • Original L/C of the contract copy
  • Original inspection certificate issued by the export inspection agency
  • GR form which is submitted in original as well as duplicate. It’s basically of the foreign exchange declaration form
  • AR4/AR5 form in original and duplicate
  • Invoice of this transport document that is railway receipt or lorry waybill.

Then the next step is the transportation of goods to the port of shipment. Transportation and movement of goods to the port for shipment involve activities like packing, marking and labeling of consignment arrangements for the movement of goods either by road or by rail. So you need to be very careful about the packing. If you pack the goods properly, it helps in minimizing freight and delivery cost. It also eliminates the possibility of the insurance company’s refusal to pay a claim in the event of lost or damaged goods in transit. So if there is some damage and you want to make some claim, the insurance company finds it’s very difficult to refuse to pay the claim.  If there are some specific instructions on packing of the export contract, it has to be followed otherwise there is a chance that your export will not be accepted by the importer. After the goods are packed, the packages are to be properly marked and labeled. Because on the ship there will be thousands of export commodities or items. So you need to mark and label it properly for easy identification.

These levels are usually in the pictorial form that could be some pictures so that the exporter could easily identify or they can easily follow your instruction.

So after the production department has completed the excise clearance and the pre-shipment inspection formalities, the export goods are packed, mark and labeled. At the same time, the export department takes steps to reserve space on the ship through which goods are to be sent. This reservation of shipping a space can be done either through the CFA or the freight broker work on behalf of the shipping company or directly from the shipping company. After this space has been reserved, the shipping company will issue a document known as shipping order. This information about the space reservation is given to the production department. So that they could make some arrangement of transportation. If the consignment has to be sent to a road carrier, not a specific formality involved in the production department. In that case, a reliable carrier is booked to send the consignment to the port generally in the name of the Clearing and forwarding agent. So there is an LR call it a lorry receipt or truck receipt. Once the good have been booked on the lorry or truck, there is a received LR or truck receipt is issued. And this document is sent along with other documents to the CFA at the port town. Based on this document CFA can take the delivery of the cargo.

 When you have to send this cargo by rail, there are some laid down procedure which needs to be followed for obtaining an allotment of Wagon. And this allotment is done on a priority basis. There are some schemes of the railway board. So according to that scheme, wagons are allotted on the priority basis for carrying export goods to the port. And there are some documents which have to be submitted for booking Railway Wagon given below:

  1. Forwarding note. it is nothing but a railway document
  2. Shipping order is the proof of reservation of shipping space issued by the shipping company.
  3. Wagon registration fee receipt: so when you pay some amount for booking the wagon. there will be a receipt and this receipt has to be submitted to the railway station. After the Wagons have been allotted, goods are loaded for which Railway’s give kind of acknowledgment receipt which is called Railway receipt and this receipt along with other documents are sent to the CFA. So at this stage, the production or export department makes an application to the insurance company for insurance coverage. Because you are dispatching your goods by rail to the port town, in between if there is some kind of loss or damage or some kind of mishap happened, you need to claim for the losses. so it’s always advisable to obtain an insurance policy. In fact, in a few cases, it’s mandatory.
  4. So Insurance companies issue insurance policies for internal as well as Overseas.

Port formalities and Customs clearance: So on the sea from the documents sent by the export the department, the CFA takes the delivery of the cargo from the railway station or from the road transport company. He arranges its storage in the warehouse. At the same time, he also starts some action to obtain customs clearance. Because he needs to obtain customs clearance and permission from the port authority for bringing this cargo into the shipment shade. He cannot keep it in the warehouse for a long. Because it increases cost and the lead time. CFA needs to have permission for bringing this cargo to the shipment shed from the port authorities.

Objectives of customs control and purpose:

  1. The objectives are very clear if you just have a look at it. It’s to ensure that the goods which are moving out of the country are moving only after compliance with different laws concerning export trade.
  2. The second objective is to ensure that the value of export good authentic. So there is no over-invoicing or under-invoicing.
  3. The third objective is the assessment and collection of export duty because it generates an income for the government. There is an export duty applicable to the export which you are undertaking. So there will be an assessment and collection of export duty and it can be done based on the customs clearance activities.
  4. And the last one is to track cargo movement so they keep compiling the data on cargo movement.

Control process: For complying with these objectives the customs grant permission of export at two different stages

  1. First, the documentary checks are made at the office of the custom that is the customs house. They perform this documentary check.
  2. Secondly, the physical examination of goods, the physical examination of goods are made in the shipment shade where the cargo has been brought. So they verify that the goods being exported are exactly the same which has been declared on the documents submitted at the customs house and the document on which custom clearance for export is the shipping bill. So, on the shipping bill, customs will give clearance for export.

The clearing and forwarding agent is to file some documents with the custom house. these documents are—

  • Shipping bill
  • The Contract or correspondence leading to the contract.
  • LC copy
  • Commercial invoice
  • GR form
  • Inspection certificate
  • AR4/AR5 form
  • Packing list or if there are other documents which custom people might ask you to submit then this document have to be submitted.

Then the Customs appraiser or the examiner examines these documents. Once these documents are examined, they appraise the value. So this appraisal is basically done with some consideration that the value and quantity declared in the shipping bill is the same as in the export order or LC. Second formalities regarding exchange control, pre-shipment quality control, and policies inspection, etc have been duly completed.

Once these documents are examined and values are appraised, the customs examiner or appraiser makes an endorsement on the duplicate copy of the shipping bill. He also gives directions to the doc appraiser about the extent of physical examination of the cargo to be conducted at the dock. He might give a kind of instruction to the doc appraiser for another physical examination of the cargo and all the documents except GR form, the original shipping bill and a copy of the commercial invoice are returned to the CFA.

These documents have to be presented to the dock appraiser.

After taking delivery of documents on the export department, CFA presents the Port Trust document to the shed superintendent of the port.

Then obtained carting order: Carting order is basically given for bringing the export cargo to the transit shade. So you have to submit all the documents mentioned in the last para. Shipping bill to packing list, so all documents have to be submitted to the customs house by the CFA.

Fig, Export procedure

Forwarding agent presents the Port Trust document to the shed superintendent of the port then obtain carting order which is basically an order for bringing the export cargo to the transit shade. And in this transit shade, the dock appraiser conducts a physical examination of the goods for the shipment. So after bringing in the cargo into the shade, he represents some documents to the dock appraiser for conducting a physical examination. This document are…

  • Export promotion copy of the shipping bill it could be in duplicate or triplicate
  • Commercial invoice
  • Packing list
  • AR4/AR5 form in duplicate and original
  • Invoice copy
  • Inspection certificate
  • The original inspection certificate
  • The GR from, Duplicate copy of the GR form.

The docks appraiser after conducting a physical examination, record examination report and make a late export endorsement on the duplicate copy of the shipping bill.

So now the dock appraiser will conduct a physical examination and he will make a late export endorsement on the duplicate copy of the shipping bill for export endorsement and then he hands over this copy of the shipping bill to the forwarding agent. There are some other documents as well and these all documents to be presented to the preventive officer. The basic duty of the Preventive Officer is to supervise the loading of cargo on board vessel then the preventive officer makes another endorsement on the duplicate copy of the shipping bill and this endorsement is known as a late ship. So once the preventive officer allows the cargo to be booked into the vessel he endorses the duplicate copy of the shipping bill like a late ship. So this constitutes an authorization by the customs to the shipping company to accept the cargo on the vessel. cargo is loaded on board of the vessel, the captain of the ship issues a receipt. This receipt is known as the mateship receipt and this receipt is issued to the shade superintendent of the port. The forwarding agent then makes the payment of the port charges he presents the mate receipt first to the preventive officer who records the certificate of shipment, all copies of the shipping bill, original and duplicate copies of AR4/AR5 form and then he returns the export promotion copy, copy of drawbacks shipping bill and present the mate receipt to the shipping company. The mate receipt which is issued by the captain of the ship is presented to the shipping company and request to issue the BL. So the shipping company issues the bill of lading or BL copy.

So in short the sequence to get the B/L is follows..

Physical examination

“Let Export” endorsement on the duplicate copy of the Shipping Bill

Handing over the docs to CFA

Presentation of docs to the Preventive officer

“Let ship” Endorsement on the duplicate copy of the Shipping Bill

Duplicate’ copy of the Shipping Bill is handed over to the agent of the shipping company

Authorization to the shipping company to accept the cargo on the vessel

Loading of goods on board the vessel

Issuing of “Mate’s Receipt’

Taking delivery of the mate receipt

Presentation of the Mate’s Receipt Preventive officer;

Issue of Bill of Lading

So once the CFA obtains the bill of lading from the shipping company, he sends these documents to the exporter—

  •  One copy of the commercial invoice duly attested by the customs
  • Export promotion copy of shipping bill
  • Drawback copy of shipping bill
  • Full set of clean on board bill of lading together with non negotiable copies of BL.
  • Original letter of credit or contract
  • Order copies of customs invoice if there is any
  • Duplicate AR5/AR4 form and invoice copy
  • GR form in triplicate

Certificate of origin and the shipment advise: The CFA arranges to dispatch this document to the exporter After receiving this document, the exporter makes an application to the Chamber of Commerce and obtain a certificate of origin. This certificate of origin is issued in duplicate. So in case of export shipment to countries where GSP concession is offered, the GSP certificate of origin will have to be produced by the exporter from the concerned authorities. So generally, the export inspection agency is the one who issues GSP certificate of origin.  

GSP certificate of origin of preferences is kind of a scheme where buy a wide range of Industrial and Agricultural Products originating in developing countries. They are given preferential access to the markets of the European Union. This preferential treatment is given in the form of reduced or zero rates of customs duty. So wherever you find that GSP certificate of origin is applicable, you will get some kind of rebate or maybe you did not pay any customs duty.  So this scheme benefit developing countries and integrate them into the world economy

Shipment advice: This advice is sent to the importer by the exporter and in fact, it is a kind of intimation about the date of shipment of the consignment by a named vessel and its expected time of arrival at the destination port and there are some documents which are to be sent along with the shipping advice. so that the importer starts making further arrangements for taking delivery of the consignment. These documents are no negotiation copy of BL, commercial invoice, packing list, customer invoice.  

Presentation of the document to the bank for negotiation/collection:

1. Commercial invoice: There could be some number of copies which bank might ask you for. You need to submit two or three or four copies of the commercial invoice.

2. Certificate of origin: Two copies of certificate of origin

3. Customs invoice: They will ask you a certain number of copies. So you need to submit those copies

4. GR form: Duplicate GR form or it’s also called a guaranteed remittance form. It is submitted to the customs department by the exporter before shipping the good and in fact, this form is submitted to customs where customs at the harbor is not computerized. There is no provision of EDI i.e Electronic data interchange. All the details like import export code, the product details, quantity, number of packs, etc have to be filled up in this GR form. The customers will verify all the details and submit one copy.

GR form needs to be submitted in duplicate and this custom copy is sent to RBI. Custom department themselves make this arrangement to send this document to the RBI and the exchange control copy, it is nothing but the exporter’s copy. Exchange control copy is submitted by the exporter along with other export documents to their banker because when you as an exporter, want to negotiate with the bank, you need to submit these documents. And it has to be submitted within 21 calendar days from the date of BL. It’s very very important. The bank will keep these documents and one’s export proceeds are received they will file the GR form. However in the statement to RBI i.e an export outstanding statement by the banks, RBI will come to know about any export proceedings and then they compare this outstanding statement with the GR form submitted by the customs. So this is in brief about the GR form

5. Packing list: they might ask you to submit a particular number of copies it could be 3,4,5 depends on the requirement

6.Full set of clean on board bill of lading negotiable plus nonnegotiable copies.

7. Some additional copies of the commercial invoice for certification by the bank

8. Original letter of credit or export contract

9. Bank certificate in the prescribed form in duplicate.

10. Marine insurance policy certificate

11. Bill of exchange

Claiming export incentives: So we discussed the processing of an export order at pre-shipment, shipment and post-shipment label. Now you will discuss the process of claiming export incentives, one is the excise rebate, So after completing the post-shipment formalities, the CFA will find the following documents which I have mentioned here with the maritime Central Excise collector or jurisdictional assistant collector we call it as JAC of Central Excise for claiming the refund of excise duty or it could be for obtaining the release from Bond depending on the case. So the documents are —

1. AR4/AR5 form duplicate copy of this form certified by the customs Preventive Officer. Click here to see the sample copy of AR4.

2. The non-negotiable copy of the BL or shipping bill certified by the customs preventive officer.

3. Some additional documents like the application for refund in form c and pre-receipt.

Duty drawback: For claiming duty drawback, the exporter’s agent that is a CFA will file the customs attested copy of the drawbacks shipping bill. So this shipping bill along with some other documents are submitted or filed by the exporter’s agent. It is submitted with the drawback department of the customs house. So the documents or drawback claim, proforma prescribe application form in 5 copies. Then there is a Bank or custom certified copy of the commercial invoice. Then the third one is a non-negotiable copy of BL. And finally, if there is any other specifically prescribed document, the department people might ask you for some other documents. And once the drawback department finds the claim to be correct, they dispatch the cheque of the claim amount to the exporter or if the exported desire this amount sent to the exporter’s bank for being credited to account with intimation to the exporter.

Here in the above topics, we have discussed some export terms and documents. So in the following section, we need to know the brief details of these terms.

A. Commercial documents: These documents are also known as shipping documents and these documents enable the exporter and importer to discharge the obligation under an export contract. Let’s check the different types of commercial documents. If you look at the list of commercial documents required for a consignment under CIF contract 9 that is cost insurance and freight contracts. These are—

  • Commercial invoice
  •  Bill of lading
  • Airway bill
  •  Post parcel receipt
  • Insurance policy certificate
  • Bill of exchange

We also require some additional commercial documents such as.. packing list ,certificate of inspection, certificate of quality etc.

B. Commercial invoices: These are the first basic and the only complete document among all commercial documents for the shipment. No import export can be done without commercial invoices even if it has no commercial value.

Different objectives of commercial devices are—

  • It fulfills the obligation under the export contract.
  •  It is required for obtaining an export inspection certificate.
  • Getting excise clearance
  • Getting customs clearance
  • and securing incentives

Commercial invoices are prepared at both the pre shipment and post shipment stages. Important things to note under LC that is letter of credit unless otherwise specified the commercial invoices must be made out in the name of the applicant of the credit.

The second important point is just like the quantity recorded on the invoice, the amount should neither be less nor more than the stipulated amount in the contract. or letter of credit. There is an exception, if the contract or L/C permits part shipment, an individual invoice can be less than the total amount and it will be mentioned clearly on LC whether part shipment is permitted or not.

A few things to mention in the invoice– like what is the final destination of the Merchandise? and in case the Merchandise is sold or agreed to be sold the time place and names of the buyer and seller and it has to be exported on consignment basis that if it is consigned the time and origin of shipment, the names of Shipper and the receiver, it has to be mentioned clearly on the commercial invoice. Then a detailed description of the Merchandise including the name and quality of each item marks used in domestic trade on the country of origin and marks and numbers on the export packing, the quantity, weights, and measures. Then the kind of currency, the country of origin, this information should be clearly mentioned on the commercial invoice. Click here to see the sample copy.

C. Bill of lading: The bill of lading is issued by the shipping company or its agent confirm that goods are either being shipped or have been shipped. So basically it is essentially a transport document and serves of the following functions…..

It’s proof of a contract of affreightment (i.e transport) between the shipping company and the shipper. (Exporter and Importer)

It also worked as a receipt given by the shipping company for cargo received by it.

Most importantly it is a document of title, this is the most significant function of BL.

Most importantly it is a document of title, this is the most significant function of BL.

There are few things to be noted down—

  • BL must contain leading identification marks.
  • A number of packages quantity.
  • Weight or any other unit of account and condition of the goods.

B/L is the only evidence to file a claim against the shipping company in the event of non-delivery defective delivery or short delivery of the cargo at the destination. I have given two different examples, in fact, both these are copied are taken from a website I have downloaded this copy from the website and its B/L issued by FedEx. you can just have a look at it to have a real feeling. How does B/L look like? What the different information that has to be captured on this document. So you can just have a look at it and you can download many more copies on the website because  B/L copies are available on the website.

Different types of BL: We have received 1. For shipment BL then 2.On board shipped BL then we have 3. Clean BL, caused or Dirty BL it’s also known as foul B/L. then there is combined BL. then through BL, trans-shipment BL and charter party BL.

  •  Straight Bill of Lading: This is typically used when shipping to a customer. The “Straight Bill of Lading” is for shipping items that have already been paid for.
  •  To Order Bill of Lading: Used for shipments when payment is not made in advance. This can be shipped to one of your distributors or a customer on terms.
  • Clean Bill of Lading: A Clean Bill of Lading is simply a BOL that the shipping carrier has to sign off on saying that when the packages were loaded they were in good condition. If the packages are damaged or the cargo is marred in some way (rusted metal, stained paper, etc.), they will need to issue a “Soiled Bill of Lading” or a “Foul Bill of Lading.”
  • Inland Bill of Lading: This allows the shipping carrier to ship cargo, by road or rail, across domestic land, but not overseas.
  • Ocean Bill of Lading: Ocean Bills of Lading allows the shipper to transport the cargo overseas, nationally or internationally.
  • Through Bill of Lading: Through Bills of Lading are a little more complex than most BOLs. It allows for the shipping carrier to pass the cargo through several different modes of transportation and/or several different distribution centers. This Bill of Lading needs to include an Inland Bill of Lading and/or an Ocean Bill of Lading depending on its final destination.
  • 7. Multimodal/Combined Transport Bill of Lading: This is a type of Through Bill of Lading that involves a minimum of two different modes of transport, land or ocean. The modes of transportation can be anything from freight boat to air.
  • Direct Bill of Lading: Use a Direct Bill of Lading when you know the same vessel that picked up the cargo will deliver it to its final destination.
  • Stale Bill of Lading: Occasionally in cases of short-over-seas cargo transportation, the cargo arrives to port before the Bill of Lading. When that happens, the Bill of Lading is then “stale.”
  • Shipped On Board Bill of Lading: A Shipped On Board Bill of Lading is issued when the cargo arrives at the port in good, expected condition from the shipping carrier and is then loaded onto the cargo ship for transport overseas.
  • Received Bill of Lading: It is simply a Bill of Lading stating that the cargo has arrived at the port and is cleared to be loaded on the ship, but does not necessary mean it has been loaded. Used as a temporary BOL when a ship is late and will be replaced by a Shipped On Board Bill of Lading when the ship arrives and the cargo is loaded.
  • Claused Bill of Lading: If the cargo is damaged or there are missing quantities, a Claused Bill of Lading is issued.

BL is not a negotiable instrument though it is transferable by endorsement. This transferability enables the bank to pay money to the exporter against the surrender of shipping documents including BL even before the goods reach the destination. Similarly, it enables the goods to be resold by the importer before it reaches the destination. So just based on this document, the importer is able to resell the goods before it reaches the destination and the exporter is also entitled to get money to get value for this shipment before it reaches the destination. what is taking exception? In fact, it’s not that type of B/L its just a process, and taking exception is the process of noting damage or discrepancies on B/L. So before a B/L is really issued, a representative of the carrier will inspect the shipment for damage to make certain that the contents of the shipment are represented correctly. If no Apparent damage can be noted and the contents of the shipment match the B/L, a clean BL will be issued and if any damage can be seen or if the contents are not what was represented and notation will be made and the document is called cloud or dirty or foul B/L. If no exceptions are noted on the BL, it is assumed to be a clean BL. Click here to see the sample B/L

  • Airway bill: Airway bill is basically a transport document of an air carrier and the evidence of the conclusion of the contract of affreightment of receipt of goods. AWB is not a document of title nor is the document transferable. But  AWB or airway bill can be made into a Transferable document and by which it can be transferred to a third party by endorsement like the BL. The importer can protect them against the seller rerouting of the good by obtaining the consignor’s copy of the AWB. It’s marked as original for the shipper and this document is sent to him through the banking channel by the exporter along with other shipment documents. Sample of AWB.Click here
  • Post parcel receipt:  A post parcel receipt basically evidences the receipt of goods exported through postal channels to the buyer. But it does not evidence, the title to goods.
  • Insurance Certificate: So cargo insurance policy or it’s also known as a marine insurance policy. It protects the cargo owners in the event of loss or damage to cargo in transit. Click here to see the sample copy of insurance.
  • Bill of exchange: Bill of exchange or draft is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a person or to the bearer of the instrument. it bridges the time gap between the shipment of goods and receipt of the sale amount. It is prepared by the exporter and given to the bank along with other shipping documents for securing the sale amount. basically, a bill of exchange is two types, one is a site bill that is to be honored on demand and there is no credit facility. And other is a usance bill that is here, you have some facility for payment at an agreed time period. It is important to have some kind of credit facility. Click here for seeing a sample copy of it.

Legal regulatory documents:

IEC: It is the importer-exporter code number. It is issued by the DGFT and it is valid for the firm’s lifetime. There is no expiry period for this document. But there are certain circumstances and there are certain conditions that can be used to cancel IEC of the organization. We need to be very careful about following regulations. (link to apply or modify IEC)

RCMC: There is one more documents i.e RCMC, Registration cum membership certificate. RCMC is issued by export promotional council, commodity board development authority etc.  Unlike IEC, RCMC is valid for specified time period, it is stickle not a legal requirement to export from India. It is needed to claiming some export import incentives. If you are claiming incentive, you need to be a member of export promotional council, commodity board or development authority. And once you become a member of council board, you will be given registration cum membership certificate.

Here some sample copy of IEC and RCMC are given to learn about the forms. There is more than 35 export promotion council in India and they take care of different products like Leather plastic etc. They are giving RCMC. Click here for details.

Foreign exchange regulation requires that all exports other than exports to Nepal and Bhutan shall be declared on the following forms. There are four different types of forms..

GR Form: It is filled in duplicate and it has to be used for all export in a physical form other than by post. Click here to see the details.

So documents are required for exporting by post :

PP Form: It has to be filled in duplicate. It is used for all export in all countries made by post parcel except when made on “Value payable’ or ‘cash on delivery’ basis. Click here to see the details.

COD, cash on delivery or VP, value payable, so a third one is VP or COD form and these forms have to be filled in one copy. and VP/COD from that is value payable or cash on delivery forms are used for exports to all countries by post parcel and the arrangements to realize proceeds through postal channels on value payable or cash on delivery basis. Click here to see the details.

Softex form. Softex form has to be filled in triplicate. It has to be prepared in triplicate and it is used for the export of computer software in nonphysical form. Click here for details.

There are some legal regulatory documents for goods is come under the export trade control policy of the Government of India. Either an export license or an export permit will be granted by the concerned authority’s license or permission is generally given on the customs document known as shipping bill and for obtaining an export license from the licensing authority.

There are two different types of forms which are needed to be used for obtaining an export license from the licensing authority. It could be either 18 or B10 form.  This form is submitted along with the shipping bill and other documents if any and in many cases specification may have to be obtained from particular government ministers in which case exporter has to apply on his letterhead.

Here is the link “How to Setup a Business in India With Import-Export License

 The export act 1962 that is export quality control and inspection act 1962 and various other regulations, it is obligatory for an exporter to obtain inspection certificate from the notified agencies. And for obtaining this certificate that inspection certificate the exporter has to apply in a document that is called as an intimation for inspection. And this document that is intimation for inspection has to be submitted along with other supporting documents like commercial invoice, technical specifications, etc.

 Export inspection agency and thereafter a certificate of inspection will be issued which along with other documents will be submitted to the customs authorities before permission to ship goods is given.

How about the permission from customs:  under the Indian customs act goods cannot be loaded on board the Carriers unless permission from the customs authorities has been obtained. And this permission is recorded on a document prescribed by the customs authorities and for shipment by sea or by air. This document is known as the shipping bill for shipment by land or by rail. It is called an application for export and for post parcel consignment, it is known as custom declaration form.

There are different types of shipping bill here I have mentioned four different types of shipping bill—

1. Free shipping bill: Free shipping bill is usually printed on white paper and in this case, there is no export duty or says there is no duty drawback its free shipping bill.

2. Dutiable shipping bill: Here goods are subject to export duty or cess and dutiable shipping bill is printed on yellow paper just like shipping bill for shipping X-Bond

3. Drawback shipping bill: Drawback shipping bill is usually printed on green paper and the goods are entitled to duty drawback. 

4. Shipping bill for shipping ex-bond: This shipping bill is printed on yellow paper and imported goods for re-export kept in the customs bonded warehouses for such good. this shipping bill for shipping ex-bond is used.

Some additional information which you will find very useful:

Application for export is used for seeking customs permission of export goods to the neighboring countries like Bangladesh by road river or rain. This is of three types namely for the export of free dutiable and drawback cargos.

Then customs declaration for goods sent by post parcel is a standard form for all types of cargo.

For claiming duty drawback the exporter has also to file another document known as form D it’s very important because you should not forget while claiming duty drawbacks that you need to file a document known as form D.

 Port authority India has specified documents for bringing the cargo into the shed for shipment as well as for payment of Port charges and the same document is known by different names at three different port. let me mention It is called a Port Trust copy of the shipping bill in Bombay. In Calcutta, the same document is known as a dock challan. In Chennai and in Cochin, this document is known as export application.

Then there are some legal documents in importing countries—

  1. Consular invoice: There are few countries will which will not accept an invoice prepared by the shipper and required that their consulate abroad issue an invoice for the customs purposes. So this configure invoice is signed and stamped by the local consulate of the country to which goods are exported.
  2. Customs invoices: So customs invoices are made out on a specified form prescribed by the customs authority of the importing country. In fact most but not all Nations customs services acceptor commercial invoice as evidence of the nature and value of the cargo for customers purposes. Some countries custom services ask that invoice should be prepared on their standardized form and this form is known as customs invoice. and the details given in this document enable the customs authorities of the important country to levy and charge import duty.
  3. Legalized or wizard invoices: These invoices constitutes a sworn affidavit by the exporter about the genuineness and correctness of the cell. This could be shown before the appropriate consulate or the Chamber of Commerce as the case may be which will put their stamp on them. So this becomes legalized invoices or we call as visaed invoices.
  4. Certified invoice: These are the self-certified invoices by the exporter about the origin of the goods.
  5.  Certificate of origin: Certificate of origin is issued by independent bodies like the Chamber of Commerce on a prescribed form even there are few export promotion councils like PO in India they can issue a certificate of origin but they cannot issue the certificate of origin if it is for a generalized differential system.
  6. GSP certificate of origin: This export Promotion Council cannot issue a GSP certificate of foreign. So GSP certificate of origin is used for the goods which get the benefit of preferential import duty treatment in countries that implement the GSP that is the generalized system of preferences and this kind of goods should be accompanied by the GSP certificate of origin. This certificate is given on the forms prescribed by the important countries.
  7. Health or veterinary or sanitary certificates: These certificates are needed in a number of countries and they certify that the goods are fit for human consumption.

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