international trade documentation
TRANSCRIPT
International Trade Documentation
Dr. Anupam Varma
Role of Proper Documentation
Correct documentation alone can ensure:
swift passage of goods to the customer,
Customs clearance, Transfer of title, and Prompt payment for the goods
supplied
“You help yourself and your buyer by appropriate and correct documentation”
EXPORT DOCUMENTATION
Export Documents
Commercial Documents Regulatory Documents
Principal Auxiliary
The Concept of Master Documents
The two master documents- one for commercial use and the other for regulatory documents meant for customs, RBI and port trust-have maximum advantage of alignment and minimum cost and time for preparing individual documents.
The two- master documents contain all the information that is common to individual documents.
Aligned Documentation System (ADS) is based on the UN layout key.
Different forms used in the international trade transaction are printed on paper of the same size and in such way that the common items of information are given the same relative slots in each of the documents.
Commercial Documentation ‘Principal export documents’ by customs of
trade are required for:- effecting physical transfer of goods- transferring of title of goods from an exporter to an importer- realising export proceeds
There are other ‘Auxiliary documents’ required for preparation and procurement of principal export documents
Regulatory Documentation
These are prescribed by different government departments in compliance with the requirements under relevant laws
Documents incidental to customs clearance of export/import consignment, foreign exchange regulations, etc are covered in this category
Assistance and Incentive Documentation
For promoting exports, from time to time Government announces many special schemes and incentives
These relate to duty free imports, concessional import duties, duty drawbacks on exports and excise related export goods, etc.
Documentation relating to above are called assistance or incentive documentation
Principal Export Documents
Commercial Invoice
Packing List Bill of
Lading/Combined Transport Document
Certificate of Inspection/Quality control
Insurance Certificate/Policy
Certificate of Origin
Bill of Exchange Shipment Advice
Commercial Invoice It is the document of account of sale
rendered by buyer to the seller It is a prima facie evidence of the
contract of sale and purchase Description of merchandise must
correspond exactly to the details in the L/C and should be made on the paper of the seller and signed by him
It should be made in the name of the opener, unless otherwise stated in L/C
Consular Invoice Needed mostly by Latin American countries,
Kenya, Uganda, Tanzania, Nigeria, Ghana, Mauritius, New Zealand, Australia, Fiji, etc.
The importer’s country require this to collect accurate import details for assessing import duties & for other statistical purposes.
Helps importer to get goods customs cleared easily
Consular invoice has to be got certified by the embassy of country concerned
Customs Invoice
Required by countries like USA, Canada, etc. for allowing entry of goods at preferential tariff rates
Invoice forms are generally available at the consular office of the importing country & should be signed and witnessed after duly filling the same.
Legalised/Visaed Invoice
Required by some countries in Middle East, Latin America, Turkey, Taiwan etc.
These invoices are sworn for their genuineness by seller as being correct before appropriate Consulate /Chamber of Commerce /Embassy and bear the stamp and authentication
Certified Invoice
Sometimes exporter is asked to certify on the invoice about the goods being of particular origin or packed at particular place and in accordance with a specific contract.
Such invoices are called as a certified invoice
Packing List It shows details of goods contained in
each parcel/shipment Shows item by item the contents of
containers or parcels shipped Enables buyer/receiver to check received
items correctly Specified number of copies are kept
inside the package, sent with shipping documents, sent to buyer, to shipping agent
Transport Documents
Following documents are used in export as transport documents:
a. Ocean freight: Bills of Ladingb. Air Freight: Airway Bills / Air
consignment notec. Rail/Road: Railway Receipt
/Consignment Noted. Post: Post Parcel Receipt
Combined Transport Document
It is a document for multi-modal movement of goods in container. The movement is carried out by more than one mode, e.g. rail and ship.
A CTD provides an alternative to establishing a series of separate and non-uniform contracts for each segment of the total transport process.
It is acceptable for negotiation under L/C.
Bill of Lading It is a document issued by the shipping
company or its agent acknowledging the receipt of goods on board of vessel, and
Undertaking to deliver the goods in the like order and conditions as received to the consignee or his order of assignee provided freight and other charges have been duly paid
It is a document of title and by practice transferable.
Types of Bill of Lading
Clean Bill of Lading Claused Bill of Lading On Board Bill of Lading Stale Bill of Lading
Airway Bill / Air Consignment Note
It is the receipt issued by the airline for the carriage of goods
It is not treated as a document of title and is not issued in negotiable forms
Indian Exchange Control discourages consignment of goods in the name of either importer, buyer or his agent.
Post Parcel Receipt It evidences merely receipt of goods for
exports by post office It is not treated as a document of title It is advisable to send post parcels in the
name of foreign correspondent bank instead of to the buyer
Inspection certificate
It indicates that the goods have been inspected before sealing for export.
Specialized inspection agencies are there in India
Self inspection certificates can also be given by export houses with good record of exports
Marine Insurance Policy / Certificate
Marine insurance is intended to protect the insured against the risk of loss or damage to goods in transit due to marine perils
Insurance Policy Marine Insurance Policy is a contract
whereby the insurer, in consideration of a payment of premium by the insured, agrees to indemnify the latter against the loss incurred in respect of goods exposed to perils of sea and incidental to sea voyage
Insurance Certificate
It gives details of the shipment insured together with a shortened version of the provision of open cover
It is a more convenient document than a policy and more easily intelligible
It does not have legal standing, cannot be assigned.
Certificate of Origin
It is required by the importer for clearance of goods in his country
Also required for taking advantage of preferential tariffs granted to exports from India in a particular country
Obtainable from a recognised Chamber of Commerce, Export Promotion Council, etc on payment of a small fee.
Generalised System of Preferences (GSP) Certificate
Many developed countries have adapted GSP
Exporters from developing countries including India are entitled to a concessional rate of import duty in these countries
Issued usually by Export Inspection Agency
Bill of Exchange Also known as ‘Draft’ It 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
‘Sight Draft’; ‘Usance Draft’ There is no standard format for Bill of
Exchange
Shipment Advice ‘Shipment Advice’ is sent by exporter to
importer intimating the date of shipment of consignment by a named vessel and its ETA at the destination port.
Shipment advice is sent in the prescribed format along with following documents: 1. Non negotiable copy of the B/L; 2. Commercial invoice; 3. Packing list; and 4. Customs invoice
The seven auxiliary documents are
1. Proforma Invoice
2. Intimation for inspection
3. Shipping instructions
4. Insurance Declaration
5. Application for certificate of origin.
6. Mate's Receipt
7. Letter to bank of collection/negotiation
of documents
Auxiliary Documents
Regulatory DocumentsThere are seven regulatory documents
associated with the pre-shipment stage of the export transaction:
1. ARE.1/AR4 Form ( for Central Excise)
2. Shipping Bill/Bill of Export (for Customs)
3. Port Trust Copy of Shipping Bill/ Export Application/Dock Challan - Port
4. Vehicle ticket - Port
(contd)
5. Exchange Control Declaration/GR/PP
forms - RBI
6. Freight Payment Certificate -
Steamer Agents
7. Insurance Premium Payment
Certificate - Insurance Co.
Regulatory Documents (contd.)
ARE.1 Form
It is used for claiming excise rebate / duty drawback from the GoI.
The different copies of ARE.1/AR4 forms should be of different colors indicated below:
Original---- White (Returned to Exporter) Duplicate--- Buff (Do) Triplicate--- Pink (Rebate sanctioning
authority ) Quadruplicate---Green (Chief Accounts
Officer at Collectorate Head Quarters) Quintuplicate---- Blue (Central Excise Officer) Sixtuplicate- Yellow (optional copy to
exporter)
Shipping Bill
Most important document required by custom authorities for allowing exports. It contains all details of goods shipped.
These are of 4 typesWhite : Export of duty free goods (3 Copies)Green : Export under claim for duty drawback
(4 copies)Yellow : Export for dutiable goods (3 copies)Pink : Export of duty free goods ex-bond (3
copies)Blue: Export under DEPB scheme (7 copies)
Port Trust Copy of Shipping Bill/Export Application/Dock Challan
An exporter has to pay the port and dock charges when the shipment is sent by sea. The amount is assessed on the basis of nature of goods, volume, weight etc.
Vehicle Ticket It is an entry pass issued by the port trust authority to the shipper to allow the latter to bring export cargo to the port for their dispatch to the importer.
Declaration Documents
GR FormsPrescribed by the RBI under FEMA to ensure that
the Forex receipts in respect of exports are repatriated to India.
Prepared in duplicate. Both copies submitted to customs at port of shipment along with shipping bill.
Customs gives ten no. running serial no. on both copies
Customs returns duplicate copy and retains originalExporter submits GR form and other documents to
his bank/authorized dealer for collection of export bills within 21 days
SDF Forms
Where shipping bills are processed electronically, SDF is used.
Submitted in duplicateCustoms gives back one copy along with a copy of the shipping bill marked as ‘Exchange Control Copy’
Should be given to authorized dealer within 21 days
PP Forms
Completed in duplicateExports to all countries are to be declared on PP
Form when goods are sent by post parcel. All such parcels are routed through the ‘foreign post offices’ located in major cities.
Postal articles intended for any permissible foreign destinations may be booked at any of the post office in India .
PP form or No objection certificate from the Reserve Bank of India is required to be enclosed to the parcel depending upon the value of the goods being exported.
SOFTEX Forms
Used in export of software otherwise than in physical form, i.e magnetic tapes, discs, etc.
Valuation of Software ExportsDisposal of SOFTEX form (triplicate)Should be submitted not later than 30 days along with invoice to the valuation authorities
Other documents
Freight Payment Certificate It is like receipt for payment of freight
Insurance Premium Payment Certificate
It is like receipt for payment of insurance premium.
Mistakes in Documentation
Particulars often incorrectly declared
Quantity vis a vis Units of Qty Gross weight & Net weight Invoice No/Date & ARE 1 No in the SB Port of Destination/ Discharge Description of goods Currency Viz USD/GBP/Aus D/Euro etc CIF Value/FOB Value Export promotion Scheme opted.
Other Documents
Black list certificateWeight NoteLanguages certificateCertificate of Chemical AnalysisPhytosanitary certificatesConditioning certificateAntiquity CertificatesCertificate of measurementTransshipment billShipping Order
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