EXPORT PROCEDURESTEP BY STEP

Dr. Ram Singh Associate Professor International Trade Operations & Logistics Indian Institute of Foreign Trade New Delhi Email: ramsingh@iift.ac.in

INTERACTION WITH MANAGERS OF MNAL, PUNE AS ON 3-4TH JULY 2012

AGENDA
Understanding trade supply chain; stages & stakeholders invovled. Documentation: Overview of Commercial and Regulatory documents ; apprasial of managerial aspects. Understanding Incoterms for cost effective trade supply chain. Understanding payments realisation; regualtory framework and mangerial aspects. Understandign transport logistics for automobiles Breifly understanding various incentives/ benefits/ duty neutralisation. Any other issue as desired ..

UNDERSTADING TRADE SUPPLY CHAIN

Buy
Order/Prepare
Exporter/ Importer DGFT EPC/ CB/ EDA/ FIEO Excise Department VAT Department Insurance Company Chamber of Commerce Export/Import Agent Embassies ECGC/Credit Checking Suppliers / Sub Contractors Other Intermediaries

Ship
Transport
Freight forwarder Packers & Consolidators Transporter Fumigation & Pest Control Carrier /MTO Shipping line Export Inspection Agency Other Intermediaries

Pay
Customs
Custom Clearance Custom House Agent ICDs/ CFSs Health Authorities/ PHO Terminal Operators Port Management Other Intermediaries

Payment
Bank Financial Institutions Factor / forfaitors Other Intermediaries

STAKHOLDERS IN TRADE SUPPLY CHAIN

UNDERSTANDING STAKEHOLDERS IN TRADE SUPPLY CHAIN

ROLE OF DGFT

Foreign Trade Policy :

Drafted by Director General of Foreign Trade under the Ministry of Commerce.

Importer Exporter code/ Other Licenses issuued by DGFT. All applications in Ayat-Niryat form . Trade Policy is implemented with the help of various other Departments mainly Customs, Excise and RBI.

In order to understand the co-relation, one must get familiar with the various laws and functions of various departments.

ROLE OF CUSTOMS & EXCISE

Foreign Trade Policy :

While some of these laws would be specific in nature for certain commodities, the generic understanding should be based on the following :

Customs Act, 1962 Customs Tariff Act, 1975 Foreign Exchange Management Act, 1999 Central Excise Act, 1944 Excise Tariff Act, 1985 Industries Development and Regulation Act, 1951 Laws of Weights and Measures

Ministry of Finance
Customs Coverage Validity of imports and exports Assessment and valuation Determination of import / export duty applicable Export Under bond clearance of excisable goods for export under bond Monitoring factory stuffed containers in certain cases Import Monitoring CENVAT Excise Coverage

Collection of duty

Rebate of excise duty post exports where exports have been effected after payment of excise duty

Examining co-relation and compliance with other laws

Inspection and supervision of cargo

Continued from the previous slide

Governing Acts/Laws/Manual 1. Customs Act, 1962

Governing Acts/Laws/Manual 1. Central Excise Act, 1944

Tools : i) Notifications ii) Public Notices iii) Customs Circular iv) General Exemption Notifications

3. Customs Law Manual

2. Customs Tariff Act, 1975

Tools : i) Notifications ii) Central Excise Circulars iii) General Exemption Notifications

3. Central Excise Law Manual

2. Central Excise Tariff Act, 1985

ROLE OF RESERVE BANK OF INDIA

RBI

Coverage Monitoring Foreign Exchange Inflow on account of exports of goods and services Outflow on account of imports of goods and services Governing Acts/Laws/Manual 1) Foreign Exchange Management Act 1999 2) Foreign Exchange Manual Tools: Master Circulars FEMA Notifications A.P. (DIR. Srs.) Circulars

In order to understand full implications of Foreign Trade Policy one must get himself familiarized with all the above mentioned departments and their working

PURVIEW OF EXPORT-IMPORT

FLOW CHART I
Knowledge of Market Proforma Invoice Knowledge of Product Sample if necessary Knowledge of Incentives Confirmation of Export Contract Preparation of Physical Exports Product Costing

Payment terms

Scrutiny of L/C

Amendments if Necessary

Benefits & Execution

Continued.

FLOW CHART I (CONTINUE FROM THE PREVIOUS SLIDE)

Pre Shipment Post Shipment

Confirmation from Buyer of Receipt of Goods

Payment Realisation

Realisation of Benefits

Statutory Records

DOCUMENTATION

SESSION II OVERVIEW OF

DOCUMENTATION PRACTICES IN INTERNATIONAL BUSINESS

A. a. Documents Prepared by Shipping/Transport Company Transport Documents: Negotiable Bill of Lading Non-Negotiable Bill Combined Transport Document Airway Bill Courier and Postal Receipt Railway Consignment Note /Road Transport Document Shipping Order Freight Payment Certificate Mates Receipt Export General Manifest Import General Manifest Delivery Order Documents Prepared by Facilitating Agencies A. Certificate of By: Exporter: Inspection / Quality A. Pro-forma Invoice Control B. Commercial Invoice A. Certificate of C. Packing List Insurance D. Shipping Instruction B. Certificate of Origin E. Intimation of Inspection C. Receipt for Payment F. Insurance Declaration of Port Charges G. Application for COO D. Vehicle Chit H. Bill of Exchange E. Insurance Premium I. Shipment Advice Payment Certificate J. Letter to the Bank for Collection / Negotiation of Documents K. ARE ( I & II) Form L. Shipping Bill / Bill of Export M. Export Application / Dock Challan / Port Trust Copy of Shipping Bill N. Exchange Control Declaration (SDF/GR / PP/ SOFTEX/VOP) Forms By: Importer: A. Import Order B. Bill of Entry C. Authorization to release the payment for import D. Import Declaration Form Documents Prepared by Exporter & Importer

b. c.

d. e. f.

E. F.

C. D.

A. B.

QUOTE/ UNQUOTE ( BAAT PATTE KI)

Don't Waste Time Learning The "Tricks Of The Trade (Documentation); Instead, Learn The Trade (Documentation) Anonymous

SIGNIFICANCE OF DOCUMENTATION
Documents are important for the following reasons:
I. II.

As an evidence of shipment and title of goods; For obtaining payment; To provide a specific and complete description of the goods; For assessment of correct Duty for clearance purpose; For obtaining Export Licences; For obtaining export finance; For completing Pre-shipment Inspection;

III. IV. V. VI.

VII.

VIII.

For claiming export benefits like Duty Drawback, etc.

COMMERCIAL / REGULATORY DOCUMENTS

Regulatory documents are required in dealing with various regulatory authorities such as customs, RBI, Excise, Licensing authorities Inspection and other Export Promotion bodies for availing incentives etc.

Commercial set of documents are mainly used for Commerce. In other words these are documents normally exchanged between buyer and seller.

UNDERSTANDING COMMERCIAL DOCUMENTS

COMMERCIAL DOCUMENTS USED IN Auxiliary Commercial Principal Commercial Documents Documents 1. Pro-forma Invoice 1. Commercial Invoice 2. Shipping Instruction 2. Packing List 3. intimation of Inspection 3. Certificate of Inspection / 4. Insurance Declaration Quality Control 5. Shipping Order 4. Certificate of Insurance 6. Mates Receipt 5. Bill of Lading / Combined Transport Document 7. Application for Certificate of 6. Certificate of Origin Origin 8. Letter to the Bank for 7. Bill of Exchange Collection / Negotiation of 8. Shipment Advice Documents

COMMON TERMS IN COMMERCIAL DOCUMENTS

All documents whether it is for export or import transaction generally contain following information

Name and address of the exporter and importer Document No. and date. Order No. and date Port of discharge Port of destination Country of origin Description of Goods Marks and nos., model nos. [if any] Weight ITC HS Code No. Value Currency Terms of payment Terms of shipment etc.

PRO-FORMA INVOICE:
Performa invoice is first and important documents of conveying exporter idea about the prices and description of goods to importer. Exporter provides all the information with respect to export purposes to importer such information may includes: 1. Tentative prices of per unit of commodity 2. Tentative description of goods 3. Tentative idea about shipping terms 4. Tentative idea about payments terms 5. Mode of shipment 6. Expected time required by export for delivering date etc.

COMMERCIAL INVOICE

It is itemized statement prepared and issued by a seller at the time of dispatching the goods to the buyer. It helps the Customs Authorities to:

ensure that goods shipped are permitted by the export policy. compute the customs duty, if any, payable on the export or the import. check the quantity of goods. They generally open a few packages at random and check the veracity of details in the invoice. check if there is any over-invoicing or under-invoicing (that may be resorted to by the importer to reduce the import duty payable).

COMMERCIAL INVOICE

Invoices are often called bills.

Various types of invoices used in International Trade are

Proforma Invoice Commercial Invoice Consular Invoice Leagalized Invoice Customs Invoice

SHIPPING INSTRUCTION

The significance furnishing the shipping to freight forwarder clearly, precisely is immense. In the modern times when export activities has become so complex, it is rightly said that the appointing a freight forwarder is a kind of extension to exporter export department. Freight forwarder shall know as much as exporter himself knows about the shipment and process of shipping it. Freight forwarder needs to know as much about the transaction as exporter know so as to comply with all of importer's requirements for successful and effective execution of contract and for keeping the importer loyal for future purposes.

IMPORTANT ASPECTS OF SHIPPING INSTRUCTIONS

There may be failure to collect against a letter of credit as that the forwarder was not known that there was a letter of credit involved in trade transaction. There may be mistake on the part of freight forwarder in insuring the shipment. Forwarder mistake to ship the goods on freight prepaid instead of collect basis. Freight forwarder mistake in preparing the certain essential documents which are important for letter of credit negotiation as freight forwarder was thinking that the exporter would prepare them. Fright forwarder mistake in returning the original documents to the shipper so as to distribute them, instead of sending them to a bank and/or consignee for payment negotiation/purchase or discounting.

SHIPPING ORDER
Shipping order is issued by the conference shipping lines whereby intimating the exporter about the reservation of space of shipment. Shipping order also describes that the specific vessel along with shipping dates and specified port.

INSURANCE DECLARATION
The standard Insurance declaration which is part of standardized documents is based on the format which is approved by the Institute of London Underwriters. It is suggested that open cover/policy holders may be supplied with blank forms of these documents and such forms can be reproduced from the standardized master document which can be sent by exporter to nearby office of General Insurance Corporation for declaration of cargo so as to get the insurance cover for the same. General insurance company should issue the certificate of insurance to exporter after completion of necessary entries and certification by the Corporation.

CERTIFICATE OF INSURANCE

As international trade transportation is full of risks and ocean carriers doesnt take any responsibility for loss/piracy/damage etc to the cargo if the cargo is shipped without the insurance cover. Ocean carriers consider it negligence on the part of exporter. Hence exporter is mandatory required to arrange the cargo/marine insurance for his export shipment. The insurance certificate indicate the amount insured of the shipments and also describes that awhile kind of risks are covered under the polices under various institute cargo clauses.

APPLICATION FOR INSPECTION CERTIFICATE

Certificate of Inspection is issued by the Inspection Agency concerned certifying that the consignment has been inspected before shipment as per the requirements of the Exports (Quality Control and Inspection) Act, 1963. It satisfies the conditions relating to quality control and inspection as applicable to it and is certified export worthy. This certificate is required: by customs before allowing shipment of goods or

This certificate bears cross references of invoice or contract number.

by a banker to negotiate the documents.

INSPECTION CERTIFICATE

Inspection can be done by Inspection Agency appointed by the Government of India, i.e. Export Inspection Agency, Textile Committee, Central Silk Board etc.

Inspection Agency may also be nominated by importing countries Government i.e. SGS and OMIC by some African Countries. Sometimes buyer himself appoints an independent private inspector to inspect the goods.

If an inspection is a part of transaction, then exporter is required to arrange for necessary inspection. It can be a certificate of quality, weight, analysis, or the like.

APPLICATION FOR CERTIFICATE OF ORIGIN

Certificate of Origin is a document, which is used to avail the preferential tariff rates as per some agreements such as GSP, GSTP. Certificate of origin indicates that the goods have been manufactured in the originating country material hence they shall be entitled to preferential duties. In certain cases countries which are giving such preferential treatment require legalization of the document from their country consular in exporter. Certification for origin of goods in other cases can also be availed from Chamber of Commerce such as PHDCCI or FICCI. However the certificate of origin provided by Chambers of Commerce is general and it has to be authenticated by importer country chamber of commerce..

CERTIFICATE OF ORIGIN [COO]

It is a certificate indicating the fact that the goods which have been exported have originated or manufactured in a particular country. So it is a sort of declaration testifying the origin of export. It is normally required by an importer to clear goods from the customs.

For political and social reasons, it is insisted by Customs Authority of importing country before goods are allowed to enter in the country. It helps the importer to take an advantage in duty concession, if any. For e.g. goods imported under Free Trade Agreement.

CERTIFICATE OF ORIGIN [COO]

On the basis of COO, Customs can ensure that certain prohibited goods of particular countries are not imported.

It also ensures that goods have not been reshipped (in the same form availing COO) by a seller who has brought them into his own country from some other place of origin. It is sent to the importer by the exporter.

It is issued or signed by an independent official organization, such as a Chamber of Commerce, on prescribed form.

CERTIFICATE OF ORIGIN

These are often required:

to meet Customs requirements in the importing state to comply with Banking requirements for other official and commercial reasons.

There are two categories of Certificate of Origin :

1. Preferential Certificate of Origin and 2. Non-preferential Certificate of Origin

PREFERENTIAL CERTIFICATE OF ORIGIN

It entitles preferential treatment in duty in the importing country.

These certificates are governed by rules of origin which are always part of Preferential Trading Agreements entered into between two or more countries. As far as India is concerned the following agreements are noteworthy: Generalized System of Preferences (GSP) Generalized System of Trade Preferences (GSTP) SAARC Preferential Trading Agreement (SAPTA) Asia- Pacific Trade Agreement (APTA) India-Sri Lanka Free Trade Agreement (ISLFTA) India- Asean FTA . Will discuss other cases with examples.

PACKING LIST

It is a consolidated statement in a prescribed format detailing how goods are packed, marked and numbered including weight and dimensions of each package. It is useful for customs at the time of examination and warehouse keeper of buyer to maintain inventory record and to effect delivery.

The exporter or his/her agent, the customs broker or the freight forwarder, reserves the shipping space based on the gross weight or the measurement shown in the packing list.

It have many details common from invoice but it does not indicate unit rate value of goods.

PACKING LIST

Customs uses it as a check-list to verify: Basic functions of Packing List are:

the outgoing cargo (in exporting) and the incoming cargo (in importing).

It is prepared in 7-10 copies or as per the requirement.

To confirm the contents of a shipment as it left the exporters premises. To indicate weights, measures and the piece count (i.e. the number of cartons or cases) in that shipment.

MATE RECEIPT

On payment of Dock dues, the exporter or his agent collects the receipt from the Port-Trust authorities and hands over to shipping company for preparing Bill of Lading. Bill of Lading is prepared on the basis of Mates Receipt. It is of a transferable nature.

Port authorities recover port dues from exporter on production of this receipt.

In case of ascertaining the exact date of shipment, the mates receipt date is also very important. Normally, the date of Export is regarded as the date of Mate Receipt or the date of Bill of Lading, whichever is later.

MATE RECEIPT

Mates receipt is a receipt issued by the Master or Mate of the vessel stating that certain goods have been received on board his vessel. It is prima-facie evidence that the goods are loaded in the vessel. It contains:

It is serially numbered.

the name of shipping line and vessel, port of loading, port of discharge and place of delivery, marks and numbers, number and kind of packages, gross weight, description of goods, container status/seal number, shipping bill number and date and condition of cargo at the time of its receipt on board the vessel.

BILL OF LADING
legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver.
A

DEFINITION OF BILL OF LADING

A document signed by a carrier (a transporter of goods) or the carrier's representative and issued to a consignor (the shipper of goods) that evidences the receipt of goods for shipment to a specified designation and person. The term derives from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the verb "to lade" which means to load a cargo onto a ship or other form of transport.

SPECIMEN OF BILL OF LADING

BILL OF LADING (B/L)

Bill of Lading contains the following information:

Shipping companys name and address. Consignees name and address. Notify party Name of the vessel, Port of loading/Shipment and port of discharge. Shipping marks and Numbers, Cubic measurements, weights Description of the goods Number of packages. Shipped on board with date-rubber stamp. Gross weight and net weight. Freight details Signature of the shipping companys agent. Container number if any. Shippers name and address. B/L Number and Date Originals Terms (on reverse)

FUNCTIONS OF BILL OF LADING

All bills of lading should be signed by either shipping company captain authorized carrier agent. Generally , bill of lading has three main function

It is a receipt from the carrier to the shipper; It is quasi- negotiable document. It is a documents of title; It is an evidence of the contract of carriage between the carrier and the shipper. Promise that the goods will be delivered to destination.

CLASSIFICATION/KINDS OF BILL OF LADING

To Order bills of Lading Straight to bills of Lading Surrender Bill of Lading Bearer Bill of Lading

TYPES OF BILL OF LADING: CONFUSIONS & CLEARANCES

Shipped on Board / On Board/ On Deck Bill of Lading Received for Shipment / "Advance Bill Of Lading Master/ Groupage Bill Of Lading Split / House / Freight Forwarder Bill of lading Through or Direct Bill of Lading Transhipment Bill of Lading Multimodal Transport / Combined Transport Bills Of Lading

TYPES OF BILL OF LADING: CONFUSIONS & CLEARANCES

Clean Bill of Lading Claused/ Foul/ Stale/ Dirty Bills Of Lading Anti-dated or Daoqianchichan Bill Of Lading Short Form Bills Of Lading Long Form Bill Of Lading Minimum/ Freight Bill Of Lading Ocean/Maritime / Seaway/ Non Negotiable Bill Of Lading

TYPES OF BILL OF LADING: CONFUSIONS & CLEARANCES

Secret /Blank /Open Bill of Lading Exchange/ Switch Bill of Lading Separate or Zhuanghuochan Bill of Lading Parcel Receipts / Parcel Bill of Lading Bolero Bill of Lading Liner/ Congen Bill of Lading Charterer Party Bill of Lading

NO .OF COPIES IN BILL OF LADING

Bills of lading are usually made out in four copies, three signed and one unsigned.

The unsigned copy is retained by the ships master for his own use. The three signed copies, or three originals, constitute the set commonly referred to in commercial contracts or letters of credit.

Though there may be more or fewer copies according to the requirements specified in the particular contract or credit.

CLEAN BILL OF LADING

A clean bill of lading is one which acknowledges receipt of the goods in apparent good order and condition without any qualification. If a bill of lading bears such notations as five boxes broken, some bags torn, case No. 12 missing, etc. is known as an Unclean Bill of Lading, which would be refused by the opening bank whose credit calls for Clean B/L.

SHIPPED ON BOARD BILL OF LADING

The carrier issuing a shipped on board bill of lading acknowledges that the goods have been loaded on board his ship. In case a received for shipment bill of lading is issued, it means that he confirms only that the goods have been delivered under his custody. For payment under documentary Ls/C, the Received for Shipment B/L is not acceptable.

SOME USEFUL TERMS IN BILL OF LADING

Marked Freight Prepaid or Paid : When freight charges are included in the invoice but the bill of lading is not marked with the words freight prepaid or freight paid:, the opening bank might refuse to make payment to the exporter. This applies, of course, to C&F and CIF contracts only. For FOB contracts, bills of lading are usually marked freight collect or freight payable at destination.

PAY ATTENTION TERMS IN BILL OF LADING

1.

Consignee:

2.

Notify party: the whole name of the notify party except there is Same As Consignee: .. Bill of Lading made out to order notify the applicant: the name and full address of applicant.

To order To order of the shipper/xxx Bank To bearer open B/L Consigned to only ((straight B/L) If the L/C stipulatesBill of Lading made out to order and blank endorsed.., ConsigneeTo order

PAY ATTENTION TERMS IN BILL OF LADING

3. Shipping terms Port of Loading: the specific port such as JNPT Mumbai; India Port of Discharge/Port of Destination such as Houston, USA Final Destination (inland city) such as Detriot, USA Port of Transshipment/Via/Through ( Singapore) Pre-carriage by Place of receipt; Pimpri; Pune Vessel/S.S./Ocean Vessel Voyage No. /Voy. No. Sailing Date/On or about DEC. 25th, 2011

AIRWAY BILL (AWB)

Airway Bill is a transport document associated with Airfreight.

It serves as a receipt for goods and an evidence of the contract of carriage, but it is not a document of title to the goods. Hence, the AWB is non-negotiable. It contains the following details: number of packages

dimensions or volume gross weight shipping marks The goods in the air consignment are consigned directly to the consignee.

AIRWAY BILL (AWB)

On the reverse side of the airway bill are the airlines terms and conditions of carriage whereby an airline is obligated to transport a consignment to its final destination once it has confirmed receipt of the shippers consignment. Airway bill can be comprised in two parts: MAWB (Master Airway bill) shipments sent on a direct basis, not consolidated.

HAWB (House Airway bill) shipments sent on a consolidation basis whereby grouping together various clients consignments under one MAWB being issued by the freight forwarder.

BILL OF EXCHANGE

Bill of Exchange [BE] is a document drawn and is an order by the exporter to the buyer to pay the money in specified exchange. It is also known as a draft. A bill of exchange is accompanied by commercial documents which are presented by a bank and released to the buyer either against payment (at sight) or against a signature for payment on a specified future date. It is an unconditional written order.

BILL OF EXCHANGE

When a BE is drawn on foreign firm it is termed as a foreign draft or bill of exchange.

It is prepared either in an international currency or Indian rupees depending on the terms of the contract. Accordingly, the bill is known by the name of currency in which it is drawn. e.g. a bill drawn in US dollars is known as a Dollar Bill and when drawn in Rupees, it is termed as Rupees Bill.

BILL OF EXCHANGE

Features of a Bill of Exchange:

A bill must be in writing, duly signed by its drawer, accepted by its drawee and properly stamped. The order must be unconditional.

It must contain an order to pay. Words like please pay US $ 5,000 on demand and oblige are not used. The sum payable mentioned must be certain or capable of being made certain. The parties to a bill must be certain.

BILL OF EXCHANGE

The most common versions of a bill of exchange are: A) Sight Draft When the drawer (exporter) expects the drawee (importer) to make payment immediately upon the draft being presented to him.

Unless and until the Draft is received, the Negotiating/ Collecting Bank does not hand over the Shipping documents and the buyer cannot take delivery of goods.

BILL OF EXCHANGE
B) Usance Draft When draft is drawn for payment at a date later than the date of presentation. It may be a fixed future (specific) date or determinable date according to the period of credit viz. 30 days, 60 days or 90 days etc. It is presented to the drawee (importer) who will retire the documents by accepting the draft by putting his signature and date.

BILL OF EXCHANGE

When the payment is received in advance no Bill of Exchange is required to be drawn.

Parties to a bill of exchange i. Drawer who makes the order for making payment. ii. Drawee whom the order to pay is made. iii. Payee whom the payment is to be made.

SHIPPING ADVICE
Shipping advice is prepared so as to provide information the overseas importer about the shipment of goods. This document is sort of intimation to the importer that goods has been shipped to importer as per agreed terms and condition in sales contract and commercial invoice.

LETTER TO BANK FOR PURCHASE/ DISCOUNT/ NEGOTIATION TRADE DOCUMENTS

Bills Negotiation / Bills Discounting allows a seller to obtain financing and receive immediate payment upon shipment of goods, based on trade transaction documents. The bank will negotiate when purchasing a Sight Bill of Exchange and discount when purchasing a Usance Bill Of Exchange. Transactional Process:

After shipping the goods, the seller presents the shipping and/or financial documents to the bank. The bank checks the documents (if accompanied by a Letter Of Credit), purchases them, and credits the net proceeds to the seller's account. The bank then sends the documents to the buyer's bank and claims reimbursement.

Regulatory Documentation Practices in India

REGULATORY DOCUMENTS USED IN INDIA Main & Important Regulatory Documents 1. Shipping Bill / Bill of Export 2. Application for Remission of Excise (ARE I & II) 3. Exchange Control Declaration (SDF/GR / PP/ SOFTEX/ VOP) Forms 4. Bank Realization Certificate 5. Proof of Landing 1. Allied Regulatory Documents 1. Export Application / Dock Challan / Port Trust Copy of Shipping Bill 2. Receipt for Payment of Port Charges 3. Vehicle Chit 4. Freight Payment Certificate 5. Insurance Premium Payment Certificate

SHIPPING BILL / BILL OF EXPORT

Goods cannot be loaded on board the carrier unless document prescribed by the customs authorities. In cases known as bill of export. Bill of Export is also known as Application for Export. obtained. Such permission to exporter is accorded on a permission from the customs authorities has not been

where the goods are sent by sea, this document is known

as Shipping Bill and when goods are sent by land/rail it is

SHIPPING BILL

Shipping Bill normally contains:

the name and address of the importer/consignee and exporter, invoice number and date, name of vessel carrying the goods, name of master or agents, port at which goods are to be discharged, country of final destination, description of goods, quantity details of each case, value of the goods as defined in the Sea Customs Act, number of packages with total weight, marks and numbers, etc.

SHIPPING BILL

Shipping bill is required to be submitted in quadruplicate. If Drawback/DEPB claim is to be made, one additional copy should be submitted. Copies of Shipping Bill are as under:

Customs Copy: For record of Customs Exporters Copy: For record of Exporters/ Exporter may forward it to shipping company. Export Promotion Copy: For office of DGFT. This copy is the most important document for claiming duty Neutralisation/Exemption benefits plus export incentives wherever applicable. Exchange Control Copy: For negotiating the export documents in bank. It is Proof of export for exchange purposes. DEPB Copy: For use in the import cell of customs for registration of licence.

TYPES OF SHIPPING BILL/ BILL OF EXPORT

Shipping Bill: Shipping Bill for export of goods under claim for duty drawback Shipping Bill for export of goods under DEPB Shipping Bill for export of dutiable goods Shipping Bill for export of duty free goods Shipping Bill for export of duty free goods ex-bond ATA Carnet Shipping Bill

Bill of Export: Bill of export for goods under claim for duty drawback Bill of export for export of goods under DEPB Bill of export for dutiable goods Bill of export for duty free goods Bill of export for duty free goods ex-bond ATA Carnet Shipping Bill Form of Bill of Entry to be filed by a passenger intending to take delivery of gold or silver from a customs bonded warehouse in India

COLOR SCHEMES IN PROCESSING OF SHIPPING BILL

Types of Shipping Bill Duty Free Exportable Goods Drawback Claim Shipping Bill Dutiable Goods Shipping Bill DRPB Schemes Shipping Bill Re- Export of Imported Material Shipping Bill or Ex-Bond Color Schemes White Green Yellow Blue Buff Number of Copies 3 copies of the Shipping bill

4 Copies of Shipping Bill 3 copies of the Shipping bill 7 copies of the Shipping bill

4 Copies of Shipping Bill

PROCESSING OF DOCUMENTS IN SHIPPING BILL

Commercial Invoices which contains all relevant particulars like number of packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of goods to be exported. Packing list or cargo manifest mentioning the contents, quantity, gross and net weight of each package of the cargo to be exported. SDF/GR/PP/ forms (in duplicate) for shipment to all the countries. Export Sales Contract, L/C, and Purchase Order of the overseas buyer as the case may be. ARE I & II (both original and duplicate) and commercial invoice/ legalized invoice/ customs invoice (as the case may be). Pre-shipment Inspection/ Examination Certificate of quality control. Certificate of Origin ( if applicable) Technical Literature ( Some times)

BILL OF ENTRY

Bill of Entry is a declaration on a prescribed form by an importer to the customs authorities about the exact nature, precise quantity and value of goods that have landed or entered inwards in the country. Importer request with this document to custom authorities (custodian of cargo) to clear his cargo after having assessed the duty payable on them. Customs authorities examine its accuracy and conformity with the country tariff and regulations.

BILL OF ENTRY

Salient features of a Bill of Entry which is to be presented for clearance of goods for home consumption are mentioned below:

Origin & Vessels Particulars Particulars of the Goods Value Duties Leviable Code Declaration of Importers/Clearing Agents

BILL OF ENTRY

Documents required by customs authorities are required to be submitted to enable them to (a) check the goods (b) decide value and classification of goods and (c) to ensure that the import is legally permitted.

Documents presented to customs along with the Bill of Entry generally include:
Invoice, Packing List, Bill of Lading or Delivery Order, Import Licence(s) / Customs Clearance Permit, Letter of Credit / Bank Draft wherever necessary Insurance Policy, Certificate of Origin etc. GATT declaration form duly filled in Importers / CHAs declaration duly signed

TYPES OF BILL OF ENTRY

Bill of Entry for Home Consumption Bill of Entry for Warehousing Bill of Entry for Ex-bond Clearance for Home consumption EDI Bill of Entry

PROCESSING OF BILL OF ENTRY

The documents that are essentially required are : Invoice Packing List Bill of Lading / Delivery Order GATT declaration form duly filled in Importers / CHAs declaration duly signed Import License or attested photocopy when clearance is under license Letter of Credit / Bank Draft wherever necessary Insurance memo or insurance policy Industrial License if required Certificate of country of origin, if preferential rate is claimed. Technical literature. Test report in case of chemicals Advance License / DEPB in original, where applicable Split up of value of spares, components and machinery No commission declaration

CENTRAL EXCISE CLEARANCE OF EXPORT CARGO

CENTRAL EXCISE CLEARANCE FOR EXPORTS

Export Without Payment of Duty

Export Clearance under Rebate Claims

Export to All countries except Bhutan

Export to Bhutan

Simplified Procedure Under LUT

Export To all Countries Except Bhutan

Export to Bhutan

PROCESSING OF DOCUMENTS ARE/CT/B-1 IS MORE OR LESS SAME IN ALL THE CASES WITH EXCEPTIONS.

APPLICATION FOR REMOVAL OF EXCISE

Application

for Remission of Excise is the export document which is filed for claiming the duty paid on inputs of exported goods. It is to be filed along with shipping bill for the export clearance and exporter shall be prepare five copies of ARE forms to be used at various purposes of duty drawback claims. ARE form is similar to the erstwhile AR.4

PROCEDURE FOR CENTRAL EXCISE

Self

Sealing

in presence of Central Excise Inspector or Superintendent of Central Excise ( Prior Notice) Usually paper of bottle sealing ( saves time / cost ) Ideal for containerized cargo

Certification Basis

APPLICABILITY OF APPLICATION FOR REMOVAL OF EXCISE

FORM A.R.E.-1 Application for removal of excisable goods for export by air/sea/post/land Combined application for removal of goods for export under claim for rebate of duty Application for removal of goods from a factory or a warehouse to another warehouse

FORM A.R.E.-2

FORM A.R.E.-3

ARE-WHO RETAINS WHAT

Original White Buff Pink Duplicate The said superintendent or Inspector of Central Excise shall return to the exporter immediately after the endorsements and signature Sent to the bond sanctioning authority ; either by Post or by handing over to the exporter in a tamper proof sealed cover after posting the particulars in officials records Retain for Official Records The said superintendent or Inspector of Central Excise shall return to the exporter immediately after the endorsements and signature.

Triplicate

Quadruplicate Green Quintuplicate Blue

Optional Copy also know as E.P. Copy The said superintendent or Inspector of Central Excise shall return to the exporter immediately after the endorsements and signature.

MANUFACTURER EXPORTER/ SIMPLIFIED PROCEDURE

FORM UT-1 Letter of undertaking for removal-for export of excisable goods without payment of duty Return for manufacturers following simplified Export procedure Form of declaration for availing benefit of rebate of Central Excise Duty paid on export of goods Statement regarding Export of excisable goods without duty

Return

Rebate Form

Statement

ISSUANCE OF FORM CT- 1 BY EXCISE OFFICIALS

FORM CT-1 Certificate for procurement of excisable goods for export without payment of duty Certificate for procurement of excisable goods for export without payment of duty from EOU Certificate for procurement of excisable goods under Procedure for Export Warehousing Certificate for removal of excisable goods under bond

FORM CT-1

FORM C.T.-2

FORM C.T.-3

PROCESSING OF BONDS FOR EXPORT:

There are six types of bonds for due despatch of goods for export:

B1 (Surety) B1 (Security) B 1 (General Surety) B 1 (General Security) B 1 6(General Surety) B16 (General Security)

TYPES OF DUTIES SAVED UNDER A.R.E.

Duties imposed under Central Excise Act 1944 Duties imposed under Additional Duties of Excise (Goods of Special Importance) 1957 Additional Duties of Excise ( Textiles & Textiles Articles) Act 1978 National Calamity Contingency Duty under section 136/ section 169 of Finance Bill 2004 Special Excise Duty collected under the Finance Bill 2004 Additional Duties levied under 157 of Finance Bill 2004 Education Cess on Excisable Goods Clause 91 & 93 of Finance Bill 2004

AMOUNT OF SECURITY OR BANK GUARANTEE

Manufacturer exporters may execute B-1/B-16 bond with 10% security/bank guarantee. Merchant exporters have to execute B-1 bond with 25% security/bank guarantee. No Bonds from :

Export Houses Star Export Houses Trading houses Star Trading Houses Premier Trading House

Registered exporters (registered with relevant Export Promotion Council).

SUBJECT TO THE CONDITION THAT

The exporters have not come to the adverse notice of the Department in the last three years.

All the formalities required under Central Excise Acts and Rules related to exports are regularly complied with by the exporters. A copy of the registration-cum-membership certificate (RCMC), duly attested by the exporter is submitted.

TYPES OF BONDS
FORM B-1 General bond with surety/security for removal for export of excisable goods without payment of duty Proforma of Running Bond Account in respect of B-1 Bond General Bond (Security)

Proforma for B-1 Bond

FORM B-3

Proforma of B- Proforma of Running Bond Account in respect of B-3 Bond 3 Bond

EXCHANGE CONTROL DECLARATION

The Foreign Exchange Management Act 1999 and subsequent rules has prescribed certain forms to be which they shall be bringing to the country through the exports in following forms. It is to be noted that used by exporters for declaring the foreign exchange declaration has to be made with appropriate forms as Management Act Rules and regulations to RBI.

mentioned below for all exports as per Foreign Exchange

EXPORT DECLARATION FORMS (GR/SDF)

As per the exchange regulations, exporters, wishing to ship goods abroad, are required to submit Export Declaration Forms to the Customs authorities (whenever the value of the shipment exceeds US $ 25,000) before any export of goods from India is made. It is to be filed by exporter stating that export proceeds would be realized within 365 days for non-status holder exporters and higher period for status holder exporters.

CONTENTS DETAILS OF EXPORT DECLARATION FORMS

These forms normally contain:

Name and address of exporter, IEC code number and description of goods. Name and address of authorised dealer through whom the proceeds of the exports have been, or will be, realised. Details of commission due to foreign agent or buyer should be correctly declared. Otherwise, difficulties may arise at the time of remittances of such commission/ payment. An exporter should note this point very carefully. It should be clearly indicated whether the export is on Outright Sale Basis or On Consignment Basis An exporter is required to give analysis of full export value, a break-up of FOB value, freight, insurance, discount, commission, etc. An exporter has to mention the period within which he will realise full export value of transaction. If the shipment is on DA terms, then an exporter has to bring forex within that period. However, normally maximum period allowed is 180 days.

TYPES OF EXCHANGE CONTROL DECLARATION

FORMS
SDF GR Form PP Form In India 95% of trade documentation at Ports at is through EDI. Manual Documentation In 5% of cases; where ICDs/CFSs/LCSs are still manually operating in the case where export is made on 'value payable' or 'cash on VP/COD Form VP/COD for refers to exports made to all countries by parcel SOFTEX FORM Used by the exporters who are into Services Industry; Use on rise with growth of Indias Services Industry channels such as value payable or cash on delivery basis. delivery' basis. post, under arrangements to realize proceeds through postal PP forms refer to exports to all countries by parcel post, except Used in Electronic Documentation;

STATUTORY DECLARATION FORM [SDF]

Procedure for Distribution / disposal of copies of SDF The SDF form should be submitted in duplicate (to be annexed to the relative shipping bill) to the Commissioner of Customs concerned.

After verifying and authenticating the declaration in form SDF, the Commissioner of Customs will hand over to the exporter, one copy of the shipping bill marked Exchange Control Copy in which form SDF has been appended for being submitted to the bank within 21 days from the date of export.

STATUTORY DECLARATION FORM [SDF]

Banks should accept the Exchange Control (EC) copy of the shipping bill and form SDF appended thereto, submitted by the exporter for collection/negotiation of shipping documents.

The manner of disposal of EC copy of shipping Bill (and form SDF appended thereto) is the same as that for GR forms.

BANK REALIZATION CERTIFICATE

Once the export proceeds are realised, the exporter has to prepare Bank Certificate of Export and Realisation for the purpose of claiming export benefits, incentives, etc. It is prepared as per Form No.1, given in Appendix 22A of Handbook of procedures 2004-09 (Vol. I).

To prepare this certificate, the date of realisation is most essential, as the exporters have to apply for the export benefits, incentives, etc. within six months following the month/quarter of the realization month.

BANK REALIZATION CERTIFICATE

It is signed by the authorized signatory of the firm/company with full name in block letters with designation, full official and residential addresses. Bankers attest this certificate as true and correct after verifying the particulars, including the date of mate receipt. This date is the most important, as this is the actual date of export.

DOCUMENTATION FOR BANK REALIZATION CERTIFICATE

It is signed by an authorized signatory of the bank with his name and designation. Bankers affix certificate number and date and also mention the Authorized Foreign Exchange Dealer's Code number allotted to Bank by Reserve bank of India. For this purpose, this certificate must be accompanied with the following documents:

A copy of invoice, A copy of customs attested export promotion copy of the shipping bill, A copy of Bill of Lading/ PP receipt/ Airway bill, A copy of the insurance certificate/Insurance policy/cover.

PROOF OF LANDING FOR REALIZING EXPORT BENEFITS / INCENTIVES

Needed claiming Incentives under FMS & MLFPS of FTP 209-09-14.

PROOF OF LANDING

A self attested copy of import bill of entry filed by importer in specified market, or Delivery order issued by port authorities, or Arrival notice issued by goods carrier, or Tracking report from the goods carrier (Shipping Line/Airline etc. or his accredited agent in India) duly certified by them, evidencing arrival of export cargo to destination Focus Market, or For Land locked Focus Market, Rail/Lorry receipts of transportation of goods from Port to Land locked Focus Market, or Any other documents that may satisfactorily prove to RA concerned that goods have landed in / reached the Focus Market.

TIPS FOR PROPER DOCUMENTATION

Shipping bills must be filed according to the scheme the exporter wants to avail . For example; DEPB /DFIA/Drawback etc. Extra care should be taken when combination of schemes is intended to be used. For example; DEEC Drawback.

Filing of Shipping Bill electronically requires correct entries including HS code for the product. Many times, small mistakes are extremely difficult to correct later on.

Implications of all Regulatory documents must be studied carefully. For example; declaration on ARE1 forms.

Co-relation between customs, excise and DGFT is extremely important. Many times documents do not match with each other, which results in delay or denying of some benefit under one or the other scheme.

TIPS FOR PROPER DOCUMENTATION

Each regulatory document is important from the point of view of claiming various benefits associated with exports. Each document therefore should be carefully looked into as to correctness of the contents, description, quantity, weight, currency, declaration etc.

Maintenance of statutory records: Since most of the schemes are in the nature of the exemption / remission of the duty, documentary compliances are insisted upon by all the government departments. For example; Appendix 23 Consumption register.

Thank You

Merci

Gracias

Danke Schon

Thank You