EXPORT PROCEDURE AND DOCUMENTATIONPROJECT REPORT ONEXPORT PROCEDURE & DOCUMENTATIONSUBMITTED TO UNIVERSITY OF MUMBAI INPARTIAL FULFILLMENT OF THE REQUIREMENTFOR THE AWARD OF BACHELOR OF MANAGEMENT STUDIESACADEMIC YEAR2006 - 20071EXPORT PROCEDURE AND DOCUMENTATIONINDEXSERIALNUMBERCONTENT PAGENUMBER INTRODUCTION 62 HOW TO SET UP AN EXPORT ORGANISATION !" HOW ONE BEGINS TO DO EXPORT ## EXPORT SALES & CONTRACT TERMS &CONGITIONS7$ TERMS OF SHIPMENT % INCOTERMS& 206 PROCESSING AN EXPORT ORDER 277 FINANCIAL RIS' INVOLVED IN FOREIGNTRADE2!! EXPORT DOCUMENTS 2(( OCTROI $"0 QUALITY CONTROL & PRE-SHIPMENTINSPECTION$7 SHIPPING ANG CUSTOMS FORMALITIES 602 SALES TAXES EXEMPTION PROCEDURE 66" METHODS OF RECEIVING PAYMENTSAGAINST EXPORTS6!# THE LETTER OF CREDIT 7$ PREPARATION AND SUBMISSION OFDOCUMENTS FOR BAN' NEGOTIATIONORPURCHASE!!6 SHIPMENT THROUGH COURIERS (7 CUSTOMPROCEDUREFOREXPORTUNDEREDI SYSTEM(2! THE ECGC COVER& 2INTRODUCTION2EXPORT PROCEDURE AND DOCUMENTATIONIndia has a mission to capture 2% of the global share of trade by 20010, upfrom the present level of less than 1%. Export is one of the lucrative business activities inIndia. The government also provides various promotional schemes to the exporters forearning valuable foreign exchange for the country and for meeting their reuirements forimportingmoderntechnologyandessential inputs. !esides, theincomefromexportbusiness is also exempted to the specified extent under the Income Tax "ct, 1#$1, %efundof &entral Excise and &ustom 'uty on export is also made under the 'uty 'ra(bac)*cheme of the +overnment. There is no *ales Tax on products meant for exports.Exports can be of goods (hich can be moved physically from one countryto another or can be of service rendered. 'etailed list of services are given in the ,oreignTrade -olicy covering more than 1$0 items e.g. Insurance, .ospital, -ostal andTelecommunication etc.TWO CLASSES OF EXPORTS)-hysical Exports/ If the goods physically go out of the country or servicesare rendered outside the country then it is called as physical export. 'eemed Exports/0here the goods do not go out of the country physically they can be termed as deemedexports.This(ill besub1ect tocertainconditionsasprescribedbythe'+,T.2nder'eemed Exports, the goods may be supplied to the manufacturer exporter (ho ultimatelyexport a finished product of (hich this supply forms a part and ultimately go out of thecountry. E.g. *upply of fabrics to the garment exporter (ho exports the garments madeout of the said fabric.The governmentmay announce from time to time the types of suppliesthat maybeconsideredasdeemedexport. The,oreign Trade-olicygivesthelist ofsupplies considered under the 'eemed Export &ategory. The policies and procedures aredifferent for -hysical Exports and 'eemed Exports as also the benefits available.In anutshell, 'eemed Exports do not en1oy all the benefits that are available under -hysicalExport. The ,oreign Trade defines exports as ta)ing out of India any goods by land, sea,air. "lthough the act does not term them as 3-hysical Exports4, (e have to put phrase to5EXPORT PROCEDURE AND DOCUMENTATIONdistinguish it from 3'eemed Exports4 (hich is sales in India but considered as exportsfor limited purpose.TYPES OF EXPORTERS/ Exporters can be basically classified into t(o groups ManufacturerExporter:"stheexporterhasthefacilitytomanufacturer theproduct he intends to export and hence he exports the products manufactured byhim. Merchant Exporter: "n exporter (ho does not have the facility to manufacturean item. !ut, he procures the same from other manufacturers or from the mar)etand exports the same. "n exporter can be both a manufacturer exporter as (ell as a merchantexporter, he can export product manufactured by him or he can export items bought fromthe mar)et.6nce it is decided to export, it is mandatory on your part to follo( certainprocedures, rules and regulations as prescribed by various regulatory authorities such as'+,T, %!I, and &ustoms. These procedures, rules and regulations are laid do(n in theExim -olicy 200780#, Exchange &ontrol 9anual, &ustoms "ct etc. "ccordingly Exportdocuments are reuired to be prepared )eeping in vie( of the reuirement of the foreignbuyers and our regulatory authorities. HOW TO SET UP AN EXPORT ORGANISATIONThe proper selection of organi:ation depends upon 7EXPORT PROCEDURE AND DOCUMENTATION "bility to raise finance. &apacity to bear the ris). 'esire to exercise control over the business. ;ature of regulatory frame(or) applicable to anyone If the si:e of the business is small, it (ould be advantageous to form a soleproprietary business organi:ation. It can be set up easily (ithout much expenses and legalformalities. It is sub1ected to only fe( governmental regulations. .o(ever, the biggestdisadvantage of sole proprietorshipbusiness is limitedabilitytoraise funds (hichrestrictsthegro(th. !esidestheo(nerhasunlimitedpersonal liabilities. Inordertoavoid this disadvantage, it is advisable to form a partnership firm.The partnership firm can also be set up (ith ease and economy. !usinesscan ta)e benefit of the varied experiences and expertise of the partners. The liability ofthe partners though1oint andseveral, is practicallydistributedamongst the variouspartners, despite the fact that the personal liability of the partner is unlimited. The ma1ordisadvantageofpartnershipfirmofbusinessorgani:ationisthat conflict amongst thepartners is a potential threat to the business. It (ill not be out of place to mention herethat partnership firms are governed by the Indian -artnership "ct, 1#52 and, thereforethey should be formed (ithin the parameters laid do(n by the "ct. &ompany is anotherformofbusinessorgani:ation, (hichhastheadvantageofdistinct legal identityandlimited liability to the share holders.It can be a private limited company or a public limited company. " privatelimited can be formed by 1ust t(o persons subscribing to its share capital. .o(ever, thenumber of its shareholders cannot exceed &ommission "gent > Indenting "gent i.e. acting on behalf of theseller and charging the &ommission. !uying "gent i.e. acting on behalf of the buyer and charging &ommission. *ervice provider i.e. providing service from India to another country.NAMING THE BUSINESS0hatever form of business organi:ation has been finally decided, namingthe business is an essential tas) for every exporter. The name and style should be soft,attractive, short and meaningful. 6pen a current account in the name of the organisationin(hosenameyouintendtoexport. Itisadvisabletoopentheaccount (ithaban)(hich is authorised to deal in ,oreign Exchange.STRUCTURE OF AN EXPORT ORGANISATION mar)eting manager for generating sales$EXPORT PROCEDURE AND DOCUMENTATION &ommercial manager for loo)ing activities of the execution of the orders. staff personnel for carrying out the day8to8day activities namelyo -reparation of pre 8 shipment documents.o &o8ordinating (ith clearing agents on the progress of the shipment to bemade.o &o8ordinating (ith the (are house?&. excise department regardingpac)ing and clearance of the goods for export.o -reparation of post shipment documents foe ban)s.o ,ollo(8up (ith the ban) on dispatch of documents, receipt of payment,availment of ban) loans etc. Toloo)intothereuirement oflicenses, claimingofexport benefitsfiilingofdocuments (ith the +overnment "uthorities in 'ischarge of Export 6bligations,if any, filing of returns to the various +overnment "gencies (hich are mandatory,prepare and )eep an information ban) of various transaction of the company, theirdomestic as (ell as international competitors. "n office boy for doing leg (or). " clearing and for(arding agent to handle the documents and the goods in thecustoms premises? in the ports of lading.'epending upon the si:e of the business the numbers of personnel undereach category may increase. ,or example if a company is transacting substantial volumeof business in more than one product. Then it is necessary to have mar)eting manager foreachproduct sothat thepersoncanconcentrateonaparticular tradetoenhancethebusiness.REGISTRATION WITH REGIONAL LICENCING AUTHORITIES OBTAINING IMPORTER EXPORTER CODE *IEC+ NUMBER&@EXPORT PROCEDURE AND DOCUMENTATIONThe &ustoms "uthorities (ill no( allo( the exporter to export or importgoods into orfrom India unless he holds a valid IE& number. !efore applying for IE& number it isnecessary to open a ban) account in the name of the company (ith any commercial ban)authori:edtodeal inforeignexchange. Thedulysignedapplicationformshouldbesupported by the follo(ing documents. !an) receipt A in duplicate B > 'emand 'raft for payment of the fees of %s. 1000>8 &ertificate from the ban)er of the applicant firm as per "nnexure 1 to the formgiven. 6ne copy of -"; number issued by Income Tax "uthorities duty attested by theapplicant. 6necopyof -assport *i:ephotographsof theapplicant dulyattestedbytheban)er to the applicant. 'eclaration by the applicant that the proprietor>partners>directors as the case maybe of the applicant company, are not associated as proprietor>partners>directors inany other firm, (hich has been caution, listed by the %!I. 0here the applicantdeclares that they are associated as proprietor>partners>directors in any other firm,(hich has been caution, listed by the %!I, they (ill be allotted IE& ;o. but (ithan additional condition that they can export only (ith %!ICs prior approval andthey should approach %!I for the purpose. Eachimporter>exporter shall bereuiredtofileimporter>exporter profileonce(ith the licensing authority shall enter the information furnished in "ppendix 2 intheir database so as to dispense (ith changes in the information given in"ppendix82, importer>exporter shall intimate the same to the licensing authority.IEC EXEMPT CATEGORIES&DEXPORT PROCEDURE AND DOCUMENTATIONThe follo(ing importer exporter is exempted from the reuirement of IE& code number. 9inistries ? 'epartment of &entral or *tate +overnment. -erson importing orexporting goods fortheir personal usenotconnected (ithtrade or manufacture or agriculture. -ersons importing?exporting goods from?to ;epal E 9yanmar provided the &I,value of single consignment does exceed Indian %s. 2company(ill bevalidfor all its branches>divisionsunits>factories asindicatedintheIE&;o. Import>Export of anycommoditybythatfirm>company. Therebeingnodateofexpiry, theIE&onceallottedisvalidtill it isrevo)ed. !ut, if no import or export is effected in the previous financial year, the same(ill be made inoperative. .o(ever, this can be made operative by a formal reuest to the'+,T.IDENTITY CARD *F,- .,/01.23/4 2-5/65.23,/6 7328 289 ,::3.9 ,: DGFT+)#EXPORT PROCEDURE AND DOCUMENTATION"s it is not al(ays possible for the top man or directors, promoters of the company tovisit '+,Tfreuently. There is a provision of issuance of identity cards to theproprietors>partners>directors and their authori:ed representatives. "n application ofIssuanceofanidentitycardmaybemadeintheformA"ppendix8Ficense>&ertificate>-ermissions may be delivered to the identity card holder and officialsof the Ficensing "uthorityA'+,TBshall not be responsible for any loss etc. In case of lossof an identity card a duplicate card may be issued on the basis of an ,I% E affidavit. Inadditiontoobtainingthe IE&;o. the exporter is alsoreuiredtoobtain!usinessIdentification ;oA!I;B. ,or this exporter is reuired to contact '+,T online on (eb site.The licensing authority issues !I; in coordination (ith customs authorities. This !I; isreuired to be mentioned on the shipping bills at the time of customs clearance of theexport cargo.RCMC *R94362-523,/-C1;-M9;concessions under the ,oreign Trade-olicy, the exporter is reuired to register himself (ith an appropriate export promotionagencybyobtainingregistration8cum8membershipcertificate. A%&9&B. If theexportproduct is that it is not covered by any E-&, %&9& in respect thereof may be issued by,IE6. "n application for registration should be accompanied by a self certified copy ofthe Importer8Exporter &ode number issued by the regional licensing authority concernedand ban) certificate in support of the applicants financial soundness.The %&9& shall bevalid for < years ending 51st 9arch of the licensing year. REGISTRATION WITH SALES TAX AUTHORITIES) +oods that are to be shipped out of the country for export are eligible for exemptionsfrom both *ales Tax and &entral *ales Tax. ,or this purpose, exporter should get himselfregistered (ith the *ale Tax "uthority of is state after follo(ing the proceduresprescribed under the *ales Tax "ct applicable to his state. HOW ONE BEGINS TO DO EXPORT10EXPORT PROCEDURE AND DOCUMENTATION!efore entering into the venture of exports, one must loo) for the product to be exportedand the mar)et (here he intends to export.In case of a manufacturer, obviously he (ould li)e to export the product he manufacturesas is or (ith possible modification as may be reuired by the mar)et. .o(ever, in case ofa merchant exporter or a trader, one has to identity the product to export. If the exporter isalready in the trade in the domestic mar)et and is familiar (ith the product it (ould be anadvantage to export the said product of (hich he has reasonable )no(ledge.!eforeselectingaproduct, onemust simultaneouslymadeastudyandfindout theprospective mar)et.,or finding out the mar)et for the selected product, the follo(ingmethods (ill help. +et statistical information as to imports of the product by various countriesand their gro(th prospects in the respective countries "pproach the chamber of commerce for their guidance to find out the mar)et. "pproach the Export -romotion &ouncil dealing in the product of selection toget more information.The Preliminary6nce you are ready (ith the product you (ish to export and have found the mar)et forthe same, you are ready to proceed further. ,ollo(ing seuences can be follo(ed/ "ny one, (ho (ishes to export, must first of all get an Importer ExporterCode Number (IE Code).This can be obtained by ma)ing a formalapplicationtotheofficeoftheReional !irectorate"eneral of#oreinTrade (!"#T). "etyour$elfrei$tered%iththerelatedExportPromotionCouncilandbecome a member. &l$o arrane to obtain Rei$tration'Cum'Member$hipCertificate (RCMC) from the council. This has t(in ob1ectives/o 2nder the ,oreign Trade -olicy, it is mandatory that an exporter gets himregistered (ith the Export -romotion &ouncil to avail of various exportfacilities.11EXPORT PROCEDURE AND DOCUMENTATIONo !eing a member, you (ill have access to all the information relating to theproduct that could be made available by the councilo 9anyforeignbuyerssendtheirenuiriesfortheimportstotheExport-romotion &ouncil. .ence you (ill have fe( customers interested in yourproduct. Ifyouareamanufacturer, findout theprovisionsundertheEGI9-olicyofgetting the ra( materials duty free. +et familiar (ith the excise formalities as goods meant for export can be cleared(ithout payment of &. Excise duty on the finished product sub1ect to complianceof certain formalities. 2nderstandthelocal government regulations inrelations totheexport of theproduct. +et information of the governmentCs regulations of the importing country as torestrictionsontheuantity,product specification, pac)ingregulations, customsregulations, reuirement of specific documents>information etc. "vailability of Hessels>"irlines, the transport charges, freuency of operation etc., To loo) for a &ustom .ouse "gent A&."B Aalso )no( as freight for(arders orclearing agentsB for handling the documents>cargo in the customs. If the product is covered underany uota regulation, find out the agency>council(hoarehandlingtheuotadistributionfortheproduct andtheavailabilityofuota for exports.FINDING A CUSTOMS6nce you have selected the mar)et, the next step is to find a prospective customer.This you can get ,rom the directory of importers of the country !y (riting to the Embassy of India in that country for assistance !y (riting to the chamber of commerce of that country !y means of participation in a ,air>Exhibition abroad either directly or throughthe Export -romotion &ouncil12EXPORT PROCEDURE AND DOCUMENTATION !y participating in international fair if organi:ed locally Through the personal contacts in that country. !y these processes one can onlyhave the list of customers. 6ne has to dialogue or correspond (ith thesecustomers bysendingsamples, getting feedbac) fromthe customers etc. toultimately select the customer (ith (hom to deal (ith. It is necessary to )no( thefinancial standingof the company(hichcanbe obtainedthroughthe ban)channel or through the office of E&+&.NEGOTIATING CONTRACT&6nce the prospective customer is found, the business deal has to be concluded. Thefollo(ing aspects may be considered before entering into a final contract(ith thebuyer. &redit 0orthiness of the &ustomer. "vailability of the *teamer>"irlines and the freuency The freight charges The full product specification The uantity, -rice Terms of -ayment Type of pac)ing and mar)ings on the pac)ages 9ode of shipment E *hipment schedule Tolerance of uantity to be shipped 'ocumentation reuirement for the customer 'ocumentation reuirement of the government of importing country &ompliance of the local governmental rules and regulations!efore entering into contract one should ta)e note of the above factors. 0hile these areindicative, the reuirements (ill vary from country to country, product to product andbuyer to buyer.15EXPORT PROCEDURE AND DOCUMENTATIONEXPORT SALES & CONTRACT TERMS & CONDITIONSHeryoftenexportersdonotenterintoanyformal contract andfinali:ethetradedealthrough the exchange of letters, cable, telex etc. It is, ho(ever, expedient that the partiesAexporters E importersB incorporate all important terms E conditions of their trade deal inaseparatedocument orcontract that (ill avoiddisputesarisingout ofuncertaintyorambiguity. Export contract may be sent in duplicate along (ith the -roforma Invoice tothe overseas buyer.NATURE OF INTERNATIONAL TRADE COUNTRACTS&There arecertain, peculiar characteristicsofinternational tradecontract(hich arenotpresent in those for sales of goods in the domestic mar)et0hereas theparties toadomestic tracecontract normallyneeds onlyagreeontheelements (hich are necessary for their particular trade transactions li)e price, description,uality and uantity of goods, delivery terms etc the situation (ill be uite different (henthebuyer andtheseller tosale>purchasecontract belongtodifferent countries. Theparties to all international trade contracts provide all their relative rights and obligationsin several (ays,or example, they may agree to adopt either the Fa( of the country of the buyer or thatof the seller. The traders are normally reluctant to leave the determination of the rightsand obligations by implications under the legal system of eitherCs country. They prefer toma)e explicit provisions regardingtherights andobligations byincludinga set ofdetailed and precise terms and conditions in their contract.EXPORT OF SAMPLES>GIFTS&Exports of bonafidetradeandtechnical samples of freelyexportableitems shall beallo(ed(ithout anylimit. +oodsincludingedibleitems of valuenot exceeding%s.17EXPORT PROCEDURE AND DOCUMENTATION100000>8 inalicensing year,maybe exportedas agift..o(ever itemsmentionedasrestricted for exports in IT&A.*B shall not be exported as a gift (ithout alicence>certificate>permission, except in the case of edible items.STANDARD CONTRACT FOMS);ot(ithstanding the efforts made by various national>international organi:ations li)e the2nited ;ations &ommission on the International Trade Fa(, there is still no perfection oradevice(hich(ouldgivethepartiesanaccurateandcompleteideaofeachothersunderstandingofvarioustradeterms, thecommercial practicesandtherightsandtheobligations vis8I8vis each other so that the misunderstandings are practically eliminated.;evertheless, the Indian &ouncil of "rbitration published in 1#$$ a boo)let on 3*tandard&ontract ,orms and 9odel "rbitration &lause for use in ,oreign Trade &ontracts4. It (asrevisedandreprintedin1#$#and1#@@. Itcanbereferredtobyexporterforvariousclause to be incorporated in the Export &ontract.ENTERING INTO AN EXPORT CONTRACT Inorder toavoiddisputes, it is necessarytoenter intoanexport contract (iththeoverseas buyer. ,or this purpose, export contract should be carefully draftedincorporating comprehensive but in precise terms, all relevant and important conditionsof the trade deal.There should not be any ambiguity regarding the exact specifications of goods and termsof sale including export price, mode of payment, storage and distribution methods, typeof pac)aging, port of shipment, delivery schedule etc. The different aspects of an exportcontract are enumerated as under/ -roduct, *tandards and *pecifications Juantity Inspection Total Halue of &ontract 1or payment of import customs duties and taxes and>or other costs and ris)sat thebuyerCsend, for examplethetradeterms'E6A'eliveryExJuayB and''-A'elivered 'uty -aidB1@EXPORT PROCEDURE AND DOCUMENTATIONJuite often, the charges and expenses at the buyerCs end may cost more to the seller thananticipated. To overcome losses, hire a reliable customs bro)er or freight for(arder in theimporting country to handle the import routines.*imilarly, it (ould be best for importers not to deal in EG0 AEx 0or)sB (hich (ouldhold the buyer responsible for the export customs clearance, payment of export customscharges and taxes, and other costs and ris)s at the sellerCs endMORE CLARIFICATION ON INCOTERMSE)* +,the named place-Ex*or.$:Exmeansfrom. 0or)smeansfactory, mill or(arehouse, (hicharethesellerCs premises. EG0 applies to goods available only at the sellerCspremises. !uyer isresponsible for loading the goods on truc) or container at the sellers premises and for thesubseuent costsandris)s. Inpractice, it isnot uncommonthat thesellerloadssthegoods on truc) or container at the sellers pre7mises (ithout charging loading fee. ; theuotation, indicate the named place Asellers premisesB after the acronymEG0forexample EG0 Mobe and EG0 *an "ntonio.The termEG0is commonly used bet(een the manufacturer AsellerB and export8traderAbuyerB, andtheexport8traderresellsonothertradetermstotheforeignbuyers.*ome manufacturers may use the term Ex ,actory, (hich means the same as Ex 0or)s.#C& +,the named point of departure- #reeCarrier:Thedeliveryof goodsontruc), rail car or container at thespecifiedpointAdepotB of departure, (hichisusuallythesellers premises, oranamedrailroadstation or a named cargo terminal or into the custody of the carrier, at sellers expense.ThepointAdepotB at originmayor maynot beacustoms clearancecentre. !uyer isresponsible for the main carriage>freight, cargo insurance and other costs and ris)s.In the air shipment, technically spea)ing, goods placed in the custody of an air carrier areconsidered as delivery on board the plane. In practice, many importers and exporters still1DEXPORT PROCEDURE AND DOCUMENTATIONuse the term ,6! in the air shipment.The term ,&" is also used in the %6>%6 Arollon>roll offB servicesIn the export uotation, indicate the point of departure AloadingB after the acronym ,&",for example ,&" .ong Mong and ,&" *eattle. *ome manufacturers may use the formerterms ,6T A,ree on Truc)sB and ,6% A,ree on %ailB in selling to export8traders.#&/ +,the named port of oriin-#ree &lon$ide /hip: +oods are placed in the doc) shed or at the side of the ship, on thedoc) or lighter, (ithin reach of its loading euipment so that they can be loaded aboardthe ship, at sellerCs expense. !uyer is responsible for the loading fee, maincarriage>freight, cargoinsurance, andother costs andris)s Inthe export uotation,indicate the port of originAloadingBafter the acronym ,"*, for example ,"* ;e( =or)and ,"*!remen.The,"*termis popularin the brea)8bul)shipmentsand(ith theimporting countries using their o(n vessels.#01 +,the named port of oriin)#ree on 1oard: The delivery of goods on the board the vessel at the named port of originAFoadingB at sellerCs expense. !uyer is responsible for the main carriage>freight, cargoinsurance and other costs and ris)s. In the export uotation, indicate the port of originAloadingB after the acronym ,6!, for example ,6! Hancouver and ,6! *hanghai.2nder the rules of the I;&6TE%9* 1##0, the term ,6! is used for ocean freight only..o(ever,inpractice, manyimportersandexportersstill usetheterm,6!intheairfreight. In ;orth "merica, the term ,6! has other applications. 9any buyers and sellersin &anada and the 2*"dealing on the open account and consignment basis areaccustomed to using the shipping terms ,6! 6rigin and ,6! destination.,6! 6rigin means the buyer is responsible for the freight and other costs and ris)s. ,6!'estination means the seller is responsible for the freight and other costs and ris)s untilthe goods are delivered to the buyerCs premises (hich may include the import custom1#EXPORT PROCEDURE AND DOCUMENTATIONclearance andpayment of import customs duties andtaxes at the buyerCs country,depending on the agreement bet(een the buyer and seller. In international trade, avoidusing the shipping terms ,6! 6rigin and ,6! 'estination,(hich are not part of theI;&6TE%9* AInternational &ommercial TermsB.C#R +,the named port of de$tination-Co$t and #reiht: The delivery of goods to the named port of destination AdischargeB atthesellers expenses.!uyerisresponsible for thecargo insuranceand othercostsandris)s. The term&,%(as formerly(rittenas &E,. 9anyimporters andexporters(orld(ide still use the term &E,.Intheexport uotation, indicatetheport ofdestinationAdischargeBaftertheacronym&,%, for example &,% Marachi and &,% "lexandria. 2nder the rules of theI;&6TE%9* 1##0, the term &ost and ,reight is used for ocean freight only. .o(ever,in practice, the term &ost and ,reight A&E,B is still commonly used in the air freight.CI# +,named port of de$tination-Co$t2 In$urance and #reiht: The cargo insurance and delivery of goods to the namedport of destination AdischargeB at the sellerCs expense. !uyer is responsible for the importcustoms clearance and other costs and ris)s.In the export uotation, indicate the port of destination AdischargeB after the acronym &I,,for example &I, -usan and &I, *ingapore. 2nder the rules of the I;&6TE%9* 1##0,the term &I,I is used for ocean freight only. .o(ever, in practice, many importers andexporters still use the term &I, in the air freight.20EXPORT PROCEDURE AND DOCUMENTATIONCPT +,the named place of de$tination-Carriae Paid To: The delivery of goods to the named port of destination AdischargeB atthe sellers expenses. !uyer assumes the cargoinsurance, import customclearance,payment of custom duties and taxes, and other costs and ris)s. In the export uotation,indicate the port of destination AdischargeB after the acronym &-T, for example &-T Fos"ngeles and &-T 6sa)a.CIP +, the named place of de$tination)Carriae and In$urance Paid To: The delivery of goods and the cargo insurance to thenamed place of destination AdischargeB at sellerCs expense. !uyer assumes the importercustoms clearance, payment of customs duties and texes, and other costs and ris)s.In the export uotation,indicate the place of destination AdischargeB after the acronym&I-, for example &I- -aris and &I- "thens.! +, the name$ point at frontier-!eli3ered &t #rontier:The delivery of goods to the specified point at the frontier atsellers expense. !uyer is responsible for the import custom clearance, payment of customduties and taxes, and other costs and ris)s. In the export uotation, indicate the point at frontier AdischargeB after the acronym '",,for example '", !uffalo and '", 0elland.!E/ +,named port of de$tination-!eli3eredEx/hip:Thedeliveryofgoodsonboardthevessel at thenamedport ofdestinationAdischargeB at sellers expense. !uyer assumes theunloadingfree, importcustoms clearance, payment of customs duties and taxes, cargo insurance, and other costsand ris)s.21EXPORT PROCEDURE AND DOCUMENTATIONIntheexportuotation, indicatethe-ortofdestinationAdischargeBaftertheacronym'E*, for example 'E* .elsin)i and 'E* *toc)holm.!E4 +, the named port of de$tination!eli3ered Ex 4uay: The delivery of goods to the Juay Athe portB at the destination atbuyersexpense. *ellerisresponsiblefortheimporter customsclearance, payment ofcustoms duties and taxes, at the buyers end. !uyer assumes the cargo insurance and othercosts and ris)s. In the export uotation, indicate the -ort of destination AdischargeB afterthe acronym 'EJ, for example 'EJ Fibreville and 'EJ 9aputo.!!5 +, the named point of de$tination-!eli3ered !uty 5npaid: The delivery of goods and the cargo insurance to the final pointatdestination, (hich is often the pro1ect site or buyers premises at sellers expense. !uyerassumes the import customs clearance, payment of customs duties and taxes. The sellermay opt not to insure the goods at his>her o(n ris)s.In the export uotation, indicate the point of destination AdischargeB after the acronym''2 for example ''2 Fa -a: and ''2 ;Cd1amena.!!P +, the named point of de$tination)!eli3ered !uty Paid: The seller is responsible for most of the expenses (hich includethe cargo insurance, import custom clearance, and payment of custom duties, and taxes atthe buyers end, and the delivery of goods to the final point of destination, (hich is oftenthe pro1ect site or buyers premise.The seller may opt not to insure the goods at his>hero(n ris). In the export uotation, indicate the point of destination AdischargeB after theacronym ''-, for example ''- !u1umbura and ''- 9babane.22EXPORT PROCEDURE AND DOCUMENTATION6E('term2(#('term2 6C('term7(!('term:Incoterms 2000, li)e its immediatepredecessor, groups the term in four categories denoted by the first letter in the three8letter abbreviation. 2nder the 6E('TERM (E)*), the seller only ma)es the goods available to thebuyer at the sellerCs o(n premises. It is the only one of that category. 2nder the 6#('TERM A,&", ,"*, E,6!B, the seller is called upon to deliver thegoods to a carrier appointed by the buyer. 2nder the6C('TERMA&,%, &I,, &-T, E &I-B, the seller has to contract forcarriage, but (ithout assuming the ris)of loss or damage to the goods oradditional cost due to events occurring after shipment or discharge. 2nder the 6!('TERM A'",, 'EJ, 'E*, ''2 E ''-B, the seller has to bear allcosts and ris)s needed to bring the goods to the place of destination."ll termslist thesellerCsandbuyerCsobligations. Therespectiveobligations ofbothparties have been grouped under up to 10 headings (here each heading on the sellerCsside 3mirrors4 the euivalent position of the buyer. Examples are 'elivery, Transfer ofris)s, and 'ivision of costs. This layout helps the user to compare the parties respectiveobligations under each Incoterms. 25EXPORT PROCEDURE AND DOCUMENTATIONPROCESSING AN EXPORT ORDER=ou should not be happy merely on receiving an export order. =ou should firstac)no(ledge the export order, and then proceed to examine carefully in respect of Items *pecification -re8shipment inspection -ayment conditions *pecial pac)aging Fabeling and mar)eting reuirements *hipment and delivery date 9arine insurance 'ocumentation reuirement etc. If you are satisfied on these aspects, a formal confirmation should be sent to the buyer,other(iseclarificationshouldbesought fromthebuyer beforeconfirmingtheorder."fter confirmation of the export order immediate steps should be ta)en forprocurement>manufacture of the export goods. In the mean(hile, you should proceed toenter into a formal export contract (ith the overseas buyer.!efore accepting any order necessary home(or) should have been done as to availabilityof the production capacity, ra( material e.t.c. It (ould be in the interest of the exporter toloo) into entering into for(ard contract to safeguard against exchange rate fluctuations.Ensure that the mode of payment is also agreed upon. In case of shipment against letter of27EXPORT PROCEDURE AND DOCUMENTATIONcredit, the buyer should be advised to open the credit (ell in advance before effecting theshipment.FINANCIAL RIS'S INVOLVED IN FOREIGN TRADE"sanexporter(hilesellinggoodsabroad, youencountervarioustypesofris)s. Thema1or ris)s (hich you have to undergo are as follo(s/ &redit %is) &urrency %is) &arriage %is) &ountry %is)=ou can protect yourself against the above ris)s by initiating appropriate steps.Credit Ri$.$ :=ou can cover your credit ris) against the foreign buyer by insisting upon opening a letterofcreditinyourfavour. "lternativelyonecanavailofthefacilityofferedbyvariouscredit ris) agencies. " specific insurance cover can also be obtained from E&+& AExports&redit E +uarantee &orporationB to cover your country ris) besides covering credit ris).Currency Ri$.$:"sregardscoveringthecurrencyris), duetotheexchangeratefluctuations, youcanreuest your ban)er to boo) a for(ard contract.Carriae Ri$.:2supplier of the goods.! A1A3?35-B D,.1;9/26)These documents generally form the basic documents basedon (hich the commercial and or regulatory documents are prepared. These documentsalsodonot have anyfixedformats andthe number of suchdocuments (ill (aryaccording to individual reuirements.8. P-,:,-;5 I/@,3.9) The starting point of the export contract is in the form of offermade by the exporter to the foreign customer. The offer made by the exporter is inthe form of a proforma invoice. It is a uotation given as a reply to an inuiry. Itnormally forms the basis of all trade transactions.C,/29/26 ,: P-,:,-;5 I/@,3.9 ;ame and address of the exporter. ;ame and address of the importer. 9ode of transportation, such as *ea or "ir or 9ultimodal transport. ;ame of the port of loading. ;ame of the port of discharge and final destination. -rovisional invoice number and date. ExporterNs reference number. !uyerNs reference number and date. ;ame of the country of origin of goods. ;ame of the country of final destination. 9ar)s and container number. . ;umber and pac)ing description. 'escription of goods giving details of uantity, rate and total amount interms of internationally accepted price uotation. *ignature of the exporter (ith date. I;=,-25/.9 ,: P-,:,-;5 I/@,3.95@EXPORT PROCEDURE AND DOCUMENTATION It forms the basis of all trade transactions. It may be useful for the importer in obtaining import licence or foreignexchange.9. I/23;523,/:,- I/6=9.23,/)0henever the consignment reuires the pre8shipment inspection, necessary application is to be made to the concernedinspection agency for conducting the inspection and issue of certificate thereof.:. D9.?5-523,/ ,: I/61-5/.9) 0here the contract terms reuire that the insuranceto be covered by the exporter, the shipper has to give details of the shipment to theinsurance company for necessary insurance cover. The detailed declaration (illcover/ ;ame of the shipper ? exporter. ;ame E address of buyer. 'etailsofgoodssuchaspac)ages, uantity, valueinforeigncurrency as (ell as in Indian %s. Etc. ;ame of the Hessel ? "ircraft. Halue for (hich insurance to be covered.=. A==?3.523,/ ,: 289 C9-23:3.529 O-343/)In case the exporter has to obtain&ertificateof 6riginfromtheconcernedauthorities, anapplicationhastobemade tothe concernedauthority(ithreuireddocuments. 0hile thesimpleinvoice copy (ill do for getting &?6 from the chamber of commerce, in respect ofobtained the same from the office of the Textile &ommittee or Export -romotion&ouncil, the documents reuirement are different.>. M529D6 R9.93=2/ 9ateNs receipt is a receipt issued by the &ommanding 6fficer ofthe ship (hen the cargo is loaded on the ship. The mateNs receipt is a prima facieevidence that goods are loaded in the vessel. The mateNs receipt is first handedovertothe-ortTrust"uthorities."fterma)ingpayment ofall port dues, theexporter or his agent collects the mateNs receipt from the -ort Trust "uthorities.The mateNs receipt is freely transferable. It must be handed over to the shipping5DEXPORT PROCEDURE AND DOCUMENTATIONcompany in order to get the bill of lading. !ill of lading is prepared on the basis ofthe mateNs receipt. TB=96 ,: M529D6 R9.93=26 Clean MateC$ Receipt: ' The &ommanding 6fficer of the ship issues a cleanmateNs receipt, if he is satisfied that the goods are pac)ed properly and there isno defect in the pac)ing of the cargo or pac)age. 4ualifiedMateC$ Receipt: 'The&ommanding6fficer of theshipissuesualifiedmateNs receipt, (henthegoods arenot pac)edproperlyandtheshipping company does not ta)e any responsibility of damage. to the goodsduring transit. C,/29/26 ,: M529D6 R9.93=2 ;ame and logo of the shipping line. ;ame and address of the shipper. ;ame and the number of vessel. ;ame of the port of loading. ;ame of the port of discharge and place of delivery. 9ar)s and container number. -ac)ing and container description. Total number of containers and pac)ages. 'escription of goods in terms of uantity. &ontainer status and seal number. +ross (eight in )g. and volume in terms of cubic meters. *hipping bill number and date. *ignature and initials of the &hief 6fficer.S34/3:3.5/.9 ,: M529D6 R9.93=25#EXPORT PROCEDURE AND DOCUMENTATION It is an ac)no(ledgement of goods received for export on board the ship. It is a transferable document. It must be handed over to the shipping companyin order to get the bill of lading. !ill of lading, (hich is the title of goods, is prepared on the basis of the mateNsreceipt. It enables the exporter to clear port trust dues to the -ort Trust "uthorities.0btainin MateC$ Receipt Thegoods arethenloadedonboardtheshipfor (hichthe9ateor the&aptain of the ship issues 9ateNs %eceipt to the -ort *uperintendent. ?. S83==3/4,-09-)it is issuedbythe*hipping>&onference Fineintimatingtheexporter about the reservation of space for shipment of cargo (hich the exporterintends to ship. 'etails of the vessel, poet of the shipment, and the date on (hichthegoodsaretobeshippedarementioned.Thisorderenablestheexportertoma)e necessary arrangements for customs clearance and loading of the goods.@. S83==3/4 I/62-1.23,/6) at the pre8shipment stage, (hen the documents are to senttothe&." forcustomsclearance, necessaryinstructionsaretobegive(ithrelevance to Theexport promotionschemeunder(hichgoodsaretobeexported. ;ameof thespecificvessel on(hichthegoodsaretobeloaded. If goods are to be ,&F or F&F. If freight amount are to be paid > collected. If shipment are covered under ".%.E.81 procedure. Instructions for obtaining !ill of Fading etc.A. B5/C ?9229- :,- /94,23523,/ ,: 0,.1;9/26) at the post shipment stage, the exporterhas to submit the documents to a ban) for negotiation or discounting or collection70EXPORT PROCEDURE AND DOCUMENTATIONfor for(arding the same tothe customer and alsofor reali:ation of exportproceeds. The ban) letter is the set of instruction for the ban) as to ho( to handlethe documents by them and by the ban) at the buyerCs country (hich may include ;ame and address of the buyer. 'etails of various documents being sent and the number of thecopies thereof. ;ame and address of the buyerCs ban) if available. If the documents are sent F>& or on open terms. If the proceeds are to ad1usted against any pre8shipment pac)ingcredit loan. If the bill amount is to be ad1usted against any for(ardexchange cover. In case of credit bill (ho has to bear the interest, either exporteror if the same is to be collected from the buyer. Instructions in case non8acceptance>non8payment by the buyer.C& R941?52,-B D,.1;9/2) %egulatory pre8shipment export documents are prescribed bythedifferent government departmentsandbodiesinordertocomply(ithvariousrules and regulations under the relevant la(s governing export trade such as exportinspection, foreign exchange regulation, ex port trade control, customs, etc. 6ut of #regulatory documents four have been standardised and aligned.These are shippingbill or bill of export, exchange control declaration A+% fromB, export application doc)challan or port trust copy of shipping bill and receipt for payment of port charges.8. S83==3/4 B3??)*hipping bill is the main customs document, reuired by thecustoms authorities forgrantingpermission fortheshipmentofgoods. Thecargois movedinsidethedoc)areaonlyafter theshippingbill is dulystamped, i.e. certified by the customs. *hipping bill is normally prepared infive copies/871EXPORT PROCEDURE AND DOCUMENTATION &ustoms copy. 'ra(bac) copy. Export promotion copy. -ort trust copy. ExporterNs copy.TB=96 ,: S83==3/4 B3??!ased on the incentives offered by the government, customs authorities have introducedthree types of shipping bills/8 !ra%bac./hippin1ill:''ra(bac)shippingbill isuseful forclaimingthecustoms dra(bac) against goods exported. !utiable /hippin 1ill/ 8 'utiable shipping bill is reuired for goods (hich aresub1ect to export duty. !uty'free /hippin 1ill: ''uty8free shipping bill is useful for exporting goodson (hich there is no export duty.In order to facilitate easy recognition and uic) processing, follo(ing colours have beenprovided to different )inds of shipping bills /Type$ of ood$ 1y /ea 1y &ir'ra(bac) shipping bill +reen +reen'utiable shipping bill =ello( -in)'uty8,ree shipping bill 0hite -in)C,/29/26 ,: S83==3/4 B3?? ;ame and address of the exporter. ;ame and address of the importer. ;ame of the vessel, master or agents and flag. ;ame of the port at (hich goods are to be discharged. &ountry of final destination.72EXPORT PROCEDURE AND DOCUMENTATION 'etails about pac)ages, description of goods, mar)s and numbers, uantity anddetails of each case.,6! price and real value of goods as defined in the *ea &ustoms "ct. 0hether Indian or foreign merchandise to be re8exported Total number of pac)ages (ith total (eight and value.S34/3:3.5/.9 ,: S83==3/4 B3??a) *hippingbill is themaincustoms document, reuiredbythecustomsauthorities for granting permission for the shipment of goods.b) The cargo is moved inside the doc) area only after the shipping bill is dulystamped, i.e. certified by the customs.c) 'uly endorsed shipping bill is also necessary for the collection of exportincentives offered by the government.d) It is useful to the &ustoms "ppraiser (hile determining the actual value ofgoods exported.9. A&R&E&:,-; *C9/2-5? 9A.369+) this form "%E81 is prescribed under &entralExcise rules for export of goods. In case goods meant for export are cleareddirectlyfromthe premises of a manufacturer, the exporter canavail thefacility of exemption from payment of terminal excise duty. The goods may becleared for export either under claim for rebate of duty paid or under bond(ithout payment of duty. In both the events the goods are to be cleared underform ".%.E81 (hich (ill sho( the details of the goods being exported, therelevant duty involved and if the duty is paid or goods being cleared underbond, details of goods being sealed either by the exporter or &entral Exciseofficials etc.:. EA.85/49 C,/2-,? 09.?5-523,/ F,-; *GREPPESOFTEX+) under the exchangecontrol regulations all exporters must declare the details of shipment formonitoring by the %eserve !an) of India. ,or this purpose, %!I hasprescribed different forms for different types of shipments li)e +%I, -- formsetc. These declaration forms must be presented to the customs officials at the75EXPORT PROCEDURE AND DOCUMENTATIONtime of passing of export documentation. 2nder the E'I processing ofshipping bill in the customs, these forms have been dispensed (ith and a ne(form *', has to be submitted to the customs in the place of above forms.=. EA=,-2 A==?3.523,/) this is the application to be made to the customs officialsbefore shipment of goods. The prescribedformof the applicationis the*hipping !ill>!ill of Export. 'ifferent types are reuired for shipment li)e ex8bond, dutyfreegoods, anddutiablegoods andfor export under differentexport promotion schemes such as claims for duty dra(bac) etc.>. V983.?9 T3.C92EC5-2 T3.C92EG529 P566 92.&)before the goods are being ta)eninside the port for loading, necessarypermission has tobe obtainedformoving the vehicle into the customs area. This permission is granted by the-ort Trust "uthority. This document (ill contain the detail of the export cargo,nameandaddressoftheshippers, lorrynumber,mar)sandnumberofthepac)ages, driverCs licence details etc.?. B5/C C9-23:3.529 ,: R95?36523,/) this is the form prescribed under the ,oreignTrade -olicy, (herein the negotiating ban) declares the fob value of exportsandfor thedateof realisationof theexport proceeds. This certificate isreuired fore obtaining the benefit under various schemes and this value offob is rec)oned as fob value of exports.D&O289- D,.1;9/2) B?5.CL362 C9-23:3.529)it certifies that theship>aircraft carryingthecargo has not touched the particular country on its 1ourney or that thegoods are not from the particular country. This is reuired by certainnations (ho have strained political and economical relations (ith theso called 3!lac) Fisted &ountries4. L5/41549 C9-23:3.529) Importers in the European &ommunity reuire alanguage certificate along (ith the +*- certificate in respect ofhandloomcotton fabrics classifiable under ;"9EGcode -->*6,TEGB,or *',. &ertificate of Inspection. Harious declarations reuired as per custom procedure.7$EXPORT PROCEDURE AND DOCUMENTATIONEA.85/49 C,/2-,? D9.?5-523,/ F,-;)all exports to (hich the reuirement ofdeclaration apply must be declared on appropriate forms as indicated belo( unless theconsignment is of samples and of L;o &ommercial HalueC GR FORM) to be completed in duplicate for exports other(ise than bypost including export of soft(are in physical formi.e. magnetictape>discs and paper media. SDFFORM)to be completed in duplicate and appended to the*hipping !ill for export declare to the customs offices notified by the&entral +overnment (hich have introduced E'I system for processing*hipping !ill. PP FORM) to be completed in duplicate for export by post. SOFTX) to be completed in triplicate for export of soft(are other(isethan in the physical form i.e. magnetic tapes>discs and paper media.T8969 :,-;6 5-9 5@53?5