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Course Code : MBA 365
Course Title : International Trade Procedures & Documentation
MODULE III - Export Import Documents
Credit units : 03
INTERNATIONAL BUSINESS – MBA TRIM 3
04/27/23 1Prepared by Sudhir Pasricha
INTERNATIONAL BUSINESS – MBA TRIM 3
04/27/23 2Prepared by Sudhir Pasricha
Learning Objectives:
Learning the importance and procedural & documentation aspects of export-import of goods and services ;
Knowledge of governments, departments, international institutions involved ;
How an Export Manager to develop a systematic methodology to handle exports ;
Understand the relevance and importance of various government policy measures for export as well as import.
MODULE III - Export Import Documents
INTERNATIONAL BUSINESS – MBA TRIM 3
04/27/23 3Prepared by Sudhir Pasricha
MODULE III - Export Import Documents
Contents Module III: Export/Import Documents
How to make Commercial, Financial, Transport, Title, Official, Insurance, Export assistance Documents
& Certificates for Exports.
Ensuring error-free export documentation as per L/C. How to open L/C,
Apply for license and make Customs/ Sales Tax documents for imports.
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MODULE III - Export Import Documents
Commercial Invoice
An invoice is very important as it contains the names of the exporter, importer, and the
consignee, and the description of goods. It has to be prepared & signed by the exporter. Other
documents are prepared by deriving information from the invoice. It is required to be
presented before different authorities for different purposes.
Bills of Exchange
It is an instrument in writing, containing an order, signed by the maker , directing a certain person to pay a
certain sum of money only to the order of a person to the bearer of the instrument. It is commonly known
as a draft.
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MODULE III - Export Import Documents
Consular Invoice
This invoice is needed to be submitted for certification to the embassy of the country concerned.
Its main purpose is to enable the importer’s country to collect accurate and authenticated
information about the value, volume, quantity, source etc. of the import for assessing import
duties and for statistical purposes. It helps the importer to get goods cleared through customs
without any undue delay.
Packing List
This statement gives the packing details of goods in a prescribed format. It is a very useful
document for customs at the time of examination and for warehouse keeper of the buyer to
maintain a record of inventory and to effect delivery.
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MODULE III - Export Import Documents
Transport Documents
Ocean (marine) Bill of Lading
This document is issued by the shipping company acknowledging the receipt of the goods
mentioned in the bill, for shipment on board of the vessel. The B/L is the legal document to be
referred in case of any dispute over the shipment.
Airway Bill
This receipt issued by an airlines company or its agent for carriage of goods is a contract between the
owner of the goods and the carrier. It should indicate freight pre-paid or freight to collect. The first
three digits of the Airway Bill Number represents the code, which identifies the carrier.
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MODULE III - Export Import Documents
Multimodal / Combined transport) Is the transportation of goods under a single contract, but performed
with at least two different means of transport; the carrier is liable (in a legal sense) for the entire carriage,
even though it is performed by several different modes of transport (by rail, sea and road, for example). The
CTD/MTD is document is increasingly being used .
CTD covers movement of cargo from place of containerization to that of destination using multimodal
transport.
Certificate of origin - stating that the goods originated from India
Inspection Certificate
It is required by some importers and countries in order to get the specifications of the goods shipped
attested. The attestation is usually
Insurance Policy / Certificate
This document, obtained from the freight forwarder , is used to assure the consignee that insurance will
cover the loss or damage to the cargo during transit (marine/air insurance).
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MODULE III - Export Import Documents
Export assistance Documents & Certificates for Exports.
Documents that are commonly used in exporting, but specific requirements vary by destination and product. It is divided into the following subsections:
COMMON EXPORT DOCUMENTSCommercial InvoiceExport Packing ListPro Forma Invoice
TRANSPORTATION DOCUMENTSAirway BillBill of LadingElectronic Export Information Filing (formerly known as the Shipper’s Export Declaration)
EXPORT COMPLIANCE DOCUMENTSExport LicensesDestination Control Statement
CERTIFICATES OF ORGINGeneric Certificate of OriginCertificate of Origin for claiming benefits under Free Trade AgreementsCertificate of Origin for goods not manufactured in the United States
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MODULE III - Export Import Documents
Export assistance Documents & Certificates for Exports. OTHER CERTIFICATES FOR SHIPMENTS OF SPECIFIC GOODSAdditional certificates are needed for different purposes
ATA CARNET/Temporary shipment certificate"Merchandise Passport, is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation. The ATA Carnet is an international customs document that allows the holder to temporarily (up to one year) import goods without payment of normally applicable duties and taxes, including value-added taxes.
Certificate of Analysis:A certificate of analysis can be required for seeds, grain, health foods, dietary supplements, fruits and vegetables, and pharmaceutical products.
Certificate of Free SaleCertificate of free sale may be issued for biologics, food, drugs, medical devices and veterinary medicine. More information is available from the Food and Drug Administration. Health authorities in some states as well as some trade associations also issue Certificates of Free Sale.
Dangerous Goods CertificateExports submitted for handling by air carriers and air freight forwarders classified as dangerous goods need to be accompanied by the Shipper’s Declaration for Dangerous Goods required by the International Air Transport Association (IATA). The exporter is responsible for accuracy of the form and ensuring that requirements related to packaging, marking, and other required information by IATA have been met.
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MODULE III - Export Import Documents
Export assistance Documents & Certificates for Exports.
For shipment of dangerous goods it is critical to identify goods by proper name, comply with
packaging and labeling requirements, which vary depending upon the type of product shipper and
the country shipped to. More information on labeling/regulations is available from the International
Air Transportation Association or Department of Transportation - HAZMAT websites.
For ocean exports, hazardous material regulations are contained in the International Maritime
Dangerous Goods regulations.
Fisheries Certificate
The National Marine Fisheries Service conducts inspections and analyses of fishery commodities for
export.
Fumigation Certificate
The Fumigation Certificate provides evidence of the fumigation of exported goods (especially
agricultural products, used clothing, etc.). This form assists in the quarantine clearance of any goods
of plant or animal origin. The seller is typically required to fumigate the commodity at his or her
expense a maximum of 15 days prior to loading.
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MODULE III - Export Import Documents
Halal Certificate
Required by most countries in the Middle East, this certificate states that the fresh or frozen meat or poultry
products were slaughtered in accordance with Islamic law. Certification by an appropriate chamber and
legalization by the consulate of the destination country is usually required.
Health Certificate
For shipment of live animals and animal products (processed foodstuffs, poultry, meat, fish, seafood, dairy
products, and eggs and egg products). Note: some countries require that health certificates be notarized
or certified by a chamber and legalized by a consulate. Health certificates are issued by the U.S.
Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS).
Ingredients Certificate
A certificate of ingredients may be requested for food products with labels that are inadequate or
incomplete. The certificate may be issued by the manufacturer and must give a description of the
product, contents, and percentage of each ingredient; chemical data; microbiological standards; storage
instructions; shelf life; and date of manufacture. If animal fats are used, the certificate must state the type
of fat used and that the product contains no pork, artificial pork flavor, or pork fat. All foodstuffs are
subject to analysis by Ministry of Health laboratories to establish their fitness for use.
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MODULE III - Export Import Documents
Inspection Certificate
Weight and Quality certificates should be provided in accordance with governing USDA/GIPSA regulations
for loading at port and loading at source/mill site as appropriate. A certificate of origin certified by the
local chamber of commerce at the load port and a phytosanitary certificate issued by APHIS/USDA and
fumigation certificate are to be provided to the buyer. Costs of all inspection, as well as
certificates/documents at the load port, are usually the responsibility of the seller. Independent
inspection certificates may required in some instances.
Pre-Shipment Inspections
The governments of a number of countries have contracted with international inspection companies to
verify the quantity, quality, and price of shipments imported into their countries. The purpose of such
inspections is to ensure that the price charged by the exporter reflects the true value of the goods, to
prevent substandard goods from entering the country, and to deflect attempts to avoid payment of
customs duties. Requirements for pre-shipment inspection are normally spelled out in letter-of-credit
or other documentary requirements. Inspections companies include Bureau Veritas, SGS and Intertek.
Some countries require pre-shipment inspection certificates for shipments of used merchandise.
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MODULE III - Export Import Documents
Insurance Certificate
Insurance certificates are used to assure the consignee that insurance will cover the loss of or damage
to the cargo during transit. These can be obtained from your freight forwarder or publishing house.
Note: an airway bill can serve as an insurance certificate for a shipment by air. Some countries may
require certification or notification.
Phytosanitary Certificate
All shipments of fresh fruits and vegetables, seeds, nuts, flour, rice, grains, lumber, plants, and plant
materials require a federal phytosanitary certificate. The certificate must verify that the product is
free from specified epidemics and/or agricultural diseases. Additional information and forms are
available from Animal and Plant Health Inspection Service (APHIS).
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MODULE III - Export Import Documents Radiation Certificate
Some counties including Saudi Arabia may require this certificate for some plant and animal imports.
The certificate states that the products are not contaminated by radioactivity.
Other (Product-Specific) Certificates
Shaving brushes and articles made of raw hair must be accompanied by a recognized official
certificate showing the consignment to be free from anthrax germs. Used clothing requires a
disinfection certificate. Grain requires a fumigation certificate, and grain and seeds require a
certificate of weight. Many countries in the Middle East require special certificates for imports of
animal fodder additives, livestock, pets, and horses.
Weight Certificate
A certificate of weight is a document issued by customs, certifying gross weight of the exported
goods.
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MODULE III - Export Import Documents
OTHER EXPORT - RELATED DOCUMENTS
Consular Invoice
Required in some countries, a consular invoice describes the shipment of goods and shows information
such as the consignor, consignee, and value of the shipment. If required, copies are available from
the destination country's embassy or consulate in the U.S. The cost for this documentation can be
significant and should be discussed with the buyer.
Dock Receipt and Warehouse Receipt
A dock receipt and warehouse receipt are used to transfer accountability when the export item is
moved by the domestic carrier to the port of embarkation and left with the ship line for export.
Import License
Import licenses are the responsibility of the importer and vary depending upon destination and
product. However, including a copy of an import license with the rest of your documentation may in
some cases help avoid problems with customs in the destination country.
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MODULE III - Export Import Documents
ISPM 15 (Wood Packaging) Marking
The International Standards for Phytosanitary Measures Guidelines for Regulating Wood
Packaging Material in International Trade (ISPM15) is one of several International Standards
for Phytosanitary Measures adopted by the International Plant Protection Convention
(IPPC). The IPPC is an international treaty to secure action to prevent the spread and
introduction of pests of plants and plant products, and to promote appropriate measures for
their control. The American Lumber Standard Committee (ALSC) and the National Wooden
Pallet and Container Association (NWPCA) provide phytosanitary certification for wood
packaging materials (WPM). APHIS will issue a phytosanitary certificate for wood package
materials only if WPM are the cargo.
Shipper’s Letter of Instruction
The shipper’s letter of instruction is issued by the exporter to the forwarding agent and includes
shipping instructions for air or ocean shipment.
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MODULE III - Export Import Documents
TEMPORARY SHIPMENT DOCUMENTS
ATA CARNET/Temporary shipment certificate
An ATA Carnet, "Merchandise Passport," is a document that facilitates the temporary importation of
products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a
security deposit normally required at the time of importation. Apply for an ATA Carnet.
Customs Certificate of Registration
Customs Form 4455 may be used (often in conjunction with a temporary import bond or ATA Carnet
for goods that are leaving the United States on a temporary basis for alteration, repair, replacement,
and processing).
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MODULE III - Export Import DocumentsHow to handle L/C and Avoid Discrepancies
1 The Letter of Credit (LC) is useful to both the importer (purchaser) and exporter (seller).
The basic terms of trade between the two parties will form an integral part of the terms and conditions of the
LC and therefore it is important for the seller to provide as much detail (description of goods, availability for
shipment, price, INCOTERMS bank name and address etc.) in either a proforma invoice or contract of sale.
2 If the seller has any concerns about the financial stability of the buyers country then it would be wise to insist
that the LC is confirmed (i.e. guaranteed by a bank in the seller's country).
3 Once the purchaser has instructed its bank (the Opening Bank) to issue an LC it should take about two or
three days for the bank to create the document and transmit it to the Advising Bank. Most LCs are transmitted
by wire and therefore will be with the advising bank within 24 hours of transmission. Note : the Advising Bank
may not necessarily be the buyer's bank.
4 As soon as the seller receives the LC advice it is vital that this document is examined to both ensure that the
terms are as set out in the proforma invoice or contract of sale and also that any additional terms (such as the
deadline for presentation of documents) can be complied with.
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MODULE III - Export Import Documents
The seller should request clarification from the Advising Bank if there are any terms within the LC that the
seller does not understand. If the seller cannot comply with any terms then it is important to advise the buyer
and request an amendment to the LC.
5 Once the goods have been shipped the seller must ensure that all documents are collated and not only
match the terms and conditions of the LC but also are consistent with one another. It is recommended that at
least one other person undertakes a second check as familiarity with the documents may well lead to a small
discrepancy being overlooked.
6 If there are any obvious discrepancies (such as late shipment) then it would be best for the seller to contact
the buyer and request an amendment to the LC. It is not recommended to ask the buyer to instruct the
Opening Bank to accept a discrepancy as there is no guarantee that it will do so.
7 Before sending the documents to the Advising Bank check to make sure that the documents should not be presented to a third party bank (a Negotiating Bank)as any error in dispatch of documents may lead to a delay in the mail.
8 If possible have the documents presented for negotiation via your own bank who should be able to undertake a check against the LC before dispatch and may even be able to act as the Negotiating Bank and possibly speed up the process.
How to handle L/C and Avoid Discrepancies
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MODULE III - Export Import Documents
A letter of credit is a method of securing payment to a vendor. When a seller asks a buyer to obtain a
letter of credit, it means the seller would like to ensure payment for a product he sells to that customer.
Typically letters of credit are issued by a bank. The most common forms are standby letters of credit for
domestic transactions and documentary letters of credit for international transactions.
Steps to Open a Letter of Credit
1 Establish the terms of the sale with your vendor. You will need to determine the following:
•How much product will you buy each month?
• How often will payment be due? With the answers to these questions, the amount guaranteed
by the letter of credit can be determined. Typically the amount of the letter of credit will total
30 days worth of product, plus or minus 10 percent.
•Do you need a documentary or standby letter of credit? A documentary letter of credit is used
for international transactions and usually covers only one transaction. A standby letter of credit
is a long-term contract covering a year or more.
How to Open a Letter of Credit
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MODULE III - Export Import Documents
2 Contact your bank to draw up the letter of credit. Once the terms of the sale have been established,
your banking officer will draw up the letter. In most cases, if you hold a line of credit with the bank,
the amount of the letter of credit will be held against the line of credit. If no line of credit exists,
the bank may hold the amount against a money market account.
3 Submit the letter of credit to the buyer for approval. Often your bank will perform this step for you.
The seller may ask to revise some of the wording. If this happens, your bank will need to approve
the changes. Once all three parties have agreed to a final document, you may conduct business
with the seller.
4 Ensure a documentary letter of credit is released. If business has been concluded and the vendor has
been paid, the seller typically releases documentary letters of credit. This will free up your line of
credit or collateral.
5 Ensure that a standby letter of credit is renewed. Many standby letters of credit renew automatically
each year unless canceled by the bank. If an auto-renewal clause does not exist, contact your bank
60 days before the letter of credit's expiration date to avoid interrupting business.
How to Open a Letter of Credit
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MODULE III - Export Import Documents
Apply for license and make Customs/ Sales Tax documents for imports.
Export Import License Procedures in IndiaHow to get import export license in India ?
This License is needed while dealing with any item that is not freely importable. In India, most goods are freely importable, but the Exim Policy of 2007 states certain goods and categories of products that are prohibited and some goods that can be conditionally imported. A typical export import business license would have two copies.
IntroductionWhile the majority of the goods are freely importable, the Exim Policy (2007) of India prohibits import of certain categories of products as well as conditional import of certain items. In such a situation it becomes important for the importer to have an import license issued by the issuing authorities of the Government of India.
Import License Issuing AuthorityIn India, Import License is issued by the Director General of Foreign Trade. DGFT Delhi office is situated in Udyog Bhawan, New Delhi 110011.
Validity of Import LicenseImport Licenses are valid for 24 months for capital goods and 18 months for raw materials components, consumable and spares, with the license term renewable.
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MODULE III - Export Import Documents
General import license/permit requirements
Most imports into India do not require a license. Provided they fall within the scope of the Open General
License they may be imported freely without restrictions.
The imports not covered by the Open General License are regulated. There are three categories of such
imports: Banned, Restricted and Canalized.
Banned/Prohibited Products may not be imported at all. They include:
• Wild animals, tallow fat and oils of animal origin, animal rennet, and unprocessed ivory.
Restricted Products are generally goods for which demand can be adequately satisfied, in normal
circumstances, by local production in India. These are permitted to be imported against a license only.
Canalized Products are generally commodity imports which must be channeled ("canalized") through public
enterprises. Many canalized products are decontrolled except for:
• Petroleum products, bulk agricultural products, such as grains and vegetable oils, and some
pharmaceutical products.
Apply for license and make Customs/ Sales Tax documents for imports.
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MODULE III - Export Import Documents
General import license/permit requirements
The following products require a Special Import License (SIL):
Betel nut (areca nut) whole or split ground
Raw silk
Launches, boats, barges, trawlers and other fishing vessels
Inflatable yachts and ships, boats and floating structures
A special import authorization is required for:
Works of art
Photographs (in rolls, or printed)
Account and manuscript books, labels, advertising materials (not including trade catalogs or circulars)
Almanacs (in sheets or cards) Waste paper and old newspaper used for packing.
Importers must be licensed to Import Leaf Tobacco which requires two sanitary certificates.
Importers must obtain a number from the Ministry of Commerce and Industry, Director General of Foreign
Trade in order to import goods.
Apply for license and make Customs/ Sales Tax documents for imports.
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MODULE III - Export Import DocumentsApply for license and make Customs/ Sales Tax documents for imports.
Import customs tariff
India uses the Harmonized Tariff System for classification. The Indian tariff contains many exceptions,
exemptions, and drawbacks. Imports are subject to duty consisting of many parts. For most imports:
Duty payable = = BCD + ACD + Special CVD + Education Cess + Customs Handling Fee.
Additional taxes and surcharges which may apply:
•Customs surcharge: 10% of the basic customs duty rate
•Education surcharge: 3% of the aggregate value of all duties and taxes.
•State tax/Value added tax: Imports are subject to taxes levied by the individual state governments with
each state having its individual, applicable sales tax and rate ranging from 2 to 20%. Many states have
agreed to replace that tax with a uniform, 12.5% state-level value added tax. This system has not yet been
implemented by all states.
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MODULE III - Export Import DocumentsApply for license and make Customs/ Sales Tax documents for imports.
Customs valuation basis
•Certain products are subject to specific duty rates.
•For items subject to ad valorem duties, the WTO Customs Valuation Agreement applies. According to this
agreement, there are six acceptable methods of determining customs value. Typically the first method is
used (unless the buyer and seller are related parties). When the value cannot be obtained this way, or is
rejected by customs, one of the other methods is to be used, in descending order:
•Transaction value (the price actually paid or payable by the importer, plus certain costs and expenses)
• Transaction value of identical goods
• Transaction value of similar goods
•Deductive value (the sale or resale value, reduced by certain costs such as customs duties, taxes, and
commissions)
•Computed value (calculated by adding together certain costs/values for production, materials, profit and
other expenses) Fall-back method.
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MODULE III - Export Import Documents
Apply for license and make Customs/ Sales Tax documents for imports.
General
Provisions
about
Customs
Procedures
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MODULE III - Export Import DocumentsApply for license and make Customs/ Sales Tax documents for imports.
http://interport-india.com/import.htm
http://www.dateyvs.com/tax/customs-law-primer/procedures-for-imports-and-exports/
http://www.dateyvs.com/useful-sites/corporate-laws/
http://www.dateyvs.com/useful-sites/taxation/
Useful & important Links
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END OF MODULE III - Export Import Documents
THANK YOU !!