International Trade Documentation

Dr. Anupam Varma

Role of Proper Documentation

Correct documentation alone can ensure:

swift passage of goods to the customer,

Customs clearance, Transfer of title, and Prompt payment for the goods

supplied

“You help yourself and your buyer by appropriate and correct documentation”

EXPORT DOCUMENTATION

Export Documents

Commercial Documents Regulatory Documents

Principal Auxiliary

The Concept of Master Documents

The two master documents- one for commercial use and the other for regulatory documents meant for customs, RBI and port trust-have maximum advantage of alignment and minimum cost and time for preparing individual documents.

The two- master documents contain all the information that is common to individual documents.

Aligned Documentation System (ADS) is based on the UN layout key.

Different forms used in the international trade transaction are printed on paper of the same size and in such way that the common items of information are given the same relative slots in each of the documents.

Commercial Documentation ‘Principal export documents’ by customs of

trade are required for:- effecting physical transfer of goods- transferring of title of goods from an exporter to an importer- realising export proceeds

There are other ‘Auxiliary documents’ required for preparation and procurement of principal export documents

Regulatory Documentation

These are prescribed by different government departments in compliance with the requirements under relevant laws

Documents incidental to customs clearance of export/import consignment, foreign exchange regulations, etc are covered in this category

Assistance and Incentive Documentation

For promoting exports, from time to time Government announces many special schemes and incentives

These relate to duty free imports, concessional import duties, duty drawbacks on exports and excise related export goods, etc.

Documentation relating to above are called assistance or incentive documentation

Principal Export Documents

Commercial Invoice

Packing List Bill of

Lading/Combined Transport Document

Certificate of Inspection/Quality control

Insurance Certificate/Policy

Certificate of Origin

Bill of Exchange Shipment Advice

Commercial Invoice It is the document of account of sale

rendered by buyer to the seller It is a prima facie evidence of the

contract of sale and purchase Description of merchandise must

correspond exactly to the details in the L/C and should be made on the paper of the seller and signed by him

It should be made in the name of the opener, unless otherwise stated in L/C

Consular Invoice Needed mostly by Latin American countries,

Kenya, Uganda, Tanzania, Nigeria, Ghana, Mauritius, New Zealand, Australia, Fiji, etc.

The importer’s country require this to collect accurate import details for assessing import duties & for other statistical purposes.

Helps importer to get goods customs cleared easily

Consular invoice has to be got certified by the embassy of country concerned

Customs Invoice

Required by countries like USA, Canada, etc. for allowing entry of goods at preferential tariff rates

Invoice forms are generally available at the consular office of the importing country & should be signed and witnessed after duly filling the same.

Legalised/Visaed Invoice

Required by some countries in Middle East, Latin America, Turkey, Taiwan etc.

These invoices are sworn for their genuineness by seller as being correct before appropriate Consulate /Chamber of Commerce /Embassy and bear the stamp and authentication

Certified Invoice

Sometimes exporter is asked to certify on the invoice about the goods being of particular origin or packed at particular place and in accordance with a specific contract.

Such invoices are called as a certified invoice

Packing List It shows details of goods contained in

each parcel/shipment Shows item by item the contents of

containers or parcels shipped Enables buyer/receiver to check received

items correctly Specified number of copies are kept

inside the package, sent with shipping documents, sent to buyer, to shipping agent

Transport Documents

Following documents are used in export as transport documents:

a. Ocean freight: Bills of Ladingb. Air Freight: Airway Bills / Air

consignment notec. Rail/Road: Railway Receipt

/Consignment Noted. Post: Post Parcel Receipt

Combined Transport Document

It is a document for multi-modal movement of goods in container. The movement is carried out by more than one mode, e.g. rail and ship.

A CTD provides an alternative to establishing a series of separate and non-uniform contracts for each segment of the total transport process.

It is acceptable for negotiation under L/C.

Bill of Lading It is a document issued by the shipping

company or its agent acknowledging the receipt of goods on board of vessel, and

Undertaking to deliver the goods in the like order and conditions as received to the consignee or his order of assignee provided freight and other charges have been duly paid

It is a document of title and by practice transferable.

Types of Bill of Lading

Clean Bill of Lading Claused Bill of Lading On Board Bill of Lading Stale Bill of Lading

Airway Bill / Air Consignment Note

It is the receipt issued by the airline for the carriage of goods

It is not treated as a document of title and is not issued in negotiable forms

Indian Exchange Control discourages consignment of goods in the name of either importer, buyer or his agent.

Post Parcel Receipt It evidences merely receipt of goods for

exports by post office It is not treated as a document of title It is advisable to send post parcels in the

name of foreign correspondent bank instead of to the buyer

Inspection certificate

It indicates that the goods have been inspected before sealing for export.

Specialized inspection agencies are there in India

Self inspection certificates can also be given by export houses with good record of exports

Marine Insurance Policy / Certificate

Marine insurance is intended to protect the insured against the risk of loss or damage to goods in transit due to marine perils

Insurance Policy Marine Insurance Policy is a contract

whereby the insurer, in consideration of a payment of premium by the insured, agrees to indemnify the latter against the loss incurred in respect of goods exposed to perils of sea and incidental to sea voyage

Insurance Certificate

It gives details of the shipment insured together with a shortened version of the provision of open cover

It is a more convenient document than a policy and more easily intelligible

It does not have legal standing, cannot be assigned.

Certificate of Origin

It is required by the importer for clearance of goods in his country

Also required for taking advantage of preferential tariffs granted to exports from India in a particular country

Obtainable from a recognised Chamber of Commerce, Export Promotion Council, etc on payment of a small fee.

Generalised System of Preferences (GSP) Certificate

Many developed countries have adapted GSP

Exporters from developing countries including India are entitled to a concessional rate of import duty in these countries

Issued usually by Export Inspection Agency

Bill of Exchange Also known as ‘Draft’ It is an instrument in writing containing

an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a person or to the bearer of the instrument

‘Sight Draft’; ‘Usance Draft’ There is no standard format for Bill of

Exchange

Shipment Advice ‘Shipment Advice’ is sent by exporter to

importer intimating the date of shipment of consignment by a named vessel and its ETA at the destination port.

Shipment advice is sent in the prescribed format along with following documents: 1. Non negotiable copy of the B/L; 2. Commercial invoice; 3. Packing list; and 4. Customs invoice

The seven auxiliary documents are

1. Proforma Invoice

2. Intimation for inspection

3. Shipping instructions

4. Insurance Declaration

5. Application for certificate of origin.

6. Mate's Receipt

7. Letter to bank of collection/negotiation

of documents

Auxiliary Documents

Regulatory DocumentsThere are seven regulatory documents

associated with the pre-shipment stage of the export transaction:

1. ARE.1/AR4 Form ( for Central Excise)

2. Shipping Bill/Bill of Export (for Customs)

3. Port Trust Copy of Shipping Bill/ Export Application/Dock Challan - Port

4. Vehicle ticket - Port

(contd)

5. Exchange Control Declaration/GR/PP

forms - RBI

6. Freight Payment Certificate -

Steamer Agents

7. Insurance Premium Payment

Certificate - Insurance Co.

Regulatory Documents (contd.)

ARE.1 Form

It is used for claiming excise rebate / duty drawback from the GoI.

The different copies of ARE.1/AR4 forms should be of different colors indicated below:

Original---- White (Returned to Exporter) Duplicate--- Buff (Do) Triplicate--- Pink (Rebate sanctioning

authority ) Quadruplicate---Green (Chief Accounts

Officer at Collectorate Head Quarters) Quintuplicate---- Blue (Central Excise Officer) Sixtuplicate- Yellow (optional copy to

exporter)

Shipping Bill

Most important document required by custom authorities for allowing exports. It contains all details of goods shipped.

These are of 4 typesWhite : Export of duty free goods (3 Copies)Green : Export under claim for duty drawback

(4 copies)Yellow : Export for dutiable goods (3 copies)Pink : Export of duty free goods ex-bond (3

copies)Blue: Export under DEPB scheme (7 copies)

Port Trust Copy of Shipping Bill/Export Application/Dock Challan

An exporter has to pay the port and dock charges when the shipment is sent by sea. The amount is assessed on the basis of nature of goods, volume, weight etc.

Vehicle Ticket It is an entry pass issued by the port trust authority to the shipper to allow the latter to bring export cargo to the port for their dispatch to the importer.

Declaration Documents

GR FormsPrescribed by the RBI under FEMA to ensure that

the Forex receipts in respect of exports are repatriated to India.

Prepared in duplicate. Both copies submitted to customs at port of shipment along with shipping bill.

Customs gives ten no. running serial no. on both copies

Customs returns duplicate copy and retains originalExporter submits GR form and other documents to

his bank/authorized dealer for collection of export bills within 21 days

SDF Forms

Where shipping bills are processed electronically, SDF is used.

Submitted in duplicateCustoms gives back one copy along with a copy of the shipping bill marked as ‘Exchange Control Copy’

Should be given to authorized dealer within 21 days

PP Forms

Completed in duplicateExports to all countries are to be declared on PP

Form when goods are sent by post parcel. All such parcels are routed through the ‘foreign post offices’ located in major cities.

Postal articles intended for any permissible foreign destinations may be booked at any of the post office in India .

PP form or No objection certificate from the Reserve Bank of India is required to be enclosed to the parcel depending upon the value of the goods being exported.

SOFTEX Forms

Used in export of software otherwise than in physical form, i.e magnetic tapes, discs, etc.

Valuation of Software ExportsDisposal of SOFTEX form (triplicate)Should be submitted not later than 30 days along with invoice to the valuation authorities

Other documents

Freight Payment Certificate It is like receipt for payment of freight

Insurance Premium Payment Certificate

It is like receipt for payment of insurance premium.

Mistakes in Documentation

Particulars often incorrectly declared

Quantity vis a vis Units of Qty Gross weight & Net weight Invoice No/Date & ARE 1 No in the SB Port of Destination/ Discharge Description of goods Currency Viz USD/GBP/Aus D/Euro etc CIF Value/FOB Value Export promotion Scheme opted.

Other Documents

Black list certificateWeight NoteLanguages certificateCertificate of Chemical AnalysisPhytosanitary certificatesConditioning certificateAntiquity CertificatesCertificate of measurementTransshipment billShipping Order

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