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Topic: Procedure of Import Documents

Submitted to: Prof. Muhammad Akram

Submitted by: Abubakar Riaz
Roll. No: 478
Section: G Morning
Semester: 8th

Hailey College of Commerce

University Of The Punjab
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Table of Contents

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The term "
 " is derived from the conceptual meaning as to
bring in the goods and services into the port of a country. The buyer of
such goods and services is referred to an "importer" who is based in the
country of import whereas the overseas based seller is referred to as an
"exporter".[1] Thus an import is any good (e.g. a commodity)
or service brought in from one country to another country in a legitimate
fashion, typically for use in trade. It is a good that is brought in from
another country for sale.[2] Import goods or services are provided to
domestic consumers by foreign producers. An import in the receiving
country is an export to the sending country.
Imports, along with exports, form the basis of international trade.
Import of goods normally requires involvement of thecustoms authorities in
both the country of import and the country of export and are often subject
to import quotas, tariffsand trade agreements. When the "imports" are the
set of goods and services imported, "Imports" also means the economic
value of all goods and services that are imported.
The macroeconomic variable I usually stands for the value of these imports
over a given period of time, usually one year.

 
 
There are two basic types of import:
1.?Industrial and consumer goods
2.?Intermediate goods and services
Companies import goods and services to supply to the domestic
market at a cheaper price and better quality than competing goods
manufactured in the domestic market. Companies import products that are
not available in the local market.
There are three broad types of importers:
1.?Looking for any product around the world to import and sell.
2.?Looking for foreign sourcing to get their products at the cheapest
price.
3.?Using foreign sourcing as part of their global supply chain.
Direct-import refers to a type of business importation involving a
major retailer (e.g. Wal-Mart) and an overseasmanufacturer. A retailer
typically purchases products designed by local companies that can be
manufactured overseas. In a direct-import program, the retailer bypasses
the local supplier (colloquial |

|) and buys the final product
directly from the manufacturer, possibly saving in added costs. This type of
business is fairly recent and follows the trends of theglobal economy.

 
Many online auction websites are now providing wholesalers through
a wholesale list, generally, the lists that require a fee to view, may not be
updated frequently, the data may be old, and the companies listed may no
longer be in business.

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Another form of online middlemen are B2B trade companies. These
cater mainly to big businesses who are importing large quantities of goods
from foreign countries. They also have sister sites that serve smaller
orders for small businesses. In addressing the concerns of listed
companies' legitimacy and dependability, such B2B portals may inspect
suppliers at their actual premises before they list suppliers. Alternatively,
these companies may also branch out of cyberspace and organize their
own sourcing fairs, where thousands of buyers and suppliers can meet
face-to-face.
  

A standard, commercial   
 ("LC") is a document issued
mostly by a financial institution, used primarily in trade finance, which
usually provides an irrevocable payment undertaking.
The LC can also be source of payment for a transaction, meaning
that redeeming the letter of credit will pay an exporter. Letters of credit
are used primarily in international trade transactions of significant value,
for deals between a supplier in one country and a customer in another.
They are also used in the land development process to ensure that
approved public facilities (streets, sidewalks, stormwater ponds, etc.) will
be built. The parties to a letter of credit are usually a


 who is to
receive the money, the

 
 of whom the applicant is a client,
and the


 
 of whom the beneficiary is a client. Almost all
letters of credit are irrevocable, i.e., cannot be amended or cancelled
without prior agreement of the beneficiary, the issuing bank and the
confirming bank, if any. In executing a transaction, letters of credit
incorporate functions common to giros and Traveler's cheques. Typically,
the documents a beneficiary has to present in order to receive payment
include a commercial invoice, bill of lading, and documents proving the
shipment was insured against loss or damage in transit. However, the list
and form of documents is open to imagination and negotiation and might
contain requirements to present documents issued by a neutral third party
evidencing the quality of the goods shipped, or their place of origin.
 

The English name letter of credit derives from the French word
accreditation, a power to do something, which in turn is derivative of the
Latin word accreditivus, meaning trust. The Application any defence
relating to the underlying contract of sale. This is as long as the seller
performs their duties to an extent that meets the requirements contained
in the LC.
 




 
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 (most secure for seller)
Where the buyer parts with money first and waits for the seller to forward
the goods
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 (more secure for seller as well as buyer)
Subject to ICC's UCP 600, where the bank gives an undertaking (on behalf
of buyer and at the request of applicant ) to pay the shipper ( beneficiary )


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the value of the goods shipped if certain documents are submitted and if
the stipulated terms and conditions are strictly complied.
Here the buyer can be confident that the goods he is expecting only will be
received since it will be evidenced in the form of certain documents called
for meeting the specified terms and conditions while the supplier can be
confident that if he meets the stipulations his payment for the shipment is
guaranteed by bank, who is independent of the parties to the contract.
? i
 
 (more secure for buyer and to a certain
extent to seller)
Also called "Cash Against Documents". Subject to ICC's URC 525, sight and
usance, for delivery of shipping documents against payment or
acceptances of draft, where shipment happens first, then the title
documents are sent to the [collecting bank] buyer's bank by seller's bank
[remitting bank], for delivering documents against c ollection of
payment/acceptance
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 (most secure for buyer)
Where the supplier ships the goods and waits for the buyer to remit the bill
proceeds, on open account terms.

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A pro forma Invoice is much the same as a commercial invoice
which, when used in international trade, represents the details of an
international sale to the Customs authorities. A pro forma invoice is
presented in the place of a commercial i nvoice when there is no sale
between the sender and the importer, or if the terms of the sale between
the seller and the buyer are such that a commercial invoice is not yet
available at the time of the international shipment. A pro forma invoice is
required to state the same facts that the commercial invoice would and the
content is prescribed by the governments who are a party to the
transaction.

   
Incoterms rules are standard trade definitions most commonly used
in international sales contracts. Devised and published by the International
Chamber of Commerce, they are at the heart of world trade.
Among the best known Incoterms rules are, FOB (Free on Board),
CIF (Cost, Insurance and Freight), and CPT (Carriage Paid To).
ICC is currently revising Incoterms 2000. The new edition,
Incoterms 2010, is expected to enter into force on 1 January 2011.

!"#"
The Harmonized Commodity Description and Coding System (HS) of
tariff nomenclature is an internationally standardized system of names and
numbers for classifying traded products developed and maintained by
the World Customs Organization (WCO) (formerly the Customs Co-
operation Council), an independent intergovernmental organization with
over 170 member countries based in Brussels, Belgium.

Pro forma invoice includes:

? Name of Importer
? Name of Exporter
? Description of goods
? There Tarrif number (HS code)
? Muantity
? Price in currency agreed and Packing
? INCO Terms
? Origin of Merchandise
? Payment condition i.e Irrevocable LC at sight
? Last date of Shipment
? Country of origin
? Final Destination
? Advising bank details
? Signature of Exporter


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This is the form given by the Advising bank and is filled by the
importer. A special adhesive stamp of 100PKR is pasted .




LC becomes payable once it is presented along with the necessary
documents, e.g. goods orders, shipping documents.


 

Transshipment or Transhipment is the shipment of goods or
container to an intermediate destination, and then from there to yet
another destination.




 

Delivery of an order in two or more consignments, if allowed by
the customer or under theterms of a letter of credit.

Following information is filled:

? Applicats name and full address
? Benificiarys name and full address
? Type of LC i.e. LC at sight
? Total amount including C&F
? Shipment destination from origin to final
? Date of expiry
? All other charges amount and due written

In case of india shipment and transshipment cant be on

Israeli/Indian vessels/Airlines is Prohibited


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$ 

This is a form for imports and is basically used of taxation purpose. It

is the application for permission under the foreign exchange regulation act
1947 to purchase foreign exchange for the payment of imports.




Person or other legal entity for whose present or future interest
(benefit) an annuity,assignment (such as a letter of credit), contract,
insurance policy, judgment, promise, trust, will, etc., is made.

 
The purchaser of the commodity the buyer of the goods

The following information is posted in this document:

? Authorized dealer name
? Beneficiarys name and address
? Indentors name and registration number
? Description of goods
? ITC No. (HS code)
? Muantity
? Port of Shipment
? Date of shipment
? Invoice value in Foreign currency
? Other terms and conditions
? Stamp and signature of the importer


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Document evidencing issuance of an insurance policy and gives
a summary of the informationgiven in a certificate of insurance.

Insurance cover note is issued on pro forma invoice, its is required

for the bank to issue the LC. First the schedule is made then the Final
receipt is issued to importer.

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War, Strikes, Riots, and Civil Commotions Risks


(Cost and Freight.) Seller owns goods until they are loaded on
vessel; selling price includes all costs so far plus cost of ocean freight.

The conditions required for Cover note

? Name of the bank
? Name of participant
? Detail of goods covered with their HS code
? The period insuraed
? Mode of convance
? Sum covered
? Contribution calculation
? Exchange rate
? Declaration
? Other conditions and warrities like Computer millium charges, radio
active exclusion clause, war, strike clause etc.


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A letter of credit that can't be canceled. This guarantees that a buyer's payment to
a seller will be received on time and for the correct amount.

This is the document called the LC it shows didderefnt conditions and

terms on which both the parties are agreed upon.

 
The 
    
 

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 (UCP) is a set of rules on the issuance and use of letters of credit.
The UCP is utilised by bankers and commercial parties in more than 175
countries in trade finance. Some 11-15% of international trade utilises
letters of credit, totalling over a trillion dollars (US) each year.


 

A bank providing cover for a payment order.

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? First of all the SWIFT code is displayed
? Form of LC i.e Irrevocalbe LC
? Date of Issue; it is read in opposte direction i.e. 080328 this means
28th of 3rd month march of year 2008
? Rules that are applicable are mentioned that are UCP Latest version
i.e. UCP 600
? Applicatns name
? Beneficary name
? Currency code and amount
? Partial shipments allowed or not
? Port of loading
? Last date of shipment
? Descriptions of goods
? Charges outside Pakistan are on beneficys account
? Period of presentation
? Reimbursement bank name
?


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SWIFT Code:
(Society for Worldwide Interbank Financial Telecommunication)
The SWIFT Bank Identification Code is an internationally-recognized
system of codes for identifying banks (see ISO 9362). These codes are
commonly used to identify the banks involved in an international wire
transfer.
It is not the only coding system for banks - individual countries also
have their own sets of codes which are used to identify banks in national
interbank business. For example, ABA numbers (or routing codes) identify
banks in the US and Canada, Sort Codes identify banks in the UK.

SWIFT is the Society for Worldwide Interbank Financial

Telecommunication, a member -owned cooperative through which the
financial world conducts its business operations with speed, certainty and
confidence. More than 9,000 banking organisations, securities institutions
and corporate customers in 209 countries trust us every day to exchange
millions of standardised financial messages.


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A bill of lading (sometimes referred to as a Bloor B/L) is a document
issued by a carrier to a shipper, acknowledging that specified goods have
been received on board as cargo for conveyance to a named place for
delivery to the consignee who is usually identified. A p

 bill of lading
involves the use of at least two different modes of transport from road,
rail, air, and sea. The term derives from the verb "to lade" which means to
load a cargo onto a ship or other form of transportation.

The bill of lading issued when the merchandise i s loaded on the

carrier and is the guarantee that the goods has been sent by the exporter




The bill issued will the shipments arrives in ships through sea way

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When the goods are shipped through airline, airway bill is issued



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When the goods are dispatched by railway track, railway receipt is
issued.

  
Their there two kinds of ports

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In Pakistan there are many dry port like At present, there are six dry
ports running under the management of Railways: Lahores Established in
1973, Karachi Dry Port Established in 1974, Muetta Dry Port Established in
1984, Peshawar Dry Port Established in 1986, Multan Dry Port Established
in 1988, Rawalpindi Dry Port Established in 1990

#
 
There are three sea ports in Pakistan that are Port Masim and Port
Gwadar, port keti Bander, port karachi.
Port Masim maximum sea weight capacity is 25,000 MT

The mentioned terms required.

? Consignee name
? Notify address
? Currency agreed upon
? Goods details and HS Code number
? Packing list
? Detailed packing list


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A commercial invoice is a document used in foreign trade. It is used
as a customs declaration provided by the person or corporation that is
exporting an item across international borders. [1] [2] Although there is no
standard format, the document must include a few specific pieces of
information such as the parties involved in the shipping transaction, the
goods being transported, the country of manufacture, and the?
 codes for those goods. A commercial invoice must also include a
statement certifying that the invoice is true, and a signature.

The invoice is the receipt for the goods shipped

The mentioned things on Commercial invoice

? Exporter name
? Importer name
? Pro forma Number
? essel number
? Port of loading
? Final destination
? Terms and delivery of payment
? Marks and number of container
? Description of goods
? Muantity
? Tariff and HS code
? Rate per KG and amount in currency decided
? Stamped by exporter bank

Invoice contains amount due to the importer

Whereas the packing list includes only the information about packing,
no amount is shown in this list.


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A shipping list, packing list, packing slip (also known as a bill of
parcel, unpacking note, packaging slip, (delivery) docket, delivery list,
or customer receipt), is a shipping document that accompanies delivery
packages, usually inside an attached shipping pouch or inside the package
itself. It commonly includes an itemized detail of the package contents and
does not include customer pricing. It serves to inform all parties, including
transport agencies, government authorities, and customers, about the
contents of the package. It helps them deal with the package accordingly.

The mentioned things on Commercial invoice

? Exporter name
? Importer name
? Pro forma Number
? essel number
? Port of loading
? Final destination
? Terms and delivery of payment
? Marks and number of container
? Description of goods
? Muantity
? Packing further details
? Tariff and HS code
? Stamped by exporter bank

Packing list includes only the information about packing, no amount is

shown in this list.

Whereas the Invoice contains amount due to the importer


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Declaration (on a prescribed form) by an importer or exporter of the
exact nature, 2recise quantity and value of goods that have landed (entered
inwards) or are being shipped out (entered outwards). Prepared by
a qualified customs clerk or broker, it is examined by customs authorities for
its accuracy and conformity with the tariff and regulations. See
also customs entry.

When all the duties and charges are paid the Custom Duty officer
(CDO) issues a bill of entry. And now the importer is allowed to ship the
commodity to the desired place.

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It is a value that is declared by the importer

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It is the value that is calculated by the CDO and duties are charged
on Assessed rate.

The bill of entry contains following information

? Exporter/ Consignors name
? Importer/Consignees names
? NTN number
? HS Code
? Currency name and code
? Description of goods
? Number of cartons
? Declared value, rate
? Assessed rate and value
? Port of shipment
? Delivery terms
? Marks and Container numbers


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It's a bond to repay a lender in the event of a shortfall in a loan
repayment.

Coverage for loss of an oblige in the event that the principal fails to
perform according to standards agreed upon between the oblige and the
principal.

? The indemnity Bond is issued for the collector of customs in the

custom house
? Warehouse name and license number
? Date of deed of indemnity
? Importers name
? Total sum amount
? 2 witnesses are also required
? The bond must be on a stamp paper of above 50PKR or so
? A post dated cherub must be attached with this bond


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A Certificate of Origin [1] (often abbreviated to CO or COO) is
a document used in international trade. It traditionally states from what
country the shipped goods originate, but "originate" in a CO does not mean
the country the goods are shipped from, but the country where their goods
are actually made. This raises a definition problem in cas es where less than
100% of the raw materials and processes and value are not all from one
country. An often used practice is that if more than 50% of the sales price
of the goods originates from one country, that country is acceptable as
the country of origin (then the "national content" is more than 50%). In
various international agreements, other percentages of national content
are acceptable.

Certificate of origin is a proof that the goods made are purely

manufactured into final good where they are claimed

This document shows the following details

? Consignor Name
? Consignee
? Consigned through
? Packages detail is given with their HS Code
? Description of goods is given
? Detailed packing list is given i.e. Bags numbers and kinds of packing
? Gross weight in KGs
? Number of pieces
? alue in Rupees and in dollars
? Stamped by the origin country


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The least criteria for importing a commodity are that:
? Account Number; LC can also be issued on cash basis
? Member of ICC; Company must have Membership in international
Chamber of Commerce
? Companys STN and NTN
? SECP Registered Company

i


First of all the both parties who want to purchase and sell the
Commodity deal with each other and bargain on different points. They
settle the product price INCO Terms, its quantity, Weight, Shipment date,
payment methods, type of LC, E xchange rate, Freight charges and other
information.

 
  


When the dealing is finalized all the agreed condition s settled are
then written in printed form called the preformed invoice.

 


To issues a LC against a commodity mostly large in quantity,
insurance of the commodity must be taken, a copy of preformed invoice is
given to the insurance company for the issuance of insurance cover note.
Insurance is issued on some reserve or goodwill o f the importer.
Documents required are
? Performa invoice
? Certificate of Origin

Certificate of origin is the document assuring the concerned that the

goods/commodity shipped are fully made by the claiming countrys
company

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Once the preformed invoice and cover note is issued, an application
is written to a bank for the issuance of letter of credit against it. The
documents that are required are as below
? Performa Invoice
? Insurance Cover Note
? Application Form
? I- Form

Here the I-Form is used for the eligibility of importing a commodity and
for deduction of tax, nowadays only STN and NTN is used, the use of I -
Form is very rare.

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After this procedure an LC Draft is issued based on all the
information given to bank, it is a almost a letter of credit but not yet
approved, this is presented to importer to make some corrections and
changes, once approved by importer and stamped the final LC document is
sent to beneficiary bank/exporter for his confirmation through SWIFT code.

#%)'',
The advising bank then sends this Letter of credit advice to the
Beneficiary bank in SWIFT Coding, the bank communicate with each other
in this coding. Other formalities and payments are also made in this code.

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When the exporter receive the letter of credit advice, if he agrees on
it the LC is approved if not then further amendments will be done up till
finalization of terms and conditions. The exporter always gives 7 days free
time to pay all the duties and expenses to clearing agent. This time period
can be expanded on request up to 14 and then 21 days in this period no
dammar age is charged.

#
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When the dealing gets final, the exporter sends original shipping
documents to importers bank and copies to importer. And set of original
documents placed in the container of commodities it.
The shipping documents contain:

? Bill of lading/ Airway Bill/ Railway Receipt

? Commercial Invoice
? Packing List
? Detailed packing list


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When payment is made to the advising bank, the bank then releases
the original shipping documents. Then bank then issues a retirement note
and after that the LC is closed on payment.

    
  




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Once the payment is made the original documents received are given
to clearing agent.

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Now as the documents are handed over, the duties are calculated on
assessed rate on the exchange rate decided.
Duties charged are


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? Custom duty(CD) i.e. according to the H.S. Code (mentioned in FBR)

? Sales tax (ST) i.e. 16% of the total value. Its fixed
? Income tax(IT) i.e. 4% (for commercial), 3% (for manufactures) of
the total value, its also fixed
? Federal excise duty(FED) i.e. 1%
? Additional sales tax i.e. 2%

There are also other charges like Dammar age charged on not
clearing the shipment on due date

 

' 
When all the duties and charges are paid the Custom Duty officer
(CDO) issues a bill of entry. And now the importer is allowed to ship the
commodity to the desired place.

%
 
Bonded warehouse is used when the importer is not willing or doesnt
want to pay the due amount in full. The importer stores the commodity in
the bonded warehouse where he can pay for commodity and ship the
goods in installment. It requires following documents:

? Indemnity bond
? Post dated cherub

Indemnity bond is the guarantee by the importer that he will pay the
full amount as scheduled otherwise the commodities can be confiscated.


*




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Payment is made to importer when the original shipping documents
are handed over to its bank.






The beneficiary bank sends these documents to the advising bank
and receives the payment form it.

-

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The state bank gives the guarantee to the beneficiary bank on the
behalf of Government of Pakistan.

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The advising bank charges the importer and receives the money and
distributes the documents

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When the importer pays its due amount the bank hands over the
original shipping documents to it.


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