Export Documentation

Introduction of Export

Export in simple words means selling goods abroad. International market being a very wide market, huge quantity of goods can be sold in the form of exports. Export refers to outflow of goods and services and inflow of foreign exchange. Export occupies a very prominent place in the list of priorities of the economic set up of developing countries because they contribute largely to foreign exchange pool. Exports play a crucial role in the economy of the country. In order to maintain healthy balance of trade and foreign exchange reserve. It is necessary to have a sustained and high rate of growth of exports. Exports are a vehicle of growth and development. They help not only in procuring the latest machinery, equipment and technology but also the goods and services, which are not available indigenously. Exports leads to national self-reliance and reduces dependence on external assistance which howsoever liberal, may not be available without strings. Though Indias export compared to other countries is very small, but one of the most important aspects of our export is the strong linkages it is forging with the world economy which is a great boon for a developing nation like India.

WHAT IS EXPORT DOCUMENTATION

The paperwork that is required for an export sales transaction The means by which the shipping process is facilitated and recorded. Documentation is essential for moving goods through the channels of distribution, transferring responsibility or possession, clearing goods through customs, and facilitating payment according to the agreed upon terms.

Incoterms

INCOTERM

refers to a type of agreement for the purchase and shipping of goods internationally. There are 13 different terms, each of which helps users deal with different situations involving the movement of goods. For example, the term FCA is often used with shipments involving Ro/Ro or container transport; DDU assists with situations found in intermodal or courier service-based shipments. INCOTERMS also deal with the documentation required for global trade, specifying which parties are responsible for which documents. Determining the paperwork required to move a shipment is an important job, since requirements vary so much between countries. Two items, however, are standard: the commercial invoice and the packing list INCOTERMS are most frequently listed by category. Terms beginning with F refer to shipments where the primary cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the seller pays for shipping. E-terms occur when a seller's responsibilities are fulfilled when goods are ready to depart from their facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive at some specific point. Because shipments are moving into a country, D terms usually involve the services of a customs broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at virtually all ports and determining who is responsible for each charge.

Recently

the ICC changed basic aspects of the definitions of a number of INCOTERMS, buyers and sellers should be aware of this. Terms that have changed have a star alongside them. EX-Works One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller with greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for pickup at the shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is released to the consignee's freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance, export clearance and handling all other paperwork. FOB (Free On Board) One of the most commonly used-and misused-terms, FOB means that the shipper/seller uses his freight forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods. "Delivery" is accomplished when the shipper/seller releases the goods to the buyer's forwarder. The buyer's responsibility for insurance and transportation begins at the same moment. FCA (Free Carrier) In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk and the expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in FCA the seller chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a predetermined port or destination point and the buyer is responsible for Insurance.

FAS

(Free Alongside Ship)*

In these transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS requires the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these terms will ordinarily use their freight forwarder to clear the goods for export. "Delivery" is accomplished when the goods are turned over to the Buyers Forwarder for insurance and transportation. CFR (Cost and Freight) This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing with the actual cost of merchandise "C" and the other "F" refers to the freight charges to a predetermined destination point. It is the shipper/seller's responsibility to get goods from their door to the port of destination. "Delivery" is accomplished at this time. It is the buyer's responsibility to cover insurance from the port of origin or port of shipment to buyer's door. Given that the shipper is responsible for transportation, the shipper also chooses the forwarder. CIF (Cost, Insurance and Freight) This arrangement similar to CFR, but instead of the buyer insuring the goods for the maritime phase of the voyage, the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the forwarder. "Delivery" as above, is accomplished at the port of destination. CPT (Carriage Paid To) In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the seller has to buy cargo insurance, naming the buyer as the insured while the goods are in transit.

CIP

(Carriage and Insurance Paid To)

This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the shipper/seller is only required to purchase minimum coverage. When this particular agreement is in force, Freight Forwarders often act in effect, as carriers. The buyer's insurance is effective when the goods are turned over to the Forwarder. DAF (Delivered At Frontier) Here the seller's responsibility is to hire a forwarder to take goods to a named frontier, which usually a border crossing point, and clear them for export. "Delivery" occurs at this time. The buyer's responsibility is to arrange with their forwarder for the pick up of the goods after they are cleared for export, carry them across the border, clear them for importation and effect delivery. In most cases, the buyer's forwarder handles the task of accepting the goods at the border across the foreign soil. DES (Delivered Ex Ship) In this type of transaction, it is the seller's responsibility to get the goods to the port of destination or to engage the forwarder to the move cargo to the port of destination uncleared. "Delivery" occurs at this time. Any destination charges that occur after the ship is docked are the buyer's responsibility. DEQ (Delivered Ex Quay)* In this arrangement, the buyer/consignee is responsible for duties and charges and the seller is responsible for delivering the goods to the quay, wharf or port of destination. In a reversal of previous practice, the buyer must also arrange for customs clearance. DDP (Delivered Duty Paid) DDP terms tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is responsible for dealing with all the tasks involved in moving goods from the manufacturing plant to the buyer/consignee's door. It is the shipper/seller's responsibility to insure the goods and absorb all costs and risks including the payment of duty and fees.

Why is export documentation necessary?

(a) as an evidence of shipment and title of goods; (b) for obtaining payment; (c) to provide a specific and complete description of the goods;

(d) for assessment of correct Duty for clearance purpose;

(e) for obtaining Export Licences; (f) for obtaining export finance; (g) for completing Pre-shipment Inspection; (h) for claiming export benefits like Duty Drawback, etc. .

Export documents

There are number of documents , which have to be prepared by the exporter in order to arrange export of his consignment. These documents mainly classified in to two i.e A) Commercial documents and B) Regulatory documents.

Commercial / Regulatory Documents

Commercial set of documents are mainly used for Commerce. In other words these are documents normally exchanged between buyer and seller. Regulatory documents are required in dealing with various regulatory authorities such as customs, RBI, Excise, Licencing authorities Inspection and other Export Promotion bodies for availing incentives etc.

Commercial / Regulatory Documents

Documents are categorized into two categories, namely Commercial Documents and Regulatory Documents.
Commercial Regulatory

Commercial Invoice
Inspection Certificate Insurance Certificate

Shipping Bill
ARE1 from (Excise) RBI Declaration Forms (GR/PP)

Bill of Lading / AWB

Application for remittance of currency

Certificate of Origin Bill of Exchange Shipment Advice Packing List

Various Licences Bill of Entry

Commercial Documents
Principal 1. Commercial Invoice 2. Inspection Certificate 3. Insurance Certificate 4. Certificate of Origin 5. Bill of Lading 6. Shipment Advice 7. Packing List 8. Bill of Exchange Auxiliary 1. Proforma Invoice 2. Intimation for Inspection 3. Declaration for Insurance 4. Application for Certificate of Origin 5. Mate Receipt 6. Shipping order 7. Shipping Instructions 8. Letter to Bank for negotiation of documents

Commercial Documentation Principal Documents

Documents Functions Prepared By

1)

Quotation

An offer to sell goods and should state clearly the price , details of quality , quantity , trade terms , and payment terms .

Exporter

2) Sales Contract

An agreement between the buyer and the seller stipulating every details of the transaction .It is legally binding documents .It is therefore advisable to seek a legal advice before sinning the contract .

Exporter and Importer

Commercial Documentation Principal Documents

Documents 3) Commercial Invoice Functions It is a formal demand note for payment issued by the exporter to the importer for good sold under a sales contract . It should give details of the good sold , payment terms and trade terms . It is also used for the customs clearance of goods . A report issued by an independent surveyor ( Inspection company) or the exporter on the specification of the shipment , including quality, quantity / and price . Required by certain buyer and countries. Prepared By Exporter

4) Inspection Certificate

Inspection Company or Exporter

Commercial Documentation Principal Documents

Functions An Insurance policy is an insurance documents evidencing insurance has been taken out on the good shipped, and it gives full details of the insurance coverage . An insurance certificate certifies that the shipment has been insured under a given open policy and is to cover loss of or damage to the cargo while in transit. Prepared By Insurer or Insurance Agent or Insurance broker.

Documents 5) Insurance policy / certificate

6) Certificate of Origin It is a certificate indicating the fact that the [COO] goods which have been exported have originated or manufactured in a particular country. So it is a sort of declaration testifying the origin of export.

Commercial Documentation Principal Documents

Functions An evidence of contract between the shipper of the goods and the carrier . The customer usually needs the original as proof or ownership to take possession of the goods , Two types 1)Straight bill ( Non Negotiable) 2)Shippers order bill ( Negotiable) Prepared By Shipping Company

Documents 7) Bill of lading ( B/L)

8) Shipment Advice

Commercial Documentation Principal Documents

Functions Prepared By

Documents 9) Packing List

A list providing information needed for Shipper transportation purpose , such as detail of invoice , buyer consignee , country of origin , vessel / flight date , port /airport of loading , port / airport of discharge , place of delivery , shipping marks / container number , weight / volume of merchandise and the fullest details of the goods.

10) Bills of Exchange

Auxiliary Documents
Functions An Invoice provided by a supplier prior to the shipment of merchandise informing the buyer of the kinds and quantities of good to sent, their value , and importation specification ( Weight , size and similar characteristics ) Prepared By Exporter

Documents 1) Pro forma Invoice

2) Dock Receipt /DR/ or mates Receipt

A receipt to confirm the receipt of cargo on warehouse pending shipment . The Dock receipt is used as documentation to prepare a bill of lading . It has no legal role regarding processing financial settlement .

Shipping Company

Documents
Product Testing Certificate

Functions
A certificate to certify that product are conformed to certain international /national technical standard , such as product quality safety , and specification etc. Document issued by the competent country when agricultural or food product are being exported, to certify that they comply with relevant legislation in the exporters country and were in good condition at time of inspection , prior to shipment and fit for human consumption. A pest control certificate issued to certify that the concerned product have been undergone the quarantine and pre shipment fumigation by the approved fumigation service provider.

Prepared By
Accredited Laboratories

Health Certificate

Exporter/Inspec tion authority

Fumigation Certificate

Exporter/ Inspection Company

Documents Consular Invoice

Functions A document required by some foreign courtiers , showing shipment information such as consignor , consignee , and value description etc. Certified by consular official of the importing country stationed in the foreign country , it is used by the county customs official to verify the value ,quantity and nature of the shipment Required for countries like Kenya Uganda Australia Fiji

Prepared By Exporter

14) Air Way bill ( AWB)

A kind of way bill used for the carriage of goods by air. This serves as a receipt of goods for delivery and state the condition of carriage but is not a title document or transferable / negotiable instrument.

Airlines

Regulatory Documents

Shipping bill

Shipping Bill is an important document required to seek permission of customs to export goods by Sea/Air. It is prepared by the exporter and submitted to the Customs. The exporter of any goods has to file a SHIPPING BILL as an entry for the purpose of export by air or sea and a BILL OF EXPORT in respect of export by land. Cargo will be allowed to be carted to Dock/Port sheds only after stamping and passing of the shipping bill by customs authorities. The exporter has to sign a declaration in the Shipping Bill regarding the truth of its contents.

Shipping bill

Shipping Bill normally contains:

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

Shipping bill

Types of Shipping Bills: FREE SHIPPING BILL: Used for export of goods which neither attract any Export duty/cess nor entitled to any Duty Drawback

DUTIABLE SHIPPING BILL: Used when export goods are subject to Export Duty/Cess. Duty is charged either on quantity basis (Fixed amount per kg. or per Metric tonne) or on certain percentage of assessable value. DRAWBACK SHIPPING BILL: Used when Duty Drawback is to be claimed. SHIPPING BILL FOR SHIPMENT EX-BOND: Used when the goods are to be exported which have been imported earlier and kept in bond prior to re-export.

Shipping bill

Types of Shipping Bills: DEPB SHIPPING BILL: When DEPB benefit is to be claimed.

DEEC SHIPPING BILL: This shipping bill is used for export of goods under Advance Authorization (Duty exemption scheme).

DEEC CUM DRAWBACK SHIPPING BILL: This shipping bill is used for export of goods where both the schemes Duty Exemption as well as Drawback are to be taken into account.

Shipping bill

Shipping bill is required to be submitted in quadruplicate. If Drawback/DEPB claim is to be made, one additional copy should be submitted. Copies of Shipping Bill are as under: Customs Copy: For record of Customs Exporters Copy: For record of Exporters/ Exporter may forward it to shipping company. Export Promotion Copy: For office of DGFT. This copy is the most important document for claiming duty Neutralisation/Exemption benefits plus export incentives wherever applicable. Exchange Control Copy: For negotiating the export documents in bank. It is Proof of export for exchange purposes. DEPB Copy: For use in the import cell of customs for registration of licence.

ARE

ARE stands for application for removal of excisable goods for exports by Air/Sea/ Post/Land. Goods which are sold overseas are exempted from payment of excise duty or entitled for Rebate of Excise Duty, if excise paid goods are exported. Under both these circumstances, the document to be used is ARE. When goods are removed without payment of duty for the purpose of export, they will get covered under the provisions of Rule 19 of the Central Excise Rules.

When excise paid goods are exported and rebate of Excise Duty is to be claimed, they will get covered under Rule 18 of Central Excise Rules

ARE is prepared before clearance of goods from the factory gate.

ARE will specify whether goods are exported under Rule 19 or under Rule 18.

There are three types of ARE:

a) ARE 1: is used for physical export of goods.

b) ARE 2: is used when goods are removed for manufacture and packing of the goods to be exported.
c) ARE 3: is used when goods are supplied as deemed exports.

Types of ARE form and their relevance

Original copy of ARE - [White]

Original copy is to be sent with the Cargo for signature of Customs Authorities. The same is to be received back from Customs after their signatures. Main original document - considered by Excise Authorities for sanctioning the rebate claim, because this is the only original document signed by customs all other documents are the copies only .

Duplicate copy of ARE [Buff]

To be sent with the Cargo for signature of Customs Authorities and is to be received back. It is received in Sealed cover from Customs, required to be submitted to Excise at the time of Rebate Claim.

Triplicate copy of ARE [Pink]

It is to be sent to the officer to whom Excise rebate is to be filed (generally the division office of Excise who has Authority to sanction rebate) either by post or by handing over to exporter in tamper proof sealed cover. Generally Range Inspector asks exporter to keep it safe and submit together with the rebate claim application.

Quadruplicate copy of ARE [Green]

Retained by excise officers at range office, generally retained by them when they come for sealing of Export Cargo.

Quintuplicate copy of ARE [Blue]

Earlier it was required to be submitted to DGFT for the claim of Export Benefit, Since the pre-audit is no more required, this copy is not to be submitted any where, can be retained by Exporter for their own records.

SDF Form/GR Form/PP form

Thank You