Collection of Foriegn Trade Terms

7/29/2019 Collection of Foriegn Trade Terms

http://slidepdf.com/reader/full/collection-of-foriegn-trade-terms 1/31



1. Commercial invoice

2. Bill of lading

3. Consular invoice

4. Certificate of origin

5. Inspection certification

6. Dock receipt and warehouse receipt

7. Destination control statement

8. Insurance certificate

9. Export license

10. Export packing list

The starting point for any Export Transaction is an enquiry.

An enquiry for product should, inter alia, specify the following details or provide the following data

Size details - Std. or oversize or undersize

Drawing, if available

Sample, if possible

Quantity required

Delivery schedule

Is the price required on FOB or C& F or CIF basis

Mode of Dispatch - Sea, air or Sea/air

Mode of Packing

Terms of Payment that would be acceptable to the Buyer - If the buyer proposes to open any Letter of Credit,

any specific requirement to be complied with by the Exporter

Is there any requirement of Pre-shipment inspection and if so, by which agency Any Certificate of Origin required - If so, from what agency.

Once the goods are ready duly packed in Export worthy cases/cartons (depending upon the mode of despatch),

the Invoice is prepared by the Exporter.

If the number of packages is more than one, a packing list is a must.

Even If the goods to be exported are excisable, no excise duty need be charged at the time of Export, as export

goods are exempt from Central Excise, but the AR4 procedure is to be followed for claiming such an

Similarly, no Sales Tax also is payable for export of goods.

EXPORT DOCUMENTATION AND PROC

Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation t

freight forwarders are specialists in this process. The following documents are commonly used in exporting; whiused in each case depends on the requirements of both our government and the government of the importing cou

STEP1: Enquiry :

STEP 2: - Proforma generation :

It is advisable that the Exporter immediately acknowledges receipt of the order, giving a schedule for the

delivery committed.

STEP 5: Goods readiness & documentation :

STEP 6: Goods removal from works :

After studying the enquiry in detail, the exporter - be it Manufacturer Exporter or Merchant Exporter - will provide

a Proforma Invoice to the Buyer.

STEP 3: Order placement :

If the offer is acceptable to the Buyer in terms of price, delivery and payment terms, the Buyer will then place an

order on the Exporter, giving as much data as possible in terms of specifications, Part No. Quantity etc. (No

STEP 4: Order acceptance :



There are different procedures for removing Export consignments to the Port, following the AR4 procedure, but

it would be advisable to get the consignment sealed by the Central Excise authorities at the factory premises

itself, so that open inspection by Customs authorities at the Port can be avoided.

If export consignments are removed from the factory of manufacture, following the AR4 procedure, claiming

exemption of excise duty, there is an obligation cast on the exporter to provide proof of export to the Central

The Exporter is expected to provide the following documents to the Clearing & Forwarding Agents, who are

entrusted with the task of shipping the consignments, either by air or by sea.

Invoice

Packing List

Declaration in Form SDF (to meet the requirements as per FERA) in duplicate.

AR4 - first and the second copy

Any other declarations, as required by Customs

On account of the introduction of Electronic Data Interchange (EDI) system for processing shipping bills

electronically at most of the locations - both for air or sea consignments - the C&F Agents are required to file

with Customs the shipping documents, through a particular format, which will vary depending on the nature of

Under claim of Drawback of duty

Without claim of DrawbackExport by a 100% EOU

Under DEPB Scheme

After completing the shipment formalities, the C & F Agents are expected to forward to the Exporter the

Customs signed Export Invoice & Packing List

Duplicate of Form SDF

Exchange control copy of the Shipping Bill, processed electronically

AR4 (original duplicate) duly endorsed by Customs for having effected the Export

Bill of Lading or Airway bill, as the case may be.

With these authenticated shipping documents, the Exporter will have to negotiate the relevant export bill

through authorized dealers of Reserve Bank, viz., Banks.

Under the Generalized System of Preference, imports from developing countries enjoy certain duty

concessions, for which the exporters in the developing countries are expected to furnish the GSP Certificate of

Origin to the Bankers, along with other shipping documents.

Broadly, payment terms can be:

DP Terms

DA Terms

Letter of Credit, payable at sight or payable at... days.

The negotiating Bank will scrutinize the shipping documents and forward them to the Banker of the importer, to

enable him clear the consignment.

It is expected of such authorized dealers of Reserve Bank to ensure receipt of export proceeds, which factor

has to be intimated to the Reserve Bank by means of periodical Returns.

STEP 7: Documents for C & F agent :

Step11: Bank to bank documents forwarding :

STEP 12: Customs obligation discharge :

As indicated above, Exporters are also expected to provide proof of export to the Central Excise authorities, on

STEP 8: Customs Clearance :

After assessment of the shipping bill and examination of the cargo by Customs (where required), the export

consignments are permitted by Customs for ultimate Export. This is what the concerned Customs officials call

STEP 9: Document Forwarding :

STEP 10: Bills negotiation :



Authorized dealers will issue Bank Certificates to the exporter, once the payment is received and only with the

issuance of the Bank Certificate, the export transaction becomes complete.

It is mandatory on the part of the Exporters to negotiate the shipping documents only through authorized

dealers of Reserve Bank, as only through such a system Reserve Bank can ensure receipt of export proceeds

the basis of the Customs endorsements made on the reverse of AR4s and get their obligation, on this score,

STEP 13: Receipt of Bank certificate :



DURES

hat exporting requires;

h of them are actuallytry.

http://history.back%28%29/



Berth Where the vessel docks.

Bonded Warehouse

secure us oms approve ac y w ere cargo

and containers are stored under close

surveillance.

Breakbulk

Loose cargo containers and non-containerized

cargo; vessel whose hatch is built to

accommodate various bulk commodities.

Breakbulk Vessel

Carries containers and non-containerized cargo;

vessel whose hatch is Vessel built to


CarrierOne who owns, operates or charters vehicles of transportation for movement of cargo.

Bulk Carrier Vessel specifically built to carry raw materials.

CellContainer slot where container fits into place on

vessel.

Cell Guides A guide for each container slot.

ChassisTrailer or wheeled unit on which a container is

placed in order to move container over the road.

COFCContainer on a Flat Car. Containers moving on

articulated flat rail cars without chassis.

Connecting Carrier An intermediary carrier utilized to connect cargo

to/from mother vessel

Container Ship Vessel built to accommodate ocean containers.

Cross Docking

the receiving dock to the shipping dock,

eliminating the need to place the merchandise in

storage.

Port of Discharge -

Port where vessel is off loaded and cargo

discharged.

Port of Loading - Port where vessel is loaded and cargo stowed

Ship's Manifest -

Contains a list of the shipments comprising the

cargo of the vessel.

Short-Shipped - Cargo manifested but not loaded.

Breakbulk -

Loose cargo containers and non-containerizedcargo; vessel whose hatch is built to


Breakbulk Vessel -

Carries containers and non-containerized cargo;

vessel whose hatch is Vessel built to


Bulk Carrier - Vessel specifically built to carry raw materials.

Bulk Containers - Containers used specifically for raw materials.



Carrier -

One who owns, operates or charters vehicles of

transportation for movement of cargo.

Container Pool / Depot -

Where containers are stored . Carrier location to

hold empty containers, various points for shipper's

utilization; an area designated for storage of

empty .



Banding Securing of cargo on a pallet generally by a steel/metalstripping.

Bolster Bracing of a commodity in a container

Chains and BindersUsed to secure (brace & chock) oversize cargo to equipment.

Container

A truck trailer body that can be detached from the chassis for

loading into a vessel, a rail car or stacked in a container depot.

Containers may be ventilated, insulated, refrigerated, flat rack,

vehicle rack, open top, bulk liquid or equipped with interior

devices. A container may be 20 feet, 40 feet, 45 feet, 48 feet or

53 feet in length, 8'0" or 8'6" in width, and 8'6" or 9'6" in height.

Container Number Identification number assigned to each container.

Container Pool / Depot

Where containers are stored usually inland for container

availability to shippers or consignees. Carrier location to hold

empty containers, various points for shipper's utilization; an area

designated for storage of empty .

Container Yard Facility where full and empty containers are stored.

CooperWarehouse worker assigned to reconstruct or repair cartons,

crates, boxes, etc.

Lift-on / Lift-off -The method by which cargo is loaded and discharged by the use

of a crane.

Roll-on / Roll-off -

The method by which wheeled vehicles can be directly driven on

and off a vessel.

Barges(noun)Conveyance used to carry loose cargo or containers in smaller

volumes than mother vessels.

Commodity DescriptionCommodity Description - Description of goods being shipped.

AMS - Automated Manifest Systems.

Bay -Section of a vessel where containers or cargo is stored.

Bolster -Bracing of a commodity in a container.

Cell -Container slot where container fits into place on vessel.

Cell Guides - A guide for each container slot.

CFS/CFS -

Cargo received and stuffed by carrier at origin and devanned bycarrier at destination.

CFS/CY -

Cargo received and stuffed by carrier at origin then delivered

intact at destination.

Commodity Description -Description of goods being shipped.



Consolidation -

Effort extended to put same destination cargo together in same

container for ease of delivery.

contract of carriage

Binding agreement (evidenced usually by an air waybill, bill of

lading, or passenger ticket) which contains conditions of carriage

that spell out the obligations and rights of a carrier and a

shipper/passenger. The carrier undertakes to deliver

goods/passengers from a named place of departure to a nameddestination, in consideration for freight/fare. This contract

addresses issues associated specifically with what is being

carried, and how the liability and compensation for damage or

injury to (or loss of) the goods/passengers is assessed,

apportioned, and paid.it contains also the carrier's policy

regarding baggage, bumping, cancellation and delays, claims



Cargo Receipt -

Air waybill

House Air Waybill (HAWB)

Arrival Notice -

lading

Bill of Lading (B/L)

Clean Bill-of-Lading

On Board Bill-of-Lading

Carrier’s Certificate



dock receipt

Bill of Lading Number

Booking

Claim

Combined Transport Bill of

Lading

Consolidation

Credit Agreement

Container Ship

Containers

Arrival Notice-

Booking -

Collect -

advice of shipment

certificate of origin



certificate of insurance (COI)

advice of shipment

CIF

FOB



A receipt of cargo for shipment by a consolidator.

• documentary evidence of the conclusion of a contract of

carriage. • proof of receipt of the goods for shipment

An air waybill issued by an airfreight consolidator. (See

also Air Waybill)

Documentation that notifies consignee of arrival

information and freight charges due. Form produced by

carrier for advanced notification to consignee of cargo

arrival.

1. Placement of cargo in its transporting vessel.2. Cargo carried in a transportation vessel

A receipt for the cargo and a contract for

transportation between a shipper and the ocean

carrier. It may also be used as an instrument of

ownership which can be bought, sold, or traded

while the goods are in transit. To be used in this

manner, it must be a negotiable "Order" Bill-of-

Lading. This is sometimes abbreviated as

"Blading, or B/L"

A clean Bill-of-lading is issued when the shipment

is received in good order. If damage or a shortage

is noted, a clean bill-of-lading will not be issued.

An On Board Bill-of-Lading certifies that the cargo

has been placed aboard the named vessel and is

signed by the master of the vessel or his

representative. On letter of credit transactions, an

On Board Bill-of-Lading is usually necessary for

the shipper to obtain payment from the bank.

U.S. Customs form used in lieu of bill of lading.



Is a document issued by a direct ocean freight carrier to

acknowledge receipt of ocean freight shipment at the

carrier's shipping terminal.

Carrier’s reference number assigned to bill of lading.

Cargo commitment made to carrier (i.e. a reservation).

A request for payment by a customer due to a shortage or

damage to cargo.

Provides a combined transport by at least two different

modes of transportation from a place at which the goods

are taken to a place designated for delivery.

Effort extended to put same destination cargo together in

same container for ease of delivery.

Agreement between carrier and shipper for release of

cargo with promise to pay ocean freight within specifiedtime. Document signed by the shipper which binds

shipper to credit terms of the conference or agreement

body.

Ocean going vessel designed to carry containers.

Containers are designed to give maximum protection

against weather, damage, and theft. Basic sizes for

containers are 20, 35, and 40 feet in length, 8 feet wide

and 8 feet high.

Documentation that notifies consignee of arrival

information and freight charges due. Form produced by

carrier for advanced notification to consignee of cargo

arrival.Cargo commitment made to carrier (i.e. a reservation).

Money to be paid at destination prior to release of bills of

lading.

Letter or form sent by an exporter to a foreign buyer

informing that the shipment of the ordered goods is on its

way. A copy of the invoice and the packing slip (and

sometimes a copy of bill of lading) may also be attached.

Also called advice note.

Document that certifies a shipment's country of origin. It is

used between members of a trading block or where

special privileges are granted to goods produced in

certain countries. Certificate of origin is commonly issued

by a trade promotion office, or a chamber of commerce in

the exporting country. Also called declaration of origin.



Document issued by an insurance company, it certif ies

that an insurance policy has been bought and shows an

abstract of the most important provisions of the insurance

contract. But it is not a substitute for the actual policy, and

is normally a non-negotiable document-it cannot be

assigned to a third party, and is unacceptable under the

terms of a letter of credit and in making a claim. In life

and health insurance a COI is issued to the members of a

group insurance plan, evidencing their participation. In

marine insurance (where cargo is insured against a

floating insurance policy) COI serves to assure the

consignee that insurance is in effect for the goods in

transit and a proper policy will follow. Also called

insurance certificate.

Letter or form sent by an exporter to a foreign buyer

informing that the shipment of the ordered goods is on its

way. A copy of the invoice and the packing slip (and

sometimes a copy of bill of lading) may also be attached. Also called advice note.

CIFmeans Cost Insurance and Freight. That means

the shipper/trader has to pay the cost of shipment up

to the ship, insurance cost of cargo and freight cost up

FOBstands for Free On Board which means the

shipper pays only costs up to loading on ship in port

and insurance cost , but freight charges are payed by



Customs Clearance

Shipment cleared by Customs for

movement.

Customs Duty

Monies paid to U.S. Customs for

goods entered into U.S. from

foreign countries.

Customs Station Area where containers are brought

for Customs inspection.

Customs Warehouse

Where cargo is temporarily stored

awaiting inspection or where cargo

is stored when seized by Customs

due to lack of permit/entry.

Certificate of OriginFormal document (required at

destinations) stating origin of cargo

and relevant cargo details.



Forwarder, Freight

Forwarder, Foreign

Freight Forwarder

Consignee/Importer

Consignor

Claim -

Company Guarantee -



An independent business that arranges the transport of

shipments for exporters. The firm may ship by land, air, or sea,

or it may specialize in one of these. Usually it handles all the

services connected with an export shipment, including

preparation of documents, booking of space, warehousing, pier

delivery, and export clearance. The firm may also handle

banking and insurance services on behalf of the exporter.

Ultimate receiver of cargo designated on the original bill of

lading.

Person or firm by whom articles are shipped (i.e. shipper).

A request for payment by a customer due to a shortage or

damage to cargo.

A letter of guarantee from a company identifying the carrier of

responsibility associated in the release of goods in lieu of bill of

lading. Protection in writing to carrier by private company.



Commercial Invoice

A document on shipper’s letterhead that

contains an accurate description of the

merchandise and show country or origin. All

items must be itemized.

Consular Invoice

Document required by some foreign

countries showing exact information as to

consignor, consignee, value description, etc.

for a shipment.

C & F -

Cost and Freight. Terms of sale. Seller

quotes price including the cost of goods and

all transportation charges to the named point

of destination.

Consular Invoice-

Document required by some foreign

countries showing exact information as to

consignor, consignee, value description, etc.

for a shipment.

Consulate Copy -

Copy of the B/L signed for consulate

purpose.

Container Number -

Identification number assigned to each

container.



Incoterms

acceptance letter of credit (L/C)

Unconfirmed Letter of Credit

sight letter of credit

Standby Letter of Credit

Revocable Letter of Credit

Irrevocable Letter of Credit

Commercial Letter of Credit

Confirmed Letter of Credit



Acceptance of Bill of Exchange



the International Chamber of Commerce has developed a set

of terms known as Incoterms. This basic terms used in

international sales contracts, and describe the responsibility of

seller and buyer (transfer of risk from buyer to seller).

Unlike a normal L/C, this type of documentary credit does not promise

to pay the beneficiary immediately upon presentation of the customary

documents, but has the additional requirement of a time or term draft

drawn on a named bank.

Aletter of creditwhere only thebankissuing it has agreed to

guaranteepayment. This differs from aconfirmed letter of credit,

where at least two banks guarantee payment. This increases

theriskfor the bank that honors the letter of credit, as it only has

one, rather than two, ways to seek recourse.

A letter of credit that is payable as soon as the required documents

have been presented.

In the event that the bank's customer defaults on a payment to the

beneficiary, and the beneficiary documents proof of its loss consistentwith any terms set forth in the letter, a standby letter of credit may be

used by the beneficiary to secure payment from the issuing bank.

An revocable letter of credit may be cancelled or modified after its date

of issue, by the issuing bank.

An irrevocable letter of credit includes a guarantee by the issuing bank

that if all of the terms and conditions set forth in the letter are satisfied

by the beneficiary, the letter of credit will be honored.

A commercial letter of credit assures the seller that the bank will

provide payment for any goods or merchandise shipped to the bank's

customer, assuming the seller provides any required documentation of

the transaction and its shipment of the purchased goods.

A letter of credit, issued by a foreign bank, which has been verified and

guaranteed by a domestic bank in the event of default by the foreign

bank or buyer. Typically, this form of letter of credit will be sought when

a domestic exporter seeks assurance of payment from a foreign

importer.



Acceptance of bill of exchange is an act by which drawee accepts the

drawer's bill of exchange by signing under the words 'accepted' on

face of the bill. It is the drawee's signed engagement to honor the bill

as presented.



Bank Guarantee

Bank Draft-

SWIFT(no.or code)

T/T payment

credit term.

non-payment risk

non-delivery risk

open account

deferred payment

D/P – Documents against Payment

D/A – Documents against Acceptance

Clean Collection

Cash Against Documents

Bank Realization certificate

advice of fate

advice of credit



advising bank

advice for advising bank

advice for beneficiary



Accepted in lieu of original bill of lading to release cargo.

A bank instrument wherein payment of funds is guaranteed.Society for Worldwide Interbank Financial Telecommunication-a

network international banks using when money wire transfer

Telegraphic transfer (TT), as one of the payment method of cash in

advance. It is one of the payment method between sellers & buyers

The time you give the buyer to pay is called the credit term.

Credit relationship in which the buyer pays upon the receipt of goods,

or on deferred payment basis.

where a person buys and receives and item with a commitment tobegin making payments at a future date.

The export documents and the bill of exchange provided to a

collecting bank are only made available to an importer when payment

is made. The collecting bank then transfers the funds to the seller

through the remitting bank.

The export documents and a time/usance bill of exchange are sent to

a remitting bank. The documents are then sent to a collecting bank

with instructions to release the documents against a buyer’s

acceptance of the bill of exchange.

The exporter creates a bill of exchange, which is sent without any

export documents to a buyer for collection through the remitting bankto the collecting bank. There is less security for an exporter since the

documents are sent directly to the importer.

This process lacks the security and legal protection of a documentary

collection since the exports documents are sent through a remitting

bank to a collection bank without a bill of exchange. It is, however, still

a collection through the banking system.

A Bank Realization certificate is a certificate that is issued by the bank

to the exporter through which export proceeds can be realized in an

orderly manner. Bank Certificate of Export & Realization is most

commonly sought by companies who have exported goods under the

Duty Entitlement Pass Book Scheme.

Written confirmation from an accepting or collecting bank to the

originating or remitting bank (which sent one or more collection

documents) whether the item was honored or dishonored by the

payee.

Communication from a bank informing a party that the same bank or

its correspondent bank (the issuing bank) has opened a letter of credit

in that party's favor.



Correspondent bank (usually in the exporter's country) of an issuing

bank (usually in the importer's country) that receives a letter of credit

(L/C) from the issuing bank for authenticating it and informing

('advising') the exporter (the L/C's beneficiary) that a L/C has been

opened by the importer in the exporter's favor. The advising bank

usually also takes on other roles in the transaction, such as (1)

confirming the letter of credit (playing the role of the 'confirmingbank'), (2) accepting a bill of exchange by endorsing it (becoming the

'accepting bank') and/or, (3) paying the exporter on presentation of

documents (becoming the 'paying bank' or 'negotiating bank'). Also

called adviser bank or nominated bank.

Communication from an issuing bank to the advising bank.Forwarding of a letter of credit (L/C) by its issuing bank to the L/C's

beneficiar usuall an ex orter .

Collection of Foriegn Trade Terms

Documents

Transcript of Collection of Foriegn Trade Terms