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METHODS OF RECEIVING PAYMENT AGAINST EXPORTS

Before we proceed to understand the concept of Letter of Credit, let us understand the various

types of payment methods available against export.

METHODS OF PAYMENT

There are three methods of payment depending upon the terms of payment, and each method

of payment involves varying degrees of risks for the exporter. The methods are:

y Payment in advance

y Documentary Bills

y Letter of Credit

y O pen Account

y Counter Trade

A. PAYMENT IN ADVANCE

This method does not involve any risk of bad debts, provided entire amount has been

received in advance. At times, a certain per cent is paid in advance, say 50% and the rest on

delivery. This method of payment is desirable when:

y The financial position of the buyer is weak or credit worthiness of the buyer is not

known.

y The economic/ political conditions in the buyer¶s country are unstable.

y The seller is not willing to assume credit risk, as un the case of open account

method.

However, this is the most unpopular methods as a foreign buyer would not be willing to pay

advance of shipment unless:

y The goods are specifically designed for the customer, and

y There is heavy demand for the goods (a seller¶s market situation).

B. DOCUMENTARY BILLS:



Under this method, the exporter agrees to submit the documents to his bank along with the

bill of exchange. The minimum documents required are

y full set of bill of lading

y commercial Invoice

y Marine Insurance policy and other document, if required.

There are two main types of documentary bills:

y Documents against Payment,

y Documents against Acceptance.

Documents against payment (D/P): The documents are released to the importer against

payment. This method indicates that the payment is made against Sight Draft. Necessary

arrangements will have to be made to store the goods, if a delay in payment occurs.

The risk involved that the importer may refuse to accept the documents and to pay against

them. The reason for non-acceptance may be political or commercial ones. In India, ECGC

covers losses arising out of such risks. Under this system, as compared to D/A, the exporter

has certain advantages:

y The document remain in the hands of the bank and the exporter does not lose

possession or the ownership of goods till payment is made,

y Other reason may include that the exporter may not be able to allow credit and wait

for payment.

Documents Against acceptance (D/A): The document are released against acceptance of

the Time Draft i.e. credit allowed for a certain period, say 90 days. However, the exporter

need not wait for payment till bill is met on due date, as he can discount the bill with the

negotiating bank and can avail of funds immediately after shipment of goods.

In case of D/A as compared to D/P bills, the risk involved is much grater, as the importer

has already taken possession of goods which may or may not be in his custody on the

maturity date of the bill. If the importer fails to pay on due date, the exporter, will have to

start civil proceedings to receive his payment, if all other alternatives fails. The risk involved

can be insured with ECGC.



C. LETTER OF CREDIT (L/C):

This method of payment has become the most popular form in recent times, it is more

secured as company to other methods of payment (other than advance payment).

A letter of credit can be defined as ³ an undertaking by importer¶s bank stating that payment

will be made to the exporter if the required documents are presented to the bank within the

variety of the L/C´.

THE LETTER OF CREIDT

Introduction

The cycle of a business transaction can be said to be complete prima facie when the buyer has

received the product he desires to buy and the seller gets his payment in due consideration of

the product supplied.



While the seller is keen to receive the payment for his supplies, the buyer is equally keen that

he gets what he wants by the paying for the same.

Tough there are many merit and demerits in each of the different mode of payments we have

discussed earlier, in relation either to the buyer or to the seller, we shall now deal in detailabout the mode of payment under the Documentary Credit.

Generally, though exporters are complacent once they get the letter of Credit on hand feeling

that their payment is secured, let me say it is as much a dubious instrument as is a safe

instrument.

If one does not understand the implications of the terms and condition of a letter of credit, the

provisions under UCP 500, how co-operative are the exporter¶s bank and how good are the

L/C opening bank and the reimbursement bank, he is sure to land in trouble at once stage or

another.

There are ample cases of frauds under the Letter of Credit. More and more ingenious methods

are adopted to circumvent the provisions of UPC 500 by fair or foul means. Hence, even the

safety and security under the Letters of Credit may prove to be no better than a mirage for a

man in the desert.

Hence, sufficient care is to be taken by the exporter to ensure that instrument is received in

order and the conditions of the L/C can be well complied with, and there are no clauses of

ambiguity.

What is a Documentary Credit?

To say in simple language, this is an Undertaking by a Bank associated with the buyer to

make the payment for the supply of goods by a seller subject to compliance of variousrequirements that may be specified in the document of undertaking by the Bank. This

document is known as Documentary Credit. A Documentary Credit is also called a Letter of

Credit (L/C).

CONTENTS OF A LETTER OF CREDIT



A letter of credit is an important instrument in realizing the payment against exports. So,

needless to mention that the letter of credit when established by the importer must contain all

necessary details which should take care of the interest of Importer as well as Exporter. Let

us see shat a letter of credit should contain in the interest of the exporter. This is only an

illustrative list.

y name and address of the bank establishing the letter of credit

y letter of credit number and date

y The letter of credit is irrevocable

y Date of expiry and place of expiry

y Value of the credit

y Product details to be shipped

y Port of loading and discharge

y Mode of transport

y Final date of shipment

y Details of goods to be exported like description of the product, quantity, unit rate,

terms of shipment like CIF, FOB etc.

y Type of packing

y Documents to be submitted to the bank upon shipment

y Tolerance level for both quantity and value

y If L/C is restricted for negotiation

y R eimbursement clause

PROCEDURE INVOLVED IN THE LETTER OF CREDIT

The following are the step in the process of opening a letter of credit:

y Exporter¶s R equest: The exporter requests the importer to issue LC in his favor. LC is

the most secured form of payment in foreign trade.y Importer¶s R equest to his Bank: The importer requests his bank to open a L/C. He

May either pay the amount of credit in his current account with the bank.

y Issue of LC: The issuing bank issues the L/C and forwards it to its correspondent bank

with also request to inform the beneficiary that the L/C has been opened. The issuing



bank may also request the advising bank to add its confirmation to the L/C, if so

required by the beneficiary.

y R eceipt of LC: the exporter takes in his possession the L/C. He should see it that the

L/C is confirmed.

y Shipment of Goods: Then exporter supplies the goods and presents the full set of

documents along with the draft to the negotiating bank.

y Scrutiny of Documents: The negotiating bank then scrutinizes the documents and if

they are in order makes the payment to the exporter.

y Negotiation: The exporter¶s bank negotiates the document against the letter of credit

and forwards the export documents to the L/C opening bank or as per their

instructions.

y R ealization of payment: The issuing bank will reimburse the amount (which is paid to

the exporter) to the negotiating bank.

y Document to Importer: the issuing in turn presents the documents to the importer and

debits his account for the corresponding amount.

In order to have uniformity and to avoid disputes, the ICC Paris has evolved uniform customs

and practices of documentary credit (UCPDC), in short known as UCP 500 effective from 1-

1-96. These are rules have been adopted by more than 150 countries. They provide the

comprehensive and practical working aid to banker, lawyer, importers, exporters, Exporters,

transporters, executives involved in international trade.

Note: as soon as an L/C is received ensure that the same is authenticated. Meaning that the

genuineness of the L/C is certified by the Advising Bank by an endorsement with the

marking µAUTHENTICATED¶ OR ELSE THE L/C IS OF NO USE.

Different Type of Documentary Credits.

There are various types of Documentary Credit opened by a bank in favour of it¶s customer

depending upon the requirement. Let us talk about few types of Documentary Credit which

are in common use.

y R evocable / Irrevocable Documentary Credit :A R evocable Documentary Credit can

be revoked (cancelled) by the buyer at his own discretion and this does not require the

consent of the seller. The risk factor here is that the L/C may be cancelled even after



the shipment is done and before the beneficiary present the documents to the bank for

claiming the reimbursement. Hence, a revocable L/C is as goods as no L/C.

obviously, no seller will entertain a revocable L/C. Contrary to this, an Irrevocable

Documentary Credit once established and advised to the beneficiary, cannot be

revoked or cancelled unilaterally by the buyer without the consent of the beneficiary

(Seller).A Seller must always ask for an Irrevocable Letter of Credit.

y R estricted/ Unrestricted Documentary Credit: A Documentary Credit stipulates the

name of the bank who is authorized to negotiate the document for claming the

reimbursement. In this case the beneficiary is obliged to negotiate the documents only

through the specified bank i.e. Negotiation of document is restricted to that particular

bank. On the contrary if no specific bank is nominated for negotiation, it may say

µNegotiation by any bank¶ which means the beneficiary is free no negotiate the

document through the bank of his choice. This is beneficial because he can negotiate

the documents through his own bank where he is having an account. Since the bank is

not alien to him, he will not face any practical/procedural difficulty in negotiating the

document. It is suggested to have an unrestricted L/C or L/C which may be restricted

to the bank of the beneficiary¶s choice.

y Confirmed/

Unconfirmed

Documentary Credit: Confirmed

Documentary Credit is one

in which the beneficiary has the option to have the L/C confirmed by a bank in the

beneficiary country i.e. the bank who confirms the L/C takes the responsibility of

making the final payment to the beneficiary upon negotiation of the document in strict

compliance with the terms and conditions of the Letter of Credit. By this process the

final payment will be made in the beneficiary¶s country by the bank which confirms

the L/C immediately upon negotiation of the documents. The beneficiary do not stand

the risk of waiting for the document to reach the opening bank who will have the final

say so to the compliance under the L/C before making the payment. Further, the payment is also made immediately after negotiation and without recourse to the

beneficiary i.e. the payment once made by the confirmed bank cannot be revoked.

Moreover, if the importing country¶s regulation changes and the money is not allowed

to be repatriated, this will eliminate the risk. On the contrary, in an unconfirmed L/C,

the negotiating bank only accepts the documents and pays for the same with recourse



i.e. if as and when the documents reach the opening bank, and the opening find some

discrepancy in the documents it may refuse to make the payment or seek clarification

for the applicant before reimbursement. The beneficiary is fully at the mercy of the

opening bank for payment. It is suggested to ask for a Confirmed L/C.

y With R esource and Without (Sans) R esource Letter of Credit: The revocable or

irrevocable LC can further be classified as with resource and without resource LC.

o With resource LC: In this type the exporter is held liable to the paying/

negotiating bank, if the draft drawn against LC is not honored by the

importer/issuing bank. The negotiating bank can make the exporter to pay

the amount along with the interest, which it has already paid to the

beneficiary.

o Without (Sans) R esource LC: In the case of sans (without) resource letter

of credit, the negotiating bank has no recourse to the exporter, but only to

the issuing bank or to the confirming bank.

Normally, the negotiating bank makes advance payment to the exporter in resource of

letter of credit either by discounting bills against letter of credit or by purchasing the

bills of exchange. In such an instance, if the issuing bank fails to make payment or

dishonor the letter of credit, then the negotiating bank cannot get the money back

from the exporter or hold him liable to pay the amount. However, in the case of with

resource letter of credit, the negotiating bank can ask the exporter to pay back the

money along with certain other expenses. For the exporter, sans R esource letter of

credit is more safe as compared to With R esource letter of credit.

y Transferable/Non-transferable Documentary Credit: In a transferable L/C, the

beneficiary can transfer the L/C opened in his name in favor of a third party who may

effect the shipment and negotiate the documents and claim payment under the said

L/C.

y R evolving Documentary Credit: Where an exporter is having a regular shipment for a

particular customer and the value of each shipment may also be of more or less equal

value, and then one can call for a R evolving Documentary Credit.

The salient feature of this L/C is that the buyer opens an L/C which can take care of

shipments, say, may be for a period of one year on a monthly basis.



For e.g. an exporter enters into a contract for supply of 5000 pairs of Trousers valued

approx.US.$.75,000/- to be shipped every month. The buyer can open an L/C for a

value of US.$.75000/- with validity for 12 months stipulating shipment every month

for a value of US$. 75000/-and by adding a clause to make 12 shipment of like value

the L/C stands replenished for the full value of the L/C after each shipment is made

the documents are negotiated for which payment are also made immediately for the

value of the shipment. The main benefit in this L/C is that the buyer, the bank and the

exporter are saved from the routine of opening one L/C every month, the anxiety of

non-receipt of the L/C on time, the amendments that may be warranted every time, the

bank charges for opening number of L/Cs etc.,. A revolving Documentary Credit may

have cumulative effect i.e. if a particular shipment is not made, then the value is

added to the value for future utilization. In an automatic R evolving Credit, the bank is

liable for the total amount covering the entire shipment and where it is non-automatic

its responsibility is restricted to the value of one shipment. In automatic R evolving

Credit the value of the credit is automatically replenished by an amendment.

Where there are continuous shipments like the one stated above one can call for a

R evolving Letter of Credit.

y Assignable Documentary Credit: In this type of L/C the benefit is shared between the

first beneficiary and the parties whose names are assigned on the L/C. The assignee isnot a party to the letter of credit but he only derives the benefit as per the L/C. this is

more beneficial to the assignee because he receives his part of the money once the

documents are negotiated by the first beneficiary in whose name the L/C is opened.

Calls for an L/C as necessary.

y Stand by Letter of Credit: This is aimed at providing a security to a seller in case the

buyer fails to perform his part. Thus this L/C is used in case of non-performance

while the other types of L/Cs are generally for some performance. Such credits are

paying on first presentation and the only document required therein is a simpledeclaration of non-performance along with the statement of claim. This type of L/C is

mainly common in U.S.A.



A standby Documentary Credit is generally common on open account trading where

the seller may expect some security for getting his payment. This is not permitted in

India.

y R ed Clause LC: The red clause LC is the usual irrevocable LC with further authorities

the negotiating bank to make advance to the beneficiary for the purpose of processing

the export goods. Thus, the red LC enables the exporter to obtain packing credit

facility for the purpose of processing the goods. It is called a red-cause LC because it

is generally printed/ typed in red ink.

y Green Clause LC: The Green LC in addition to permitting packing credit advance also

provides for the storing facilities at the port of shipment. Green LCs is extensively

used in Australian wool creditors.

y Back-to-Back LC: Back-to Back LC is a domestic letter of credit. It is a ancillary

credit created by a bank based on a confirmed export LC received by the direct

exporters. The direct exporter keep the original LC (received from issuing bank) with

the negotiating or some other bank in India, as a security, and obtains another LC in

favour of domestic supplier. Through this route the domestic supplier gains direct

access to a pre-shipment loan based on the receipt of domestic or back-to-back LC.

y Documentary LC: Most of the L\C is documentary L\C. Payment is being made by

the bank against delivery of the full set of documents as laid down by the terms of

credit. The important documents required to be submitted by the exporter under

documentary LC includes the following:

o Bill of Lading /Airway Bill or any other transport document

o Commercial Invoice

o Insurance Policy

o Shipping Bill

o Certificate of Origin

o Combined Invoice and Certificate of Value and Origin

o GSP/CWP certificate

o Packing List

o Certificate of Quality Inspection

o Bill of Exchange



o Any other document if required.

A letter of credit may call for some or most of the above documents and may also call for

some other documents specific to the shipment.

y Traveler¶s LC: Traveler¶s LC is issued to the person who intends to make a journey

abroad. The correspondent/ agent of the bank honors all the cheques drawn on this

credit by its holder up to the amount mentioned in LC. Traveler¶s LC has more

advantages as compared to traveler¶s cheques. In case of cheque, the holder can

withdraw up to the amount of the cheque. Again, he has to carry a number of cheque.

In case of traveler¶s LC, the holder can draw any amount up to the limit mentioned in

the LC, and he need to carry only one paper of LC.

Types of Payments under a Documentary Credit.

Payment under a documentary credit can be of the following types:

y payment at Sight: In this mode, the payment is made by the L/C opening bank or its

nominated bank or by a confirming bank on presentation of the documents in full

conformity with the L/C. The L/C may or may not call for draft at sight for the full

value of the documents.

y Deferred Payment Scheme: In this case the payment is to be made at a future date as

stipulated in the L/C. Here, generally NO draft is required as the due date of payment

is defined in the L/C. In case of a confirmed L/C, the final payment is made by the

confirmed bank on due date and by the issuing bank or its nominated bank if the L/C

is not confirmed.

y Acceptance Credit : This type of credit requires a usance draft to be drawn on a

nominated or accepting bank. The payment is made by the nominated/accepting bank

on the due date as per instructions of the negotiating bank. In case of a confirmed L/C

the payment on due date is made by the negotiating bank (confirming bank).

y Negotiation Credit: Here the payment is made by the negotiating bank upon

negotiation of the documents if it prepares to take the risk and will recourse to the

beneficiary. If the credit is confirmed, then the negotiation bank is obliged to make

the payment upon submission of a clean document by the beneficiary.



Expect in the case of confirmed L/C there is always a time lag between the date of

negotiation of the document and the date of receipt of the payment. This is a grey area. If the

bank acts swiftly and without prejudice, one gets payment within a week¶s time. If the

payment is delayed beyond this time, though an exporter has every right to ask for

compensation, in actual practice, no justice is done to the exporter for the delayed payment.

Very rarely, on persistent approach by the exporter/their banker, does a defaulting bank

comes forward to compensate for the delayed payment. Generally the exporter has to forego

lot of money in correspondence through the negotiating bank because every communication

of the bank is charged to the exporter. It is no surprise many exporter suffer this loss silently.

Feature of a Documentary Credit

A documentary credit is a document in writing issue by the bank on behalf of its customer

(The Buyer). Documentary Credit must stipulate the Type of Credit as detailed above and

inter alia will also stipulate the

Following details :

y the name of the Bank issuing the Documentary Credit.(The L/C O pening Bank)

y the name and address of the buyer on whose behalf the credit is Issued.(The

Applicant)

y the name and address of a bank in the country of the seller the credit through Whom

the L/C is to be advised to the seller.

y The name and address of the Seller (Beneficiary)

y The Maximum Value the opening bank undertakes to pay to the Beneficiary.

y The date of issue of the credit.

y The Expiry Date of the L/C

y The Validity Date for shipment.

y The

D

etails of the product to be shipped.(D

escription)y Details of document required for claiming the payment from the O pening bank.

y The name and address of the bank authorized to negotiate the documents.

y The R eimbursement Clause.



As soon as an L/C is received ensure that the L/C is authenticated. If the L/C received in mail

the signatures are got to be verified by the advising bank. In case of telex/swift the bank

should endorse on the document authenticated and then only the L/C is a valid document.

W

hile the above details are the minimum that aD

ocumentary Credit may have in actual practice there can be other stipulations mutually agreeable to the buyer, seller and the

opening bank as also the negotiating bank.

The guidelines for the interpretation and usage of Letter of Credit are governed by the UCP

500 (Uniform Customs Practice for Documentary Credit) published by the International

Chamber of Commerce (ICC). The UPC 500 covers all the procedural aspects relating to the

transactions under a Letter of Credit. Hence one is suggested to be familiar with all the 49

Articles as detailed in the UCP 500 of 1994.

While all the elements and events that one may encounter in each and every organization can

not be explained, the UCP 500 has attempted to take care most of the queries that one may

encounter normally.

The ICC Uniform Customs and Practice was first published in 1993. Taking into the

consideration of the various developments in the transactions under the Documentary Credit

the ICC has been reviewing these rules and updating the same. As time changes and the

international transactions faces new aspects, attempts will be made to get the UCP 500

revised.

Scrutiny of letter of credit

Mere receipt of letter of credit is no guarantee of payment. There are many ifs and buts before

the documents are submitted to the bank against the letter of credit for realization of proceeds

from the opening bank. As soon as the letter of credit is received a through scrutiny is to be

undertaken to ensure that

y First and foremost that the credit is properly authenticated by the advising bank.



y The letter of credit has been opened in accordance with the terms of the contract.

y The name and address of the beneficiary has been spelt properly.

y The details of product description, quality, and value are in order.

y The validity of shipment and expiry are correct.

y The documents that are required can be submitted.

y There is sufficient % of tolerance of quantity and value.

y The unit price and the terms of contract are correct.

y The terms and conditions stipulated can be complied with.

y That the credit is available for negotiation without restriction.

y In case of exports requires the credit to be confirmed by the local, then necessary

clause is incorporated by the opening bank on the credit.

y Last but not the least; the credit has a reimbursing clause enabling the negotiation

bank to get reimbursement of the money paid to the exporter against the documents.

There are only few suggestions. The requirement may differ for different exporter and the

scrutiny has be done relative to the requirement.

AMENDMENTS TO THE CREDIT

On scrutiny of the letter of credit, if the exporter finds that some change are required to be

made in the credit, he should immediately request the buyer to make necessary change in theletter of credit and the opening bank issued necessary amendment in this respect. Any oral

and written agreement by the importer about change in the credit directly to the exporter

should not be accepted as it is not valid under the credit. Any change must be advised by the

importer through the opening bank only as a sort of amendment to the original credit.

DOCUMENTARY CREDIT IN GENERAL

Of all the various type of payments, the most safest as far as the exporter is concerned is to

get an advance payment in full for the value of shipment to be effected. O bviously, this puts

the buyer totally at the mercy of the seller and unless the buyer feels unavoidable he will not

be prepared to make advance payment. Hence, of the rest of the modes of payment, the best is

calling for a Documentary Credit for any shipment. Now let us see how we can take care of

the interest of the exporter while an L/C is established.



It is suggested that the exporter gives the full details as to the various requirements to the

buyer for incorporation in the L/C. this will avoid the necessary of asking for amendments

and will save both time and money. Bear in mind every amendment costs you badly. Care

are should be taken to ensure that there are NO spelling mistakes, omission and commission

of ³, or´, or such small things. A discrepancy is a discrepancy and there is nothing like minor

discrepancy or major discrepancy as far as the bank is concerned. A bank strictly deals in

documents and the documents are expected to be cent percent in line with details give in the

Documentary Credit. Ensure that the Validity for shipment and for negotiation of documents

can be complied with. If not possible, call for amendment extending the validity as required.

Unless the L/C specifies the tolerance for the quantity and value, the exporter should follow

the quantity and value as stipulated in the L/C. There is provision for a tolerance of the

quantity up to 5 percent more or less than stipulated in the L/C even if the L/C does notspecify tolerance exclusively and unless tolerance is prohibited 0 specifically. However, the

value of documents, on no account, could exceed the limits of the L/C.

Check the description of the product properly, the rates if specified, and quantity of each of

the items. Ask for amendment where you cannot copy with the terms. Make sure that all the

documents as called for by the Credit can be submitted without any exception.

The last but not the least is the R eimbursement clause (Getting the funds for the shipment

made). An L/C without this clause is no L/C. if there is no provision as to from where the

exporter is going to get paid for, the whole exercise of the L/C is futile. The opening bank

may specify the reimbursement clauses as follows:

y The negotiating bank to send the documents to the opening bank who will, upon

receipt of the documents, arrange for reimbursement as claimed by the negotiation

bank.

y The negotiating bank can claim reimbursement directly from a nominated bank (say

ABC Bank, New York) either upon negotiation of documents or after a period of ¾

days of negotiation subject to the documents being submitted by the beneficiary is

strictly in conformity with terms and condition of the letter of credit.



I for one prefer the reimbursement clause as in b) so that on one hand my bank sends the

documents to the opening bank and at the same times claims the reimbursement from

nominated bank.

These are some of the aspects one should take care to ensure that the L/C established in hisfavor is in order and that he can comply with all the provision thereof. However, one is

advised to make a checklist and take a note of each and every condition of the L/C for

compliance at the right time.

PARTIES TO LETTER OF CREDIT

y Applicant: the buyer or importer of goods.

y Issuing Bank: importer¶s bank who issues the L/C.

y Beneficiary: the party to whom the L/C is addressed. The seller or supplier of goods.

y Advising Bank: issuing bank¶s branch or correspondent bank in the exporter¶s country

to which the L/C is sent for onward transmission to the beneficiary.

y Confirming Bank: the bank in beneficiary¶s country which guarantees the credit on

the request of the issuing bank. (Many a times the advising bank and confirming bank

are one and the same).

y Negotiation Bank: the bank to whom the beneficiary present his documents for

Payment u Under L/C.

y R eimbursing Bank: the bank which will reimburse the negotiating bank for the value

of the credit.

Where an L/C stipulates that the Negotiation is restricted to a specific bank which is not the

Advising Bank or Where the L/C is not restricted, and the seller desires to negotiate the

document which is not the advising bank, then we have a separate Negotiating Bank.

Where the opening bank prefers to advise the L/C through its own branch in the beneficiary

country or through another bank of its choice, then the L/C may be advised to the beneficiary

directly by this bank or if it instructed to advise the L/C through the buyer¶s nominated bank

then it does so. Here, we have two advising bank.



As far as possible, one should restrict the involvement of the number of the banks to the

minimum. More the number of the banks, more the time in the transmission of the L/C, in

addition to multiplicity of bank charges.

SP

ECIAL NO

TE

Though one may strongly feel that a Letter of Credit is the safest mode of payment, one will

face innumerous practical difficulties in so far as compliance with the terms and conditions of

the L/C. since several documents are involved, there are every possible of discrepancy in the

documents either between different documents or between the document or between the

document and the L/C. the Negotiating bank soft pedal some of the discrepancies which they

feel may not be pointed out by the opening bank as discrepancy to favour its customer. In the

like manner the opening bank, to safeguard the interest of the buyer, would like to ensure that

the document submitted against a Letter of Credit are strictly in full conformity of the L/C.

For mastery of the operation under the Letter of Credit one is advised to completely study the

various articles of the UCP 500 so that one can be clear in his mind as to the various

provisions available under the Documentary Credit which will stand good while negotiating

the documents with the bank. While the articles of UCP 500 come safeguard the interest of

both the buyer and the seller, there are certain elements which may be outside the definition

of the UPC 500. Also there is certain flexibility provisions in the UPC 500 which one might

like to exploit to his favour.

So, in spite of the L/C being the safest method to ensure the payment, unless both the buyer

and the seller follow the business ethics there is every chance that one gets cheated by the

other. As a prudent exporter one should be very careful in selecting his customer apart from

taking other safety measures.

If the customer is too good, and you have been dealing with them for a long time, one may

relax and term the L/C as the best method to receive payment. If the customer turns out to be

unscrupulous then he can play havoc. This is applicable to both the seller and the buyer.

There are books on fraudulent us of the Documentary Credits. Sometimes it may be the buyer

who is at the receiving end and some time it may be the other way.



A study of such book as above may help one to take adequate care. But, the brain is always

working in multi directions. It will be no surprise if one comes across newer and newer

dubious methods being adopted by the contracting parties.

TOTAL OPERATION UNDER THE LETTER OF CREDIT.

T he Unconfirmed L/C.

y The Buyer makes an application to his bank to open an L/C.

y O pening bank establishes the L/C.

y O pening bank advises the L/C through his associate or through the bank. Nominated

by the beneficiary.

y The Bank in the beneficiary country which receives the L/C sends the Original L/C to

the customer either directly or through the bank Specified in the L/C.

y The buyer complies with the L/C requirements and submits the relevant documents.

To the bank for claiming reimbursement.

y The negotiating bank negotiates and sends the documents to the opening bank or as

Directed. Meantime pays the beneficiary.

y Advises the opening bank or the reimbursement bank the details of his Accounts and

the nominated bank where the proceeds are to be credited.

y Once the credit is received, the nominated bank advises the negotiating bank of the

credit. Thus the negotiating bank gets the credit for the L/C documents.

T he Confirmed L/C.

All the steps from 1to6 as far as the beneficiary are concerned since the payment is made to

the beneficiary without recourse. However, the negotiating bank may have to follow the

subsequent steps since he has to receive his money from the opening bank.



PREPARATION AND SUBMISSION OF DOCUMENTS FOR

BANK NEGOTTIATION /PURCHASE

Document against exports should normally be realized through an authorized dealer foreignexchange. However payment of export can be received directly from the overseas buyer in

the form of bank draft, pay order, banker¶s cheque, personal cheque foreign currency notes,

foreign currency traveler¶s cheque, etc. Without any monetary limit provided the exporter¶s

track record is good, he is a customer of the authorized dealers through whom documents are

to be negotiated and prima facie the instrument of payment represents export proceeds

realization. Take care to submit various documents in a proper manner and within the

prescribed time schedule. Apply to the R eserve Bank for extension of time in case you feel

there is likely to be a delay in realizing export proceeds.

The following are the steps in realizing export proceeds:

y Approaching a Bank: After dispatch of the goods, either by sea, or by air, the exporter

should approach his bank (authorized dealer) with a formal request to realize sale

proceeds from the foreign buyer. It is obligatory to submit the shipping documents to

an authorized dealer within 21 days of the date of shipment (subject to certain

exceptions). In India, the exporters have to realize the full value of exports within 180

days from the date of shipment, (unless the payment terms offered are ³deferred

payment terms´). Where it is not possible to realize the sale proceeds within the

prescribed period, the exporter should apply for extension in prescribed form ETX (in

duplicate) to R BI.



y Submission of Documents to the Bank: The exporter should submit the following

documents

o Bill of Exchange

o Full set of Bill of Lading

o Commercial Invoice Copies

o Certificate of Origin

o Insurance Policy

o Inspection Certificate

o Packing List

o GR (duplicate copy to forward it to R BI)

o Bank Certificate

o Other relevant documents.

The above documents need to be submitted in two complete sets, because it is

customary to dispatch two sets of documents, one after the other. This is because, if

one set is misplaced or delayed in transit, the importer can get at least the other set

and clear the goods.

y Verification of Documents: The bank will verify the documents to find

o Whether the required documents are in order.

o Whether the required documents are attested by customs and other

authorities.

y Letter of Indemnity: If the exporter wants immediate payment from his bankers, then

his bankers may provide advance payment only when the exporter signs an indemnity

letter. The implications of an indemnity letter is that in the event of refusal of payment

by the issuing bank in respect of LC, then the negotiating bank can ask the exporter to

pay back the money advanced along with necessary charges.

Common Document Discrepancies

o Credit Expired

o Late shipment

o Presented after permitted time from date of issue of shipping documents



SHIPMENT THROUGH COURIERS

In addition to the exporter by sea, air, rail or road, exports are also allowed by courier under

the courier imports or exporters (clearance) R egulation Act, 1998.

These regulations shall apply for clearance of goods carried by authorized courier on

outgoing flights on behalf of exports. Consigner for a commercial consideration.

Export Terms & conditions:

Export of any item can be affected by courier, except the following.

y Goods which are subject to cess.

y Goods proposed to be exported with claim of duly drawback.

y Goods proposed to be exported under DEPB, EPCG, AL (Advance License)

y Where the value of goods is more than R s. 25,0000/-

y Goods where weight of individual packet is more than 32 kg.

CUSTOM PROCEDURE FOR EXPORT UNDER EDI SYSTEM



It is brought to the notice of all exporters, importers, CHAs, Trade and General Public that

the computerized processing of Shipping Bills under the Indian Customs EDI (Electronic

Data Interchange) System ± (Exports), will commence w.e.f.1`5-09-2004. The computerized

processing of shipping bills would be in respect of the following categories:

y Duty Free white shipping bills

y Dutiable shipping bills (Cess)

y DEEC Shipping Bills

y EPCG Shipping Bills

y DEPB Shipping Bills

y DFR C Shipping Bills

y 100% EOU Shipping Bills

y R e export, Jobbing Shipping Bills

y Drawback Shipping Bills

y Other NFEI Shipping Bills

The procedure to be followed in respect of filing of shipping bills under the Indian

customs EDI System-Exports at CFS-Mulund shall be as follows:

2. DATA ENTRY FOR SHIPPING BILLS

2.1 Exporters/CHAs are required to register their IE codes, CHAs Licence Nos,

and the Bank A/C No.(for credit of Drawback amount) in the Customs

Computer Systems before an EDI Shipping Bill is filed.

2.2 Exporters/CHAs would be required to submit at the SERVICE CENTR E the

following documents.

y A declaration in the specified format

y SDF declaration

y Quota/Inspection Certificate

y Drawback/DEEC/DFR C/DEPB Declarations etc., as applicable



2.3 The formats should be duly completed in all respects and should be signed by

the exporter or his authorized CHA . Forms, which are incomplete or

unsigned will not be accepted for data entry

2.4 Initially, data entry for Shipping Bills will be allowed to be made only at the

Service centre. After the exporters/CHAs become conversant with the EDI

procedures, the option of R emote EDI System would also be made available.

In the R emote EDI system (R ES) Exporters/CHAs can electronically file their

shipping bills from their offices.

2.5 The schedule of charges to be levied for data entry at the Service Centre is as

follows:

Charges for S/Bills having up to five items ... R s.60/-

Charges for additional block of five items ... R s.10/-

Amendment fees (for a block of five items) ... R s.10/-

Printing of a S/Bill for R emote EDI System ... R s.20/-

2.6 The Service Centre operators shall carefully enter the data on the basis of

declarations made by the CHAs/Exporters. After completion of data entry, the

checklist will be printed by the Data Entry O perator and shall be handed over

to the Exporters/CHAs for confirmation of the correctness. Thereafter, the

CHA/Exporters will make corrections, if any, in the checklist and return the

same to the operator duly signed. The operator shall make the corresponding

corrections in the date and shall submit the shipping bill. The operator shall

not make any amendment after generation of the checklist and before

submission in the system unless the corrections made by the CHAs/Exporters

are clearly indicated on the checklist against the respective fields and duly

authenticated by CHA/Exporters signature.

2.7 The system automatically generates the S/Bill Number. The operator shall

endorse the same on the checklist in clear and bold figures. It should be noted

that no copy of the S/Bill would be available at this stage.



2.8 The declarations would be accepted at the service centre from 10.00 hrs to

16.30 hrs. Declarations received up to 16.30 hrs will be entered in the

computer system on the same day.

2.9 The validity of the S/Bill in EDI System is fifteen days only. After expiry of

fifteen days from the date of filing of shipping bill, the exporter has to file the

declaration afresh.

3 PROCEDURE FOR GR-1

3.1 Under the revised EDI procedure there would be no GR -1 Procedure.

Exporters(including CHAs) would be required to file a declaration in the form

SDF. It would be filed at the stage of ³goods arrival´ One copy of the

declaration would be attached to the original copy of the S/Bill generated by

the system and retained by the customs.The second copy would be attached tothe duplicate S/B (the exchange control copy) and surrendered by the exporter

to the authorized dealer for collection/negotiations.

3.2 The exporters are required to obtain a certificate from the bank through which

they would be realizing the export proceeds. If the exporter wishes to operate

through different banks for the purpose, a certificate would have to be

obtained from each of the banks. The certificates would be submitted to

customs and registered in the system. These would have to be submitted once

a year for confirmation or whenever the bank is changed.

3.3 In the declaration form to be filled by the exporters for the electronic

processing of export documents, the exporters would need to mention the

name of the bank and the branch code as mentioned in the certificate from the

bank. The customs will verify the details in the declaration with the

information captured in the system through the certificates registered earlier.

3.4 In the case of S/Bs processed manually, the existing arrangement of filing GR -

1 forms would continue.

y OCTROI PROCEDURES, QUOTA ALLOCATION AND OTHER

CERTIFICATION.

1.1 The processing of S/Bs involving allocation of ready-made garments quota by

the Apparel Export Promotion Council (AEPC) will change with the



introduction of the system. The quota allocation label will be pasted on the

export invoice instead of S/B. Allocation number of AEPC would be entered

in the system at the time of S/B data entry. The quota certification on export

invoice should be submitted to Customs along with other original documents

at the time of examination of export cargo.

1.2 As a transitional measure, AEPC certification even on S/B form would be

accepted. However, in these cases, S/B number should be indicated on the

invoice when goods are presented for examination. This transitional

facilitation measure will be available for a period of two months i.e., upto 30th

November 2004.

1.3 For determining the validity date of the quota, the relevant date would be the

date on which the full consignment is presented for examination and the date

to recorded in the system.

1.4 The certificate of other agencies, such as, the Cotton Textiles Export

Promotion Council; the Wildlife Inspection Agency under CITES; the

Engineering Export Promotion Council; the Agricultural Produce Export

Development Agency (APEDA), the Central Silk Board and the All India

Handicraft Board should also be obtained on the invoice. Similarly, the no

objection of the Asst. Drug Controller and of the Archaeological of Survey

India would be obtained on the Invoice.

The transitional arrangements would be the same as in the case of AEPC certification.

1.5 The exporters would have to make use of export invoice or such other

documents as required by the Octroi Authorities for the purpose of octroi

exemption.

2. ARRIVAL OF GOODS AT EXPORT EXAMINATION SHEDS IN CFS

2.1 The existing procedure of permitting entry of goods, brought for the purpose

of examination (and subsequent: ³Let export´O

rder) in the CF

S on thestrength of S/B shall be discontinued. The CO NCOR will permit entry of the

goods on the strength of the checklist, the date entry form and the declaration.

The CO NCOR would endorse the quantity of goods entering the CFS on the

reverse of the checklist



through the Service Centre or, in case of EDI connectivity, through terminals

of the Exporter / CHA. After all the queries have been satisfactorily replied to,

AC / DC will pass the S/B

4. CUSTOMS EXAMINATION OF EXPORT CARGO

4.1 On receipt of the goods in the Export Shed in the CFS, the exporter will

contact the system examining officer (SEO)and present the checklist with the

endorsement of CO NCOR on the declaration, along with all original

documents such as Invoice, Packing List, AR E-1(AR -4)etc. He will also

present additional particulars in the prescribed form.

4.2 SEO will verify the quantity of the goods actually received against that entered

in the system. He will enter the particulars in the system. The system would

identify the Examining Officer (if more than one are available)who would be

carrying out physical examination of goods. The system would also indicate

the packages(the quantity and the serial numbers) to be subjected to

examination. SEO would write this information on the checklist and hand it

over to the exporter. He would hand over the original documents to the

Examining Officer. No examination order shall be given unless the goods have

been physically received in the Export Shed. It may, however, be clarified that

Customs may examine all the packages/goods in case of any discrepancy.

4.3 The Examining Officer may inspect and/or examine the shipment, as per

instructions contained in the checklist and enter the examination report in the

system. There will be no written examination report. He will then mark the

Electronic S/B and forward the checklist along with the original documents to

the Appraiser/Supdt. in Charge. If the Appraiser/Supdt. is satisfied that the

particulars entered in the system conform to the description given in the

original documents (including AEPC quota and other certifications) and the

;physical examination, he will proceed to give ³:Let Export´ order for the

shipment and inform the exporter. The Appraiser/Supdt. would retain the

checklist, the declaration and all original documents with him.

4.4 In case of any variation between the declaration in S/B and the documents or

physical examination report, the Appraiser/Supdt. will mark the electronic S/B

to AC/DC Exports. He will also forward the documents to AC/DC and advise

the exporters to meet the AC/DC for further action regarding settlement of

dispute. In case the Exporter agrees with the views of theDepartment, the S/B



would be processed finally. Where the exporter disputes the views of the

Department, the case would be adjudicated following the principles of natural

justice.

5. GENERATION OF SHIPPING BILLS

5.1 As soon as the Shed Appraiser/Supdt.gives ³Let Export´ order, the system

would print 6 copies of the S/B in case of Free and scheme S/B. In case of

DEPB there are 7 S/B. If the S/B (DEPB) is assessed provisionally, then EP

copy will be generated only after AC/DC finalises the assessment. On the

examination report the Appraiser/Shed Supt.will sign. On all the copies, the

Appraiser/Shed Supdt., Examination Offer as well as exporter¶s

representative/CHA will sign. Name and ID Card number of the Exporters

representative/CHA should be clearly mentioned below his signature.

5.2 The distribution of S/Bills is as follows:

DEPB Scheme S/Bills Other Scheme S/Bills

y 1. Exporter¶s copy 1. Exporters copy

y 2. Custom¶s Copy 2. Customs copy

y 3. Exchange Control Copy 3. ExchangeControl Copy

y 4. Scheme Bill Copy 4. E.P.Copy

y 5. E.P.Copy 5. TR -1. TR -2 Copiesy 6. TR -1, TR -2 Copies

5.3 The original AEPC quota and other certificates will be retained with the

S/Bills and recorded in the Export Shed.

6. PAYMENT OF MERCHANT OVERTIME (MOT)

6.1 For the time being the present manual system for payment of Merchant

Overtime (MOT) charges will continue.

6.2 MOT charges will be required to be paid by exporter when the goods are

examined by Customs for allowing ³Let Export´ beyond the normal office

hours. No charges would be required to be paid on normal working days

when the examination itself is being done for ³Let Export´ upto 05.oo PM. In

addition, no charges would be required to be paid if the exporter wants the

goods to be entered in CO NCOR (CFS) only for meeting the quota deadlines.



7. DRAWAL OF SAMPLES

7.1 Where the Appraiser of Customs orders for samples to be drawn and tested,

the Examining Officers will proceed to draw two samples from the

consignment and enter the particulars thereof along with name of the testing

agency in the system. No registers will be maintained for recording dates of

samples drawn. Three copies of the test memo will be sprepared and signed by

the Examining Officer, the Appraiser and Exporter. The disposal of the three

copies would be as follows:

y Original to be sent along with the sample to the testing agency

y Duplicate copy to be retained with the second sample

y Triplicate to be handed over to the exporter.

7.2 AC/DC may, if he deems necessary, order for sample to be drawn for purposes

other than testing such as visual inspection and verification of description,

market value enquiry etc.

11 QUERIES11.1 With the discontinuation of the assessment of S/B in the Export Department,

there should not be any queries. The exporter, during examination, can clarify

doubts, if any. In case where the need arises for the detailed answer from the

exporter, a query can be raised in the system buy the Appraiser, but would

need prior approval of AC/DC (Exports) The S/B will remain pending and

cannot be printed till the exporter replies to the query to the satisfaction of the

Assistant Commissioner/Dy. Commissioner

12 AMENDMENTS:

12.1 Corrections/amendments in the checklist can be made at the service centre

provided the system has not generated the S/B number. Where corrections are

required to be made after the generation of the S/B No. or, after the goods

have been brought in the docks/CFS, amendments will be carried out in the

following manner.



y If the goods have not yet been allowed ³Let Export´, Assistant Commissioner/Dy.

Commissioner may allow the amendment.

y Where the ³Let Export´ order has been given, the Addl./Joint Commissioner

(Exports) would allow the amendments

12.2 In both the cases, after the permission for amendments has been granted, the

Asstt./Dy. Commissioner(Exports) will approve the amendments on the system.

Where the print out of the S/B has already been granted, the exporter will

surrender all copies of the S/Bill to the Appraiser for cancellation before

amendment is approved in the system.

13. SHORT SHIPMENTS, SHUT OUT, CANCELLATION AND BACK TO

TOWN PERMISSIONS.

13.1 AC/DE (Export) will give permission for issue of short shipment certificate,

shut out or cancellation of S/B, on the basis of an application made by the

exporter. The S/B particulars would need to be cancelled /modified in the

system before granting such permission. AC/DC should check the status of the

goods, before granting permission.

14. AMENDMENT OF FREIGHT AMOUNT

14.1 If the freight/insurance amount undergoes a change before ³Let Exports´ is

given, corresponding changes would also need to be made in the S/B with the

approval of AC/DC Exports. But if the change has taken place after the ³Let

Exports´ Order, approval of Additional/Jt.Commissioner would be required.

Non-intimation of such changes would amount to mis-declaration and may

attract penal action under Customs Act 1962.

15. RECONSTRUCTION OF LOST DOCUMENTS:

15.1 Duplicate print out of EDI S/B cannot be allowed to be generated if it is lost,

since extra copies of S/B are liable to be misused. However, a certificate can

be issued by the Customs stating that ³Let Exports´ order has been passed in

the system to enable the goods to be accepted by the Shipping Line, for export.



Drawback will be sanctioned on the basis of the ³Let Export´ order already

recorded on the system.

16 RE-PRINT OF SHIPPING BILL:

16.1 Similarly, reprints can be allowed where there is a system failure, as a result of

which the print out(after the ³Let Export´ order) has not been generated or

there is a misprint. Permission of AC/DC (exports) would be necessary for the

purpose. The misprint copy shall be cancelled before such permission is

granted

17 EXPORT OF GOODS UNDER CESS

17.1 For export items, which are subject to export cess the corresponding serialnumber of the Cess Schedule should be clearly mentioned. A printed challan

generated by the system would be handed over to the exporter. The cess

amount indicated should be paid in the Bank of India, Extension Branch of

CFS, under a receipt.

18. EXPORT OF GOODS UNDER CLAIM FOR DRAWBACK

18.1 The scheme of computerized processing of drawback claims under the Indian

Customs EDI system-Exports will be applicable for all exports through CFS.

18.2 In respect of goods to be exported under claim for drawback, the exporters

will file declaration in the form. The declaration in the form would also be

required to be filed when the export goods are presented at the Export Shed for

examination & ³Let Export´

18.3 The exporters who intend to export the goods through CFS under claim for

drawback are advised to open their account with the Bank of India branch

situated at CFS-Mulund. This is required to be done to enable direct credit of

the drawback amount to the exporters account, obviating the need for issue of

separate cheque by post. The exporters are required to indicate their account

number opened with the Bank of India branch at CFS-Mulund. It would not be

possible to accept any shipment for export under claim for drawback in case



the account number of the exporter in the bank is not indicated in the

declaration form.

18.4 The exporters are also required to give their account number along with the

details of the bank through which the export proceeds are to be realized.

18.5 Export declarations involving a drawback amount of more than rupees one

lakh will be processed on screen by the AC/DC before the goods can be

brought for examination and for allowing ³Let Export´:

18.6 The drawback claims are sanctioned subject to the provisions of the Customs

Act 1962, the Customs and Central Excise duties drawback rules 1995 and

conditions prescribed under different sub-headings of the All Industry rates as

per notification number 26/2003-Cus(NT) dated 1.4.2003 as amended by

notification number 12/2004-Cus(NT) dated 29-01-04.

18.7 After actual export of the goods, the drawback claims will be processed

through EDI system by the officers of drawback branch on first come first

serve basis. There is no need for filing separate drawback claim. The claims

will be processed, based on the Train Summary/Inward way bill, submitted by

CO NCOR . The status of the S/Bill and sanction of drawback claim can be

ascertained from the ³query counter´ set up at the service centre. If any query

has been raised or deficiency noticed, the same will be shown on the terminal

and a printout of the query/deficiency may be obtained by the authorized

person or the exporter from the service centre. The exporters are advised to

reply to such queries expeditiously and such replies shall be got entered in the

EDI system at the service centre . The claim comes in queue of the EDI

system after reply to queries/deficiencies is entered by the service centre.

18.8 Shipping Bills in respect of goods under claim for drawback against brand

rates would also be processed in the same manner, except that drawback

would be sanctioned only after the original band rate letter is produced before

the designated customs officer in the office of Asstt/Dy. Commissioner

(Export) and is entered in the system. The exporter should specify the SS No.

of drawback as 98.01 for provisional drawback.

18.9 All the claims sanctioned in a particular day will be enumerated in a scroll and

transferred to the Bank through EDI. The bank will credit the drawback

amount in the Account of the exporter on the next day and will handle

accounts of the exporters as per their instructions. Bank will also send a



fortnightly statement to the exporters about the payments of their drawback

claims.

19. EXPORT OF GOODS UNDER DEPB

19.1 W

hile filing information as per the format, exporters are required to ensurethat correct Group Code No. of the goods being exported and the item No. of

relevant Group is clearly mentioned (item-wise details). The exporters/CHAs

are advised to fill Item No, in the same manner as given in the Public Notices

issued by DGFT.

19.2 DEPB Credit in respect of items like formulations, injections etc. of group

code No.62 (Chemicals) are at a specific percentage of credit rate for the

relevant bulk drug. For proper calculations of DEPB rate, exporters/CHAs are

advised to claim export under the specific Sl.No. if they are exportinginjections and thereafter mention Sl.No. of Group Code 62 of the bulk drug of

which such injections have been made. The system will calculate the said

specific percentage of the DEPB rate of such bulk drugs, formulations of

which are being exported.

19.3 All the DEPB S/Bills having FOB value less than R s.5 lakhs and/or DEPB

rates less than 20% will be assessed by Appraiser/Supdt. (DEPB Cell)

However, the S/Bill having FOB value more than R s.5 lakhs and/or credit rate

20% or more will be assessed by AC/DC (Export) . Any query at the time

assessing by Appraiser (DEPB cell) or AC/DC (Export) may be obtained from

the service centre and reply to the query has to be furnished through service

centre.

19.4 If the group code No., Item No. and FOB value declared is accepted by the

Appraiser/Supdt (DEPB Cell) or Asstt./Dy. Commissioner(Export), goods

may be brought and entered in the system. The examining officer will feed the

examination report and ³Let Export´ order will be given by Appraiser/Supdt.

in the EDI system. Seven copies of S/Bill will be printed for the purposes

mentioned against each as under :

Customs Copy For record of Customs

Exporter¶s copy For record of Exporters

E.P.Copy For office of DGFT



DPB copy For use in the import cell of ICD Bangalore for registration of licence.

Exchange Control Copy For negotiating the export documents in bank

TR -1TR -2 copies

19.5 There is a provision for changing the Group Code No./Item No./Value for

DEPB credit purposes and such changes will be reflected in the print out of the

S/Bill. Such charges may be done by Appraiser/Supdt. (DEPB Cell)

AC/DC(Export) as well as by Appraiser/Supdt.(Exam.) The credit will be

allowed by the DGFT at the rate/value (for credit purposes only) as approved

by Customs. The EP copy of the shipping bill shall be used by the Exporters to

obtain DEPB licence from DGFT.

19.6 In case, for credit purposes, the exporter accepts the lower value as determined

by customs, such lower value will be entered by Appraiser (DEPB Cell)

AC/DC (Export) or by Appraiser (Exam) for each item(s) Printout of S/Bill at

item level will indicate for FOB value as well value for DEPB credit purposes.

Exporters are required to apply for the DEPB Licence at the B value accepted

by Customs and not the value declared by them. However, as DEPB is issued

on the basis of exchange rate applicable on the date of Let Export, exporters

are advised to apply for DEPB Licence at the value accepted by Customs at

the time of export multiplied by exchange rate on the date of Let Export(LEO)

(As per para 4.43 of EXIM Policy 2003 edition)

19.7 In case the exporter does not accept the value determined by the customs, the

exports will be allowed provisionally after taking samples µfor market enquiry.

The words ³NOT VALID FOR DEPB´ will be printed on all the copies of

S/Bill and the exporters will be not be eligible for DEPB licence against

provisionally assessed S/Bills. In such cases, EP copy of S/Bill will not be

printed and only 6 copies will be printed. However, market enquiries about

value will be conducted in such cases and either after issue of the Show Cause

Notice the market value will be determined or may be accepted by the

Exporters on his own. In such cases where samples are drawn subject to

market enquiry the copy of the S/Bill for claiming DEPB will be generated

after determination of value on the basis of market enquiry and handed over to

the exporters duly signed by Appraiser/Supdt. of Customs. In such cases



wherever market value has been found to be less than twice the credit claimed,

the market value will be mentioned in the EP copy of S/Bill as under :

³Market value of the goods is R s«««..and credit not to exceed 50% of the

market value´

Sample may also be drawn for the other purposes such as Chemical test,.

DEPB entitlement etc. The procedure of Provisional Assessment shall be

applicable mutates mutandis to above cases as well and the cases will be

finalized after necessary reports etc. arte received and unprinted copy of S/Bill

meant for DEPB Licence shall be released thereafter for printing.

19.8 R egistration of DEPB Licence:

The DEPB Licence in respect of exports made from this customs station will

be required to be registered at the same station. Before registration, the

concerned officer will verify the S/Bill(s) in the Licence from the computer

ensure that exports have been affected and value mentioned is as determined

by customs at the time of export. In cases of S/Bills assessed provisionally, the

verification will not be possible because S/Bill will not be in the verification

queue. The exporters are advised to obtain licences for the items exported un

DEPB scheme and not for non-DEPB items. If the lower value for credit

purposes has been accepted at the time of export, the licenses shall be obtained

only for such lower value and not for FOB value declared in S/Bill or as per

Bank realisation certificate. Similarly in cases where market value of the

goods is less than twice the credit availed, the licence shall be obtained for

50% of the present market value of the goods. The computer at the time of

registration of licence will calculate admissible credit on the basis of exchange

rate on the date of realisation of export proceeds (as per bank realisation

certificate) for DEPB items only and at customs approved value at the time of

export. If the amount of licence is more than the amount of credit calculated



by the system, it will not be possible to register a licence and reference will be

made to DGFT for correction of amount of credit. If the amount of credit as

per customs computer matches with the credit as per DEPB licence, computer

will generate printout regarding verification of the exports giving details like

S/Bill No. date , rate of credit, FOB value as approved by customs and amount

of credit etc. DEPB licence will be registered on the basis of printout of

verification report duly signed by AC/DC (Export). If a DEPB Licence is

having S/Bills exported from other ports in the same city the exporters can get

the licence registered at any of the ports from where he intends to import the

goods in the city after verification about exports from other ports from where

exports were affected. The same procedure will be followed for DFR C

Licences also.

20. EXPORT OF GOODS UNDER 100% EOU SCHEME

20.1 The exporters can get the export goods examined by Central

Excise/Customs Officer at the factory even prior to filling of S/Bill. Self

sealing facility is also available. He shall obtain the examination report in the

form to this Public Notice duty signed and stamped by the examining officer

and supervision officer at the factory. The export invoice shall also be signed

and stamped by both the officers at the factory. Thereafter the goods shall be

brought to the concerned customs warehouse for the purpose of clearance

and subsequent ³Let Export´. The exporters/CHA shall present the goods for

registration along with Examination R eport, AR E-1, Export Invoice duly

signed by the Examining Officer and supervising officer at the factory, check

list, declaration in form and other documents such as document of

transportation, AR E-1, etc., to the examiner in the concerned shed. After

registration of goods, the shipping bill will be marked to an examiner for

verification of documents and seal. If seal is found intact the S/Bill will berecommended for LEO, which will be given by the shed appraiser. However if

seal is not found intact, the goods will be marked for examination and LEO

will be given if the goods are found in order.

21. EXPORT OF GOODS UNDER EPCG SCHEME



21.1 All the exporters intending to file shipping bills under the EPCG scheme should first

get their EPCG licence registered with the Export section. For registration of EPCG licence,

the exporter/CHA shall produce the Xerox copy of EPCG licence to the service centre for

data entry. A printout of the relevant particulars entered will be given to the exporter/CHA

for his confirmation. After verifying the correctness of the particulars entered, the said

printout will be signed by the exporter. Thereafter, the original EPCG licence along with the

attested copy of the licence and the signed printout of the particulars shall be presented to the

Appraiser/Supt (EPCG Cell)The Appraiser/Supdt. (EPCG Cell) would verify the particulars

entered in the computer with original licence and register the same in EDI system. The

registration number of the EPCG Licence would be furnished to the exporters/CHA, who

shall note the same carefully for future reference. The said registration number would need to

be mentioned against respective item on the declaration form filed for data entry of the s/bill,

at the time of export of goods. All the EPCG S/Bill would be processed on screen by the

Appraiser/Supdt.(EPCG Cell) and the AC/DC (Export). After processing of the EPCG S/Bill

by the Appraiser EPCG Cell and AC/DC Export, the goods can be presented at the Customs

warehouse for registration, examination and ³Let Export´ as in the case of other export

goods. After train summary is submitted to CO NCOR , the S/Bill will be put to Appraiser

queue for logging/printing of ledger. After logging/printing of ledger, the EPCG bill will be

moved to history tables.

22 EXPORT OF GOODS UNDER THE DEEC SCHEME

22.1 Only shipping bills pertaining to DEEC books issued on or after 1.4.95 will be

processed on the EDI system.

22.2 All the exporters intending to file s/bills under the DEEC scheme including those

under the claim for drawback should first get their DEEC Book registered with the CFS

Mulund. The registration can be done in the service centre.

The original DEEC book would need to be produced at the service centre for data entry. A

print out of the relevant particulars entered will be given to the exporter/CHA. The DEEC

Book would need to be presented to the Appraiser/Supdt., DEEC Cell, who would verify the

particulars entered in the computer with the original DEEC and register the same in the EDI

system. The registration No. of the DEEC Book would be furnished to the exporter/CHA,

which would need to be mentioned on the declaration forms at the CFS for export of goods It



would not be necessary thereafter for the exporter/CHA to produce the original DEEC book

for processing of the export declarations

22.3 Each book will be allotted a R egistration No. should be indicated on the shipping bills

in the relevant columns.22.4 Exporters/CHAs that will be filling S/Bills for export of goods under the DEEC

Scheme would be required to file additional declarations regarding availment/non-

availment of MODVAT or regarding observance/non-observance of specified

procedures prescribed in the Central Excise 1944 in the form. The declaration should

be supported by necessary certificates (AR E-1 or for non-availment of MODVAT)

issued by the jurisdiction Central Excise authorities. ³Let Export´ would be allowed

only after verification of all these certificates at the time of examination of goods. The

fact that the prescribed DEEC declaration is being made should be clearly stated at theappropriate place in the declaration being filled in the service centre or through R ES-

Mode.

22.5 All the export declarations for DEEC would be processed on screen by the

Appraiser/Supdt., Export Department and the AC/DC Exports. The said processing

would be akin to the processing of Bill of Entry on the EDI System with provisions

for query/reply. After the declarations have been so processed and accepted, the goods

can be presented at the Export Shed along with DEEC Books registered in the4 EDI

System so that the export declarations are processed expeditiously.

22.6 Further, exporters availing of DEEC benefits in terms of various notifications should

file the relevant declarations.

22.7 It is further clarified as follows:

y While giving details relating to DEEC operations in the form the exporters/CHAs

should indicate the S.No. of the goods being exported in the column titled ³ITEM

S.NO.IN DEEC BOOK PAR T E´

y If inputs mentioned in DEEC Import book only have been used in the manufacture of the goods under export, in column titled ³Item Sr.No. in DEEC Book Part C´ the

exporters/CHAs are required to give S.No. of inputs in Part-C of the DEEC Book and

Exporters need not fill up column titled ³DESCR IPTIO N OF R AW MATER IALS´

y If some inputs which are not in Part-C of the DEEC Book have been used in the

manufacture of the goods under export and the exporter wants to declare such inputs,



he shall give the description of such inputs in column titled ³DESCR IPTIO N OF

R AW MATER IALS´

y In the Col. ³IND/IMP´, the exporters are required to write ³N´, if the inputs used are

indigenous and ³M´. if the inputs used are imported.

y In column titled ³Cess Schedule Sl.No.´ the relevant Sl.No. of the Schedule relating

to Cess should be mentioned.

23. EXPORT OF GOODS UNDER DFRC SCHEME:

The details pertaining to export products i.e. input materials utilized as per SIO N should be

clearly mentioned in the declaration mentioned at Annexure A at the time of filing.

24. EXPORT GENERAL MANIFEST:

24.1 All the steamer agents shall furnish the Export General Manifest, House Bill of

Landing wise, t the Customs electronically. In the beginning, the steamer agents are

required to enter the manifest in the Customs Computer System through the Service

Centre on payment of the prescribed fee. (In due course, arrangements will be made

for the electronic delivery of Export General Manifest through EDI Service

Providers. Till such time, all the EGMs will have to be entered at the Customs

Computer System only.)

25. GRIEVANCE HANDLING

25.1 The Asstt. Commissioner/ Dy. Commissioner of Customs, CFS-Mulund may be

approached by exporters or their CHAs for settlement of any problems faced at any

stage of the export clearance.

THE ECGC COVER

The abbreviated form for Export Credit and Guarantee Corporation is ECGC. As the

name indicates this is a sort of guarantee or a sort of cover for the exporter. Let us now see

what this is all about.



Needless to say that an exporter before entering into a contract with the overseas buyer for

making any supply, takes care to ensure that the customer with whom he is dealing have

some credit worthiness. This he may be able to do either through the local agent who is in a

better position to know about the customer or through a bank or through any of the exporter¶s

associates if happens to be in the area of the customer etc., But, in a business things may

change. The financial status of a customer may take drastic turn and an established customer

may go bankrupt within a short period of time.

Moreover, the buyer may be willing to make the payment, but there are other environment

which prevents him from effecting the transfer of funds through the bank. For e.g., there

could be break out of war, the balance of payment position of the country may become

unfavourable, there may be some coup of the government etc., and all transactions could be

sealed.

These are the risk factors for the exporters. What is the guarantee that he will get paid for the

supplies he has made?

With a view to provide support to Indian exporters, the Govt. of India set up the Export R isk

Insurance Corporation (ER IC) in 1957. This was transformed into Export Credit & Guarantee

Corporation Ltd. in 1964. In order to give the Indian identity a sharper focus the name was

again changed to Export Credit & Guarantee Corporation of India Ltd., in 1983. This is a

company wholly owned by the Govt. of India and functions under the administrative control

of the Ministry of Commerce and managed by the Board of Directors representing

Government, Banking, Insurance, Trade, Industry etc.

Though one may insist for a Letter of Credit, still there could be some elements of risk which

we will study later here. Except getting an advance payment for the full value of the supplies,

any other mode of payment will have some risk.

Take the case of an exporter who has made supplies and before the payment is received the buyer goes bankrupt or there comes some new provision or policy of Government of the

importing country preventing repatriation of the funds to other countries what recourse the

exporter has to recover his dues. The litigation procedure might be time consuming and the

exporter can never be sure of getting his full payment. An ECGC cover a safeguard his

interest to a great extent.



An exporter can either agree for sight payment or can made shipment on credit terms for say

60 days, 90 days etc., In project exports the period of payment may extend to some years.

Longer the period of cre3dit given to the customer, more will be the risk factor for the

exporter.

In respect of sight bill, there is almost no risk because the customer has to make payment first

before he retires the documents. Therefore, before the title of the goods is passed on to the

customer, the importer makes the3 payment. However, in respect of usance bill (credit bills)

the buyer retires the documents by accepting the usance draft and takes delivery of the goods.

In case the customer goes bankrupt or become insolvent, before the due date of payment, the

exporter is totally at a loss. While big units may be able to absorb the one time loss, small

exporters will get broke even with one such transaction. Here the ECGC comes into picture.

It takes up the responsibility of paying the funds to the exporter and makes all effortsincluding legal proceedings to recover the dues from the customer, provided the exporter has

taken an ECGC cover.

W HAT ECGC OFFERS FOR PROTECTION OF EXPORTER¶S INTEREST ?

ECGC offers various types of insurance cover to protect the exporter¶s interest. For each type

of cover an exporter has to take Policy specific to the respective requirements. The Policy

that is most commonly taken by the exporters is the Standard Policy or otherwise called the

Shipments (Comprehensive R isks) Policy.

SHIPMENTS (COMPREHENSIVE RISKS) POLICY also called STANDARD POLICY

For exporters with an annual export turnover in excess of R s.50 lakhs, the Shipments

(ComprehensiveR isks) Policy is the one intended for covering shipments on cash basis or on

short-term credit basis. (Credits not exceeding 180 days)

The risks covered this Policy is as follows effective from the date of shipment.:

Commercial Risks

y Insolvency of the buyer

y Failure of the buyer to make payment within a specified period.

y Buyer¶s failure to accept the goods subject to certain conditions.



Political Risks

y Imposition of restrictions by the Govt. of the buyer¶s country or any government

action which may block or delay the transfer of payment made by the buyer.

y War, civil war, revolution or civil disturbances in the buyer¶s country

y New import restrictions or cancellation of a valid import licence

y Interruption or diversion of voyage outside India resulting in payment of

additional freight or insurance charges which cannot be recovered from the buyer.

y Any other cause of loss neither occurring outside India nor normally insured by

general insurers and beyond the control of both the e porters and the buyer.

Risks not covered under the Policy

The Standard Policy does not cover losses on account of following risks:

y Commercial disputes including quality disputes raised by the buyer unless the

exporter obtains a decree from a competent court of law in the buyer¶s country

in his favour

y Causes inherent in the nature of the goods

y Buyer¶s failure to obtain necessary import or exchange control clearance from

authorities concerned

y Insolvency or default of the agent of the exporter or of the collecting bank

y Loss or damage to goods which can be covered by general insurers.

y Exchange rate fluctuations

y Failure of the exporter to fulfill the terms of the export contract or negligence on

his part.

Shipments Covered



The Standard Policy is meant to cover all the shipments that may be made by an exporter

during a period of 24 months ahead. The policy cannot be issued for selected shipments,

selected buyer or selected markets. For specific requirements an exporter can opt for different

policy from the various services offered by the corporation

Exclusions:

Shipments made against advance payments received or shipments against confirmed letters of

credit which has the confirmation from the bank in India may be excluded.

However, shipments against confirmed L/C may be covered for political risks only. The

premium for cover under political risks will be less than that under the comprehensive policy.

ECGC may also agree to exclude certain items if the exporter is dealingt in different distinct

products.

Shipments to Associates:

Shipments to buyers i.e. the foreign buyers in whose business the exporter has financial

interest, are normally excluded from the Policy. However such shipments can be covered

against political risks.

Shipments on Consignment basis :

Shipments on consignment basis can be covered only against political risks.

Shipments by Air

Since the buyer is able to take delivery of the goods even without retiring the bank

documents, shipments by air are not covered under the policy. However, the exporter may

cover such shipments for payments under open terms. The exporter can have cover for such

shipments, if he has obtained Credit Limit on such buyers on open delivery terms and also

pays the premium at rates applicable to open delivery terms.

HOW TO GET ECGC COVER

Step 1. Open Policy:



An exporter desiring to get the ECGC cover has to approach the office of the ECGC making

a Proposal. He must make his home work and be clear as to what will be his total turnover

during a year ad what will be the maximum amount he expects to be outstanding from

various buyers at a given point of time.Once this is clear he can apply for an O pen Policy for

the maximum amount that he expects to be outstanding at a given point of time. Suppose, he

expects that at any given time his outstanding will be say R s.50/- lakhs then he can apply for

a policy for this amount. After verification of the details of the exporter, the ECGC

may issue a open policy for R s.50 lakhs with a validity of say 2 years. This is the first step.

Step 2. - Credit Limit on Individual Buyer

Once the open policy is taken, as a next step the exporter must make out the list of the

customers to whom he expects to make shipment. For each and every customer he has to

apply to the ECGC to have a limit of liability fixed. That is to say, he has to declare the

maximum amount of bills he expects to be outstanding from each customer at a given point

of time. Based on the value of business dealing, suppose the exporter expects that from

customer A the outstanding may be R s.10 lakhs. Then the exporter has to apply to ECGC in

the prescribed form for getting limit fixed for the customer. On receipt of the application,

ECGC will check for the credit worthiness of the customer either through their own net work

of offices globally, or through the customer¶s bank or through some reputed independent

agency. Based on the credit report, ECGC will determine the limit that can be fixed for the

customer. If it feels that a limit of R s.10 lakhs is in order, it will advise the exporter of the

same. Similarly, the exporter can have the limit fixed to all his customers.

Once the limit is taken from ECGC, the exporter is free to make his shipments to the various

customers. If shipment for any customer is made before getting the limit fixed by ECGC, no

risk will be covered for that shipment.

Step 3 ± Payment of Premium and filing of monthly returns

For the risk the ECGC takes, it charges a premium on the value of the shipments actually

made. This is calculated as per the table to be supplied by ECGC which shows the premium

per R s.100 of exports.



covering only the political risk since under L/C, the bank stands as a guarantor and there is no

commercial risk.

An exporter must cover all his exports under ECGC, including bills on sight basis, and are

NO

T under L/C. He cannot be selective to certain countries or certain buyer. The cover is onwhole turnover basis.

For all shipments under L/C, the buyer may take a separate policy to cover the political risks.

The premium for L/C shipments will be relatively less than that on comprehensive policy.

Note: ECGC cover is not for non-payment on account of dispute on quality, damages to the

goods, theft, pilferage etc.

The cover is only when the party goes insolvent or there are some political risk due to whichthe exporter is not in a position to get the payment immediately or on due date. This cover

must be distinguished from the general insurance.

VARIOUS POLICIES OFFERED BY ECGC:

1. STANDARD POLICY

An exporter whose annual export turnover is more than R s.50 lakhs is eligible for this

policy

Period of the Policy: 24 Months

Exclusions permitted: Export to Associates

Letters of Credit

Consignment Exports

Risk Covered: Commercial R isks

Political R isks

LC O pening Bank R isks

Percentage of Cover: 90%

Minimum Premium: R s.10, 000/- adjustable



Minimum Premium : R s.2, 000 adjustable

Important Obligations of the Exporter:

y O btaining valid credit limit on buyers and banks

y Quarterly Declaration of shipment and payment of premium.

y Declaration of payment overdue by more than 30 days

y Filing of claim within 24 months

y Sharing of recovery.

Highlights

y Highest coverage/compensation

y Lowest premium rate

y NCB of 5% every year

y Discrepancy cover for LC

y Automatic approval for resale/shipment upto 25% of GIV

y Increased discretionary limit

3. SPECIFIC SHIPMENT POLICIES ± SHORT TERM (SSP-ST)

These policies can be availed of by exporters who do not hold our Standard Policy or byexporters having standard policy, in respect of shipment permitted to be excluded from the

purview of the standard policy. Exporters can pick and choose the contract/shipment to be

covered and indicate the type of cover required.

Period of Policy :

The policy would be valid for shipment(s) made from the date of the policy upto last date

allowed under the relevant contract for shipment.

Risk Covered:

y Commercial R isks

y Political risks

y LC O pening Bank R isk



Important Obligation of the Exporters:

1. Deposit Premium on Quarterly in advance

2. Submission of shipment declaration quarterly

3. D

eclaration of payment overdue for more than 30 days4. Filing of the within 12 months from due date

5. Sharing of recovery

Highlights:

1 Selective buyer can be insured

2 O ption to exclude LC exports

3 Premium rate can be reduced proportionately

5 . EXPORTS TURNOVER POLICY

Turnover Policy is for the benefit of large exporters who contribute not less than R s.10 lakhs

per annum towards premium. The policy envisages projection of the export turnover of the

policyholder for a year and the initial determination on the premium payable on that basis,

subject to adjustment at the end of the year based on actual.

Period of the Policy : 12 Months

Risk covered: Commercial R isks

Political R isks


Percentage of Cover: 90%

Important Obligation of the Exporter



1. Premium will be payable in four equal quarterly installments in

advance

2. Submission of quarterly statement of shipments

3. Declaration of overdue payments

4. Filling of claim within 24 months from due date

5. Sharing of recovery

Highlights:

1. Simplified procedure for payment of premium

2. 10% of projected premium is waived when exports increase beyond

projection

3. Increased discretionary limit

6 . BUYER EXPOSURE POLICY :

The Buyer Exposure Policy is to insure the exporters having large number of shipments with

simplified procedure and rationalized premium. An exporters can chose to obtain exposure

based cover on the selected buyer. The cover would be cover against commercial and

political risk. The option to exclude LC shipment is available. If the exporter has opted for

commercial and political risks cover, failure of LC opening bank with World R ank up to

25,000 as per latest Bankers Almanac is available. If exporters opts for only political risks for

LC exports premium at a less rate is offered

Period of the Policy: 12 months

Risk covered: Buyer R isk


Political R isks

Percentage of Cover: 90% for Standard policyholder and 80% for others

Important Obligations of the Exporter:

1 Premium Payable in advance



Risks covered:

y Commercial R isks on stockholding agent and/or ultimate buyer

y Political R isks

Percentage of Cover: 90% for Standard Policyholders and 80% for others

Important obligations of Exporters:

y Advance deposit of premium in advance on quarterly or monthly basis

y O btaining credit limit on ultimate buyers beyond the discretionary limit

y Quarterly/Monthly statement of actual exports

y Overdue declaration

y Filing of claim

y Sharing of recovery

Highlights:

y Covers only the consignments exports

y R ationalized premium for 360 days

y Automatic cover for ultimate buyers upto discretionary limit

y Commercial risks on agents coveredy Extended period for realization upto 360 days

9 CONSIGNMENT EXPORTS POLICY (GLOBAL ENTITY)

A method adopted by India exporters is consignment exports where goods are shipped to

their own branch office overseas ready for sale to overseas buyers, as and when orders are

received. Thus separate credit insurance policy is introduce to cover exclusively shipments by

the exporters to their branches overseas on consignment basis taking into account their

special features, providing adequate incentives and simplifying the procedures considerably.

Period of the Policy: 12Months

Risks covered:

y Commercial R isks on overseas branch on conditions





y Advance deposit of premium in advance on quarterly or monthly basis

y O btaining credit limit on ultimate buyers beyond the discretionary limit

y Quarterly/Monthly statement of actual exports


y Filing of claim


Highlights:

y Covers only the consignments exports

y R ationalized premium for 360 days

y Automatic cover for ultimate buyers upto discretionary limit

y Commercial risks on agents covered

y Extended period for realization upto 360 days

10 . SERVICES POLICIES

Services Policies offer protection to Indian firms against payments risks involved inrendering services to foreign parties. A wide range of services, hiring or leasing can be

covered under these policies. The exporters can opt for whole Turnover Services Policy or

for Specific Services Policy depending on the nature of services provided. The premium rates

applicable. To standard policy will be applied for whole turnover services policy and specific

shipment policy (SSP-ST) premium rates will be applied for Specific Service Policy.

Period of the Policy: 12/24 Months

Risks covered:

y Commercial R isks on ultimate buyers

y Political R isks

y LC O pening Bank R isks





y Advance deposit of premium in advance to cover premium

y O btaining credit limit on services receiver

y Monthly statement of actual service provided


y Filing of claim


Highlights:

y O ption to select the type of cover.

8 . MATURITY FACTORING

The Maturity Factoring scheme, as designed by ECGC has unique features and does not

exactly fit into the conventional mould of maturity factoring. The changes devised are

intended to give the clients the benefits of full factoring services through the maturity

factoring scheme, thus effectively addressing the needs of exporters to avail of pre- finance

(advance) on the receivable, for their working capital requirements. One important feature is

the very role and special benefits envisaged for banks under the scheme.

Benefits:

y 100% credit guarantee protection against had debts

y Sales register maintenance in respects of factored transaction

y R egular monitoring of outstanding credits, facilitating collection of receivable on due

date, recovery, at its own cost, of all recoverable had debts



Setting up Charges and Factoring Charges

y The factoring application fee payable initially is R s.10,000/- For setting up permitted

limits on each of the overseas customers, the exporter will have to pay a processing

fee equal to 0.05% of the permitted limit sought subject to minimum of R

s.2000/-after of this, the factoring charges payable as and when an exports bill is to be

factored depends on the country to which the exports is made and the credit period.

Exporters Obligations:

y R egistration and obtaining permitted limit on the buyer

y Payment of factoring charges with statement of exports made

Inform developments

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Documents

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