SP ITDOC MOD 3 (3)

Course Code : MBA 365

Course Title : International Trade Procedures & Documentation

MODULE III - Export Import Documents

Credit units : 03

INTERNATIONAL BUSINESS – MBA TRIM 3

04/27/23 1Prepared by Sudhir Pasricha



Learning Objectives:

Learning the importance and procedural & documentation aspects of export-import of goods and services ;

Knowledge of governments, departments, international institutions involved ;

How an Export Manager to develop a systematic methodology to handle exports ;

Understand the relevance and importance of various government policy measures for export as well as import.





Contents Module III: Export/Import Documents

How to make Commercial, Financial, Transport, Title, Official, Insurance, Export assistance Documents

& Certificates for Exports.

Ensuring error-free export documentation as per L/C. How to open L/C,

Apply for license and make Customs/ Sales Tax documents for imports.




Commercial Invoice

An invoice is very important as it contains the names of the exporter, importer, and the

consignee, and the description of goods. It has to be prepared & signed by the exporter. Other

documents are prepared by deriving information from the invoice. It is required to be

presented before different authorities for different purposes.

Bills of Exchange

It is an instrument in writing, containing an order, signed by the maker , directing a certain person to pay a

certain sum of money only to the order of a person to the bearer of the instrument. It is commonly known

as a draft.




Consular Invoice

This invoice is needed to be submitted for certification to the embassy of the country concerned.

Its main purpose is to enable the importer’s country to collect accurate and authenticated

information about the value, volume, quantity, source etc. of the import for assessing import

duties and for statistical purposes. It helps the importer to get goods cleared through customs

without any undue delay.

Packing List

This statement gives the packing details of goods in a prescribed format. It is a very useful

document for customs at the time of examination and for warehouse keeper of the buyer to

maintain a record of inventory and to effect delivery.




Transport Documents

Ocean (marine) Bill of Lading

This document is issued by the shipping company acknowledging the receipt of the goods

mentioned in the bill, for shipment on board of the vessel. The B/L is the legal document to be

referred in case of any dispute over the shipment.

Airway Bill

This receipt issued by an airlines company or its agent for carriage of goods is a contract between the

owner of the goods and the carrier. It should indicate freight pre-paid or freight to collect. The first

three digits of the Airway Bill Number represents the code, which identifies the carrier.




Multimodal / Combined transport) Is the transportation of goods under a single contract, but performed

with at least two different means of transport; the carrier is liable (in a legal sense) for the entire carriage,

even though it is performed by several different modes of transport (by rail, sea and road, for example). The

CTD/MTD is document is increasingly being used .

CTD covers movement of cargo from place of containerization to that of destination using multimodal

transport.

Certificate of origin - stating that the goods originated from India

Inspection Certificate

It is required by some importers and countries in order to get the specifications of the goods shipped

attested. The attestation is usually

Insurance Policy / Certificate

This document, obtained from the freight forwarder , is used to assure the consignee that insurance will

cover the loss or damage to the cargo during transit (marine/air insurance).



Export assistance Documents & Certificates for Exports.

Documents that are commonly used in exporting, but specific requirements vary by destination and product. It is divided into the following subsections:

COMMON EXPORT DOCUMENTSCommercial InvoiceExport Packing ListPro Forma Invoice

TRANSPORTATION DOCUMENTSAirway BillBill of LadingElectronic Export Information Filing (formerly known as the Shipper’s Export Declaration)

EXPORT COMPLIANCE DOCUMENTSExport LicensesDestination Control Statement

CERTIFICATES OF ORGINGeneric Certificate of OriginCertificate of Origin for claiming benefits under Free Trade AgreementsCertificate of Origin for goods not manufactured in the United States



Export assistance Documents & Certificates for Exports. OTHER CERTIFICATES FOR SHIPMENTS OF SPECIFIC GOODSAdditional certificates are needed for different purposes

ATA CARNET/Temporary shipment certificate"Merchandise Passport, is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation. The ATA Carnet is an international customs document that allows the holder to temporarily (up to one year) import goods without payment of normally applicable duties and taxes, including value-added taxes.

Certificate of Analysis:A certificate of analysis can be required for seeds, grain, health foods, dietary supplements, fruits and vegetables, and pharmaceutical products.

Certificate of Free SaleCertificate of free sale may be issued for biologics, food, drugs, medical devices and veterinary medicine. More information is available from the Food and Drug Administration. Health authorities in some states as well as some trade associations also issue Certificates of Free Sale.

Dangerous Goods CertificateExports submitted for handling by air carriers and air freight forwarders classified as dangerous goods need to be accompanied by the Shipper’s Declaration for Dangerous Goods required by the International Air Transport Association (IATA). The exporter is responsible for accuracy of the form and ensuring that requirements related to packaging, marking, and other required information by IATA have been met.



Export assistance Documents & Certificates for Exports.

For shipment of dangerous goods it is critical to identify goods by proper name, comply with

packaging and labeling requirements, which vary depending upon the type of product shipper and

the country shipped to. More information on labeling/regulations is available from the International

Air Transportation Association or Department of Transportation - HAZMAT websites.

For ocean exports, hazardous material regulations are contained in the International Maritime

Dangerous Goods regulations.

Fisheries Certificate

The National Marine Fisheries Service conducts inspections and analyses of fishery commodities for

export.

Fumigation Certificate

The Fumigation Certificate provides evidence of the fumigation of exported goods (especially

agricultural products, used clothing, etc.). This form assists in the quarantine clearance of any goods

of plant or animal origin. The seller is typically required to fumigate the commodity at his or her

expense a maximum of 15 days prior to loading.




Halal Certificate

Required by most countries in the Middle East, this certificate states that the fresh or frozen meat or poultry

products were slaughtered in accordance with Islamic law. Certification by an appropriate chamber and

legalization by the consulate of the destination country is usually required.

Health Certificate

For shipment of live animals and animal products (processed foodstuffs, poultry, meat, fish, seafood, dairy

products, and eggs and egg products). Note: some countries require that health certificates be notarized

or certified by a chamber and legalized by a consulate. Health certificates are issued by the U.S.

Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS).

Ingredients Certificate

A certificate of ingredients may be requested for food products with labels that are inadequate or

incomplete. The certificate may be issued by the manufacturer and must give a description of the

product, contents, and percentage of each ingredient; chemical data; microbiological standards; storage

instructions; shelf life; and date of manufacture. If animal fats are used, the certificate must state the type

of fat used and that the product contains no pork, artificial pork flavor, or pork fat. All foodstuffs are

subject to analysis by Ministry of Health laboratories to establish their fitness for use.




Inspection Certificate

Weight and Quality certificates should be provided in accordance with governing USDA/GIPSA regulations

for loading at port and loading at source/mill site as appropriate. A certificate of origin certified by the

local chamber of commerce at the load port and a phytosanitary certificate issued by APHIS/USDA and

fumigation certificate are to be provided to the buyer. Costs of all inspection, as well as

certificates/documents at the load port, are usually the responsibility of the seller. Independent

inspection certificates may required in some instances.

Pre-Shipment Inspections

The governments of a number of countries have contracted with international inspection companies to

verify the quantity, quality, and price of shipments imported into their countries. The purpose of such

inspections is to ensure that the price charged by the exporter reflects the true value of the goods, to

prevent substandard goods from entering the country, and to deflect attempts to avoid payment of

customs duties. Requirements for pre-shipment inspection are normally spelled out in letter-of-credit

or other documentary requirements. Inspections companies include Bureau Veritas, SGS and Intertek.

Some countries require pre-shipment inspection certificates for shipments of used merchandise.




Insurance Certificate

Insurance certificates are used to assure the consignee that insurance will cover the loss of or damage

to the cargo during transit. These can be obtained from your freight forwarder or publishing house.

Note: an airway bill can serve as an insurance certificate for a shipment by air. Some countries may

require certification or notification.

Phytosanitary Certificate

All shipments of fresh fruits and vegetables, seeds, nuts, flour, rice, grains, lumber, plants, and plant

materials require a federal phytosanitary certificate. The certificate must verify that the product is

free from specified epidemics and/or agricultural diseases. Additional information and forms are

available from Animal and Plant Health Inspection Service (APHIS).



MODULE III - Export Import Documents Radiation Certificate

Some counties including Saudi Arabia may require this certificate for some plant and animal imports.

The certificate states that the products are not contaminated by radioactivity.

Other (Product-Specific) Certificates

Shaving brushes and articles made of raw hair must be accompanied by a recognized official

certificate showing the consignment to be free from anthrax germs. Used clothing requires a

disinfection certificate. Grain requires a fumigation certificate, and grain and seeds require a

certificate of weight. Many countries in the Middle East require special certificates for imports of

animal fodder additives, livestock, pets, and horses.

Weight Certificate

A certificate of weight is a document issued by customs, certifying gross weight of the exported

goods.




OTHER EXPORT - RELATED DOCUMENTS

Consular Invoice

Required in some countries, a consular invoice describes the shipment of goods and shows information

such as the consignor, consignee, and value of the shipment. If required, copies are available from

the destination country's embassy or consulate in the U.S. The cost for this documentation can be

significant and should be discussed with the buyer.

Dock Receipt and Warehouse Receipt

A dock receipt and warehouse receipt are used to transfer accountability when the export item is

moved by the domestic carrier to the port of embarkation and left with the ship line for export.

Import License

Import licenses are the responsibility of the importer and vary depending upon destination and

product. However, including a copy of an import license with the rest of your documentation may in

some cases help avoid problems with customs in the destination country.




ISPM 15 (Wood Packaging) Marking

The International Standards for Phytosanitary Measures Guidelines for Regulating Wood

Packaging Material in International Trade (ISPM15) is one of several International Standards

for Phytosanitary Measures adopted by the International Plant Protection Convention

(IPPC). The IPPC is an international treaty to secure action to prevent the spread and

introduction of pests of plants and plant products, and to promote appropriate measures for

their control. The American Lumber Standard Committee (ALSC) and the National Wooden

Pallet and Container Association (NWPCA) provide phytosanitary certification for wood

packaging materials (WPM). APHIS will issue a phytosanitary certificate for wood package

materials only if WPM are the cargo.

Shipper’s Letter of Instruction

The shipper’s letter of instruction is issued by the exporter to the forwarding agent and includes

shipping instructions for air or ocean shipment.




TEMPORARY SHIPMENT DOCUMENTS

ATA CARNET/Temporary shipment certificate

An ATA Carnet, "Merchandise Passport," is a document that facilitates the temporary importation of

products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a

security deposit normally required at the time of importation. Apply for an ATA Carnet.

Customs Certificate of Registration

Customs Form 4455 may be used (often in conjunction with a temporary import bond or ATA Carnet

for goods that are leaving the United States on a temporary basis for alteration, repair, replacement,

and processing).


MODULE III - Export Import DocumentsHow to handle L/C and Avoid Discrepancies

1 The Letter of Credit (LC) is useful to both the importer (purchaser) and exporter (seller).

The basic terms of trade between the two parties will form an integral part of the terms and conditions of the

LC and therefore it is important for the seller to provide as much detail (description of goods, availability for

shipment, price, INCOTERMS bank name and address etc.) in either a proforma invoice or contract of sale.

2 If the seller has any concerns about the financial stability of the buyers country then it would be wise to insist

that the LC is confirmed (i.e. guaranteed by a bank in the seller's country).

3 Once the purchaser has instructed its bank (the Opening Bank) to issue an LC it should take about two or

three days for the bank to create the document and transmit it to the Advising Bank. Most LCs are transmitted

by wire and therefore will be with the advising bank within 24 hours of transmission. Note : the Advising Bank

may not necessarily be the buyer's bank.

4 As soon as the seller receives the LC advice it is vital that this document is examined to both ensure that the

terms are as set out in the proforma invoice or contract of sale and also that any additional terms (such as the

deadline for presentation of documents) can be complied with.



The seller should request clarification from the Advising Bank if there are any terms within the LC that the

seller does not understand. If the seller cannot comply with any terms then it is important to advise the buyer

and request an amendment to the LC.

5 Once the goods have been shipped the seller must ensure that all documents are collated and not only

match the terms and conditions of the LC but also are consistent with one another. It is recommended that at

least one other person undertakes a second check as familiarity with the documents may well lead to a small

discrepancy being overlooked.

6 If there are any obvious discrepancies (such as late shipment) then it would be best for the seller to contact

the buyer and request an amendment to the LC. It is not recommended to ask the buyer to instruct the

Opening Bank to accept a discrepancy as there is no guarantee that it will do so.

7 Before sending the documents to the Advising Bank check to make sure that the documents should not be presented to a third party bank (a Negotiating Bank)as any error in dispatch of documents may lead to a delay in the mail.

8 If possible have the documents presented for negotiation via your own bank who should be able to undertake a check against the LC before dispatch and may even be able to act as the Negotiating Bank and possibly speed up the process.

How to handle L/C and Avoid Discrepancies



A letter of credit is a method of securing payment to a vendor. When a seller asks a buyer to obtain a

letter of credit, it means the seller would like to ensure payment for a product he sells to that customer.

Typically letters of credit are issued by a bank. The most common forms are standby letters of credit for

domestic transactions and documentary letters of credit for international transactions.

Steps to Open a Letter of Credit

1 Establish the terms of the sale with your vendor. You will need to determine the following:

•How much product will you buy each month?

• How often will payment be due? With the answers to these questions, the amount guaranteed

by the letter of credit can be determined. Typically the amount of the letter of credit will total

30 days worth of product, plus or minus 10 percent.

•Do you need a documentary or standby letter of credit? A documentary letter of credit is used

for international transactions and usually covers only one transaction. A standby letter of credit

is a long-term contract covering a year or more.

How to Open a Letter of Credit




2 Contact your bank to draw up the letter of credit. Once the terms of the sale have been established,

your banking officer will draw up the letter. In most cases, if you hold a line of credit with the bank,

the amount of the letter of credit will be held against the line of credit. If no line of credit exists,

the bank may hold the amount against a money market account.

3 Submit the letter of credit to the buyer for approval. Often your bank will perform this step for you.

The seller may ask to revise some of the wording. If this happens, your bank will need to approve

the changes. Once all three parties have agreed to a final document, you may conduct business

with the seller.

4 Ensure a documentary letter of credit is released. If business has been concluded and the vendor has

been paid, the seller typically releases documentary letters of credit. This will free up your line of

credit or collateral.

5 Ensure that a standby letter of credit is renewed. Many standby letters of credit renew automatically

each year unless canceled by the bank. If an auto-renewal clause does not exist, contact your bank

60 days before the letter of credit's expiration date to avoid interrupting business.

How to Open a Letter of Credit




Export Import License Procedures in IndiaHow to get import export license in India ?

This License is needed while dealing with any item that is not freely importable. In India, most goods are freely importable, but the Exim Policy of 2007 states certain goods and categories of products that are prohibited and some goods that can be conditionally imported. A typical export import business license would have two copies.

IntroductionWhile the majority of the goods are freely importable, the Exim Policy (2007) of India prohibits import of certain categories of products as well as conditional import of certain items. In such a situation it becomes important for the importer to have an import license issued by the issuing authorities of the Government of India.

Import License Issuing AuthorityIn India, Import License is issued by the Director General of Foreign Trade. DGFT Delhi office is situated in Udyog Bhawan, New Delhi 110011.

Validity of Import LicenseImport Licenses are valid for 24 months for capital goods and 18 months for raw materials components, consumable and spares, with the license term renewable.



General import license/permit requirements

Most imports into India do not require a license. Provided they fall within the scope of the Open General

License they may be imported freely without restrictions.

The imports not covered by the Open General License are regulated. There are three categories of such

imports: Banned, Restricted and Canalized.

Banned/Prohibited Products may not be imported at all. They include:

• Wild animals, tallow fat and oils of animal origin, animal rennet, and unprocessed ivory.

Restricted Products are generally goods for which demand can be adequately satisfied, in normal

circumstances, by local production in India. These are permitted to be imported against a license only.

Canalized Products are generally commodity imports which must be channeled ("canalized") through public

enterprises. Many canalized products are decontrolled except for:

• Petroleum products, bulk agricultural products, such as grains and vegetable oils, and some

pharmaceutical products.




General import license/permit requirements

The following products require a Special Import License (SIL):

Betel nut (areca nut) whole or split ground

Raw silk

Launches, boats, barges, trawlers and other fishing vessels

Inflatable yachts and ships, boats and floating structures

A special import authorization is required for:

Works of art

Photographs (in rolls, or printed)

Account and manuscript books, labels, advertising materials (not including trade catalogs or circulars)

Almanacs (in sheets or cards) Waste paper and old newspaper used for packing.

Importers must be licensed to Import Leaf Tobacco which requires two sanitary certificates.

Importers must obtain a number from the Ministry of Commerce and Industry, Director General of Foreign

Trade in order to import goods.



MODULE III - Export Import DocumentsApply for license and make Customs/ Sales Tax documents for imports.

Import customs tariff

India uses the Harmonized Tariff System for classification. The Indian tariff contains many exceptions,

exemptions, and drawbacks. Imports are subject to duty consisting of many parts. For most imports:

Duty payable = = BCD + ACD + Special CVD + Education Cess + Customs Handling Fee.

Additional taxes and surcharges which may apply:

•Customs surcharge: 10% of the basic customs duty rate

•Education surcharge: 3% of the aggregate value of all duties and taxes.

•State tax/Value added tax: Imports are subject to taxes levied by the individual state governments with

each state having its individual, applicable sales tax and rate ranging from 2 to 20%. Many states have

agreed to replace that tax with a uniform, 12.5% state-level value added tax. This system has not yet been

implemented by all states.



Customs valuation basis

•Certain products are subject to specific duty rates.

•For items subject to ad valorem duties, the WTO Customs Valuation Agreement applies. According to this

agreement, there are six acceptable methods of determining customs value. Typically the first method is

used (unless the buyer and seller are related parties). When the value cannot be obtained this way, or is

rejected by customs, one of the other methods is to be used, in descending order:

•Transaction value (the price actually paid or payable by the importer, plus certain costs and expenses)

• Transaction value of identical goods

• Transaction value of similar goods

•Deductive value (the sale or resale value, reduced by certain costs such as customs duties, taxes, and

commissions)

•Computed value (calculated by adding together certain costs/values for production, materials, profit and

other expenses) Fall-back method.




General

Provisions

about

Customs

Procedures



http://interport-india.com/import.htm

http://www.dateyvs.com/tax/customs-law-primer/procedures-for-imports-and-exports/

http://www.dateyvs.com/useful-sites/corporate-laws/

http://www.dateyvs.com/useful-sites/taxation/

Useful & important Links


END OF MODULE III - Export Import Documents

THANK YOU !!

SP ITDOC MOD 3 (3)

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Transcript of SP ITDOC MOD 3 (3)