Evolution of Export Documentation in India: A Comprehensive Guide
DR. BHUPINDER P S CHAHAL
Export-Import
Documentation in India
Role of Export Documentation
Export documentation plays a vital role in
international marketing as it facilitates the smooth
flow of goods and payments thereof across national
frontiers.
Exporters are required to follow certain formalities
and procedures, using a number of documents.
Each of these documents serves a specific purpose
and hence carries its own significance.
A clear understanding of all documents and their
purpose, how to prepare these, number of copies
required, when and where to file, is a must for all
export professionals.
Export Documentation in India
Export Documentation in India has evolved a great
deal of interest since 1990.
Prior to 1990, documentation was manual and it
lacked proper co-ordination.
The result was lot of delays and mistakes, rendering
the task very clumsy, tiresome, repetitive, and truly
frustrating.
India adopted the ADS (Aligned Documentation
System) in 1991 which is the Internationally
accepted documentation system
Export Documentation in India
Export documentation is complex in nature as the
number of documents to be filled-in is very large, so
also is the number of the concerned authorities to
whom the relevant documents to be submitted.
It is, therefore, advisable to take the help of
shipping and forwarding agents who will obtain and
fill out the documents correctly as well as arrange
for transportation.
Parties: Interested in export
documentation in India
Parties interested in the documentation of exports in India are:
1.
Buyers and exporters,
2.
Buying agents,
3.
RBI,
4.
Authorized dealers (where the exporter has his bank Account),
5.
Buyer’s bank (foreign bank),
6.
DGFT,
7.
Customs and Port Authorities,
8.
VAT and Excise Authorities,
9.
EPC’s,
10.
Insurance Companies,
11.
Inspection Agencies,
12.
Clearing and Forwarding Agents,
13.
Shipping Companies/Airlines and Inland Carriers etc
Export Documentation in India
Proper Documentation will ensure smooth sailing with
the requirements of the above agencies and the
resulting transaction will be a successful one.
Inaccurate or incomplete documentation will result in
serious financial and goodwill losses.
Such losses can be completely avoided by understanding
clearly the documentation requirements of all concerned
parties and then meticulously planning to get the right
documents in the right numbers, at the right places and
at the right time.
Classification of Export Documents
Export Documents can be classified into following
four categories:
(1) Commercial Documents
(2) Regulatory Documents
(3) Export Assistance Documents
(4) Documents Required by Importing Countries
(1) Commercial Documents:
These documents are
used by exporters/importers to discharge their
respective legal and other incidental responsibilities
under sales contract.
Classification of Export Documents
Commercial documents can be further sub-divided
into:
(i) Principal Commercial Documents
(ii) Auxiliary Commercial Documents
(i) Principal Commercial Documents:
These
documents serves the following purposes:
(a) To effect physical transfer of goods and title of
the goods from exporter to the buyer.
(b) To realize export sales proceeds.
Classification of Export Documents
Principal Documents include:
Commercial Invoice (and the invoice prescribed by
the importer)
Packing list
Certificate of Inspection
Certificate of Insurance/Insurance Policy
Bill of Lading/Airway bill/Combined Transport
Documents
Certificate of Origin
Bill of Exchange
Shipment Advice
Classification of Export Documents
(ii) Auxiliary Commercial Documents:
These
Documents are required to prepare /procure the
principal commercial documents and include:
Proforma Invoice
Shipping Instructions
Insurance Declaration
Intimation for Inspection
Shipping Order
Mates Receipt
Application for Certificate of Origin
Letter to bank for negotiation /collection of documents
Classification of Export Documents
(2) Regulatory Documents:
These are prescribed by
various Government Departments/Bodies for compliance
of formalities under relevant laws governing export
transactions. These include:
(i) Exchange Control Declaration Form-GR Form
(ii) Freight Payment Certificate
(iii) Insurance Premium Payment Certificate
(iv) ARE I/ARE II Forms
(v) Shipping Bill/Bill of Export
(vi) Port Trust Copy of Shipping Bill/Export
Application/Dock Challan
(vii) Receipt of Payment of Port Charges
(viii) Vehicle Ticket.
Classification of Export Documents
(3)
Export Assistance Documents
: These are the
documents which are required for claiming
assistance under the various export assistance
measures as may be in operation from to time.
Currently, these refer to drawbacks of central excise
and customs duties, packing credit facilities etc
(4)
Documentation required by Importing
Countries:
These are the documents which are
required by the importer in order to satisfy the
requirements of his Government. These include
certificates of origin, consular invoice, quality
control certificate etc.
Commercial Documents
(1) Commercial Invoice
:
It is the basic and most important document in an export transaction and
extreme care has to be taken by the exporter to prepare this document.
This document requires the exporter to submit details such as
1.
his own details,
2.
Invoice number with date,
3.
details of the consignee and buyer (if the buyer is other than consignee),
4.
buyer’s order number with date,
5.
country of origin of the goods,
6.
country of final destination,
7.
terms of payment and delivery,
8.
pre-carriage details (Road/Rail),
9.
vessel/flight number,
10.
port of loading,
11.
port of discharge,
12.
final destination,
13.
container number,
14.
number and kind of packaging,
15.
detailed description of goods,
16.
quantity,
17.
rate and
18.
total amount chargeable etc
Commercial Documents
Therefore, a Commercial Invoice contains the
complete details of the export order.
Normally, the trade practice is to raise and send a
Proforma Invoice to the buyer for his approval,
once the order has been finalized.
On receipt of the approved Proforma Invoice, the
exporter can use it as a part of the export
contract.
The Commercial Invoice then becomes easier to
prepare on the basis of the approved Proforma
Invoice.
Commercial Documents
(2) Packing List:
This document provides the details of number of
packages; quantity packed in each of them; the
weight and measurement of each of the package
and the net and gross weight of the total
consignment.
Net weight refers to the actual weight of the items
and the gross weight means the weight of the items
plus the weight of the packing material.
The packing list serves a useful purpose of the
exporter while dispatching the consignment as a
cross check of goods sent.
Commercial Documents
For the port personnel, it comes handy while planning
the loading and offloading of cargo.
It is also an essential document for the customs
authorities as they as they can carry out the physical
examination of the cargo and conduct checks on the
weight and measurements of the goods smoothly
against the declarations made by the exporter in the
packing list.
(3) Certificate of Inspection:
This is the Certificate
issued by the Export Inspection Agency after it has
conducted the pre-shipment inspection of goods for
export provided the goods fall under the notified
category of goods requiring compulsory shipment of
inspection.
Commercial Documents
(4) Certificate of Insurance/Insurance Policy:
Insurance is an important area in the export business
as the stakes are usually very high.
Protection needs to be taken in the form of insurance
cover for the duration of transit of goods from the
exporter to the importer.
(5) Bill of Lading:
This is issued when the goods are shipped using ocean
(marine) transport.
When the exporter finally hand over the goods to the
shipping company for loading on board the ship for
transport to their final destination, the shipping
company issues a set of Bills of Lading to the exporter.
Commercial Documents
(6) Airway Bill:
Airway Bill is a bill of lading when the goods are
shipped using air transport.
It is also known as air consignment note or airway
bill of lading.
(7) Combined Transport Document:
This is also known as Multi-modal Transport
Document.
Ever since containers have become popular, the
concept of Combined Transport Document has
gained solid ground.
Commercial Documents
(8) Certificate Of Origin:
This document serves as a proof of the country of
origin of goods for the importer in his country.
Imported countries usually require this to be
produced at the time customs clearance of import
cargo.
It also plays an important part in computing the
liability and the rate of import duty in the country
of import.
This certificate declares the details of goods to be
shipped and the country where these goods are
grown, manufactured or produced.
Such goods needs to have substantial value
addition so as to become eligible to certification of
this nature.
Commercial Documents
(9) Bill of Exchange:
Also known as Draft, this is an instruments for payment
realization.
It is a written unconditional order for payment from a
drawer to a drawee, directing the drawee to pay a
specified amount of money in a given currency to the
drawer or a named payee at a fixed or determinable
future date.
The exporter is the drawer and he draws (prepares and
signs) this unconditional order in writing upon the
importer (drawee) asking him to pay a certain sum of
money either to himself or his nominee (endorsee).
Commercial Documents
This order could be made for payment on demand,
called a bill of exchange at sight or payment at a
future date, called a usance bill of exchange.
(10) Shipping Advice:
The exporter sends this document , called shipping
advice, to the buyer soon after the shipment is
made to provide him all the shipment details.
This serves as an advance intimation of the
shipment and allows the importer to arrange for
delivery of the same.
Suggested Readings
(1) International Marketing Management-an Indian perspective
by R.L Varshney and B.Bhattacharya, Sixth Edition, 2006
published by Sultan Chand and Sons, New Delhi.
(2) International Business Law and its Environment by Richard
Schaffer, Beverley and Filiberto Augsti, Sixth Edition, 2005
published by Thomson South-Western United States.
(3) Manual on Export Documentation published by Commercial
Law Publishers (India) Private Limited, NREW Delhi, 2006.
(4) International Business Law, Text, Cases and Readings,
Fourth Edition, 2004. Published by Prentice Hall, U.S.A
(5) International Marketing by Philips R.Cateora and John L.
Graham published by Tata McGraw Hill
(6) International Business by Charles W.L Hill and Arun K.Jain
published by Tata McGraw-Hill Publishing Company Limited,
New Delhi.
(7) Export and import Management by Aseem Kumar
published by Excel Books, 2007
Export documentation in India has seen significant advancements since the adoption of the Aligned Documentation System in 1991. Proper understanding and execution of export documentation are crucial for smooth international trade transactions, involving various concerned parties and authorities. This guide discusses the role, complexity, and importance of export documentation, as well as the key parties involved and the necessity of accurate documentation to prevent financial and goodwill losses.
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Presentation Transcript
Export-Import Documentation in India DR. BHUPINDER P S CHAHAL
Role of Export Documentation Export international marketing as it facilitates the smooth flow of goods and payments thereof across national frontiers. Exporters are required to follow certain formalities and procedures, using a number of documents. Each of these documents serves a specific purpose and hence carries its own significance. A clear understanding of all documents and their purpose, how to prepare these, number of copies required, when and where to file, is a must for all export professionals. documentation plays a vital role in
Export Documentation in India Export Documentation in India has evolved a great deal of interest since 1990. Prior to 1990, documentation was manual and it lacked proper co-ordination. The result was lot of delays and mistakes, rendering the task very clumsy, tiresome, repetitive, and truly frustrating. India adopted the ADS (Aligned Documentation System) in 1991 which accepted documentation system is the Internationally
Export Documentation in India Export documentation is complex in nature as the number of documents to be filled-in is very large, so also is the number of the concerned authorities to whom the relevant documents to be submitted. It is, therefore, advisable to take the help of shipping and forwarding agents who will obtain and fill out the documents correctly as well as arrange for transportation.
Parties: Interested in export documentation in India Parties interested in the documentation of exports in India are: 1. Buyers and exporters, 2. Buying agents, 3. RBI, 4. Authorized dealers (where the exporter has his bank Account), 5. Buyer s bank (foreign bank), 6. DGFT, 7. Customs and Port Authorities, 8. VAT and Excise Authorities, 9. EPC s, 10. Insurance Companies, 11. Inspection Agencies, 12. Clearing and Forwarding Agents, 13. Shipping Companies/Airlines and Inland Carriers etc
Export Documentation in India Proper Documentation will ensure smooth sailing with the requirements of the above resulting transaction will be a successful one. Inaccurate or incomplete documentation will result in serious financial and goodwill losses. Such losses can be completely avoided by understanding clearly the documentation requirements of all concerned parties and then meticulously planning to get the right documents in the right numbers, at the right places and at the right time. agencies and the
Classification of Export Documents Export Documents can be classified into following four categories: (1) Commercial Documents (2) Regulatory Documents (3) Export Assistance Documents (4) Documents Required by Importing Countries (1) Commercial Documents: These documents are used by exporters/importers to discharge their respective legal and other incidental responsibilities under sales contract.
Classification of Export Documents Commercial documents can be further sub-divided into: (i) Principal Commercial Documents (ii) Auxiliary Commercial Documents (i) Principal Commercial Documents: These documents serves the following purposes: (a) To effect physical transfer of goods and title of the goods from exporter to the buyer. (b) To realize export sales proceeds.
Classification of Export Documents Principal Documents include: Commercial Invoice (and the invoice prescribed by the importer) Packing list Certificate of Inspection Certificate of Insurance/Insurance Policy Bill of Lading/Airway Documents Certificate of Origin Bill of Exchange Shipment Advice bill/Combined Transport
Classification of Export Documents (ii) Auxiliary Documents principal commercial documents and include: Proforma Invoice Shipping Instructions Insurance Declaration Intimation for Inspection Shipping Order Mates Receipt Application for Certificate of Origin Letter to bank for negotiation /collection of documents Commercial required Documents: prepare These the are to /procure
Classification of Export Documents (2) Regulatory Documents: These are prescribed by various Government Departments/Bodies for compliance of formalities under relevant laws governing export transactions. These include: (i) Exchange Control Declaration Form-GR Form (ii) Freight Payment Certificate (iii) Insurance Premium Payment Certificate (iv) ARE I/ARE II Forms (v) Shipping Bill/Bill of Export (vi) Port Trust Copy Application/Dock Challan (vii) Receipt of Payment of Port Charges (viii) Vehicle Ticket. of Shipping Bill/Export
Classification of Export Documents (3) Export Assistance Documents: These are the documents which are assistance under the various export assistance measures as may be in operation from to time. Currently, these refer to drawbacks of central excise and customs duties, packing credit facilities etc (4) Documentation required Countries: These are the documents which are required by the importer in order to satisfy the requirements of his Government. These include certificates of origin, control certificate etc. required for claiming by Importing consular invoice, quality
Commercial Documents (1) Commercial Invoice: It is the basic and most important document in an export transaction and extreme care has to be taken by the exporter to prepare this document. This document requires the exporter to submit details such as 1. his own details, 2. Invoice number with date, 3. details of the consignee and buyer (if the buyer is other than consignee), 4. buyer s order number with date, 5. country of origin of the goods, 6. country of final destination, 7. terms of payment and delivery, 8. pre-carriage details (Road/Rail), 9. vessel/flight number, 10. port of loading, 11. port of discharge, 12. final destination, 13. container number, 14. number and kind of packaging, 15. detailed description of goods, 16. quantity, 17. rate and 18. total amount chargeable etc
Commercial Documents Therefore, a Commercial Invoice contains the complete details of the export order. Normally, the trade practice is to raise and send a Proforma Invoice to the buyer for his approval, once the order has been finalized. On receipt of the approved Proforma Invoice, the exporter can use it as a part of the export contract. The Commercial Invoice then becomes easier to prepare on the basis of the approved Proforma Invoice.
Commercial Documents (2) Packing List: This document provides the details of number of packages; quantity packed in each of them; the weight and measurement of each of the package and the net and gross consignment. Net weight refers to the actual weight of the items and the gross weight means the weight of the items plus the weight of the packing material. The packing list serves a useful purpose of the exporter while dispatching the consignment as a cross check of goods sent. weight of the total
Commercial Documents For the port personnel, it comes handy while planning the loading and offloading of cargo. It is also an essential document for the customs authorities as they as they can carry out the physical examination of the cargo and conduct checks on the weight and measurements of the goods smoothly against the declarations made by the exporter in the packing list. (3) Certificate of Inspection: This is the Certificate issued by the Export Inspection Agency after it has conducted the pre-shipment inspection of goods for export provided the goods fall under the notified category of goods requiring compulsory shipment of inspection.
Commercial Documents (4) Certificate of Insurance/Insurance Policy: Insurance is an important area in the export business as the stakes are usually very high. Protection needs to be taken in the form of insurance cover for the duration of transit of goods exporter to the importer. (5) Bill of Lading: This is issued when the goods are shipped using ocean (marine) transport. When the exporter finally hand over the goods to the shipping company for loading on board the ship for transport to their final company issues a set of Bills of Lading to the exporter. from the destination, the shipping
Commercial Documents (6) Airway Bill: Airway Bill is a bill of lading when the goods are shipped using air transport. It is also known as air consignment note or airway bill of lading. (7) Combined Transport Document: This is also known as Document. Ever since containers have become popular, the concept of Combined Transport Document has gained solid ground. Multi-modal Transport
Commercial Documents (8) Certificate Of Origin: This document serves as a proof of the country of origin of goods for the importer in his country. Imported countries usually require this to be produced at the time customs clearance of import cargo. It also plays an important part in computing the liability and the rate of import duty in the country of import. This certificate declares the details of goods to be shipped and the country where these goods are grown, manufactured or produced. Such goods needs to addition so as to become eligible to certification of this nature. have substantial value
Commercial Documents (9) Bill of Exchange: Also known as Draft, this is an instruments for payment realization. It is a written unconditional order for payment from a drawer to a drawee, directing the drawee to pay a specified amount of money in a given currency to the drawer or a named payee at a fixed or determinable future date. The exporter is the drawer and he draws (prepares and signs) this unconditional order in writing upon the importer (drawee) asking him to pay a certain sum of money either to himself or his nominee (endorsee).
Commercial Documents This order could be made for payment on demand, called a bill of exchange at sight or payment at a future date, called a usance bill of exchange. (10) Shipping Advice: The exporter sends this document , called shipping advice, to the buyer soon after the shipment is made to provide him all the shipment details. This serves as an advance intimation of the shipment and allows the importer to arrange for delivery of the same.
Suggested Readings (1) International Marketing Management-an Indian perspective by R.L Varshney and B.Bhattacharya, Sixth Edition, 2006 published by Sultan Chand and Sons, New Delhi. (2) International Business Law and its Environment by Richard Schaffer, Beverley and Filiberto Augsti, Sixth Edition, 2005 published by Thomson South-Western United States. (3) Manual on Export Documentation published by Commercial Law Publishers (India) Private Limited, NREW Delhi, 2006. (4) International Business Law, Text, Cases and Readings, Fourth Edition, 2004. Published by Prentice Hall, U.S.A (5) International Marketing by Philips R.Cateora and John L. Graham published by Tata McGraw Hill (6) International Business by Charles W.L Hill and Arun K.Jain published by Tata McGraw-Hill Publishing Company Limited, New Delhi. (7) Export and import Management published by Excel Books, 2007 by Aseem Kumar
