The compilation of these International Business Notes makes students exam preparation simpler and organised.
Export Procedures and Documentation
Import and Export is the most favored mode of entering into International Business. But are the procedure and documentation required to suffice this mode are as smooth as it seems? Let’s understand the Export Procedures and Documentations.
Export Procedures
1. Exporter gets a request from the potential buyer asking for data with respect to cost, standard and different terms & conditions for transportation of merchandise. The exporter answers with a citation known as a proforma invoice.
2. In the event that the purchaser approves of the parts of terms and conditions, he puts in the request or ‘indent’ for the merchandise.
3. In the wake of getting the request or indent, the exporter attempts an inquiry with respect to the financial soundness of the importer to evaluate the danger of non-payment by the importer.
4. As indicated by customs laws, the exporter or the export firm should have a fare permit before continuing with the export. The following steps are taken after acquiring the export license.
- opening record in any approved bank
- To acquire import-export code (IEC) number from Directorate General Foreign Trade (DGFT) or Regional Import Export Licensing Authority (RIELA).
- Register with a suitable export-promoting committee.
- To get enrolled with Export Credit and Guarantee Corporation (ECGC).
5. After getting the export license the exporter meets with his banker to get pre-dispatch finance for carrying out production.
6. Exporter, after getting the pre-shipment fund from the bank, looks at preparing the merchandise according to the importer.
7. The law of India ensures that very selective and incredible quality products are exported out of India. The exporter needs to introduce a pre-shipment examination report along with various papers at the time of dispatch Import – Export Procedure and Documentation
8. As demonstrated by the Central Excise Tariff Act, excise duty on the material used as a part of creating the merchandise is to be paid. For a similar cause, the exporter applies to the concerned Excise Commissioner in the area with a receipt.
9. Remembering the ultimate objective to get Tariff concessions or diverse exclusions the importer may ask for the exporter to send an authentication of origin.
10. The exporter applies to the logistics organization for the plan of transportation space. He needs to give full information as for the merchandise to be dispatched, conceivable date of shipment, and port of destination. The logistics organization issues a transportation course of action. Which is a guideline to the captain of the ship, after accepting an application for dispatching.
11. The merchandise is stuffed and set apart with crucial data like name and address of the importing person, gross and net weight, port of shipment and destination, etc. After this, the exporter makes the strategy for the transportation of merchandise to the port.
12. To protect the merchandise amid the ocean travel, the exporter gets great guaranteed with the insurance agency.
13. Before stacking the merchandise on the ship they must be cleared by the client. For this reason, the exporter makes the bill and submits 5 duplicates of the bill along with:
- Certificate of origin
- Commercial Invoice
- Export Order
- Letter of credit
- Certificate of Inspection, where essential.
- Marine Insurance Policy.
On presenting the mentioned documents, the director of the concerned port trust approaches to obtain to be sent order which is the guideline to the staff at the entryway of the port to allow the cargo within the dock.
14. After the merchandise has been stacked on the ship, the captain issues mate’s receipt to the port administrator which contains data with respect to the vessel, bill, information about the merchandise, date of shipment denotes, the state of the merchandise.
15. The clearing and forwarding specialist (C&F operator) hands over the mate’s receipt to the transportation organization for analyzing the cargo. On accepting the cargo the transportation organization issues a bill of lading.
16. The exporter readies a receipt for the outgoing merchandise. The receipt contains data with respect to the quantity of merchandise sent and the sum to be paid by the importer. It is properly confirmed by the customs.
17. After dispatching the merchandise, the importer is given details by the exporter. Different reports like an attested duplicate of the receipt, bill of lading packing list, Insurance arrangement, certificate of origin, and letter of credit are sent by the exporter through his bank. These records are required by the importing merchant for getting the products cleared from customs.
Documents Used in Export Transactions
A. Documents Related to Goods
Seller Bill:- It is a seller’s bill data about products like amount, the number of packages, blemishes on packing, the name of the ship, port of destination, terms of delivery and payment, and so on.
Certificate of Inspection:- For guaranteeing quality, the government has made an inspection of specific products necessary by some approved organizations like the trade Inspection board of India (EICI) and so forth. In the wake of reviewing the merchandise, the organization issues a certificate of inspection that the merchandise has been reviewed as required under the export (Quality Control and Inspection) Act, 1963.
Packing List:- This document is with respect to the number of cases or packs and the details of products contained in these packs. It gives finish insights with respect to the products sent out and the condition in which they are being sent.
Testament of Origin:- This authentication indicates the nation in which the merchandise is being produced. This authentication empowers the importer to claim levy concessions or different exemptions. This declaration is likewise required in the event that when there is a prohibition on imports of a few products in specific nations.
B. Documents Related to Shipment
Transportation Bill: It is the basic document based on which consent is allowed for the export of merchandise by the customs office. It contains details of as to whom the merchandise being sent, the name of the vessel, exporter’s name and address, a nation of definite goal, and so on.
Mate’s Receipt:- This receipt is issued by the captain or mate of the ship to the exporter after the merchandise is stacked on board the ship. It contains the name of the vessel, quantity, marks, condition of the freight at the time of receipt on board the ship, and so on.
Bill of lading:- It is a record issued by the shipping organization. It goes about as proof with respect to the acknowledgment of the delivery organization to convey the merchandise to the port of destination. It is additionally referred to as the title to the merchandise and is openly transferable by underwriting and delivery.
Airway Bill:- Similar to a shipping bill, it is a record issued by the airline organization on getting the products onboard.
Cart Ticket:- Also known as cart chit or gate pass, it is established by the exporter. It contains insights with respect to sending out payloads like the number of items, shipping charge number, port of destination, and so forth.
Marine Insurance Policy:- It is a document containing contract between the exporter and the Insurance Company to reimburse the safeguarded against the misfortune brought in regard to products presented to the risks of the ocean travel in light of an installment called premium
C. Document Related to Payment
Letter of credit:- It is an assurance letter issued by the importer’s bank expressing that it will respect the export bills to the bank of the exporter up to a specific sum.
Bill of Exchange:- In export and import exchange, the exporter draws the bill on the importer requesting that he pay predefined money to someone in particular or the owner of the instrument. The records required by the importer for guaranteeing the title of exported merchandise are passed on to him just when the importer acknowledges this bill.
Bank Certificate of Payment:- It is a declaration that the required documents identifying with the specific export deal have been arranged and payment has been gotten related to the exchange control regulation.
Example:
Question:
Which of the following documents are not required for obtaining an export license?
a. IEC number
b. Letter of credit
c. Registration cum membership certificate
d. Bank account number
Answer:
(b) Bank account, IEC, registration with export promotion council, and registration with ECGC.