Answer the following questions.
Explain briefly Export-Import procedures and Documentation.
Explain briefly Export-Import procedures and Documentation.
Following are the export-import procedures:
Procedure of export trade-
In order to export, an exporter needs to follow these steps:
i. The exporter should first assess the creditworthiness of the importer, through an enquiry. He should then ask for a letter of credit from the importer’s bank, guaranteeing to honour the draft of a specified amount drawn on it by the exporter.
ii. Once the exporter is assured that he will be paid for the goods, he will need to register himself and secure an Importer Exporter Code (IEC) number in order to obtain an export licence.
iii. After obtaining the licence, he should acquire pre-shipment finance from a bank in order to purchase raw materials to undertake production and packaging.
iv. After the finance is made available, the exporter can procure the raw materials and other inputs required and start the production process.
v. After the goods are produced, the exporter must get them inspected before he exports them. For this inspection, he must contact the Export Inspection Agency (EIA) or another designated agency and obtain a Certificate of Inspection.
vi. The exporter then needs to secure excise clearance, for which he must submit an invoice to the regional excise commissioner. The excise commissioner then examines the invoice and, if satisfied, issues the excise clearance to the exporter.
vii. Once the excise clearance is received, the exporter needs a certificate of origin, which specifies the country in which the goods are being produced. It allows the importer to claim tariff concessions and other exemptions, if any.
viii. Next, the exporter needs to submit an application to a shipping company for booking shipping space in a vessel. In the application, he must provide details such as the type of goods to be shipped and the port of destination. After the application is received, the shipping company will issue a shipping order to the captain of its ship to inform him/her that the specified goods will be received on board after the customs clearance.
ix. The goods are then properly packed and labelled with all the necessary information, such as the importer’s name, port of destination and gross and net weight of the goods.
x. Once the goods are ready for export, the exporter must insure the goods against perils of the sea or any related damage.
xi. It must then secure customs clearance before loading the goods on the ship. For getting customs clearance, the exporter must submit the necessary documents to the customs appraiser at Customs House.
xii. After customs clearance, a mate’s receipt will be issued by the captain or commanding officer of the ship to the exporter as evidence that the cargo has been loaded on the ship.
xiii. Later, a bill of lading will have to be obtained from the shipping company, as a token of acceptance, that the goods have been put on board its vessel.
xiv. After the goods are shipped, an invoice will have to be prepared by the exporter, which will include the quantity of goods sent and the amount to be paid by the importer.
xv. The exporter then needs to send a set of documents to the banker that are to be handed over to the importer on acceptance of the bill of exchange. After receiving the bill of exchange, the importer, will instruct its bank to transfer money to the exporter’s bank account.
xvi. Finally, the exporter would be required to collect from the bank a certificate of payment, which will state that the necessary documents, along with the bills of exchange, have been presented to the importer for payment, and that the payment has been received in accordance with the exchange control regulations.
Documents Related to Export Trade
Document
Details
Export Invoice
Information regarding quantity of goods, total value of goods, number and marks of packaging, name of the ship, etc. is given in this document.
Packing List
Information related to the goods that are packed, such as the number of items packed in one package, details of goods contained in one package, etc. is given in this document.
Certificate of Origin
It specifies the country in which, the goods being exported, were produced (allows the importer to claim tariff concessions and other exemptions).
Certificate of Inspection
It is proof that the goods being exported are of good quality.
Mate’s Receipt
It is the receipt issued by the captain or commanding officer of a ship to an exporter as evidence that the exporter’s cargo has been loaded on the ship.
Shipping Bill
It forms the basis of obtaining customs clearance.
Bill of Lading
It is an undertaking signed by the shipping company to transfer the goods to the port of destination.
Airway Bill
It is issued by an airline as a token of acceptance that the goods for export have been put on board its aircraft.
Marine Insurance Policy
It is a contract in which the insurance company agrees to pay an exporter a specified amount in case of loss of goods or damage caused during transit in sea.
Cart Ticket/Cart Chit/Gate Pass
It gives information about the exporter’s cargo.
Letter of Credit
It is issued by the bank of an importer that guarantees to honour a draft of a specified amount drawn on it by the exporter.
Bill of Exchange
It indicates the amount that is to be paid by the importer to the bearer of the bill.
Bank certificate of Payment
It certifies that the necessary documents have been presented to the importer and that payment from the importer has been received.
Procedure of import trade-
In order to import, an importer needs to follow these steps:
i. The importer should first make an enquiry regarding the price and other relevant information about the goods to be imported by sending a trade enquiry to the exporter. On receipt of the trade enquiry, the exporter will prepare a quotation and send it to the importer.
ii. The importer must find out whether the goods to be imported are subject to import licensing. If needed, he must secure an import licence.
iii. The firm must then convert domestic currency into foreign currency to make payments to the exporter. This is done by submitting an application to a bank in the prescribed form along with other documents.
iv. Once the import licence is obtained, the importer can place an order with the exporter specifying the price, quantity and quality of the goods required.
v. The importer will be required to send a letter of credit to the exporter. This letter is obtained from the importer’s bank and it acts as a bank guarantee, stating that the draft of a specified amount drawn on it by the exporter will be honoured.
vi. Next, the importer should arrange finance in order to make payments to the exporter on the arrival of the goods. This is necessary to avoid penalties on account of any delay in payment.
vii. Once the goods are shipped, the exporter will send a shipment advice to the importer. This document is proof of dispatch of the goods and contains information about the bill of lading, name of the vessel with date, port of export, description of goods, etc.
viii. The importer must then prepare a bill of exchange that is to be handed over to the exporter’s bank in exchange for the export documents. After this is done, the importer is required to instruct its bank to transfer money to the exporter’s bank account.
ix. An Import General Manifest will be issued by the person in-charge of the carrier (ship or airliner) in which the goods are being imported. This is done in order to inform the officer in-charge at the dock or the airport about the arrival of the goods. This document contains information about the goods being imported and it is on the basis of this document that the unloading of cargo will take place.
x. Once the goods arrive at the port, the importer must get customs clearance, which, in turn, requires a delivery order, a port duty dues receipt and a bill of entry.
Documents Related to Import Trade
Document
Detail
Trade Enquiry
It is the document sent by an importer to an exporter, seeking information about the prices of goods and the terms and conditions relating to the supply of goods.
Proforma Invoice
This contains all the necessary information about the good being imported and also the conditions on which the exporter will supply those goods.
Import Order
It is the placement of order with the exporter stating the amount of goods to be supplied and the expected time of delivery.
Import Licence
It is the licence issued by the government, permitting an importer to bring in goods from outside the country.
Letter of Credit
It is issued by the bank of an importer guaranteeing to honour a draft of a specified amount drawn on it by the exporter.
Shipment Advice
It is a document sent by an exporter to an importer as proof that the goods ordered have been shipped.
Bill of Lading
It is an undertaking signed by the shipping company to transfer the goods to the port of destination.
Airway Bill
This is issued by an airline as a token of acceptance that the goods meant to be exported have been put on board its aircraft.
Bill of Entry
It is a form given by the Customs Clearance that is to be filled by the importer at the time of receiving the imported goods.
Bill of Exchange
It indicates the amount to be paid by the importer to the bearer of the bill.
Sight Draft
This draft instructs the bank of the exporter to hand over the documents to the importer only after the payment has been received.
Usance Draft
This draft instructs the bank of the exporter to hand over the documents to the importer after the bill of exchange has been received.
Import General Manifest
It is issued by the person in charge of the carrier (ship or airliner) in which the goods are being imported (on the basis of which the cargo will be unloaded).
Dock Challan
This is a bill stating the dock charges that the importer must pay in order to get the Customs Clearance.
Procedure of export trade-
In order to export, an exporter needs to follow these steps:
i. The exporter should first assess the creditworthiness of the importer, through an enquiry. He should then ask for a letter of credit from the importer’s bank, guaranteeing to honour the draft of a specified amount drawn on it by the exporter.
ii. Once the exporter is assured that he will be paid for the goods, he will need to register himself and secure an Importer Exporter Code (IEC) number in order to obtain an export licence.
iii. After obtaining the licence, he should acquire pre-shipment finance from a bank in order to purchase raw materials to undertake production and packaging.
iv. After the finance is made available, the exporter can procure the raw materials and other inputs required and start the production process.
v. After the goods are produced, the exporter must get them inspected before he exports them. For this inspection, he must contact the Export Inspection Agency (EIA) or another designated agency and obtain a Certificate of Inspection.
vi. The exporter then needs to secure excise clearance, for which he must submit an invoice to the regional excise commissioner. The excise commissioner then examines the invoice and, if satisfied, issues the excise clearance to the exporter.
vii. Once the excise clearance is received, the exporter needs a certificate of origin, which specifies the country in which the goods are being produced. It allows the importer to claim tariff concessions and other exemptions, if any.
viii. Next, the exporter needs to submit an application to a shipping company for booking shipping space in a vessel. In the application, he must provide details such as the type of goods to be shipped and the port of destination. After the application is received, the shipping company will issue a shipping order to the captain of its ship to inform him/her that the specified goods will be received on board after the customs clearance.
ix. The goods are then properly packed and labelled with all the necessary information, such as the importer’s name, port of destination and gross and net weight of the goods.
x. Once the goods are ready for export, the exporter must insure the goods against perils of the sea or any related damage.
xi. It must then secure customs clearance before loading the goods on the ship. For getting customs clearance, the exporter must submit the necessary documents to the customs appraiser at Customs House.
xii. After customs clearance, a mate’s receipt will be issued by the captain or commanding officer of the ship to the exporter as evidence that the cargo has been loaded on the ship.
xiii. Later, a bill of lading will have to be obtained from the shipping company, as a token of acceptance, that the goods have been put on board its vessel.
xiv. After the goods are shipped, an invoice will have to be prepared by the exporter, which will include the quantity of goods sent and the amount to be paid by the importer.
xv. The exporter then needs to send a set of documents to the banker that are to be handed over to the importer on acceptance of the bill of exchange. After receiving the bill of exchange, the importer, will instruct its bank to transfer money to the exporter’s bank account.
xvi. Finally, the exporter would be required to collect from the bank a certificate of payment, which will state that the necessary documents, along with the bills of exchange, have been presented to the importer for payment, and that the payment has been received in accordance with the exchange control regulations.
| Document | Details |
| Export Invoice | Information regarding quantity of goods, total value of goods, number and marks of packaging, name of the ship, etc. is given in this document. |
| Packing List | Information related to the goods that are packed, such as the number of items packed in one package, details of goods contained in one package, etc. is given in this document. |
| Certificate of Origin | It specifies the country in which, the goods being exported, were produced (allows the importer to claim tariff concessions and other exemptions). |
| Certificate of Inspection | It is proof that the goods being exported are of good quality. |
| Mate’s Receipt | It is the receipt issued by the captain or commanding officer of a ship to an exporter as evidence that the exporter’s cargo has been loaded on the ship. |
| Shipping Bill | It forms the basis of obtaining customs clearance. |
| Bill of Lading | It is an undertaking signed by the shipping company to transfer the goods to the port of destination. |
| Airway Bill | It is issued by an airline as a token of acceptance that the goods for export have been put on board its aircraft. |
| Marine Insurance Policy | It is a contract in which the insurance company agrees to pay an exporter a specified amount in case of loss of goods or damage caused during transit in sea. |
| Cart Ticket/Cart Chit/Gate Pass | It gives information about the exporter’s cargo. |
| Letter of Credit | It is issued by the bank of an importer that guarantees to honour a draft of a specified amount drawn on it by the exporter. |
| Bill of Exchange | It indicates the amount that is to be paid by the importer to the bearer of the bill. |
| Bank certificate of Payment | It certifies that the necessary documents have been presented to the importer and that payment from the importer has been received. |
Procedure of import trade-
In order to import, an importer needs to follow these steps:
i. The importer should first make an enquiry regarding the price and other relevant information about the goods to be imported by sending a trade enquiry to the exporter. On receipt of the trade enquiry, the exporter will prepare a quotation and send it to the importer.
ii. The importer must find out whether the goods to be imported are subject to import licensing. If needed, he must secure an import licence.
iii. The firm must then convert domestic currency into foreign currency to make payments to the exporter. This is done by submitting an application to a bank in the prescribed form along with other documents.
iv. Once the import licence is obtained, the importer can place an order with the exporter specifying the price, quantity and quality of the goods required.
v. The importer will be required to send a letter of credit to the exporter. This letter is obtained from the importer’s bank and it acts as a bank guarantee, stating that the draft of a specified amount drawn on it by the exporter will be honoured.
vi. Next, the importer should arrange finance in order to make payments to the exporter on the arrival of the goods. This is necessary to avoid penalties on account of any delay in payment.
vii. Once the goods are shipped, the exporter will send a shipment advice to the importer. This document is proof of dispatch of the goods and contains information about the bill of lading, name of the vessel with date, port of export, description of goods, etc.
viii. The importer must then prepare a bill of exchange that is to be handed over to the exporter’s bank in exchange for the export documents. After this is done, the importer is required to instruct its bank to transfer money to the exporter’s bank account.
ix. An Import General Manifest will be issued by the person in-charge of the carrier (ship or airliner) in which the goods are being imported. This is done in order to inform the officer in-charge at the dock or the airport about the arrival of the goods. This document contains information about the goods being imported and it is on the basis of this document that the unloading of cargo will take place.
x. Once the goods arrive at the port, the importer must get customs clearance, which, in turn, requires a delivery order, a port duty dues receipt and a bill of entry.
| Document | Detail |
| Trade Enquiry | It is the document sent by an importer to an exporter, seeking information about the prices of goods and the terms and conditions relating to the supply of goods. |
| Proforma Invoice | This contains all the necessary information about the good being imported and also the conditions on which the exporter will supply those goods. |
| Import Order | It is the placement of order with the exporter stating the amount of goods to be supplied and the expected time of delivery. |
| Import Licence | It is the licence issued by the government, permitting an importer to bring in goods from outside the country. |
| Letter of Credit | It is issued by the bank of an importer guaranteeing to honour a draft of a specified amount drawn on it by the exporter. |
| Shipment Advice | It is a document sent by an exporter to an importer as proof that the goods ordered have been shipped. |
| Bill of Lading | It is an undertaking signed by the shipping company to transfer the goods to the port of destination. |
| Airway Bill | This is issued by an airline as a token of acceptance that the goods meant to be exported have been put on board its aircraft. |
| Bill of Entry | It is a form given by the Customs Clearance that is to be filled by the importer at the time of receiving the imported goods. |
| Bill of Exchange | It indicates the amount to be paid by the importer to the bearer of the bill. |
| Sight Draft | This draft instructs the bank of the exporter to hand over the documents to the importer only after the payment has been received. |
| Usance Draft | This draft instructs the bank of the exporter to hand over the documents to the importer after the bill of exchange has been received. |
| Import General Manifest | It is issued by the person in charge of the carrier (ship or airliner) in which the goods are being imported (on the basis of which the cargo will be unloaded). |
| Dock Challan | This is a bill stating the dock charges that the importer must pay in order to get the Customs Clearance. |
