Definition of Export Trade Documentation: Financial and Commercial

Introduction

Export documentation is a tedious but necessary process that all exporters must pay close attention to, as documentation requirements vary considerably by country, commodity, and situation. Although exporters must fill out and submit many different forms for each international shipment, most require similar data elements and can (and should) be duplicated precisely from one document to the next.

Fortunately, there are software products that capture the primary details of the shipment and insert them into the necessary documents without flaw. This Fast Fact will describe many of the documents your business will need in order to export successfully.

This lesson explains documents used in export documents are authenticated records certifying that the goods are exported in general export documents are classified as commercial documents and regulatory documents. Commercial documents are those by customs of trade, are required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds. Regulatory documents are those which have been proscribed by different government department/ bodies in compliance of the requirements of various rules and regulations under relevant laws. Governing, export trade such as, export inspection, foreign exchange regulations, export trade control customs etc.

Commercial Documents Are Listed Below

Proforma invoice

Commercial invoice

Packing list

Shipping instructions

Intimation for inspection

Certificate of inspection/Quality control

Insurance declaration

Certificate of insurance

Shipping order

Mate receipt

Bill of loading /combined transport document

Application for certificate of origin

Certificate of origin

Bill of exchange

Shipment advice

Letter to the band for collection/negotiation of documents.

Regulatory Documents Are Listed Below:

Out of 16 commercial documents, exporters have to send as many as eight documents are known as principal export documents.

Commercial invoice packing list, bill of lading/combined transport document, certificate of inspection, quality control. Insurance policy, certificate of origin, bill of exchange and shipment advice are called principle export documents. The remaining eight documents are known as auxiliary documents.

Classification of Documents

The export related documents can be classified into the following four heads for easy understanding

Documents related to Goods,

Documents related to Transport,

Documents related to Payments, IV.

Documents related to Inspection,

Documents related to Exchange Control, and

Documents relating to Excisable Goods.

Documents Related to Goods

Proforma Invoice

Commercial Invoice

Packing List

Certificate of Origin

Consular Invoice

GSP Certificate.

Documents Related to Transport

Shipping Order

Mate’s Receipt

Bill of Lading

Airway Bill

Shipping Bill

Marine Insurance policy

Post Parcel Receipt

Port Trust Document

Documents Related to Payment

Letter of Credit

Bill of Exchange

Bank Certificate of Payment.

Documents Related to Inspection

Certificate of Inspection

Documents Related Of Exchange Control

Guaranteed |Remittance (GR) Form

Post Parcel (PP) Form

Value Payable/Cast on-Delivery (VP/COD) Form

Documents Relating to Excisable Goods

AR4 Form

Form C

Documents Related to Goods

Export documents related goods are explained below.

Proforma Invoice

It is a provisional invoice. The primary purpose of the proforma invoice is to state the terms and conditions and other subject matter relating to export to export to the importer. The information contained in the proforma invoice is as the same commercial invoice and document format is also the same. The proforma invoice sent by the exporter is used by the importer

To get import license,

To open letter of credit and

To arrange for loan in foreign exchange.

Commercial Invoice

The commercial Invoice described the entire details of goods involved in export transaction. It is an important export document. it serves as a bill for goods exported. Import duty in the importers country is calculated on the basis of commercial invoice. It is the evidence of contract of sale. The commercial invoice should be given prescribed format. It should correspond with the specifications relating to goods given in the letter of credit.

Contents of Commercial Invoice

Commercial invoice contains the following information related to goods.

Name and address of the exporter and importer,

Invoice number

Reference number of exporter and exporter,

Terms of delivery of goods and payment for export,

Name of the ship/aircraft.

Port of loading and port of discharge,

Detailed description of goods,

Details of packing, number of packages, types and specified markings on the packages,

Quantity of goods, unit price of goods and total price,

Details of freight and insurance.

Packing List

Export packs the export cargo according to the instruction of the importer. Packing of note reveals the contents of single pack. One packing note is prepared for one pack. In there are so many pack, consolidated statement of packing notes is to be prepared. Packing list shows the contents of the whole consignment of export. Exporter should submit packing list to the customs authorities and insurance company in order to fulfill the documentary obligation for export.

Certificate of Origin

Certificate of Origin is generally issued by the Chamber of Commerce. Export Promotion Council and other export related institutions which are authorised by the government of India are also issuing certificate of origin.

Contents of Certificate of Origin

Description of goods-quantity and value,

Number of packages and markings packages –wise,

Declaration by the exporter,

Certificate by the issuing authority.

In foreign trade, certain specified countries provide concession in import duty to goods being exported from a particular country. This concession is given under generalized system preferences. A proof is required to the countries providing concession that the goods are manufactured in that particular country. Certificate of origin serves as a proof in this regard

Consular Invoice

In foreign trade, some importing countries may insist and require consular invoiced in addition to commercial invoices. The format of the consular invoice is to be received from the office of the respective consulate of the importing country functioning in the exporter’s country. After getting the format, exporters should complete the form by providing necessary information about the exportable goods. The consular invoice should be signed and authenticated by the consulate of the importing country functioning in the exporter’s country. Exporter has to pay a nominal fee to the local consulate for issuing and certifying the consular invoice.

GSP Certificate

GSP certificate is used by the developing country to get duty concession from the developed countries. Concession refers that the developed countries will reduce import duty when they import goods from the specified developing countries. Developing countries are encouraged to export to developed countries and developed countries levy concessional import duty under generalized system of preferences (GSP) scheme of the United Nations Conference of Trade and Development (UNCTAD). India is also one of the countries getting concessions under GSP.

GSP certificate is required to avail this type of concession. Export promotion councils and directorate General of Foreign trade are authorised by the government to issue GSP certificate to the exporters. Central silk board, coin board, all India handicraft board, textiles committed and jute commissioner are also authorised to issue GSP certificate to the exporters coming under their direction and control.

Export Documentation

Essential data elements must be uniform on all documents:

Name & Address of Seller / Shipper

Name & Address of Buyer / Consignee

Origin Point & Destination Point

Port of Load / Unload

Description of the Goods

Number of Pieces, Cartons, Crates

Net weight, Gross Weight, Volume

Invoice & Purchase Order Numbers

Material Handling

Packing List: A packing list is prepared by the shipper and is a detailed breakdown of the items within a shipment. It may also include any “special marks” for identification. For example, the customer may want “ABC XX” in blue letters on the side of the packaging. For insurance claims and tracking purposes, it helps to describe what is in each “package”. The packing list should also reference the customer’s purchase order number and destination. Often, a packing list is taped to palletized cargo or on the main carton/box of a shipment so that the importer’s customs agency or any transportation handlers can have easy access to it to know what the goods are and their destination. The quantity and items listed on the commercial invoice must match with the packing list, but not necessarily match the pro-forma invoice. Some companies prepare a packing list that is identical to the commercial invoice, minus the prices and other monetary details.

Dock (or Warehouse) Receipt: The dock or warehouse receipt is issued by a warehouse supervisor or port officer and certifies that the goods have been received by the shipping company. This document is used to transfer accountability when goods are moved by the domestic carrier to the port of embarkation and left with the international carrier. At this time, the carrier’s Bill of Lading is also signed by both parties and copies are issued accordingly.

Bills of Lading (B/L)

A Bill of Lading is issued by the carrier to the shipper for receipt of the goods, and is a contract between the owner of the goods and the carrier to deliver the goods. Sometimes the B/L acts as title to the goods so an “Original” B/L is issued- usually a set of three. Whoever presents one of those Original, Negotiable B/L can take possession of the goods. A B/L can be either negotiable or non-negotiable.

Non-negotiable (or “straight”) B/L: Indicates that the shipper will deliver the goods to the buyer and that title of the goods has not been transferred to the shipper (i.e., the buyer or seller “owns” the goods while they are being shipped). This type of B/L is often used when payment for the goods has already been made in advance.

Negotiable (or “shipper’s order”) B/L: Serves as a title document to the goods, issued “to the order of ” a party, usually the shipper, whose endorsement is required to effect its negotiation. It can also be issued “to the order of ” the buyer’s bank as part of a documentary credit/letter of credit stipulation so that when the buyer’s bank receives the Original B/L, they can endorse it over to the buyer at the time of payment for the buyer to clear the goods at customs. Sometimes the negotiable B/L may be consigned “To Order” without reference to a company. A negotiable B/L can be bought or traded while the goods are in transit, whereas a “Straight” B/L is non-negotiable and is consigned to the buyer.

The B/L is frequently electronically manifested by the shipping line company using the data sent by the shipper or its agent. Bills of Lading also include a “notify party” (usually the buyer or their agent) so that when the vessel arrives at the port of destination, the carrier can notify the party that the goods are available, are in need of customs clearing, or are ready for pick up. Usually the importer can pick up the goods after customs clearance and duties are paid. “Freight Collect” means the consignee pays the freight charges as well. “Freight Prepaid” means the shipper pays the freight charges, but not customs clearance unless the terms are “delivered duty paid”. If Certificate of Insurance: This document indicates the type and amount of insurance in force on a particular shipment for loss or damage while in transit. It is sometimes referred to as Marine insurance, but may cover the entire voyage.

Certificate of Inspection: Some customers will require a “pre-shipment inspection” to satisfy their own requirements or local regulations, according to an industry, government, or carrier specification. Neutral organizations specialize in these types of certifications, whereby an inspector checks the goods in question prior to shipment. Sometimes an inspector can look at a sample, but other times inspection must occur when the goods are packaged to issue a certificate.

Certificate of Free Sale: This form may be required by the importing country to ensure that the goods offered for entry comply with domestic requirements for sale in the U.S. It is often required for agricultural, medicinal, or cosmetic products and can be issued by the VEDP or U.S. FDA.

Certificate of Authentication (Apostille): An original document that has been notarized may require “authentication” by the Secretary of the Commonwealth. An Apostille certificate will be issued according to the country (language) of destination, confirming the status of the notary who has witnessed the original document. Phytosanitary Certificate: Primarily a document required to import goods into the U.S., confirming compliance with phytosanitary safety regarding agricultural and animal health standards.

Special Documents

Declaration of Dangerous Goods (DGD): A DGD declares the nature, quantity, and quantity of hazardous materials and reports the proper classification for each item.

ATA Carnet

A Carnet, sometimes referred to as a “merchandise passport”, is used for shipping goods to countries on a temporary, duty-free basis only. For a fee, this passport allows a company to ship needed materials to foreign trade shows or conduct repairs overseas. Within a year, the materials must return to the U.S. in order to avoid a hefty fine.

Documentary Letters of Credit (L/C): A letter of credit is a document issued by a bank committing to pay the seller/exporter a stated amount of money on behalf of the buyer/ importer as long as the specific terms and conditions are met. Of all shipping documents, errors or making changes to the L/C are the most costly and time consuming because of the risk of payment in error. Knowledge of the proper forms required, along with uniformity and document control, will help exporters prevent errors in shipping documentation, save processing time, create good file management, improve customer service, and of course, avoid costly fines.