Lecture 4

Documentation
Framework:
Aligned
Documentation
System
ALIGNED DOCUMENTATION SYSTEM (ADS)
 The standardisation of the pre-shipment export documents is done on the
basis of the system, popularly known as Aligned Documentation System
(ADS).
 To ensure benefits to everyone in the international trade chain from
easier documentation.
 To enter information on an easy basis and access the information with
greater convenience.
 to enter the data quickly and read them with greater ease and speed.
 Two categories:
1. Commercial Documents
2. Regulatory Documents
 Commercial documents may be classified as Principal Export
Documents and Auxiliary Documents.
Commercial Documents
 The objectives of Commercial documents are:
1. To effect physical transfer of goods from the exporter’s place to the
importer’s place.
2. To transfer property and title of goods from the exporter to the importer
and
3. Realization of export proceeds from the exporter to the importer.
 Out of the 16 commercial documents in the Export Documentation
Framework, as many as 14 documents have been standardized and
aligned one to another.
 Commercial documents may be classified as Principal Export
Documents and Auxiliary Documents.
Commercial Documents
 Principal Export Documents: These are the eight documents, which are required to
be sent by the exporter to the importer.
These are known as Principal Export Documents. They are:
(i) Commercial invoice
(ii) Packing list
(iii) Certification of inspection/quality control (where required)
(iv) Bill of lading/Combined Transportation Documentation
(v) Shipping Advice
(vi) Certificate of origin
(vii) Insurance Certificate/Policy (In case of CIF export sales contract)
(viii) Bill of Exchange.
 Auxiliary Export Documents: The remaining eight documents, other than principal
export documents, are known as auxiliary export documents. They are:
(i) Proforma invoice
(ii) Intimation for Inspection
(iii) Shipping Instructions
(iv) Insurance Declaration
(v) Shipping Orders
(vi) Mate’s Receipt
(vii) Application for Certificate of Origin and
(viii) Letter to the Bank for Collection/Negotiation of Documents.
REGULATORY DOCUMENTS
 Regulatory pre-shipment export documents are those which have been
prescribed by different government departments and bodies in the
context of export trade.
 These documents are meant to comply with the various rules and
regulations under relevant laws governing export trade such as export
inspection, foreign exchange regulations, export trade control and
customs etc.
 There are 9 regulatory documents associated with the pre-shipment
stage of an export transaction. Out of them, only 4 have been
standardized.
REGULATORY DOCUMENTS
(1) Gate Pass-I/Gate Pass II: The Central Excise Authorities prescribe them.
(2) ARE-1: These are Central Excise forms. Earlier, AR4 and AR5 Forms have been
used. In their place, ARE 1 form , now, is used.
(3) Shipping Bill/Bill of Export: They are standardized and prescribed by the Central
Excise Authorities.
• For export of goods.
• For export of duty free goods.
• For export of dutiable goods.
• For export of goods under claim for duty drawback.
(4) Export Application/Dock Challan: Standardized and prescribed by the Port Trust
Authorities.
(5) Receipt for Payment of Port Charges: Standardized.
(6) Vehicle Ticket.
(7) Exchange Control Declaration Forms: GR/PP forms are standardized and prescribed
by RBI.
(8) Freight Payment Certificate.
(9) Insurance Premium Payment Certificate.
Classification of Commercial and Regulatory Documents

 Documents related to goods

 Documents related to shipment
 Documents related to payment
 Documents related to inspection
 Documents related to excisable goods and
 Documents related to foreign exchange regulations.
DOCUMENTS RELATED TO GOODS
(i) Proforma Invoice
Proforma invoice is the starting point of an export contract. As and when
the exporter receives the trade inquiry from the importer, exporter submits
the Proforma invoice to the importer.
 details such as name and address of the exporter, name and address of
the intending importer, nature of goods, mode of transportation, unit
price in terms of internationally accepted quotation, name of the country
of origin of goods, name of the country of final destination, period
required for executing contract after receipt of confirmed order and
finally signature of the exporter.
 It forms basis of all trade transactions and further negotiation or contract
is made on this basis.
 It helps the importer to obtain the import licence, where required, and
obtain foreign exchange for completion of the contract.
DOCUMENTS RELATED TO GOODS
(ii) Commercial Invoice
A commercial invoice is the seller’s bill for merchandise or goods sold by
him.
 details in respect of name and address of seller (exporter), name and
address of buyer (importer), date, exporter’s reference number,
importer’s reference number, description of goods, price per unit at
particular location, quantity, total value, packing specifications, terms of
sale (FOB, CIF etc), identification marks of the package, total number of
packages, name and number of the vessel or flight, bill of lading
number, place and country of destination, country of origin of goods,
reference to letter of credit, if opened, terms of payment, and finally
signature of the exporter etc.
DOCUMENTS RELATED TO GOODS
Significance of Commercial Invoice
 (A) It is prima facie evidence of the contract of sale and purchase of
goods. On the basis of the invoice, all the other documents, in the
context of export, are prepared as it is the basic document.
 (B) Invoice constitutes the main document for various export formalities
such as preshipment inspection, quality, excise and customs procedures.
 (C) It is useful for accounting purposes, both by the exporter and
importer.
 (D) This document is required in collection/negotiation of documents
through the bank.
 (E) For claiming incentives, this document is essential.
DOCUMENTS RELATED TO GOODS
(iii) Consular Invoice
Some of the importing countries insist that the invoice is to be signed by
the importing county’s consular located in the exporter’s country. Such
invoices are known as consular invoice. The exporter has to pay a certain
fee to obtain the certificate/invoice. Such charges fees vary from country to
country.
 The main purpose to obtain consular invoice is to secure authentication
of information contained in the invoice.
 Once the invoice is signed by the consular of the country, the importer
gets comfort and confidence in respect of accuracy of information in
respect of quality, source of goods, volume and grade.
DOCUMENTS RELATED TO GOODS
Significance of Consular Invoice can be Summarized
Importance to the Exporter
1. Once the invoice is signed by the consulate of the importing country, the exporter
is reasonably assured that there are no import restrictions in the importer’s country
for the goods and that there would be no problem in realization of export proceeds
or foreign exchange.
2. It enables prompt clearance from the customs of exporter’s country for shipping the
goods.
Importance to the Importer
 1. In the importer’s country, the customs do not normally open the packages. It helps
 the importer to get speedy delivery of goods.
 2. Lot of unnecessary hardship which importer faces once the packages are opened is
 avoided.
Importance to the Customs
 1. The customs of the exporting country can easily clear the goods.
 2. The customs of the importing country need not open the packages for checking
and can easily calculate the import duties
DOCUMENTS RELATED TO GOODS
iv. Packing Note and Packing List
There is a difference between packing note and packing list. Packing note
refers to the particulars of contents of an individual pack while packing list is a
consolidated statement of the contents of the total number of cases or packs.
A packing note contains the following details:
(a) Date of packing,
(b) Number of packing note,
(c) Number of case to which it relates to,
(d) Contents of case in terms of quantity and weight,
(e) Marking numbers,
(f) Name of exporter,
(g) Name of importer,
(h) Importer’s order number,
(i) Number and date of bill of lading and
(j) Name of vessel/flight.
 No particular form has been prescribed for both packing note/list.
 Normally, ten copies are prepared. Two copies are sent, in advance, to the
buyer, one copy along with the documents, one to the shipping agent and the
remaining are retained by the exporter.
DOCUMENTS RELATED TO GOODS
v. Certificate of Origin
As the very name indicates, certificate of origin is a certificate that specifies the
name
of the country where goods are produced. This is absolutely necessary where
the importing country has banned the entry of goods of certain countries to
ensure that the goods from those countries are not allowed to enter in. At the
time of arrival of the goods in the importer’s country, this certificate is
necessary for the customs to permit preferential tariff. Certain countries offer
preferential tariff to goods produced and imported from India. In
such a case, this is a must to the importer to claim preferential tariff and
importer insists on this document from the exporter. This enables the
importer’s country to regulate the concessional tariff only to select countries
and deny to the rest of the countries.
A certificate of origin can be obtained from Chamber of Commerce, Export
Promotion Council and various trade associations which have been authorized
by Government of India to issue. The agency from which certificate of origin is
obtained should conform to the terms of letter of credit.
DOCUMENTS RELATED TO GOODS
Significance of Certificate of Origin
 (A) Certificate of origin is required for availing concession
under Commonwealth Preferences (CWP) as well as
Generalized System of Preferences (GSP).
 (B) It facilitates the importer to adhere to the rules and
regulations of his country.
 (C) Customs in the importer’s country allow the
concessional tariff only on production of this certificate.
 (D) When goods from some countries are banned, importing
country requires this certificate to ensure that goods from
banned countries are not entering into the country.
 (E) Exporting country may insist on this certificate to ensure
that the goods imported are not reshipped again.
DOCUMENTS RELATED TO SHIPMENT
(i) Shipping Bill
The shipping bill is the main document on the basis of which the customs permission
is given. Under manual processing of export documents, the exporter is required to file the
appropriate type of shipping bill to seek the order for customs clearance of the export
shipment. Under computerized processing, the exporter does not prepare the shipping bill;
instead it is computer generated. The customs order is called “LET EXPORT Order”. After
the shipping bill is stamped by the customs, then only the goods are allowed to be carted
to the docks.
The shipping bill contains the following particulars:
 (A) Nature of goods exported,
 (B) Name of vessel, master or agents,
 (C) Flag,
 (D) Country of destination, the port at which the goods are to be discharged,
 (E) Exporter’s address,
 (F) Importer’s address,
 (G) Details of the packages, such as numbers and marks,
 (H) Quantity details of each case, total number of cases and aggregate weight,
 (I) F.O.B. prices and real value as defined in the Sea Customs Act and
 (J) Whether the merchandise is Indian or foreign origin which is re-exported.
DOCUMENTS RELATED TO SHIPMENT
The shipping bill is prepared in five copies:
1. Customs copy
2. Drawback copy
3. Export Promotion copy
4. Port Trust copy and
5. Exporters copy
Importance of Shipping Bill
 (A) It is an important document required by the customs
authorities for clearance of goods. The customs authorities
endorses the duplicate copy of the shipping bill with “Let Export
Order” and “Let Ship Order”.
 (B) After the clearance of customs, exporter can load the goods
on ship.
 (C) Shipping bill endorsed by the customs authorities facilitates
the exporter to claim incentives such as excise duty refund and
duty drawback.
DOCUMENTS RELATED TO SHIPMENT
Types of Shipping Bills
(1) Free Shipping Bill
(2) Dutiable Shipping Bill
(3) Drawback Shipping Bill
(4) Shipping bill for Shipment Ex-Bond
(5) Coastal Shipping Bill
DOCUMENTS RELATED TO SHIPMENT
(ii) Mate’s Receipt
A mate’s receipt is issued by the mate (assistant to the captain of the ship)
after the cargo is loaded into the ship. It is an acknowledgment that the
goods have been received on
board the ship.
 Mate’ receipt contains the details about
1. Name of the vessel,
2. Date of shipment,
3. Berth,
4. Marks,
5. Numbers,
6. Description and condition of goods at the time they are shipped, port of
loading,
7. Name and address of the shipper,
8. Name and address of the importer(consignee) and
9. Other required details.
DOCUMENTS RELATED TO SHIPMENT
Types of Mate’s Receipts
Mate’s receipt can be clean or qualified.
(A) Clean Mate’s Receipt
(B) Qualified Mate’s Receipt
Significance of Mate’s Receipt
(1) Mate’s receipt is an acknowledgment of goods. It is not a document of
title.
(2) It is issued to enable the exporter or his agent to secure bill of lading
from the
shipping company.
(3) Bill of Lading, which is the title to the goods, is prepared on the basis
of Mate’s
receipt so it should be obtained without any adverse remarks.
(4) Port Trust Authorities are enabled to collect their dues as it is routed
through
them.
DOCUMENTS RELATED TO SHIPMENT
(iii) Cart Ticket
A cart ticket is also known as cart chit. This is prepared by the exporter,
which contains the details of the vehicle number, description of goods,
quantity, name of the shipper, shipping bill number and port of destination.
The driver of the vehicle carries the cart ticket.
At the time of entry into Port, the cart ticket is verified by the Port
Authorities to satisfy that the vehicle is carrying only those goods, which
are mentioned in the cart ticket. After being satisfied, the
gatekeeper/warden/inspector issues the gate pass to the driver and allows
entry of the vehicle into the premises of the port.
DOCUMENTS RELATED TO SHIPMENT
(iv) Certificate of Measurement
Freight is charged either on the basis of weight or measurement. When
weight is the basis of measurement, the shipping company for the purpose
of calculation of freight may accept the weight declared by the exporter.
However, when measurement is the basis for calculation of freight, the
shipping company may insist on a certificate issued by Chamber of
Commerce or other approved organization in respect of goods. The
certificate of measurement contains the details in respect of description of
goods, quantity, length, breadth and depth of the packages, name of the
vessel and port of destination of the cargo etc.,
DOCUMENTS RELATED TO SHIPMENT
(v) Bill of Lading
Bill of Lading is a document issued by the shipping company or his agent
acknowledging the receipt of cargo on board. This is an undertaking to deliver
the goods in the same order and condition as received to the consignee or his
agent on receipt of freight, the shipping company is entitled to. It is a very
important document to the exporter as it constitutes document of title to the
goods.
Each shipping company has its own bill of lading. The exporter prepares the
bill of lading in the form obtained from the shipping company or agents of
shipping company.
The goods can be consigned to order of the exporter, which means the exporter
can authorize someone else to receive the goods on his behalf. In such a case,
the exporter would discharge the bill of lading on its reverse. When the bill of
lading is negotiated through the bank, it would be endorsed in favour of the
bank that would endorse further to the importer, on receipt of payment. Bill of
Lading is made in signed set of 2 originals, any one of which can give title to
the goods. The shipping company also issues non-negotiable copies (unsigned)
which are not documents of title to goods but serves the purpose of record
only.
DOCUMENTS RELATED TO SHIPMENT
Main Purposes
It serves three main purposes.
(A) As a document of title to the goods
(B) As a receipt from the shipping company and
(C) As a contract of affreightment (transportation) of goods
Types of Bill of Lading
(1) Received for Shipment B/L
(2) On Board Shipped B/L
(3) Clean B/L
(4) Claused or Dirty B/L
(5) Transshipment or Through B/L
(6) Stale B/L
(7) To Order B/L
(8) Charter Party B/L
(9) Freight paid B/L
(10) Freight Collect B/L
DOCUMENTS RELATED TO SHIPMENT
Generally, the importer insists on the “clean on-board shipped” bill of lading with the
prohibition of transshipment of goods as goods can suffer damage during transshipment. If
transshipment is allowed, even period of journey may take longer.
B/L is a non-negotiable document: A bill of lading is not a negotiable document while it is a
transferable document. Transferability enables the exporter to claim payment from the bank
even before the goods reach the destination. Similarly, it enables the importer to sell the
goods even before they reach the destination.
Parties mentioned in B/L: There are three main columns in B/L. These are shipper
(consignor), consignee or order of and notifying party. Notifying party is party to whom
notice is to be sent on the arrival of goods at the place of destination. When the B/L is made
to the order of, the person, in whose name it is made to the order of, has the right to endorse
further. To illustrate:
Consignor: Cherry & Co, Bhopal
Consignee or to the order of: Dimpy & Co, Newjersey, U.S.A.
Notifying Bank: Bank of America, Newjersey
In this case, Dimpy & co has the total right for the cargo as the consignee. So, Cherry
& Co can not transfer title to the goods to the third party. If payment of the goods is not
received, consignor loses title to the goods and so B/L is not to be made in this way.
However, where advance payment has been received or goods are shipped under irrevocable
letter of credit, bill of lading can be made in the name of the consignee. In the normal
circumstances, exporter takes the bill of lading to his order and endorses to the bank at the
time of negotiation and in this way his interests are fully protected.
DOCUMENTS RELATED TO SHIPMENT
Who can lodge claim:
B/L is the only evidence to file claim against the shipping
company in the event of non-delivery, defective delivery or short delivery. If the
importer
makes payment, he can lodge the claim, as he will be in possession of negotiable copy
of
B/L. Otherwise, exporter can lodge the claim and receive the value of goods.
Contents of B/L
1. Name and address of the shipper.
2 Name and address of the vessel.
3. Name of port of loading.
4. Date of loading of goods.
5. Name of port of discharge and place of delivery.
6. Quantity, quality, marks and other description.
7. Number of packages.
8. Freight paid or payable.
9. Number of originals issued.
10. Name of the shipping company.
11 Voyage number and date.
12. Signature of the issuing authority.
DOCUMENTS RELATED TO SHIPMENT
SIGNIFICANCE OF BILL OF LADING
1. Importance to the Exporter
2. Importance to the Importer
3. Importance to the Shipping Company
DOCUMENTS RELATED TO SHIPMENT
(vi) Airway Bill
Airway Bill is also called Air consignment Note. It is a receipt issued by an
airline for the carriage of goods. As each shipping company has its own
Bill of Lading, so each airline has its own airway bill. Airway Bill or Air
consignment note is not treated as a document of title to goods and is not
issued in negotiable form. Delivery of the goods is made to the consignee
without the production of airway bill.
 Importance of Airway Bill
1. It is a contract of carriage of goods between the consignor and airlines or
his agent.
2. It acts as a customs declaration form.
3. It contains details of freight and so works as a freight bill.
DOCUMENTS RELATED TO SHIPMENT
(vii) Bill of Entry
Bill of Entry is a declaration form made by the importer or his clearing agent in the
prescribed form under Bill of Entry Regulations, 1971 on the strength of which clearance of
imported goods can be made.
When goods are imported into a country, customs duty has to be paid by the importer.
For this purpose, importer prepares the Bill of Entry declaring the value of goods, quantity
and description. This is prepared in triplicate. Customs authorities may ask the importer to
produce the invoice of the exporter, broker’s note and insurance policy to satisfy about the
correctness of value of goods declared.
For the purpose of giving information, goods are classified into three categories.
(1) Free Goods: These goods are not subjected to any customs duty.
(2) Goods for Home Consumption: These goods are imported for self-consumption.
(3) Bonded Goods: Where goods are subject to customs duty, till duty is paid, goods
are kept in Bond.
Contents of Bill of Entry
1. Name and address of importer.
2. Name and address of exporter.
3. Import licence number.
4. Name of port where goods are to be cleared.
5. Desription of goods.
6. Value of goods.
7. Rate and value of import duty payable.
DOCUMENTS RELATED TO PAYMENT
(i ) Letter of Credit
A letter of credit is a document-containing guarantee of a bank to make
payment to the exporter, under certain conditions and up to a certain
amount, provided the conditions contained in the letter of credit are
complied with. For a detailed presentation, reader may refer to the chapter
on Export Financing.
DOCUMENTS RELATED TO PAYMENT
(ii ) Bill of Exchange
The Negotiable Instruments Act, 1881 defines a Bill of Exchange as “ an
instrument in writing containing an unconditional undertaking, signed by
the maker, directing a certain person to pay a certain sum of money only to,
or to the order of, a certain person or to the bearer of the instrument”.
 There are five important parties to a Bill of Exchange:
1. The Drawer:
2. The Drawee:
3. The Payee:
4. The Endorser:
5. The Endorsee:
DOCUMENTS RELATED TO PAYMENT
Types of Bills of Exchange
(a) Sight Bill of Exchange: In this Bill of Exchange, also known as demand
Bill of Exchange, the drawee has to make the payment, on presentation.
(b) Usance Bill of Exchange: In case of Usance or Time Bill of Exchange,
payment is to be made on the maturity date, after a certain period, known
as tenor. When the calculation of period is made with reference to the sight
of bill, the bill is known as ‘after sight usance bill’. Sometimes, the
maturity date is calculated with reference to the date of bill of exchange, it
is known as ‘after date usance bill’.
(c) Clean Bill of Exchange: A clean Bill of Exchange is one when the
relative shipping documents do not accompany with it. In this case, the
relative shipping documents i.e. Bill of Lading is sent directly to the
importer to enable him to take delivery of the cargo.
DOCUMENTS RELATED TO PAYMENT
(i ) Letter of Credit
A letter of credit is a document-containing guarantee of a bank to make
payment to the exporter, under certain conditions and up to a certain
amount, provided the conditions contained in the letter of credit are
complied with. For a detailed presentation, reader may refer to the chapter
on Export Financing.
DOCUMENTS RELATED TO PAYMENT
(d) Documentary Bill of Exchange: A documentary Bill of Exchange is one where
the relative shipping documents such as Bill of Lading, marine insurance policy,
invoice and other documents are sent along with the Bill of Exchange. This is the
common form in export trade.
The documents are given to the bank either for collection or negotiation. In case
the importer gets the documents on acceptance, it is called Documents against
Acceptance. If the importer gets the documents only on payment, it is called
Documents against Payment.
After shipment of goods, the exporter draws the bill on the importer or, more
frequently, on bank acting for the importer, as agreed between the exporter and
importer. The exporter usually draws the bill to his own order or that of his bank.
Later, he endorses the bill in favour of his bank. Exporter may request his bank
to collect or purchase the bill. In case of purchase of bill, exporter receives the
export proceeds immediately. In any case, the exporter’s bank sends the documents
to its branch or correspondent’s bank in importer’s place. The bank at that end
sends the intimation of receipt of documents to the importer either for acceptance
DOCUMENTS RELATED TO PAYMENT
or payment, dependant on the nature of bill drawn. In case of Documents against
acceptance, importer accepts the bill and then only gets title to goods. In case of
Documents against payment, importer has to make the payment for securing delivery
of documents.
(iii) Trust Receipt: In case of D/P bill, the importer has to make the payment to take
delivery of goods. If the importer is unable to make the payment, on arrival of the
shipment, and take possession of goods, he executes a Trust Receipt to take delivery
of goods. Importer will have the right to sell the goods and would be acting as agent
of the bank. Importer will be depositing the sale proceeds with the bank, as and
when sales are made. Till the importer makes the final settlement, bank retains
ownership for the merchandise and the role of the importer is not that of owner but
that of agent to the bank. This arrangement facilitates the importer to take delivery
of goods when sufficient funds are not available with him. This facility provides the
flexibility to the importer while the interests of bank are protected, at all times.
DOCUMENTS RELATED TO PAYMENT
(iv) Bank Certificate of Payment: It is a certificate issued by the
negotiating bank to the exporter that the bill covering the shipment has
been negotiated through it and export proceeds have been received from
the importer. The certificate indicates the details of the merchandise
exported. Exporter submits this certificate of payment for establishing that
the export transaction has been completed totally by him. This certificate is
required to comply with the requirements for the discharge of export
obligation.
DOCUMENTS RELATING TO INSPECTION
Certificate of Inspection
It is a certificate issued by the Export Inspection Agency certifying that the
consignment has been inspected under the Export (Quality Control and
Inspection) Act, 1963 and found that the requirements relating to quality
control and inspection have been complied with,
as applicable, and the goods are export worthy.
DOCUMENTS RELATED TO EXCISABLE GOODS
(1) GP Forms
GP stands for Gate Pass. A GP form, gate pass, is issued for the removal of
excisable goods from the factory or warehouse. Form GP1 is issued for the
removal of excisable goods on payment of duty. GP2 is issued for the
removal of excisable goods without payment of duty.
(2) Form C
It is not to be confused with C form. Form C is used for applying for rebate
of duty on excisable goods (other than vegetable, non-essential oils and
tea) exported by sea. It is to be submitted, in triplicate, to the Collector of
Central Excise.
(3) Forms AR4/AR4A
These forms are meant for removal of excisable goods for export by
sea/post. Now, in their place, ARE-1 form is used.
DOCUMENTS RELATED TO FOREIGN EXCHANGE REGULATIONS-LEGAL
REGULATED DOCUMENTS
Foreign Exchange Regulations require that all exports other than exports to Nepal and
Bhutan shall be declared on the following forms:
1. GR Form
GR is an exchange control document required by Reserve Bank of India. It is required
to be filled, in duplicate, for all exports in physical form other than by post. An exporter has
to realize the export proceeds within a period of 180 days from the date of shipment, in
India. To ensure control on realization, RBI has introduced this procedure.
GR form, in duplicate, is to be submitted by the exporter to the customs along with the
Shipping Bill. Customs will give their running serial number on both the copies. After
admitting the customs shipping bill, customs will certify the value of goods declared by the
exporter in the space earmarked and also record their assessment of value. Customs retains
the original copy and return the duplicate to the exporter. Customs sends the original GR
form to RBI, which will be an indication of the goods, which are to be exported. Exporter
has to submit the duplicate of GR form to the authorized dealer, named in GR form, along
with other shipping documents within a period of 21 days of shipment for the purpose of
negotiation. After the negotiation of bill, the authorized dealer will report the transaction
of negotiation to RBI. On receipt of the original, RBI is apprised of the developments in
respect of the export transaction.
DOCUMENTS RELATED TO FOREIGN EXCHANGE REGULATIONS-LEGAL
REGULATED DOCUMENTS
Once the export proceeds are received from the importer, the authorized dealer has to
forward the duplicate copy of GR form together with the copy of invoice to RBI. RBI
recognizes that the export transaction has been concluded and export proceeds have
been fully realized. At certain customs offices, shipping bills are processed
electronically. So, at those offices,
GR form has been replaced by SDF (Statutory Declaration Form).
2. PP Form
It is required to be filled in for all export transactions, in duplicate, for all countries to be
made by post parcel, except when made on “value payable” or “cash on delivery basis”.
3. VP/COD Form
It is required to be filled for all export transactions to all countries by post where the
export proceeds are realized on “value payable” or “cash on delivery basis”.
3. SOFTEX Form
It is required to be prepared, in triplicate, for export of computer software in nonphysical
form.
All the above documents serve the purpose of monitoring the realization of export
proceeds in the stipulated manner.
INCOTERMS 2000
Meaning of Incoterms
There are a number of common sale or trade terms used in international trade to
express the sale price and corresponding rights and obligations of the seller and buyer.
These terms are defined by the International Chamber of Commerce, which are known as
‘Incoterms.
Purpose of Incoterms
The purpose of Incoterms is to provide common interpretation for the different trade
terms used in international trade.
In international business, parties are from diverse nations. Different meanings exist for
different terms, due to different trade practices followed in those countries. Specific terms
are to be interpreted by all parties in a similar manner; otherwise disputes are bound to
arise. This can create misunderstandings and disputes. They may lead to litigation resulting
in wastage of time, money and strained relationship, disrupting the long- standing mutally
beneficial business contacts. In order to remedy the problem, International Chamber of
Commerce has developed Incoterms. The uncertainties of different interpretation have been
greatly avoided or atleast reduced by these Incoterms. These terms have been revised
several times with the changes in international commercial practices, from time to time. The
current version of Incoterms has been issued in 1990. They define the rights and
responsibilities of importers and exporters in international trade.
INCOTERMS 2000
Types of Contracts
Type of contract depends on the basis of price quotation. Mainly, there are
three types of contracts, which are often used in international market.
Ex Works Contract: The seller fulfills his obligation by delivering the
goods at his factory/shop/warehouse. The buyer bears all the costs and
risks in taking the goods from that place to the desired destination. This
term represents the minimum obligation on the part of the seller. In this
type of contract, the obligations of the seller are the lowest and
contract price is always the lowest.
Free on Board (FOB): The seller fulfills his obligation when he delivers the
goods on the ship rails at the named port of shipment. The buyer has to
bear all costs and risks from that point of time. Cartage up to the port,
inland insurance, port dues and loading charges into the ship are to be
borne by the seller. The seller has to take care of all these expenses. The
term can only be used for sea or inland water transport.
INCOTERMS 2000
Duties of the Exporter
(A) Supply the contracted goods in conformity with the contract of sale and deliver the
goods on board the vessel named by the buyer at the named port of shipment;
(B) Bear all costs and risks of the goods until such time as they shall have effectively
passed the ship’s rail. In other words, once goods are placed on ship’s rail, title to
the property passes to the buyer and so risks too;
(C) Provide at his own expense the customary clean shipping documents as proof of
delivery of goods;
(D) Provide export licence and pay export duty, if any; and
(E) Pay loading costs.
Duties of the Importer
(A) Reserve the necessary shipping space and give due notice of the same to the
exporter;
(B) Bear all costs and risks of the goods from the time when they shall have effectively
passed the ship’s rail;
(C) Pay freight;
(D) Pay unloading costs and
(E) Pay the price as provided in the contract to the exporter.
INCOTERMS 2000
Cost Insurance Freight (CIF): In addition to the responsibilities associated with FOB
contract, exporter has to arrange shipping space, bear the ship freight and marine
insurance charges from his contract price.
Duties of the Exporter
(A) Supply the goods in conformity with the contract of sale, arrange at his own
expense, for shipping space by the usual route and pay freight charges for the carriage of
goods;
(B) Obtain at his own risk and expense all documentation regarding government
authorization necessary for the export of goods;
(C) Load the goods at his own expense on board the vessel at the port of shipment;
(D) Procure at his own cost in a transferable form a policy of marine insurance for a
value equivalent to C.I.F. plus 10%;
(E) Bear all risks until the goods shall have effectively crossed the ship’s rail and
furnish to the buyer a clean negotiable bill of lading;
(F) Provide export licence;
(G) Pay export duty if any and
(H) Insure the goods.
INCOTERMS 2000
Duties of the Importer
(A) Accept the documents when tendered by the exporter, if they are in
conformity with the contract of sale and pay the price;
(B) Receive the goods at the port of destination and bear all costs except
freight and marine insurance, incurred in respect of carriage of the goods;
(C) Pay unloading costs and
(D) Bear all risks of the goods from the time they shall have effectively
passed the ship’s rail at the port of shipment.