Export procedure and documentation

The term Export consists of several commercial and regulatory formalities and these
formalities are very complex and time consuming.
A function of international trade whereby goods produced in one country are shipped to
another country for future sale or trade. The sale of such goods adds to the producing nation's
gross output. I f used for trade, exports are exchanged for other products or services. Exports
are one of the oldest forms of economic transfer, and occur on a large scale between nations
that have fewer restrictions on trade, such as tariffs or subsidies.
Basic steps of Export procedure:
5 stages involved in export procedure:
Stage 1: Registration Procedure.
Stage 2: Pre-shipment Procedures.
Stage 3: Shipment Procedures.
Stage 4: Realizing export incentives.
Stage 5: Post-shipment procedures.

Stage 1: Registration Procedure.

The exporter is required -to register his organization with a number of institutions and
authorities, which directly or indirectly help him in the smooth conduct of export, trade. The
registration stage includes: -
a. Registration of the Organization: - The form of organization selected by the exporter must. Be
registered under the appropriate Act of the country.
A joint stock company under the Companies Act, 1956.;
A partnership firm under the Partnership Act, 1932.;
A sale trader should seek permission from the local authorities, as required.
b. Opening-Bank Account: - The exporter should open a current account in the name of the firm
or company with a commercial bank which is authorized by the Reserve bank to deal in foreign
exchange. Such bank also serves as a source of pre-shipment and post-shipment finance for the
exporter.
c. Obtaining Importer-Exporter Code Number (lEC No.): - Prior to 1.1.1997, it was obligatory
for every exporter to obtain CNX number from the bank. However, since then, IEC number
issued by the Director General for Foreign Trade (DGFT) has replaced the CNX number. The
application form for obtaining IEC number should be accompanied by fee of Rs. 1000.
d. Obtaining Permanent Account Number- (PAN): Export income is subject to a number of
exemptions and deductions under different sections of the Income Tax Act. For claiming such
exemptions and deductions, the exporter should register his organization with the Income Tax
Authorities and obtain the Permanent Account Number (PAN).
e. Obtaining Sales Tax Number: - Exportable goods are exempted from sales tax, provided, the
exporter or his firm is registered with the Sales Tax Authorities. , For this purpose, the exporter
is required to make an application in the prescribed form to the Sales Tax Office (STO) in
whose jurisdiction his {exporters). Office is situated f. Registration with, Export Promotion
Council (EPC): It is obligatory for every exporter to, register with the appropriate Export
Promotion Council (EPC) and obtain the Registration-cum-Membership Certificate (RCMC).
The benefits provided in the current EXIM Policy are extended only to the registered exporters
having valid RCMC.
g. Registration with ECGC: - The exporter should also register with the PIC under Export Credit
and Guarantee scheme in order to secure overseas payment against political and commercial
risks. It also helps the exporters in obtaining the financial assistance from commercial banks
and other financial institutions.
h. Registration with other Authorities: - The exporter should also register with various other
authorities, such as: -
Trade Development Authority of Pakistan. Trade corporation of Pakistan, Chamber of
Commerce etc.



Stage 2 and 3:Shipment Stages

Export, cargo can be exported to the overseas buyer by sea, air or land. However, shipment by
sea is the most popular and generally resorted to, as it is comparatively cheaper. Besides, the
ships capacity is far greater than other modes of transportation. Nevertheless, transportation by
air is utilized for export of expensive items like, diamonds, gold, etc. The shipment stage
includes the following steps
a. Reservation of Shipping Space: - Once the export contract is finalized, the exporter reserves
the required space in the vessel for shipment. On accepting the exporters request, the shipping
company issues a Shipping Order. The original copy of the shipping order as given to the
exporter and the duplicate instruction by the shipping company to the commanding officer of the
ship that the goods as per the details given should be received on board.
b. Arrangement of Internal Transportation up to the Port of Shipment:-The exporter makes
necessary arrangements for transportation of goods to the port either by road or railways. On
loading goods into the railway wagon, the railway authorities issue a Railway Receipt, which
may be either freight paid or freight to pay. It serves as a title to the goods. The exporter
doses the railway receipt in favor of his agent to enable him to take delivery of the goods at
the port of shipment.
c. Preparation and Processing of Shipping Documents :- As the goods reaches the port of
shipment, the exporter should issue detailed instructions to the C&F agent for the shipment of
cargo along with a complete set of the documents listed below:-
Letter of Credit along with the export contract or export order.
Commercial Invoice (2 copies)
Packing List or Packing Note.
-Certificate of Origin.
GR Form (original and duplicate)
ARE-I Form.
Certificate of Inspection, where necessary (original copy)
Marine Insurance Policy.
d. Customs Clearance: - The cargo must be cleared from the Customs before it is loaded on the
ship. For this, the above mentioned documents, along with five copies of shipping bill, are to be
submitted to the Customs Appraiser at the Customs House. The Customs Appraiser ensures that
all the formalities relating to exchange control, quality control, pre-shipment inspection and
licensing have been complied with by the exporter. After verification, all documents, except the
original GR, original copy of Shipping Bill and one copy of Commercial Invoice, are returned to
the C&F agent.
e. Obtaining Carting Order from the Port Trust Authorities: - The C&F agent, then, approaches
the Superintendent of the concerned Port Trust for obtaining the Carting Order for moving the
cargo inside the dock. After obtaining the Carting Order, the cargo is physically moved into the
port area and stored in the appropriate shed.
f. Customs Examination and Issue of Let Export Order: - The Customs Examiner at the port of
shipment physically examines the goods and seals the packages in his presence. The same can be
arranged for at the factory or warehouse of the exporter by making an application to the Assistant
Collector of Customs. The Customs Examiner, if satisfied, issues a formal permission I for the
loading of cargo on the ship in the form of a order.
g. Obtaining Let Export Order. Order issued by the Customs Preventive Officer. The C&F
agent submits the duplicate copy of Shipping Bill, duly endorsed by the Customs Examiner, to
the Customs Preventive Officer who endorses it with the Let Ship Order.
h. Obtaining Mates Receipt and Bill of Lading: - The goods are then loaded on board the ship
for which the Mate or the Captain of the ship issues Mates Receipt to the Port Superintendent
The Port Superintendent, on receipt of port dues, hands over the Mates Receipt to the C&F
Agent. The C&F Agent surrenders the Mates Receipt to the Shipping Company for obtaining
the Bill of Lading. The Shipping Company issues two to three negotiable and two to three non-
negotiable copies of Bill of Lading.
Pre- Shipment Stage
Pre-shipment stage consists of the following steps:
a. Approaching Foreign Buyers: - In order to secure an export order, a new exporter can make
use of one or more .of the techniques, such as, advertising in international media, sales
promotion, public relation, personal selling, publicity and participation in trade fairs and
exhibitions.
b. Inquiry and Offer: - An inquiry is a request from a prospective importer about description of
goods, their standard or grade, size, weight or quantity, terms of payments, etc. On getting an
inquiry, the exporter must process it immediately by making an offer in the form of a Performa
invoice.
c. Confirmation of Order: - Once the negotiations are completed and the terms and conditions
are finalized, the exporter sends three copies of Performa Invoice to the importer for the
confirmation of order. The importer signs these copies and sends back two copies to the exporter.
d. Opening Letter of Credit:- The documentary credit or letter of credit is the most appropriate
and secured method of payment adopted to settle international transactions. On finalization of the
export. Contract, the importer opens a letter of credit in favor of the exporter, if agreed upon in
the contract.
e. Arrangement of Pre-shipment Finance: On securing the letter of credit, the exporter
procures a pre-shipment finance from his bank for procuring raw materials and other
components, processing and packing of goods and transfer of goods to the port of shipment.
f. Production or Procurement of Goods: - On securing the pre-shipment finance from the
bank, the exporter either arranges for the production of the required goods. Or procures them
from the domestic market as per the specifications of the importer.
g. Packing and Marking: - Then the goods should be properly packed and necessary details
such as port of shipment and destination, country of origin, gross and net weight, etc. If required,
assistance can be taken from packaging institutes.
h. Pre-shipment Inspection - If the goods to be exported are subject to compulsory quality
control and pre-shipment inspection then the exporter should contact the Export Inspection
Agency (EIA). For obtaining an inspection certificate.
i. Central Excise Clearance: - The exporters are totally exempted from the payment of central
excise duty.
j.Obtaining Insurance Cover: - The exporter must take appropriate policies in order to insure
risks: ECGE policy in order to cover credit risks, Marine policy, if the price quotation agreed
upon is CIF, Appointment of C&F Agent: - Since exporting is a complex and time- consuming
process, the exporter should appoint a Clearing and Forwarding (C&F) agent for the smooth
clearance of goods from the customs and preparation and submission of various export
documents.
Post Shipment Stage
The post-shipment stage consists of the following steps: -
a. Submission of Documents by the C&F Agent to the Exporter: - On the completion of the
shipping procedure, the C&F agent submits the following documents to the exporter:-
A copy of invoice duly attested by the Customs.
Drawback copy of the shipping bill.
Export promotion copy of the shipping bill.
A full set of negotiable and non-negotiable copies of bill of lading.
The original L/C, export order or contract.
Duplicate copy of the ARE-I form.
b. Shipment Advice to Importer: - After the shipment of goods, the exporter intimates the
importer about the shipment of goods giving him details about the date of shipment, the name of
the vessel, the destination, etc. He should also send one copy of nonnegotiable bill of lading to
the importer.
c. Presentation of Documents to Bank for Negotiation: - Submission of relevant documents to
the bank and the process of getting the payment from the bank is called Negotiation of the
Documents and tile documents are called Negotiable Set of Documents. The set normally
contains: -
Bill of Exchange, Sight Draft or Usance Draft.
Full set of Bill of Lading or Airway Bill.
Original Letter of Credit.
Customs Invoice.
Commercial Invoice including one copy duly certified by the Customs.
Packing List.
Foreign exchange declaration forms, GR/SOFTEX/PP forms in duplicate.
Exchange control copy of the Shipping Bill.
Certificate of Origin, GSP or APR Certificate, etc.
Marine Insurance Policy, in duplicate.
d.Acceptance of the bill of exchange: - Bill of Exchange accompanied by the above documents
is known as the Documentary Bill of Exchange. It is of two types:
-Documents against Payment (Sight Drafts): - In case of sight draft, the drawer instructs the bank
to hand over the relevant documents to the importer only against payment.
-Documents against Acceptance (Usance Draft): - In case of usance draft, the drawer instructs
the bank to hand over the relevant documents to the importer against his acceptance of the bill
of exchange.
-Letter of Indemnity: - The exporter can get immediate payment from his bank on the
submission of documents by signing a letter of indemnity. By signing the letter of
indemnity the exporter undertakes to indemnify the bank in the event of non-receipt of payment
from the importer along with accrued interests.
- Realization of Export Proceeds :- On receiving the documentary bill of exchange, the importer
releases payment in case of sight draft or accepts the usance draft undertaking to pay on maturity
of the bill of exchange. The exporters bank receives the payment through importers bank and
is credited to exporters account.
(f) Processing of GR Form: - On receiving the export proceeds, the exporters bank intimates the
same to the bank by recording the fact on the duplicate copy of GR. The bank verifies the details
in duplicate copy of GR with, the, original copy of GR received from the Customs. If the details
are found to be I in order then the export transaction is treated to be completed.
(g) Realization, of Export Incentives: - If the exporter is eligible for export incentives, then he
should submit claim for the same accompanied by the bank certificate to the appropriate
authority.
Documents required:
There are five broad categories of documentation you will encounter when exporting.
These are:
1. Documents involving the importer
The Performa invoice
The export contract
The commercial invoice
The packing list
Letter of credit
Certificate of origin
Certificates of health
Fumigation certificate
Pre-shipment inspection certificate
Transport documents
2. Documents required exporting goods from Pakistan
Exporter registration form
Letter of credit
Commercial invoice
Bill of entry export
Form F178
Form NEP (no foreign exchange proceeds)
Form E (repatriation of foreign exchange earnings)
Export permit
3. Documents required for transportation
Bill of lading
Air waybill
Freight transit order
Road consignment note
Export cargo shipping instruction
4. Documents required for payment
Commercial invoice
Letter of credit
Transport documents
5. Insurance documents
Marine insurance
Documents required by the importer
The export process is encumbered by the amount of documentation the exporter faces around
every turn. These documents can be broken down into four groups; (1) those required by the
importer (and for customs clearing in the target market), (2) those required to export the goods
from Pakistan, (3) those required for payment and (4) those required to transport the goods (i.e.
the transport documents). In many instances, the documents may be the same (for example, the
commercial invoice may be required in more than one instance as may the bill of lading/airway
bill). In this section, we deal with the documents required by the importer and for clearing the
goods through customs in the target market.
Documents involving the importer
The quotation
The proforma invoice
The export contract
The commercial invoice
The packing list
Letter of credit
Certificates of origin/health/fumigation/pre-shipment inspection
Transport documents
Documents required to export goods from Pakistan
Documents required for transportation
Documents required for payment
Marine Insurance
Details pertinent to the proforma invoice
The following details are pertinent to the setting up of the proforma invoice and need careful
attention:
A complete and clear description of the goods in question
The quantity of goods in question including the number and kinds of packaging involved
The total price of the goods (and unit price where applicable)
The currency in which the goods will be sold (e.g. US dollars or rends)
The likely delivery schedule and delivery terms
The physical addresses of both the exporter (referred to as the shipper) and importer
(sometimes referred to as the consignee)
The payment methods, for example cash in advance or L/C
The payment terms, for example 30 days on sight
The Inco term to be used
Who is responsible for the banking fees and other related costs (insurance and freight
costs are covered by the Inco term in question)
The exporter's banking details
The country of origin of the goods
The expected country of final destination
Any freight details such as the port of loading and discharge
Any transshipment requirements
Customs' and consular invoices
Some countries, however, may require the commercial invoice to be completed on their own
specified forms - such commercial invoices are known as "Customs' invoices" and may be
provided in lieu of or in addition to the standard commercial invoices referred to above. In
addition, a "consular invoice" is required by certain countries. The consular invoice must be
prepared in the language of the destination country and can be obtained from the country's
consulate, and often must be "consularised" (i.e. stamped by an authorized Consul official in the
exporting country).
What should appear in the commercial invoice
The following details need to appear in the commercial invoice:
The name of the shipper/exporter and their contact details, including physical address
The name of the importer/consignee and their contact details, including physical
address
An order number of reference to correspondence between the supplier and importer
A complete and clear description of the goods in question (including brandmarks and
the HS number)
The packing details unless provided in a separate packing list
The quantity of goods in question including the number and kinds of packaging
involved
The external dimensions, cubic capacity, weight, numbers and contents of each
package shipped.
The total price of the goods (and unit price where applicable) usually quotes as a
CIF/FOB price
The currency in which the goods will be sold (e.g. US dollars or rands)
The type and amount of discount given
The likely delivery schedule and delivery terms
The payment methods, for example cash in advance or L/C
The payment terms, for example 30 days on sight
The Incoterm to be used
Who is responsible for the banking fees and other related costs (insurance and freight
costs are covered by the incoterm in question)
What the freight and insurance charges are
The exporter's banking details
A declaration of the country of origin of the goods
The expected country of final destination
Any freight details such as the port of loading and discharge
Any trasshipment requirements
Any other information relevant to the order


When you prepare your goods for shipment, you will be required to prepare a detailed export
packing list. This is a formal document that itemises quite a number of details about the cargo
such as:
Your name and contact details
The importer's/consignee's/buyer's name, address and contact details
The gross, tare and net weights of the cargo
The nature, quality and specifications of the product being shipped
The type of package (such as pallet, box, crate, drum, carton, etc.)
The measurements/dimensions of each package
The number of pallets/boxes/crates/drums, etc.
The contents of each pallet or box (or other container)
The package markings, if any, as well as shipper's and buyer's reference numbers
It is also important that the details on the packing list (such as shipper's/importer's details,
number of items involved, etc.), match what is stipulated on the commercial invoice and bill of
lading/airway bill. You can imagine that if there is a mismatch between the packing list and the
other transport/export documents that this may lead to closer scrutiny of the cargo and may
ultimately result in delays in the cargo arriving at its destination! Note that pricing information is
not required on the packing list



Letter of credit
In this section we discuss the following topics and terminology within the area of documentary
credits:
Sight credits

Usance credits
Transferable credits
Revolving credits
Transferable credits
Standby credits

Sight credits
This is an easy enough term to explain. A sight credit or L/C is one which paid upon presentation
of the required documentation (as stipulated in the original L/C) to the issuing or confirming
bank. As exporter, you need to be careful however, as some L/Cs state that payment will only be
made at a specified branch counter of the issuing or confirming bank (and won't necessarily be
paid or transferred directly into your account). The process of having to go to a particular branch
and receive payment and then to transfer this payment into your account will slow down the
payment process and may add further costs to the overall process. Thus, when working with
sight L/Cs (or any L/Cs for that matter) make sure where payment will be made.
Usance credits
An L/C can specify any credit period that you have negotiated with the importer. A letter of
credit that that incorporates a payment after a given term (e.g. 60 days) is known as a usance
credit (also referred to as a term or acceptance credit). The correct phrase is hat the L/C is at
usance, meaning that it will come into effect at some future date (also referred to as maturity).
You should note that the maturity date may also have further stipulations associated with it; for
example:
90 days sight
120 days from Bill of Lading (B/L) date
60 days and upon issuing of a FDA (US Food and Drug Administration) clearance
Some of these provisos can have a significant impact on your receiving payment and you should
make yourself fully aware of any such provisos to your L/C. A usance/term credit will require
you, as exporter, to finance the gap between delivery and payment.
Transferable credits
An irrevocable L/C may also be transferable. In the case of a transferable L/C, the exporter can
transfer all or part of his/her rights to another party. Transferable letters of credit are often used
when the exporter is the importer's agent or a middleperson (i.e. export agent) between supplier
and importer, and not the actual supplier of merchandise. With a transferable letter of credit, the
exporter uses the credit standing of the issuing bank and avoids having to borrow or use his own
funds to buy goods from a supplier. Hence, it is a viable pre-export financing vehicle. Before
transfer can be made, the exporter must contact, in writing, the bank handling the disbursement
of funds - the transferring bank. Transferable L/Cs can only be transferred based on the terms
and conditions specified in the original credit, with certain exceptions. Therefore, it may be
difficult to achieve flexibility and confidentiality with this finance method.
The transferring bank, whether it has confirmed the letter of credit or not, is only obligated to
make the transfer to the extent and in the manner expressly specified in the L/C. Transferable
L/Cs involve specific risks. When a bank opens a transferable letter of credit for a buyer, neither
party can be certain of who will be the ultimate supplier. Both parties must rely upon the
importer's assessment of the exporter's reputation and ability to perform. To reduce overall risk
and prevent the shipment of substandard goods, an independent certificate of inspection may be
required in the documentation.
For simplicity's sake, many banks prefer single transfer and discourage multiple transfers, but
will do multiple transfers if conditions are right. Partial transfers can also be made to one or
several suppliers if the terms of the original L/C allow for partial shipments. The processing of
this type of letter of credit can become complicated and tricky, requiring logistics coordination
and the highest level of precision. Incomplete and/or ambiguous information on the transferable
letter of credit almost always leads to problems. Furthermore, the beneficiary of the transferable
letter of credit must be available throughout the entire negotiation process to assist the
transferring bank.
Revolving credits
The term "revolving" is used to describe a letter of credit, which, incorporates a condition
whereby the credit amount is to be renewed or reinstated automatically without the need for a
specific amendments to the credit. This type of credit is used when regular trade is conducted
between an exporter and an overseas buyer. A revolving credit can be irrevocable or confirmed.
Although a credit may, in theory, revolve in relation to amount, in practice this is rare, as it
would mean that there might be no limit to the number of times a specific amount could be
drawn. A credit, which revolves in relation to time, is a much more common form of a revolving
credit. For example, a revolving credit could be made available for an amount of US$ 10 000 per
month (irrespective of whether any sum was drawn during the previous month) with an overall
validity of six months. A revolving credit may be:
Cumulative, i.e. any sum not utilised during the first period is carried over and may be
utilised in the subsequent period.
Non-cumulative i.e. any sum not utilised during the first period ceases to be available in
subsequent periods.
Back-to-back credits
Back-to-back L/Cs are another common occurrence in the world of international trade. When an
exporter, who is not a manufacturer, but obtains goods from a supplier by acting as an export
agent for the supplier for example, has received an L/C from an importer, the exporter, in turn,
may request his bank to open a L/C in favour of his supplier on the strength of the existing L/C.
These two credits are said to be "back-to-back", that is to say the one is issued on the security of
the other. A bank will only consider opening a second credit if the same goods are involved in
both credits. In terms of the back-to-back L/C, the exporter is both the beneficiary/exporter of the
first credit and the applicant/buyer for the second credit.
Standby credits
A standby L/C is one which is issued in favour of the exporter for the purpose of "backing-up"
certain specified obligations of the importer. A standby letter of credit requires the exporter's
presentation of documents which indicate that importer has not met the obligations which the
standby letter of credit backs-up. A standby letter of credit, therefore, is not intended to be drawn
upon by the standby letter of credit beneficiary unless the standby letter of credit applicant does
not meet its obligations as specified by the standby letter of credit.


Pre-shipment inspection certificates
It is not uncommon for importers to want to confirm that the to-be-exported goods
meet their requirements. This is particularly so in instances where it is essential that
the goods meet certain standards. These same importers unfortunately cannot always
fly to all the countries from where they are buying their products and for this reason,
they may:
a. Require that the shipment be inspected just before loading by an independent
third-party arranged and generally paid for by the importer. The exporter will
need to indicate an approximate time and place for this inspection to take
place.
b. Ask the exporter to obtain the pre-shipment inspection certificate from an
independent third-party inspection firm which is then forwarded to the
importer. In this instance either the exporter or the importer may pay for the
inspection, depending what was negotiated in the contract.
The independent contractor - usually a recognised firm in this field - will undertake a
detailed inspection of equipment or materials after manufacture, but prior to
shipment. The scope of the inspection includes quantity and quality, packing and
marking and supervision of loading. A Certificate of Inspection can be provided
against a Letter of Credit and may be authorised by a Chamber of Commerce.
Occasionally, the importer may ask a trusted individual to undertake the inspection
on their behalf.
Furthermore, some countries may require certification for selected products (this is
independently from the importer) and in these instances a pre-shipment inspection is
a necessary step to receive an import certificate for the shipment. Without this
certificate the shipment will not be able to clear customs in the country of destination.

Transport Documents

Bill of lading
Air waybill
Freight transit order
Road consignment note
Export cargo shipping instruction.

Sample documents are attached at the end as annexure.