STAGES IN IMPLEMENTING

EXPORT TRANSACTION

Presented by:
NIKHIL PURI (21)
PALAK ARORA (22)
PALAK GUPTA (23)
 INTRODUCTION
• In reality, an export exercise is concluded successfully only after the
exporter has been able to deliver the consignment in accordance
with the export contract and receive payment for the goods.
• This involves practice of prescribed procedure to be performed. The
fact is that one does not need only to be very well informed about
his/her export company, his/her products, his/her suppliers, his/her
export chain, his/her market, the world market, but one also needs to
know the export rules and terms, the different cultures that one
targets and the final customers’ needs.
• Then comes fulfilling these needs by the most competitive way and
by adding value to one’s services. This is so because all sell the
same products with minor changes , but what makes the difference
is the method and the value added services one provides to the
ultimate consumers. Simply speaking, that making an export
company is an easy process, but making d successful and long
lasting export company is a very difficult task
 STEPS INVOLVED IN AN EXPORT
TRANSACTION
These are listed as follows:
1. Having an Export Order:
Processing of an export order starts with the receipt of an export
order. An export order, simply stated, means that there should be an
agreement in the form of a document, between the exporter and
importer before the exporter actually starts producing or procuring
goods for shipment. Generally an export order may take the form of
proforma invoice or purchase order or letter of credit. You have
already learnt these just in the preceding section.
• 2. Examination and Confirmation of Order:
• Having received an export order, the exporter should examine it
with reference to the terms and conditions of the contract. In fact,
this is the most crucial stage as all subsequent actions and reactions
depend on the terms and conditions of the export order.
• The examination of an export order, therefore, includes items like
product description, terms of payment, terms of shipment,
inspection and insurance requirement, documents realising payment
and the last date of negotiation of documents with the bank. Having
being satisfied with these, the export order is confirmed by the
exporter.
• 3. Manufacturing or Procuring Goods:
• The Reserve Bank of India (RBI), under the export credit (interest
subsidy) scheme, extends pre-shipment credit to exporter to finance
working capital needs for purchase of raw materials, processing
them and converting them into finished goods for the purpose of
exports. The exporter approaches the bank on the basis of laid down
procedures for the pre-shipment credit. Having received credit, the
exporter starts to manufacture / procure and pack the goods for
shipment overseas.
• 4. Clearance from Central Excise:
• As soon as goods have been manufactured/ procured, the process for
obtaining clearance from central excise duty starts. The Central
Excise and Sale Act of India and the related rules provide the refund
of excise duty paid. There are two alternative schemes whereby 100
per cent rebate on duty is given to export products on the submission
of the proof of shipment.
• The first scheme is to make payment of the excise duty at the time
of removing the export consignment from the factory and file a
claim for rebate of duty after exportation of goods. The second
scheme is to remove goods from factory/warehouse without
payment but under an appropriate bond with the excise authorities.
The exporter needs to apply on a form known as AR4 or AR4A to
the Central Excise Range Superintendent for obtaining excise
clearance.
• Form A is filed when goods are to be cleared after examination by
the excise inspector. In all other cases, form AR4A is filed.
• 5. Pre-Shipment Inspection:
• There are number of-goods whose export requires quality
certification as per the Government of India’s notification.
Consequently, the Indian custom authorities will require the
submission of an inspection certificate issued by the competent and
designated authority before permitting the shipment of goods takes
place.
• Inspection of export goods may be conducted under:
• (i) Consignment-wise Inspection
• (ii) In-process Quality Control, and
• (iii) Self-Certification.
• The Inspection Certificate is issued in triplicate. The original copy is
for the customs verification. The second copy of the certificate is
sent to the importer and the third copy remains with the exporter for
his reference purpose.
• 6. Appointment of Clearing and Forwarding Agents:
• On completion of the process of obtaining the Inspection Certificate from
the custom agencies, the exporter appoints clearing and forwarding agents
who perform a number of functions on behalf of the exporter.
• The main functions performed by these agents include packing, marking
and labeling of consignment, arrangement for transport to the port
arrangement for shipment overseas, customs clearance of cargo,
procurement of transport and other documents.
• In order to facilitate the exporter in discharging his duties, the following
documents are submitted to the agent:
• (i) Commercial invoice in 8-10 copies
• (ii) Customs Declaration Form in triplicate
• (iii) Packing list
• (iv) Letter of Credit (original)
• (v) Inspection Certificate (original)
• (vi) G.R. Form (in original and duplicate)
• (vii) AR4/ AR4A (in original and duplicate)
• (viii) GP-l/GP-2 (original)
• (ix) Railway Receipt/Lorry Way Bill, as the case may be
• 7. Goods to Port of Shipment:
• After the excise clearance and pre-shipment inspection formalities
are completed, the goods to be exported are packed, marked and
labeled. Proper marking, labeling and packing help quick and safe
transportation of goods. The export department takes steps to
reserve space on the ship through which goods are to be sent to the
importer.
• The shipping space can be reserved either through the clearing and
forwarding agent or freight broker who works on behalf of the
shipping company or directly from the shipping company. Once the
space is reserved, the shipping company issues a document known
as Shipping Order. This order serves as a proof of space reservation.
• If goods are sent through a road carrier to the port, no specific
formality is involved. In case, the goods are sent by rail to the port
of shipment, allotment of wagon needs to be obtained from the
Railway Board.
• The following documents are submitted to the booking railway
yard/station:
• (i) Forwarding Note (A Railway Document)
• (ii) Shipping Order
• (iii) Wagon Registration Fee Receipt
• Once wagons have been allotted, goods are loaded, for which
railways will issue Railway Receipt (RR). Then, this receipt and
other documents are sent to the clearing and forwarding agent at the
port town. At the same time, the production/export department takes
insurance policy in duplicate for risk coverage (internal as well as
overseas) for the goods to be exported.
• 8. Port Formalities and Customs Clearance:
• Having received the documents from the export department, the
clearing and forwarding agent takes delivery of the cargo from the
railway station or the road transport company and stores it in the
warehouse. He also obtains customs clearance and permission from
the port authorities to bring the cargo into the shipment shed.
• The custom department grants permission for export at the office
of the customs and physical verification of goods in the shipment
shed. The clearance for export is given on the Shipping Bill.
• The clearing and forwarding agent is required to submit the
following documents with the Customs House for obtaining
customs clearance and permission:
• (i) Shipping Bill
• (ii) Contract Form
• (iii) Letter of Credit, if applicable
• (iv) Commercial Invoice
• (v) GR Form
• (vi) Inspection Certificate
• (vii) AR4/AR4-A Form
• (viii) Packing List, if needed
• After receiving documents from the export department, the clearing
and forwarding agent presents the Port Trust Document to the Shed
Superintendent of the port. He obtains carting order bringing the
cargo to the transit shed for physical examination by the Dock
Appraiser.
• The Dock Appraiser is presented the following documents to
facilitate him in physical examination of export goods:
• (i) Shipping Bill
• (ii) Commercial Invoice
• (iii) Packing List
• (iv) AR4/ AR4-A Form and Gate Pass
• (v) GR Form (duplicate)
• (vi) Inspection Certificate (original)
• The Dock Appraiser, after making examination, makes ‘Let Export’
endorsement on the duplicate copy of the Shipping Bill and hands
over it to the Forwarding Agent. All these documents are presented
to the Preventive Officer who puts an endorsement ‘Let Ship’ on the
duplicate copy of the Shipping Bill. The preventive officer
supervises the loading of cargo on board the vessel.
• After the goods are loaded on board the vessel, the captain of the
ship issues a receipt known as ‘Mate’s Receipt’ to the Shed
Superintendent of the port concern. The forwarding, agent after
paying port charges, takes the delivery of the ‘Mate Receipt’. He
submits to Shipping Company and requests it to issue the Bill of
Lading.
• 9. Dispatch of Documents by Forwarding Agent to the Exporter:
• After obtaining the Bill of Lading from the Shipping Company, the
clearing and forwarding agent dispatches all the documents to his /
her exporter.
• These documents include:
• (i) Commercial Invoice (attested by the customs)
• (ii) Export Promotion Copy
• (iii) Drawback Copy
• (iv) Clean on Board Bill of Lading
• (v) Letter of Credit
• (vi) AR4/ AR4A and Gate Pass
• (vii) GR Form (in duplicate)
• 10. Certificate of Origin:
• On receipt of above documents from the forwarding agent, the
exporter now applies to the Chamber of Commerce for a Certificate
of Origin and obtains it. If the goods are exported to countries
offering GSP concessions, the exporter needs to procure the GSP
Certificate of Origin from the concerned authority like Export
Inspection Agency.
• 11. Dispatch of Shipment Advice to the Importer:
• At last, the exporter sends ‘Shipment Advice’ to the importer
intimating the date of shipment of the consignment by a named
vessel and its expected time of arrival at the destination port of the
importer.
• The following documents are also sent to the importer to facilitate
him for taking delivery of the’ consignment:
• (i) Bill of Lading (non-negotiable copy)
• (ii) Commercial Invoice
• (iii) Packing List
• (iv) Customs Invoice
• 12. Submission of Documents to Bank:
• At the end of the process, the exporter presents the following
documents to his bank for realisation of his amount due to the
importer:
• (i) Commercial Invoice’
• (ii) Certificate of Origin
• (iii) Packing List
• (iv) Letter of Credit
• (v) Marine Insurance Policy
• (vi) GR Form
• (vii) Bill of Lading
• (viii) Bill of Exchange
• (ix) Bank Certification
• (x) Commercial Invoice
• 13. Claiming Export Incentives:
• On completion of the processing of an export order at the three
levels of shipment i.e., pre-shipment, shipment and post-shipment,
the exporter claims for export incentives from various duty
drawback schemes admissible to him / her which subsequently get
credited in their account.
THANK YOU ..!!!