UNIT - 1

EXPORT DOCUMENTATION

MEANING OF EXPORT:
According to section 2 (18) of Customs Act 1962
“Export of goods means taking goods out of
India to a place outside India”.
MEANING OF EXPORT IN INTERNATIONAL
TRADE:
Export refers to a product or service produced in
one country but sold to a buyer abroad. Exports are
one of the oldest forms of economic transfer and
occur on a large scale between nations.
EXPORT PROCEDURES OR EXPORT DOCUMENTATION

1) Preliminary Exercise
2) Export Documentation
3) Export Procedure
4) Export Finance
5) Export Categories
6) Export Sample
7) Letter of Credit
8) IEC Number
 1. PRELIMINARY EXERCISE:
What to do first before starting the export business?
1. Select a quality product.
2. Select a particular overseas market.
3. Concentrate only on few products and minimum three countries
(If you are a beginner).
4. Ensure that you can manufacture or procure the selected products
at competitive prices in sufficient quantity and will be able to
meet the delivery schedule.
5. Get the full information of similar products of other
manufacturers in the selected markets, their prices, marketing
techniques, terms of business etc. to offer your products to
overseas buyer with reduced prices to capture the market.
6. Assess the degree of competition of product(s) which you propose
to export in a particular market.
1. PRELIMINARY EXERCISE:

Where do you get the export information?

1. Various publications of Chambers of Commerce.
2. Export Promotion Councils
3. Export Credit Guarantee Corporation
4. Banks/ Financial institutions
5. Institutions engaged in International Trade
6. Private Publications / Project Report available on certain fee
1. PRELIMINARY EXERCISE:

How to select a commodity for export?

1. Own manufacturer of capacity.
2. Availability from others – merchant exporter.
3. The demand for the commodity in the importing country
4. Government of India’s policy and regulations – export.
5. Foreign Government policy and regulations – import.
6. Total profitability of commodity.
7. Quota fixation (in both countries).
8. Knowledge and experience of similar – exporters – export of such
commodities in various countries.
1. PRELIMINARY EXERCISE:

How to select a commodity for export?

1. Own manufacturer of capacity.
2. Availability from others – merchant exporter.
3. The demand for the commodity in the importing country
4. Government of India’s policy and regulations – export.
5. Foreign Government policy and regulations – import.
6. Total profitability of commodity.
7. Quota fixation (in both countries).
8. Knowledge and experience of similar – exporters – export of such
commodities in various countries.
 1. PRELIMINARY EXERCISE:

How to obtain particulars of foreign buyers?

1) Trade representatives (India and Foreign Governments).
2) Export Promotion Councils and Commodity Boards and other
Govt. and Semi-Government Agencies.
3) International Trade Directories and International Yellow pages
4) Participating / visiting in International Trade Fairs and exhibitions
in India and abroad.
5) Reading materials published by various trade related
organizations.
6) Advertising in Indian and as well as foreign newspapers,
magazines and journals.
1. PRELIMINARY EXERCISE:

How to obtain particulars of foreign buyers?

1) Trade representatives (India and Foreign Governments).
2) Export Promotion Councils and Commodity Boards and other
Govt. and Semi-Government Agencies.
3) International Trade Directories and International Yellow pages
4) Participating / visiting in International Trade Fairs and exhibitions
in India and abroad.
5) Reading materials published by various trade related
organizations.
6) Advertising in Indian and as well as foreign newspapers,
magazines and journals.
7) Relatives, friends and other contacts in foreign countries
1. PRELIMINARY EXERCISE:

Once the buyer is ensured, our position in respect of the following to

be assured
1. Price to the overseas buyers.
2. The terms of credit which one can offer.
3. Packaging, transportation, storage, distribution and after sales
service methods.
4. The promotional methods, which one can offer.
 2. EXPORT DOCUMENTATION
Documentation is one of the most important aspects of overseas trade.
Current documentation is very important because it alone can secure
the swift passage of goods through the customer resulting in prompt
payment of goods exported.

1. Export Order
The exporter is required to produce copies of export order to
various government / departments / financial institutions e.g. to get
export licenses, availing post shipment finance etc.
2. Order Acceptance
Exporter commits the shipment of goods covered at the agreed price
during a specified time. Sometimes, the exporter needs a copy of his
order acceptance signed by the importer
3. Letter of Credit
Letter of Credit is a document issued by the Importer‟s Bank in
favour of the Exporter giving him the draw bills up to a particular
amount (as per the contract) covering a specified shipment of goods
and assuring him of payment against the delivery of shipping
documents.

4. Transport Documents
Ocean Foreign (Types of Bill of lading) It is a document issued by the
shipping company or its agent acknowledging the receipt of goods
mentioned in the bill for shipment on board the vessel and
undertaking to deliver the goods in the like order and condition as
received, to the consignee or his order of assignee, provided the
freight and other changes specified from the legal point of view,
A bill of lading is a formal receipt acknowledging the receipt of
goods from export for the purpose of shipment. Bill of lading is
usually made out in sets of four.
The exporter should submit the sets of bill of lading together with the
mate receipt to the shipping company which would calculate the
freight amount on the basis of measurement or weight as certified by
the recognized chamber of commerce.
Post Parcel Receipt It evidences the receipt of goods for exports by
the post office and it is also not treated as a document of title
5. Bill of Exchange
It is also known as “Draft” When exporter expects the importer to
make immediate payment upon the presentation of the draft that draft
is called a “Sight Draft” or Draft drawn at first sight or on Demand or
on presentation. When the draft is drawn for payment at a date later
than presentation, it is called a „Usance Draft‟ or Usance Bill or
“Demand Draft‟.

6. Insurance Policy / Certificate

Marine Insurance Certificate is a document which give details of the
shipment insured together with a shortened version of the provisions
of open cover. The exporter should buy the policy for the CIF value
plus ten percent to cover other expenses which the importer might
have to incur in anticipation of safe arrival of the goods
7.Certificate of Origin
The exporter should obtain this from any recognized Chamber of
Commerce, EPC, Government Dept. on payment of a small fee.

8. G.S.P. Certificate
EEC adopted the Generalized System of Preferences. Under G.SP
manufacturers and Semi-manufacture from developing countries
including India will be entitled to a concessional rate of import duty
in these countries.
9. Certificate of Inspection
It is issued by the inspection agency concerned certifying that the
consignment has been inspected as required under the Export (Quality
Controls & Inspection).

10. Certificate of Measurement

It should be obtained either from Indian Chamber of Commerce or
any other approved organization.

11. Shipping Order About the reservation of space of shipment of

cargo through a particular vessel from a specified port and on a
specified date.
12. Cart / Lorry Ticket This is prepared for admittance of cargo
through the port gate.

13. Dock Challan / Export Application

Export application is required at Cochin, Mumbai and Chennai for
payment of port charges and Dock Challan is used at Kolkata port.

14. Shipper’s Declaration Form

The exporter has to submit this declaration to the customs authorities,
regarding the value, sort, specification quantity, description of goods
being exporter.
15. Commercial Invoice
It is a prima facie evidence of the contract of sale and purchase.

16. Consular Invoice

It is a document required manly by the Latin American countries. It
facilitates the clearing of goods through customs of the importing
country.

17. Shipping Bill It is an important document required by the customs

authorities for allowing shipment.
• Duty free shipping bill - Printed on white paper
• Dutiable shipping bill - Oriented on yellow paper
• Drawback shipping bill - Printed on green paper
18. Shipping bill for shipment Ex-bond In case of goods imported for
re export and kept in bonds this type of shipping bill is used which is
printed on yellow paper.

19. Freight Declaration It is to be attended to the export documents of

the importer agrees to pay the freight.

20. Health Certificate

This is required for export of food products, seeds, animal meat
products etc. issued by the Health Department of Exporting Country.

21. Certificate of Value

Though indicated in the commercial invoice, some countries need this
separately.
22. Certificate of Exports and Realization
After shipment, the exporters should get their export certified by an
authorized dealer in foreign exchange. While presenting the export
document to an authorized dealer, he should fill in and give to the
bank and declaration (in triplicate) in the prescribed from known as
“Bank Certificate of Export and Realization”.
The exporter will get this certificate from the negotiating bank only
after the realization of the proceeds.
Common Discrepancies in Export Documents
1. Credit expired
2. Late shipment
3. Credit amount exceeding
4. Under insured
5. Insurance risk covered not as specified in credit
6. Absence of freight paid statement on bill of lading, where credit
covers Cost & Freight (C&F) and Cost, Insurance and Freight
(CIF) Shipment.
7. shown on invoice and bill of exchange differ
 3. EXPORT PROCEDURE
• Categories of Exporters
Preliminary Exercise
Importer – Exporter Code (IEC) Number
 Categories of importers exporters exempted from obtaining
Importer Exporter Code
 Application and supporting documents
 Documents are to be attached
 Validity of Importer Exporter Code number
 Registration with Export Promotion Council
 Registration with sales tax authorities
Export Sample and Price Quoting
Letter Of Credit
 Parties to a letter of credit
 Types of letter of credit
 Documents required under letters of credit
 Common discrepancies in export documents
 4. EXPORT FINANCE

 Pre-shipment finance
 Post- shipment Finance

Export Documents - Export Finance

1) Pre-shipment Finance
 Packing credit
 Advances against cash incentives
 Advance against Duty Drawback Entitlement
2) Post-shipment Finance
 Negotiations / payments / acceptance of export documents under
letter of credit
 Purchase / discount of export documents
 Advances against bills sent on collection basis
 Advances against exports on consignment basis
 Advances against un drawn balances
 Advances against cash incentives
 Advances against duty-draw-back entitlement
 Financing exports under deferred payment arrangements, turnkey
projects, construction contracts etc.
 5. EXPORT CATEGORIES

Export Categories
a) Manufacturer Exporter
b) Merchant Exporter
c) Service Exporter
d) Project Exporter
e) Deemed Exporter
A. Manufacturer Exporter:
Manufacturer Exporter means a person who manufactures
goods and exports or intends to export such goods.
Example: Tata, Birla & Kirloskars in Indian exports.

B. Merchant Exporter:
A merchant exporter is primarily concerned with exporting
goods after purchasing them from manufacturers. Merchant
exporters do not usually own manufacturing facilities but
buy goods from manufacturers and sell them
internationally.
C. Service Exporter:
Service Exporter is an exporter who exports the services
where we can't see the product physically, i.e, intangible
products. We can explain service export simply as, any
service provided by a person in one nation to people or
companies from another.

For example:
- Rents paid by a north American resident for property
owned outside their home country.
- Call center support provided to users from outside.
D. Project Exporter:
Project exporter is one who set up engineering, construction
or infrastructure projects overseas within the framework of
the Foreign Trade Policy (FTP) of the Government of India
and conforming to the guidelines prescribed by the Reserve
Bank of India (RBI) for undertaking such projects.

E. Deemed Exporter:
"Deemed Exporter is one who does transactions in which
the goods supplied do not leave the country, and the
payment for such supplies is received either in Indian
rupees or in free foreign exchange. The following
categories of supply of goods by the main/ sub-contractors
are regarded as "Deemed.
 6. EXPORT SAMPLE
Export sample is a sample against which an overseas buyer agrees
to make payment is exported in the same manner as the normal
goods are exported. Sample can also be carried personally by you
while travelling abroad provided these are otherwise permissible or
cleared for export as explained earlier.
EXAMPLE:
Samples having permanent marking as “sample not for sale” are
allowed freely for export without any limit. However, in such cases
where indelible marking is not available, the samples may be
allowed for a value not exceeding US $ 10,000, per consignment.

For export of sample products which are restricted for export as

mentioned in the ITC (HS) Code, an application may be made to the
office of Director General of Foreign Trade (DGFT).
 7. LETTER OF CREDIT

MEANING OF LETTER OF CREDIT

A letter of credit is a letter from a bank guaranteeing that a
buyer’s payment to a seller will be received on time and
for the correct amount. If the buyer is unable to make a
payment on the purchase, the bank will be required to
cover the full or remaining amount of the purchase. It may
be offered as a facility (financial assistance that is
essentially a loan).
Due to the nature of international dealings, including
factors such as distance, differing laws in each country,
and difficulty in knowing each party personally, the use of
letters of credit has become a very important aspect of
international trade.

EXAMPLE OF LETTER OF CREDIT:

Citibank offers letters of credit for buyers in Latin
America, Africa, Eastern Europe, Asia, and the Middle
East who may have difficulty obtaining international credit
on their own. Citibank’s letters of credit help exporters
minimize the importer’s country risk and the issuing
bank’s commercial credit risk.
8. IMPORT-EXPORT CODE / NUMBER
An Importer -Exporter Code (IEC) is a key business identification
number which mandatory for export from India or Import to India. No
export or import shall be made by any person without obtaining an
IEC unless specifically exempted.

IEC is a must to export and import of goods and services and received
from the regional licensing authority unless specifically exempted
under any other provision of the Export Import policies.
Categories of Importers Exporters exempted from obtaining IEC Number
1. Ministries / Departments of the Central or State Government
2. Persons importing or exporting goods for their personal use not connected
with trade.

Application and Supporting Documents

3. Application as given by the Regional Licensing Authority
4. Demand Drafts for payment of the fee of Rs.1000/-

Documents to be attached
5. Sales Tax registration certificate
6. Copy of the passport in case of an individual
7. Certificate from the banker of the firm
8. Copy of PAN issued by the income tax authorities