SP Itdoc Mod 3

INTERNATIONAL BUSINESS MBA TRIM 3
Course Code : MBA 365
Course Title : International Trade Procedures & Documentation

MODULE III - Export Import Documents
Credit units : 03
02/14/16
Prepared by Sudhir Pasricha

Learning Objectives:
rning the importance and procedural & documentation aspects of export-import of goods and services
owledge of governments, departments, international institutions involved ;
w an Export Manager to develop a systematic methodology to handle exports ;
derstand the relevance and importance of various government policy measures for export as well as im
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Conte
nts
Module III: Export/Import Documents
How to make Commercial, Financial, Transport, Title, Official, Insurance, Export
assistance Documents
& Certificates for Exports.
Ensuring error-free export documentation as per L/C. How to open L/C,
Apply for license and make Customs/ Sales Tax documents for imports.
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Commercial Invoice
An invoice is very important as it contains the names of the exporter,

importer, and the consignee, and the description of goods. It has to be
prepared & signed by the exporter. Other documents are prepared by
deriving information from the invoice. It is required to be presented before
different authorities for different purposes.
Bills of Exchange
It is an instrument in writing, containing an order, signed by the maker , directing a
certain person to pay a certain sum of money only to the order of a person to the
bearer of the instrument. It is commonly known as a draft.
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Consular Invoice
This invoice is needed to be submitted for certification to the embassy of the
country concerned.
Its main purpose is to enable the importers country to collect accurate and
authenticated information about the value, volume, quantity, source etc. of the
import for assessing import duties and for statistical purposes. It helps the
importer to get goods cleared through customs without any undue delay.
Packing List
This statement gives the packing details of goods in a prescribed format. It is a
very useful document for customs at the time of examination and for
warehouse keeper of the buyer to maintain a record of inventory and to effect
delivery.
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Transport Documents
Ocean (marine) Bill of Lading
This document is issued by the shipping company acknowledging the receipt of the goods
mentioned in the bill, for shipment on board of the vessel. The B/L is the legal document to be
referred in case of any dispute over the shipment.
Airway Bill
This receipt issued by an airlines company or its agent for carriage of goods is a
contract between the
owner of the goods and the carrier. It should indicate freight pre-paid or freight to
collect. The first three digits of the Airway Bill Number represents the code, which
identifies the carrier.
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Multimodal / Combined transport) Is the transportation of goods under a single
contract, but performed with at least two different means oftransport; the carrier is
liable (in a legal sense) for the entire carriage, even though it is performed by several
different modes of transport (by rail, sea and road, for example). The CTD/MTD is
document is increasingly being used .
CTD covers movement of cargo from place of containerization to that of destination
using multimodal transport.
Certificate of origin - stating that the goods originated from India
Inspection Certificate
It is required by some importers and countries in order to get the specifications of the
goods shipped attested. The attestation is usually
Insurance Policy / Certificate
This document, obtained from the freight forwarder , is used to assure the consignee
that insurance will cover the loss or damage to the cargo during transit (marine/air
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insurance).

Export assistance Documents & Certificates for
Exports.
Documents that are commonly used in exporting, but specific requirements vary
by destination and product. It is divided into the following subsections:
COMMON EXPORT DOCUMENTS
Commercial Invoice
Export Packing List
Pro Forma Invoice
TRANSPORTATION DOCUMENTS
Airway Bill
Bill of Lading
Electronic Export Information Filing (formerly known as the Shippers Export
Declaration)
EXPORT COMPLIANCE DOCUMENTS
Export Licenses
Destination Control Statement
CERTIFICATES OF ORGIN
Generic Certificate of Origin
Certificate of Origin for claiming benefits under Free Trade Agreements
Certificate of Origin for goods not manufactured in the United States
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OTHER CERTIFICATES FOR SHIPMENTS OF SPECIFIC GOODS
Additional certificates are needed for
different purposes
Exports.
ATA CARNET/Temporary shipment certificate
"Merchandise Passport,is a document that facilitates the temporary importation of
products into foreign countries by eliminating tariffs and value-added taxes (VAT) or
the posting of a security deposit normally required at the time of importation. TheATA
Carnetis an international customs document that allows the holder to temporarily (up
to one year) import goods without payment of normally applicable duties and taxes,
including value-added taxes.
Certificate of Analysis:
A certificate of analysis can be required for seeds, grain, health foods, dietary
supplements, fruits and vegetables, and pharmaceutical products.
Certificate of Free Sale
Certificate of free sale may be issued for biologics, food, drugs, medical devices and
veterinary medicine. More information is available from theFood and Drug
Administration. Health authorities in some states as well as some trade associations
also issue Certificates of Free Sale.
Dangerous Goods Certificate
Exports submitted for handling by air carriers and air freight forwarders classified as
dangerous goods need to be accompanied by the Shippers Declaration for Dangerous
Goods required by the International Air Transport Association (IATA). The exporter is
9
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Prepared
Sudhir Pasricha
responsible
for accuracy of the form
andbyensuring
that requirements related to

For shipment of dangerous goods it is critical to identify goods by proper name,
Exports.
comply with packaging and labeling requirements, which vary depending upon
the type of product shipper and the country shipped to. More information on
labeling/regulations is available from theInternational Air Transportation
AssociationorDepartment of Transportation - HAZMATwebsites.
For ocean exports, hazardous material regulations are contained in the
International Maritime Dangerous Goods regulations.
Fisheries Certificate
TheNational Marine Fisheries Serviceconducts inspections and analyses of
fishery commodities for export.
Fumigation Certificate
The Fumigation Certificate provides evidence of the fumigation of exported goods
(especially agricultural products, used clothing, etc.). This form assists in the
quarantine clearance of any goods of plant or animal origin. The seller is typically
required to fumigate the commodity at his or her expense a maximum of 15 days
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Halal Certificate
Required by most countries in the Middle East, this certificate states that the fresh or
frozen meat or poultry products were slaughtered in accordance with Islamic law.
Certification by an appropriate chamber and legalization by the consulate of the
destination country is usually required.
Health Certificate
For shipment of live animals and animal products (processed foodstuffs, poultry, meat,
fish, seafood, dairy products, and eggs and egg products). Note: some countries
require that health certificates be notarized or certified by a chamber and legalized
by a consulate. Health certificates are issued by the U.S. Department of Agricultures
Animal and Plant Health Inspection Service (APHIS).
Ingredients Certificate
A certificate of ingredients may be requested for food products with labels that are
inadequate or incomplete. The certificate may be issued by the manufacturer and
must give a description of the product, contents, and percentage of each ingredient;
chemical data; microbiological standards; storage instructions; shelf life; and date of
manufacture.
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If animal fats arePrepared

used, the
certificate
11
by Sudhir
Pasrichamust state the type of fat used

Inspection Certificate
Weight and Quality certificates should be provided in accordance with governing
USDA/GIPSA regulations for loading at port and loading at source/mill site as
appropriate. A certificate of origin certified by the local chamber of commerce at
the load port and a phytosanitary certificate issued by APHIS/USDA and fumigation
certificate are to be provided to the buyer. Costs of all inspection, as well as
certificates/documents at the load port, are usually the responsibility of the seller.
Independent inspection certificates may required in some instances.
Pre-Shipment Inspections
The governments of a number of countries have contracted with international
inspection companies to verify the quantity, quality, and price of shipments
imported into their countries. The purpose of such inspections is to ensure that the
price charged by the exporter reflects the true value of the goods, to prevent
substandard goods from entering the country, and to deflect attempts to avoid
payment of customs duties. Requirements for pre-shipment inspection are
normally
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spelled out in letter-of-credit

other
documentary requirements.
Prepared byor
Sudhir
Pasricha
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Insurance Certificate
Insurance certificates are used to assure the consignee that insurance will cover the
loss of or damage to the cargo during transit. These can be obtained from your
freightforwarder or publishing house. Note: an airway bill can serve as an
insurance certificate for a shipment by air. Some countries may require
certification or notification.
Phytosanitary Certificate
All shipments of fresh fruits and vegetables, seeds, nuts, flour, rice, grains, lumber,
plants, and plant materials require a federal phytosanitary certificate. The
certificate must verify that the product is free from specified epidemics and/or
agricultural diseases. Additional information andformsare available fromAnimal
and Plant Health Inspection Service(APHIS).
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Radiation Certificate
Some counties including Saudi Arabia may require this certificate for some plant
and animal imports. The certificate states that the products are not
contaminated by radioactivity.
Other (Product-Specific) Certificates
Shaving brushes and articles made of raw hair must be accompanied by a
recognized official certificate showing the consignment to be free from anthrax
germs. Used clothing requires a disinfection certificate. Grain requires a
fumigation certificate, and grain and seeds require a certificate of weight. Many
countries in the Middle East require special certificates for imports of animal
fodder additives, livestock, pets, and horses.
Weight Certificate
Acertificate of weightis a document issued by customs, certifying gross weight of
the exported goods.
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OTHER EXPORT - RELATED DOCUMENTS
Consular Invoice
Required in some countries, a consular invoice describes the shipment of goods
and shows information such as the consignor, consignee, and value of the
shipment. If required, copies are available from thedestination country's embassy
or consulate in the U.S.The cost for this documentation can be significant and
should be discussed with the buyer.
Dock Receipt and Warehouse Receipt
A dock receipt and warehouse receipt are used to transfer accountability when the
export item is moved by the domestic carrier to the port of embarkation and left
with the ship line for export.
Import License
Import licenses are the responsibility of the importer and vary depending upon
destination and product. However, including a copy of an import license with the
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15
rest of your documentation may in some cases help avoid problems with customs

ISPM 15 (Wood Packaging) Marking
The International Standards for Phytosanitary Measures Guidelines for
Regulating Wood Packaging Material in International Trade (ISPM15) is one
of several International Standards for Phytosanitary Measures adopted by
the International Plant Protection Convention (IPPC). The IPPC is an
international treaty to secure action to prevent the spread and
introduction of pests of plants and plant products, and to promote
appropriate measures for their control. The American Lumber Standard
Committee (ALSC) and the National Wooden Pallet and Container
Association (NWPCA) provide phytosanitary certification for wood
packaging materials (WPM). APHIS will issue a phytosanitary certificate for
wood package materials only if WPM are the cargo.
Shippers Letter of Instruction
The shippers letter of instruction is issued by the exporter to the forwarding
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agent and includes shipping instructions for air or ocean shipment.
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TEMPORARY SHIPMENT DOCUMENTS

ATA CARNET/Temporary shipment certificate
AnATA Carnet, "Merchandise Passport," is a document that facilitates the
temporary importation of products into foreign countries by eliminating tariffs and
value-added taxes (VAT) or the posting of a security deposit normally required at
the time of importation.Apply for an ATA Carnet.
Customs Certificate of Registration
CustomsForm 4455may be used (often in conjunction with a temporary import
bond or ATA Carnet for goods that are leaving the United States on a temporary
basis for alteration, repair, replacement, and processing).
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How to handle L/C and Avoid Discrepancies
1 The Letter of Credit (LC) is useful to both the importer (purchaser) and exporter (seller).
The basic terms of trade between the two parties will form an integral part of the terms
and conditions of the LC and therefore it is important for the seller to provide as much
detail (description of goods, availability for shipment, price, INCOTERMS bank name and
address etc.) in either a proforma invoice or contract of sale.
2 If the seller has any concerns about the financial stability of the buyers country then it
would be wise to insist that the LC is confirmed (i.e. guaranteed by a bank in the seller's
country).
3 Once the purchaser has instructed its bank (the Opening Bank) to issue an LC it should
take about two or three days for the bank to create the document and transmit it to the
Advising Bank. Most LCs are transmitted by wire and therefore will be with the advising
bank within 24 hours of transmission. Note : the Advising Bank may not necessarily be the
buyer's bank.
4 As soon as the seller receives the LC advice it is vital that this document is examined
to
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How to handle L/C and Avoid Discrepancies
The seller should request clarification from the Advising Bank if there are any terms
within the LC that the seller does not understand. If the seller cannot comply with any
terms then it is important to advise the buyer and request an amendment to the LC.
5 Once the goods have been shipped the seller must ensure that all documents are
collated and not only match the terms and conditions of the LC but also are consistent
with one another. It is recommended that at least one other person undertakes a second
check as familiarity with the documents may well lead to a small discrepancy being
overlooked.
6 If there are any obvious discrepancies (such as late shipment) then it would be best for
the seller to contact the buyer and request an amendment to the LC. It is not
recommended to ask the buyer to instruct the Opening Bank to accept a discrepancy as
there is no guarantee that it will do so.
7 Before sending the documents to the Advising Bank check to make sure that the
documents should not be presented to a third party bank (a Negotiating Bank)as any
error in dispatch of documents may lead to a delay in the mail.
8 If possible have the documents presented for negotiation via your own bank who
should
be able to undertake a check
against
the LC
before dispatch and may even be19
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Prepared
by Sudhir
Pasricha

How to Open a Letter of Credit
A letter of credit is a method of securing payment to a vendor. When a seller asks a
buyer to obtain a
letter of credit, it means the seller would like to ensure payment for a product he
sells to that customer.
Typically letters of credit are issued by a bank. The most common forms are standby
letters of credit for
domestic transactions and documentary letters of credit for international
transactions.
Steps to Open a Letter of Credit
1
Establish the terms of the sale with your vendor. You will need to determine the
following:
How much product will you buy each month?
How often will payment be due? With the answers to these questions, the amount
guaranteed
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How to Open a Letter of Credit
2
Contact your bank to draw up the letter of credit. Once the terms of the sale have
been established,
your banking officer will draw up the letter. In most cases, if you hold a line of
credit with the bank,
the amount of the letter of credit will be held against the line of credit. If no line
of credit exists,
the bank may hold the amount against a money market account.
Submit the letter of credit to the buyer for approval. Often your bank will perform
this step for you.
The seller may ask to revise some of the wording. If this happens, your bank will
need to approve
the changes. Once all three parties have agreed to a final document, you may
conduct business
with the seller.
Ensure a documentary letter Prepared

of credit
is released. If business has been concluded
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by Sudhir Pasricha
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Apply for license and make Customs/ Sales Tax documents for
imports.
Export Import License Procedures in India
How to get import export license in India ?
This License is needed while dealing with any item that is not freely importable. In
India, most goods are freely importable, but the Exim Policy of 2007 states certain
goods and categories of products that are prohibited and some goods that can be
conditionally imported. A typical export import business license would have two
copies.
Introduction
While the majority of the goods are freely importable, the Exim Policy (2007) of
India prohibits import of certain categories of products as well as conditional import
of certain items. In such a situation it becomes important for the importer to have
an import license issued by the issuing authorities of the Government of India.
Import License Issuing Authority
In India, Import License is issued by the Director General of Foreign Trade. DGFT
Delhi office is situated in Udyog Bhawan, New Delhi 110011.
Validity of Import License
Import Licenses are valid for 24 months for capital goods and 18 months for raw
materials components, consumable and spares, with the license term renewable.
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General import license/permit requirements
imports.
Most imports into India do not require a license. Provided they fall within the scope of
theOpen General Licensethey may be imported freely without restrictions.
The imports not covered by theOpen General Licenseare regulated. There are three
categories of such imports:Banned, Restricted and Canalized.
Banned/Prohibited Productsmay not be imported at all. They include:
Wild animals, tallow fat and oils of animal origin, animal rennet, and
unprocessed ivory.
Restricted Productsare generally goods for which demand can be adequately

satisfied, in normal circumstances, by local production in India. These are permitted to
be imported against a license only.
Canalized Productsare generally commodity imports which must be channeled
("canalized") through public enterprises. Many canalized products are decontrolled
except
for:
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General import license/permit requirements
imports.
The following products require aSpecial Import License (SIL):

Betel nut (areca nut) whole or split ground
Raw silk
Launches, boats, barges, trawlers and other fishing vessels
Inflatable yachts and ships, boats and floating structures
A special import authorization is required for:
Works of art
Photographs (in rolls, or printed)
Account and manuscript books, labels, advertising materials (not including trade
catalogs or circulars)
Almanacs (in sheets or cards) Waste paper and old newspaper used for packing.
Importers must be licensed toImport Leaf Tobaccowhich requires two sanitary
certificates.
Importers must obtain a number from the Ministry of Commerce and Industry,Director
General
of Foreign Tradein order Prepared
to import
goods.
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by Sudhir
Pasricha
24

imports.
Import customs tarif
India uses theHarmonized Tariff Systemfor classification. The Indian tariff contains
many exceptions, exemptions, and drawbacks. Imports are subject to duty consisting of
many parts. For most imports:
Duty payable = = BCD + ACD + Special CVD + Education Cess + Customs
Handling Fee.
Additional taxes and surcharges which may apply:
Customs surcharge: 10% of the basic customs duty rate
Education surcharge: 3% of the aggregate value of all duties and taxes.
State tax/Value added tax: Imports are subject to taxes levied by the individual state
governments with each state having its individual, applicable sales tax and rate
ranging from 2 to 20%. Many states have agreed to replace that tax with a uniform,
12.5% state-levelvalue added tax. This system has not yet been implemented by all
states.
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25

imports.
Customs valuation basis
Certain products are subject tospecific duty rates.
For items subject toad valoremduties, the WTO Customs Valuation Agreement
applies. According to this agreement, there are six acceptable methods of
determiningcustoms value. Typically the first method is used (unless the buyer and
seller arerelated parties). When the value cannot be obtained this way, or is rejected
by customs, one of the other methods is to be used, in descending order:
Transaction value (the price actually paid or payable by theimporter, plus certain costs
and expenses)
Transaction value of identical goods
Transaction value of similar goods
Deductive value (the sale or resale value, reduced by certain costs such as customs
duties, taxes, and commissions)
Computed value (calculated by adding together certain costs/values for production,
materials, profit and other expenses) Fall-back method.
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imports.
General
Provisions
about
Customs
Procedures
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27

imports.
Useful & important Links

http://interport-india.com/import.htm
http://www.dateyvs.com/tax/customs-law-primer/procedures-for-imports-and-exports/
http://www.dateyvs.com/useful-sites/corporate-laws/
http://www.dateyvs.com/useful-sites/taxation/
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28
END OF MODULE III - Export Import Documents

THANK YOU !!
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INTERNATIONAL BUSINESS MBA TRIM 3

Course Code : MBA 365

Course Title : International Trade Procedures & Documentation

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

owledge of governments, departments, international institutions involved ;

w an Export Manager to develop a systematic methodology to handle exports ;

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

An invoice is very important as it contains the names of the exporter,

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

MODULE III - Export Import Documents

MODULE III - Export Import Documents

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

If animal fats arePrepared

INTERNATIONAL BUSINESS MBA TRIM 3

spelled out in letter-of-credit

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Prepared by Sudhir Pasricha

agent and includes shipping instructions for air or ocean shipment.

INTERNATIONAL BUSINESS MBA TRIM 3

TEMPORARY SHIPMENT DOCUMENTS

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

MODULE III - Export Import Documents

Prepared by Sudhir Pasricha

INTERNATIONAL BUSINESS MBA TRIM 3

Ensure a documentary letter Prepared

MODULE III - Export Import Documents

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

Restricted Productsare generally goods for which demand can be adequately

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

The following products require aSpecial Import License (SIL):

MODULE III - Export Import Documents

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

Transaction value of identical goods

Transaction value of similar goods

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

Prepared by Sudhir Pasricha

MODULE III - Export Import Documents

Useful & important Links