Protecting Global Business Interests
Answer to this question lies in the nature of the business relations between the exporter and the importer operating from two countries. One knows, unlike the domestic business, the commercial practices and legal systems are different in the two countries the exporter and importer are operating from. Therefore, in order to protect the respective interests of the exporter and the importer involved in export business, certain documentary formalities become essential. Such documentation facilitates the smooth flow of goods and payments thereof across national frontiers.
Classification of Export Documents
Export documents based on the functions performed by them are broadly classified into four types:
- Commercial Documents
- Regulatory Documents
- Export Assistance Documents
- Documents required by Importing Countries
Commercial Documents
- Commercial Invoice: This is the first basic and the only complete document in an export transaction. It is, in fact, a document of contents containing information about goods. Harmonized System Nomenclature (HSN), price charged, the terms of shipment and marks and numbers on the packages containing the merchandise. Besides commercial invoice, there is a proforma invoice also. The importer requires this document for obtaining an import license and opening a letter of credit in favor of the exporter.
- Bill of Lading: Bill of lading (B/L) is a document which is issued by the shipping company acknowledging that the goods mentioned therein are either being shipped or have been shipped. This is also an undertaking that the goods in like order and condition as received will be delivered to the consignee, provided that the freight specified therein has been duly paid.
- Airway Bill: In air carriage, the transport document is known as the airway bill. This document performs three functions of a forwarding note for the goods, receipt for the goods tendered, and authority to obtain delivery of goods. Since it is non-negotiable, so it does not carry the same validity as a bill of lading for sea transport carries.
- Bill of Exchange (B/E): Bill of exchange is an instrument or draft used for the payment in international / export business. It is an instrument in writing containing an unconditional order, signed by the marker, directing a certain person to pay a certain sum of money only to or to the order of a person or to the bearer of the instrument. The person to whom the bill of exchange is addressed is to pay either on demand or at a fixed or a determinable future.
- Letter of Credit: It is a written instrument issued by the buyer’s (importer’s) bank, authorising the seller (exporter) to draw in accordance with certain terms and stipulating in a legal form that all such bills (drafts) will be honoured. Letter of credit provides the exporter with more security than open accounts or bills of exchange.
Regulatory Documents
- Legal Documents for Export from India: There are two types of regulatory documents, one, documents needed for registration and two, documents needed for shipment.
- Shipping Bill: The shipping bill is the main document on the basis of which the custom’s permission for export is given. Post parcel consignment requires customs declaration form to be filled in.
- Marine Insurance Policy: It is the basic instrument in marine insurance. A marine policy is a contract and a legal document which serves as evidence of the agreement between the insurer and the assured. The policy must be produced to press a claim in a court of law. An exporter must also put up the marine insurance policy as a collateral security when he gets an advance against his bank Credit.
Export Assistance Documents
- Application Form for Registration: Exporters desirous of availing themselves of the benefits of the import policy are required to register themselves with the appropriate registering authority such as Export Promotion Councils (EPC), Commodity Boards and Chief Controller of Imports and Exports (CCIE), New Delhi. The application for registration should be accompanied by a certificate from the exporter’s bankers in regard to his financial soundness.
- Allotment of Indigenous Raw Materials on Priority Basis: Manufacturer- exporters may apply to the Director of Export Promotion, Ministry of Commerce, for replenishment of the indigenous materials used in the manufacture of goods for export.
- Duty Drawback: For claiming this incentive, the main document is the customs attested drawback copy of shipping bill. This is to be accompanied by other documents such as drawback payment order, final commercial invoice and a copy of bill of lading or airway bill, as the case may be.
- REP License and CCS: For claiming REP license and cash compensatory support (CCS), the exporter is required to prepare and file a number of documents. Key documents include: Application in the prescribed form , Acknowledgement slip , Bank challan for the application fee paid , Advance receipt for cash assistance amount , A duly certified copy of shipping bill , and Non-negotiable copy of bill of lading/airway bill.
Documents Required by Importing Countries
Importing countries need some documents because of the legal necessity. These are obtained by the exporter and sent to the importer.
- Consular Invoice: Issued by the consulate of the importing country; it gives a declaration about the true value of goods shipped.
- Certificate of Origin: Issued by independent bodies like the chamber of commerce to certify goods were produced in that country.
- GSP Certificate of Origin: Required for goods getting preferential import-duty treatment under the Generalized System of Preferences.
- Customs Invoices: Enable customs authorities of the importing country to levy and charge import duty.
- Certified Invoice: Self-certified by the exporter about the origin of the goods.
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