17 – Export Documentation

Introduction

Import operations rely heavily on documentation. It is crucial from the moment an exporter receives an order from a buyer through the point at which the exporter seeks government export incentives. Documentation promotes the smooth flow of physical items and payments across national borders at every stage of the export process. There are a lot of documents that must be submitted. Documentation provides two essential functions:

(a) trade regulation, and

(b) export facilitation.

17.1 The Importance of Export Documentation

Export paperwork supports the flow of goods and money across national borders in international trade. The importance of documentation is based on its nature and purpose.

Numerous documents, which are generally employed, serve two purposes:

(i) satisfy the various regulatory provisions imposed by the government on products export/import, and

(ii) facilitate export promotion (operational requirements).

Export paperwork must be completed for various objectives, including export declarations in accordance with the country’s exchange control legislation, transportation of commodities, customs clearance of the goods, and others.

17.1.1 Statutory Authority

Section 18 of the Foreign Exchange Regulation Act of 1973, as amended by the Foreign Exchange Regulation Act of 1993, establishes the statutory controls on exports. The federal government issued two notifications on 1.1.1974 under the provisions of this Section relating to exports by post or other than by post.

Notification No. FI/67/EC/73-1, dated January 1, 1974, as amended, deals with non-postal export and prohibits the export of all goods, directly or indirectly, to any place outside India, other than Nepal and Bhutan, unless an exporter furnishes a declaration in the prescribed form and affirms in the said declaration that the total export value of the goods has been or will be paid in the specified period and manner.

The notification also states that the preceding limitation does not apply to the export of:

1. Trade samples are provided free of charge.
2. Travellers’ personal effects, whether accompanied or unaccompanied.
3. Goods are sent by air with a declaration from the sender that their value is less than ten thousand rupees and that the shipment does not entail any foreign exchange transaction.
4. An unlicensed dealer’s certifications state that their export excludes foreign exchange transactions covering goods shipped via airfreight.
5. Goods whose export, in the view of the Reserve Bank of India, does not entail any foreign exchange transaction and which the Reserve Bank has, by general or special order, authorised to be exported without the provision of a declaration as provided for herein.

17.1.2 Export Documentation Function

Export documentation may serve any or all of the following purposes:

• An attestation of facts, such as a certificate of origin;
• Evidence of the terms and conditions of a contract if carriage, such as an airway bill;
• Evidence of ownership or title to goods, such as a bill of lading;
• A promissory note, that is, a promise to pay; and
• A demand for payment, such as a bill of exchange.
• A declaration of liability, such as that seen on a customs bill of entry and
• a receipt for goods received.

17.2 Forms of Declaration

Four primary declaration forms must be used. These are the GR, PP, VP/COD, and Softex Forms. All exports subject to the declaration requirement must be declared on the forms outlined below:

• GR Form: Used for all non-postal exports to all countries. The Reserve Bank of India was responsible for creating this form. The form declares that the foreign exchange earned in lieu of items shipped would be deposited with the RBI. The exporter completes and submits this document. The form is created in duplicate; the original must be provided to customs authorities at the time of shipment, and they will return it to the RBI. Following the dispatch of the products, a duplicate copy of the form and additional documentation are provided to the negotiating bank. The bank also sends it to the RBI. If an exporter wishes to keep the proceeds in the importing country with an agent or branches abroad, the exporter must obtain approval from the Reserve Bank of India.
• PP Form: Used for parcel post exports to all countries except those where payment is made on a “Value Payable” or “Cash on Delivery” basis.
• VP/COD Form: Used for parcel post exports to all nations with an agreement to realise proceeds through postal channels on a “Value payable” or “Cash on Delivery” basis.
• Softex: Used for the non-physical export of computer software.

17.2.1 Export Documentation Form Disposal

GR forms covering the export of products other than jewellery must be completed in duplicate by the exporter, and both copies must be presented to customs at the port of shipment. After confirming the particulars and admitting the accompanying shipping bill, Customs will provide their running serial number on both copies of the GR form. Also, customs will record the assessed value and confirm the exporter’s declared value. Duplicate copies will be returned to the exporter and customers for submission to the Reserve Bank of India, which will keep the original. At the time of actual shipping, a duplicate copy of the GR form will be provided to customs. After evaluating the goods and certification of the quantity passed for shipping, the duplicate copy will be returned to the exporter for submission to the authorised dealer. However, in the case of deep-sea fishing, an exception to the filing of GR forms with customs authorities has been made.

The PP forms must be provided to an authorised dealer for countersigning. Only if the post package is addressed to his branch or correspondent bank in the country of import can the authorised dealer countersign the form. The concerned overseas branch or correspondent should be ordered to deliver the post parcel in exchange for payment or acceptance of the appropriate bill, as applicable. After countersigning, the authorised dealer will return the original PP form to the exporter and keep the replica. The original PP form with the parcel should then be returned to the post office.

Computer software can be exported physically, i.e., on magnetic tape and paper media, or in non-physical form via direct data transmission via specific earth station/satellite links. The export of computer software in physical form is subject to the standard declaration on GR/PP form, and the laws that apply to such exports will also apply to such exports. However, exporting software in non-physical form carries several dangers, and special standards have been developed to deal with such exports.

17.3 Important Documents

The following subsections discuss some of the most important documents in international business:

17.3.1 Documents for Goods Transportation

The following documents are related to commodities transportation:

• Airway bill or air consignment note: An airway bill or air consignment note is a receipt that an airline carrier or its agent provides for the transportation of goods. It is not a title document and is not issued in negotiable form. After identifying oneself as the party in the airway bill as consignee/receiver and paying any charges, the products are delivered to the consignee mentioned in the AWB. As a result, it is preferable to consign the items in the name of a foreign correspondent bank, as this allows you to retain control over the products until payment is made/documents are accepted for payment. The airway bill comprises three originals and six to eleven duplicates. It is a non-negotiable piece of paper. The carrier sending the AWB keeps the original 1 (green) for accounting purposes. Original 2 (pink) travels with the shipment to its eventual destination. The shipper receives Original 3 (blue) as verification of receipt of goods for shipment. Another reason for processing the export documents is that they are needed for operational reasons. The primary role of the customs officials is to ensure that the exporter has complied with all of the requirements and the rules in place in the country.
• Bill of lading (B/L): If the cargo is to be exported by ship, the bill of lading, a statement by the shipping company that the goods to be exported have been shipped on board, is a critical document. A bill of lading is also an assurance that the items will be delivered to the consignee in the same condition they were received, provided that the freight has been paid in full. The following conditions should be included in the bill of lading:
  • The ship’s name
  • Loading location
  • Loading data
  • Loading port
  • Goods description and identification markers
  • Freight paid or to be paid
  • The consignee’s name and address
  • Destination post

A clean bill of lading does not contain any superimposed clauses or statements stating products, packaging, or any other part of the consignment are in faulty condition. A foul/clause bill of lading, on the other hand, is one on which the captain of the ship makes some foul remarks such as products damaged, leaking, packages broken, and so on.

• Mate reception: It is issued by the vessel’s captain after the cargo has been loaded and contains the shipper’s name, place of receipt and voyage number, port of loading, port of discharge, port of delivery, marks and numbers, container number, description of goods, gross weight, and other information by the standardised aligned document format. The receipt is transferrable and must be presented to the shipping company’s office to be converted into a bill of lading.
• Combined transport document: Inland Container Depots (ICD) have been established at various locations throughout the country. These dry ports have enabled the transport document known as the Combined Transport Document to cover the whole journey of goods from ICD to the destination.

17.3.2 Customs Clearance of Goods Document

The key document customs authorities require to approve a shipment is the shipping bill.

Shipping Charges: Shipping bills are classified into four sorts. The central difference between them is whether the items are subject to

(a) export duty/cess

(b) duty-free status

(c) eligibility to duty drawback

(d) entitlement to duty credit under the DEPB programme, and re-export of imported goods. The shipping bill exports products that do not attract duty/cess and are not eligible for duty drawback on their exportation. The term “dutiable shipping bill” refers to items subject to export duty/cess but may or may not be eligible for duty drawback. The drawback shipping bill, also known as the bill of exports, is the document that must be filed with the land customs authority to ship goods that are eligible for drawback. When exported under the DEPB scheme, a DEPB shipping bill is used. The Shipping Bill for shipment ex-bond is intended for use in the case of imported goods for re-exportation held in bond.

The following documents are necessary for the shipping bill to be processed:

• Duplicate GR forms for shipment to all countries.
• Four copies of the packing list, which includes the contents and gross and net weights of each packet.
• Four copies of invoices with all essential details such as the number of packages, quantity, unit rate, total fob/cif value, and a correct and complete description of the items.
• A contract, a letter of credit, and a purchase order are all required.
• Certificate of inspection/examination

The shipping bill formats given are as follows:

• White shipping bill for export of duty-free products prepared in triplicate in the standardised format.
• A green shipping bill in quadruplicate for the export of goods under duty drawback.
• Prepare a yellow shipping bill in triplicate for the shipment of dutiable commodities.
• A pink shipping bill in triplicate for the export of duty-free goods ex-bond.
• Seven copies of a blue shipping bill for exports under the DEPB system.

Customs authorities’ evaluation

The customs appraiser/examiner examines shipping documents and appraises the value based on the following criteria:

• That the value and quantity declared in the shipping bill match the value and amount stated in the export order/letter of credit.
• All formalities, such as exchange control, pre-shipment quality control inspection, and so on, have been completed. After reviewing the paperwork and determining the value, the customs examiner/appraiser signs an endorsement on the duplicate copy of the shipping bill, instructing the dock appraiser on the scope of physical examination of the cargo to be performed at the docks. Except for the GR form, the original shipping bill, and a duplicate commercial invoice, all documentation is returned to the forwarding agent to be presented to the dock appraiser.

17.3.3 Additional Documents

The other documents are as follows:

• Commercial invoice: This is the fundamental document in an export transaction. All other documents are created using the information included in the invoice. It provides information such as the description of the items, the price paid, the quantity of commodities, the various costs incurred, the terms of shipment, the number of packages contained in the merchandise, and the marks/codes. The invoice should also include the date, the buyers’ and sellers’ names and addresses, the shipping vessel’s name, and the destination’s port.
• Consular invoice: A Consular Invoice is a document required chiefly by Latin American countries, Kenya, Uganda, Tanzania, Mauritius, New Zealand, Myanmar, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, and Zanzibar. This invoice is the most crucial document for certification to the country’s embassy. The exporter must charge the relevant embassy for accreditation for this invoice. The consular invoice must be prepared in the approved format and signed/certified by the consular of the importing country in the country of export. The primary functions of the consular invoice are to allow the importer’s government to collect precise and authenticated information about the import’s value, volume, quality, and source, among other things, to calculate import tariffs and other statistical purposes. It enables the importer to clear the goods through customs without undue delay.
• Customs invoice: Countries like the United States and Canada demand customs invoices for customs valuation. In such circumstances, the exporter must submit the invoice in the appropriate format. According to the agreement, the commercial invoice may be of different types depending on the privet charged. (a) FOB invoice; (b) C&F invoice; (c) CIF invoice; (d) ex-ship pricing; and (e) Franco invoice.
• Legalised invoice: Legalised invoices are required in some countries, such as Mexico. Regarding the goal of exporting countries, it is not dissimilar to the consular invoice. The sole distinction is that there is no prescribed format for obtaining a legalised invoice.
• Certified invoice: At times, the exporter must attest on the invoice that the items are of a specific origin, were manufactured/packed in a specific location, and were in accordance with a specified contract. When such credentials appear on an invoice, it is referred to as a certified invoice.
• Bill of exchange: A foreign draught or bill of exchange is a draught bill drawn on a foreign corporation. Depending on the contract terms, it is prepared in either international money or Indian rupees. As a result, the bill is identified by the name of the currency in which it is drawn. For example, a bill issued in US dollars is known as a “Dollar Bill,” while a bill drawn in rupees is known as a “Rupee Bill.” There are two sorts of bills of exchange or draughts: (a) “Sight Draft” and (b) “Usance Draft or Usance Bill.” A sight draught is when the drawer, or exporter, expects the drawee, or importer, to make payment immediately after the draught is delivered to him. Where the exporter has agreed to give the foreign buyer, he writes a usance bill, a draught issued for payment later than the presentation date.
• Proforma invoice: When discussing the bills above, it is essential to remember the term “proforma invoice.” This is the temporary commercial invoice that an exporter prepares and sends to an importer. It provides practically all of the same information as a business invoice. The purpose of this invoice is to assist the importer in (1) obtaining an import licence in his own country if one is required and (2) opening a letter of credit in his own country in favour of the exporter. Even if a proforma invoice is not required, the exporter should develop the habit of sending one.
• Packing list: This is a list of items in each parcel/shipment. It displays the contents of the containers or parcels shipped item by item, allowing the buyer/receiver to inspect the shipment. The packing list must be prepared as an aligned document.
• Letter of credit: The most common type of export trade is the letter of credit, abbreviated as LC. It is a promise made by the overseas importer to the exporter via his banker to pay the proceeds and receive documents certifying the shipment of goods. The exporter should carefully review the LC’s terms and conditions to ensure that (i) he can meet them and (ii) they are consistent with the basic contract entered into with the importer.
• Boat insurance: It is the fundamental tool in maritime insurance. A marine insurance policy is a legally binding agreement between the policyholder and the insurance company. It is also a legal document that can be produced in a court of law if a claim is made. Unless otherwise instructed by the importer, the policy is generally implemented when the goods are ready for shipment. When the exporter needs an advance against his bank credit, he can use the policy as collateral security.
• Export licence: For controlled commodities, restricted and negative list words (DGFT), an export licence must be obtained from the Directorate General of Foreign Trade.
• Inspection certificate: To improve the image of Indian goods overseas, the Government of India has implemented pre-shipment and quality control inspections of the items. As a result, the exporter must get an inspection certificate from the DGFT.
• Certificate of origin: The Export Council of India and its various agencies have been authorised by the Government of India to issue the certificate of origin. The export promotion offices in Mumbai, Kolkata, Chennai, and Cochin, as well as the FIEO, Chambers of Commerce, and licencing office heads, have been authorised to issue the certificate of origin.
• Generalised System of Preferences (GSP): Some countries, mainly Commonwealth countries and advanced countries, which have granted concessions to poor countries under the generalised system of preferences, require exporters to present a certificate of origin. As a result, the exporter must submit the GR-I form, an export licence, an inspection certificate, a consular invoice, and a certificate of origin. All of these forms are referred to as regulatory documents.
• Certificate of chemical analysis: Importers may require exporters to send a certificate of chemical analysis from a recognised analyst to ensure that the quality and grade of items such as metallic ores, pigments, and so on are the same as specified in the sale contract.

17.3.4 Documents for Export Assistance

Several documents are required to claim the various assistance available under the various export assistance schemes that may be in effect at any given time. These schemes are currently the duty drawback scheme and packing credit facilities.

• Duty drawback scheme: An exporter is entitled to specific duties everyday in the country at no cost. Customs duty, octroi duty, sales tax, excise, and other taxes an exporter pays are refunded under the duty drawback plan. The government provides tariff drawbacks to certain commodities/products that are exported as an incentive. The duty drawback rates are stated individually on a percentage basis based on the items shipped. The commerce ministry announces changes to these rates regularly. After the items have been shipped, the duty drawback is claimed.
• Packing credit facilities: The government has provided exporters with packing credit facilities in pre-shipment and post-shipment credit. An exporter is entitled to credit from his commercial bank for the manufacture and packaging of his goods in the case of pre-shipment credit. This credit is granted to him at a reduced interest rate. In addition, he may claim duty drawback credit in the pre-shipment credit. An exporter is entitled to credit from his commercial bank after the goods have been shipped and documents have been negotiated with the bank under post-shipment credit. In the after-shipment credit, he receives the balance of the pre-shipment credit and the duty drawback if it has not previously been claimed.
• Foreign documents: The importer must provide certain documents to meet his government’s requirements. The exporter obtains these in his country and submits them to the importer for this purpose. These include, for example, a certificate of origin, a consular invoice, and a quality control certificate.
• Origin certification: As the name implies, these certificates are documentation that certifies the place of origin of the merchandise. Commonwealth and developed countries that have made GSP concessions to developing countries require this certificate, which can be received by authorised agencies. The Indian government has authorised the Federation of Indian Chambers of Commerce and Industry (FICCI), the Export Promotion Council (EPC), and numerous other trade groups to issue certificates of origin.

17.4 India’s Export Documentation Requirements

In India, export paperwork has grown significantly, notably after 1990. Efforts are being made to streamline and upgrade the system even more quickly. Before 1990, all documentation was manual and uncoordinated. As a result, numerous delays and errors made the process awkward, boring, repetitive, and extremely aggravating. In 1991, India adopted the ADS. The acronym ADS stands for Aligned Documentation System, the internationally recognised documentation system.

Export paperwork is essential in international marketing because it promotes the free flow of goods and payments across national borders. Paperwork accompanies every package, and these forms must be filled out completely and correctly. However, export documentation is complicated since the number of documents to be filled out is considerable, as is the number of involved authorities to whom the appropriate documents must be presented. Furthermore, the documents necessary vary by nation.

Incorrect papers may result in items not being delivered to the importer. You may receive the correct documents after some time but may have to pay storage fees. More importantly, the importer will think twice about importing from the same supplier in the future.

It is, therefore, advisable to seek the assistance of shipping and forwarding agents, who will obtain and correctly complete the necessary documentation and arrange for shipment. However, every exporter should be well-versed in export documents and procedures.

Export papers are categorised into four types based on the functions to be performed:

1. Commercial Papers: Examples include commercial invoices, bills of exchange, bills of lading, letters of credit, marine insurance policies, and certificates.
2. Regulatory Documents: These are the documents required to comply with the rules and regulations that govern export trade transactions, such as foreign exchange restrictions, customs formalities, export inspection, and so on.
3. Export Aid Documentation: These documents are required to claim assistance under the various export assistance programmes that may be in effect at any moment. These currently pertain to the disadvantages of Central Excise and Customs charges, packing credit facilities, etc.
4. Importing countries’ documentation requirements: This is the paperwork that the importer must have to meet his country’s requirements. Examples include certifications of origin, consular invoices, quality control certificates, etc.

Export documents can be divided into two types based on their precise requirements: (1) Regulatory and (2) Operational.

1. Regulatory Requirements: An exporter must closely adhere to the regulations of both the exporting and receiving countries. In India, for example, there is exchange control. As a result, when we export products, we must give the RBI an undertaking to realise the foreign exchange instead of the commodities exported. We do this by submitting the GR form, and we cannot export unless we do so. Then, some goods are subject to export controls. To export the regulated items, we must first obtain a licence. As a result, another document must be utilised. A system of mandatory pre-shipment inspection and quality control of various export items is in place to help develop an image of Indian goods overseas. The exporter must obtain an inspection certificate, resulting in another document. Several importing countries require the exporter to produce specific specified documents duly certified by their missions in the exporting country. This condition necessitates using a consular invoice and, in some cases, a validated invoice. Some countries, mainly Commonwealth countries and developed countries, have provided favours to developing countries under the Generalized System of Preferences that requires exporters to submit a certificate of origin. As a result, the exporter must submit the GR form, the export licence inspection certificate, the consular invoice, the legalised invoice, and the certificate of origin. This is an example of a regulatory document.

2. Operational Requirements: The customs authorities are in charge of ensuring that exporters follow all regulations in force in the country. They designed the Shipping bill for their own records. No shipping firm or airline will accept export cargo without customs officials’ permission on the shipment bill. Commercial invoices and packing lists must be submitted in addition to the shipping cost.