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- 1. Presentation on “Export ProcedureDocumentation” Established under the Gujarat Private Universities Amendment Act 2011 and recognized under section 22 and 2(f) of UGC Subject: International Trade Procedures and Documentation Subject Code: BBA404T Assigned by: Dr. Murari Behera Assistant Professor Department of Business and Management
- 2. About Me! Name: PranshuRaval IAR No. : IAR/12854
- 3. Table of contents 05Post-Shipment Stage 04 Shipment Stage 03 Pre-Shipment Stage 02 Registration Stage 01 Introduction
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- 5. Exporting 101: AComplex but Rewarding Journey Exporting involves navigating intricate commercial and regulatory formalities across borders. Exporters must be well-versed in these procedures, ensuring compliance with both their own and the importing country's regulations. Careful preparation of documentation across four key stages – registration, pre-shipment, shipment, and post-shipment – is crucial for a smooth and successful export journey. Introduction about Export Trade Procedure
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- 7. Steps involved inthe Registration Stage • Registration of Organisation • Opening Bank Account • Obtaining Importer-Exporter Code Number (IEC No.) • Obtaining Permanent Account Number (PAN Number) • Obtaining Sales Tax Number • Registration with Export Promotion Council (EPC) • Registration with ECGC • Registration with other Authorities The following steps are involved:
- 8. Registration of theOrganisation The form of organisation selected by the exporter must be registered under the appropriate Act of the country. A joint stock company under the Companies Act, 1956 A partnership firm under the Indian Partnership Act, 1932 A sole trader should seek permission from the local authorities
- 9. Opening a BankAccount The exporter should open a current account in the name of the firm or company with a commercial bank which is authorised by the Reserve Bank of India (RBI) to deal in foreign exchange.
- 10. Obtaining Importer-Exporter CodeNumber (IEC No.) Prior to 01st January 1997, it was obligatory for every exporter to obtain CNX number has been replaced by IEC number issued by the Director General for Foreign Trade (DGFT). The application form for obtaining IEC number should be accompanied by fee of Rs. 1000.
- 11. Obtaining Permanent AccountNumber (PAN Number) Export income is subject to a number of exemptions and deductions under different sections of the Income Tax Act. For claiming such exemptions and deductions, the exporter should register his organisation with the Income Tax Authorities and obtain the PAN.
- 12. Obtaining Sales TaxNumber Exportable goods are exempted from sales tax, provided the exporter or his firm is registered with the Sales Tax Authorities. For this purpose, the exporter is required to make an application in the prescribed form to the Sales Tax Office in whose jurisdiction his office is situated.
- 13. Registration with ExportPromotion Council (EPC) It is obligatory for every exporter to register with the appropriate Export Promotion Council (EPC) and obtain the 'Registration cum-Membership Certificate' (RCMC). The benefits provided in the current EXIM Policy are extended only to the registered exporters having valid RCMC.
- 14. Registration with ECGC Theexporter should also register with the Export Credit and Guarantee Corporation of India (ECGC) in order to secure overseas payments against political and commercial risks. It also helps the exporters in obtaining the financial assistance from commercial banks and other financial institutions.
- 15. Registration with otherAuthorities The exporter should also register with various other authorities such as: Federation of Indian Export Organisation (FIEO) Indian Trade Promotion Organisation (ITPO) Chambers of Commerce (COC) Productivity Councils
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- 17. Steps involved inthe Pre-Shipment Stage • Approaching Foreign Buyers • Inquiry and Offer • Confirmation of Order • Opening Letter of Credit • Arrangement of Pre-Shipment Finance • Production or Procurement of Goods • Packing and Marking • Pre-Shipment Inspection • Central Excise Clearance • Obtaining Insurance Cover • Appointment of C&F Agent The following steps are involved:
- 18. Approaching Foreign Buyers Inorder to secure an export order, a new exporter can make use of one or more of the techniques, such as, advertising in international media, sales promotion, public relation, personal selling, publicity and participation in trade fairs and exhibitions.
- 19. Inquiry and Offer Aninquiry is a request from a prospective importer about description of goods, their standard or grade, size, weight or quantity, terms of payments, etc. On getting an inquiry, the exporter must process it immediately by making an offer in the form of a proforma invoice.
- 20. Confirmation of Order Oncethe negotiations are completed and the terms and conditions are finalised, the exporter sends three copies of proforma invoice to the importer for the confirmation of order. The importer signs these copies and sends back two copies to the exporter.
- 21. Opening Letter ofCredit The documentary credit or letter of credit is the most appropriate and secured method of payment adopted to settle international transactions. On finalisation of the export contract, the importer opens a letter of credit in favour of the exporter, if agreed upon in the contract.
- 22. Arrangement of Pre-ShipmentFinance On securing the letter of credit, the exporter procures a pre-shipment finance from his bank for procuring raw materials and other components, processing and packing of goods and transfer of goods to the port of shipment.
- 23. Production or Procurementof Goods On securing the pre-shipment finance from the bank, the exporter either arranges for the production of the required goods or procures them from the domestic market as per the specifications of the importer.
- 24. Packing and Marking Thenthe goods should be properly packed and marked with necessary details such as port of shipment and destination, country of origin, gross and net weight, etc. If required, assistance can betaken from the Indian Institute of Packing (IIP).
- 25. Pre-Shipment Inspection If thegoods to be exported are subject to compulsory quality control and pre-shipment inspection then the exporter should contact the Export Inspection Agency (EIA) for obtaining an inspection certificate.
- 26. Obtaining Insurance Cover Theexporter must take appropriate policies in order to insure risks: ECGE policy in order to cover credit risks Marine policy, if the price quotation agreed upon is CIF
- 27. Appointment of C&FAgent If the goods to be exported are subject to compulsory quality control and pre-shipment inspection then the exporter should contact the Export Inspection Agency (EIA) for obtaining an inspection certificate.
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- 29. Steps involved inthe Shipment Stage • Reservation of Shipping Space • Arrangement of Internal Transportation up to the Port of Shipment • Preparation and Processing of Shipping Documents • Custom Clearance • Obtaining ‘Carting order’ from the Port Authorities • Custom Examination and Issue of ‘Let Export Order’ • Obtaining ‘Let Ship Order’ from the Customs Preventive Officer • Obtaining Mate’s Receipt and Bill of Lading The following steps are involved:
- 30. Reservation of ShippingSpace Once the export contract is finalised, the exporter reserves the required space in the vessel for shipment. On accepting the exporter's request, the shipping company issues a Shipping Order. The original copy of the shipping order is given to the exporter and the duplicate is sent to the commanding officer of the ship. “The shipping order is an instruction by the shipping company to the commanding officer of the ship that the goods as per the details given should be received on board.”
- 31. Arrangement of InternalTransportation up to the Port of Shipment The exporter makes necessary arrangements for transportation of goods to the port either by road or railways. On loading goods into the railway wagon, the railway authorities issue a 'Railway Receipt', which may be either 'freight paid' or 'freight to pay'. It serves as a title to the goods. The exporter endorses the railway receipt in favour of his agent to enable him to take delivery of the goods at the port of shipment.
- 32. Preparation and Processingof Shipping Documents As the goods reaches the port of shipment, the exporter should issue detailed instructions to the C&F agent for the shipment of cargo along with a complete set of the documents listed below: • Letter of Credit along with the export contract or export order • Commercial Invoice (2 copies) • Packing List or Packing Note • Certificate of Origin • GR Form (original and duplicate) • ARE-I Form • Certificate of Inspection • Marine Insurance Policy.
- 33. Custom Clearance The cargomust be cleared from the Customs before it is loaded on the ship. For this, the above mentioned documents, along with with five copies of shipping bill, are to be submitted to the Customs Appraiser at the Customs House. The Customs Appraiser ensures that all the formalities relating to exchange control, quality control, pre-shipment inspection and licensing have been complied with by the exporter. After verification, all documents, except the original GR, original copy of Shipping Bill and one copy of Commercial Invoice, are returned to the C&F agent.
- 34. Obtaining ‘Carting Order’from the Port Trust Authorities The C&F agent, then, approaches the Superintendent of the concerned Port Trust for obtaining the 'Carting Order' for moving the cargo inside the dock. After obtaining the Carting Order, the cargo is physically moved into the port area and stored in the appropriate shed.
- 35. Custom Examination andIssue of ‘Let Export Order’ The Customs Examiner at the port of shipment physically examines the goods and seals the packages in his presence. The same can be arranged for at the factory or warehouse of the exporter by making an application to the Assistant Collector of Customs. The Customs Examiner, if satisfied, issues a formal permission for the loading of cargo on the ship in the form of a 'Let Export Order'.
- 36. Obtaining ‘Let ShipOrder’ from the Customs Preventive Officer 'Let Export Order' must be supplemented by a 'Let Ship Order' issued by the Customs Preventive Officer. The C&F agent submits the duplicate copy of Shipping Bill, duly endorsed by the Customs Examiner, to the Customs Preventive Officer who endorses it with the 'Let Ship Order'.
- 37. Obtaining Mate’s Receiptand Bill of Lading The goods are then loaded on board the ship for which the Mate or the Captain of the ship issues Mate's Receipt to the Port Superintendent. The Port Superintendent, on receipt of port dues, hands over the Mate's Receipt to the C&F Agent. The C&F Agent surrenders the Mate's Receipt to the Shipping Company for obtaining the Bill of Lading. The Shipping Company issues two to three negotiable and two to three non-negotiable copies of Bill of Lading.
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- 39. Steps involved inthe Post-Shipment Stage • Submission of Documents by the C&F Agent to the Exporter • Shipment Advice to Importer • Presentation of Documents to Bank for Negotiation • Despatch of Documents • Acceptance of Bills of Exchange • Letter of Indemnity • Realisation of Export Proceeds • Processing of GR Form • Realisation of Export Incentives The following steps are involved:
- 40. Submission of Documentsby the C&F Agent to the Exporter On the completion of the shipping procedure, the C&F agent submits the following documents to the exporter: • A copy of invoice duly attested by the Customs • Drawback copy of the shipping bill • Export promotion copy of the shipping bill • A full set of negotiable and non-negotiable copies of bill of lading • The original L/C, export order or contract • Duplicate copy of the ARE-I form
- 41. Shipment Advice toImporter After the shipment of goods, the exporter intimates the importer about the shipment of goods giving him details about the date of shipment, the name of the vessel, the destination, etc. He should also send one copy of non-negotiable bill of lading to the importer.
- 42. Presentation of Documentsto Bank for Negotiation Submission of relevant documents to the bank and the process of getting the payment from the bank is called "Negotiation of the Documents" and the documents are called 'Negotiable Set of Documents'. The set normally contains: • Bill of Exchange, Sight Draft • Full set of Bill of Lading or Airway Bill • Original Letter of Credit • Customs Invoice • Commercial Invoice including one copy duly certified by the Customs • Packing List • Foreign exchange declaration forms, GR/SOFTEX/PP forms in duplicate • Exchange control copy of the Shipping Bill • Certificate of Origin, GSP or APR Certificate, etc. • Marine Insurance Policy, in duplicate
- 43. Despatch of Documents Thebank negotiates these documents to the importer's bank in the manner as specified in the L/C. Before negotiating documents, the exporter's bank scrutinises them in order to ensure that all formalities have been complied with and all documents are in order. The bank then sends the Bank Certificate and attested copies of commercial invoice to the exporter.
- 44. Acceptance of Billsof Exchange Bill of Exchange accompanied by the above documents is known as the Documentary Bill of Exchange. It is of two types: • Documents against Payment (Sight Drafts): In case of sight draft, the drawer instructs the bank to hand over the relevant documents to the importer only against payment. • Documents against Acceptance (Usance Draft): In case of Usance draft, the drawer instructs the bank to hand over the relevant documents to the importer against his 'acceptance' of the bill of exchange.
- 45. Letter of Indemnity Theexporter can get immediate payment from his bank on the submission of documents by signing a letter of indemnity. By signing the letter of indemnity the exporter undertakes to indemnify the bank in the event of non- receipt of payment from the importer along with accrued interests.
- 46. Realisation of ExportProceeds On receiving the documentary bill of exchange, the importer releases payment in case of sight draft or accepts the usance draft undertaking to pay on maturity of the bill of exchange. The exporter's bank receives the payment through importer's bank and is credited to exporter's account.
- 47. Processing of GRForm On receiving the export proceeds, the exporter's bank intimates the same to the RBI by recording the fact on the duplicate copy of GR. The RBI verifies the details in duplicate copy of GR with the original copy of GR received from the Customs. If the details are found to be in order then the export transaction is treated to be completed.
- 48. Realisation of ExportIncentives If the exporter is eligible for export incentives, then he should submit claim for the same accompanied by the bank certificate to the appropriate authority.
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