EX-IM - DOCUMENTATION

A
PRESENTATION

BY

DR. PAWAN K. CHUGAN

INSTITUTE OF MANAGEMENT
NIRMA UNIVERSITY, AHMEDABAD
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DOCUMENTS IN ANY TRADE - WHY ?

TO RECORD A WRITTEN EVIDENCE
HAVING CARRIED OUT A
TRANSACTION

INTERNATIONAL TRADE IS NO
EXCEPTION

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
IN FACT IT CALLS FOR EXECUTION
OF MORE DOCUMENTS THAN IN
LOCAL TRADE

NORMALLY, DOCUMENTS ARE
REQUIRED TO SATISFY TWO BASIC
REQUIREMENTS , NAMELY
 Regulatory Requirements and
 Operational Requirements 3
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Regulatory Requirements
Documents used or executed to satisfy the
statutory requirements of any trade and
other regulatory authorities are called
REGULATORY DOCUMENTS OR
OFFICIAL DOCUMENTS. For example
in International Trade the commercial
parties need to execute documents to
satisfy the requirements of Trade
Control Authorities, Exchange Control
Authorities, Banking Bodies, etc. 4
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Operational Requirements
Documents used or executed to satisfy the
normal commercial requirements of the
parties to the transactions are referred
to as operational or commercial
documents such as Proforma Invoice,
Commercial Invoice, Packing List, etc.

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CLASSIFICATION OF DOCUMENTS BY
USE
Documents used in International
Trade/Business transactions are broadly
classified into five categories, namely :
1. Financial Documents
2. Commercial Documents
3. Transport Documents
4. Risk Covering Documents
5. Official / Regulatory Documents 6
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 The above classifications are based on
functional aspects of the documents.
 Sometimes, a document may perform
more than one function. In such cases
it can be classified into more than one
category.
 For example : A commercial invoice may
contain a declaration regarding origin of
goods, which is attested by a competent
authority.
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 In such case it is an invoice-cum-certificate
of origin and fulfills the functions of
commercial as well as regulatory
requirements.
 Accordingly, it can be classified as
commercial document or as regulatory
document.
 Other examples are inspection certificate,
health certificate, etc.
 Hence, the functional classification of
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documents is not a water -tight classification.
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Financial Documents
As the name indicates financial documents
are the documents which perform the
function of obtaining finance, collection
of payment, etc. The most common
financial document used is a Bill of
Exchange.

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BILL OF EXCHANGE
• A bill of exchange (B/E) is also referred
as “Draft” or “Hundi”.
• In many of the countries, a B/E is
recognised as a legal document.
• In India, section 5 of the Negotiable
Instruments Act, 1881 defines the B/E.
• As per the definition given, it has three
basic parties namely:
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– DRAWER ( a person who draws an order,
draft or bill of exchange)
– DRAWEE(a person on whom an order, draft
or bill of exchange is drawn)
– PAYEE ( a person to whom a cheque, draft
or bill of exchange is payable) and
• B/E has the following five important
characteristics :
– It is an instrument in writing.
– It is an unconditional order signed by
maker (drawer). 11
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– It is a direction given to a specific
person (Drawee).
– It is a direction to make payment of a
specific or fixed amount.
– It is made payable to a certain person
or to his order or Bearer.
The act does not specify any particular
format for a B/E, but it must satisfy the
above characteristics.
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B/E can be classified into two categories
depending upon the time of payment ordered
thereunder :
1. Sight B/E : It is also known as Demand B/E.
Under such a B/E the drawee has to make
payment on presentation / sight / demand.
2. Usance B/E : They are also known as
“TENOR” or “TIME” B/E. The drawee is
directed to make payment after a stated
period from a particular date or event.
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In international trade Usance B/E are
normally drawn in two ways namely:
1- D/P BASIS - Document against Payment
Basis.
• Drawee is allowed to make payment after
a stated tenor but documents covered by
the draft will be delivered only on
payment of the draft amount.

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2- D/A BASIS- Document against Acceptance
Basis.
• Documents will be delivered to the drawee
against his acceptance of the draft for
payment at the maturity on the due date.

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Commercial Documents
The documents which are needed by the
buyer and seller for their normal
commercial (business) transactions are
termed as commercial documents. Some
of the common commercial documents
are :

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Proforma Invoice
• Is basically a form of quotation by the
seller to the potential buyer.
• Is a sort of invitation to the buyer from
the seller to place a firm order on him.
• Normally, it is similar to an ordinary
commercial invoice except for the fact
that the word “PROFORMA” appears
on it.
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• Normally, it shows the terms and prices

in addition to the description of goods so
that once the buyer has accepted the
order, there is a firm contract to be
performed as per terms and conditions
mentioned in it.
• The Proforma Invoice normally forms
the basis of all Trade transactions.

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• Is required by the buyer for his record

purpose since this forms the basis of the
trade transaction.
• Is also required by the authorities of the
buyer’s country for granting him import
license or foreign exchange.

Commercial Invoice
• Is the basic document in any trade.
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• It is also called the “document of contents”
because it generally contains all the
information required for the preparation
of all other documents.
• It is the seller’s bill of merchandise.
• There is no standard format for
commercial invoice but it normally
contains the following:
– Date
– Name and Address of the seller and buyer 20
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– Order number / Contract number /
Proforma invoice number or details of
Letter of Credit.
– Description, Quantity and (sometimes)
Quality of the goods.
– Terms of sale.
– Port of shipment and port of destination.
– Value of goods and any adjustments like
advance / discounts /etc. but the total value
must always be given.
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– Shipping marks or number of packages.
– Additionally it may also contain reference
number etc. of other documents.

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Packing List
• This document shows the nature and
number of goods etc. put in each packet /
container etc. with distinctive number of
marks.
• This is generally needed by the importer
when he is importing different types or
sizes of merchandise so that he may
identify the nature of goods in each
package. 23
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• This may also be used when an importer

is importing goods for ultimate direct
distribution to various suppliers.
• It is also used by customs for checking
the goods on random basis or otherwise.
• Thus, packing list is mainly to facilitate
easy identification of goods in each
package / container by the importer or
customs etc.
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Transport Documents
In the international trade the goods move
from the warehouse of the exporter to
warehouse of the importer. The
movement is made by land, water or air
or a combination of one or more of these
modes. Therefore, in international trade
such transport documents are many each
having its own significance. However,
most important aspect to be remembered
is that it must show the name / number of
carrier. Some of these documents are: 25
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Bill of Lading
• It is a transport document representing
movement of goods by water (ocean or
sea).
• It is a formal receipt given by the ship
owner or their authorised agents stating
that the goods mentioned therein
(quantity, quality, description, etc.) are
shipped to a specified date and vessel and
are deliverable to the person mentioned
therein or to his order after payment of
all dues of the shipping company. 26
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• There are three main functions of a Bill
of Lading:
1- It is an evidence of contract
affreightment.
2- It is a receipt of the goods.
3- It is a document of title to goods.
• Generally Bill of Lading are issued in a
set of 2 or 3. The exact number of
originals is indicated on each Bill of
Lading . 27
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• These are called Negotiable Bills of

Lading and presentation of any one of
them will entitle the holder to claim the
goods thereunder and render the other
negotiable copies void.
• Production of one copy of Negotiable Bill
of Lading is a must for claiming the
goods.

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AIRWAY BILL
• It is an acknowledgement issued by an
Airline Company or of their authorised
agent (and not forwarding agents) stating
that they have received the goods detailed
therein ( number of packages, quantity
and nature of goods ) for despatch by Air
to the named consignee at the address
stated therein.
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• Unlike a B/L, and AWB is not a
document of title to goods because it is
merely an acknowledgement of goods.
• Thus, when it is not a title to goods
naturally it is not a negotiable
documents.
• Since, an AWB is not a document of title
to goods it is not necessary for a
consignee to possess the AWB for taking
the delivery of goods.
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• Thus, for shippers the AWB is not a safe

document as a B/L.
• Further, in case of AWB it is obligatory
on the part of Airlines to notify the
consignee on arrival of goods and they
will normally deliver the goods to the
consignee or his order on proper
identification.

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OFFICIAL DOCUMENTS
Official documents are otherwise called as
Regulatory Documents, because most of
these documents are required for
compliance of regulations. Some of these
are:
Export Declaration Forms
G.R. FORM
P.P. FORM
SOFTEX FORM and SDF Form
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Export Declaration Forms
• As per Indian Exchange Control
regulations details of all goods ( except
certain exempted categories) by whatever
means exported from India are required
to be declared on certain specified forms.
• These forms are known as Export
Declaration Forms.
• These Forms are evolved by RBI to
ensure that the value of all the goods
exported from India is declared, and
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• The Foreign Exchange due there against
these goods is repatriated to India.
• In export trade, the goods leave under
the supervision of one agency ( Customs /
Post Office ) and proceeds thereof are
received through another agency ( Banks
etc.).
• These export declaration forms are so
designed that they can have an effective
check over the cycle of movement of
goods out of India and receipt of their
value in foreign exchange into India. 34
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• These forms also enable the RBI to
compile vital foreign trade data of the
country and also to exercise control over
the exporter/export activities.
• These export declaration forms have two
important aspects:
– Declaration of exporter as to the nature and
exact value of goods being exported.
– An undertaking of the exporter to realise the
full export value declared thereon and
repatriate the same into India. 35
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• All these forms bear distinct serial number
with a two-alphabet prefix followed by a six
digit numeral.
• Each form has a specific validity date by which
the same can be used for shipment.
• Following are such forms which are printed by
RBI for supplying to the Authorized Dealers to
be used by their clients.
– G.R. FORM – This form is in duplicate
to be used when exports are made to
all countries otherwise than by post.
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– P.P. FORM – Also in duplicate and should
be used when exports are made to a country
by parcel post except when on “Value
Payable” or “Cash on Delivery” basis.
– SOFTEX FORM – To be used when
computer software is being exported in Non-
Physical form. This form has to be submitted
in triplicate.
– SDF- Statutory Declaration Form – It is
required, where shipping bill related
documentation is processed electronically. It
replaces GR form.
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Certificate of Origin
• It indicates the country of origin where the
goods were originally manufactured /
produced.
• It is issued by an independent agency like
Chamber of Commerce, Export Promotion
Council, Trade Association or any other
body, which is authorised for this purpose.

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• This document may form part of the

invoice itself or may be a separate
document.
• In many countries, permission to import
is refused unless a certificate of origin is
produced.
• It is also used to determine the
concessional tariff rates applicable to the
goods.
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Shipping Order

THIS document is issued by the shipping

(Conference) Line intimating the shipper
(exporter) about the reservation of space
for shipment of cargo through a
particular vessel from specified port on a
specified date.

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• The exporter must obtain the shipping

order as its possession helps in getting
priority in movement of export cargo by
rail.

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Shipping Advice or Shipment Advice
It is used to inform the overseas customer
about the shipment of goods. It contains
information regarding the invoice
number, B/L or AWB number and date,
name of port and vessel with date of
shipment, description of goods and
quantity. On obtaining the B/L exporter
should send a Shipping Advice along with
other documents to his overseas buyer
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Some other documents
Mate Receipt
• As soon as the goods are loaded on board the
vessel, the Captain or Master of the Ship
furnishes a document called the “Mate
Receipt” to the Port Superintendent in charge
of the shed.
• It is a document certifying loading of the cargo
on board the vessel and contains other details,
such as a brief description of the cargo, the
number of packages, shipping marks, the name
of the vessel, and the date of issue. 43
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• It also contains a comment by the Master
of the vessel on the condition of the cargo
at the time of its receipt on board the
vessel.
• Usually, damages to packing or improper
packing finds a place in the Mate
Receipt, which is ultimately reflected in
the bill of lading.
• Such marks on the B/L may not be
acceptable to the buyer.
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• Every exporter therefore, tries to obtain a
clean Mate Receipt.
Shipping Bill (Bill of Export)
• The Shipping Bill is the main document on
the basis of which the Custom’s permission
for export is given.
• It contains particular of the goods
exported, quantity, prices, packages, name
of the vessel, agent, the port at which the
goods are to be discharged, country of
final destination, the exporter’s name and
address etc. 45
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• It is only after the Shipping Bill is stamped by the
Customs that cargo is allowed to be carted to Port
Sheds and Docks.
• Whereas SB is used for export by sea or air or even
shipment of goods by sea from one coastal port to
another in the country, Bill of Export is used for
export by land.
Normally following three types of shipping bills are
available with customs authorities:
• Dutiable shipping bill
• Free shipping bill
• Drawback shipping bill 46
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• Dutiable shipping bill –it is for those
goods for which there is export duty, but
may or may not be entitled for duty
drawback.
• Free shipping bill – for which there is no
export duty. These Non - drawback
shipping bills, generally, are used when
the exporter imports an item from
abroad for re-export or when drawback
is not applicable.
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• Drawback shipping bill – when goods are
manufactured in India on which
drawback of duty is allowed, the shipping
bill used is called the drawback shipping
bill.

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Bill of Entry
Upon arrival of the goods, by air or by sea, the
importer, as per the section 46 of the Customs
Act. 1962 has to file a form known as Bill of
Entry to clear the goods from customs. Here
importer has the following options:
Bill of Entry for Home Consumption - This bill is
of white colour and used when an importer
desire to clear the goods immediately upon
their arrival and pays full amount of duty as
these goods are for the consumption in India.
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Bill of Entry for warehouses – This bill is of
yellow colour. It is to be filed when immediate
delivery of goods is not needed.
This type of bill of entry allows importer to keep
the goods in store i.e. in warehouse without
payment of duty under a bond. The goods can
be cleared at later date, when needed against
the payment of duty.
Thus, in this case importer is allowed to defer the
payment of duty until the goods are actually
required by him. This type of document is also
known as “Bond Bill of Entry” as a bond is
executed by the importer for the transfer of
goods to a warehouse without payment of duty.
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Bill of Entry for ex-bond clearance- This is
of green colour. It is used to clear earlier
stored goods from the warehouse against
the actual payment of duty.
As these goods are already been classified
in the yellow bill of entry, no further
classification and valuation is done in this
bill, the rate of duty payable, however, is
the rate of duty applicable on the date of
removal of goods from the warehouse.
Hence, the rate of duty in this bill may be
different from the yellow bill of entry. 51
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Bill of Entry is filed in quadruplicate. The original and
duplicate are meant for customs, third copy is for the
importer and four copy is for the bank for making
remittances. Bill of entry must be filed on the
prescribed form by the importer or his authorized
agent giving the prescribed details such as:
• Name and address of importer
• Importer Exporter Code (IEC)
• Name address and Licence number of CHA
• Vessel Name and related details
• Port of shipment
• Country of Origin
• Bill of Lading Number
• Description and Number of Packages
• Quantity and Description of goods
• Customs Tariff Heading
• Details of Exemption from Customs duty claimed
• Invoice Number
• Value
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