EXPORT DOCUMENTATION

SUBMITTED TO: Mr. Vikas Kumar

SUBMITTED BY: Chetna 3rd Sem MFM

Export documentation
1.Introduction The export process is made more complex by the wide variety of documents that the exporter needs to complete to ensure that the order reaches its destination quickly, safely and without problems. These documents range include those required by the South African authorities (such as bills of entry, foreign exchange documents, export permits, etc.), those required by the importer (such as the Performa and commercial invoices, certificates of origin and health, and pre-shipment inspection documents), those required for payment (such as the South African Reserve Bank forms, the letter of credit and the bill of lading) and finally, those required for transportation (such as the bill of lading, the airway bill or the freight transit order). Documentation requirements for export shipments also vary widely according to the country of destination and the type of product being shipped. Most exporters rely on an international freight forwarder to handle the export documentation because of the multitude of documentary requirements involved in physically exporting goods and it is strongly recommended that you also make use of a freight forwarder to help you work your way through the maze of documentation. Click here for a list of freight forwarders that you can approach to help you. 2.The benefits of documentation Documentation is a key means of conveying information from one person or company to another, and also serves as permanent proof of tasks and actions undertaken throughout the export process. Documentation is not only required for your own business purposes and that of your business partner, but also to satisfy the customs authorities in both countries and to facilite the transportation of and payment for goods sold. One value of documentation is that copies can be made and shared with the parties involved in the export process (although you should always ensure that you make identical copies from an agreed-upon master - it is no use making changes without the other party's agreement and then presenting these as the "latest" copies). If the documentation is complete, accurate, agreed upon by the parties involved and signed by each of these of these parties (or their representatives), the document will represent a legally binding document. 3.Function of export documentation Export documentation may serve any or all of the following functions:

An attestation of facts, such as a certificate of origin Evidence of of the terms and conditions of a contract if carriage, such as in the case of an airwaybill Evidence of ownership or title to goods, such as in the case of a bill of lading

A promissory note; that is, a promise to pay A demand for payment, as with a bill of exchange A decalaration of liability, such as with a customs bill of entry A receipt for goods received.

4. Broad categories of export documentation There are five broad categories of documentation you will encounter when exporting. These are: 1. Documents involving the importer

The proforma invoice The export contract The commercial invoice The packing list Letter of credit Certificate of origin Certificates of health Fumigation certificate Pre-shipment inspection certificate Transport documents

2. Documents required to export goods from South Africa

Exporter registration form Letter of credit Commercial invoice Bill of entry export Form NEP (no foreign exchange proceeds) Form E (repatriation of foreign exchange earnings) Export permit

With effect from 01 January 2011 you no longer need to have your F178 attested. What remains is for you to complete field 28 of the SAD500 form, and list the UCR number.

3. Documents required for transportation

Bill of lading Air waybill Freight transit order Road consignment note Export cargo shipping instruction

4. Documents required for payment

Commercial invoice Letter of credit Transport documents

5. Insurance documents

Marine insurance

5. Documents required for transportation The export process is encumbered by the amount of documentation the exporter faces around every turn. These documents can be broken down into four groups; (1) those required by the importer (and for customs clearing in the target market), (2) those required to export the goods from South Africa, (3) those required for payment and (4) those required to transport the goods (i.e. the transport documents). In many instances, the documents may be the same (for example, the commercial invoice may be required in more than one instance as may the bill of lading/airway bill). In this section, we deal with the documents required to faciluate trasnportation. They include:

Bill of lading- in the case of sea freight Air waybill - in the case of air freight Freight transit order- in the case of rail freight Road consignment note - in the case of road freight Export cargo shipping instructionECSI

6. Documents required for payment The export process is encumbered by the amount of documentation the exporter faces around every turn. These documents can be broken down into four groups; (1) those required by the importer (and for customs clearing in the target market), (2) those required to export the goods from South Africa, (3) those required for payment and (4) those required to transport the goods (i.e. the transport documents). In many instances, the documents may be the same (for example, the commercial invoice may be required in more than one instance as may the bill of lading/airway bill). In this section, we deal with the documents required to faciliate payment. These documents include:

Commercial invoice Letter of credit Transport documents

7. Standardized and aligned pre-shipment export documents On an average, about 24 commercial and regulatory documents are associated with an export transaction in India. They include 15 important commercial documents and are discussed as under: a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. Performa Invoice Commercial Invoice Packing list Shipping instructions Certification of Inspection/Quality control Insurance declaration Certificate of insurance Shipping order Mate receipt B/L/ Combined Transport Document Application for certificate of origin Certificate of origin Bill of exchange Shipment advise Letter to the bank for collection/negotiation.

The commercial documents are those which, by custom or trade are required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds.

DOCUMENT CONNECTED WITH TRANSPORTATION OF GOODS.

1.

Air Way Bill (AWB) Air consignment Note.

The receipt issued by an airline or its agent for the carriage of goods is called airway bill or air consignment note. It is issued in terms and conditions of the contract of carriage of goods. It is not a document of title and it is not issued in a negotiable form. Generally AWB is issued in three copies, viz; for the carrier, for the consignee and for the consignor. 2. Postal Parcel Receipt (PPR).

Like the AWB, the PPR evidence merely the receipt of the goods to be exported to the buyer and is not a document of title

3.

Bill of Lading (B/L).

A Bill of Lading is the most important document in Foreign Trade. It is generally issued by a shipping company. It services as a receipt from the shipping company who undertakes to deliver the goods at agreed destination on payment of freight in a prearranged manner and also a document of title to the goods. B/L is generally made out in the sets of two or three originals. All the originals are duly signed by the master of ship or the agent of the steamship company and all the originals are equally valid for taking the delivery of goods and once one original copy is utilized the other originals become full and void.

B/L is nor a negotiable instrument in terms of Negotiable instrument Act, However, it is a practice to call the original copies as negotiable copies.

4.

Combined Transport Document (CTD)

With the introduction of multimode movement of goods in container on the basis of single contract from and to interior of the country, government has established Inland Container Depot (ICDs) at selected center. These dry depots have made it possible to

cover the entire movement of goods, from ICD to destination, under one transport document called CTD. Rules governing combined transport document are designed by International Chamber of Commerce (Brochure No.298) considering the international practices.

COMMERCIAL DOCUMENTS. 1. Performa Invoice

As the name denotes, it is an invoice in established Performa, payment of which is not intended. These invoices are used for obtaining financial assistance like Packing Credit from a banking institution, as Performa invoice together with an offer, acceptance on which will form a legal contract.

2.

Commercial Invoice

It is the most widely used invoice in commercial transactions. It is the statement of account of sale rendered by the seller to the buyer and is prepared on sellers letterhead or in the prescribed form on A-4 size paper. It contains the name of the buyer and his address, date, reference number, quantity, marks description of goods unit price, total value of goods, terms of payment/C & B/L no. Etc.

3.

Consular Invoice

A consular invoice is required by some countries like Canda, USA, etca consul for invoice is required to be prepared in a prescribed format and it should be signed/certified by the consul of the importing country located in the country of export. The main purpose of a consular invoice is to enable the importers country to collect accurate and authenticated information about the value, volume, quality, source etc; of the import for assessing import duties and for other statistics purposes.

4.

Customs Invoice

Countries like USA, Canada etc. need customs invoice. It is generally made out on a special form prescribed by the custom authorities of the importing country and helps

for allowing entry of goods in the importing country at preferential tariff rates. The invoice forms are generally available at the consular office of the importing country and are required to be signed and withenessed after duly filling the same.

5.

Legalized/ Visaed Invoice

These are the invoices sworn for their genuineness by the seller as being correct before the appropriate consulate/chamber of commerce/embassy as the case may be and they bear the stamp and authentication of the consulate/chapter of commerce/embassy as being in order. They collect a nominal charge from the seller for doing this.

INSURANCE DOCUMENTS

1.

Letter of insurance.

This is analogous to cover note issued by the broker. It is stated that particular subject are placed under insurance and certificate/policy of insurance will be issued later on.

2.

Brokers Certificate

This is also not acceptable as broker issues the same, as broker acts for the insured and cannot compel insurer to accept the proposal of insurance.

3.

Insurance Certificate.

The insurance on open cover or floating policy covering all shipment on certain terms and subjects to conditions laid down. Unless the insurance certificate gives details of the conditions of cover it is not so much value to third party who negotiate the shipping documents.

4.

Insurance Policy.

This is a basic legal document-evidencing contract of insurance between the insurer and insured. It gives full details of all the risks covered. Marine or transit insurance policies can be assigned by the insured merely by endorsement and delivery. Insurance policies are issued in different forms like floating policy, open policy or cover, specific policy etc A floating policy is a contract of insurance for covering a number of shipments, the details of which are not finalized when the contract of insurance is conclude. The relevant details like name of the vessel, destination, description of cargo etc. is therefore required to be declared subsequently and endorse in the policy. An open cover /policy is valid for a given period of time or permanently open. As per this policy the insurer undertakes to insure all the shipments for which the details are already intimated to the insurer. A specific policy covers specific shipments and such policy is readily available for submitting with the export documents.The coverage of risks is classified into categories like A, B, C etc. and the insurance policies are issued accordingly.

FINANCIAL DOCUMENTS 1. Draft

It is bill of exchange. According to section 5 of the Negotiable Instruments Act, 1881 a bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only on or to the order of a person to the bearer of the instrument. A bill of exchange contains an order from the Creditor to the debtor to pay a specific amount to a person mentioned therein. The make of the bill is called the drawer the person who is directed to pay is called the drawee. The person who is entitled to receive payment is called payee. In an export transaction it is advisable that an exporter draws a draft, which may either at sight/on demand or usance. Drafts are mainly make in two sets with all other concerned documents and mailed to the foreign correspondent through an authorized dealer for presentation to the drawee/importer, When any of the drafts is paid on presentation it is called an at sight/on demand draft and if accepted when it is a usance draft by the drawee, then the second draft becomes null and void.

2.

Clean Bill and Documentary Bill

When the drawer of a bill encloses with it a document of title to goods or any other equivalent document it is called a documentary bill. In an export transaction the exporter delivers to the banker, documents like full set of B/L, AWB, PPR etc together with documents like drafts, invoices, packing list etc for presentment to the drawee. Depending upon the tender of the bill i.e. D/P or D/A, the documents are delivered to the drawee against payment or acceptance. If no such documents are attached with the bill, then it is called as a clean bill.

3.

Stamp Duty

All drafts are drawn on the drawee. Unlike in most of the foreign countries, the Indian stamp Act does not required the sight drafts to be stamped. I.e no stamp duty is applicable to drafts drawn at sight/demand bills. Drafts drawn on usance basis require to be adequately stamped. Stamp duty is the same no matter whether the bills is drawn or negotiated in India.

4.

Acceptance of Bill

A bill of exchange payable on demand or at sight or on a fixed date does not need acceptance and hence presentment for acceptance is unnecessary unless such presentation is specifically desired. A draft payable after sight must be presented for acceptance since the maturity date of the bill can only be determined after such acceptance. When the drawee of a bill signified his consent to the drawers order in the bill of writing his name across the face of the bill with or without the word accepted the bill is said to be accepted. Acceptance of a bill, therefore, means that the drawee gives his consent to pay the amount mentioned therein on the due date/maturity date. The foreign correspondent bank usually advises the due date to the exporter through his banker in India .

5.

Noting/Protesting of Foreign Bills

At the time the bills are forwarded to the exporters bank, it is advisable to provide the bank with clear instructions/steps to be taken in case the bills are dishonored on presentation or maturity as the case may be. The drawer/holder for value may cause the dishonor to be noted by a Notary Public on the instrument or upon a paper attached thereto or partly upon each. The notary formally makes a demand of acceptance or payment upon the acceptor or drawee and on his refusal to do so notes the same on the bill. Thus Noting means the fact that the bill has been dishonored is recorded on it and puts the drawer/holder for value on a higher pedestal in the eyes of law. This is

done within a reasonable time after dishonor. Usually the notary makes the following observations: a) b) c) The date of dishonor. The reason, if any assigned for such dishonor. The Notary s charges.

The foreign bills must, thereafter Protested for dishonor, for it is to be placed as documentary evidence in the court of law. In other words the observations made thereon by the notary will be taken at face value. A protest is a certificate issued by the Notary Public attesting that the bill has been dishonored and will usually contain: a) The name of the person for whom and against whom the instrument has been protested. b) A statement that the Notary Public and the reason for dishonor demanded acceptance or payment from the acceptor or drawee. c) The place and time of dishonor of the bill d) The signature of the Notary Public.

THIRD PARTY DOCUMENTS 1. Certificate of Origin. Generally the importer to furnish to him a certificate stating that the goods are of his countrys origin will call upon an exporter. Independent bodies like, the Chamber of Commerce, Handicrafts Board, Export inspection Council etc, will give this certificate Who Issue them against payment or nominal fees after being satisfied of the origin of goods. There may be a preferential tariff in favour of goods from particular countries and therefore, it has to be ensured that the exporter who has brought them into his own country from some other place of origin has not reshipped the goods; which is not eligible for the preference.

2. Black List Certificate. This is to certify that the ship/aircraft carrying the goods has not touched a particular country on its journey or that the goods are not of a particular country. This certificate is usually called where countries have strained political relations with another.

3. Packing List. This document showing details of goods contained in each parcel/shipment. It shows item-by-item the contents of the containers or parcels shipped to enable the buyer/receiver of the shipment to check the shipment.

4. Manufacturers/Suppliers quality/Inspection Certificate. This is a certificate to the effect that the goods, which have manufactured/supplied, are as per the requirement of the contract of sale. been

5. Certificate of Inspection. Inspection certificate, indicating that goods have been inspected before some countries need under some contracts or shipment. This certificate is generally required to be issued by one of the authorized independent Inspection Agencies like Export Inspection Agency, Textile Committee, and Central Silk Board etc.

6. Certificate of Analysis. Certificate regarding the chemical analysis of the goods issued by a competent office. Certificate of shipping agent that a certain lot of goods have been shipped.

7. Health/Veterinary/Sanitary Certificate. When the goods imported are foodstuffs, marine products, livestock etc. a certificate from the health/veterinary/sanitary/authorities is called for. This is because the importer desires to know if the goods are fit for human consumption.

ESSENTIAL DOCUMENTS
The invoice and bill of lading are the two documents required for every export shipment. As such, you should ensure that all other documents associated with the shipment match the information on these documents.

1. Invoices Pro-forma Invoice: A pro-forma invoice is an invoice sent to the buyer before the shipment, giving the buyer a chance to review the sale terms (quantity of goods, value, specifications) and get an import license, if required in their country. It also allows the buyer to work with their bank to arrange any financial process for payment. For example, to open a Documentary Credit (Letter of Credit), the buyers bank will use the pro-forma invoice as a source of information. The exporter/seller should not send their customer a pro-forma invoice unless they fully understand what they are offering to the buyer. If no changes are required on the pro-forma invoice after the buyer reviews it, the exporter can simply change its date and title and turn it into a commercial invoice. Commercial Invoice: A commercial invoice is prepared by the seller/exporter and addressed to the buyer/importer, and is one of the first documents prepared when a transaction has been agreed upon. The invoice identifies the buyer and seller, describes the goods sold and all terms of sale, including IncoTerms, payment terms, relevant bank information, shipping details, etc. An invoice may be itemized to show cost of goods, freight, and insurance, or other special handling. The invoice may be numbered and have multiple purchase order numbers. U.S. Customs does not actually need a copy of the invoice, unless requested, but the information included is used to prepare other documents. Consular invoice: A consular invoice is the commercial invoice stamped or notarized by the consulate or embassy of your customers country, if required. For example, if you are exporting to Egypt and your buyer requires a consular invoice, the Egyptian embassy in Washington, D.C. will do this for a small fee. Usually a freight forwarder will offer this service, but an exporter can send the original invoice to the consulate, have it notarized/legalized as required, pay the fee, and have the documents returned or forwarded on. It is important to understand that consular invoices are required in the

buyers country, so you need to add the time/costs associated with obtaining one to the price of the goods you are shipping. The invoice should include a [non]-diversion statement, as provided below. As the U.S. Principal Party of Interest (or exporter of record), this statements attests to and informs your customers that you are using due diligence to control the shipment and abide by regulations, particularly shipments to embargoed/sanctioned countries.

2.

Material Handling

Packing List: A packing list is prepared by the shipper and is a detailed break down of the items within a shipment. It may also include any special marks for identification. For example, the customer may want ABC XX in blue letters on the side of the packaging. For insurance claims and tracking purposes, it helps to describe what is in each package. The packing list should also reference the customers purchase order number and destination. Often, a packing list is taped to palletized cargo or on the main carton/box of a shipment so that the importers customs agency or any transportation handlers can have easy access to it to know what the goods are and their destination. The quantity and items listed on the commercial invoice must match with the packing list, but not necessarily match the pro-forma invoice. Some companies prepare a packing list that is identical to the commercial invoice, minus the prices and other monetary details.

Dock (or Warehouse) Receipt: The dock or warehouse receipt is issued by a warehouse supervisor or port officer and certifies that the goods have been received by the shipping company. This document is used to transfer accountability when goods are moved by the domestic carrier to the port of embarkation and left with the international carrier. At this time, the carriers Bill of Lading is also signed by both parties and copies are issued accordingly.

3. Bills of Lading (B/L) A Bill of Lading is issued by the carrier to the shipper for receipt of the goods, and is a contract between the owner of the goods and the carrier to deliver the goods. Sometimes the B/L acts as title to the goods so an Original B/L is issued- usually a set of three.

Whoever presents one of those Original, Negotiable B/L can take possession of the goods. A B/L can be either negotiable or non-negotiable. Non-negotiable (or straight) B/L: Indicates that the shipper will deliver the goods to the buyer and that title of the goods has not been transferred to the shipper (i.e., the buyer or seller owns the goods while they are being shipped). This type of B/L is often used when payment for the goods has already been made in advance. Negotiable (or shippers order ) B/L: Serves as a title document to the goods, issued to the order of a party, usually the shipper, whose endorsement is required to effect its negotiation. It can also be issued to the order of the buyers bank as part of a documentary credit/letter of credit stipulation so that when the buyers bank receives the Original B/L, they can endorse it over to the buyer at the time of payment for the buyer to clear the goods at customs. Sometimes the negotiable B/L may be consigned To Order without reference to a company. A negotiable B/L can be bought or traded while the goods are in transit, whereas a Straight B/L is non-negotiable and is consigned to the buyer. The B/L is frequently electronically manifested by the shipping line company using the data sent by the shipper or its agent. Bills of Lading also include a notify party (usually the buyer or their agent) so that when the vessel arrives at the port of destination, the carrier can notify the party that the goods are available, are in need of customs clearing, or are ready for pick up. Usually the importer can pick up the goods after customs clearance and duties are paid. Freight Collect means the consignee pays the freight charges as well. Freight Prepaid means the shipper pays the freight charges, but not customs clearance unless the terms are delivered duty paid. If payment is due to the exporter before the importer receives the goods, advance charges can be added to the bill so the importer pays for the goods along with the other charges. Two checks should be received so the carrier can forward one check to the exporter for the cost of goods. Inland Bill of Lading: Issued by the trucking company and/or the railroad line for taking the goods from the exporters facility to the port of embarkation or consolidation facility. Ocean Bill of Lading (OBL): The Ocean B/L is an invoice, and may be issued as a clean bill of lading, meaning the carrier certifies that the goods have been received

without visible damage. An On-Board B/L may be issued when the goods are received into the carriers port facility, basically confirming the cargo will be sailing. Air Way Bill (AWB): The Air Way Bill is a form of bill of lading used for the air transport of goods. AWBs are non-negotiable, mainly because of the short amount of time that the goods are in transit. The original AWB is rarely needed by the importer at the other end of the shipment to prove ownership of goods. A house airway bill is issued by a freight forwarder on behalf of the actual carrier, which is the case when a freight forwarder has a contract rate with an air cargo service to expedite the documentation.

4. Export and License Declaration Electronic Export Information (EEI): EEI is the acronym for the new process of filing what was the Shippers Export Declaration (SED) form 7525V. Census uses the EEI to collect trade data on the products, quantities, dollar value, volume and destinations of U.S. exports. To properly complete an EEI, the exporter is responsible for classifying their product under the appropriate Schedule B Number, or HS Code. An EEI is filed online and the Internal Transaction Number (Sample: ITN X20091110000001) is applied to key shipping documents, i.e., Invoice, B/L, verifying the actual filing. An EEI is required for U.S. exports valued $2,500 or more per individual Schedule B Number. If the value is under $2,500, the exporter must note that using the following statement: No EEI required, shipment valued under $2,500 per individual Schedule B Number. Also, this process is used to manage U.S. export regulations for any commodity requiring an export license and, regardless of value, the license number must be in the EEI. Filing an EEI is not required for shipments to Canada (unless an export license is involved), nor if shipping between U.S. territories, such as the Virgin Islands. However, it is required for shipments to Puerto Rico.

5. Certificates Certificate of Origin (C/O): A document prepared by the original manufacturer and certified by a quasi-official authority - such as a Chamber of Commerce - stating the items country of origin. Most countries that require a C/O will accept a generic C/O as

long as all of the required data elements are given. However, some countries, like Israel, have a special green C/O form that must be used. To take advantage of duty free provisions in a U.S. Free Trade Agreement, be sure to use the particular C/O that addresses the rules of origin criteria for each country. Certificate of Insurance: This document indicates the type and amount of insurance in force on a particular shipment for loss or damage while in transit. It is sometimes referred to as Marine insurance, but may cover the entire voyage. Certificate of Inspection: Some customers will require a pre-shipment inspection to satisfy their own requirements or local regulations, according to an industry, government, or carrier specification. Neutral organizations specialize in these types of certifications, whereby an inspector checks the goods in question prior to shipment. Sometimes an inspector can look at a sample, but other times inspection must occur when the goods are packaged to issue a certificate. Certificate of Free Sale: This form may be required by the importing country to ensure that the goods offered for entry comply with domestic requirements for sale in the U.S. It is often required for agricultural, medicinal, or cosmetic products and can be issued by the VEDP or U.S. FDA. Certificate of Authentication (Apostille): An original document that has been notarized may require authentication by the Secretary of the Commonwealth. An Apostille certificate will be issued according to the country (language) of destination, confirming the status of the notary who has witnessed the original document. Phytosanitary Certificate: Primarily a document required to import goods into the U.S., confirming compliance with phytosanitary safety regarding agricultural and animal health standards. 6. Special Documents Declaration of Dangerous Goods (DGD): A DGD declares the nature, quantity, and quantity of hazardous materials and reports the proper classification for each item. ATA Carnet: A Carnet, sometimes referred to as a merchandise passport, is used for shipping goods to countries on a temporary, duty-free basis only. For a fee, this passport allows a company to ship needed materials to foreign trade shows or conduct repairs

overseas. Within a year, the materials must return to the U.S. in order to avoid a hefty fine. Documentary Letters of Credit (L/C): A letter of credit is a document issued by a bank committing to pay the seller/exporter a stated amount of money on behalf of the buyer/importer as long as the specific terms and conditions are met. Of all shipping documents, errors or making changes to the L/C are the most costly and time consuming because of the risk of payment in error. Knowledge of the proper forms required, along with uniformity and document control, will help exporters prevent errors in shipping documentation, save processing time, create good file management, improve customer service, and of course, avoid costly fines.

REFERENCES
1. http://www.superindian.net/NewsArticleDetail177.htm 2. http://www.indianindustry.com/trade-information/documentsrequired.html 3. http://www.exporthelp.co.za/modules/17_documentation/intro.html