Export Documentation categorization and commercial documents explained

1. D R . B H U P I N D E R P S C H A H A L
A S S O C I A T E P R O F E S S O R ,
C H A N D I G A R H U N I V E R S I T Y ( P B . )
Export-Import
Documentation in India

2. I. Preliminary stage
 Organizing
 Registering with various authorities
 Appointing agents
 Approaching foreign buyers
II. Pre shipment stage
 Confirmation of order
 Obtaining letter of credit
 Obtaining pre shipment finance
 Production & procurement of goods
 Packing & marking
 Pre shipment inspection
 Central excise clearance
 ECGC cover
 Marine insurance policy
 Appointment of clearing & forwarding
agent
 Instruction to C & F Agent
III. Shipment stage
 Processing of shipping documents in
the custom house
 Physical examination of goods at the
port
 Loading of goods
IV. Post – shipment stage
 Dispatch of documents by C & F
agent to the exporter
 Shipment advice to the importer
 Presentation of documents to the
banks
 Realization of Export proceeds
 Realization of Export incentives
 Follow – up of Export Sales

3. Role of Export Documentation
 Export documentation plays a vital role in international
marketing as it facilitates the smooth flow of goods and
payments thereof across national frontiers.
 Exporters are required to follow certain formalities and
procedures, using a number of documents.
 Each of these documents serves a specific purpose and
hence carries its own significance.
 A clear understanding of all documents and their purpose,
how to prepare these, number of copies required, when and
where to file, is a must for all export professionals.

4. Export Documentation in India
 Export Documentation in India has evolved a great
deal of interest since 1990.
 Prior to 1990, documentation was manual and it
lacked proper co-ordination.
 The result was lot of delays and mistakes, rendering
the task very clumsy, tiresome, repetitive, and truly
frustrating.
 India adopted the ADS (Aligned Documentation
System) in 1991 which is the Internationally
accepted documentation system

5. Export Documentation in India
 Export documentation is complex in nature as the number of
documents to be filled-in is very large, so also is the number
of the concerned authorities to whom the relevant
documents to be submitted.
 It is, therefore, advisable to take the help of shipping and
forwarding agents who will obtain and fill out the documents
correctly as well as arrange for transportation.

6. Parties: Interested in export
documentation in India
 Parties interested in the documentation of exports in India are:
1. Buyers and exporters,
2. Buying agents,
3. RBI,
4. Authorized dealers (where the exporter has his bank Account),
5. Buyer’s bank (foreign bank),
6. DGFT,
7. Customs and Port Authorities,
8. VAT and Excise Authorities,
9. EPC’s,
10. Insurance Companies,
11. Inspection Agencies,
12. Clearing and Forwarding Agents,
13. Shipping Companies/Airlines and Inland Carriers etc

7. Export Documentation in India
 Proper Documentation will ensure smooth sailing with
the requirements of the above agencies and the
resulting transaction will be a successful one.
 Inaccurate or incomplete documentation will result in
serious financial and goodwill losses.
 Such losses can be completely avoided by understanding
clearly the documentation requirements of all concerned
parties and then meticulously planning to get the right
documents in the right numbers, at the right places and
at the right time.

8. Classification of Export Documents
 Export Documents can be classified into following
four categories:
(1) Commercial Documents
(2) Regulatory Documents
(3) Export Assistance Documents
(4) Documents Required by Importing Countries
(1) Commercial Documents: These documents are
used by exporters/importers to discharge their
respective legal and other incidental responsibilities
under sales contract.

9. Classification of Export Documents
Commercial documents can be further sub-divided
into:
(i) Principal Commercial Documents
(ii) Auxiliary Commercial Documents
(i) Principal Commercial Documents: These
documents serves the following purposes:
(a) To effect physical transfer of goods and title of
the goods from exporter to the buyer.
(b) To realize export sales proceeds.

10. Classification of Export Documents
Principal Documents include:
 Commercial Invoice (and the invoice prescribed by
the importer)
 Packing list
 Certificate of Inspection
 Certificate of Insurance/Insurance Policy
 Bill of Lading/Airway bill/Combined Transport
Documents
 Certificate of Origin
 Bill of Exchange
 Shipment Advice

11. Classification of Export Documents
(ii) Auxiliary Commercial Documents: These
Documents are required to prepare /procure the
principal commercial documents and include:
 Proforma Invoice
 Shipping Instructions
 Insurance Declaration
 Intimation for Inspection
 Shipping Order
 Mates Receipt
 Application for Certificate of Origin
 Letter to bank for negotiation /collection of documents

12. Classification of Export Documents
(2) Regulatory Documents: These are prescribed by
various Government Departments/Bodies for compliance
of formalities under relevant laws governing export
transactions. These include:
(i) Exchange Control Declaration Form-GR Form
(ii) Freight Payment Certificate
(iii) Insurance Premium Payment Certificate
(iv) ARE I/ARE II Forms
(v) Shipping Bill/Bill of Export
(vi) Port Trust Copy of Shipping Bill/Export
Application/Dock Challan
(vii) Receipt of Payment of Port Charges
(viii) Vehicle Ticket.

13. Classification of Export Documents
(3) Export Assistance Documents: These are the
documents which are required for claiming
assistance under the various export assistance
measures as may be in operation from to time.
Currently, these refer to drawbacks of central excise
and customs duties, packing credit facilities etc
(4) Documentation required by Importing
Countries: These are the documents which are
required by the importer in order to satisfy the
requirements of his Government. These include
certificates of origin, consular invoice, quality
control certificate etc.

14. Commercial Documents
(1) Commercial Invoice:
 It is the basic and most important document in an export transaction and
extreme care has to be taken by the exporter to prepare this document.
 This document requires the exporter to submit details such as
1. His own details,
2. Invoice number with date,
3. details of the consignee and buyer (if the buyer is other than consignee),
4. buyer’s order number with date,
5. country of origin of the goods,
6. country of final destination,
7. terms of payment and delivery,
8. pre-carriage details (Road/Rail),
9. vessel/flight number,
10. port of loading,
11. port of discharge,
12. final destination,
13. container number,
14. number and kind of packaging,
15. detailed description of goods,
16. quantity,
17. rate and
18. total amount chargeable etc

15. Commercial Documents
 Therefore, a Commercial Invoice contains the
complete details of the export order.
 Normally, the trade practice is to raise and send a
Proforma Invoice to the buyer for his approval,
once the order has been finalized.
 On receipt of the approved Proforma Invoice, the
exporter can use it as a part of the export
contract.
 The Commercial Invoice then becomes easier to
prepare on the basis of the approved Proforma
Invoice.

16. Commercial Documents
(2) Packing List:
 This document provides the details of number of
packages; quantity packed in each of them; the
weight and measurement of each of the package
and the net and gross weight of the total
consignment.
 Net weight refers to the actual weight of the items
and the gross weight means the weight of the items
plus the weight of the packing material.
 The packing list serves a useful purpose of the
exporter while dispatching the consignment as a
cross check of goods sent.

17. Commercial Documents
 For the port personnel, it comes handy while planning
the loading and offloading of cargo.
 It is also an essential document for the customs
authorities as they as they can carry out the physical
examination of the cargo and conduct checks on the
weight and measurements of the goods smoothly
against the declarations made by the exporter in the
packing list.
(3) Certificate of Inspection: This is the Certificate
issued by the Export Inspection Agency after it has
conducted the pre-shipment inspection of goods for
export provided the goods fall under the notified
category of goods requiring compulsory shipment of
inspection.

18. Commercial Documents
(4) Certificate of Insurance/Insurance Policy:
 Insurance is an important area in the export business
as the stakes are usually very high.
 Protection needs to be taken in the form of insurance
cover for the duration of transit of goods from the
exporter to the importer.
(5) Bill of Lading:
 This is issued when the goods are shipped using ocean
(marine) transport.
 When the exporter finally hand over the goods to the
shipping company for loading on board the ship for
transport to their final destination, the shipping
company issues a set of Bills of Lading to the exporter.

19. Commercial Documents
(6) Airway Bill:
 Airway Bill is a bill of lading when the goods are
shipped using air transport.
 It is also known as air consignment note or airway
bill of lading.
(7) Combined Transport Document:
 This is also known as Multi-modal Transport
Document.
 Ever since containers have become popular, the
concept of Combined Transport Document has
gained solid ground.

20. Commercial Documents
(8) Certificate Of Origin:
 This document serves as a proof of the country of origin
of goods for the importer in his country.
 Imported countries usually require this to be produced at
the time customs clearance of import cargo.
 It also plays an important part in computing the liability
and the rate of import duty in the country of import.
 This certificate declares the details of goods to be
shipped and the country where these goods are grown,
manufactured or produced.
 Such goods needs to have substantial value addition so as
to become eligible to certification of this nature.

21. Commercial Documents
(9) Bill of Exchange:
 Also known as Draft, this is an instruments for payment
realization.
 It is a written unconditional order for payment from a
drawer to a drawee, directing the drawee to pay a
specified amount of money in a given currency to the
drawer or a named payee at a fixed or determinable
future date.
 The exporter is the drawer and he draws (prepares and
signs) this unconditional order in writing upon the
importer (drawee) asking him to pay a certain sum of
money either to himself or his nominee (endorsee).

22. Commercial Documents
 This order could be made for payment on demand, called
a bill of exchange at sight or payment at a future date,
called a usance bill of exchange.
(10) Shipping Advice:
 The exporter sends this document , called shipping
advice, to the buyer soon after the shipment is made to
provide him all the shipment details.
 This serves as an advance intimation of the shipment and
allows the importer to arrange for delivery of the same.

23. Suggested Readings
(1) International Marketing Management-an Indian perspective
by R.L Varshney and B.Bhattacharya, Sixth Edition, 2006
published by Sultan Chand and Sons, New Delhi.
(2) International Business Law and its Environment by Richard
Schaffer, Beverley and Filiberto Augsti, Sixth Edition, 2005
published by Thomson South-Western United States.
(3) Manual on Export Documentation published by Commercial
Law Publishers (India) Private Limited, NREW Delhi, 2006.
(4) International Business Law, Text, Cases and Readings,
Fourth Edition, 2004. Published by Prentice Hall, U.S.A

24. Suggested Readings
(5) International Marketing by Philips R.Cateora and
John L. Graham published by Tata McGraw Hill
(6) International Business by Charles W.L Hill and
Arun K.Jain published by Tata McGraw-Hill
Publishing Company Limited, New Delhi.
(7) Export and import Management by Aseem
Kumar published by Excel Books, 2007