Documentation for Export

Procedure of Documentation

The following discussions are in the context of the documents required for exporting from India.

Special documents may be required depending on the type of product or destination.

Certain export products may require a quality control inspection certificate from the Export Inspection Agency. Some food and pharmaceutical product may require a health or sanitary certificate for export.

• Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. Usually the Shipping Bill is of four types and the major distinction lies with regard to the goods being subject to certain conditions which are mentioned below.
  • Export duty/ cess
  • Free of duty/ cess
  • Entitlement of duty drawback
  • Entitlement of credit of duty under DEPB Scheme
  • Re-export of imported goods

The following are the export documents required for the processing of the Shipping Bill.

• GR forms (in duplicate) for shipment to all the countries.
• 4 copies of the packing list mentioning the contents, quantity, gross and net weight of each package.
• 4 copies of invoices which contains all relevant particulars like number of packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of goods etc.
• Contract, L/ C, Purchase Order of the overseas buyer.
• AR4 (both original and duplicate) and invoice.
• Inspection/ Examination Certificate.

The formats presented for the Shipping Bill are as given below.

• White Shipping Bill in triplicate for export of duty free of goods.
• Green Shipping Bill in quadruplicate for the export of goods which are under claim for duty drawback.
• Yellow Shipping Bill in triplicate for the export of dutiable goods.
• Blue Shipping Bill in 7 copies for exports under the DEPB scheme.

For the goods which are cleared by Land Customs, Bill of Export (also of 4 types – white, green, yellow & pink) is required instead of Shipping Bill.

Documents Required for Post Parcel Customs Clearance

• In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below.
  • Customs Declaration Form: It is prescribed by the Universal Postal Union (UPU) and   international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender.
  • Dispatch Note, also known as CP2. It is filled by the sender to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted.
  • Prescriptions regarding the minimum and maximum sizes of the parcel with its maximum weight :
  • Minimum size: Total surface area not less than 140 mm X 90 mm.
  • Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of circumference 0.9 m. / 2.00 m.
  • Maximum weight: 10 kg usually, 20 kg for some destinations.

• Commercial invoice: Issued by the seller for the full realisable amount of goods as per trade term.
• Consular Invoice: Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Australia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export.
• Customs Invoice: Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate.
• Legalised/Visaed Invoice: This shows the seller’s genuineness before the appropriate consulate/ chamber of commerce/ embassy. It do not have any prescribed form.
• Certified Invoice: It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery.
• Packing List: It shows the details of goods contained in each parcel/ shipment.
• Certificate of Inspection – It shows that goods have been inspected before shipment.

• Black List Certificate: It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s).
• Weight Note: Required to confirm the packets or bales or other form are of a stipulated weight.
• Manufacturers/ Supplier’s Quality/ Inspection Certificate.
• Manufacturer’s Certificate: It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and are available.
• Certificate of Chemical Analysis: It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc.
• Certificate of Shipment: It signifies that a certain lot of goods have been shipped.
• Health/ Veterinary/ Sanitary Certification: Required for export of foodstuffs, marine products, hides, livestock etc.
• Certificate of Conditioning: It is issued by the competent office to certify compliance of humidity factor, dry weight, etc.
• Antiquity Measurement: Issued by Archaeological Survey of India in case of antiques.
• Transshipment Bill: It is used for goods imported into a customs port/ airport intended for transshipment.
• Shipping Order: Issued by the Shipping (Conference) Line which intimates the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date.
• Cart/ Lorry Ticket: It is prepared for admittance of the cargo through the port gate and includes the shipper’s name, cart/ lorry No., marks on packages, quantity, etc.
• Shut Out Advice: It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter.
• Short Shipment Form: It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.
• Shipping Advice: It is prepared in aligned document to be used to inform the overseas customer about the shipment of goods.

Types of Documents

In exports, it is quite common for cargos to require a variety of certificates before they are permitted to be imported into the country of destination. The purpose of a certificate is to provide pre-shipment confirmation of the status of a particular aspect (health, value, condition, origin, etc.) of a specific cargo.

Without these certificates, the cargo will not be permitted to be imported and so certificates play a very important role in the export process and one need to ensure that.

• required certificates have been obtained,
• That these certificates are correct and acceptable to the importing authorities (i.e. that you cargo complies with the requirements of the importing authority).

It is pointless in having a certificate, which confirms that the cargo does not comply with the import requirements; such cargo will simply not be permitted to be imported.

The types of certificates that one may be required to obtain, include.

• Consular Invoice: Required in some countries, a consular invoice describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. If required, copies are available from the destination country’s embassy or consulate in the S. The cost for this documentation can be significant and should be discussed with the buyer.
• Commercial Invoice: A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, and number of copies, language to be used, and other characteristics.
• Certificates of Value: A Certificate of Value is intended to confirm the value of a cargo to assist in quick clearing of the goods in the country of destination. Often the Certificate of value is combined with a Certificate of Origin and is referred to as a Certificate of Value and Origin (CVO). A CVO outlines details about the labour and packing costs, royalties or commissions (if applicable), freight charges and any overseas insurance costs. The CVO also provides an exporter’s declaration and statement, in the form of clauses, about the value and origin of the goods.
• Bill of Lading: A bill of lading is a contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading, which is non-negotiable, and a negotiable or shipper’s order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods.
• Export Packing List or Cargo Manifest: Considerably more detailed and informative than a standard domestic packing list, an export packing list lists seller, buyer, shipper, invoice number, date of shipment, mode of transport, carrier, and itemizes quantity, description, the type of package, such as a box, crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms), package marks, and dimensions, if appropriate. Both commercial stationers and freight forwarders carry packing list forms. A packing list may serve as conforming document. It is not a substitute for a commercial invoice. In addition, S. and foreign customs officials may use the export packing list to check the cargo.
• Health Certificate: For shipment of live animals and animal products (processed foodstuffs, poultry, meat, fish, seafood, dairy products, and eggs and egg products). Some countries require that health certificates be notarized or certified by a chamber and legalized by a consulate.
• Export Declaration Form: It is a Customs form completed and submitted by an exporter at the port of export, it is meant to serve two major purposes: (1) to provide information on amount, nature, and value of exports to the statistical office for compilation of foreign trade data, and (2) to serves as and export control document.

Cargo Insurance

The term cargo insurance, popularly known as marine insurance, applies to all modes of transportation. The need for export (or import) cargo insurance often differs from exporter to exporter (or importer to importer) and from consignment to consignment.

Cargo insurance provides coverage against physical damage or loss of goods during shipping, whether by land, sea or air. Because of the many dangers inherent in shipping, most individuals and businesses choose to insure their goods while they are in transit even when the insurance is not mandatory in trade term.

Depending on the international commercial terms, either the seller (the exporter) or the buyer (the importer) is responsible for insuring the cargo. The seller is obligated to insure the cargo in the CIF and CIP terms. The seller may opt not to insure the cargo at his/her own risks in the DDU and DDP terms.

The trade terms DDU and DDP are often used in the turnkey projects where the amount at stake is large. In practice, the seller usually insures the cargo in the DDU and DDP terms.

Important aspects of Insurance are as follows.

• Insurance Policy and Cover Note: The insurance policy or policy is a document of the proof of insurance coverage. The format of insurance policy forms varies from insurer to insurer, but all essentially has the Institute Clauses and the same information as contained in the Insurance Application-Instructions (IAI).

The policy has to be issued and signed by an insurance company or its agent. If more than one original is issued and is so indicated in the policy, all the originals must be presented to the bank, unless otherwise authorized in the letter of credit (L/C).

The sample letter of credit requires “insurance policy in duplicate …” as such the presentation of one original and one copy (both signed) will satisfy the requirement.

Unless authorized in the letter of credit (L/C), the cover note issued by broker, which is a temporary insurance coverage pending the later issuance of an insurance policy, is not acceptable.

• Insurance Policy and Insurance Certificate: The insurance policy, either a specific policy or an open policy, is issued once by the insurer. In the case of the exporter holding an open policy, he/she cannot send that sole policy to all the buyers and for all the shipments made over a period of time. Therefore, in lieu thereof an insurance certificate—certificate of insurance—is issued by the exporter to each shipment. The blank insurance certificates are supplied by the insurer pre-signed and bearing the open policy number of the exporter.

Unless otherwise stipulated in the letter of credit (L/C), the insurance certificate issued under the open policy is acceptable. If the L/C specifically calls for an insurance certificate, the insurance policy is accepted in lieu thereof. In practice, the insurance policy is often used. In the sample letter of credit the insurance policy is required; hence the bank will not accept the insurance certificate.

Open Policy and Specific Policy

• Open Policy : The open policy—blanket policy or floating policy—is issued once by the insurer under contract to cover all shipments made by the exporter over a period of time (one year usually) subject to renewal, rather than to one shipment only. It is more often used by the large exporter.

In an open policy the exporter is required to periodically (monthly usually) declare every shipment made to any location, covering any type of goods, and using any means of conveyance, including multimodal transport and transhipment, in order that the insurer may calculate the insurance premiums and invoice them accordingly. The exporter completes the insurance declaration form supplied by the insurer and/or supplies the copy of the insurance certificates to the insurer. An insurance declaration form typically contains the information in an Insurance Application-Instructions (IAI).

• Specific Policy: The specific policy—voyage policy—is issued by the insurer to cover a particular shipment or one shipment only. The specific policy is often used in many countries. The exporter may use the Insurance Application-Instructions (IAI) or similar form to apply for a specific policy.

Advantages of an Open Policy over a Specific Policy,

• Time Saving and Convenience: In certain countries the insurance agent (broker) may hand-deliver the insurance policy to the exporter within 4-5 hours after the receipt of the Insurance Application-Instructions (IAI) or similar form. However, in some countries it is not uncommon that the policy is mailed to the exporter 2-3 days after the receipt of the Insurance Application-Instructions (IAI) or similar form. Considering that the uncertain time frame to reach the addressee, the deadline to meet the L/C latest negotiation date may not be met.

In an open policy the exporter may have the documentary proof of insurance coverage in a matter of minutes by simply completing and signing the blank insurance certificates supplied by the insurer.

• Shipments Insured Automatically: Under the open policy the insurer most often does not know the shipments made by the exporter before the receipt of the insurance declaration form and/or copy of the insurance certificates, but such shipments are insured.
• Principles of Cargo (Marine) Insurance: The cargo (marine) insurance works on the principles of insurable interest, utmost good faith, and indemnity.
• Insurable Interest: When the goods are lost or damaged and the owner of the goods (i.e., the title holder in the goods) suffers a loss, fails to realize an expected profit, or incurs liability from the loss or damage, the owner (the title holder) is deemed to have an insurable interest in the goods.

When the exporter delivers the goods, the insurable interest in such goods transfers at the point and time where the risk shifts from the exporter to the importer, as determined by the international commercial terms used.

The time the insurable interest transfers from the exporter to the importer is, technically, the time the exporter endorses the specific policy or the insurance certificate to the importer, as the case may be.

The insurance certificate bears the open policy number of the exporter and, like in a specific policy, the claim agent at port of destination and that claim payable at destination is also indicated.

The importer relies on the specific policy or the insurance certificate and the supporting claims documents as proof that the goods have been insured and that he/she has the insurable interest in the goods when filing for insurance claims against loss or damage.

In the trade terms DDU and DDP, the exporter is responsible for the risks up to the delivery of goods to the final point at destination (the project site or importer’s premises usually), as such the insurable interest in the goods does not transfer from the exporter to the importer in the shipment.

Some countries may require that the import and/or export shipments be insured with their national insurance companies.

• Utmost Good Faith: The principle of utmost good faith is indispensable in any insurance contract. Under the open policy the insurer usually knows only of the shipments made by the exporter after the receipt of the insurance declaration form and/or the copy of the insurance certificates. Under such circumstances, a consignment may have reached the importer in.
  • Good condition, that is, without sustaining any loss or damage, before the insurer knows of such consignment. If the exporter knows that the consignment has safely reached the importer and deliberately does not declare such consignment in the insurance declaration form in order to avoid paying the insurance premium, such action is a breach of good faith. Consequently, the insurer may cancel the insurance policy issued to the exporter when the exporter’s bad faith is known.
  • Bad condition, that is, sustaining loss or damage, before the insurer knows of such consignment. Whether or not the exporter knows that the consignment has not safely reached the importer and fails to declare such consignment in the insurance declaration form, the insurer is liable to pay for the loss or damage out of good faith.

• Indemnity: Cargo insurance is a contract of indemnity, that is, to compensate for the loss or damage in terms of the value of the insured goods. The amount insured as agreed between the insurer and the assured forms the basis of indemnity.
• Institute Clauses: The Institute Clauses of the Institute of London Underwriters, often referred to as the London Clauses or English Clauses, form the basis of the cargo insurance contract in many countries.

In U.S.A. and some other areas, the Institute Clauses of the American Institute of Marine Underwriters, often referred to as the American Institute Clauses or American Clauses, are used. The American Clauses and the London Clauses can be different from one another.

The most common Institute Clauses include the Institute Cargo Clauses, Institute War Clauses, Institute Strike Clauses, and Institute Air Cargo Clauses.

• Institute Cargo Clauses: The Institute Cargo Clauses specifically excludes the risks of war (in the F.C. & S. Clause—Free of Capture and Seizure Clause) and the risks of strikes, riots and civil commotions (in the F.S.R. &C.C. Clause—Free of Strikes, Riots and Civil Commotions Clause). The risks of delay in delivery and inherent vice are not included in the Clauses.
• Institute War Clauses (Cargo): The Institute War Clauses (Cargo) specifically exclude the loss, damage or expense arising from any hostile use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. The Clauses cover.
  • The risks excluded in the Institute Cargo Clauses by the F.C.&S. Clause;
  • The loss of or damage to the interest insured caused by: hostilities, warlike operations, civil war, revolution, rebellion, insurrection or civil strife arising there from; mines, torpedoes, bombs or other engines of war;
  • The general average and salvage charges incurred for the purpose of avoiding or in connection with the avoidance of, loss by a peril insured against by these clauses.

Under the War Clauses, the insurance takes effect only as the interest insured are loaded on an overseas vessel and terminates either as the interest are discharged from the overseas vessel at final port or place of discharge, or on expiry of 15 days counting from midnight of the day of arrival of the vessel at the final port or place of discharge, whichever shall first occur. In other words the goods are covered only while they are on a vessel.

In the case of transhipment, the overseas vessel arrives at an intermediate port or place to discharge the interest for on-carriage by another overseas vessel, the insurance terminates on expiry of 15 days counting from midnight of the day of arrival of the vessel at the intermediate port or place, but reattaches as the interest are loaded on the on-carrying overseas vessel. During the period of 15 days such insurance remains in force after discharge at such intermediate port or place of discharge.

• Institute Strike Clauses (Cargo): The Institute Strikes, Riots and Civil Commotions Clauses is commonly referred to as the Institute Strike Clauses.

The insurance covers the loss of or damage to the property insured caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions, and persons acting maliciously. However, it does not cover the loss or damage proximately caused by delay, inherent vice or nature of the property insured and the loss or damage caused by hostilities, warlike operations, civil war, revolution, rebel-lion, insurrection or civil strife arising there from.

• Institute Air Cargo Clauses (All Risks): The Institute Air Cargo Clauses (All Risks) are used specifically in air freight. The terms and conditions of cover closely follow the Institute Cargo Clauses (All Risks) revised to suit air shipments. The Clauses exclude sending by Post (i.e., postal shipments not covered).

Hull Insurance

Hull insurance covers more than the hull. Sails, motors and masts may also be included.

Hull insurance is boat insurance that covers damage to a boat, its machinery and its equipment.

It is the closest maritime equivalent to comprehensive and collision automobile insurance. Like other products in the insurance market, coverage and deductibles vary by company. Hull insurance is a term sometimes used for aircrafts as well.

Hull policies in most instances will cover all damage not specifically excluded by a policy. In rare cases, insurance carriers will sell policies that cover damage from incidents that are named. If a policy is “all risk” the boat owner or agent should read the list of exclusions to determine what is not covered. Common exclusions include damage from normal wear and tear, insects, zebra mussels and marine life. Some policies may exclude damage to machinery, such as engines.

Brown Water vs. Blue Water

There may be significant differences for blue water insurance policies. Hull policies often are distinguished by whether they cover incidents in brown water or blue water. Brown water policies refers “to hull and liability coverage for tugboats, barges and other types of commercial vessels and businesses that operate primarily on or near inland and coastal waterways,” according to Marine Insurance House. Blue-water denotes ocean-going ships and larger vessels used in international shipping or trade. In addition to blue water and brown water policies, some marine policies will have navigation clauses which stipulate where a boat owner can take the insured vessel.

Hull and Cargo

Cargo is not usually covered by hull insurance. Hull insurance typically does not apply to cargo. Coverage for cargo, where applicable, is typically sold as a separate policy.

Deductibles

Deductibles vary between insurance policies and the value of the boat that is insured. Some firms use flat deductibles, such as $1,000 per incident. Others’ base deductibles as a percentage of a boat’s value. There may be separate deductibles to cover damage to a trailer or a boat’s electronics. If a ship is damaged in a named storm, such as a hurricane, the deductible may rise to a higher percentage of a ship’s value when compared to the standard deductible.

Air Cargo Insurance

Air Cargo Insurance is a type of insurance policy that protects a buyer or seller of goods being transported through the air. Air cargo insurance is designed to protect the insured against items damaged, destroyed or lost. Cargo insurance is offered through insurance companies, some freight forwarders and trade service intermediaries. The amount of coverage and deductible required with this insurance varies, with each insurance provider.

A premium for the cargo is often calculated based on the value of the item, whether the item is hazardous, where it is being transported and the route that will be taken to reach its destination.

Insurance Claim Settlement

Claims are submitted for different types of insurance policies depending on what the insurance policy is designed to cover. Once a claim has been filed, an insurer may need to investigate the circumstances before a payment is made on the claim. An insurer has certain procedures in place to determine the validity of each submitted claim.

Generally the following steps are involved.

• File a claim

Intimate the insurer about the incident within the time-frame mentioned in the policy.

Usually the following documents should be submitted:

• Survey Report
• Insurance policy or insurance certificate (original duly endorsed)
• Bill of Lading (in airfreight: Airwaybill)
• Loading reports
• Shipping instructions
• Copy of the claim letter to the carrier’s agent
• Original reply to claim letter
• Copies of letters in which you hold the carrier responsible
• Commercial invoice (the insurance does not pay more than the actual damage)
• Packing list (incl. list of weights)
• Carrier’s short delivery certificate or letter
• Any other document in respect of the loss and/or damage which may facilitate the adjustment of the claim.

• Verification of Information and ascertainment of loss

Whenever a claim is filed for a loss due to an accident, an insurer will investigate to get all of the facts based on which insurance adjuster will ascertain the loss and settle the claim accordingly.