1.A.

Distinguish between Export order, Agreement & contract

Export Order
It is a formal request or instruction the buyer/importer sent to the exporter/seller
so as to place an order of a particular commodity, once all the information on the
quotation received from the exporter/seller have been fully scrutinized by the
buyer/seller and all terms and conditions duly satisfy their requirements (for
example items, specification, pre-shipment inspection, payment conditions,
special packaging, labelling and marketing requirements, shipment and delivery
date, marine insurance, documentation etc). Therefore the order must conform
to the quotation received.

Export Agreement
Both trading partners are mutually agreed on certain terms and conditions.
Agreement may not necessarily lead to legal liability should one party deviate
from the agreement.

Export Contract
Contract are legally binding agreements. Both parties sign their agreement; those
agreements which do give rise to rights and liabilities. It becomes a legally binding
contract between importer and exporter. In order to avoid disputes, it is
necessary to enter into an export contract with the overseas buyer. For this
purpose, export contract should be carefully drafted incorporating comprehensive
but in precise terms, all relevant and important conditions of the trade deal.
B. what are the Important elements of an Export Order? Explain in details the
role of different elements

Export Order Process

Enquiry

Quotation

Order

Letter of Credit checked

Order acknowledgement

Order process & Progress

Packing & Marking

Space booking

Documents prepared
Transport
Customs
Insurance
Payment

Goods dispatched

Payment received
Whatever
1) Before
be the mode
exportoforder
gathering
is finalised
information,
for acceptance,
exporter hasittoisreact
highly
withessential
speed andto the
exporter

(A)Getting Export Order – Enquiry

1) Export Licensing
exporter has to check up whether any license is required before
accepting and executing export order. Needless to add, the items of
export agreed upon do not fall in the banned list
2) Inquiry and Offer
Exporter may receive inquiries, directly. An inquiry is a request from
the prospective buyer to keep him informed of the terms and
conditions of sale. Any export inquiry has to be attended with
promptness and meticulous care.
Whatever be the mode of gathering information, exporter has to react
with speed and elegance by submitting the offer, through proforma
invoice, with detailed literature in respect of product such as
specifications, quality, packing, price, mode of transport and period
required for supply of goods, after receipt of confirmed order.
An offer is a proposal, which may be in the form of a letter or
proforma invoice. It is desirable to send samples as they speak better
about quality, which is the main criterion for selection of exporter.

3) Examination of Terms of Export

Before the export order is finalised for acceptance, it is highly essential to
the exporter to examine the terms and conditions, carefully as follows:
i. Product description including specifications, style, colour, packing
conditions etc.
ii. Marking and Labeling requirements, if any.
iii. Price, terms of payment (FOB, CIF etc.) including currency, nature of
letter of credit (revocable, irrevocable, confirmed, unconfirmed,
restricted, unrestricted etc) credit period, if any.
2) Export Agreement, Export Order and Export Contract signify the same essence. It

iv. Terms of shipment including choice of the carrier, mode of carriage,

place of delivery, date of shipment/delivery, port of shipment,
Transshipment etc.
v. Inspection requirement including type of inspection, place of
inspection and inspection agency.
vi. Insurance requirements including nature of risks to be covered and
insurable value.
vii. Documents for realizing payment including nature and number of
invoices, certificate of origin, certificate of inspection, insurance
policy, document of title etc.
viii. Last date for negotiation of documents with bank.
ix. Frustration clause indicating circumstances under which both the
parties would be discharged from liability.

If any condition is not acceptable, suitable amendment has to be secured

from importer and only after all the clauses are acceptable, exporter has to
accept export order.

4) Export Contract and Confirmation of Acceptance

Export Agreement, Export Order and Export Contract signify the same
essence. It indicates the decision of foreign buyer to buy specified items
from the exporter at the mutually agreed terms and conditions. This can
take place in three ways:
i. Exporter may send the proforma invoice, in triplicate, to the
importer. Importer accepts and sends two copies of proforma
invoice, duly signed. As offer has been accepted, a binding contract
has formed. However, exporter sends one copy of the proforma
invoice, duly signed, again, to the importer as a token of confirmation
of acceptance. This confirmation is, indeed, a precaution to ensure
that the exporter has received the acceptance of contract from the
importer and confirmation of acceptance would be a record to the
importer
 ii. Instead of exchanging the proforma invoice, a second way is for the
importer to place a purchase order, duly signed, on the exporter,
which is accepted by the exporter. Then, a confirmation follows from
the exporter to the importer. It is commercially prudent to send
confirmation in the form of a documentary evidence. There is no
specific format of this confirmatory letter and an ordinary letter also
would serve the purpose. In certain countries, it may be a legal
requirement.
iii. A contract may incorporate all the terms and conditions such as
description of goods, quantity, price, total amount payable, delivery
schedule, mode of payment,payment of freight and other clauses
such as certificate of origin and inspectionthat may be mutually
agreed upon between the importer and exporter. When both the
parties sign the contract, it becomes a binding contract between the
exporter and importer.

(B) Pre-Shipment – Order

1) Pre-shipment Finance
If the exporter is in need of finance to execute the export contract, he
has to make arrangements for securing necessary finance, well in
advance. Now-a-days, banks extend financial assistance liberally, at
concessional interest rate. Under the export credit (interest subsidy
scheme), the RBI enables the commercial banks to extend pre-
shipment credit in the form of packing credit and post-shipment credit,
both at concessional interest rates. Pre-shipment credit is given to an
exporter for purchase of raw materials, processing them and
converting them into finished goods for the purpose of exports.
2) Production and Procurement of Goods
Once export contract is confirmed, exporter has to arrange
manufacture of goods meant for export, if they are not readily
available. In case, there are production constraints, priority is to be
given for exports as timely delivery is the most important criterion in
case of exports and, if necessary, certain rescheduling of production
for meeting indigenous requirements may have to be made. If the
goods are not to be manufactured but are to be procured from the
local market, necessary action has to be initiated to meet the delivery
schedule.

3) Shipping Space
As soon as confirmed export contract is received from the importer,
exporter has to make the necessary arrangements for shipping
space. The exporter has to make the necessary reservation, in case
goods are to be sent by sea. The reason is there is shortage of
shipping space and equally their frequency is also limited. Exporter
has to gather information about the sailings for the port of destination,
matching the delivery schedule. Necessary information can be
gathered from Daily Shipping intelligence to which exporters may
subscribe. Shipping agents work on behalf of the shipping companies
who can be contacted too about the availability of the required space
to match the schedule of delivery, at economic cost. Clearing and
Forwarding agents are the specialized people in this line of activity
who can be appointed.
Exporter sends the cargo to the clearing and forwarding agents who
take care of shipment of goods. In case, goods are to be sent by air,
the problem is not that difficult as there are adequate airlines for
Necessary markings have to be made on the packages by the exporter, following

booking the cargo.

4) Packing and Marking

Soon after the goods are ready for shipment, they should be properly
be packed and marked. Importer’s specific instructions in respect of
packing and marking should be complied with, totally. In the absence
of instructions from importer, exporter has to follow the packing rules
prescribed by The Bureau of Indian Standards for certain items. The
British Standard Packing Code, published by the British Standards
Institute and the Exporters’ Encyclopedia published in the U.S.A. give
detailed packing instructions which can be followed by the exporters
to match international standards in respect of packing. In respect of
hazardous goods, shipping companies too give certain packing
instructions, which are to be followed, scrupulously.
Necessary markings have to be made on the packages by the
exporter, following importer’s instructions. Marking should include
markings of the consignee, port of shipment, port of destination,
measurements, the country of origin, gross and net weight and any
other instructions of the importer.

5) Quality Control and Pre-Shipment Inspection

6) Central Excise Clearance
7) Appointment of Clearing & Forwarding Agent
8) Obtaining Insurance Cover

C) Shipment – cargo movement

1) Documentary Examination at Customs House
2) Obtaining ‘Carting Order’ and Customs Physical Examination
3) Loading cargo on Vessel
 4) Exchange Control Formalities

(C) Post-Shipment – payment

1) Presentation of Documents for Negotiation
2) Export Incentives

Qu.2
Methods of payment
Open Account
Bills of exchange
Documentary letters of Credit
Cash in advance

Explain how is L/C considered to be superior that the other methods;

Open Account
The least secure method of payment and therefore only used regularly in low risk
markets. It literally means ‘pay me when you like’ common in W/Europe and USA.

Bills of Exchange (Drafts)

Referred to as Documentary Collections by the Banks, the use of Bills of
Exchange , sometimes called Drafts, introduces a new documentary requirement
for the exporter in that the Bill of Exchange will be drawn up by them in addition
to the other shipping documents. The security which Bills of Exchange offer is
based on the fact that the procedures involve the banks in arranging for collection
of payment from the buyer on behalf of the seller.
The exporter having agreed such a method of payment with the buyer will draw
up a Bill of Exchange which will from part of the document set which will be sent
to their bank in India.

a.Document against payment (D/P) – Sight Draft (amount is paid at sight i.e no
credit period will be allowed, the overseas bank will require the buyer to pay the
due amount at sight of the documents. The security for the seller is that the bank
will not release the documents to the buyer unless payment is made)
b.Document Againsts Acceptance (D/A) – Termed Bill ( in this case the overseas
bank will not collect payment in return for the documents but will instead release
the documents against Acceptance of the Bill. This usually requires only a
signature, of the Drawee and often a company stamp. The credit term of the Bill is
known as the tenor and when this expires, i.e 60 days later , the bill is said to have
matured and will be represented for payment.
Possible for dishonor to take place.)

Advance payment reduces the losses of seller. The amount and extent of advance
payment depends upon the factors stated above. Since buyer also runs a risk of
non-delivery or delayed delivery the buyer is also reluctant to pay the amount in
advance to the supplier of goods

Documentary letter of Credit (L/C)

Most exporters will feel that a promise from a bank to pay is an improvement on
a promise from the buyer. The ultimate form of bank guarantee used in
International Trade is that of the letter of Credit which in simple terms, is a letter
from a bank promising to pay an amount of money. However the typical
operation involves the use of Documentary letters of Credit which promise to pay
only if the documents stated on the Credit are provided by the exporter. In this
respect they are very much conditional guarantees of payment.
Documentary letter of credit procedure

Seller Agree contract and documentary Buyer

Credit payment

Advise or Buyer instructs

Confirm credit to bank to open the credit
the seller

India bank Credit sent to India bank

(Advising or Overseas
confirming bank
issuing bank) (issuing
bank)

Types of L/C
Irrevocable
Cannot be cancelled before expiry without the consent of both parties

Revocable
This credit is subject to cancellation without notice (by either party)
There are only used where the parties are closely related and a means of efficient
funds transfer ot as security of payment.

Confirmed
It may be in the exporter’s interests to obtain the promise of the India bank to
pay, by adding their confirmation to the credit.
Transferable
In the cases where a middleman operates bet. A manufacturer and an end-user it
is possible for a credit to be raised showing the agent as the beneficiary but also
allowing the transfer of a percentage of the credit to the manufacturer

Back to Back
Considering same situation as above, It may be the first credit, paying the agent,
is used to raise a second credit for a lesser amount paying the manufacturer, with
identical documentary requirements.

Revolving
Where a series of identical shipments are to be made it is possible to raise one
Credit to cover all of them, rather that a separate Credit for each shipment. They
are known as revolving because after payment against a shipment the amount
payable is re-instated for the next shipment.

Qu. 3 What are the various types of export finances?

Pre-shipment Finance
Pre-shipment finance is financial assistance extended to the exporter before the
shipment of goods and post-shipment finance is concerned with the financial
assistance extended after shipment of goods.
Classification of Pre-Shipment of Finance:
(A) Packing Credit
(B) Advances against incentives receivable from Government
(C) Pre-shipment credit in Foreign Currency.

Post-shipment Finance

Post-shipment finance may be defined as loan or advance granted by the bank to

the exporter after the date of shipment of goods till the date of realization of
export proceeds

Qu.4 Why do we require pre-shipment inspection of goods?

It may be necessary for the exporter to obtain some form of certification,

generally as to the standard of goods prior to actual shipment. These may result
from a specific buyer’s requirements or may be needed to meet import
regulations in the country of destination. Such requirements can actually obstruct
sales into a particular market or more likely increase the cost in view of the
expense of testing and certification and potentially the cost of product
modifications to meet the required standards.

Under the Export(Quality Control and Inspection) Act, 1963, about 1000
commodities under the major groups of Food and Agriculture, Fishery, Minerals,
Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic
Products, Pesticides, Light Engineering, Steel Products, Jute Products, Coir and
Coir Products, Footwear and Footwear Products / Components are subject to
compulsory pre-shipment inspection.

At times, foreign buyers lay down their own standards / specifications which may
or may not be in consonance with the domestic standards. They may also insist
upon inspection by their own nominated agencies. These issues should be sorted
out before confirmation of order. Specific provisions have also been made for
compulsory inspection of textile goods.

Pre-shipment inspection gives importers and governments specific protection

against:
1. Non-conformity to samples
2. Non-conformity to specifications
3. Unsafe or hazardous products
4. Non-conformity to safety regulations
5. Incorrect quantity or size
6. Short shipments

There are three methods of pre-shipment inspection:

1. Consignment-wise inspection
Each consignment is subjected to detailed inspection

2. In-process Quality Control

Manufacturing/processing units, having continuous processing system, are
given an
option to become “export-worthy” status units so that they get the
inspection
 certificate, based on their own declaration. These units are highly quality
conscious
and conduct thorough quality control at each and every stage of production
that
includes:
• Raw materials and bought out components,
• Process control,
• Product control and
• Packing and packaging control.

3. Self-Certification
Certain manufacturing units are given the freedom to certify their
inspection certificates. The philosophy behind the scheme is that
manufacturing units, with proven track record of maintenance of quality,
deserve to enjoy the freedom for issuance of pre-shipment inspection
certificate themselves. The essential condition is that the unit has not
received any complaint during the last three years.

Qu.5

Risks are inseparable from business activity. The taking of calculated risks is a day
to day part of every decision-maker’s life.
Causes of risks
Physical risk - loss or damage
Credit risk - non payment
Exchange risk – foreign exchange fluctuation
Marketing risk – not guarantee that your product will be successful on the market

Ways to minimize
Cargo Marine Insurance
The Cargo Insurance occupies an important place in the overseas commerce. It
provides protection to the insured (assured) against fortuitous losses.
Marine Insurance, is a contract, "Whereby the insurer undertakes to indemnity
the assured in the manner and extent agreed against losses incident to the
marineadventure." Thus the loss of goods can be compensated in monetary terms
by the insurance Company. (insurer)

Export Credit Insurance

Payment for exports are exposed to risk due to un-expected political &
commercial risks viz. War civil war, etc. are political risks. Balance of payment
problems or import restrictions etc. are commercial risk. The other commercial
risks include protected default of buyer, Bankruptcy of buyer etc.Thus doing
export business is dangerous.
Export credit insurance is designed to protect exporters from the payment risks.

Exchange risk management

The Foreign currency is like any commodity: which does not have a fixed value.
The parity of foreign currency viz. a viz. home currency keeps on fluctuating.
There is always a risk of adverse fluctuation. A prudent trader in FE should try to
minimize the exposure.
This could be done by the following methods:
i) By forward Cover
ii) Exchange Fluctuation Risks cover

Explain the role of documentation in the export trade How is aligned

documentation system helpful in the promotion of Export trade Explain the role
of various regulation documents?

BECAUSE OF THE IMPORTANCE OF ALL THE DOCUMENTS REQUIRED FOR EXPORT

AND AS MENTIONED AGAINST EACH DOC REQD THE ROLE OF DOCUMENTATION
IS CONSIDERED AS THE MOST IMPORTANT IN EXPORT TRADE.
Documents Required for export trade are as follows:

Certain documentation takes place while 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 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.


 Re-export of imported goods

The following are the documents required for the processing of the Shipping Bill:

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.

Note :- 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.
 Despatch 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, Ausatralia, 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).
The cargo is physically moved into the port.
The dock appraiser physically examines the goods. After verification and prima facie
satisfied, the dock appraiser seals the packages, prepares physical inspection report and
passes the cargo for shipment by issuing the formal order “Let Export Order” on the back
 Weight Note - Required to confirm the packets or bales or other form are
of a stipulated weight.
 Manufacturer's/ 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.

 Transhipment Bill - It is used for goods imported into a customs port/

airport intended for transhipment.
 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.
Assingment B

Qu.1. Explain the role of documentation in the Export Trade. How is aligned
documentation system helpful in the promotion of Export Trade? Explain the
role of various regulation documents.

Documentation is used

To keep shipment and delivery on schedule,

To describe cargo,

For customs clearance,

To indicate the ownership of goods for collection purposes or in the event of

dispute

To obtain payment.

Documentation plays a vital role in the Export Trade. Trade overseas needs the
support of export documents. Operations with foreign countries are made very
complex, the sellers must explain what they are selling and the buyers must know
what they are buying. For that reason, we use the following export documents:

Export documents are used for different purposes: commerce, guarantee, and
transport. Commercial documents are those that give information about the
products being exported. Guarantee are does that inform the user about features
of the products for insurance purposes. Export documents also facilitate the
transport of merchandise. Bills of lading are needing for exporters to receive
payment.

Some of export documents are used for commercial purposes like bills, notes and
weight packing. There are also documents to guarantee the quality of what is
being exported. Insurance documents certify what is covered by insurance. Bills of
lading are examples of transport documents.
There are different export documents that do not offer the same benefits to each
user.

Letters of credit are an instrument that guarantees to the seller that he or she will
be paid for the merchandise sent when it matches the criteria set in the contract
by the importer.

Most are irrevocable and confirmed, which means that they cannot be modified
but with the consent of the parts involved. Additionally, these documents relieve
the exporter from any worry about nonpayment.

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

The are broad categories of documentation you will encounter when exporting

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
  Exporter registration form
 Letter of credit
 Commercial invoice
 Bill of entry export
 Export permit

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

Aligned Documentation System (ADS) is adopted Documents related to exports

are printed on uniform length and standard A-4 size of paper.
Initially, information is entered in Master Document 1 and Master Document 2.
From these documents, Common information, required to be incorporated in all
the relative documents, is entered in the slots at the same locations. An exporter
can develop 14 out of 16 Commercial Documents with the help of Master
Document 1. Shipping order and Bill of Exchange are the only two Commercial
Documents that can not be developed as these have not been standardized. In a
similar manner, with the help of Master Document 2, three of the Regulatory
Documents-GR form, Shipping Bill/ Bill of Export and Port trust copy of Shipping
Bill can be developed.
 Main advantage of this system is to enter the data quickly and read them with
greater ease and speed. Document alignment is a major trade facilitation activity.
Aligned Documentation System is based on the U.N. layout key. Deriving national
document subsets from the UN Layout Key rules simplifies trade documentation
on an international scale, bringing considerable benefits to traders.
Advantages of Aligned Documentation System
1. Dispenses Conventional Documentation preparation: Once information is
entered into Master Documents, it becomes possible to prepare many
Commercial and Regulatory Documents with the help of masking reproduction
technique. The documents are aligned to one another. All documents are
printed in the same size of paper. Common items of information are given the
same relative slots in each of the documents included in the system. The
common items of information occupy the same relative position on each form.
For example, shipper top left, references top right, signatory details bottom
right and so on.

2. Easier to Complete and Access: This makes forms both easier to complete and
easier to process. Since common positions are used for data items, it is
possible to use a ‘Master Document.’ This master document can be used to
produce a range of documents using a photocopier and overlays (to provide
the form outlines and hide unwanted data).

3. Benefit to All Parties: All parties in the international trade chain benefit from
easier document processing. Using documents that comply with UN alignment
standards speed up form preparation, cut costs and reduce errors. Exporters
may actually get paid quicker than otherwise!
4. Better Image: Aligned documents simplify document checking and training
new staff. They even enhance an organization’s professional image.

Regulatory pre-shipment export documents are those which have been

prescribed by different government departments and bodies in the context of
export trade. These documents are meant to comply with the various rules and
regulations under relevant laws governing export trade such as export inspection,
foreign exchange regulations, export trade control and customs etc.
There are 9 regulatory documents associated with the pre-shipment stage of an
export transaction. Out of them, only 4 have been standardized. The regulatory
documents are as follows:
1. Gate Pass-I/Gate Pass II: The Central Excise Authorities prescribe them. √
2. ARE-1: These are Central Excise forms. Earlier, AR4 and AR5 Forms have been
used. In their place, ARE 1 form , now, is used. √
3. Shipping Bill/Bill of Export: They are standardized and prescribed by the
Central Excise Authorities. √
 For export of goods.
 For export of duty free goods.
 For export of dutiable goods.
 For export of goods under claim for duty drawback
SHIPPING Bill/BILL of EXPORT; Shipping Bills is the main document required by the
Customs Authority for I1lowing shipment. Basically, shipping bills are of four
types. The Major distinction between one type and another shipping bill lies with
regard to the :goods being subject of (~) export duty/cess, (b) free of duty/cess,
(c) :entitlement to duty drawback, (d) entitlement of credit of duty under DEPB
scheme, and (e) re-export of imported goods
4. Export Application/Dock Challan: Standardized and prescribed by the Port
Trust Authorities.
5. Receipt for Payment of Port Charges: Standardized.
6. Vehicle Ticket.
7. Exchange Control Declaration Forms: GR/PP forms are standardized and
prescribed by RBI.
8. Freight Payment Certificate.
9. Insurance Premium Payment Certificate.

1. Regulatory Documents :

o These document are required to comply with rules and regulations

governing export trade transactions such as –

o FERA

o Customs formalities
 o Export Inspections etc

2. Regulatory Requirements:

o Exporter has to follow strictly the requirements of both the exporting

and importing country e.g. under FERA an exporter has to submit FORM
which declares that “we undertake to realize the Foreign Exchange in
lieu of goods exported. This is submitted to RBI

o …………….

3.

o Licence to export the controlled commodities.

1. Pre-shipment inspection and quality control are

compulsory in order to build up the image of Indian goods
abroad

4.

o Certain documents certified by their missions in the exporting country.

This gives the need of consular invoice and in some cases, the use of
legalized invoice

o Then, there are countries, specially the commonwealth countries, and

also those developed countries, which have offered concessions to the
developing countries under the Generalized System of Preferences,
which demand that the exporters must submit a certificate of origin.

5. Thus the Exporters submit

1. G R Form

2. Export Licence

3. Inspection Certificate

4. Legalized Invoice and

 5. Certificate of Origin

The different regulatory documents may be classified into

1. Documents related to goods,
2. Documents related to shipment,
3. Documents related to payment,
4. Documents related to inspection,
5. Documents related to excisable goods
6. Documents related to foreign exchange regulations.

Related to goods
Consular invoice
Some of the importing countries insist that the invoice is to be signed by the
importing county’s consular located in the exporter’s country. Such invoices are
known as consular invoice. The exporter has to pay a certain fee to obtain the
certificate/invoice. Such charges/ fees vary from country to country. The main
purpose to obtain consular invoice is to secure authentication of information
contained in the invoice. Once the invoice is signed by the consular of the
country, the importer gets comfort and confidence in respect of accuracy of
information in respect of quality, source of goods, volume and grade

Related to shipment
Certificate of origin
Certificate of origin is a certificate that specifies the name of the country where
goods are produced. This is absolutely necessary where the importing country
has banned the entry of goods of certain countries to ensure that the goods from
those countries are not allowed to enter in. At the time of arrival of the goodsin
the importer’s country, this certificate is necessary for the customs to permit
preferential tariff.

Certificate of Measurement
Freight is charged either on the basis of weight or measurement. When weight is
the basis of measurement, the shipping company for the purpose of calculation of
freight may accept the weight declared by the exporter. However, when
measurement is the basis for calculation of freight, the shipping company may
insist on a certificate issued by Chamber of Commerce or other approved
organization in respect of goods. The certificate of measurement contains the
details in respect of description of goods, quantity, length,breadth and depth of
the packages, name of the vessel and port of destination of the cargo etc.,

Related to shipment
Shipping Bill
The shipping bill is the main document on the basis of which the customs
permission is given. Under manual processing of export documents, the exporter
is required to file the appropriate type of shipping bill to seek the order for
customs clearance of the export shipment. Under computerized processing, the
exporter does not prepare the shipping bill instead it is computer generated. The
customs order is called “LET EXPORT Order”. After the shipping bill is stamped by
the customs, then only the goods are allowed to be carted to the docks.

RELATED TO EXCISABLE GOODS

(1) GP Forms
GP stands for Gate Pass. A GP form, gate pass, is issued for the removal of
excisable goods from the factory or warehouse. Form GP1 is issued for the
removal of excisable goods on payment of duty. GP2 is issued for the removal of
excisable goods without payment of duty.
(2) Form C
It is not to be confused with C form. Form C is used for applying for rebate of
duty on excisable goods (other than vegetable, non-essential oils and tea)
exported by sea. It is to be submitted, in triplicate, to the Collector of Central
Excise.
(3) Forms AR4/AR4A
These forms are meant for removal of excisable goods for export by sea/post.
Now, in their place, ARE-1 form is used.
RELATED TO FOREIGN EXCHANGE REGULATIONS-LEGAL REGULATED
DOCUMENTS

GR Form
GR is an exchange control document required by Reserve Bank of India. It is
required to be filled, in duplicate, for all exports in physical form other than by
post. An exporter has to realize the export proceeds within a period of 180 days
from the date of shipment, in India. To ensure control on realization, RBI has
introduced this procedure.

PP Form
It is required to be filled in for all export transactions, in duplicate, for all
countries to be made by post parcel, except when made on “value payable” or
“cash on delivery basis”.

VP/COD Form
It is required to be filled for all export transactions to all countries by post
where the
export proce eds are realized on “value payable” or “cash on delivery basis”.

SOFTEX Form
It is required to be prepared, in triplicate, for export of computer software in
non-
physical form. All the above documents serve the purpose of monitoring the
realization of
export proceeds in the stipulated manner.

QUES 2
Describe the formalities and registration with the different authorities before an
exporter can accept export contract?
There are various formalities and registrations to be made with different
authorities before an exporter can enter into export business and accept an
export order.
1. Selection of Name of Firm
An entrepreneur can choose any name for the firm he wants to start. It is
desirable that the name of the firms indicates that the business relates to export /
import. Various words like global, international and overseas in the name of the
firm convey the meaning that the firm is engaged in export / import.
2. Approval to Name of Firm
There is no need to obtain prior approval of Regional Licensing Authority of
DGFT for the proposed name of business firm. However, if the firm is planning to
export ready made garments to any country, approval from Apparel Export
Promotion Council (AEPC) is required.
The entrepreneur has to apply to AEPC in the prescribed application form for the
clearance of the name. While applying, one can suggest two or three names, in
the order of preference.
Once the name is approved, registration of firm in that name with AEPC is to be
made within a period of three months. After the registration is done, the firm
would become a registered exporter and be able to get the quota allocation for
export of ready made garments to export quota countries. Export of ready made
garments to countries like USA, Canada and countries of European Union requires
quota approval from AEPC.
3. Registration of Organization
 The form of organization can be sole proprietorship, partnership firm under
Indian Partnership Act, 1932 or Joint Stock Company registered under the
Companies Act, 1956. If it is a joint stock company, it can be either a private
limited company or public limited company. If the form of business is partnership
or joint stock company, registration under the appropriate act is required. A sole
trader requires permission from local authorities, as required. No separate
registration is needed for a sole proprietorship.
4. Opening of Bank Account
The firm or company has to open a bank account with a branch of a
commercial bank, authorised by Reserve Bank of India to deal in foreign
exchange. Only a select few branches of commercial banks are authorised by RBI
to deal in foreign exchange. The firm may require pre and post shipment finance
for its business. In deciding the bank and branch, the firm has to keep its credit
requirements and cooperative attitude of the bank to assist as it would be a new
entrant in the field of international business. Timely credit is an important
ingredient for the success or failure of business, in particular, in international
business which is highly competitive.
5. Obtaining Permanent Account Number
Export income is subject to a number of exemptions and deductions under the
Income Tax Act. For claiming those exemptions and deductions, it is necessary for
every exporter to obtain Permanent Account Number from the income tax
authority. This PAN is required to be quoted while applying for Export Import
Code number.

6. Registration with Sales Tax Authorities

 Exporter need not pay sales tax while making purchases, meant for export. For
availing the benefit, firm has to register with sales tax authorities and secure
sales tax number. Exporter/purchaser has to give Form -H to the
seller/manufacturer. For this purpose, exporter has to make an application along
with copy of letter of credit or export order to the Sales Tax Office that has
jurisdiction to his office for issuance of Form-H. Exporter prepares Form-H, in
triplicate, and issues two copies to the seller and retains one copy for his record.

7. Importer-Exporter Code number

No export or import transaction can be made without obtaining an importer-
exporter code number. IEC number is a pre-condition for exports from and
imports into India. IEC number entitles to import or export any item of non-
prohibited goods. This code number is made compulsory, now.
The Registered/Head office of the applicant shall make an application for
grant of IEC number to the Regional office of DGFT (known as Regional Licensing
Authority), having territorial jurisdiction over the firm, along with the following
documents:
(A) Profile of the exporter/importer
(B) Demand draft from a bank for Rs.1,000 as fees
(C) Certificate from the banker of the applicant
(D) Two copies of passport size photographs of the applicant, duly attested by
bank.
(E) If there is any non-resident investment in the applicant firm and such
investment is with full repatriation benefit, full particulars of such investment are
to be disclosed and approval of RBI for such investment is to be enclosed.
(F) Declaration on applicant’s letterhead that there is no association of the
applicant’s firm with caution listed firms.
The Licensing authority shall allot the IEC number in a prescribed format. There
is no expiry date for IEC number. It shall be valid till it is revoked. This number is
to be, invariably, quoted in all documents, prescribed by rules, in particular, in Bill
of Entry in case of imports and in Shipping Bill, in case of exports.
Prior to 1-1-1997, it was necessary for every exporter to obtain CNX number
from RBI.
Now, it is no longer required as IEC number has replaced CNX number.
8. Registration cum Membership Certificate
It is obligatory for every exporter to register with appropriate Export
Promotion Council (EPC) and obtain Registration cum Membership Certificate.
Any person applying for import or export licence or any other benefit under the
current Exim Policy is required to obtain Registration cum Membership Certificate
(RCMC). The benefits provided in the current Exim Policy are available only to
those having valid RCMC.
A registered exporter receives ocean of literature and necessary guidance
regarding export market information from the Council. Any exporter may obtain
RCMC from any Export Promotion Council relating to his main line of business.
There are different Export Promotion Councils such as Engineering Export
Promotion Council, Chemical Export Promotion Council, Apparel Export
Promotion Council and Textile Export Promotion Council etc. However, if the
export product is not covered by any EPC, the concerned Regional Licensing
Authority of DGFT can issue RCMC to the exporter. With the receipt of certificate,
the exporter will be known as “Registered Exporter”. The benefits provided in the
current Exim policy are available only to the registered exporters having valid
RCMC.
9. Registration with ECGC
The exporter should also register with Export Credit and Guarantee
Corporation of India (ECGC) in order to secure export payments against political
and commercial risks. It also helps to get financial assistance from commercial
banks and other financial organizations.
10. Registration under Central Excise Law
Central excise levy is applicable if the following conditions are satisfied:
(a) The duty is on the goods
(b) The goods must be excisable
(c) The goods must be manufactured or produced and
(d) The goods must be manufactured produced in India.
When Registration is to be Made: Every manufacturer/producer of goods has
to submit the prescribed application form to the jurisdictional Range officer of
the Central Excise for registration if the total value of the goods cleared for home
consumption, known as Domestic turnover, exceeds the exemption limit. The
exemption limit is Rs. 100 lakhs in case of SSI unit and Rs. 50 lakhs in case of non-
SSI units. However, the unit is exempt from registration, if the products
manufactured by it are not excisable. Manufacture of salt does not attract excise
duty. The incidence of duty is attracted when the goods are cleared from the
factory/warehouse of the manufacturer.
Allotment of Registration Number: Once the unit is registered with Central
Excise Authority, they allot Excise Control Code (ECC) Number. The ECC number is
15 digit code number with the first 10 digits being the same as Permanent
Account Number.
Applicability of Excise Duty to Exporter: In respect of applicability of excise duty
on exports concerned, goods enjoy exemption from duty on the final product,
meant for export. Where exemption is not availed, refund of
excise duty paid is made, after actual export. Secondly, refund of excise duty is
made on inputs used in the manufacture of goods, meant for export. The exporter
has to submit the prescribed form ARE-1, in sixtuplicate, to the competent central
excise authority for the central excise clearance of the goods.

11. Registration with other Authorities

It is desirable for the exporters to become members of local Chamber of
Commerce, Productivity Council or any other trade promotion organization
recognized by the Ministry of Commerce or Industry. Local membership helps the
exporters in different ways, including in obtaining Certificate of Origin, which is
vital for exports to certain countries.

12. Registration for Business Identification Number

The exporters have to obtain PAN based Business Identification Number (BIN)
from the Directorate General of Foreign Trade prior to filing for customs
clearance of export goods. Purpose of BIN is to bring a common identification
number to all persons dealing with various regulatory agencies, such as the
Central Excise and Customs Department, Income Tax Department, Offices of
Director General of Foreign Trade etc. All assesses would be considerably
benefited if they have to obtain just one identification number for use by the
various Government agencies.

13. Export Licensing

Many items of goods are free for exports without obtaining any license, if they
do not fall in the Negative List.
The Negative list consists of goods the import or export of which is prohibited,
restricted through licensing or otherwise canalized.
Part–I :
Prohibited Items: These items can not be exported or imported. These items
include wild life, exotic birds, wood and wood products in the form of logs,
timber, pulp and charcoal.
Part–II :
Restricted Items: These are the items, export or import of which is restricted
through license. They can be imported or exported only in accordance with the
regulations governing in this behalf.
Part–III : Canalized Items: Goods, which are canalized, can be imported or
exported through the canalizing agency, specified in the Negative List. The
Director General of Foreign Trade may issue a licence to any other person to
import or export those items, which are included in the Negative List.
It is evident from the above, all goods may be exported barring items in the
Negative List. Items in the Negative list can be prohibited items, imported or
exported by licence or through the designated canalizing agency or others under
special conditions. So, it is necessary for the exporter to check the nature of the
item before he enters into the contract or even makes efforts to secure the
export order. Needless to add, the item of export agreed upon should not fall in
the banned list.

Qu 3. How have the draconian provisions on FERA been modified in the FEMA?

The object of FERA 1973 was to conserve foreign exchange and prevention of
leakage of it due to adverse position of foreign exchange balance in India.
After liberalisation in 1992, various sectors for opened for FDI time to time which
radically changed the foreign exchange position. Instead of negative balance,
there was substantial foreign exchange reserve so it was felt necessary to drop
out the draconian law of FERA.

The object of FEMA which replaced FERA from 1st June, 2000 was:
To consolidate and amend the law relating to foreign exchange with the object to
facilitating external trade and payments and for promoting the foreign exchange
market in India.

So the new law is for the management of foreign exchange instead of regulation
of foreign exchange. The draconian provisions were dropped out in new
enactment.
1. The size of the bare act got reduced to 49 sections in place of 81 sections in
FERA.
 Under the liberalized exchange rate management system, exporters are permitted
 to maintain foreign currency balances in separate foreign currency accounts known
2. The violation of FERA was criminal offence while it is civil offence under FEMA
3. The Offences were not compoundable under FERA while it is permitted under
FEMA.
4. Citizenship was the criteria for residential status under FERA while number of
182 days stay in India is the criteria for residential status under FEMA.
5. Several provisions for payments viz. Basic Travel Quota (BTQ), business travel,
export commission, gifts, and donations liberalised remittance scheme are the
very friendly measures for easy movement of foreign exchange under FEMA.
6. FEMA is a civil law while FERA was a very-2 draconian police or criminal law.
The objective of FERA was to conserve foreign exchange and put them to
judicious utilization. The focus of FEMA is to facilitate external trade and
payments and to promote and maintain an orderly growth of foreign exchange
market, in India. FEMA has diluted the rigorous enforcement provisions that were
the hallmark of the erstwhile legislation. The FEMA is more transparent in its
application.
MAIN PROVISIONS OF FEMA
The Act provides:
 The amount representing the full value of goods exported should be
realized and paid to the authorized dealer on the due date for payment or
within a period of six months from the date of shipment, whichever is
earlier. In case of exports of software in non-physical form, the period is
reckoned from the date of invoice. This period restriction is not applicable
in respect of shipment made on deferred payment terms or consignment
basis.

 Ceiling on agency commission at 12.5% of FOB value has been abolished

with effect from 1st June 2000, date when FEMA has come into force.

 Residents going abroad for business purposes or attending seminars or

participating in conferences can avail foreign exchange up to $ 25,000 per
trip, without the approval of RBI. Period of stay is immaterial.
 Under the liberalized exchange rate management system, exporters are
permitted to maintain foreign currency balances in separate foreign
 currency accounts known as ‘Exchange Earners Currency’ (EEFC) with effect
1-3-1994.

FEMA is administered through various provisions as under:

1.FEMA 1999 (total 49 sections)
2. Rules prescribed by Central Government (six set of rules)
3. Regulations made by RBU (22 sets of regulations issued so far)
4. Master circulars and circulars issued by RBI
5. RBI instructions to authorised persons (A I P series) directions
6. Industrial Policy issued by Ministry of Industry
7. External Commercial Borrowings (ECB)/GDR/ADR policy announced by Ministry
of Finance
8. Certain other relevant provisions under Income Tax, Custom law, FCRA,
SAFEMA, COFEPOSA

Discuss in details the provisions pertaining to:

a. Change of Tenor of Bill

1. In terms of Paragraph C.14 of the AP DIR series Circular No. 12 FEMA

Notification issued by RBI (FED), banks have been permitted, on request
from exporters, to allow change of the tenor of the original buyer/
consignee, provided inter alia, the revised due date of payment does not
fall beyond six months from the date of shipment.
2. In such cases as well as where change of tenor up to six months from the
date of shipment has been allowed, it would be in order for banks to
extend the concessional rate of interest up to the revised notional due
date, subject to the interest rates Directive issued by RBI.
Note: Ceilings rates of interest on credit extended to exporters as prescribed in
the circular are lower than the maximum lending rates normally charged to
other borrowers and are, therefore, indicated as concessive in this sense.

b. Delayed Remittance

Charging interest on delayed remittance – ‘Delayed Period Interest’

The existing procedure for remittance of collection of Government

receipts/revenues for crediting into Government account maintained at CAS,
RBI, Nagpur has been reviewed by a Committee set up by Government of India
with members drawn from Government, Reserve Bank of India and a few
select Public Sector Banks. Based on recommendations of the Committee, it
has been decided as under:

Permissible period for remittance of Government Revenues

a) Local Transactions - Wherever the collecting branch and focal point branch
are in the same city/agglomeration, the settlement of transaction with CAS,
RBI, Nagpur is required to be completed within T+3 working days (where T is
the day when money is available at the branch). For calculating the working
days, the RBI calendar will be followed.

b) Outstation Transactions - Wherever the collecting branch and the focal

point branch are in different city/agglomeration, the settlement of transaction
with CAS, RBI, Nagpur is required to be completed within T+5 working days
(where T is the day when money is available at the branch). For calculating the
working days, the RBI calendar will be followed.
1. Total amount, which has not been remitted in time and the penalty due
along with the details of the individual cases will be intimated by concerned
Ministry /department to the Head Office of the bank concerned on a
quarterly basis by the 15th of the following month. The period of delay for
this purpose will be counted from the date of receipt of the collection at
the receiving branch (actual realization of money in the bank) till they are
reported to RBI, CAS, Nagpur for credit to Government.
2. The present system of charging penalty at Bank Rate +2 % will continue.
The charges shall henceforth be known as ‘Delayed Period Interest’.

3. There will be no change in the permissible remittance period or penal

charges for the various Deposit Schemes of the Ministry of Finance.

4. Delayed period interest will be recoverable from the banks regardless of

the amount involved.

c. Payment of Export Claims

Authorised dealers are permitted to remit export claims, by exporters, on
application by letter containing particulars such as Importer-Exporter code
number, GR / PP form number, date of shipment, name of commodity,
invoice value, name and address of claimant, nature and amount of claim
as also documentary evidence in support of the claim, provided-

1. the amount does not exceed 15% of invoice value;

and
2. the relative export proceeds have already been realised and
repatriated to India.
In case of exporters who have been in the export business for more than three
years, remittances may be allowed without any percentage ceiling, provided-

1. the exporter is not on the Exporters' caution list of Reserve Bank;

and
2. his track record is satisfactory (cf. para 6C.13) In all such cases of
remittances, the exporter should be advised to surrender
proportionate incentives, if any, received by him.
d. Retention of Foreign Currency Amount
For the purpose of clause (a) and clause (e) of Section 9 of the Act, the Reserve
Bank specifies the following limits for possession or retention of foreign
currency or foreign coins, namely retention by a person resident in India of
foreign currency notes, bank notes and foreign currency travellers' cheques
not exceeding US$ 2000 or its equivalent in aggregate, provided that such
foreign exchange in the form of currency notes, bank notes and travellers
cheques;
1. was acquired by him while on a visit to any place outside India by way of
payment for services not arising from any business in or anything done
in India; or
2. was acquired by him, from any person not resident in India and who is
on a visit to India, as honorarium or gift or for services rendered or in
settlement of any lawful obligation; or
3. was acquired by him by way of honorarium or gift while on a visit to any
place outside India; or
4. represents unspent amount of foreign exchange acquired by him from
an authorised person for travel abroad.
Case study

Qu.1. Prepare one set of Documents as required by L/C issuing Bank of YOUR
COUNTRY.
 Inspection Certificate
 Certificate of Origin

The issuing banks' role is to provide a guarantee to the seller that if compliant
documents are presented, the bank will pay the seller the amount due and to
examine the documents, and only pay if these documents comply with the terms
and conditions set out in the letter of credit.

When making payment for product on behalf of its customer, the issuing bank
must verify that all documents and drafts conform precisely to the terms and
conditions of the letter of credit.

Documentary requirements

 Drafts (Bill of Exchange)

These are often drawn on the Issuing or the confirming bank. This is to say
that the Drawee on such bills will be a bank rather than the buyer. The Bills
will reflect whether the Credit is payable at sight or contains a credit term

 Commercial Invoice
The billing for the goods and services. It includes a description of
merchandise, price, FOB origin, and name and address of buyer and seller.
The buyer and seller information must correspond exactly to the
description in the letter of credit. Unless the letter of credit specifically
 states otherwise, a generic description of the merchandise is usually
acceptable in the other accompanying documents.
 Transport documents such as a Bill of Lading or Airway Bill
A document evidencing the receipt of goods for shipment and issued by a
freight carrier engaged in the business of forwarding or transporting goods.
The documents evidence control of goods. They also serve as a receipt for
the merchandise shipped and as evidence of the carrier's obligation to
transport the goods to their proper destination.
 Insurance Policy or Certificate
This will be necessary if the contract is one which requires the exporter to
arrange for the cargo insurance, that is, CIF, CIP, DDU or DDP. Such cover
must be for the risks and the amount specified.
 Additional Documents

Above represent the typical documentary requirements on a Credit but

there could be obviously be a number of other documents depending on
the specific consignment involved. These may include Certificate of Origin,
Inspection Certificates, Consular Invoices, Clean Reports of Findings,
Standards Certificates, Black List Certificates, Psychosanitary Certificates,
Veterinary Certificates.

 Warranty of Title
A warranty given by a seller to a buyer of goods that states that the title
being conveyed is good and that the transfer is rightful. This is a method of
certifying clear title to product transfer. It is generally issued to the
 purchaser and issuing bank expressing an agreement to indemnify and hold
both parties harmless.
 Letter of Indemnity
specifically indemnifies the purchaser against a certain stated circumstance.
Indemnification is generally used to guaranty that shipping documents will
be provided in good order when available.

Qu.2 Write short Notes on:

a) Let Export Order on the shipping bill indicates completion of physical

examination of goods. It also allowed entry to the Dock on the strength of the
checklist and other declarations filed by the exporter in the Service Center
b) Let Ship Order is given on the copy of shipping bill by the preventive officer,
which gives authorization to the master of vessel to ship goods on board.
c) Customs Appraiser examines export documents while Shed Appraiser
examines Export goods

d) The Customs Appraiser/Examiner examines shipping documents and appraises

the value having regard to the following considerations:

1) That the value and the quantity declared in the shipping Bill is the same as
in the export order/letter of credit.

2)That the formalities regarding exchange control, pre-shipment quality

control inspection etc., have been duly completed.
Customs Appraiser examines export documents while Shed Appraiser examines

After examination of documents and appraisement of value, the Customs

Appraiser makes an endorsement on the duplicate copy of the Shipping Bill
giving directions to the Dock Appraiser about the extent of physical
examination of the cargo be conducted at the docks. All the documents,
except GR (Original) Form, the original Shipping Bill and a copy of the
Commercial Invoice are returned to the Forwarding Agent to be presented to
the Dock Appraiser.

Dock Appraiser physical examination of export cargo. The Dock Appraiser

after conducting physical examination records examination report and makes
"Let Export" endorsement on the duplicate copy of the Shipping Bill and hands
it over to the Forwarding Agent along with all other documents to be
presented to the Preventive Officer of the Customs Department who
supervises the loading of cargo on board the vessels.

e) Port Procedures