Complete It
Complete It
1. Indent
Indent is an order placed by the importers to the exports. It contains
the essential information regarding the goods to be imported i.e.
quality, quantity, packing, packaging, mode of payment, insurance,
price of good, etc.
When the price at which the goods are to be purchased by the
importer is clearly stated in an order (Indent), with no options to the
exporter, then it called "Closed Indent".
If the prices are not mentioned by the importer and it is left to the
discretion of the exporter, then it is known as "Open Indent".
Indent can be sent by the importer directly to the exporter or it may be
sent through the indent agencies.
2. Mate's Receipt
Mate's Receipt is a receipt issued by Captain / Master / Mate of the
ship.
The Mate of the ship after receiving the goods on the board and after
inspection of the goods issues this receipt.
The loading of the goods on the ship is possible only after presentation
of 'shipping order'. Mate's receipt contains details regarding name of
ship, date on which the goods are loaded, description of goods,
numbers and marks on the packages, conditions of cargo, etc. This
receipt is issued to the exporter who has to present the mate's receipt
in the office of shipping company by which he will get bill of lading.
Mate Receipt may be clean or qualified. It is qualified if there is some
defect in the cargo loaded on the ship, in such case the captain makes
adverse remark on the receipt. In case of clean receipt, the cargo in
good condition and the adverse remark is not mentioned. The bill of
lading is always prepared on the basis of mate's receipt. In short
mate's receipt is an acknowledgement of the receipt of goods on board
of the ship.
3. Bill of Landing
4. Letter of Credit
Letter of Credit is an important document in international trade. It is for
safety and security of the exporter as regards payment for the goods
to be exported.
Letter of Credit can be defined as "an undertaking by importer's bank
stating that payment will be made to the exporter if the required
documents are presented to the bank".
Before executing an export order, the exporter of goods desires to
have adequate proof regarding the credit worthiness of the importer. It
is issued by the bank (in the importer's country) in favour of the foreign
supplier, it contains a guarantee or an undertaking by one bank that
the bill of exchange drawn on the importer will be honoured on
presentation to the extent of the amount specified in the letter. Letter
of Credit may also be issued on the strength of the business of the
importer with the bank.
The Letter of Credit also contains certain conditions such as date of bill,
date for shipment, shipment by approved vessels with approved flags
packing, etc.
The advantages of the letter of credit to the exporters are many such
as :1. Exporter gets safety and security of payment for the goods exported.
2. The exporter gets discounting facility from the bank.
3. It enables the exporter to take more initiative in promoting exports and earns
foreign exchange for his country.
5. Certificate of Origin
6. Consular Invoice
Consular Invoice is an important document used in foreign trade. It is
issued by the Trade consulate of the importing country stationed in the
exporters country. Consular is a government officer having office in
other countries. This document is also obtained by the exporter and is
sent to the importer along with other shipping documents. This invoice
is also useful for importer at the time of payment of importy duty. For
obtaining document from the consular the exporter has to pay the
prescribed fees. This document contains information about goods and
the value of goods.
Sometimes, the custom authorities desire to open the packages and
scrutinize the goods for the purpose of calculating custom duty. Due to
which there is delay in clearing the goods from dock or port. To avoid
this, one copy is sent to the custom authorities of the importing
country, second copy is retained by the consulate office for reference
and the third copy is given to the exporter which is forwarded by
exporter to the importer with other documents.
7. Bill of Entry
Bill of entry is a document required in case of import of goods. It is like
shipping bill in case of exports. A Bill of Entry is the document
testifying the fact that goods of the stated value and description in
specified quantity are entering into the country from abroad. The
customs office supplies this form which is prepared in triplicate. Three
different colours are used to prepare bill of entry. One copy is retained
by custom department, other is retained by port trust and the third is
kept by the importer.
The bill of entry is divided into three classes :1. Entry for duty free goods.
2. Entry of goods which are meant for consumption at home.
3. Entry for goods to be re-exported.
In India, all these entries are on the same form.
The contents of Bill of Entry are :1. Name and address of importer.
2. Import License number of importer.
3. Name and address of exporter.
4. Name of port where goods are to be cleared.
5. Value of goods.
6. Description of goods.
7. Rate and amount of import duty payable.
8. Other relevant details.
8. Dock's Receipt
Dock authorities issue dock's receipt once the goods are stored in the
sheds at the docks. The Clearing and Forwarding agent clears the
documents from the customs authorities. Then he approaches the Port
Trust authorities and obtains the Carting Order. The Carting Order is
the permission to cart the goods inside the docks. The goods are then
brought inside the docks. The goods may be loaded immediately on
the ship. Many-a-times immediate loading on ship is not possible. The
goods are then stored in sheds at the port or docks. The dock
9. Commercial Invoice
Commercial invoice is a basic export document. It contains all the
information, which is required for preparation of all other documents. It
is the exporter's bill for goods which the importer has to pay.
Commercial invoice contains the following information :1. Name and address of exporter and importer.
2. Description of goods (weight, quality, quantity, rate, etc.)
3. Value of goods after discount, if any.
4. Net amount payable by the importer.
5. Terms and Conditions of sale
Other details of shipment to be included are :1. Name of ship on which goods are loaded.
2. Letter of Credit Number.
3. License number of exporter.
4. Bill of lading number.
5. Packaging Specifications.
6. Shipping terms and Conditions, etc.
The document used in foreign trade.
Foreign trade involves the usage of various document. Some of the
important document used in foreign trade are as follows:
I. Bill of Lading:
A bill of lading denotes an evidence of contract where the ship-owner
acknowledges the receipt of the goods on board the ship and
()EXPORT DOCUMENTS
Documents required for an international sale can vary significantly
from transaction to transaction, depending on the destination and
the product being shipped. At a minimum, there will be two
documents: the invoice and the transport document. The buyer
will usually provide the seller with a list of documents needed to
get the goods into his country as expeditiously and inexpensively
as possible. Some documentary requirements are not open to
negotiation, as they are needed by the importer to clear customs
at the port of destination. This presentation discusses
documentation in relation to export letters of credit.
When the letter of credit payment method is used for an export
sale, each document presented under the terms and conditions of
the letter of credit must:
1) Conform to all L/C terms and conditions.
2) Comply with the UCP 500.
3) Agree with the data content of every other document.
For the following documents listed, the number in parenthesis
refers to the relevant UCP 500 article.
THE BILL OF EXCHANGE / DRAFT (UCP Article 9)
Almost every letter of credit presentation and documentary
collection is accompanied by a draft. This demand for payment is
drawn by the seller on the payee. The payee on a letter of credit
draft is almost always a bank. For a documentary collection it
would be the buyer.
COMMERCIAL INVOICE (UCP Article 37)
The accounting document claiming payment from the buyer.
Normally an export invoice would include:
- Sellers name and address
- Buyers name and address
- Issue Date
- Invoice Number
- Shipping marks and numbers
- Term of Sale: e.g. FOB, etc.
- Shipping information
- Info required by L/C
- Country of Origin
- L/C number
- Merchandise description, P.O. number, unit price, and total price
CONSULAR INVOICE / VISAED INVOICE (UCP Articles 20, 21)
For exchange control and balance of payments reasons, some
Invoice:
Consular Invoice:
It is an invoice made out in a specially printed form of theexporter and is shown before
the consul of importing country stationed in theexporters country as being correct in all
respect. The consular of theimporting country then certifies the invoice. A consular
invoice enables theimporter country to have all accurate record of the merchandise
shipped.
Legalized Invoice:
Some Middle East countries require that the commercial invoice should be countersigned
and stamped by the authorized officer in their Embassy or the consulate in the exporters
country instead of consular invoice.
Black-listed Certificate:
Under this certificate, the exporter has to provide aBlack-listed certificate evidencing that
all parties involved including the bank and shipping line are not black-listed. Due to
strained political relation or anyother reasons some countries do not allow transactions
with some particular countries. These countries and the exporters are treated as Blacklisted.
Health, Veterinary and Sanitary Certificate/Photo Sanitary Certificate,Certificate of Analysis
: This certificate is generally needed in purchase of foodstuff, hides and livestock and in
the use of packing materials. It is issued by the recognized health authorities in the
exporting countries. The certificate confirms that the shipment meets the required health,
veterinary and sanitary standards.
c.Insurance documents
There are some risks of damage, loss or destruction of goods during the time of
transit.Marine Insurance plays a very vital role in this respect. The scope of Marine
Insuranceextends to Sea, Land and Air conveyances only in respect of good from one
country toanother country or one place to another place with short distance through the
vessel, craftwhich the goods are carried or conveyed. Marine insurance comprises of the
following:
Marine Cargo Insurance
Marine Hull Insurance
Freight
There are various types of marine insurance policies, which differ in respect of the
cover provided to the insured. The main types are as follows:
i)Floating policy:A floating policy is a contract of insurance means to cover a number of
shipments, the details of which are not finalized when theinsurance contract is concluded.
Under the floating policy, insurance cover is given in general terms and details of
shipments are declaredsubsequently and endorsed in the policy.
ii)Time policy:It covers the subject matter of insurance for a period of time.
iii)Voyage policy:It insures the subject matter from one place to another irrespective of
the length of time taken.
iv)Mixed policy:It covers both a voyage and a period of time exceeding 30days.
v)Open cover or Blank policy: This policy is automatically covers all theshipments of the
exporter up to an estimated amount during a given period.
vi)Specific policy: A specific policy is a contract of insurance, which coversa specific
shipment.
vii)Valued policy:A valued policy is one, which specifies the agreed value
of merchandise insured.
viii)Unvalued policy:In this type of policy, the value of the merchandiseinsured is not
specified. The insurable value of the goods is ascertainedlater on subject to the limit of
the sum insured.
d.Transport Documents:
This document indicates that the goods, which are delivered to the named
shippers,airlines or transporters, must be carried to a named port, airport or place of
delivery.Following transport documents are being used at present in the international
trade
:i)Airway Bill/Air consignment Note:
This document confirms the delivery of goods to an airline or its agent for transportation
by air to a named consigneeaccording to the defined and agreed terms.
ii)Mates Receipt:
It is a prima facie evidence of the quantity and condition of thegoods received. When the
goods are delivered to the shipping company for transportation, at first a temporary
receipt is issued by the ships Chief Officer acknowledging the delivery of the goods
alongside the carrying vessel which isknown as Mates Receipt. On the basis of Mates
receipt, the shipper has to paythe port dues and other charges.
iii)Bill of Lading:
A bill of lading is a document which is issued y the transportationcarrier to the shipper
acknowledging that they have received the shipment of goods and that they have been
placed on board a particular vessel which is boundfor a particular destination and states
the terms in which these goods received areto be carried. Normally a bill of lading
contains the port of shipment and of destination, the name of consignee, the number,
contents and identification marks of the goods shipped and the amount of freight paid
or to pay.The bill of lading serves three main purposes,
as a document of title of the goods
as a receipt from the shipping company and
as a contract for transportation of the goods.
v)Roadway Bill:
It is an internationally approved document of transaction when goods are being sent by
road through the countries that had ratified the CMR (Convention Merchandise Routers).
vi)Post Parcel Documents:
It is a receipt issued by Post Office for the parcel. The post office has received for direct
delivery to the addressee. It is not a document of title of goods and generally contains the
post office stamp.
e.Financial and financing documents
There are some documents used for payment in international trade transaction such as:
Bill of Exchange
Promissory Note
Trust Receipt
Letter of Credit
Bill of Exchange:Bill of Exchange is one of the key financial instruments inInternational
Trade. It is an instrument by which sellers can obtain the payment fromtheir buyers for
the invoiced value of goods.As per section 5 of the Negotiable Instrument Act. 1881, A
bill of Exchange is aninstrument in writing containing an unconditional order, signed by
the market,directing a certain person to pay on demand or at a fixed or determinable
futuretime a certain sum of money only to, or to the order of, a certain person or
the bearer of the instrument.
Features of a Bill of exchange:
a . I t m u s t b e u n c o n d i t i o n a l o r d e r.
b.It must be written order.
c.Addressed by one person to another. The term person includescorporations,
partnerships as well as natural persons.
d . D u l l y s i g n e d b y t h e p e r s o n g i v i n g t h e o r d e r.
e.Bill must be payable on demand or on a determinable date.
f . T h e B i l l o f E x c h a n g e m u s t b e m a k e p a y a b l e t o o r d e r o r t o bearer.
g.It must indicate the payment of a certain sum
Parties of a Bill of exchange:
There are six parties involved in a bill of exchange. They are:
a.The Drawer:
b.The drawee:
c . T h e P a y e e :
d.The endorser:
e.The endorsee:
f.The acceptor:
Promissory Note:
It is a negotiable instrument. As per section 4 of the NegotiableInstrument Act. 1881, A
promissory note is an instrument in writing (not being a bank-note or a currency note)
containing an unconditional undertaking signed by the maker, to pay on demand or at a
fixed or determinable future time a certain sum of money only to, or to the order of a
certain person, or to the bearer of the instrument.
Features of a promissory note:
a)It must be unconditional promise
b)Must be written by one person to another