*EXPORT PROCEDURES

AND DOCUMENTATION

*Contents:*Meaning of Export*Why Export?*Export Procedure & Documents Required

MEANING OF

EXPORT

To send goods or services across national frontiers for the purpose of selling and realizing foreign exchange.

A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation's gross output. If used for trade, exports are exchanged for other products or services. Exports are one of the oldest forms of economic transfer, and occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies.

Why Export?*Access: Today, improvements in trade finance, the Internet, and trade

agreements have dramatically increased access to markets worldwide.

*Profitability: Exporting can be profitable for businesses of all sizes. On average, sales grow faster, more jobs are created, and employees earn more than in non-exporting firms.

*Faster growth: Selling in an overseas markets can help your business grow at a faster rate than if you were confined to New Zealand markets.

*Reduced local market dependence: Selling in different countries diversifies risks such as exposure to economic conditions or seasonal factors. During a local economic downturn your overseas customers may be unaffected.

*Improved innovation: Exposure to new ideas, technology and processes can help you company develop innovative products and services.

*Greater competitiveness: Trading in the global marketplace increases your exposure to international best practice, ideas and alternative ways of doing business – improving your chances of competing at home and overseas.

*Expand Sales: Exporting can help increase sales by extending your market base to overseas countries where you can find new customers and niche markets.

Why Export?

*EXPORT PROCEDURE

*Registration*Obtain Export License*Shipping Bill to be submitted*Excise Formalities at the Time of Export*Duty drawback Formalities*G R / SDF / SOFTEX Form under FEMA*Other Documents Required*Check in Customs*Examination of goods before export*“Let Export” Order by Customs Authorities*Processing under EDI system*Conveyance to leave on written order*Other Customs Procedures

Registration1. Registration with Director General of Foreign Trade (DGFT):

It is necessary to get registered with DGFT, Ministry of Commerce, Government of India.

DGFT provides exporter a 10 digits IEC code without which no exporter is allowed to export aboard.

However, if the goods are exported to Nepal, or to Myanmar through Indo-Myanmar boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-.

While submitting an application form for IEC number, an applicant is required to submit the following:

PAN number, as only one IEC is issued against one PAN.

Current Bank A/c number and Banker’s Certificate.Bank Receipt (in duplicates)/Demand Draft for

payment of the fee of Rs. 1,000/-.

Registration

Registration2. Registration with Export Promotion Council:

In order to enable you to obtain benefits/concession under the export-import policy, you are required to register yourself with an appropriate export promotion agency by obtaining registration-cum- membership certificate.

An application for registration should be accompanied by a self certified copy of the IEC number. Membership fee should be paid in the form of cheque or draft after ascertaining the amount from the concerned EPC.

The RCMC certificate is valid from 1st April of the licensing year in which it was issued and shall be valid for five years ending 31st March of the licensing year, unless otherwise specified.

3. Registration with Income Tax Authorities:

Goods exported out of the country are eligible for exemption from both Value Added Tax and Central Sales Tax. So, to get the benefit of tax exemption it is important for an exporter to get registered with the Tax Authorities.

4. Registration with Commodity Boards:

Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. At present, there are five statutory Commodity Boards under the Department of Commerce. These Boards are responsible for production, development and export of tea, coffee, rubber, spices and tobacco.

Registration

EXPORT LICENSE:An export license is a document issued by the appropriate licensing agency after which an exporter is allowed to transport his product in a foreign market. Export license depends on the nature of goods to be transported as well as the destination port. So, while making the determination one must consider the following necessary points:

What is being exported? Where it is being exported? Who will receive the items? What will be the use of the items?

Canalisation:Canalisation is an important feature of Export License under which certain goods can be imported only by designated agencies. For an example, an item like gold, in bulk, can be imported only by specified banks like SBI and some foreign banks or designated agencies.

Application for an Export License:Export license are issued only for the goods mentioned in the Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application can be submitted to the Director General of Foreign Trade (DGFT).

Exports Free unless regulated:The Director General of Foreign Trade (DGFT) from time to time specifies through a public notice according to which any goods, not included in the ITC (HS) Classifications of Export and Import items may be exported without a license. Such terms and conditions may include Minimum Export Price (MEP), registration with specified authorities, quantitative ceilings and compliance with other laws, rules, regulations.

EXPORT LICENSE:

DocumentsIt is said that “International Trade is a sale of documents”. It is very important to clearly understand the documents involved in the transaction to avoid the risk factors and adhere to the legal obligations. The entire documentation in export trade can be basically divided into two categories:

Export Documents

Pre-shipment

Documents

Post – Shipment

Documents

Pre-shipment DocumentsPre-shipment documents are those that an exporter has to generate, authenticate and submit to the concerned authorities and departments to get the necessary clearances, prior to the actual shipment of the cargo, so that the cargo can be shipped out with valid documents. The pre-shipment documents are generally prepared when the product is ready for export and prior to shipment. The standard pre-shipment documents include:

Customs Invoice Packing List G R Form (original and duplicate) ARE-1 Form (original and duplicate) Copy Of Export order Letter Of Credit Shipping Bill (entire set) Export Licence(for notified items) Certificate Of Origin Certificate Of Inspection Any Other Documents (as required in L/C or by Customs)

Post-shipment DocumentsThe post-shipment documents comprise the certified copies of some of the main pre-shipment documents and certain additional documents to be generated and compiled by the exporter so that the proof of shipments can be properly presented to the negotiating bank for collecting the payments through L/C or for presentation to the foreign buyer for collection of payment through the nominated bank. The standard pre-shipment documents include:

Custom attested invoice Custom attested packing list Copy of Export Order / Copy Of LC Commercial Invoice Consular Invoice (If Specified) Bill of Lading / Air Way Bill Certificate of Origin Certificate of Inspection (If Specified) Bill of Exchange (Draft) G R Form (Duplicate) Any other document specified in Export Order / LC

Shipping Bill to be submitted by ExporterShipping Bill and Bill of Export Regulations prescribe form of shipping bills. It should be submitted in quadruplicate. If drawback claim is to be made, one additional copy should be submitted. There are five forms :

Shipping Bill for export of goods under claim for duty drawback- it should be in Green colour

Shipping Bill for export of dutiable goods - it should be in yellow colour.

Shipping bill for export of duty free goods - it should be white colour

shipping bill for export of duty free goods ex-bond - i.e. from bonded store room - it should be in pink colour

Shipping Bill for export under DEPB scheme - Blue colour.

The shipping bill form requires details like:• Name of Exporter• Name of Consignee• Invoice Number• Details of packing• Description of goods• Quantity• FOB Value etc. Appropriate form of shipping bill should be used.

Customs authorities give serial number (called 'Thoka Number') to shipping bill, when it is presented.

Shipping Bill to be submitted by Exporter

Excise formalities at the time of Export

If the goods are cleared by manufacturer for export, the goods are accompanied by ARE-1 (earlier AR-4).

This form should be submitted to customs authorities.

The Customs Officer certifies that the goods under this form have indeed been exported.

This form has then to be submitted to Maritime Commissioner for obtaining ‘proof of export’.

The bond executed by Manufacturer-exporter with excise authorities is released only when ‘proof of export’ is accepted by Maritime Commissioner or Assistant Commissioner, where bond was executed.

Duty drawback formalities

If the exporter intends to claim duty drawback on his exports, he has to follow prescribed procedures and submit necessary papers. The procedures are discussed in the chapter on ‘Export Incentives'. He has to make endorsement of shipping bill that claim for duty drawback is being made. If he fails to do so due to genuine reasons, Commissioner of Customs can grant exemption from this provision.

G R / SDF / SOFTEX Form under FEMA

Reserve Bank of India has prescribed GR / SDF form under FEMA.

GRFGuaranteed

Receipt Form

Used whenshipping bills are processed

manually

SDFStatutory

Declaration Form

Used when shipping bills are processed electronically

Other documents required for export

The following are the export documents required to be prepared by the exporter:

• 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.• ARE-1 (both original and duplicate) and invoice.• Inspection/ Examination Certificate.

In case of excisable goods, from ARE-1 prepared at the time of clearance from factory should also be submitted.

Check in customs

Document submitted is processed by customs authorities, and following are checked:

Value and classification of goods under drawback schedule in case of drawback shipping bills.

Export duty / cess if applicable. Advance License shipping bills are checked to ensure that description

in invoice and final product specified in Advance License matches. If necessary, samples may be drawn and assessment may be done after visual inspection or testing.

Exportability of goods under EXIM policy and other laws - Some exports are totally prohibited under various Acts e.g. items restricted or prohibited under Foreign Trade (Regulation) Act; antiques; art treasures; Arms; narcotics etc. Some items like tea, coffee and coir products can be exported only against authorization/ license under respective Acts.

Examination of goods before export

• After shipping bill is passed by export department, the goods are presented to shed appraiser (exports) in dock for examination.

• Goods will be examined by examiner.• This inspection is necessary:

to ensure that prohibited goods are not exported. goods tally with description and invoice. duty drawback, where applicable, is correctly

claimed.

“Let Export” Order by Customs Authorities

Customs Officer will verify the contents and after he is satisfied that goods are not prohibited for exports and that export duty, if applicable is paid, will permit clearance by giving ‘let ship’ or ‘let export’ order.

GR-1, ARE-1, octroi papers, quota certification for export etc. are also signed. Exporter’s copy of shipping Bill, GR-1, ARE-1 etc. duly certified are handed over to exporter or CHA

Processing under EDI system

• Under EDI system, declarations in prescribed form are to be filed through ‘Service Centre’ of customs.

• After verification, shipping bill number is generated by the system, which is endorsed on printed checklist generated for verification of data.

• Goods are inspected at docks on the basis of printed check list. • All documents are submitted to Customs Officer along with

checklist.• If goods and documents are found in order, ‘let export’ order is

issued. Then two copies of Shipping Bill are generated: Customs Exporter’s copy Exporter’s copy

Processing under EDI system

• Exporter’s copy is generated only after EGM (Export General Manifest) is submitted by shipping agent.

These are signed by CHA and customs officer and then by Appraiser.

• Exporter’s copy of Shipping Bill, SDF, ARE-1 etc. duly signed are handed over to exporter or CHA.

SDF, ARE-1, octroi papers, quota certification for export etc. are also signed.

Conveyance to leave on written order

• The vessel or aircraft which carry export goods cannot leave the customs station unless a written order is given by Custom Officer.

• Such order is given only after:(a) export manifest is submitted, (b) shipping bills or bills of export, bills of transshipment etc.

are submitted,(c) duties on stores consumed are paid or payment of the

same is secured, (d) no penalty is leviable,(e) export duty, if applicable, is paid.

Such permission is not required if the conveyance is carrying onlyluggage of occupants.

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