Project capstone

PROJECT REPORT
ON
“EXPORT PROCEDURE & DOCUMENTATION”
NAME : DARSHANKUMAR K. VAJA
ROLL NO. : 91900373002
GUIDELINES UNDER :
DR. RAVIRAJ SINH GOHIL
(PROGRAM CO – ORDINATOR)
DR. VIRAL TOLIA
( CAPSTONE MINOR )

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I am very thankful to all those involved who have enabled me to
successfully complete my project on ‘Export Procedure &
Documentation’.
I would like to express my sincere gratitude to Dr. Ravirajsinh
Gohil and Dr. Viral Tolia without whose support and encouragement I
would not have achieved what I have today.
I am heartily thankful to the whole unit of LUCKY EXPORT for
the warm response they had given me to complete my summer training. I
am also thankful to Mr. ANIL WATS (GENERAL MANAGER –
EXPORTS ) for giving me opportunity to undertake this project in his
reputed organization.

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S.No. Particulars Page No.
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Acknowledgement
Executive Summary
Statement Of Obejective
Focus Of The Study
Company Profile
Research Methodology
Procedure Of Exports and Its Documentation
1. Pre-Export Activities
2. Processing Of Export Order
i. Stage 1st
-- Confirmation of Export
Contract
ii. Stage 2nd
– Sourcing of Export Order
iii. Stage 3rd
– Dispatching
iv. Stage 4th
– Pre Shipment Operations
v. Stage 5th
– Custom Clearance
vi. Stage 6th
– Post Shipment Operations
3. Work Flow Chart of Company
Modes Of Payment
Government Incentives For Exports
Summary
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Conclusion
Limitations of the Study
Bibliography
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EXECUTIVE SUMMARY
The present study is a comprehensive study of EXPORT
DOCUMENTATION AND PROCEDURE . The research work is done
in collaboration with LUCKY EXPORT to assess the overall export
procedure & documentation. On concentrating the objective of project,
the maximum information is summed up sequentially. The executive
summary of the study describes...
Objective
The main objective of the study is to formulate the overall procedure of
export orders say ‘how to export’, documentation, modes of payment &
incentives from Govt. of LUCKY EXPORT.
Research Methodology
Research comprises defining and redefining problems. Research purpose
is to discover answer to question through the procedure of scientific
procedure. Interviews and discussion with the supervisors and officials

to get the root of the pre-determined objective and in order to outline the
‘a to z’ steps of processing export order.
Findings & Recommendations
On the execution of the objective of study, it might be conclude that
processing of export order can be a tedious and costly activity. A careful
planning and implementation of appropriate procedure can reduce time
and cost drastically. A fair documentation not only reduces the threats of
frauds, bottlenecks and risks but also enhances the business relationship
between Exporters, Importers & Governments in the whole world.

STATEMENT OF OBJECTIVES
The complexity of business operations greatly accentuate as
businessmen cross the national boundaries. A lot of formalities and
modalities of several organizations have to be compiled to and as error
can create bottle necks in the free flow of goods, documents, information
and payments.
Documentation is definitely one of the prime specialized functions
of international business. The documents safeguard the interests of
Exporter, Importer, Banks, Governments, Transport Agencies, Insurance
Agencies and Inspection Agencies.
Main Objective of the Study
The main objective of the training was to study the systematic export
procedure & documentation of a reputed export house say LUCKY
EXPORT to overcome any kind of error, bottleneck, frauds and mistake
for the awareness and implementation of standardized rule-regulations &

documentation to contribute the integration of International Business up
to any extent.
Sub Objectives of the Study
The sub objectives of the study were:
• To study the department wise functions & sequential
documentation for various operations in export orders
adopted by LUCKY EXPORTS.
• To study the standard modes of payment in export-import.
• To identify the incentives, discounts & duty drawbacks to
exporters by the Government.

FOCUS OF THE STUDY
The focus of the study was the formulation the multifunction
procedure of an export unit named LUCKY EXPORT. The focus of the
study was on identifying the activities of different divisions and
departments of LUCKY EXPORT having an impact on the export
procedure of this unit. Focus was to outline the standard modes of
payment for export houses. Researcher analyzed the pre-export
formalities and necessities for exportation. The project is an attempt to
formulate the ‘how to export’ concept finally to contribute to national
and international economy & business relationship.

COMPANY PROFILE
Lucky Group is Government Recognized Trading House with diverse
interest in trading. Their group turn over from export is approximately
USD. 50 Million. Their offices are in Moscow, Sharjah & Khartoum
besides corporate office at Noida (India) and representative offices in
various African countries like Ivory Coast, Senegal, Ethiopia.
Lucky Group of Companies, an India based Engineering, Procurement &
Construction (EPC) company was established in the year 1990. It is
affiliated with:
1. Delhi Chamber of Commerce
2. Federation of Indian Export Organization
3. Confederation on Indian Industry
4. Federation of Indian Chamber of Commerce and Industry
It is ISO 9001:2008 certified and Star Export House status holder from
Government of India consecutively for the last 15 years.
The Lucky Group Companies are:
LUCKY EXPORTS

EXPOTEC INTERNATIONAL COPPICE
TECHNOLOGIES
LIMITED PVT.
LIMITED
LUCKY EXPORTS
About the Company
Business Type: Manufacturer
Eng. Goods, Plants, Medical, Pharmaceutical.
Exporter
Eng. Goods, Plants, Medical, Pharmaceutical.
BOARD OF DIRECTORS
Lucky Group comprises of a Board of Directors perceptive to the
dynamics of international business. This body controls and provides
strategic direction to all Group companies.
Dilawar Shaban
Chairman of the
Board
Iqbal Shaban
President

Rafique Shaban
Executive Director
Raza Shaban
Executive Director
Saleem Shaban
Executive Director

VISION
AND
MISSION
VISION:
To become respected global trading company that provides best of
business solution delivered by best-in-class people.
MISSION:
Our mission is to cater to the specific scrap metal needs of our customers
and, at the same time, to expand our sourcing points by creating strategic
alliances with our key suppliers to best create value for our clients.

Engineering Projects Division
Complete solutions to the Industrial sector through
• Consultancy Service
• Supply of Plants and Machinery
• Project Management
• Erection and Commissioning
• Training
• After Sale Services
Small and Medium (SME) Industry
• Food Processing Plants
o Tomato Processing Plants
o Potato Wafers Manufacturing Plants
o Squash Manufacturing Plants
o Pasta Making Plants
o Bread Making Plants
o Biscuit Making Plants
o Fruit Processing Plants
o Corn Flakes Making Plants
o Milk Processing Plants (Yoghurt, Cheese)
o Ice cream Plant
o Honey Processing Plant
o Rice Mill
o Wheat Flour Mill

• Printing and Stationery Industries
o Paper Carry Bag Making Plant
o Plastic Carry Bag Making Plant
o Envelopes Making Plant
o Exercise Book Making Plant
o Chalk Manufacturing Plant
o Gem Clip Manufacturing Plant
o Staple Pin Manufacturing Plant
Large Scale Industries
• Refrigeration and Cold Storage Plants
• Packaging Plants
• Pharmaceuticals Plants
• Textile Mills
• Cement Plants
• Leather Processing Plants
• Steel Rolling Mills
• Effluent Treatment Plants
• Printing Presses
Including Rehabilitation of old plants & Machinery in above sectors

RESEARCH METHODOLOGY
Research in a common parlance refers to a search for knowledge.
Research can also be defined as scientific and systematic search for
pertinent information on the specific topic. So research means careful
investigation on inquiry especially through search for new fact in branch
of knowledge. Research is an academic activity and as such as term
should be used in a technical sense. “Research comprises defining and
redefining problem, formulation hypothesis or suggested solution,
collection, organizing and evaluating data, make deduction and research
conclusion and careful testing the conclusion to determine whether they
fit or not ”. Research purpose is to discover answer to question through
the procedure of scientific procedure.
As in live studies on LUCKY EXPORT. The LUCKY EXPORT
did the research work manually and intents to assess the overall potential
and performance of this unit and desire. Research has helped to portray

accurately the characteristic of a particular unit. Research helped to find
out the problem faced by the unit, unit strength where they have
competitive edge over the other competitors, unit weakness where the
unit has to improve how they need to turn them into the opportunities.
Objective of the Research Methodology
The main objective of the research methodology of this in-house training
project is to evaluate the Export Procedure and Documentation
Operations of an Export Oriented Company. The assessment of
potential, procedures, documentation and the analysis of LUCKY
EXPORT demands a lot of time to be spent on observation of various
activities and the process, the unit engage into, interviews and discussion
with the supervisors and officials to get to the root of problem and in
order to suggest corrective measure to LUCKY EXPORT . The research
design utilized for this specific study has been explained as follows….

RESEARCH DESIGN
The study is descriptive and empirical in nature with applied bias.
Descriptive Study:
Descriptive studies are utilized when the researcher attempts to describe
the state of affairs without controlling the variables causing change. This
study includes the survey and fact finding inquires of different kind. The
major purpose of descriptive research was description of the state of
affairs that exists in LUCKY EXPORT, the functional activities and
procedure adopted and the working of LUCKY EXPORT. Interviews
were taken of the executive and various kinds of facts were sought by
this.
Empirical Studies:
An empirical research relies on experience or observation alone often
without due regard for system and theory. It is the data research coming
up with the conclusion which is capable being verified by observation
and experiment. As in case of, the observation was done to find the

export procedure & documentation problem and the weakness. In this,
help of various departments was taken to observe the working and to
deduce conclusion to suggest course of action to . In this the fact were
taken into hand from LUCKY EXPORT at their source and is then
utilized to infer desired information.
Collection of Data
The study has utilized both primary as well as secondary data for
analyzing export performance, procedure & documentation of LUCKY
EXPORT.
Primary Data: The primary data was collected through the interview
techniques & personnel meeting where the Heads of different functional
departments, various executive are interviewed and pretended
information were collected pertaining to various aspects of export
activities.

Secondary Data: It was collected through scanning, searching and
disseminating information through company research profile and
company maintained data also in search information for export
procedure and export market related data was collected through the data
compiled by Government Manual, Export Import policy of DGFT,
customs and excise manuals, RBI exchange control Manual and other
organization that compile data for various export oriented activities and
documentation.
Analysis Pattern
The nature of the project is of the subjective nature so for the analysis of
the available data, the use various statistical and mathematical and
graphical techniques was not required. There were no additional
statistical and technical tool were considered for suitability of the
procedure & problem in order to achieve the desire objective. The study
was of the qualitative aspect not the quantitative. All the data was
collected through interviews a secondary data so not tool were used

Export Procedure
&
Its Documentation

GATEWAYS TO GLOBAL MARKETS
Exports are key to the economic survival of a nation. Exports not
only help a country earn foreign exchange, they help create jobs, peace,
prosperity, and the power to influence.
To be successful in exporting and importing, it helps to know why so
many export and import businesses do not succeed. Success cannot be
rushed by high hopes. Rather, it comes incrementally.
The success of an export business is often attributed to luck. Work
harder and there will be more luck. The export success of Taiwan,
China, Japan, South Korea, Germany and other countries (areas) is not a
miracle, it is the result of hard work. The business miracle will not
happen without working hard. However, success cannot be rushed by
hard work.
The events in a large number of export offices worldwide are
comparable to the events in a football game. It is not unusual to see
colleagues kicking responsibilities back and forth, just like football
players do the ball. It is important that employees' responsibilities are
clearly spelled out and that systems of operation are flexible in order to
accommodate the rapidly changing needs of world markets.
Dangers of Imbalance in International Trade
Trade surplus---favorable balance of trade---is an excess of exports
over imports. Trade deficit---unfavorable balance of trade---is an
excess of imports over exports. In layperson's parlance, the trade surplus

means earn more and spend less, while the trade deficit means spend
more and less.
The trade surplus and deficit is analogous to one person's fortune is
another person's misfortune. The danger is imminent in either situation.
A country with a record trade surplus is often threatened with sanctions
and trade barriers from a deficit-ridden importing country. A country
with a record trade deficit is usually faced with the internal social
upheaval.
The imposition of trade barriers, such as import quotas and higher
duties, is not a solution to meeting the international challenge. The trade
barrier will be confronted with a trade retaliation. A trade retaliation will
be faced with a counter-retaliation. The conflict will not end if an
agreement is not reached. The remedy to beat the trade imbalance is to
understand foreign cultures and business practices, and to provide
competitive products and services.
It is a good practice to diversify export markets. Concentrating exports
to only a few markets poses imminent danger to an exporting country.
Too much export concentration in a market usually invites protectionist
trade laws from the importing country. In case the importing country
imposes sanctions, the effect to the economy of the exporting country
and the livelihood of its people can be devastating.
Changing Global Marketplace and Meeting Challenges
The world markets have changed enormously in the past decade. New
markets have been opened with the end of cold war. New economic
blocks have been formed. New trading alliances are shaping. Inevitably,
a new way of thinking and approach to doing business is necessary in
order to survive in the fast changing economy.

Exports are key to the economic survival of a nation. A nation that
exports more will grow stronger. The stronger a nation is, the more
recognition and respect it will earn.
➢ Increased Worldwide Competition
There can be no growth without competition. As the world
population grows, which is estimated at a rate of 1.7% annually,
more products and services are needed. Business people worldwide
are keenly competing to fill these needs. World trade grew in
volume at an average of 5% annually over the past 25 years. With
the end of cold war, more resources worldwide are geared towards
exporting. The export business has become more competitive.
Exporting becomes more challenging with continued population
growth and
the addition of new exporters.
➢ Effects of Social Upheaval and Recession
Any form of instability in a country can ruin its economy and may
place its international trade in disarray. With the end of cold war,
the earth has become a more peaceful place to live. However, an
alarming occurrence is the growing number of permanent lower
class in numerous countries, including in developed nations. The
adverse effect of social upheaval is paramount. It can undermine
the economic progress of a nation. There is an urgent need to stop
the growing number of the lower class. The task requires a
concerted effort from the government and people. The task is not
easily done.
The effect of recession is immense, businesses sink, dreams of a
lifetime shatter, and the lower class increases. Vigorous export
promotions, increase in exports, and diversification of export
markets can help reduce the number of the lower class.
➢ Use of Terminology in Different Countries

The use of terminology differs from country to country. The term
salesperson is easy to decipher as the salesman or saleswoman,
but it is a term that is unheard of in some countries. The account
manager is the sales representative, the buyer is the purchaser, the
accounting assistant is the bookkeeper, the human resources
department is the personnel department, the flat is the apartment,
the chop is the stamp, the motor carrier is the trucking company,
and the letter carrier is the postman.
➢ The Role of Export-Traders and Buying Trend
Export-traders play a crucial role in international trade. Prior to the
1970's when export product quality was a common problem in
many less developed countries, foreign buyers relied on export-
traders for product sourcing and pre-shipment inspections. The
nature of the order then normally was fewer items and more
volume, that is, the number of items was few and the quantity of
each item was large. At that time, many manufacturers did not
know how to export, thus they relied upon export-traders for
exporting, known as indirect exporting.
There were far fewer exporters worldwide before the 1970's. The
foreign buyers then did not have many export sources from which
to compare an offer. The export business was lucrative due to
much less competition. As time progressed, competition built. The
manufacturers competed on providing better quality products and
lowering prices. The price war made the traditional practice of
single source of supply difficult for export-traders to maintain. The
export-traders changing the source of supply of similar products
from one manufacturer to the other became inevitable. The
manufacturers needed to survive and direct exporting was the
solution. Many manufacturers started exporting directly in the mid-
1970's.

Export product quality in general improved markedly in the late
1970's. However, the problem of quality remains a nightmare to
some importers. During the oil crisis of the late 1970's, there was a
significant increase in the number of manufacturers who export
directly. Many foreign buyers deal directly with the manufacturers
to save commission or fees and/or markups of export-traders.
➢ Tools of Export-Import Communication
The telecommunication technology 'explosion' in the past decade
has changed the way people interact around the world. With new
technology on hand, some of our prime tools of export
communication, for example telex (teletype exchange or teleprinter
and exchange), have become obsolete.
The telex, like a fax (facsimile) or an e-mail (electronic mail), uses
a telephone line in transmitting the messages. Telex was the 'e-mail
of yesteryear'. But instead of a computer screen, you have a roll of
paper, which may come in duplicate, triplicate or quadruplicate,
either carbonless or the much older type having a carbon paper in
between the sheets, where the outgoing and incoming messages
appeared, that is, where the messages are typed. And instead of
saving the typed message in a computer disk or hard drive, each
alphanumeric character that was keyed (typed) in a telex, aside
from appearing on the paper roll, is simultaneously translated and
stored in a paper tape in coded form in a series of punched holes.
Keying a wrong character may mean retyping the message from
the beginning. The 'final' tape is rerun to send the message out or
make additional copies of the message. The advantage of having a
'final' tape is to save the transmission time and cost. Or, you can
send the message directly. Each character that was keyed (typed)
will instantly appear at the receiver's end. Therefore, as long as the
line is 'on', the sender and the receiver can 'talk' over the telex, that
is, exchange messages over the telex while the line is 'on'.Although

the e-mail is popular nowadays, the fax remains as an important
tool of export communication in many countries.

STARTING AN EXPORT BUSINESS
In exporting, it is not a prerequisite for a business to sell to its domestic
market before selling abroad. There are many successful export-traders
and export-manufacturers, notably in Asia, who have been selling their
products entirely to the foreign markets.
Exporting is not for large companies only. Contrary to a belief that only
large companies can export, in fact there are more small and medium-
sized companies than large companies in the world that are engaged in
exporting. The size of a company is not static. Most large companies at
one time were small companies. Not to mention, small and medium-
sized companies are the leading source of job creation in many
countries.
➢ Export Phobia
Fear comes naturally to anyone new to exporting. Fear of the
unknown, or lack of information, is one of the reasons that many
businesses that are doing well nationally are reluctant to engage in
exporting.
➢ Export Mindset
The business ground is a battleground. Exporting, like any other
business, involves risks. It is necessary to prepare for the
challenges and the consequences. Engaging in exporting is akin to
engaging in a war. It is a war of price, quality, delivery and
service. It is a battle for the business orders. It is a fight for the
company's survival---profits and growth. In practice, rough

strategies are often used by some exporters in order to win
contracts.

TYPES OF EXPORT BUSINESSES
Export businesses are mainly classified into export-traders, export-
manufacturers and service-exporters.
➢ Merchant Exporters (Traders)
The export-traders include the export companies known as trading
houses, trading companies, buying offices, buying agents,
purchasing agents, resident buyers, sourcing agents, export
representatives, export distributors, export agents, export
management companies (EMCs), and manufacturers'
representatives.
The export-trader operates on a buy-and-sell basis or a
commission/fee basis, or a combination of these two. In the buy-
and-sell basis, the export-trader buys from export-manufacturers
and adds a markup to the export price. In the commission/fee basis,
the export-trader collects a commission or fee from the export-
manufacturer or the foreign importer, or from both of them without
adding a markup to the price.
➢ Export-Manufacturers
Export-manufacturers include the manufacturers, producers,
assemblers and processors of export goods. Export-manufacturers
either directly export the goods or indirectly export the goods
through the export-traders.
➢ Service-Exporters

Service-exporters include the banks, ocean shipping (steamship)
companies, air cargo companies or airlines, trucking companies,
rail carriers, insurance companies, freight forwarders or
consolidators, consulting firms, and miscellaneous service
companies. Service-exporters provide services to export-traders
and export-manufacturers.

PRE-EXPORT ACTIVITIES
The planned group work for export order processing can greatly
facilitate subsequent operations and avoid the hassles associated with the
process. The pre-export activities can be divided into the following sets
of activities:
A. Study Of Government Rules And Regulations
B. Identifying Various Parties And Liasion
C. Registration
D. Obtaining I/E Code Number.
A) Study Of Govt. Rules And Regulations
International trade is governed by a plethora of rules and regulations of
various government bodies of exporter and importer. A careful study of
these as a pre-requisite of exports while the rules governing exports will
vary with commodity and importer country’s regulation, as a broad
frame work the most important Acts/Publications which must be

consulted by an exporter in connection with processing of an export
order are :
a) Foreign trade(development and regulation) act, 1992
b) Customs act,1962
c) Carriage of goods by sea act, 1924
d) Foreign exchange regulations act, 1973 (now being replaced by
FEMA and Money Laundering Bills)
e) Schedule of charges of goods in respect of the port of shipment
B) Identifying Parties And Liasioning With Them
Exports involve coordinated effects of a large numbers of interdependent
organizations. The main parties which are involved in export process are
:
➢ The Exporter
➢ The Foreign Buyer
➢ The Negotiation Bank
➢ The Reserve Bank of India
➢ Director General of Foreign Trade

➢ The Collector of Customs
➢ The Port Commissioner
➢ Clearing & Forwarding Agents.
Besides these, other parties may also be associated depending on the
nature of commodity and rules guiding the export of the same. Examples
of these bodies can be Inspection Agencies, Export Promotion Council,
Concor, Ministry of Agriculture etc.
C) Registration
For stepping in the field of an export business, it is compulsory for a
company to get registered with Export Promotion Council related to
the main product line with which they are dealing.
FUNCTION OF EXPORT PROMOTION COUNCIL:
The main function of EPC is to promote and develop the export of
the related product line for enhancing the export. They organize Trade
Fairs with in India and Abroad. They encourage the members registered
with them to participate in Trade Fairs and advertise their products in
whole world. The main role of the EPC is to Project India’s image

abroad as a reliable supplier of high quality goods. The EPC keeps
abreast of the trends and opportunities in the foreign markets and
circulate important information among its members.
APPLICATION & DOCUMENTS REQUIRED FOR
REGISTRATION:
➢ Application form cum Membership form worth Rs.10
➢ A copy of PAN No. issued by income tax authorities duly
➢ Import Export Code Number
➢ Sales Tax Copy
➢ Bank draft of Rs.6000.
D) Importer/Exporter Code Number
Every person / firm / company engaged in export business in India is
required to obtain Import-Export Code(IEC) No. from the Regional
Licensing Authority concerned (Director General of Foreign Trade).
Custom authorities shall not allow clearance of goods to an importer or
exporter who does not posses IEC No. It is compulsory quote this Code
Number in the relevant Bill of Entry / Shipping Bill.

Applications and supporting Documents Required to Get IEC
Number:
➢ Application form
➢ Commercial Bank Account Number(Current or Cash-Credit
Account)
➢ Demand draft for payment of Rs.1000
➢ Certificate from the banker of the applicant in the format given in
the application form.
➢ Two copies of passport size photograph of applicant duly attested
by the banker of applicant.
➢ Permanent Account No (PAN).

PROCESSING OF EXPORT ORDER
Stage-1st
Confirmation of Export Contract
The exporter scrutinizes the export order with reference to
the term & conditions of the contract. According to section 4(1) of the
Sale of Goods Act, 1930,” A contract of sale of goods is a contract
whereby the seller transfer or agree to transfer the property in goods to
the buyer for a price,” therefore, this Act includes both a ‘Sale’ and an
‘Agreement to sell’.
This is the most crucial stage. All subsequent actions and
reactions will depend on the terms and conditions of the export contract.
It should be ensured that the contract has been entered into in
accordance with the prevalent export promotion policies of the country
and the foreign exchange regulations. The export order must specify the
mode of the payment in unmistakable terms such as letter of Credit,
Documents of Payment, Documents against Acceptance, etc. The
specifications stipulated by the importer in the export order and the L/C
such as delivery schedule, packing, inspection, marking, etc., must be
strictly adhered to. The documents required by the foreign buyer must be
prepared and submitted to the negotiating bank in the exact specified
form and manner.

ELEMENTS OF EXPORT CONTRACT
An export contract, as described above, should be as clear as possible.
The various elements of it should clearly define the duties and
responsibilities of the parties; determine the exact point at which the title
and/or risk change from seller to buyer. The various elements of an
export contract are as follow:
1. Product, Standards and Specifications
2. Quantity
3. Inspection
4. Total Value of the Contract
5. Terms of Delivery/Commercial Terms
6. Taxes, Duties and Charges
7. Period of Delivery Shipment/Part Shipment etc
8. Packing Labeling and Marking
9. Terms of Payment-Amount, Mode & Currency
10. Discounts and Commissions
11. Licenses and Permits

12. Insurance
13. Documentary Requirement
14. Guarantee
15. Force Majeure or Excuse for Non-Performance of
Contract
16. Remedies.
17. Arbitration.
Besides these main elements, an export contract may contain
other elements desired by the parties to the contract. Export order should
be confirmed by the exporter only after the terms and conditions of the
L/C have been found to be in order.
Stage-2nd
Sourcing of Export Order
Upon confirmations of the export order preparations for the dispatch of
goods are started. A ‘Delivery Note’ (in duplicate) or ‘Production Order’
is sent to the Work Manager or the Factory manager. This note should
contain the description of the goods as has been given in the export

order, along with a copy of the instructions given by the importer. The
date by which the goods must be manufactured, the date by which the
necessary formalities must be completed, the requisite time margins to
be given and the shipment must be clearly intimated to Works manager.
This is what the manufacturers. The specifications and instructions to be
intimated to the supplier of export goods shall, however, remain the
same. While sourcing the goods from suppliers, merchant exporter has
to lay down clear cut specifications of quality norms because the
ultimate accountability to the buyer is of the exporter only. In case of
poor quality, the exporter may not be in position to get repeat order from
the foreign customers who have wide choice of the exporters in the
world market.
Sourcing of export order in LUCKY EXPORTS is based
upon quality production system. Merchandiser finals the export contract
with his correspondent buyer and receives an export order via fax, e-
mail or courier. After receiving the export order, merchandiser orders a
production order to Production Manager in written form. This
production order contains the following entities:

➢ P.O. Number
➢ Invoice Number
➢ Product Name
➢ Product Specifications ( colour , size, weight etc)
➢ Quantity
➢ Instructions(stitching, labeling etc)
➢ Dispatch Date
Required quantity is produced in fully by production unit
after the recommendation of production samples in accordance with
order sample. Produced quantity is delivered to Packing Department for
dispatching operations.
Stage-3rd
Dispatching
As the Production unit delivers the goods to Packing
Department, the following procedures are to be followed in order to
dispatch the goods:-
1) Packing

The Packing Incharge receives the importer’s instructions for packing
from the Merchandiser and covers the following operations:
i) Final finishing of the goods(final passing, clipping etc)
ii) Tagging & Folding(according to importer’s instructions)
iii) Packing(Cartoon, bale or pair-packing)
2) Labeling
Specific marketing and labeling is used on report shipping cartons &
containers to:
i) Meet shipping regulations
ii) Ensure proper handling
iii) Conceal the identity of contents
iv)Help receivers identify shipments
In overseas buyer usually specifies export marks that should
appear on the cargo for easy identification by receivers. Many
markings may be needed for shipment. Exporters need to put the
following markings on cartons to be shipped:
➢ Shipper’s mark
➢ Country of origin

➢ Weight marking(in Lbs or Kgs)
➢ No. of packages & size of cases
➢ Cautionary markings such as ‘this side up ’ or ‘use no
hooks’
(In English and in language of country of destination)
➢ Port of entry
3) Inspection
After packing and labeling, goods are inspected by the inspection
agent or buying agent on behalf of importer. That means importer
sends his own agency to inspect the goods. The inspector has right to
open any of the carton or bale to verify the goods in accordance with
invoice, packing list and desired quality scale.
If he finds any defect he can send these goods for processing again,
otherwise, he issues Inspection Certificate. If buyer demands
handloom certificate then exporter ask textile committee to inspect
the consignment and provide them handloom inspection certificate.
This certificate can be helpful to suit against importer in case of
disputers or undue rejection of goods by importer.

4) Containerization
A container is an article of transport equipment, strong enough for the
repeated use, to facilitate handling and carriage of goods by one or
other modes of transport.
Normally containers having following dimensions are used in
handloom field:-
i) 20 ft. 26 cbm
ii) 40 ft. 54 cbm
iii) 30 ft. 60 cbm (high cube)
LUCKY EXPORTS makes use of container of 20 & 40 ft.
il.(according to the goods to be dispatched).
5) Locking of Containers
Before locking the container, excise authorities select 10% of rolls as
samples and inspect them. The samples are sent for further sub-
mission to customs. After examination of cargo, the excise seal along
with the seal of shipping line on the container and endorse the excise

invoice, AR-2 form, gate-pass etc. The main check point in the excise
documents are:-
➢ Name & Address of Consignee
➢ Destination
➢ Description of goods & Specifications
➢ FOB value of goods
➢ Quantity
➢ Movements of goods(from -- to --)
➢ Container no. & Truck no.
➢ Identification marks & Excise no.
For additional security of goods, in transit, the doors of container
are locked with the iron rods with seals. In case of any shortage
reported by the buyer and when a claim is required to be filled, excise
endorsed documents play extremely crucial role.
Stage-4th
Pre-Shipment Operations
Documents used for Pre-Shipment

The singed with the buyer defines the specification of the goods to the
supplied. On the basis of this contract, invoice instructions are given the
packing department packs the rolls depending on these instructions, the
validation of above instructions are done by pre-shipment department.
On linking the bales by packing department, the pre-shipment
documents are generated, which primarily includes shipment advice
from, invoice, packing includes shipment advice from, invoice, packing
list etc.
1) Shipment Advice Form: It is a sort of covering letter, showing the
list of documents enclosed with it. It also contains some other details
like Lorry Receipt No., RBI Code No. B/L particulars etc. The
shipping advice is particularly important in short-sea trades, for
example within the Asian countries where the goods may arrive at the
port of destination before the shipping documents, and in the ports of
destination where theft and pilferage of the imported goods is
rampant.

2) Letter of credit: A standard, commercial letter of credit is a
document issued mostly by a financial institution, used primarily in
trade finance, which usually provides an irrevocable payment

undertaking. The letter of credit can also be source of payment for a
transaction, meaning that redeeming the letter of credit will pay an
exporter. Letters of credit are used primarily in international trade
transactions of significant value, for deals between a supplier in one
country and a customer in another. They are also used in the land
development process to ensure that approved public facilities (streets,
sidewalks, storm water ponds, etc.) will be built. The parties to a
letter of credit are usually a beneficiary who is to receive the money,
the issuing bank of whom the applicant is a client, and the advising
bank of whom the beneficiary is a client. Almost all letters of credit
are irrevocable, i.e., cannot be amended or canceled without prior
agreement of the beneficiary, the issuing bank and the confirming
bank, if any.
Sample document LC:
THE MOON BANK
INTERNATIONAL OPERATIONS
5 MOONLIGHT BLVD.,

EXPORT-CITY AND POSTAL CODE
EXPORT-COUNTRY
OUR ADVICE NO.
MB-5432
ISSUING BANK REF. NO. &
DATE
SBRE-777 January 26, 2001
TO UVW Exports
88 Prosperity Street East, Suite 707
Export-City and Postal Code
Dear Sirs:
We have been requested by The Sun Bank, Sunlight City, Import-
Country
to advise that they have opened with us their irrevocable
documentary credit number SB-87654
for account of DEF Imports, 7 Sunshine Street, Sunlight City, Import-
Country
in your favor for the amount of not exceeding Twenty Five Thousand
U.S. Dollars (US$25,000.00)
available by your draft(s) drawn on us
at sight
for full invoice value

accompanied by the following documents:
1. Signed commercial invoice in five (5) copies indicating the
buyer's
Purchase Order No. DEF-101 dated January 10, 2001.
2. Packing list in five (5) copies.
3. Full set 3/3 clean on board ocean bill of lading, plus two (2) non-
negotiable copies, issued to order of The Sun Bank, Sunlight
City, Import-Country, notify the above accountee, marked
"freight Prepaid", dated latest March 19, 2001, and showing
documentary credit number.
4. Insurance policy in duplicate for 110% CIF value covering
Institute Cargo Clauses (A), Institute War and Strike Clauses,
evidencing that claims are payable in Import-Country.
Covering: 100 Sets 'ABC' Brand Pneumatic Tools, 1/2" drive,
complete with hose and quick couplings, CIF Sunny Port
Shipment
from
Moonbeam Port, Export-Country to Sunny Port,
Import-Country
Partial
shipment
Prohibited
Transshipm
ent
Permitted
Special conditions:
1. All documents indicating the Import License No. IP/123456

dated January 18, 2001.
2. All charges outside the Import-Country are on beneficiary's
account.
Documents must be presented for payment within 15 days
after the date of shipment.
Draft(s) drawn under this credit must be marked
Drawn under documentary credit No. SB-87654 of The Sun Bank,
Sunlight City, Import-Country, dated January 26, 2001
We confirm this credit and hereby undertake that all drafts drawn under
and in conformity with the
terms of this credit will be duly honored upon delivery of documents as
specified, if presented at
this office on or before March 26, 2001
Very truly yours,
Authorized Signature
Unless otherwise expressly stated, this Credit is subject to the Uniform
Customs and Practice for Documentary Credits, 1993 Revision,
International Chamber of Commerce Publication No. 500.
Letter of Credit Particulars:
a) Latest Negotiation Date

The latest negotiation date is the last day of the period of time
allowed by the letter of credit (L/C) for the presentation of
documents and/or draft(s) to the bank. The latest negotiation date
is not necessarily the L/C expiry date. In the sample letter of credit
the latest negotiation date can be March 26, 2001 or 15 days after
the date of shipment, whichever comes first.
In case the L/C does not stipulate the latest negotiation, it is within
21 days after the date of issuance of the transport documents, but
on or before the L/C expiry date.
b) Expiry Date and Place
The expiry date and place is the last day of validity of the credit
and the place allowed by the letter of credit (L/C) for the
presentation of documents and/or draft(s) for payment, acceptance
or negotiation. In the sample letter of credit the expiry date is
March 26, 2001 and the place for presentation of document is
Export-City, which is the beneficiary's city.
In case the validity of an L/C is stated in a period of time, for
example "this credit is valid for three months" or "this credit is
available for two months" or "this credit is good for one month",
but does not specify the date from which the time is to run, its
validity starts from the issuance date of L/C by the issuing bank.
The bank normally discourages stating the L/C validity in a period
of time.
In case the expiry date and/or the latest negotiation date falls on a
day on which the bank is closed for reasons not including the acts
of God, strikes, riots, civil commotions, lockouts, insurrections,
wars or any other causes beyond the bank's control, the expiry date
and/or the latest negotiation date is extended to the succeeding first
day on which the bank is opened. Such extension, however, does
not extend the latest date of shipment.

c) Draft(s) Drawn On
The draft(s) drawn on answers the question "Which bank or who
is the drawee (the payer) of the draft?" The draft is most often
drawn on the confirming bank or the issuing bank. In some cases,
the draft is drawn on the applicant. In the sample letter of credit the
draft is drawn on the confirming bank, which is The Moon Bank.
d) Draft(s) Drawn At
The draft(s) drawn at answers the question "The draft is drawn at
what terms?" It can be a sight draft (i.e., payment on demand or on
presentation) or a term draft (i.e., payment at a fixed or
determinable future time). In the sample letter of credit the draft is
drawn at sight.
e) Draft(s) Drawn Under
The draft(s) drawn under answers the question "The draft is
drawn under which credit and the credit is of which bank?" In the
sample letter of credit, the L/C requires that the draft(s) be marked
"Drawn under documentary credit No. SB-87654 of The Sun Bank,
Sunlight City, Import-Country, dated January 26, 2001" (please see
the completed sample draft).
f) Latest Shipment
The latest shipment---latest date of shipment or last date for
shipment---is the last day of the period of time allowed by the
letter of credit (L/C) for shipment, dispatch or taking in charge. In

the sample letter of credit the latest shipment date is March 19,
2001.
g) Port or Point of Origin and Port or Point of Destination
The port or point of origin is the port or place of loading,
dispatch or taking in charge. The port or point of destination is
the port or place of discharge or delivery. Some of the expressions
that may appear in the letter of credit (L/C) indicating the origin
and the destination are:
▪ "shipment from ... to ..."
▪ "dispatch from ... to ..."
▪ "carriage from ... to ..."
▪ "delivery from ... to ..."
▪ "forward from ... to ..."
▪ "taken in charge at ... for transportation to ..."
In the sample letter of credit the origin is Moonbeam Port,
Export-Country and the destination is Sunny Port, Import-
Country.

3) Commercial Invoice: The commercial invoice is a record or
evidence of transaction between the exporter and the importer.
Invoice is a bill for itemized goods or services. The pre-shipment
invoice is a shipment detailing the transaction.
It is one of the most important documents prepared and
signed by exporter with whose help other documents are prepared.
The description of merchandise as given in the commercial invoice
must correspond to the description in the L/C and other documents
must contain the similar description are:
Specific Language Requirements in the Commercial Invoice
Certain importing countries may require that the commercial
invoice and the packing list be made out in, or translated to, the
language of the importing country, for example, in French for
shipment to France, in Italian to Italy, and in Spanish to Mexico
and Venezuela.
Declaration on Commercial Invoice
The declaration on the commercial invoice for some countries
must be in a specified wording. The exporter may check the

wording with the customs broker, the government external trade
department, or the foreign government trade office concerned in
the exporting country.
The content of a typical declaration includes a sworn statement
from the exporter indicating that the goods in question are
manufactured in the exporting country, and that the amount shown
in the invoice is the true and correct value.
Certification and/or Legalization of Commercial Invoice
The letter of credit (L/C) from certain importing countries, in
particular from the Middle East, requires the certification and/or
legalization of the commercial invoice.
The certification, which usually is performed by the local Chamber
of Commerce of the exporting country, is to confirm that the
invoice and declaration (in the invoice) are correct. The
legalization, which is done by The Consulate or The Commercial
Section of the Embassy of the importing country, is to verify that
the invoice is correct.
The certification and legalization are most often satisfied with a
stamp or a seal on the invoice and payment of a fee. The
processing time may take one week
Signature and/or stamp
The commercial invoice and packing list need not be signed,
unless otherwise stipulated in the letter of credit (L/C). In practice,
the original and the copy of the commercial invoice and packing
list are often signed.
Description of Goods

The description of the goods in the commercial invoice must
correspond with the description in the letter of credit (L/C). In all
other documents, the description can be in general terms provided
it is not inconsistent with the description in the L/C.
Shipping Marks & Numbers
• Quantity
If the letter of credit (L/C) does not stipulate the quantity in a
stated number of units (i.e., it does not state in units such as piece,
set, box, dozen, or gross), or unless the L/C stipulates that the
quantity of the goods specified must not be exceeded or reduced, a
tolerance of 5% more or 5% less quantity is permitted, provided
the total amount does not exceed the amount of the L/C.
In the sample L/C the stated quantity is 100 Sets, thus the quantity
in the invoice must be 100 Sets. If such sample L/C does not state
the quantity, the UVW Exports can ship between 95 sets and 100
sets of pneumatic tools, but not over 100 sets as the total amount
will exceed the L/C amount of US$25,000. If such L/C does not
state the quantity and the L/C amount is US$26,250 or more, the
exporter may ship between 95 and 105 sets.
If the L/C quantity is indicated using the words "about",
"approximately", "circa" or similar expressions, the quantity in the
invoice cannot exceed 10% more or 10% less than the quantity
indicated in the L/C. For example, if the L/C quantity is "about 100
sets", the quantity in the invoice can be any quantity between 90
sets and 110 sets, provided the total amount does not exceed the
amount of the L/C.
• Unit Price

If the letter of credit (L/C) unit price is indicated using the words
"about", "approximately", "circa" or similar expressions, the unit
price in the invoice cannot exceed 10% more or 10% less than the
unit price indicated in the L/C. For example, if the L/C unit price is
"about US$250", the unit price in the invoice can be any unit price
between US$225 and US$275, provided the total amount does not
exceed the amount of the L/C.
• Amount
Unless otherwise stipulated in the letter of credit (L/C), the amount
must not exceed the amount permitted by the L/C. If the L/C
amount is indicated using the words "about", "approximately",
"circa" or similar expressions, the amount of the invoice cannot
exceed 10% more or 10% less than the amount indicated in the
L/C. For example, if the L/C amount is "approximately
US$10,000", the amount of invoice can be any amount between
US$9,000 and US$11,000.
Explanations:
Fields in the Preamble of the Commercial Invoice
" For account and risk of Messrs. "
Enter the complete name and address of the importer (the
consignee) in the field (For account and risk of Messrs.). The title
Messrs. stands for Messieurs in French meaning gentlemen. It is
used to address a business firm in a formal manner, the same way
the title Mr., Mrs. or Miss is used to address a person.
" Letter of Credit No. " , " Date " and " Issuing Bank "

Referring to the sample L/C, enter "SB-87654", "January 26,
2001" and "The Sun Bank" in the respective fields in the
documents. The sample L/C does not stipulate indicating this
information in the documents except the draft(s), thus UVW
Exports may choose not to enter it in the documents, but there is
no harm if it is entered in the documents.
" Import Permit/License No. " and " Date "
Referring to the sample L/C, enter "IP/123456" and "January 18,
2001" in the commercial invoice and all other documents,
including bill of lading and insurance policy.
" Buyer's P.O. or Contract No. " and " Date "
The letter of credit may require the documents to show the
purchase order (P.O.) or contract number. Referring to the sample
L/C, enter "DEF-101" and "January 10, 2001" in the respective
fields in the documents.
" Buyer's Department / Store No. "
The department or store number is often required when dealing
with the chain stores. It is the identification number of the store or
branch of a chain store. The store number is used in the routing of
goods by the chain store. It identifies the store that places the order
or to which branch (of the chain store) the goods will be delivered.
" Shipment on or about "
Shipment on or about is the ETD (estimated time of departure) or
the ETS (estimated time of sailing). In practice, the date of loading
on board, dispatch or taking in charge is often regarded as the
ETD.

" From (Port of Loading) " and " To (Port of Discharge) "
The port of loading is the port or point of origin and the port of
discharge is the port or point of destination. Referring to the
sample L/C, enter "Moonbeam Port, Export-Country" as the
origin and "Sunny Port, Import-Country" as the destination in
the fields.
" Via (Tranship At) "
The via (tranship at) refers to the transhipping port or point in a
transhipment. For example, if a consignment destined for
landlocked Afghanistan has to tranship at Karachi, Pakistan, enter
"Karachi, Pakistan" in the field.
" For Transhipment To "
For transhipment to is the final destination in the onward routing
or carriage, which is often the consignee's place (city).

4) Packing List: It is a document showing the details of goods
contained in individual packages, which helps customs authorities
and receives in identifying the contents of specific package.
It contains almost all the information provided in invoice
along with details of packing like:
➢ No. of bales or cartons
➢ Gross weight
➢ Net weight
➢ Dimensions etc.
For the purpose of explaining other fields in the packing list, it is
assumed that the pneumatic tools in the sample L/C contain the
following data:
The catalogue or item number of the pneumatic
tools is A380
Each set is in an inner box and there are two boxes
in an export master carton, or a total of 50 cartons
for the 100 sets
Each master carton:

Net Weight (N.W.) ..... 20 kgs. (44.1 lbs.)
Gross Weight (G.W.) ..... 23 kgs. (50.7 lbs.)
Measurement (Meas.)..... 0.113 CBM (4 cft.)
61 cms. x 61 cms. x
30.5 cms.
(2' x 2' x 1')
" Package No. "
The entries preferably arranged in sequence from the lowest
number to the highest, that is, from package No. 1 and up. From
the sample L/C, enter "C/No. 1-50" or the like in the field
(Package No.), provided it is not inconsistent with the marks and
numbers on the master cartons.
" Item No. " and " Description of Goods "
The description of the goods in the packing list can be in general
terms, provided it is not inconsistent with the description in the
L/C. From the sample L/C and data of the pneumatic tools above,
entering "A380" and "'ABC' Brand Pneumatic Tools" in the
fields will satisfy the requirements.
" Quantity "
It shows the total quantity within a stated range of the package
number and the breakdown in each package. The stated range is
C/No. 1-50, enter:
100 Sets
2 Sets/Ctn.
or
100 Sets
2 Sets @ Ctn.

or the like in the field. The / and @ used here stands for per or
each.
" Weight "
It shows the total weight within a stated range of the package
number and the weight of each package. The stated range is C/No.
1-50, enter:
1,150 Kgs.
23 Kgs./Ctn.
or
1,150 Kgs.
23 Kgs. @ Ctn.
or the like in the field and put a notation "Gross Weight".
As far as the carrier is concerned, the gross weight or measurement
of a consignment is needed to calculate the freight. In case the
goods are assessed in the importing country or exported on the net
weight basis, it is necessary to show the net weight and gross
weight in the packing list. The entry may appear as:
N.W. 1,000 Kgs.
G.W. 1,150 Kgs.
" Measurement "
Ocean shipments are most often charged by the cubic meter (CBM
or cbm). Enter:
5.65 CBM
0.113 CBM/Ctn.

in the field (Measurement). Sometimes, it is necessary to include
the size or dimensions (length-width-height) of the master
package. The entry may appear as:
5.65 CBM
0.113 CBM/Ctn.
@ 61 x 61 x 30.5 Cms.
The @ stands for at or each.
Some carriers may calculate the freight on a cubic feet (cft. or cu.
ft.) basis. In the case of an irregular shaped cargo, take the three
widest dimensions that describe the smallest cubic space enclosing
the cargo to determine the measurement.
" Signature and/or Stamp "
The packing list and commercial invoice need not be signed,
unless otherwise stipulated in the letter of credit (L/C). In practice,
the original and the copy of the packing list and commercial
invoice are often signed.
Summary of Totals in a Consignment
Total Number of Packages
For example a consignment where the range of the carton number
is as follows:
C/No. 1-8
C/No. 9-17
C/No. 18-23
C/No. 24-30
C/No. 31-42
C/No. 43-50
- Product A
- Product B
- Product C
- Product D
- Product E
- Product F
put a summary "Total 50 Cartons" in a succeeding row after the
"C/No. 43-50".

Total Quantity
If a consignment consists of different units, preferably show all the
units used in the summary of totals. For example, a shipment
includes:
100 dozen
200 dozen
300 boxes
400 boxes
- Product A
- Product B
- Product C
- Product D
as such the total shows "300 Dozen and 700 Boxes".
Total Weight and Total Measurement
If the net weight and gross weight are used in the breakdown, the
summary must show the total net weight and the total gross weight.
If kgs., lbs., CBM and cft. are used in the breakdown, the summary
must show the total of kgs., lbs., CBM and cft..
Under certain circumtances, such as in a consignment consisting of
a few master cartons where each carton contains several small
items of different sizes, it is necessary to show the breakdown of
the quantity of each item. There is no need to show the breakdown
of the weight and measurement of each carton. Simply entering the
total weight and the total measurement of the consignment in the
summary row would satisfy the export requirements.
5) ARE-1 Form: This document is prepared by exporter & it acts as a
excise document. This document contains details like:
➢ Description of package

➢ Marks and number on packages
➢ Gross weight
➢ Net weight
➢ Description of finished goods
➢ Value
➢ Invoice number and date
➢ Amount of rebate claimed under rule 18.
6 copies of this document are prepared which are as follows:
(1) Original (White) - is sent with container
(2) Duplicate (Buff) - is sent with container
(3) Triplicate (Pink) - to excise authority
after proof
(4) Quadruplicate (Green) - shipment is
obtained
(5) Quintuplicate (Blue) - kept for office record

(6) Sixtuplicate (Yellow) - to control excise
authority
6) Bill of Exchange: A bill of exchange is also known as draft, which
contains an order from the exporter LUCKY EXPORTS to the
importer to pay a specified amount to a person. To whom it is
directed to pay is called maker of a bill means exporter (LUCKY
EXPORTS).
When the goods are shipped by Sea, the bills are drawn in
sets and two mailed to the foreign correspondent through an
authorized dealer for presentation to the importer. A bill of exchange
is to two types:-
a) Sight Bill: When the importer makes the payment immediately
after the draft presented to him. It is called a sight bill.
b) Usance Bill: When the exporter (LUCKY EXPORTS) has agreed
to give credit to the foreign buyer, he draws a bill, which is called
usance bill. A usance bill is drawn for payment at a date later than

the date of presentation. There is no aligned document for draft;
the same can be prepared by the exporter in the usual format.
Drafts Drawn On the Bank
In the sample L/C the draft is drawn on the confirming bank,
which is The Moon Bank. The UVW Exports may issue a draft
drawn on The Moon Bank as follows:
Sample Instrument: Draft
The "No." (number) in the above sample draft may be used for the
exporter's reference number. Blank drafts are available at the
paying bank.
First of Exchange (Second Unpaid) and Second of Exchange (First
Unpaid)
In practice, it is not uncommon that two drafts are drawn on the
drawee bank in a letter of credit (L/C) to ensure that at least one
draft reaches the drawee when they are dispatched separately. The
issuance of more than one draft in a letter of credit follows the
same logic as in the issuance of bill of lading in more than one

original. At times even three drafts may be drawn on the drawee
bank, this practice was not uncommon before in certain countries.
In contrast, normally one draft (sola bill) is issued in a
documentary collection where the draft is drawn on the importer.
The sample draft shown above is the first draft, marked "First of
Exchange (Second Unpaid)" and the number "1". In the second
draft, if any is issued, is marked "Second of Exchange (First
Unpaid)" and the number "2". Some drafts may not be numbered
"1" or "2".
The Letters of Undertaking Instead of the Drafts
In certain exporting countries, the government levy a heavy tax on
drafts. In such a circumstance, the exporter may request the
importer to specify in his/her letter of credit (L/C) application that
"No drafts be issued". When the documents are presented to the
negotiating bank, the bank issues a letter of undertaking
indicating when and where the money will be paid, instead of
accepting a draft drawn by the exporter.
'Availed' Term Drafts
The word "aval" in French means endorsement. A term draft
accepted by the importer does not guarantee payment on maturity,
hence it is not readily accepted for discounting or as collateral in a
loan. The exporter may arrange to have the accepted draft to be
'availed' by the importer's bank---the bank adds its endorsement as
guarantee of payment. The 'availed' term draft can be readily
discounted, thus providing the exporter with immediate funds.

The Parties in the Collection of Drafts
• Drawer
The drawer is the party who issues the draft and to whom the
payment is made. The drawer is the seller (the exporter) and the
payee of the draft. The payee could be another party rather than the
exporter, or could be the bona fide holder (the bearer) of the draft.
• Drawee
The drawee is the party who owes the money or agrees to make
the payment and to whom the draft is addressed (made out). The
drawee is the buyer (the importer), the acceptor and the payer of
the draft in a documentary collection. In a letter of credit the
drawee most often is the confirming bank or the issuing bank,
which is the acceptor and the payer of the draft.
• Remitting Bank
The exporter's bank to whom the exporter sends the draft, shipping
documents and documentary collection instructions, and who
subsequently relays them to the collecting bank in a documentary
collection is called the remitting bank.
The term remitting bank as used under a letter of credit may refer
to a nominated bank from whom the issuing bank or the
confirming bank, if any, receives the shipping documents.
Collecting Bank (Presenting Bank)
The bank in the importer's country (the importer's bank usually)
involved in processing the collection---presents the draft to the

importer for payment or acceptance, and thereafter releases the
shipping documents to the importer in accordance with the
instructions of the exporter---is called the collecting bank or the
presenting bank.
7) Certificates of Origin
The certificate of origin is a document certifying the country in which
the product was manufactured, and in certain cases may include such
information as the local material and labor contents of the product.
Some importing countries require a certificate of origin to establish
whether or not a preferential duty rate is applicable. A popular example
of the certificate of origin is the Form A, which is often called the GSP
Form A.
The certificate of origin (C/O)is an alternative to the declaration or the
certification and/or legalization of the commercial invoice. The C/O is
based on the rules of the country of origin.
The country of origin is the country where the goods are grown,
produced or manufactured. The manufactured goods must have been
substantially transformed in the exporting country as the country of
origin, to their present form ready for export. Certain operations such as
packaging, splitting and sorting may not be considered as sufficient
operations to confer origin.
The certificate of origin includes the Form A, Chamber of Commerce
Certificate of Origin, Exporter's Certificate of Origin, and Free Trade
Market Certificate of Origin. The trade agreement, import practice, and
letter of credit (L/C) stipulation determine the type of C/O needed.

Free Trade Market Certificates of Origin
NAFTA Certificate of Origin
The North American Free Tree Agreement (NAFTA) Certificate of
Origin is used within the NAFTA countries (i.e., Canada, USA and
Mexico). The form is available at the customs office. It is self-
certified by the exporter.
EC Certificate of Origin
The European Community (EC) Certificate of Origin, as its name
implies, is used in the European Community. It is issued by the
Chamber of Commerce of the exporting country, usually with
payment of a fee.
EC countries consist of Belgium, Denmark, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain,
and United Kingdom.
Movement Certificates
Different Movement Certificates are being used in the European
Union (EU)---EC (European Community) and EFTA (European
Free Trade Association) countries. The certificates require
endorsement by the customs of the exporting country.
EFTA countries consist of Austria, Finland, Iceland, Norway,
Sweden, Switzerland, and Liechtenstein.

DOCUMENT CONNECTED WITH TRANSPORTATION OF GOODS
• Air Way Bill (AWB) Air consignment Note.
The receipt issued by an airline or its agent for the carriage of goods is
called airway bill or air consignment note. It is issued in terms and
conditions of the contract of carriage of goods. It is not a document of
title and it is not issued in a negotiable form.
Generally AWB is issued in three copies, viz; for the carrier, for the
consignee and for the consignor.
• Postal Parcel Receipt (PPR).
Like the AWB, the PPR evidence merely the receipt of the goods to be
exported to the buyer and is not a document of title.
• Bill of Lading (B/L).
A Bill of Lading is the most important document in Foreign Trade. It
is generally issued by a shipping company. It services as a receipt
from the shipping company who undertakes to deliver the goods at
agreed destination on payment of freight in a prearranged manner and
also a document of title to the goods. B/L is generally made out in
the sets of two or three originals. All the originals are duly signed by
the master of ship or the agent of the steamship company and all the
originals are equally valid for taking the delivery of goods and once
one original copy is utilized the other originals become full and void.
B/L is nor a negotiable instrument in terms of Negotiable instrument
Act, However, it is a practice to call the original copies as negotiable
copies.

Ocean (Marine) Bills of Lading
The bill of lading (in ocean transport), waybill or consignment note (in
air, road, rail or sea transport), and receipt (in postal or courier delivery)
are collectively known as the transport documents.
Please see the sample Ocean Bill of Lading below. The bill of lading
(B/L) serves as a receipt for goods, an evidence of the contract of
carriage, and a document of title to the goods. The carrier issues the B/L
according to the information in a dock receipt, or in some cases
according to a completed working copy of the B/L supplied by the
customs broker.
The B/L must indicate that the goods have been loaded on board or
shipped on a named vessel, and it must be signed or authenticated by the
carrier or the master, or the agent on behalf of the carrier or the master.
The signature or authentication must be identified as carrier or master,
and in the case of agent signing or authenticating, the name and capacity
of the carrier or the master on whose behalf such agent signs or
authenticates must be indicated.
Unless otherwise stipulated in the letter of credit (L/C), a bill of lading
containing an indication that it is subject to a charter party and/or that
the vessel is propelled by sail only is not acceptable.

Sample Document:
Ocean Bill of Lading

INSURANCE DOCUMENTS
• Letter of insurance.
This is analogous to cover note issued by the broker. It is stated that
particular subject are placed under insurance and certificate/policy of
insurance will be issued later on.
• Broker’s Certificate
This is also not acceptable as broker issues the same, as broker acts for
the insured and cannot compel insurer to accept the proposal of
insurance.
• Insurance Certificate
The insurance on “open cover” or “floating” policy covering all
shipment on certain terms and subjects to conditions laid down.
Unless the insurance certificate gives details of the conditions of cover
it is not so much value to third party who negotiate the shipping
documents.
• Insurance Policy
This is a basic legal document-evidencing contract of insurance
between the insurer and insured. It gives full details of all the risks
covered. Marine or transit insurance policies can be assigned by the
insured merely by endorsement and delivery. Insurance policies are
issued in different forms like floating policy, open policy or cover,
specific policy etc…

A floating policy is a contract of insurance for covering a number of
shipments, the details of which are not finalized when the contract of
insurance is conclude. The relevant details like name of the vessel,
destination, description of cargo etc. is therefore required to be
declared subsequently and endorse in the policy.
An open cover /policy is valid for a given period of time or
permanently open. As per this policy the insurer undertakes to insure
all the shipments for which the details are already intimated to the
insurer.
A specific policy covers specific shipments and such policy is readily
available for submitting with the export documents.
The coverage of risks is classified into categories like A, B, C etc. and
the insurance policies are issued accordingly.
➢ Parties involved in Pre-Shipment:
1) Marketing Department
2) Pre-shipment
3) Warehouse
4) Excise department
5) Clearing and forwarding agent
6) Inland Container Depot (Parparganj, Babarpur etc.)
7) P & O, APL, Contship (Vessel Owners)

The above documents along with cargo are sent to ICD by road. The
ICD used by may be Parparganj, tuglakabad or any other, depending on
the contract with the importer.
Stage-5th
Customs Clearance
Custom House Agent (CHA) and freight forwarders, who are
known as clearing and forwarding agents, generally act on behalf of
importance and exporters for handling their export shipments or clearing
their import consignments.
They handle all documentation work through the customs & port
authorities and other regulatory agencies
Documents required for customs clearance:
1) Shipping Bill: Shipping bill is the main document required by
customs authority for allowing shipment. The exporter (LUCKY
EXPORT) has to submit some documents for shipping bill which are
as follows:
➢ SDF (GR Form) in duplicate for shipment.
➢ Four copies of packing list giving contents, quantity gross and
net weight of each package

➢ Four copies of invoice indicating all relevant particulars such as
number of packages, quantity, unit rate, total FOB/CIF value,
correct and full description of goods etc
➢ Purchase Order, Letter of Credit
➢ Inspection certificate
Each shipping bill set consist of following copies”-
i) Original - Retained by customs
ii) Duplicate - Exporter’s certificate
iii) Triplicate - Drawback copy/DEEC copy
iv)Quadruplicate - to excise department
v) Quintuplicate - Export Promotion Copy
vi)Sixtuplicate - Exchange Control Copy
* Exchange control copy is also called GR Form/SDF Form.
Types of Shipping Bills:
i) Free (White in colour): Used in cases where exported goods do
not get any export benefits.
ii) Drawback (Green in colour): Used in cases where the exported
goods attract the benefit under drawback rules.

iii) Dutiable (Yellow in colour): Used where the exported goods
are manufactured in bond (EOU Goods). Such type of shipping
bill is not used in LUCKY EXPORTS, because the company
has no dealing with EOUs.
iv)Bond (Pink in colour): Used where the exported goods are
manufactured in bond (EOU goods). Such type of shipping bill
is not used in LUCKY EXPORTS, because the company has
no dealing with EOUs
2) GR/SDF Form: GR/SDF form is filled and submitted by the
exporter. The exporter give this form to his shipping agent to get it
stamped from the customs office after clearance of goods from
custom. GR/SDF form is prepared in duplicate. The original copy
remains with authorities and they submit it to the Reserve Bank of
India. Duplicate copy is submitted to Negotiating Bank, after
mentioning the date of receipt of payment on GR/SDF form they also
send it to RBI.
Contents of GR Form:
i) Name of advising bank (if exports is under L/C arrangement)

ii) Name of bank through which payment is to be realized.
iii) Customs assessable value.
iv)Quantity of goods.
v)
3) Bill of Lading: The bill of lading is a document issued by the
shipping company or its agent acknowledging the receipts of the goods
mentioned in the bill for shipment on board and undertaking to deliver
the goods in who like order and condition as received to the consignee or
his order provided the freight and other charges specified in the bill of
lading require will depend upon the terms of better of credit.

CONTAINERISATION
Modern ship building technology has brought forth dry cargo bulk
carriers and tankers to reduce per unit cost of transportation in tramp
shipping. Likewise the container technology has brought in the
cellular ships to carry general cargo in containers to reduce cargo-
handling cost and promote faster movements.
The container system of transportation involves bulking of the break-
bulk cargoes by putting them in containers of standard sizes shown
below: -
Length Streadth Height
10’ X 8’ X 8’
20’ X 8’ X 8’-81/2’-9’-91/2’
30’ X 8’ X 8’
40’ X 8’ X 8’
The movement of containers would progress in the following phases: -
• From port to port (Pier to Pier)- the carriage of containers is
confined to the scalage of journey.
• From Inland Container Depot (ICD) in one country to ICD in
another country- the movement of containers is extended to the
interior parts of the country and
• Door to Door-the movement of containers is further extended
right to the factory gates of the manufacturer/exporter to the
door of the importer’s warehouse in a foreign country.

Thus the container transportation system through effective co-
ordination of international movements operates on a much wider scale
and endeavors to provide maximum convenience to cargo owners.
The system aims at: -
• Faster and reliable delivery of goods.
• Better protection of fragile & containable cargoes.
• Ensuring original quality of goods.
• Reduction in pilferage.
• Physical separation of dirty cargoes.
• Simplification of documents & procedures.
• Reduction in the Packing cost of the cargo.
• Reduction in cargo handling cost & ship’s time at ports.
Volumetric Calculation of Weight for charging: -
When shipping lightweight and bulky packages, use the following
formula to help you determine their volumetric weight:
Multiply the width by the length by depth of your shipment and divide
the total by 6000.
For example
If the width is 50cm, length 40cm and the depth 30cm.
Vol. Wt. = 50cm x 40cm x 30cm = 10 Kgs
6000

Stage-6th
Post-Shipment Operations
This document, also called as commercial invoice, is widely
used in commercial transaction. The seller generates this after the
shipment is done. It is the statement of account of sale rendered by the
seller to the buyer and is prepared in a specific format. The invoice is
usually made out for the full realization amount of goods. It is one of the
documents required for negotiation.
The post-shipment department is done for preparing this
invoice, the bill of lading-number and date, shipping bill number and
date, GR number and date, freight details, quota details and letter of
credit or contract copy is required.
This invoice is actually a commercial invoice. The major
difference between pre and post invoices are as follow:-
✓ The pre-shipment invoice is used for customs clearance while
the other one is sent to the L/C opener/buyer for getting the
realization through the bank.

✓ The post shipment invoice may contain the discount or partial
advance payment, if any, thereby reducing the bill amount
compared to the pre-shipment.
Negotiation / Collection through Bank
Once the goods have been shipped and the necessary documents are
dispatched to the importer, the next step is to collect the payment from
the importer. It is obligatory for the exporter to submit the shipping
documents to your bank with in 21 days of the shipment of goods for
onwards dispatch to the overseas correspondent bank. Who will arrange
the payment of the same to your bank describing the documents
enclosed with it.
1) ocuments sent to the Bank:
The exporter presents the following documents to the bank for
negotiation:-
✓ Commercial Invoice No. 5 copies
✓ Packing list 7 copies
✓ Bill of Lading 2 orig. + 3 copies

✓ Customs Invoice No. 10 orig. + 4 copies
✓ Single Entry Declaration 1 copy
✓ Weight List 10 orig.+ 1 copy
✓ Original copy of Letter of Credit
Additional Documents:
✓ Certificate of Origin:
There are certain countries that require their importers to
obtain certificate of origin from the exporter, without which
clearance of goods is not allowed.
✓ Generalized System of Performance (GSP Certificate):
It is a document which is a special requirement of EEC
member countries and a few other European countries. Under
the GSP manufacturers and semi-manufacturers from
developing countries including India are entitled to a
cocsessional rate of import duty.
When the documents are submitted to the bank, it is a request to
the bank to negotiate the documents if the same are drawn under the
letter of credit.

The bank examines all the documents in a process which is as
follows:
a) The bank examined all the terms and conditions are according to
the original order and also that of letter of credit.
b) The set of all these documents is sent to the importer bank by the
first airmail. After that the second set is also sent by the second
airmail for the confirmation of first set.
c) A duplicate copy of GR form is transmitted to the exchange
control department of Reserve bank of India on receipt of
payment from abroad.
d) The original copy of the bank certificate as applied for by exporter
along with attested copies of commercial invoice is returned to the
exporter.
2) Documents sent to the Party:-
➢ Bill of Lading 3 Copies
➢ Commercial Invoice 5 Copies
➢ Packing list 5 Copies

➢ Special Customs Invoice 5 Copies
➢ Single Entry Declaration 2 Copies
➢ Weight List 2 Copies

FLOW CHART OF EXPORT PROCEDURE
UNDERSTANDING THE
REQUIREMENT & ACCESSING THE
CAPABILITIES
& CAPACITIES
ACCEPTENCE
FOR SAMPLING
SAMPLING
PREPARATION
SAMPLE
APPROVED BY
BUYER
ORDER RECIVING &
EXPORT CONTRACT
FINALALIZING
P.O. TO PRODUCTION
INCHARGE
SOURCING
(DYING, CUTTING, STITCHING,
LABELING FINISHING OF PRODUCTS)
DISPATCHING
(TAGGING, FOLDING, PACKING,
INSPECTION & TRANSPORTATION)
PREPARATION OF PRE-SHIPMENT
DOCUMENTS
(PACKING LIST, COMMERCIAL INVOICE, AR-2
FORM, BILL OF EXCHANGE ETC)
CUSTOM CLEARANCE & SHIPPING
(SHIPPING BILL, BILL OF LADING ETC)
POST SHIPMENT OPERATIONS
(NEGOTIATING DOCUMENTS, COLLECTION OF
PAYMENTS THROUGH BANKS)
RECEIPT OF INQUIRY
FROM BUYER
NO
NO
REVIEW
BUYER’S
COMMENT
FEEDBACK

MODES OF PAYMENT
Managerial functions tend to become more and more complicated
as the operations of a company cross the boundaries of the nation in
which it is operating. Exports finance is no exception to this
generalization. The risk dimension accentuates significantly as soon as
the goods are sold to a buyer outside the country. Some of the risk
factors are inadequate personal knowledge about the foreign buyers,
possible restrictions on transfer of funds from importer’s country,
fluctuations in rates of exchange, obstacles to payments for reasons such
as wars, political disturbances payment delays and a lot of other socio
political factors. It may be appreciated that these risk factors originate
out of one common reason i.e. the business operations are done in
different of business environment.
The final indicator of success any business is its financial
viability and in exports the inflow of funds is from across the borders.
So, an export transaction is deemed to be complete only after the final
payment has been received. The payment is influenced by several factors

such as government rules and practices, bankers, Om Policies,
importer’s financial position and the prevailing trade practices in the
industry. The payment can influence other factors of marketing mix,
price being the most significantly affected. The exports managers must
take the following factors into account while evolving their payment
policies.
a) The institutional aspect – the operations of the mechanism and
credit facibilities.
b) Foreign exchange and its relation to export terms and receipt of the
export proceeds.
c) The methods of receiving payments.
d) Other factors.
i) Exporter’s knowledge of the buyer.
ii) Buyer’s financial position.
iii) Security of payment and risk factors.
iv)Time taken for payment
Methods of Payment in Exports

Due to the significance of risks in exports payments, the methods of
payment can be classified into following categories depending upon the
risks associated:
➢ Payment in Advance.
➢ Open Account.
➢ Documentary Bills.
➢ Shipment on Consignment Basis.
➢ Documentary Credit under Letter of Credit.

GOVERNMENT INCENTIVES FOR EXPORTS
Benefits for Export House/Trading House/Star Trading House/Super
Star Trading House:
a) Off shore trading /merchanting with advance payment to suppliers.
b) Membership of Policymaking open bodies and business delegations.
c) Self declared pass scheme.
d) Duty exemption scheme with legal undertaking instead of B/C.
e) E.P.C.G. scheme with legal undertaking instead of B/G (Bank
Guarantee).
f) Import of cars as one time facility once in five years against their
valid status.
g) No prior approval required for opening offices abroad.
h) Foreign equity can be raised up to 51%.
i) Marketing development assistance through FIEO.
j) Higher Entitlements for foreign exchange for foreign travel.
k) EEFC funds utilization for setting up offices abroad.

Duty Drawback
The duties suffered on the raw material used in the final export product,
whether imported or procured indigenously, are refunded to the exporter
through duty drawback scheme.
The cost/duty figures supplied by all industries are used arrive at
duty drawback rates, which are published as all industry rates. In case
exporter is not satisfied with this rate, he has an option of getting a
special band rate. The current scheme does not allow drawback, if
the exporter has already audited MODVAT credit.
Duly Exemption Scheme
I. DEEC.
II. DEPB
I. Duty Exemption Entitlement Certificate (DEEC): Under this
scheme, exporter is given license to import raw material without
payment of duty. This license is called an Advance License. The
transaction under the license as to be logged by customs in a book

called DEEC book. This book has two separate parts for exports and
imports. The exporter has to undertake an export obligation in terms
of value and quantity. The licensing authority, Director General of
Foreign Trade, monitors the export obligation.
The license could be two types:
❖ Quantity based Advance License
❖ Value based Advance License
The exporter has twelve months time to fulfill export
obligation. Non-fulfillment of the obligation attracts the duty waired
easier on the imports of raw material plus interest plus penalties.
II. Duty Entitlement Pass Book Scheme (DEPB):
A manufacturer- exporter or an exporter granted an
EH/TH/STH/SSTH certificate shall be eligible to avail the benefits of
this scheme.

This scheme shall apply only for the export of the product where
standard input-output norms have been published in hand book of
procedures.
❖ Pass book shall be issued quantity based only.
❖ The export goods shall not be eligible for drawbacks on the
inputs for which credit is taken in pass book.
❖ Pass book will be valid for a period of two years from the
date of issue.
❖ In pass book scheme exporter have to first export the goods
and get the credit in pass book then one can import utilizing
the credit.
Exports Promotion Capital Goods Scheme (EPCG Scheme)
The scheme allows import of new capital goods as well as computer
software systems at 5% customs duty subject to export obligation
equivalent to 5 times CIF value of capital goods to be fulfilled over a
periods of 8 years reckoned from the date of issuance of license over a
period of 8 years. However, in export of EPCG license for Rs.100 crore

or over, the same export obligation shall be required to be fulfilled over
a period of 12 years. The capital goods shall include jigs, fixtures, dies
and molded spares may also be imported under the scheme up to 20% of
CIF value of capital goods.
A person holding an EPCG license may source the capital goods
from domestic manufacturers supplying capital goods to EPCG license
holders shall be eligible for deemed export benefit.
Period from the date of Proportion of total export
Issuance of license obligation
1) Block of 1st
& 2nd
year Nil
2) Block of 3rd
& 4th
year 15%
3) Block of 5th
& 6th
year 35%
4) Block of 7th
& 8th
year 50%.
However, the export obligation of particular block of year may be
set off by the excess exports made in the proceeding block of the year.
In respect of license of Rs.100 crore or more, the export obligation
shall be fulfilled over a period of 12 years in the following proportions:-

Period from the date of issue Proportion of total
export
Of license obligation
1) Block of 1st
& 5th
year Nil
2) Block of 6th
& 8th
year 15%
3) Block of 9th
& 10th
year 35%
4) Block of 11th
& 12th
year 50%.
An application for grant of an EPCG license shall be made in
APPENDIX 9 of the Handbook of procedure along with documents
prescribed there in.
The licensee holder shall submit a yearly report on progress made
in fulfillment of export obligation in Appendix 9A & 9B of Handbook of
procedures, duly certified by Chartered Accountant to the concerned
licensing authority.

PROCEDURE:
1. Seller and Buyer conclude a sales contract, with method of payment
usually by letter of credit (documentary credit).
2. Buyer applies to his issuing bank, usually in Buyer's country, for
letter of credit in favor of Seller (beneficiary).
3. Issuing bank requests another bank, usually a correspondent bank in
Seller's country, to advise, and usually to confirm, the credit.
4. Advising bank, usually in Seller's country, forwards letter of credit to
Seller informing about the terms and conditions of credit.
5. If credit terms and conditions conform to sales contract, Seller
prepares goods and documentation, and arranges delivery of goods to
carrier.
6. Seller presents documents evidencing the shipment and draft (bill of
exchange) to paying, accepting or negotiating bank named in the
credit (the advising bank usually), or any bank willing to negotiate
under the terms of credit.
7. Bank examines the documents and draft for compliance with credit
terms. If complied with, bank will pay, accept or negotiate.
8. Bank, if other than the issuing bank, sends the documents and draft
to the issuing bank.

9. Bank examines the documents and draft for compliance with credit
terms. If complied with, Seller's draft is honored.
10. Documents release to Buyer after payment, or on other terms agreed
between the bank and Buyer.
11. Buyer surrenders bill of lading to carrier (in case of ocean freight) in
exchange for the goods or the delivery order.

COST FACTOR OF EXPORT-IMPORT GOODS

COST FACTORS OF EXPORT-IMPORT GOODS
1
• Materials, labor and overhead
• Custom packagings
• Inspection fees
• Licensing fees
• Royalties
2
• Buying agent's commissions
• Trader's markups
3
• Bank charges and commissions
• Overseas agent's commissions
• Freight forwarder's charges
• Documentation charges
• Insurance premiums
• Export license fees
• Certification fees
• Consular fees
• Advertising
4
• Road freight (cartage, drayage) and/or rail freight
• Routing costs (canal and inland waterway links)
• Uninsured damages

• Theft and pilferages
• Handling charges
• Demurrage
5
• Brokerage fees
• Export levies
6
• Air freight
7
• Overtime charges
• Warehousing
• Loading fees
• Demurrage
• Wharfage
8
• Ocean freight
• Lighterage
9

• Uninsured damages (e.g. war and acts of God)
• Pilferages
10
• Lighter age
11
• Quarantine charges
• Overtime charges
• Unloading fees
• Warehousing
• Demurrage
• Wharf age
12
• Import duties and taxes
• Bank charges and commissions
• Import license fees
• Brokerage fees
13
• Road freight (cartage, drayage) and/or rail freight
• Routing costs (canal and inland waterway links)
• Uninsured damages
• Demurrage

14
• Warehousing
• Interest charges
• Advertising

INTERNATIONAL COMMERCIAL TERMS (INCOTERMS)

INTERNATIONAL COMMERCIAL TERMS
EXW Ex Works
FAS Free Alongside Ship
FCA Free Carrier
FOB Free On Board
CFR Cost and Freight
(The former acronym of Cost and Freight was C&F)
CIF Cost, Insurance and Freight
CIP Carriage and Insurance Paid To
CPT Carriage Paid To
DAF Delivered At Frontier
DDP Delivered Duty Paid
DDU Delivered Duty Unpaid
DEQ Delivered Ex Quay
DES Delivered Ex Ship
Incoterms or international commercial terms are a series of
international sales terms, published by International Chamber of
Commerce (ICC) and widely used in international commercial
transactions. They are used to divide transaction costs and

responsibilities between buyer and seller and reflect state-of-the-art
transportation practices
Group F – Main carriage unpaid
FCA – Free Carrier (named place)
The seller hands over the goods, cleared for export, into the
custody of the first carrier (named by the buyer) at the named
place. This term is suitable for all modes of transport, including
carriage by air, rail, road, and containerized / multi-modal
transport.
FAS – free alongside Ship (named loading port)
The seller must place the goods alongside the ship at the named
port. The seller must clear the goods for export; this changed in the
2000 version of the Incoterms. Suitable for maritime transport
only.
FOB – Free on board (named loading port)
The seller must load the goods on board the ship nominated by the
buyer, cost and risk being divided at ship's rail. The seller must
clear the goods for export. Maritime transport only. It also includes
Air transport when the seller is not able to export the goods on the
schedule time mentioned in the letter of credit. In this case the
seller allows a deduction of sum equivalent to the carriage by ship
from the air carriage.
Group C – Main carriage paid
CFR or CNF – Cost and Freight (named destination port)
Seller must pay the costs and freight to bring the goods to the port
of destination. However, risk is transferred to the buyer once the
goods have crossed the ship's rail. Maritime transport only.

CIF – Cost, Insurance and Freight (named destination port)
Exactly the same as CFR except that the seller must in addition
procure and pay for insurance for the buyer. Maritime transport
only.
CPT – Carriage Paid To (named place of destination)
The general/containerized/multimodal equivalent of CFR. The
seller pays for carriage to the named point of destination, but risk
passes when the goods are handed over to the first carrier.
CIP – Carriage and Insurance Paid (To) (named place of destination)
The containerised transport/multimodal equivalent of CIF. Seller
pays for carriage and insurance to the named destination point, but
risk passes when the goods are handed over to the first carrier.
Group D – Arrival
DAF – Delivered At Frontier (named place)
This term can be used when the goods are transported by rail and
road. The seller pays for transportation to the named place of
delivery at the frontier. The buyer arranges for customs clearance
and pays for transportation from the frontier to his factory. The
passing of risk occurs at the frontier.
DES – Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not
occur until the ship has arrived at the named port of destination and
the goods made available for unloading to the buyer. The seller
pays the same freight and insurance costs as he would under a CIF
arrangement. Unlike CFR and CIF terms, the seller has agreed to
bear not just cost, but also Risk and Title up to the arrival of the
vessel at the named port. Costs for unloading the goods and any
duties, taxes, etc are for the Buyer. A commonly used term in
shipping bulk commodities, such as coal, grain, dry chemicals - -
and where the seller either owns or has chartered, their own vessel.
DEQ – Delivered Ex Quay (named port)
This is similar to DES, but the passing of risk does not occur until
the goods have been unloaded at the port of destination.

DDU – Delivered Duty Unpaid (named destination place)
This term means that the seller delivers the goods to the buyer to
the named place of destination in the contract of sale. The goods
are not cleared for import or unloaded from any form of transport
at the place of destination. The buyer is responsible for the costs
and risks for the unloading, duty and any subsequent delivery
beyond the place of destination. However, if the buyer wishes the
seller to bear cost and risks associated with the import clearance,
duty, unloading and subsequent delivery beyond the place of
destination, then this all needs to be explicitly agreed upon in the
contract of sale.
DDP – Delivered Duty Paid (named destination place)
This term means that the seller pays for all transportation costs and
bears all risk until the goods have been delivered and pays the
duty. Also used interchangeably with the term "Free
Domicile".The most comprehensive term for the buyer. In most of
the importing countries, taxes such as (but not limited to) VAT and
excises should not be considered prepaid being handled as a
"refundable" tax. Therefore VAT and excises usually are not
representing a direct cost for the importer since they will be
recovered against the sales on the local (domestic) market.

SUMMARY OF INCOTERMS
For a given term, "Yes" indicates that the seller has the responsibility to
provide the service included in the price. "No" indicates it is the
buyer's responsibility. If insurance is not included in the term (for
example, CFR) then insurance for transport is the responsibility of the
buyer or the seller depending on who owns the cargo at time of
transport. In the case of CFR terms, it would be the buyer while in the
case of DDU or DDP terms, it would be the seller.
Incot
erms
Lo
ad
to
tru
ck
Exp
ort-
duty
pay
ment
Tran
sport
to
expo
rter's
port
Unl
oad
fro
m
truc
k at
the
orig
in's
port
Lan
ding
char
ges
at
origi
n's
port
Trans
port
to
impo
rter's
port
Landi
ng
charg
es at
impo
rter's
port
Unlo
ad
onto
truck
s
from
the
impo
rters'
port
Trans
port
to
destin
ation
Insur
ance
Entr
y -
Cust
oms
clear
ance
Ent
ry -
Dut
ies
and
Ta
xes
EXW
N
o
No No No No No No No No No No No
FCA
Ye
s
Yes Yes No No No No No No No No No
FAS
Ye
s
Yes Yes Yes No No No No No No No No
FOB
Ye
s
Yes Yes Yes Yes No No No No No No No
CFR Ye Yes Yes Yes Yes Yes Yes No No No No No

s
CIF
Ye
s
Yes Yes Yes Yes Yes No No No Yes No No
CPT
Ye
s
Yes Yes Yes Yes Yes No No No No No No
CIP
Ye
s
Yes Yes Yes Yes Yes No No No Yes No No
DAF
Ye
s
DES
Ye
s
DEQ
Ye
s
Yes Yes Yes Yes Yes Yes No No No No No
DDU
Ye
s
Yes Yes Yes Yes Yes Yes Yes Yes No No No
DDP
Ye
s
Yes Yes Yes Yes Yes Yes Yes Yes No Yes
Ye
s

CONCLUSION
It is clear from the above study that the complexity of international
import-export business can be overcome easily by a systematic export
procedure & fair documentation. This is only the documentation which
safeguards the interests of Exporter, Importer, Banks, Governments,
Transport Agencies, Insurance Agencies and Inspection Agencies. Thus
the whole study concludes in brief …
• To survive & grow in today’s international market for any export
house, the systematic export procedure is compulsory.
• To overcome any kind of error, bottleneck, fraud and mistake; the
awareness and implementation of standardized rule-regulations &
documentation is necessary.
• The final indicator of success any business is its financial
viability and in exports the inflow of funds is from across the

borders. Thus mode of payment must be decided on the basis of
best business suitability according to the Govt. & RBI policies.
• Also the Government of India has instituted many support
programmes with a view to give thrust to our sectors. These
programmes have been made to facilitate the exporters in their
exports efforts at various stages of export process.

LIMITATIONS OF THE STUDY
❖ Partial information of negotiable documents because of securities
reasons.
❖ No direct knowledge of the operations of Forwarding Agents.
❖ All the findings are based on the information from
Seller/Exporter side only.
❖ Export Rules, Regulations & Compliances are too wide to cover
thoroughly in short term project.
❖ Primary data is analyzed though interview of executives and they
may not be available and may not be part of research.
❖ Less sufficient response of executives & supervisors in respect to
information related to securities & weakness matter of unit.

BIBLIOGRAPHY
• WEBPAGES export911.com
indiandata.com
Superindian.com
• HOW TO EXPORT A NABHI
PUBLICATION
• NEW IMPORT-EXPORT POLICY A NABHI
PUBLICATION
• EXPORT-IMPORT by: AJAY
SRIVASTAVA
ANSWER BOOK -2010
• LUCKY EXPORT NEWSLETTER
• COMPANY WEB SITE
www.luckygroupcompanies.net
• COMPANY BROCHURE

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