Trade Documents

✔ Purchase Order
✔ Invoice
✔ Transport Documents
✔ Marine Insurance
✔ Bill of Exchange
✔ NTR
✔ Export Declaration Forms
✔ Shipping Bill
✔ Certificate of Origin
✔ Manufacturers Certificate
✔ G.S.P. Certificate
✔ Packing List/Note
✔ Certificate of Inspection
✔ Transshipment Bill
✔ Mate’s Receipt

EXPORT DOCUMENTS

Given below are the various documents involved in the export of goods.

✔ Pro-forma Invoice:

A pro forma invoice is a document that states a commitment from the seller to sell
goods to the buyer at specified prices & currency and terms. It is used to declare the
value of the trade. It is not a true invoice, because it is not used to record accounts
receivable for the seller and accounts payable for the buyer. Sales quotes are prepared
in the form of a pro forma invoice which is different from a commercial invoice. The
content of a pro forma invoice is almost identical to a commercial invoice and is
usually considered a binding agreement although the price might change in advance
of the final sale. Banks usually prefer a pro forma invoice to a quotation for
establishment of a letter of credit or for advance payment by the importer through his
bank.

✔ Purchase Order:
A Purchase Order (PO) is the next document executed. Sometimes an acceptance of
the Pro forma Invoice by the buyer might be construed as an acceptance to Trade
(thus an accepted Pro Forma Invoice is as good as purchase order). The Exporter and
the Importer negotiate with each other to sell and purchase goods. The Exporter
commits to sell the Importer :-
○ certain goods
○ at a certain price and
○ at a certain date.

In the Purchase Order all this is put in writing and signed by both the parties. On
signing the PO, there is a commitment on both sides and is legally binding on both
sides.

PO is not only important to the exporter and importer, but it is also of concern to their
respective countries, since it affects the balance of payment position of both the
countries. It is, therefore, not just a matter of product, manufacturing, packing,
shipment and payment but also one of the concerns to licensing authorities, exchange
control authorities and banks dealing in export trade.

The exporter is required to produce copies of export order to various Government

departments/Financial institutions for many things like - obtaining export licenses for
products covered under restricted items for exports, availing pre-shipment & post-
shipment finance, other incentives, dealing with inspection authorities, insurance
underwriters, customs offices, exchange control authorities, etc. for various purposes.

Order Acceptance

The Order Acceptance is another important commercial document prepared by the

exporter confirming the acceptance of order placed by the importer. Under this
document, he commits the shipment of goods covered at the agreed price during a
specified time. Sometimes, the exporter needs a copy of his order acceptance signed
by the importer.

The order acceptance normally covers:

○ Name and address of the importer

○ Name and address of the consignee
○ Port of shipment
○ Country of final destination
○ Description of goods
 ○ Quantity
○ Price each and total amount of the order
○ Terms of delivery
○ Details of freight and insurance
○ Mode of transport
○ Packing and marking details
○ Terms of payment

✔ Invoice

It is a prima facie evidence of the contract of sale and purchase. The invoice should be
strictly in accordance with the contract of sale (PO). It contains following details:

○ Name and Address of Seller

○ Name and Address of Buyer
○ Name and address of the consignee
○ Description of Goods i.e Technical features, Physical features
○ Quantity of Goods
○ Gross Weight / Net Weight
○ Price of Goods – unit price and total price
○ Country of Origin
○ Port of Loading & Port of Discharge
○ Payment Terms
○ After sale service and warranty details
○ Validity of Invoice
○ Delivery Schedules

✔ Packing List/Note:

A Packing List/Note gives description of goods exported in detail including every

part, component, specifications, etc. It includes following details

○ Date of packing
○ Connecting invoice number
○ Order number
○ Port of Loading
 ○ Port of Discharge
○ Country of Destination
○ Quantity of goods
○ Description of goods item wise
○ Gross weight and Net Weight
○ Item-wise details

✔ Transport Documents:
The following documents are used in export business as transport documents:

Ways of Transport Document Issued

○ Transport by Sea ○ Bill of Lading
○ Freight Forwarder’s Receipt
○ Air Freight ○ Airway Bill/Air consignment note
○ Rail/Road ○ Railway Receipt/Consignment
note
○ Post ○ Post Parcel Receipt
○ Courier ○ Courier Receipt/Way Bill

✔ Bill of Lading:
It is a document of title and it is evidence of shipment.
The Bill of Lading is a document issued by the shipping company or its agent:
○ acknowledging the receipt of goods mentioned in the bill for shipment on
board the vessel
○ undertaking to deliver the goods in the same order and condition as received,
○ to the consignee mentioned on the Bill of Lading.

Consignor is one who ships the goods. Consignee is one who can collect goods from
shipping company.

The Bill of Lading contains details such as the:

○ Name of the consignor

○ Name and destination of the vessel
 ○ Destination of the goods
○ Description of goods
○ Quantity of goods
○ Marks and numbers
○ Invoice number
○ GR number
○ Gross and Net weight
○ Number of packages
○ Amount of freight etc.
○ Date and place of shipment

From the legal point of view, a Bill of Lading is:

1. A formal receipt by the ship-owner or the master of the ship acknowledging

that the goods of the stated specifications, quantity and condition has been
received in the custody of the ship-owner for the purpose of shipment or is on
board a certain ship;
2. A memorandum of the contract of carriage, repeating in detail, the terms of the
contract which was in fact concluded prior to the signing of the bill; and
3. A document of title of the goods enabling the consignee to dispose off the
goods by endorsement.

Bills of Lading are usually made out in sets of three (or more, and the same is
specified on the Bill of Lading).

The exporter should submit ALL the sets of Bill of Lading together with the mate
receipt to the shipping company, which would calculate the freight amount on the
basis of measurement or weight as certified by the recognized Chamber of
Commerce. On payment of the freight, the shipping company returns the Bill of
Lading duly signed and stamped. If required, the exporter may prepare additional
copies of the Bill of Lading.

In some cases, the exporter may have the Bill made out to his own order or in the
name of the Bank. The consignee or the consignor, as the case may be, may transfer
the bill either by:

○ an endorsement, which names the transferee to whom the delivery is to be

made or
 ○ an endorsement in blank (i.e. without naming an endorsee).

✔ Mate’s Receipt:

Mate’s Receipt is issued by the Chief of Vessel after the cargo is loaded. It contains

○ Name of shipping line

○ Vessel Name
○ Port of loading
○ Port of discharge
○ Place of delivery
○ Marks and numbers
○ Number and kind of containers
○ Description of goods
○ Container status/seal number
○ Gross weight
○ Condition of cargo at the time of its receipt on board the vessel
○ Shipping bill number and date.

The mate receipt is of a transferable nature and must be presented immediately at the
shipping company’s office to be exchanged into Bill of Lading.

✔ Shipping Bill

Shipping Bill is an important document required by the Customs Authorities for

allowing shipment. It is prepared by the exporter and it contains:

○ Name of the vessel,

○ Master or agents, flag
○ Port at which goods are to be discharged
○ Country of final destination
○ Exporter’s name and address
○ Details about packages
○ Number and description of goods
○ Marks and numbers
○ Quantity
 ○ FOB price, real value as defined in the Sea Customs Act
○ Whether Indian or Foreign merchandise to be re-exported
○ Total number of packages with total weight
○ Value and the name and address of the Importer.

The Shipping Bills are of following types.

1. Duty-free shipping Bill:

This type of Shipping Bill is printed on white paper and used for the goods for
which neither duty nor cess is applicable. It is also used for the goods
manufactured out of materials imported under the duty-free import.

2. Dutiable Shipping Bill:

This type of shipping bill is used for the goods subject to export duty/cess,
which is either entitled or not entitled for drawback. This shipping bill is used
separately in respect of which export duty is levied on the basis of (a) market
price and (b) tariff assessed value, and printed on yellow paper for all goods
except mica and jute.

3. Drawback Shipping Bill:

If the export of goods is simultaneously by duty free and/or subject to export
duty/cess, this type of shipping bill is compulsorily to be used whether alone
or along with any other shipping bill. This type of shipping bill is printed on
the Green paper.

4. Shipping Bill for Shipment Ex-bond:

In case of goods imported for re-export and kept in-bond, this type of shipping
bill is used which is printed on yellow paper.

✔ Certificate of Origin:

It is issued by a recognized Chamber of Commerce, Export Promotion Council or

Government Department.
 It certifies that the goods are of Indian origin and are manufactured in India. It is also
required by exporter to categorise its product under get concession/exemptions on
duties from the government.

✔ Manufacturers Certificate:

In addition to the certificate of origin, some countries require Manufacturers

Certificate stating that:
○ the goods exported by him are manufactured in India
○ the goods does not contain any raw material or components imported into
India from other country

✔ Certificate of Inspection:

Certificate of Inspection is issued by the Inspection Agency concerned, certifying that

the consignment has been inspected as required under the Export (Quality Control &
Inspection) Act, 1963 and satisfies the conditions relating to quality control and
inspection as applicable to it and is certified export worthy. In addition to this
certificate, some countries need ‘Clean Report-of-findings’ under a certificate of SGS.
(SGS is a company who inspects the goods and gives a certificate to that effect).

✔ Transshipment Bill:

In the word Transshipment - ‘Trans’ stands for transfer and ‘Shipment’ means cargo
i.e. when cargo is transferred from one ship to another it is called as Transshipment.
Sometimes shipping companies do not have direct ship service to the port of
discharge. In such cases, goods are taken by one vessel (ship) to a port from where
they are transferred to another vessel for delivery to port of discharge.