BILL OF ENTRY

WHAT IS BILL OF ENTRY?

As the name suggests, a Bill of Entry in import is a legal declaration document filled by an
importer or a customs house agent under the Bill of Entry Regulations. It’s an important
document required to initiate the import customs clearance process in a country. An importer
has to specify all the necessary details in the Bill of Entry, including the type, quantity, and
quality of goods that they’ve imported from a foreign country.

Once the customs authorities of both importing and exporting countries approve the goods,
they’re then passed on to the importer.

DOCUMENTS REQUIRED FOR BILL OF ENTRY

A Bill of Entry is comparatively simpler to fill with a limited number of form fields. Ideally, the
document includes the following components:

 Name and business address of the importer

 Name, business address, and the country of the exporter
 Name of the port of arrival and its code
 Description and value of the goods/consignment
 The license number of the importer
 Value of the import duty and payable rate
 Import-export code and CHA code

After filing the Bill of Entry, a commissioned customs magistrate will inspect the goods. Post
the inspection, the importer is informed about the necessary customs duty, GST, and IGST
compensations, if applications, to clear the goods for final dispatch to the importer’s
destination. An importer can then assert a claim on input tax credit (ITC) for IGST and other
payments. This, however, does not include standard customs duty.  
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HOW TO GET A BILL OF ENTRY?

As per the officials, a Bill of Entry can be acquired from the customs office or online through
the official government site. For instance, an importer in India can fill a Bill of Entry by logging
on to ICEGATE or request a clearance agent to do the needful in lieu of a nominal fee.

BILL OF ENTRY FORMAT

Every government has its own set of rules describing a Bill of Entry. However, here’s a basic
format for a Bill of Entry. 

1. Code and license number of the port where goods arrive

2. Code of the customs house agent (CHA), import-export code (IEC), and name and business
address of the importer.
3. Name of the vessel, shipment port, country of origin and its code, country of the
consignment (if different from the country of origin), and its code.
4. Date of issue of the bill of lading
5. Details of the goods and their value
1. Packaging and quantity:
 Description of the goods, serial number, and unit code of the goods
 Number of packages in the consignment and their weight/volume
 Description of the goods 
 Customs tariff heading that includes the exemption notification and year

2. Customs duty:

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  Nature of the duty code
 Assessable goods value
 Additional charges such as landing and handling charges (if any)
 Basic rate and amount of customs duty levied

3. Additional duty: 

 Central excise tariff (CET) owing to the notification of exemption and year
 Special additional duty (SAD) for customs
 Value, rate, and total additional duty

4. IGST:

 GST code
 IGST rate and amount 
 Compensation cess amount 

5. Exemption notification to claim IGST exemption and GST compensation 

6. Total payable amount of duty (includes assessable value along with customs duty and any
other additional charges) and the total number of packages

7. Declarations and signature of the customs house agent and the importer 

WHY IS BILL OF ENTRY IMPORTANT?

Every document mandated for imposters and exporters to fill has a legal significance behind it.
The Bill of Entry is no exception.

A Bill of entry:

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1. Enables importers to furnish all the necessary details of the consignment to the customs
authority
2. Serves as a document of authentication informing the authorities that no illegal
commodities have been imported into the country
3. Helps customs authorities to cross-verify all the necessary details from the documents
submitted by an exporter at the country of export
4. Allows the customs office to charge the correct taxes and duties and avoid malpractices
5. Adds to the economic welfare of a country

To conclude, this is just an overview of what you need to know about the Bill of Entry. Since
it’s one of the most important documents for an import in a country, you must get in-depth
knowledge about this bill and its corresponding documents besides understanding the meaning
of the Bill of Entry, to ensure a smooth goods importation process.

DIFFERENCE BETWEEN BILL OF ENTRY AND BILL OF LADING

The Bill of Lading and the Bill of Entry are two completely unique documents. Here are the
major differences between them.

 The Bill of Lading is issued by a shipping company when the commodities being
transported are loaded onto a ship. The Bill of Entry on the other hand must exist for every
commodity being imported into a country.
 Bills of Lading help in identifying and maintaining information about the consignments
being transported with details such as quantity, weight, etc. The bill of entry is used to
calculate duties that will apply to a particular consignment.
 Bills of Lading are issued for the buyer/seller and help ensure that each shipment reaches
where it needs to go. Bills of Entry are created by customs broker and filed in the Customs
Department of a country.

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 BILL OF LADING

WHAT IS BILL OF LADING?

A bill of lading serves as evidence for a contract of affreightment . This usually arises when a
ship owner, or other person authorized to act on his behalf employs his vessel as a general ship
by advertising that he is willing to accept cargo from people for a particular voyage.

THE IMPORTANCE OF BILLS OF LADING

The carrier need not require all originals to be submitted before delivery. Therefore, the
exporter must retain control over the complete set of the originals until payment is effected, a
bill of exchange is accepted, or some other assurance for payment has been made to him.

A bill of lading is very important when making shipments to move the cargo or freight from one
point or distribution center to the other. On the one hand, it is a contract between a carrier and
shipper for the transportation of goods, and on the other hand, it serves as a receipt issued by a
carrier to the shipper.

Hence, the bill of lading is considered a legal document which provides all the vital details to
the shipper and the carrier to conveniently process the freight shipment through different
maritime countries and invoice it correctly.

The original copy of the bill of lading is provided to the carrier, and a copy of the same should
also be ascribed to the packaged freight.

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PURPOSE

The bill of lading document is meant to act as a transport document as evidence of the contract
of carriage of the goods. A negotiable bill of lading has the following legal qualities:

 It acts as a piece of evidence for the carriage contract containing the terms and conditions
under which the goods transportation will be carried out.
 It represents a receipt which endorses that the carrier has received the cargo as per the
contract and the goods are received in good condition.
 It is a document of title permitting the sale of goods in transit and raising financial credit.
 Most local and international systems do not consider a bill of lading as a title document.
It provides the right for the delivery to be made to the possessor.

DIFFERENT TYPES OF BILL OF LADING

Depending on your shipping destination and type of cargo, there are different bills of ladings.
They can be classified based on “how it is executed” and “Method of operation”

BASED ON EXECUTION

1. Straight bill of lading reveals that the goods are consigned to a specified person, and it is not
negotiable, free from existing equities. It means any endorsee acquires no better rights than
those held by the endorser. This type of bill is also known as a non-negotiable bill of lading, and
from the banker’s point of view, this type of bill of lading is not safe. This type of bill is
prominently used for military cargo.

2. Open bill of lading – This is a negotiable bill of lading where the name of the Consignee can
be changed with the consignees’ signature and thus transferred. This can be transferred multiple
times. A switch bill of lading is a type of open bill of lading.
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3. Bearer bill of lading is a bill that states that delivery shall be made to whosoever holds the
bill. Such a bill may be created explicitly or an order bill that fails to nominate the Consignee,
whether in its original form or through an endorsement in blank. A bearer bill can be negotiated
by physical delivery. They are used for bulk cargo that is turned over in small amounts.

4. Order bill of lading is the bill that uses express words to make the bill negotiable. This
means that delivery is to be made to the further order of the Consignee using words such as
“delivery to A Ltd. or to order or assigns. The cargo is only delivered to the bona fide holder of
the lading bill, which must be verified by an agent who issues the delivery order and the
verified bill of lading. The order bill of lading:

–    is the most modern type of bill which is widely used all over the world

–    ensures the safety of delivery of cargo to a bonafide holder of B/L

–    Since the ship visits several foreign ports where the language, practice, and procedures may
differ, the master might be inconvenienced during the cargo delivery. People might fraudulently
collect the cargo.

–    To overcome this difficulty and avoid future cargo claims and litigations, the Consignee or
the holder is required to surrender the bill of lading to the ship’s agent at the discharge port,
who will verify the genuineness of the bill of lading. When satisfied, the agent will issue a
delivery order and the verified bill of lading. Now any person can collect the cargo from the
ship by surrendering the bill of lading and the delivery note to the ship.

As the bill of lading is made to “to order” of the Consignee, it is a negotiable instrument of title.
This means that the ownership of the bill of lading can be transferred from one person to
another by authorising the signature and delivery of the bill of lading.

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All goods which have not been paid in advance and are shipped under “To order” of the bill of
lading can be categorised into two types:

 To Order, Blank Endorsed: not consigned to any named party but ‘To Order’ of the
consignor, with the intended – Consignee’s name given under ‘notify party.’ The
consignor must stamp and sign (endorse) this B/L so its title can be transferred.
 To Order, Bank: consigned to a bank with the intended Consignee’s name under ‘notify
party.’ The bank endorses the B/L to the intended Consignee against payment of (or a
pledge to pay) the amount of the accompanying bill of exchange. ‘To Order’ B/Ls are
used commonly in the letter of credit transactions and may be bought, sold, traded, or
used as security for borrowing money from banks or other lenders.

BASED ON METHOD OF OPERATION

1. Received for shipment bill of lading–This bill is sent from agent /charterer to shipper.
The endorsement of this bill ensures that the carrier has received goods but does not
confirm it is onboard the assigned vessel.
2. Shipped B/L – This bill of lading is Issued when cargo is loaded on board. It binds the
shipowner and the shipper directly.
3. A clean bill of lading states that the cargo has been loaded on board the ship in apparent
good order and condition. Such a bill of lading will not bear a clause or notation which
expressively declares a defective condition of goods and/or the packaging. The opposite
term is a soiled bill of lading. It reflects that the carrier received the goods in anything but
good condition.
4. Through B/L – This bill of lading is a legal document allowing direct cargo delivery
from point A to point B. The bill provides transportation of goods both within domestic
borders and through international shipment as it serves as a receipt of the cargo, a
contract of carriage, and sometimes title for the products as well
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 5. Combined transport B/L – This bill gives information about cargo transported in large
containers by sea and land, i.e. through multi-model transport.
6. Dirty bill of lading: If the shipowner objects to “the condition of the cargo are in good
order”, they can include a clause thereby causing the bill of lading to be “claused or
dirty” along with the remarks as per the finding of the cargo condition. E.g. torn packing,
broken cargo, shortage in the quantity of the goods etc.

NEGOTIABLE AND NON-NEGOTIABLE BILL OF LADING

Negotiable Bill of Lading:  In this type of bill, clear instruction is provided to deliver the goods
to anyone possessing the original copy of the bill, which signifies the title and control of the
freight. In this type of bill, the buyer/ receiver or their agent has to acquire and present an
original copy of the bill of lading at the discharge port. Without an original bill copy, the freight
will not be released.

Non-Negotiable Bill of Lading:  This type of bill of lading fixes a specific consignee/name of

the receiver to whom the freights will be shipped and delivered. It, however, does not itself
serve the owner of the goods. Under this bill, the assigned receiver/ buyers can claim the cargo
by confirming their identity.

FUNCTIONS OF BILLS OF LADING

1. Sets of Bills of Lading:

This is an old practice where the bills are signed in the sets of three originals to facilitate the
goods are timely delivered even when the original is lost. They are stated as the first original,
second original, and third original on top of the bill. A duplicate copy with the stamp – “Non-
negotiable” may also be distributed.
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The master will sign the original bill of lading, and when the master of the agent signs the three-
bill of lading, all other copies are considered void. This clause is written on the bill of lading
supplied in sets.

This is why the bank, negotiating a letter of credit covering the cargo, will always ask for the
full set of B/Ls. This prevents other B/L holders from legally claiming the cargo before the
bank does.

2. Bill of Lading as a Contract of Carriage:

The contract between the carrier and the shipper is already created before issuing the bill of
lading when the cargo is loaded on the ship. This is done to safeguard the shipper in case the
cargo is damaged before loading it on board the vessel and to help the shipper in the claim
process. For the carrier and the Consignee, the bill of lading will act as the actual contract of
carriage.

The popularly used conventions and rules which cover the contract of carriage for carrying
goods by sea  :

–    Hamburg Rules

–    Rotterdam Rules

–    Hague Rules

–    US COGSA

–    Hague – Visby Rules

The convention governing the carriage contract is usually stated on the first page of the bill of
lading. Upon booking space for shipment by the Consignee, the carrier sends a booking
confirmation which states  Clauses sent by the carrier. It will indicate the terms and conditions
governing the booking and carriage contract.
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CONTENTS OF FREIGHT BILL OF LADING

The bill of lading comprises the following details:

 The complete name and official address of the receiver and the shipper.
 The Purchase order numbers, special reference/ invoice or reference numbers, and special
instructions to help the shipper and the Consignee release the goods for pickup or are
accepted at delivery.
 The date of the pickup acts as a reference to track the freight.
 The description of items includes the number of units being shipped, NMFC freight class,
the weight and dimension of the products, and the nature of the cargo being carried, i.e.
dangerous goods etc.
 If the goods are hazardous, the Department of Transportation hazardous material
designation is tagged, and it is cited on the bill to follow particular rules and requirements
when shipping.
 The packaging details include crates, pallets, cartons, pills, drums etc.
 Any special notes or instructions for the carrier.

ELECTRONIC BILL OF LADING

With the modernisation of the shipping industry as a whole, the bill of lading is also modernised
to the electronic bill of lading to solve the issues occurring while using a paper bill of lading
under the latest iteration of the International Group of P&I Clubs. The problem faced when
using a paper bill of ladings are:

The paper bill uses printed bills of lading which are both costly. The bill has to be couriered,
which is an additional cost.

–    The slow movement of the paper-based bill of lading.

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–    Carriers are obligated to release the goods on the production of an original bill of lading,
which will slow the process if not received in time.

–    The paper bill can be forged, and delivery of goods against a forged bill of lading will lead
to a huge loss

ADVANTAGES OF BILL OF LADING

 As there are no papers involved, it saves paper cost as well as the cost involved in
sending the paper to a different destination by courier
 The electronic bill of lading can be transmitted instantaneously worldwide in the presence
of an internet connection, enabling quick trade and ease of multiple ownership transfers
during the cargo carriage.
 If any modifications are required in the bill, they can be made quickly and cost-
effectively compared to the bill of lading paper system.
 If the electronic bill of lading system is drawn correctly, such as introducing audit trials,
PIN, electronic signature etc., it will be difficult to commit fraud.

PROBLEMS WITH ELECTRONIC BILL OF LADING

 It is possible to negotiate and transfer the possession of the paper bill as it is evidence of
the title of the goods. However, this is not automatically the case with e-bill.
 If the electronic bill system is not secured, it can be hacked, and the details can be
manipulated as per the hacker’s convenience, leading to fraud and loss of cargo.
 Implementation of an electronic bill system across the industry needs consent from all the
stakeholders, which will take time.

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