This Information is prepared based on the Actual Foreign Purchase Practice and

Clearance of goods after shipment, Ethiopian Case.

Basically, there are three terms of payment & two methods of delivery.
Terms of Payments: -
 Letter of credit ( L.C)
 Cash Against Documents (C.A.D)
 Telegraphic Transfer (T.T)
Terms of Delivery:
 Cost And Freight (CFR),
 Ex-Works (EXW), buying from supplier ware house
 Cost Insurance and Freight (CIF)
 Delivered At Terminal (DAT)
 Free On Board (F.O.B)
 Free Carrier (FCA)

1. Cost And Freight (CFR)

C F R (CAD document) Means:-
The Supplier should deliver until final port of discharge on their responsibility
2. Freight On Board (F.O.B)
F.O.B (Freight on Board) Means:-
The Supplier should discharge only until port of loading

Step -1- PROFORMA

Suppliers proforma Invoice: said to contain: -
 Proforma No
 Proforma Date
 Items HS Code No (Harmonized System Code) (not less than six digit)
 Terms of Payment
 Terms of Delivery
 Manufacturer:- Full Name & Address (Tel. Fax Number) if Any(Optional)
  Supplier :- Full Name & Address (Tel. Fax Number & Bank Address)
 Country of Origin
 Country of Dispatch
 Delivery Date
 Packing
 Weight
 Items Name, UOM,Unit Price, Total Price
 If terms of delivery is CFR :-
-There should be breakdown for freight cost
Fob Cost xx
Freight xx
Total CFR Djib xxx
- Destination port should be indicated
- Bank address
-Validity Date (If Any)
Step -2- Special Permission Required
A) If the import of item is drug, Vaccine, We must get permission from
Ethiopian Food Medicine & Health Care Control Authority : (attaching
Application letter & Proforma)
B) If Import of item is Plant, Chemicals & Chicks, We must get Permission
from Ethiopian Agriculture & Rural Development (MOA)
C) If Import of item is Vehicle, We must get Permission from ministry of
transportation. Etc…….

Step 3:- Marine Cover: Insurance

Apply to insurance company & insured all risk of items.
To Apply Insurance Company:-
 Apply ESW for Full Marine Insurance Cover applicable for Sea, Airworthy
or Road transport.
 Attached Proforma invoice, Tin, Import license to the system
 Apply manual incase goods move to final warehouse than dry port.
  Pay insurance fee, accept offer, and pay the marine cover
Step -3- Bank Application by ESW
 If the Source of FCY Retention, Start the application process with Bank import
permit.
 If the Source of Fcy is from Allocation,(From Bank), start application from FCY
approval stage.
A) If L.C,

 Fill ESW for FCY Permit Based on Our Supplier Performa Invoice &
 Fill the supplier name and address as Sourcing methods for future retrial
under the supplier list in the form ESW portal provided.
 Supplier Full Name, Address, Bank Address etc…
 Attach Supplier Proforma Invoice and insurance cover
 Attach Business License & Tin Certificate (if new to apply)
 If import of the item needs pre import permit, attach the permit.
Send SWIFT message to supplier to witness LC is opened to supplier
The Bank May Charge : its service charge 3.5%, Opening commission 3.5% , NBE
service charge 2.5% May Differ bank to bank except NBE share.

B) If C.A.D

 Receive Supplier Proforma as LC above

 Apply ESW for marine Insurance
 Fill FCY PERMIT same as LC
 Collect 100% cash or Equivalent following FCY, or agree with the Bank on
Cash deposited equivalent to the FCY Amount.
 FCY application for CAD will be considered as Purchase order
Send Bank Approved PO in favor of the supplier

 Accept Document in the system while it is being arrived, This time, we

consider Bank permit is obtained after Documents arrival it means.
  Bank Received original Document without any Discrepancy as the items
value has deducted from beneficiary 100% on document approval.
C. If T.T ( < $ 5,000.00 )
The same as above C.A.D Steps however,
 Bank Approval is secured from Bank Permit
 Bank Transfer advise is the TT payment documents

 Shipping Documents has sent to buyer directly

 All shipping & permit documents should be indorsed by the bank
stamp.
 Send SWIFT Message to confirm that Advance Payment is done

Note: All document should indicate L/C,CAD,TT Number & Exchange Control
License Number, Strictly as per LC text, TT Swift, and PO fields.

If original Documents are delayed and we need to clear the items by copy Shipping
document, we ask our bank by undertaking letter, Deposit some like 2.5% of the
total Value for CAD and 10% for LC and apply customs by attached Agreement
form & bank delivery order letter in case the importer on the bill is on Notify
caption and sent to bank.
 Goods may move to buyer either by Ocean, Air or Land Transport.
 Meantime, final shipping Document may Arrived Banks or to the hands of
the buyer in case of TT.

1. Collect Shipping invoice provide Carrier is ESL,

 Collect the freight invoice(3) from ESL Office. These invoices are Sea freight
invoice, Destination Clearance invoice, and inland transport invoice
  If freight paid from birr Account, (Document approved by allocation), Effect
payment against deduction instruction letter, Collect freight three of
payment bank Advice.
 Payment could be from FCY Account, Retention Account, Diaspora
Account, means Document was approved from own FCY source, or purchase
is FRANCO, freight will be paid 100% from FCY account bank will deduct
from fcy account and issue Bank Advice.

2. Back to ESL and Collect Advise of the ff

 Freight Settlement for 3 of the bank advice
 Go For Container Deposit, Pay by CPO.
For 20’ of one container = deposit birr 100,000.00
For 40’ of one container = depose birr 200,000.00

 If importer returns the container to ESL, ESL must return the container
deposit back for the buyer.
To get an Indorsed B/L By ESL/carrier we Require:

 B/L Original Copy 1

 Apply by ESL Release form
 Business license
 Freight Payment Requisition invoice
 Freight Settlement invoice
Clearing Documents Handed to Transitor
 Chamberized original Commercial Invoices
 Certificate of origin certified by chamber of commerce & indicated
importer exchange control license No.
 Packing list.
 Bill of loading /Air way bill Endorsed by importer company stamp)
for ocean freight
 ESW Marine Insurance cover, ESW Marin insurance receipt
  ESL Release and Container Deposit Agreement form/letter…. 2
original
 Container Deposit copy
 Freight Payment Request invoice –ocean
 Freight Payment Request invoice –Destination clearance
 Freight Payment Request invoice –inland
 Sea Freight settlement bank advise
 Inland freight settlement bank advise
 Destination Clearance settlement bank advise
 Sea Freight settlement
 Inland freight settlement
 Destination Clearance settlement
 ESW Bank Permit
 If split : split letter copy to Ethio Transit and email to Customs.
 Business license, Only once, Delegation letter. Only once, ESW Duty
free portal print out if item is privileged.
For Duty free, and application is Digital, attach all the document on ESW to be
verified by investment office and Approved by Ministry of Finance.

We should clear imported items permit by availing Goods declaration and a copy of
Commercial invoice at NBE against the NBE import Account Number.

Customs Proceedings for Imported Goods

i. Customs Declaration
A Transit officer in behalf of the importer prepare a customs declaration (goods
declaration) and submit such declaration to the Customs Commission. The custom
declaration must include
 Goods description;
 tariff classification,
 Valuation and payment of duties and taxes,
 Name and address of the trade operator and,
  The mode of transportation to be used
After the submission, the Customs Commission will examine the declaration by verifying
the correctness of data information, tariff classification, valuation and payment of duties
and taxes registered and supporting documents attached to declaration.
The verification process may also include the fulfillment of legislative requirements
administered by other regulatory agencies, such as veterinary, health and/or phytosanitary
issues.
ii. Payment of Customs Duty and Taxes
The importer is required to pay duties and taxes on the imported goods which include
a. Duty at 0-35% based on the type of good imported, %*CIF
b. Excise Tax for few selected goods at 10%-100% and raised to 500% for used
cars (a+b)*%
c. VAT at 15%, (a+b)*%
d. Surtax at 10%, (a+b+c)*%
e. Withholding tax at 3% on (CIF),
f. Social Security tax(3% on (CIF),
There is also a physical examination that will be conducted on the goods in order to
 Ensure that the imported goods are not harmful to the public.
 Ensure their origin, country of export, nature, condition, quality, quantity,
tariff classification and value of the goods are in accordance with the
information furnished in the goods declaration.

iii. Clearance and Goods Release

Other regulatory bodies will also be involved in the clearance of certain imported goods.
 Pre-import permits are issued, as well as the ones for which an import permit is
issued only at the time of clearance.
 The importer or his/her agent is responsible for obtaining the necessary permits
from the regulatory agencies at the time of clearance.
 For instance, a person importing medicine is required to obtain a pre-license,
before the starting of the import procedure and an import permit at the time of
entry in order to obtain clearance.
After the physical examination and obtaining the necessary license, the importer will
obtain a goods release charges upon the payment of services charges.
The goods will then be released and the importer takes possession of them. In addition,
the Customs Commission (ERCA) will issue a final declaration for the importer as a
certificate of completing the import procedures and importation of goods.
Any importer who obtained a foreign currency permit should present the final import
customs declaration to the NBE. This is a requirement for importing (or exporting) goods
in the future.
Note that an importer should keep all records and documents related to the import for five
years from the date of Customs Commission (ERCA’s) acceptance of the goods
declaration. During this period, Customs Commission (ERCA) may perform a post
clearance audit of the import. The purpose of such audits, which may cover traders’
commercial data, business systems, records and books, is to verify the accuracy and
authenticity of declarations and information provided by the importer.