EXPORT PRELIMINARIES

Establishing a Business Firm

• Selection of Name of the firm

– Approval of the name – AEPC
• Registration of Organisation
• Opening of Bank Account
• Obtaining Permanent Account No.
• Registration with Sales Tax Authorities
• Importer Exporter Code No. : From Regional office of DGFT
 Establishing a Business Firm

• Registration cum Membership Certificate (RCMC)

• Registration with ECGC – Export Credit and Guarantee
Corporation of India
• Registration under Excise Law
• Registration with other Authorities
• Registration for Business identification number
• Export Licensing
 Import Export Code (IE Code)

• An Import Export Code or IE Code is a must for any business involved in the export of goods
from India. The Directorate General of Foreign Trade (DGFT) gives a unique IE Code to the
businesses to track imports and exports from India. The following documents must
available for obtaining IE Code in the name of the business:
• The applicant should have a PAN Card.
• He should have a Current or Savings bank account in a bank which deals in Foreign
Exchange.
• He should have sale deed, rental/lease deed, electricity/phone bill for address verification
• If an applicant is Non-Resident Indian (NRI) or there is Non-Resident interest in the
firm/company they are required to submit the scanned copy of RBI approval letter.
• He should have an email-id and mobile number.
• He should have a Cancelled Cheque with Entity’s or Individual’s name pre-printed on it OR
he should have Bankers Certificate in the prescribed format.
• He should have a Net Banking account or Debit/Credit card for Online payment of
Government Fees of Rs. 500/-
• According to the Previous Notification, it was mandatory to have a Digital Signature for
filing an application for IEC Code.
 Import Export Code (IE Code)
• The following documents must available for obtaining IE Code in the name of the
business:

• In the case of the applicant is a Company/LLP/Partnership Firm:

– Name of the Company/LLP/Partnership Firm
– Certificate of Incorporation / Partnership Deed
– MOA & AOA of the Company, in case of LLP / Partnership Firm, the Partnership Deed
– Directors/Partners Identity Proof
– Directors/Partners Address Proof
– List of Directors / Partners
– Bank Reference Letter
• In case of the applicant being a Person or Proprietorship
– Name of the Proprietorship / Individual
– Identity Proof
– Address Proof
– Bank Reference Letter
 Registration-cum Membership Certificate

• Registration-Cum-Membership Certificate (RCMC) is a certificate that

validates an exporter dealing with products registered with an agency/
organization that are authorised by the Indian Government.
• While applying for RCMC, an exporter has to declare his main line of
business in the application.
• The exporter is required to obtain RCMC from the Council which is
concerned with the product of
• his main line of business.
• In case an export product is not covered by any Export promotion
Council/Commodity Board etc.,
• RCMC in respect thereof is to be obtained from FIFO. Further, in case of
multi product is yet to be
• settled, the exporter has an option to obtain RCMC from Federation of
Indian Exporters Organizaton (FIEO).
 Registration-cum Membership Certificate

• In respect of multi product exporters having their head office/registered office in the North
Eastern
• States, RCMC may be obtained from Shellac & Forest Products Export promotion Council
• (except for the products looked after by APEDA, Spices Board and Tea Board).
• In repect of exporters of handicrafts and handloom products from the State of Jammu &
Kashmir,
• Director, Handicrafts, Government of Jammu & kashmir is authorised to issue Registration
Cum Membership Certificate (RCMC).
• It is issued for five financial years by the Export Promotion Councils (EPC's) / Commodity-
Board/ Development- Authority (or) other completed authority in India. These bodies
function as the Registering Authority to issue the RCMC to its user. It is deemed to be valid
from 1st April of the licensing year in which it was issued and shall be valid for 5 financial
years ending 31st march of the licensing year, unless otherwise is specified.
 Business Identification No.
• Business identification is a number assigned to an organization, allowing the IRS
and other governmental agencies to regard it as a legally organized business.

• When you register your business, it is critical to clearly identify the organization to
the IRS by using the correct industry codes and identification numbers, as well as
filing the proper documentation. If you are operating more than one business type
or trade, it can be difficult to find the right code that describes it. No matter how
your business is set up, you must be sure to include several pieces of information
when you file the annual income tax forms. These items include:

• Name of the business (if it is registered under a different name than yours)
• Principal business code
• Principal profession or business
 Steps for Export Transaction
1. Apply to the regional office of DGFT for getting IEC Code
2. Register with EPCs
3. Agree on terms and conditions of the of the contract such as pricing , documents, freight
charges currency etc.
4. With Export order in hand the exporter starts manufacturing goods.
5. Exporter makes arrangement for quality control and obtains from the inspector of quality
control a certificate of quality
6. Exportables are then dispatched to ports
7. Exporter has to apply for a marine insurance cover.
8. The exporter contacts the clearing and forwarding agent(C&F) for shipping bill
9. Captain of the ship issues a Mate’s Receipt
10. When the port payments are made exporter gets the Bill of Lading or Airway Bill
11. Applying to the relevent Chamber of Commerce for obtaining Certificate of Origin
12. Sending of Documents to the importer stating Date of Shipment, name of the vessel
13. Exporter now presents all the documents to the bank within 21 days of the shipment
14. The Exporte’rs bank sends these documents to the importer’s bank for payment.
 Certificate of Origin

• A Certificate of Origin (CO) is an important international trade document that certifies that
goods in a particular export shipment are wholly obtained, produced, manufactured or
processed in a particular country. They declare the ‘nationality’ of the product and also serve as
a declaration by the exporter to satisfy customs or trade requirements.

• COs are requested by customs, banks, private stakeholders and importers for several purposes.
Almost every country in the world requires CO for customs clearance procedures: when
determining the duty that will be assessed on the goods or, in some cases, whether the goods
may be legally imported at all.

• There are two types of COs that chambers can issue:

• Non-Preferential COs which certify that the goods are subject to no preferential treatment.
These are the main type of COs that chambers can issue and are also known as “Normal COs”.
• Preferential COs, which certify that goods are subject to reduced tariffs or exemptions when
they are exported to countries extending these privileges. These COs tend to be closely
associated with Regional Trade Agreements.
 Mate’s Receipt

• A mate receipt is a receipt issued by the commanding officer of the ship

when the cargo is loaded on board, and contains the information about
the name of the vessel, berth, date of shipment, description of packages,
marks and numbers, condition of the cargo at the time of receipt on board
the ship. The port superintendent, on receipt of port dues, hands over the
mate's receipt to the C&F agent.
 Bill of Lading

• A Bill of Lading is a document that the Carrier of goods issues to the

“Shipper” of the goods.

• It’s a document to provide evidence or proof of shipment. This is

extremely important in International Trade as it provides ‘title’ as to who
legally owns the cargo. The Bill of Lading is important in International
Trade when it comes to the Incoterms® that the goods are sold on and the
payment terms agreed between buyer and seller. In a lot of cases, buyers
and sellers will agree to pay a deposit to the supplier then arrange the
balance payment ‘upon receipt of Bill of Lading’.
 Bill of Lading
• This means that when the goods have been shipped and the shipper
receives the B/L from the carrier (shipping line). The shipper will use this
document as security and will only email a ‘copy’ of the Bill of Lading and
other shipping documents to the buyer to prove that the goods have
been shipped and to request the balance payment. The shipper will hold
title to the original Bill of Lading (originals) and therefore legally retain
ownership of the cargo. The shipper will use this as security to ensure
that they receive the balance payment for the goods.

• A B/L is also used when shippers and consignees arrange Letter’s of Credit
(L/Cs) with both party’s banks. Letters of Credit are contracts written
between the shipper’s bank and the consignee’s bank that will guarantee
payment of goods ‘upon Bill of Lading’.
 Shipping Bill
• A shipping bill is an important document that an exporter needs to
obtain from the customs department before getting his products
ready to ship from India. While shipping products from one country
to another, an exporter is required to follow a certain export
procedure, obtain documents and get clearance from customs.

• After receiving a shipping bill, the customs authority conducts

inspection, post which, it issues an Let Export Order – the final legal
procedure required to move goods out of India. This process is
completed by the Indian Customs Department by finding out the
net value of the goods to be exported) on the shipping bill which is
signed and sealed by customs officers
 Types of shipping bill
• Types of Shipping Bills
• There are four types of Shipping Bills:

• Dutiable Shipping Bill: It is printed on yellow paper and is meant for goods that are to
be exported on payment of export duty.

• Duty-Free Shipping Bill: It is printed on white paper and is for goods exported without
duty payment. These are not eligible for duty drawback.

• Drawback Shipping Bill: It is printed on green paper, but once the drawback has been
paid it is printed on white paper.

• Shipping Bill for export of goods under Duty Entitlement Passbook Scheme (DEPB): It is
printed in blue; this is for goods exported under the government’s DEPB export
incentive scheme.
 How is Shipping Bill generated?

• The Central Board of Indirect Taxes and Customs has a

national platform named Indian Customs Electronic Gateway
(ICEGATE) that provides e-filing services, including electronic
filing of Shipping Bills. To facilitate faster Customs clearance,
ICEGATE is linked with multiple organizations like the Reserve
Bank of India (RBI), Directorate General of Foreign Trade
(DGFT), government ministries, and government partner
agencies.

• The Indian Customs EDI System (ICES) acts as the online and
real-time interface for custom clearance through ICEGATE and
via Electronic Data Interchange (EDI). ICES has also enabled
internal automation of the Custom House.
 Bill of entry
• A Bill of Entry (BE) is a legal document that is filed by
customs clearance agents or importers on or before
the arrival of the imported goods. It is submitted to
the Customs department as a part of the customs
clearance procedure. Once this is completed, the
importer will be able to claim ITC on the goods. The
bill of entry can be issued for either home
consumption or bond clearance. When it is issued for
bond clearance, the bond number and date of
issuance need to be included.
 Bill of entry
• This bill of entry is issued by two entities—firms that
import goods from foreign countries and firms that sell
goods in India after purchasing them from SEZ.

• The format of the bill of entry is fairly simple and includes

some important details like port code and license number,
importer’s name and address, customs house agent code,
importer’s export code (IEC), country of origin and its
code, country of consignment and its code, port of
shipment, vessel’s name and some important details
about the goods.
 Bill of entry
• After the bill of entry is filed, the concerned goods are
examined by a customs officer after which the importer has to
pay taxes like GST, IGST and customs duty. These are paid to
clear the goods and the importer can claim ITC compensation
cess for GST and IGST but not for the customs duty.

• The bill of entry will include the IGST, GST and customs duty
paid by the importer as well. Along with this the bill will have
two sections for signatures of both, the importer and the
customs agent. Only after both these parties sign the bill, the
bill becomes valid and verified.
 Format and Content of the Shipping Bill

• Now let us look at the complete format of Form SB I (Regulation 2). The various fields
required to be filled in are related to the following:

• Exporter, buyer, and customs broker details

• Carrier, port, and transportation details

• Invoice-related information

• Cargo-related itemized information

• Export duty and GST-related information

• Export scheme/job work/re-export details

 What does the shipping bill include?

• • Details of exporter, buyer or importer and customs agent

• • Name of the vessel
• • Transportation and port of loading and discharge details
• • Cargo details (gross and net weight, nature)
• • Invoice details (number of commercial invoices, nature of payment, invoice value in both
currencies)
• • GST and export duty-related information
• • FOB (Freight on Board) price and insurance amount of items
• • Container numbers
• • Duty Drawback details
• • Nature of goods exported
• • Country of destination and the port at which goods are to be discharged
• • Exporter’s address
• • Importer’s address
• • Details of packages such as numbers and marks
 ARE-1 Form
• Form ARE-1 is an application for removal of excisable
goods for export by Air, Sea, Post or Land. This form
is issued by a manufacturer or merchant when
excisable goods are exported.