Assignment Code: AED-01/TMA/2020-2021

Course Code: AED-01

Assignment Name: Export Procedures and Documentation

Year: 2020-2021

Verification Status: Verified by Professor

Valid Until: December 31, 2021

Q1) You are a manager in the Export firm and planning to export your products. In this connection, state various commercial documents required for the export. Explain the features of each commercial document.

Ans) The following are the documents and its respective functions for an export firm to export products:

Commercial invoices : This is the first basic and the only complete document among all commercial documents for the shipment. Besides fulfilling the obligation under the export contract, the exporter needs this document for a number of other purposes including :

1. obtaining export inspection certificate

2. getting excise clearance

3. getting customs clearance and

4. securing incentives.

Thus, this document is prepared at both the pre-shipment and post-shipment stages.

The commercial invoice also sets forth the terms of sale (i.e.fob/cif/c&f), etc, mode and date of shipment and terms of payment. It can also serve as a packing list and a certificate of origin. A packing list shows details of goods contained in each pack of shipment. When the law in an importing country does not specifically require a separate certificate of origin issued by a third party, it can be self-certified by the exporter on the commercial invoice. The format of commercial invoice is devised by exporters themselves according to the requirements of their business.

Bill of lading: Bill of lading is issued by the shipping company or its agents stating that goods are either being shipped or have been shipped. Essentially a transport document, it serves many purposes in international commerce. Bill of lading serves the following three distinct functions.

1. This document evidences the contract of affreightment (transport) between the shipping company and the shipper (exporter or importer).

2. It is a receipt given by the shipping company for cargo received by it.

3. It is a document of title (This is the most significant function of the bill of lading).

Bill of lading Is a document of title that will enable the lawful holder of any of the

original BIL to take delivery of the goods at the stipulated port of destination. Thus, a claimant of title to goods is required to surrender an original BIL (also popularly known as negotiable copy of BIL) for claiming goods from the shipping company or its agents. A bill of lading is not a negotiable instrument, though it is transferable by endorsement and delivery.

Airway bill: In air carriage, the transport document is known as the airway bill (AWB). This document constitutes prima fade evidence of the conclusion of the contract of affreightment, of receipt of goods and of conditions of carriage. This documents, there- fore, performs the triple functions as a forwarding note for the goods, receipt for the goods tendered and authority to obtain delivery of goods. By itself, A WB is not a document of title, nor is this document transferable. However, AWB can be made into a transferable document by which it can be transferred to a third party by endorsement like the BIL But, by and large, the business and commercial practice does not treat A WB as a document of title.

The functions of A WB are similar to BIL in regard to its characteristics as an evidence of contract and as cargo receipt. The A WB may be given as a receipt either for cargo given to the carrier pending shipment or for cargo loaded on board the aircraft. It may either be a clean receipt or a claused receipt. As regards the document of title characteristics, AWB is not a document of title, but this feature can be incorporated in it by making an Order AWB. General practices in the trade is to get the consignee-named AWB. Consequently, goods are delivered to the consignee named in the AWB.

The consignee will have to identify himself as the party named in AWB and goods may be delivered to him without any hindrance. But if the interests of the exporter have not been protected, the consignee may get hold of the goods and may also not pay for them. Hence, exporters provide for a clause in the contract which requires AWB to be made in the name of the paying bank, which will ensure exchange of goods for payment by the importer. On the other hand, the importer can protect himself against the seller's re-routing of the goods by obtaining the consignor's copy of the AWB (marked "Original 3 for Shipper"),'which is sent to him through the banking channel by the exporter along with other shipping documents.

Post parcel receipt: Post parcel receipt (PPR) evidences merely the receipt of the goods exported through postal channels to the buyer. It does not evidence the title to goods. The parcel is consigned to the consignee named in the contract between exporter and importer. The consignee, can identify himself with the postal authorities at the destination and obtain delivery of the goods.

Insurance policy or certificate: Cargo insurance policy (also called marine insurance policy) provides protection to cargo owners in the event of loss or damage to cargo in transit. This loss or damage is caused by accidents which cannot be known in advance and against which no protection is possible. These may be caused by natural calamities as well as by man-made accidents. It is, therefore, necessary that the risk of loss or damage to the cargo is minimised by obtaining a suitable insurance cover from an insurance company.

Bill of Exchange: Bill of exchange or draft is "an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a person or to the bearer of the instrument. Further, the person to whom it is addressed is to pay either on demand or at fixed or determinable future.

Bill of exchange (B/E) is an important commercial document which bridges the time gap between shipment of goods and receipt of sale amount. This document is prepared by the exporter and given to the bank along with other shipping documents for securing the sale amount. In this sense, B/E is attached to other documents, which will be given to the importer only after he has honoured the BIR either by actual payment or by undertaking to make payment at a future date.

Simply stated, the maker of B/E is the exporter {drawer) and the person who is directed to pay is the importer (drawee). while the person who is entitled to receive payment is the exporter (payee) or anyone directed by him. The sum of money to be paid by the drawee is the amount billed in the commercial invoice and recorded in B/E.

Q2) i) What are the basic principles of operation of ECGC? Describe the procedure for taking a policy from ECGC.

Ans)There are two basic principles on which the Export Credit and Guarantee Corporation (ECGC) works:

Spread of risks: An exporter is required to insure all the shipments that may be made by him during the next two years. To avoid undue difficulty to the exporters, exceptions have been made in respect of transactions made against (i) advance payment or (ii) irrevocable letters of credit confirmed by banks in India. Shipments made to agents and associates may also be excluded. Where the exporter deals in different types of goods, he may exclude those items which are not of an allied nature. The basic idea is that the exporter is not allowed to pick and choose bad risks only for insurance. This is also necessary to reduce premia in general. It is open for the exporter to take political cover for transactions under this para.

An exporter is a co-insurer: ECGC normally pays 90 per cent of the losses on account of political or commercial risks. In the event of loss due to repudiation of contractual obligations by the buyer, ECGC indemnifies the exporter upto 90 per cent of the loss. In this situation, a final and enforceable decree against the overseas buyer is obtained in a competent court of law in the buyer's country. The Corporation, at its discretion, may waive such legal action where it is satisfied that such legal action is not worthwhile. In such cases, losses are indemnified upto 90 per cent.

The insured will have to bear the rest of the loss. This is necessary to ensure that (i) the exporter also takes necessary precaution in selecting the parties to which he may decide to export, (ii) he may not overextend credit and (iii) he may take all possible care to minimise the  risk.

In addition to these two basic principles, ECGC being in insurance business, also follows three baslc principles of insurance. They are:

1. ECGC contracts are contracts of good faith which means that non-disclosure of a material fact will render the contract void. In other words, the exporter is bound to disclose every material fact within his knowledge to the ECGC which may adversely affect the ECGC. Again, any material alteration of the risk arising between the date of the proposal and the issue of the policy must be disclosed to the ECGC.

2. The insured is duty bound to minimize the loss. He should conduct business with ordinary prudence and diligence and act as an uninsured. The action that needs to be taken depends upon the facts and circumstances of the case.

3. Under the principle of subrogation, ECGC steps into the shoes of the exporter, if recoveries are made after the payment of the claim by the ECGC, they are shared with the ECGC in the same proportion in which the loss was borne.

Procedure for taking a policy from ECGC:

An intending exporter should fill in a proposal form (no. 12 1) available with all ECGC offices and submit it to the nearest office. After examining the proposal, ECGC would send him an acceptance letter stating the terms of its cover and premium rates. The policy will be issued after the exporter conveys his consent to the premium rates and pays a non-refundable policy fee. The premium rates are closely related to the risks involved and depend upon (i) length of the credit, (ii) terms of payment, (iii) credit worthiness of the buyer and his country and (iv) the past record of the exporter.

ECGC normally fixes a maximum limit of its liability for shipments in each of the policy years. It is therefore, advisable for exporters to estimate the maximum outstanding payment due from overseas buyers at any time during the policy period and to obtain the policy with Maximum Liability for such value. The Maximum Liability fixed under the Policy can be enhanced subsequently, if necessary.

Obligations of the Policy Holders: Following are the obligations of the policy holders:

1. Declaration of Shipments

2. Fixation of Credit limit on each Buyer

3. Reporting Defaults

Q2) ii) Explain the procedure for making claim from ECGC along with the documentation formalities.

Ans) A claim will arise when any of the risks insured under the policy materialises. If an overseas buyer goes insolvent, the exporter becomes eligible for a claim one month after his loss is admitted to rank against the insolvent's estate or after four months for the due date, whichever is earlier. In case of protracted default, claim is payable after four months from the due date. Claims in respect of additional handling, transport or insurance charges incurred by the exporter because of interruption or diversion of voyage outside India are payable after proof of loss is furnished. Jn all other cases, claim is payable after four months from the date of the event causing loss.

However, in case of-exports to countries where long transfer delays are experienced, ECGC may extend the waiting period and claims for such shipments are payable after the expiry of such extended period. Sometimes the buyer does not accept goods or pay for then1 because of differences over fulfilment of the terms of contract by the exporter, counter claims 01. set-off. In such cases, ECGC considers claims after the dispute between the parties is resolved and the amount payable is established by obtaining a decree in a court of law in the country of buyer. This condition is waived in cases where the Corporation is satisfied that the exporter is not at fault and that no useful purpose would be served by proceeding against the buyer.

Procedural Formalities

The ECGC has three types of claim forms:

1. Form No. 501 for claims arising due to non-payment for goods accepted by the buyer,

2. Form No. 502 for claims arising because of the non-acceptance of goods/documents by the buyer, and

3. Form No.503 for claims on account of delay in transfer of funds to India. Claims due to the above causes should be filed in the respective prescribed forms.

Other types of claims can be filed by means of a letter, giving full particulars of the cause and extent of loss. The claims have to be substantiated to the ECGC office that issued the policy. Again, the claim forms should be sent through the bank which handled the export bill concerned. No claim will be entertained by the ECGC if it is not filed within a period of 24 months from the due date of the concerned bills.

Documents in Support of Claims

Every claim has to be supported by documentary evidence. Important documents that should accompany the claim forms are the following:

• Certified copy of the export order

• Certified copies of invoices

• Certified copies of bills of lading

• Copies of the correspondence with the buyer

• In case of insolvency of the buyer, copy of the letter from the official receiver / liquidator admitting the claim.

• In case of protracted default, (i) protect note, (ii) original of unpaid bills, (iii) advice of non-payment received from the bank, and (iv) copy of the plaintiff if a suit has been filed. In case of transfer delays, certified copy of payment advice received from the collecting banker indicating the date on which payment was made by the buyer in local currency. This should also certify that all exchange control formalities necessary for transfer of funds to India have been complied with by the buyer.

All claims are paid in Indian rupees through the Bank which handled the bills concerned.

Q3) Do you think that containerization has become a predominant form of unitized transport? Discuss and explain the features of Liner and Tramp Shipping Services.

Ans) Containers have become the order of the day. Intermodal transportation is the movement of cargo from one location to another location via more than one mode of transportation (i.e. rail, road, river/ocean). Unitisation, in general terms, may be defined as consolidation of a number of bags, boxes, packs, etc. in a single cargo unit, the most important of which is the container. The purpose of unitisation is to assist the process of cargo handling through reducing the handling frequency of each cargo unit. Unitisation has particular relevance to the making up of a number of "small sized" items into one unit of standard size.

In international trade, containerisation has become a predominant form of unitised transport. I: enables the transportation of cargo from the warehouse of the exporter to that of the importers directly.

Containerisation offers many advantages including the following:

1. Speed and economy of handling

2. Safety both with regard to breakage and pilferage

3. Greater efficiency due to less re-handling of individual packages

4. Less packaging cost

5. Less cost of insurance and handling

6. Door-to-door transport service.

Liner Shipping Service

The liner ship has the following features.

It is designed to carry a variety of cargo, with spaces for bales, bundles, boxes, barrels, drums, etc. as well as for reefer (refrigerated) cargo. The designs of the holds and number of decks will be different from those of a tramp. With the increased share of containerised cargo, specially designed container ships for carrying different categories of containers operate.

• The cargo handling equipment on a liner will be varied and sophisticated for quick loading and unloading of cargo to ensure quick turn-round. A quick turn-round means that the ship spends the least possible time in the port and most of its time in transit.

• It operates regularly between fixed ports and normally loads in several ports. It serves a number of discharging ports along a predetermined route.

• In order to ensure speedier carriage, it is fitted with sophisticated and expensive propelling machinery.

• It provides pre-announced scheduled services on given terms and conditions of carriage. These terms and conditions mostly relate to the responsibilities and liabilities of the shipowners in receipt, carriage and delivery of cargo. Liners, thus, provide services on terms and conditions which are not negotiable.

• It generally offers carriage on fixed and stable freight rates.

Tramp Shipping Service

A tramp carrier has the following features:

• It is primarily designed to carry the more simple and homogeneous cargo in large quantity. It is, therefore, designed to fully utilise its carrying capacity for carriage of one type of cargo. For example, a grain-carrying ship will be designed in such a way that a full cargo of grains in bulk can be accommodated in the lower holds, feeders and bins. Since one kind of homogeneous cargo is to be handled, a tramp will have comparatively simple equipment. Bulk cargoes are normally loaded and discharged by mechanical equipment, elevators, pumps, etc.

• Because of the comparatively low unit value of commodities carried, a tramp will be operated at the lowest possible cost. This objective can be achieved by operating ships having relatively less speed by fitting less expensive propelling machinery.

• A tramp generally carries cargoes of one or two ship users. Hence, loading and discharging are confined to a few ports.

• It does not have a fixed route and predetermined schedule of departure as it is to be engaged by one/two users as and when their need arises.

• It offers services at terms and conditions, including freight hire charges, which are not fixed and given but are negotiable.

Q4) i) Litigation is better than arbitration for settlement of international trade disputes.

Ans) There are two well recognised methods for settlement of disputes, i.e., litigation and arbitration. Litigation is not suitable for settlement of trade disputes due to time consuming process, high costs and uncertainty of the final decision. The basic limitations of litigations are:

1. Court process is proverbially slow, time consuming and formalistic

2. Avoidable necessity of expert witnesses and other evidence

3. Inconvenience to the parties iv) Adverse Public Image

4. Bitterness and disruption of trade relationships

5. Unfamiliarity of the laws and procedures of different countries

These limitations encourage the arbitration for the settlement of various disputes. The bas~c advantages of arbitration are:

1. Quickness: Arbitration is much quicker than litigation. It can be completed as quickly as the parties want it, depending on the circumstances and the nature of the particular case. Under the Arbitration Act, the arbitrators have to make the award within four months from the date of entering on the reference. Usually an arbitration case may be settled between four months to one year.

2. Inexpensiveness: The costs and expenses in arbitration are also much less tha11in litigation. The arbitration fees usually are around 2 per cent of the claim value or less in institutional arbitration. The other incidental expenses are also moderate and low.

3. Promotes goodwill: Arbitration is a process of goodwill and it helps promote friendly trade relations between the parties. The arbitrator is a person chosen by the parties themselves on the basis of their faith and confidence in him.

4. Sound and Cogent decisions: In arbitration it is possible to choose a person having knowledge and experience in the particular line of trade. This helps in avoiding the necessity of expert witnesses for educating the judge or for proving trade customs and practices.

5.  Privacy: Arbitration proceedings are not open to public and arbitrator's decisions are not published in law reports like the court decisions. Therefore, arbitration preserves the privacy and trade secrets of the parties.

Q4 ii) Standard policies of ECGC cover losses due to all types of risks.

Ans) Risks covered under Standard Policies: Risks covered under standard policies fall into the following two categories.

Commercial Risksommercial Risks: This includes:

• the insolvency of the buyer

• the buyer's protracted default to pay (within 4 months of due date) for goods accepted by him; and

• in some special circumstances specified In the policy, buyer's failure to accept the goods, when such non-acceptance is not due to exporter's action.

Political Risks: This includes:

• imposition of restrictions on remittances by the Government in the buyer's country or any government action which may block or delay payment to the exporter

• war, revolution or civil disturbances in the buyer's country

• new import licensing restrictions or cancellation of a valid import licence in the buyer's country, after the date of shipment or contract as applicable

• cancellation of export licence or imposition of new export licensing restrictions in India after effective date of contract (under contracts policy)

• payment of additional handling, transport or insurance charges occasioned by interruption or diversion of voyage which cannot be recovered from the buyer; and any other cause of loss occurring outside India, not normally insured by general insurers, and beyond the control of the exporter and or the buyer.

In cases where the buyer happens to be a foreign Government or a Government department and it refuses to pay, the default will fall under the category of political risks.

Risks not covered: The standard policies do not cover losses due to the following risks:

1. Commercial disputes including quality disputes raised by the buyer, unless the exporter obtains a decree from a competent court of law in the buyer's country in his favour

2. causes inherent in the nature of the goods

3. buyer's failure to obtain necessary import or exchange authorisation from authorities in his country

4. insolvency or default of any agent of the exporter or of the collecting bank

5. loss or damage to goods which can be covered by general insurers

6. failure of the exporter to fulfil the terms of the export contract or negligence on his part vii) exchange rate fluctuation (except under schemes mentioned later in the chapter).

The ECGC also does not cover risks which can normally be insured with commercial insurers.

An exporter may either take a comprehensive risks policy covering both political and commercial risks or secure himself against political risks only, depending upon his requirements. It must, however, be noted that ECGC does not issue policies to cover commercial risks only.

Q4) iii) There are no reasons for securing insurance cover by the exporter.

Ans) There are two reasons for securing the insurance cover.

The first reason concerns the legal dimension of limited liability of the carriers and other intermediaries.. The second reason concerns commercial considerations. Let us discuss them.

Legal Dimension

When the goods are in transit from the exporter to the importer, they are, at different stages, in the custody of different agencies and authorities including the clearing and forwarding agents, carriers, port and customs authorities, etc. If there is any loss or damage to the goods, while in their custody, the concerned intermediary may be held liable to pay damages to the cargo owners.

The nature and extent of liabilities of various intermediaries have been defined in the respective laws enacted by the government all over the world.

According to these law3, the intermediaries cannot be held liable for loss to the cargo, if it was caused by reasons or events beyond their control. For example, if the loss is due to natural disasters or war or strike, the intermediaries will not be liable to pay for the loss. Further, if the loss has occurred even after the concerned intermediary has exercised reasonable care in keeping the goods, it is legally exempted from the liability. In such situation, the cargo owners who suffer the loss cannot recover it from the intermediaries and they have no other option but to obtain appropriate insurance cover.

The laws also state that where the carriers or other intermediaries are liable for loss or damage, the maximum amount of recovery is limited to the sun1stipulated in the respective laws. For example for goods carried by the Indian shipping companies, the maximum liability of the shipowner is $100 per package. Thus, where the lost cargo is more valuable than the maximum recoverable amount, the cargo owners will have to bear some of the loss themselves.

Q4) iv) Export houses are not entitled to get any special benefits.

Ans) Export/Trading/Star Trading Super Star Trading Houses have been accorded special status. When exporters achieve the specified level of exports over a period, they may be recognised as EWTH/STWSSTH. The exporters, registered with FIE0 or EPC are eligible for this purpose. The export performance criteria may be based on either f.0.b. value of exports or net foreign exchange earnings. Let us discuss them in detail.

F.O.B. Criteria : The manufacturing or merchandising units, who have achieved the following targets can be accorded the status of above mentioned Export Houses. Deemed exports are not counted for this purpose.

Exporters have option to get recognition for the year. In this case relaxation in above turnover has been permitted to the exporters.

Net Foreign Exchange Earnings : Exporters have an option for obtaining the status of Export and other houses based on the following Net Foreign Exchange Earnings. Exporters have also an option to get recognition for one year. In this case relaxation in above earnings has been permitted.

EH/TH/STH/SSTH are entitled to the following special benefits :

1. Import Facilities

2. Marking Development Assistance

3. Foreign Currency Accounts

4. Foreign Exchange Facilities

5. Other facilities like training of personnel, trade delegation, exemption from pre-shipment

6. inspection, green channel facility, etc

Commercial Dimension

From the point of view of an exporter, a transaction is complete as soon as the importer either pays for the Bill of Exchange on its presentation or he undertakes to make payment at a future date by accepting the Bill. Sometimes even before the Bill of Exchange is presented to the importer, he gets to know about the loss of goods in transit and does not accept the Bill when presented. In such a situation, the exporter is compelled to bear the loss. Prudent exporters, when dealing with unknown customers on DP or DA payment terms, prefer to get cargo insured. Further, as a commercial practice, cargo insurance makes it possible for, the exporter to get post-shipment finance from the negotiating bank because the insurance policy is one of the required document sunder a c.i.f. contract. If on the other hand, the contract is on f.0.b. terms with payment on DP or DA basis, the negotiating bank may advance money immediately after shipment (provided the shipping documents are in order and the bank is favoured with an appropriate insurance policy.)

Q5) i) General conditions in export contracts

Ans)  Export contract refers to the subject matter of the contract. In addition, the contracts also mention the rights of the party concerned against the party which may have failed to honour his contractual obligations, except under some valid reasons. The movemect of goods in export transactions involve risk and costs. The goods may get lost, stolen or damaged during transit. The contract inust specify who will bear this risk and upto what point. Similarly, physical movement of goods will mean costs. Whose responsibility will it bc to bear these costs ? These issues are to be resolved through contracts.

Most exporters have developed standard general conditions of exports to be incorporated in an export contra& It simplifies the day-to-day export operations. It also reduces the possibility of missing out some important aspect, each time a contract is drafted. The complexity of the general conditions depends upon what is being exported. If the product is standard, such as garments, handicraft or light engineering goods, a simple set of general conditions will suffice. On the other hand, a contract for the sale of petrochemicals plant may run into hundreds of pages. For a majority of products being exported from India, the following aspects should be covered under the general conditions:

• The parties

• The description of the products Quality

• Price per unit

• Total value

• Currency

• Tax and Charges

• Packing

• Marking and Labelling Mode of Transport

• Delivery : Place and Schedule Insurance

• Inspection

• Documentation

• Mode of Payment

• Credit period, if any

• Warranties

• Passing of Risk

• Passing of property

• Availability / non-availability of Export-Import Licences Force Majeure

• Settlement of Disputes

• Proper Law of the Contract

• Jurisdiction

Indian Council of Arbitration which has been set up by the Ministry of Commerce. Government of India has developed a Model Contract form for the benefit of Indian exporter. This model is appropriate for most small and medium enterprises exporting standard products.

Q5) ii) Deferred credit facilities

Ans) Export of goods on deferred payment terms can be financed under suppliers credit or Buyer'$ credit. Let us first understand what they are.

Supplier's Credit: The exporter extends credit directly to the overseas buyer and seeks refinance from commercial banks1EXIM bank .

Buyer's Credit: It is a loan extended by a financial institutions or a consortium of financial institutions to the overseas buyer for financing a particular contract.

Under this scheme, credit is granted by EXIM Bank jointly with an authorised dealer to foreign buyers m connection with export of capital goods and turnkey projects from India. The exporters are paid out of the buyer's credit on a non-recourse basis on their complying with the terms of the export contracts to be financed under the scheme. Before the expolter eniers into any contract providing for credit terms to be financed under buyer's credlt scheme, they should have detailed discussion with the bankers. While considering proposals under the scheme, the following factors are taken into account by EXIM Bank:

1. competence and capability of Indian exporters in complying with the proposed commercial terms of the contract;

2. justifiability of the contract on commercial considerations;

3. economic viability of the overseas projects concerned of the importer and general

4. economic conditions of his country; iv) credit worthiness of foreign borrower.

Reserve Bank's permission is also required for the purpose of granting credit under the scheme since payment will have to be made to the exporter on behalf of non-resident buyer. Application to the Reserve Bank should be made by the authorised dealer in Form DPX 6 for the purpose.

Q5) iii) War perils

Ans) War perils covered by the Institute War Clauses refer to following events:

1. War, civil war, revolution, rebellion, insurrection or civil strike or any hostile act by or

   against a belligerent power;

2. Capture, seizure, arrest, restraint or detainment of carrier or craft arising from event mentioned (i) above. Thus, confiscation by the customs authorities of goods being smuggled cannot be insured; and

3. Derelict (abandoned) mines, torpedoes, bombs or other derelict weapons of war.

It is clear from the above that war risk insurance is not only against hostile or warlike acts but also for perils which continue to exist even after war is over.

War risk cover is provided with certain restrictions about the duration of the cover. Some of the major restrictions are:

1. The cover is restricted to the period while the goods are water-borne in the ship or are in

   the craft;

2. The cover attaches as the goods are loaded into the vessel aircraft or craft used to carry the

   goods to the vessel;

3. The cover terminates either as the goods are discharged from the vessel/ aircraft at the final

   port of discharge or on the expiry of 15 days from the midnight of the day of the arrival, whichever is earlier. The limit of 15 days also applies to cases where vessel/ aircraft carrying cargo cannot go to the final port and the cargo is discharged i t some other port; and

4. In the case of sea shipments, the 15-day limit does not apply where cargo after being discharged from the overseas vessel into a craft for delivering the cargo to the shore. The time limit for goods in crafts is 60 days after discharge from the overseas vessel.

Q5) iv) Procedure for claiming duty drawback

Ans) The claim of Duty Drawback (DBK) is processed and passed for payment, primarily on the basis of the relevant information given in the Drawback copy of shipping bill. Exporters are required to file the Drawback copy of shipping bill in triplicate, in quadruplicate if any export assistance is applicable, well in advance in the Export Department or Central Registration Unit at the port or ICD Container Freight Station / Air Cargo Complex, etc. The DBK Shipping Bill must indicate the DBK Schedule No, of the export product, product description, DBK rate and total amount of drawback claim. In addition, it should also have a declaration that exports are being made under a claim of Duty Drawback. At the same time there should also be a declaration that the duties of customs and central excise have been paid in respect of the material inputs used in manufacture of export goods as also in respect of container or packing materials. Exporters have to make sure that no separate claim is being made for rebate of central excise duties under the Central Excise Rules.

The Shipping Bills and other documents are scrutinised and examined by the concerned Customs Officer. Duplicate and Triplicate copies of the Shipping Bills with suitable examination order are returned to the exporters for presenting them to the Docks Appals mg Officer. The Custom Officer gives examination report on both the copies of shipping bills and returns duplicate and triplicate copies to the exporters and original copy is retained. Exporters present duplicate and triplicate copy of shipping bills duly examined by the customs office to the Docks Appraising Officer along with the export goods. If the officer finds it in order, he endorses 'Let Export' order on both copies of the Shipping Bills. Triplicate copy of the Shipping Bill is declined to be a claim for the drawback. If claims are found admissible and in order, are sanctioned. The amount is credited in the ledger account of the exporter maintained in the Drawback section.

Documents : The claim for duty drawback is filed along with the following documents :

1. Copy of export contract or letter of credit, as the case may be.

2. Copy of packing list.

3. Copy of AR4 form, wherever applicable.

4. Insurance certificate wherever necessary.

5. Copy of communication regarding rate of drawback (if applicable) vi) Copy of Test Report (if required)

6. Declarations (if required)

7. Declaration regarding not availing MODVAT.

8. Certificate from the Jurisdictional Excise Superintendent (if applicable) x) Any other documents.

9. Where an exporter desires that he may be granted the incentives of drawback provisionally, Iic may, after making the application, apply in writing to the Drawback Directorate. He may request that a provisional amount be granted to him towards drawback on export of such goods, pending determination of the amount or rate of drawback. However, for making provisional claims of duty drawback an exporter play be required to execute a general bond for the amount of drawback claim, with the Collector of Customs at the port from which the said goods are exported.

   
   

If the rate of drawback is less than three-fourth of the duties paid on the materials or components used in the production or manufacture of the said goods, he may within sixty days from the date of export, make an application in writing to the Drawback Directorate for fixation of appropriate amount or rate of drawback. The procedure and documents required for such application is the same mentioned earlier for fixation of drawback rates.

Duty Drawback Credit Scheme: As an export promotional measure, the Government of India have authorised the Reserve Bank of India to instruct the commercial banks (Authorised Dealers in Foreign Exchange) to grant interest-free credit to the exporters. The credit is given against their Duty Drawback entitlements pending scrutiny, sanction and payment by the Custom House. Such interest-free credit is being made available to exporters in India. for a period of 90 days. However, the scheme is applicable only for export of such products for which Drawback rates have already been determined either on all-industry rate basis or on brand-rate basis.

Drawback on export by post : Where goods are to be exported by post under a claim of drawback, the outer surface of the packing must be marked as 'DKAWBACK- EXPORT'

In such cases, the exporters will submit to the Postal Authorities a Drawback Claim Form

instead of a shipping bill giving details regarding drawback schedule number, product

description, drawback rate and amount.