The business dealing with export and imports is controlled by the Foreign Trade (Development and Regulation) Act, 1992. As per the current provisions under Foreign Trade Policy, 2015-2020, these businesses have to follow several norms. These norms mainly include the paperwork which concerns crossing the national boundaries. Both the exporter and importers face the obligation of submitting a set of documents. The documents include commercial documents and regulatory documents. The commercial documents are exchanged between the buyer and seller. Whereas the regulatory documents deal with different regulatory authorities, like excise, customs, export promotional bodies, etc.

The main commercial import export documentation are as follows:

• Airway Bill or Bill of Entry
• Commercial Invoice or the packing list
• Bill of Export or Shipping Bill or Bill of Entry

The main regulatory documents are as follows:

• GSTR 1 and GSTR 2 (GST return forms)
• GSTR refund form
• Bank Realisation Certificate
• Exchange Control Declaration
• RCMC or Registration cum Membership Certificate

Required Import Export Documentation for Goods

• Bill of Entry: The document of the Bill of Entry is legal and required for import customs clearance. The Bill of Exchange has to be filled by an importer or Customs House Agent (CHA). This document should be duly signed. This document is regulated by the department of Reserve Bank and Customs. It indicates the total outward remittance of a country. This document has to be filed within thirty days from the arrival of the goods.
• Commercial Invoice: An invoice is the most important document in any business transaction. The document of the commercial invoice is needed for clearance of import customs. This invoice is required for value appraisal by the customs officials concerned. The calculation of assessable value is done based on terms set for the delivery of goods. The terms are mentioned in the invoice that the importer produces at the location of the customs. The officer verifies the value mentioned in the invoice along with the market value of the physical goods. This procedure prevents any kind of fraudulent activities and hence plays an important role in the import business.
• Airway Bill or Bill of Lading: BL/AWB or Bill of Lading/Airway Bill is another document required for clearance of import customs. This bill is a carrier document that is submitted with customs. Airway bill comes under air shipment and Bill of Lading comes under sea shipment. This bill provides minute details of cargo along with the time of delivery.
• Insurance Certificate: It is another document required while importing customs clearing. The insurance certificate supports declarations made by the importer while the time of delivery. This document allows the customs officers to verify if the selling price of the goods includes or not. Moreover, insurance clearance also lets finding the assessable value of the goods for determining import duty.
• Import License: This license is very important in the procedures of import customs clearance. Having an import license is a must for specific products with guidelines of the government. The regulations for the specific items might vary from time to time as per government rules. The import license is very importantly insisted by the government while import customs clearance.
• Letter of Credit/Purchase Order: This is another document that is required for import customs clearance. This document possesses all the terms and conditions set for the sale contract. These terms and conditions allow the officials to confirm the assessed values of the goods imported. The terms include price and quantity of goods, mode of payment, and delivery terms. A consignment of imports can be conducted based on a letter of credit. In this case, the importer submits a copy of this document while import clearance.

Other than the above-mentioned documents several other documents are required while import custom clearance. These documents include technical write-up/literature, test reports, industrial license, and RCMC (Registration cum Membership Certificate). Several documents related to tax are needed are documents of duty exemption, central excise, and DGFT/GATT declarations.

Documents Required for Exporting Goods

• Export License: This license is allotted by the DGFT or Directorate General of Foreign Trade. This document allows the seller (exporter) to trade in goods that are restricted in India. It has to be produced while shipping the first cargo.
• Proforma Invoice: This invoice is one of the preliminary invoices. It is issued by the exporter (seller) to the importer (buyer). The Proforma invoice includes every detail of the and description of the goods. The details include the price of the goods, mode of payment, and delivery options for the sale.
• COO (Country Of Origin) Certificate: As the name suggests, this certificate ensures the manufacturing, processing, and production of goods in a particular country. The COO certificate possesses the declaration of the exporter along with an inspection certificate.
• Letter of Credit: An exporter can acquire a Letter of Credit from the buyer’s (importer) bank. This document states the amount that the importer would go through for payment. In certain cases, export can be conducted only after producing a Letter of Credit.
• Warehouse Receipt: This receipt ensures the safekeeping of the goods in the warehouse. This document mainly authorizes that the goods concerned for export are safe in the warehouse. The goods are therefore ready and available for transfer to the buyer.

Other documents are required for export customs clearance. They are health certificates, dangerous goods forms, consular invoices, insurance certificates, etc.

The Procedure for Conducting Import and Export

The procedure of import and export involves several steps while conducting the activities. Typically, these procedures include ensuring compliance and licensing before shipping the goods. Then jobs like uploading or unloading the goods, and making transport arrangements are also done. The export-import procedures also include getting the custom clearance along with paying taxes before the goods are released.

The Import Procedure

1. Obtaining Import Export Code: Before importing any goods from India, the business entities have to obtain IEC. The Import Export Code number is obtained from the joint DGFT of the region. The Import Export Code is a pan-based registration for the traders. This registration comes with lifetime validity. The IEC is needed for sending shipments and clearing customs. It is also required while sending and receiving money in foreign currency. The process involved in obtaining IEC registration takes 10-15 days to complete.
2. Guaranteeing Legal Compliance under Different Trade Laws: After the allotment of IEC, the business goods should be compliant with different regulatory acts. The acts are Foreign Trade Policy, 2015-2020, Foreign Trade (Development and Regulation) Act, 1992, and Customs Act. There are several exceptional items like prohibited, canalized, or restricted that need special attention. These items require additional licenses and permits from the federal government and DGFT.
3. Procure Licenses of Import: An import license can be of two types, a specific license or a general license. A general license provides a permit for importing goods from any country. Whereas an individual or specific license authorizes importing goods from only some specific countries. The import license is required for import clearance and renewable. The import license bears a validity of different durations for different goods. The durations are 18 months for spare parts, any consumable items, and raw material components. For capital goods, the validity of this license is 24 months.
4. Filing Bill of Entry and other Formalities to Complete Custom Clearance: A Bill of Entry is a document that provides certain information. The information includes the exact nature of goods imported, the value of goods, and the precise quantity. The bill of entry is furnished after acquiring the import license. Bill of Entry generates automatically when goods are cleared through the Electronic Data Interchange system. Otherwise, the importer has to submit several documents that support the goods imported. These documents include a certificate of origin and inspection, commercial invoice, bill of exchange, and some others. After shipping, the customs officials tally the bill of entry and the information provided. After that, a “pass-out order” is issued and proceeded.
5. Determining the Rate of Import Duty: India imposes a basic customs duty on every imported goods. This duty is prescribed in the Customs Tariff Act, 1975. Other good-specific duties are also imposed. They are anti-dumping duty, social welfare surcharge, and safeguard duty. The government also levies IGST or Integrated Goods and Service Tax under the GST system. The IGST rate varies as per the imported goods are classified.

The Export Procedure

The procedure for exporting goods is mostly similar to the import procedures. Any business which is planning to get involved in export business has to get IEC registration. The exporter has to meet all the legal compliances that are set under different trade laws. The exporter also has to avail of an exporter license from the regional joint DGFT if required. Getting registered under the ICC or Indian Chamber of Commerce is important for an exporter. ICC issues the Non-Preferential Certificates of Origin. This certificate certifies that the exporter originated in India.

Conclusion

The mentioned documents are not the complete list involved in the export and import of goods. In different situations, several other supporting documents are also required for customs clearance. Any concerns that are engaged in exporting from or importing to India might require some more paperwork. Hence the exporters and importers are advised to check with the shipping lines for detailed information.

Shivam Thakor

“Passionate International Trade Expert”

For the past 12 years, I have helped manufacturers & traders to create their presence in the global market. My method is designed to empower your business with international trade skills to succeed in your business. Talk with me today about how I can support your growth in international business, limit your turnover, and put you on a solid track to success and profit.