Stages in Export Order Processing

The exporter should scrutinize the export order with reference to the terms and conditions of the contract. This is most crucial stage. All subsequent actions and reactions will depend on the terms and conditions of the export contact. It should be ensured that the contract has been entered into in accordance with the prevalent export promotion policies of the country and the foreign exchange regulations. The export order must specify the mode of payment in unmistakable terms such as Letter of Credit, Documents on payment, Documents against Acceptance etc. The best mode of payment is through an irrevocable and confirmed letter of credit. The essential terms and conditions of the export order must tally with those of the L/C. The specification stipulated by the importer in the export order and the L/C such as delivery schedule, packing, inspection, marking etc., must be strictly adhered to. The documents required by the foreign buyer must be prepared and submitted to the negotiating bank in the exact specified form and manner. The most important documents which are usually demanded by the importer are: (1) Bill of Exchange, (2) Commercial invoice, (3) On-board Clean Bill of Lading, (4) Marine insurance Policy, (5) Packing List and (6) Certificate of Origin. The export order should be confirmed by the exporter only after the terms and conditions of the L/C have been found to be in order.

As soon as the export order has been confirmed preparations for the dispatch of goods are started. A delivery note (in duplicate) is sent to the Works Manager or the factory Manager. This note should contain the description of the goods as has been given in the export order, along with a copy of the instructions given by the importer. The date by which the goods must be manufactured, the date by which the necessary formalities must be completed the requisite time margins to be given and the shipment must be clearly intimated to the Works Manager. Nothing should be left to the discretion of the Works Manager. This is what the manufacturer-exporter has to do. A merchant–exporter has either to obtain the required goods from the market or has to get them manufactured from other manufacturers. The specifications and instructions to be intimated to the supplier of export goods shall, however, remaining the same.

As soon as the goods have been manufactured or procured, the following procedures are to be followed:

The clearance of the Excise Authorities has to be obtained. This can be done in two ways. The first way is to make payment of the excise duty at the time of removing the export consignment from the factory and file a claim for rebate of duty after exportation of goods. The second way is to secure clearance under Bond. This involves entering into a bond under such terms and conditions as the Collector of Customs may decide. When the export goods are removed from the factory, a debit entry for excise duty is made in the bond Account of the exporter. This obligation is discharged after exportation of the goods. The exporter has to prepare two important documents: AR-4 firm and invoice / challan in lieu of Gate Pass. If the exporter so wishes, the Central Excise Officer can make physical verification at the factory and seal the packages. For this purpose, a prescribed supervision fee has to be paid.

After the goods have been dispatched to the port town, the Works Manager sends a dispatch advice to the Export Department. Soon after, an application is sent to the insurance company for marine insurance cover. The insurance policy is obtained in duplicate.

At this stage all formalities in relation to floor price regulations, canalizations certificate of origin, ECGC cover and consular invoice wherever necessary, should be completed. Thereafter the Export Departments sends the following documents its clearing and forwarding agency, along with detailed instructions: (1) Commercial Invoice showing the details and value of goods specifying f.o.b or c.i.f or c&f price, as the case may be, and the market/real value (usually two copies); (2) Original Export order ; (3) Original Letter of Credit; (4) GR form original showing the IEC Code No. allotted by the DGFT; (5) AR-4 Form (original and duplicate copies); (6) Invoice / Challan in lieu of Excise Gate Pass (original); (7) Packing and Weight Lists; (8) Certificate of Inspection; (9) Declaration Form in triplicate; (10) Consular Invoice, where necessary; (11) Export License where necessary; (12) Endorsements regarding floor price, canalizations etc. where necessary (13) Purchase Memo, and(14) Railway receipt.

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