Documents are a necessary evil in all business transactions. Be it sales, purchase, or shipping, if even a single document is missing, it creates havoc for all the parties concerned.
In shipping, documentation is an indispensable part of transporting goods from country to another. Goods cannot enter or leave a country without relevant and complete documents accompanying the cargo.
It is therefore necessary that the exporters and importers double check all the documents. Without the complete set of documents, they will not be able to handover or collect the cargo, and might even end up incurring a penalty.
Earlier, exporters or importers were required to submit around 7-8 mandatory documents and any other paperwork required depending on the nature of the cargo or the importing/exporting country’s rules and regulations. This had made the process quite tedious and expensive.
In 2015, in an effort to improve the export and import process, the Department of Commerce had set up a committee to study the procedure and recommend ways to reduce the documentation required in the export process. The committee, after due study and consultation with concerned authorities, recommended to keep three mandatory documents for exports and three mandatory documents for imports.
Based on the recommendations of the committee, the Director General of Foreign Trade (DGFT) had issued a formal notification to announce the changes in the documentation requirements. The new rule came into force from April 2015. According to the new rule, the three mandatory documents required for export and import are:
3 Mandatory Documents Required for Exports:
Bill of Lading: The bill of lading is the most important document in the shipping process for both export and import. It is a legal document which contains all the details pertaining to the cargo being shipped, the destination, the terms of sale, and the details of the recipient. It must be signed by the appointed signatory of the shipping line, the exporter, and the importer.
For smooth transportation of goods from one place to another, it is necessary that the exporter obtain a correct and complete bill of lading from the shipping line/forwarder. He must then send the bill of lading to the importer. The importer can collect the cargo only after he presents the bill of lading to the shipping line at the destination port.
Commercial Invoice-cum-Packing List: A commercial invoice, as the name suggests, is a document that provides the details of the sales transaction like name of seller and buyer, the value and quantity of the goods sold.
A packing list contains the details of the goods that are being shipped. It should mention the correct description of the goods, quantity, weight (gross and net), number and type of packages, and marks and numbers, carrier name, export date, export license number, and letter of credit number. This information is necessary for the Customs to ascertain the value of the goods and to facilitate examination at the time of clearance.
Importers in India must obtain a copy of the commercial invoice and packing list as they need to present the same to collect the cargo.
Shipping Bill/Bill of Export: A bill of export or shipping bill is a document requirement by the customs authority. It provides the details of any benefit that the shipper has availed in terms of customs duty, export schemes of the government, credit obtained under DEPB. If the goods are re-export of previously imported goods, then such details are also mentioned in the bill. The Customs do not provide clearance without a shipping bill or bill of export.
3 Mandatory Documents Required for Imports:
Like in exports, bill of lading and commercial invoice-cum-packing list are also mandatory documents for importing goods into the country. The importer needs to collect these documents from the exporter. Apart from these two documents, importers also need to present a bill of entry to be able to collect their cargo at the destination port.
Bill of Entry: A bill of entry is a declaration by an importer or his appointed agent. It provides details of the type of cargo, its value, and quantity. It is prepared in three copies. The Customs inspect and clear the goods based on the information provided in the bill of entry. To ensure that there is no malpractice regarding the value of the goods, the bill of entry is tallied with the sales invoice or insurance policy.
These are the main documents that must accompany every import or export shipment.
*Additional documents might be required depending upon the nature of the cargo, or due to any other rules and regulations of the authorities in India or of the country with which the exporter or importer is doing business. For any specific country or product related documentation, traders must check with their agents or shipping lines.
To read the complete notification, click here.