India's engineering exports fell 19 per cent short of the target last fiscal at USD 58.2 billion on account of weak demand from major markets like the US and Europe.The government had set a target of USD 72 billion. "In the first half of 2011-12, the exporters were getting good number of orders, but in the second half there was a weak demand from western markets like the US and Europe," said an official of the Engineering Export Promotion Council (EEPC), which is under the Ministry of Commerce.

India's engineering exports are likely to touch USD 76 billion in the current fiscal, an increase of about 27 per cent year-on-year, mainly due to increasing demand from new markets in Latin America.

"We are getting good demands from new markets like Brazil, Mexico, Argentina and Columbia. Exporters are also getting good orders from West Asia and Africa too," Engineering Exports Promotion Council (EEPC) Chairman Aman Chadha said.

The engineering sector contributes about one-fourth of the country's overall merchandise exports and the share is expected to grow further, Chadha said.

During April-June this fiscal, the sector's shipments grew by 94 per cent year-on-year to USD 23 billion. In 2010-11, engineering exports registered their highest ever growth of about 85 per cent to USD 60.1 billion.

However, Chadha said outbound shipments during the second half of the current fiscal may get hit due to the end of the Duty Entitlement Pass Book (DEPB), a tax benefit scheme, by September-end.

The lion's share of about 60 per cent of the funds under the DEPB goes to exporters in the chemical and engineering sectors.

Under the 14-year-old DEPB scheme, the government spends about Rs 8,500cr annually to reimburse exporters on the taxes paid on the import equivalent content of export products.

Exporters are lobbying hard with the Commerce Ministry for further extension of the scheme.

"After September, engineering exports may not show excellent growth rates due to the end of DEPB," he said, adding, "If the government fixes high rates in the Duty Drawback scheme, then the high growth could continue."

The government plans to replace the DEPB with an alternate Duty Drawback scheme. The DEPB, which was to end on June 30, was extended till September so that there could be smooth transition to the Duty Drawback scheme.

The Commerce Ministry is looking at increasing the country's engineering exports to USD 125 billion by 2013-14.

Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners.

India's exports stood at USD 245.9 billion in 2010-11.

DOCUMENTATION:

EXPORTS

Providing your Forwarder with a suitable “letter of authorization” to act as your agent on overseas documentation matters. Although not a required or standardized document, preparing a thorough and well organized “Shipper’s Letter of Instructions” (SLI) is a good practice for your company to establish. You can give your Forwarder limited authorization and initial instructions with an SLI as soon as the shipment details emerge, which allows time to prepare documents, make arrangements, and ask questions. Freight Forwarder is not absolutely required for a successful export shipment; a licensed Customs House Broker is required to clear goods imported into any country, including the United States.

Below are some factors to consider when determining which documents are needed for a particular shipment. Country of origin and destination, as well as transshipment Mode of transportation — truck, rail, ocean, air, pipeline

Commodity — agriculture, livestock, safety/security, end-use, intangible- software, service Size — value, volume, weight, dimensions Parties to the transaction — shipper, consignee, agents, brokers, banks

Documents can be prepared by the exporter and then processed or forwarded by a Freight Forwarder. Invoices — Commercial, Pro-forma, Consular Packing Lists — Dock, or Warehouse, Receipt Bills of Lading (B/L) — Ocean B/L, or Motor/Truck or Air Bill, or Way Bill Electronic Export Information (formerly the Shipper’s Export Declaration or SED) is not an actual document but still a very important part of the export process Certificates of Origin (C/O), sometimes country-specific — NAFTA C/O, Israel C/O Declaration of Dangerous Goods (DGD) — Hazmat, placards Certificates — Insurance, Free Sale, Inspection, Phytosanitary, Authentication (Apostille) Miscellaneous: Letters of Credit, ATA Carnet, Duty Drawback

Essential Documentation The invoice and bill of lading are the two documents required for every export shipment.

INVOICES Pro-forma Invoice: A pro-forma invoice is an invoice sent to the buyer before the shipment, giving the buyer a chance to review the sale terms (quantity of goods, value, specifications) and get an import license, if required in their country. It also allows the buyer to work with their bank to arrange any financial process for payment. For example, to open a Documentary Credit (Letter of Credit), the buyer’s bank will use the pro-forma invoice as a source of information. The exporter/seller should not send their customer a pro-forma invoice unless they fully understand what they are offering to the buyer. If no changes are required on the pro-forma invoice after the buyer reviews it, the exporter can simply change its date and title and turn it into a commercial invoice.

Commercial Invoice: A commercial invoice is prepared by the seller/exporter and addressed to the buyer/importer, and is one of the first documents prepared

when a transaction has been agreed upon. The invoice identifies the buyer and seller, describes the goods sold and all terms of sale, including Inco Terms, payment terms, relevant bank information, shipping details, etc. An invoice may be itemized to show cost of goods, freight, and insurance, or other special handling. The invoice may be numbered and have multiple “purchase order” numbers. U.S. Customs does not actually need a copy of the invoice, unless requested, but the information included is used to prepare other documents.

Consular invoice: A consular invoice is the commercial invoice stamped or notarized by the consulate or embassy of your customer’s country, if required. For example, if you are exporting to Egypt and your buyer requires a consular invoice, the Egyptian embassy in Washington, D.C. will do this for a small fee. Usually a freight forwarder will offer this service, but an exporter can send the original invoice to the consulate, have it notarized/legalized as required, pay the fee, and have the documents returned or forwarded on. It is important to understand that consular invoices are required in the buyer’s country, so you need to add the time/costs associated with obtaining one to the price of the goods you are shipping. The invoice should include a [non]-diversion statement.

MATERIAL HANDLING Packing List: A packing list is prepared by the shipper and is a detailed breakdown of the items within a shipment. It may also include any “special marks” for identification. For example, the customer may want “ABC XX” in blue letters on the side of the packaging. For insurance claims and tracking purposes, it helps to describe what is in each “package”. The packing list should also reference the customer’s purchase order number and destination. Often, a packing list is taped to palletized cargo or on the main carton/box of a shipment so that the importer’s customs agency or any transportation handlers can have easy access to it to know what the goods are and their destination. The quantity and items listed on the commercial invoice must match with the packing list, but not necessarily match the pro-forma invoice.

Dock (or Warehouse) Receipt: The dock or warehouse receipt is issued by a warehouse supervisor or port officer and certifies that the goods have been received by the shipping company. This document is used to transfer accountability when goods are moved by the domestic carrier to the port of

embarkation and left with the international carrier. At this time, the carrier’s Bill of Lading is also signed by both parties and copies are issued accordingly.

Bills of Lading (B/L) A Bill of Lading is issued by the carrier to the shipper for receipt of the goods, and is a contract between the owner of the goods and the carrier to deliver the goods. Sometimes the B/L acts as title to the goods so an “Original” B/L is issued- usually a set of three. Whoever presents one of those Original, Negotiable B/L can take possession of the goods. A B/L can be either negotiable or non-negotiable.

Non-negotiable (or “straight”) B/L: Indicates that the shipper will deliver the goods to the buyer and that title of the goods has not been transferred to the shipper (i.e., the buyer or seller “owns” the goods while they are being shipped). This type of B/L is often used when payment for the goods has already been made in advance.

Negotiable (or “shipper’s order”) B/L: Serves as a title document to the goods, issued “to the order of” a party, usually the shipper, whose endorsement is required to effect its negotiation. It can also be issued “to the order of” the buyer’s bank as part of a documentary credit/letter of credit stipulation so that when the buyer’s bank receives the Original B/L, they can endorse it over to the buyer at the time of payment for the buyer to clear the goods at customs. Sometimes the negotiable B/L may be consigned “To Order” without reference to a company. A negotiable B/L can be bought or traded while the goods are in transit, whereas a “Straight” B/L is non-negotiable and is consigned to the buyer.

Bills of Lading also include a “notify party” (usually the buyer or their agent) so that when the vessel arrives at the port of destination, the carrier can notify the party that the goods are available, are in need of customs clearing, or are ready for pick up. Usually the importer can pick up the goods after customs clearance and duties are paid. “Freight Collect” means the consignee pays the freight charges as well. “Freight Prepaid” means the shipper pays the freight charges, but not customs clearance unless the terms are “delivered duty paid”.

Inland Bill of Lading: Issued by the trucking company and/or the railroad line for taking the goods from the exporter’s facility to the port of embarkation or consolidation facility.

Ocean Bill of Lading (OBL): The Ocean B/L is an invoice, and may be issued as a “clean” bill of lading, meaning the carrier certifies that the goods have been received without visible damage. An “On-Board” B/L may be issued when the goods are received into the carrier’s port facility, basically confirming the cargo will be sailing.

Air Way Bill (AWB): The Air Way Bill is a form of bill of lading used for the air transport of goods. AWBs are non-negotiable, mainly because of the short amount of time that the goods are in transit. The original AWB is rarely needed by the importer at the other end of the shipment to prove ownership of goods. A “house airway bill” is issued by a freight forwarder on behalf of the actual carrier, which is the case when a freight forwarder has a contract rate with an air cargo service to expedite the documentation.

Export and License Declaration Electronic Export Information (EEI): “EEI” is the acronym for the new process of filing what was the Shipper’s Export Declaration (SED) form 7525V. Census uses the EEI to collect trade data on the products, quantities, dollar value, volume and destinations of U.S. exports. To properly complete an EEI, the exporter is responsible for classifying their product under the appropriate Schedule B Number, or HS Code. An EEI is filed online and the Internal Transaction Number (Sample: ITN X20091110000001) is applied to key shipping documents, i.e., Invoice, B/L, verifying the actual filing. An EEI is required for U.S. exports valued $2,500 or more per individual Schedule B Number. If the value is under $2,500, the exporter must note that using the following statement: “No EEI required, shipment valued under $2,500 per individual Schedule B Number.”

CERTIFICATES Certificate of Origin (C/O): A document prepared by the original manufacturer and certified by a quasi-official authority - such as a Chamber of Commerce - stating the items’ country of origin. Most countries that require a C/O will accept a generic C/O as long as all of the required data elements are given. However, some countries, like Israel, have a special green C/O form that must be used. To take advantage of duty free provisions in a U.S. Free Trade Agreement, be sure to use the particular C/O that addresses the “rules of origin” criteria for each country.

Certificate of Insurance: This document indicates the type and amount of insurance in force on a particular shipment for loss or damage while in transit. It is sometimes referred to as marine insurance, but may cover the entire voyage.

Certificate of Inspection: Some customers will require a “pre-shipment inspection” to satisfy their own requirements or local regulations, according to an industry, government, or carrier specification. Neutral organizations specialize in these types of certifications, whereby an inspector checks the goods in question prior to shipment. Sometimes an inspector can look at a sample, but other times inspection must occur when the goods are packaged to issue a certificate.

Certificate of Free Sale: This form may be required by the importing country to ensure that the goods offered for entry comply with domestic requirements for sale in the U.S. It is often required for agricultural, medicinal, or cosmetic products and can be issued by the VEDP or U.S. FDA.

Certificate of Authentication (Apostille): An original document that has been notarized may require “authentication” by the Secretary of the Commonwealth. An Apostille certificate will be issued according to the country (language) of destination, confirming the status of the notary who has witnessed the original document. Phyto sanitary Certificate: Primarily a document required to import goods into the U.S., confirming compliance with phyto sanitary safety regarding agricultural and animal health standards.

Special Documents Declaration of Dangerous Goods (DGD): A DGD declares the nature, quantity, and quantity of hazardous materials and reports the proper classification for each item.

ATA Carnet: A Carnet, sometimes referred to as a “merchandise passport”, is used for shipping goods to countries on a temporary, duty-free basis only. For a fee, this passport allows a company to ship needed materials to foreign trade shows or conduct repairs overseas. Within a year, the materials must return to the U.S. in order to avoid a hefty fine.

Documentary Letters of Credit (L/C): A letter of credit is a document issued by a bank committing to pay the seller/exporter a stated amount of money on behalf of the buyer/importer as long as the specific terms and conditions are met. Of all shipping documents, errors or making changes to the L/C are the most costly and time consuming because of the risk of payment in error.

IMPORTS

Basic document is ‘Entry’

Entry’ in relation to goods means entry made in Bill of Entry, Shipping Bill or Bill of Export. In case of import by post, label or declaration accompanying goods is ‘entry’

Loading and unloading at specified places only

Imported goods can be unloaded only at specified places. Goods can be exported only from specified places.

Computerization of customs procedures

Customs procedures are largely computerized. Most of documents have to be e-filed.

Amendment to documents

Documents submitted to customs can be amended with permission In case of bill of entry, shipping bill or bill of export, it can be amended after clearance only on the

basis of documentary evidence which was in existence at the time the goods were cleared, warehoused or exported, and not on basis of any subsequent document. [Proviso to section 149].

ICD and CFS Imported and export goods are usually handled in containers. These can be stored in Inland Container Depot (ICD) or Container Freight Station (CFS). They function like dry port for handling and temporary storage of imported/export goods and empty containers.

Boat Notes ‘Boat Notes’ are used for transferring small cargo from ship to shore, or from shore to ship, without berthing the ship.

Transshipment of goods

Goods can be transshipped from one conveyance to other after following required procedure. Such transshipment may be to any major port or airport in India. The goods can be transshipped to any other customs station in India if Customs Officer is satisfied that the goods are bona fide intended for transshipment to any customs station. The facility is available at all customs ports and Inland Container Depots (ICDs).

Coastal goods Procedures have been prescribed for coastal goods, even if there is neither import nor export.

GENERAL PROVISIONS ABOUT CUSTOMS PROCEDURES

Import Procedures

e-filing of documents Goods should arrive at customs port/airport only. Most of customs procedures are computerized. E-filing of documents is required.

Import manifest or Import Report

‘Person in charge of conveyance’ is required to submit Import Manifest or Import Report.

Entry Inwards Goods can be unloaded only after grant of ‘Entry Inwards’.Risk Management System

Self Assessment on basis of ‘Risk Management System’ (RMS) has been introduced in respect of specified goods and importers.

Bill of Entry for home consumption on payment of customs duty

Importer has to submit Bill of Entry giving details of goods being imported, along with required documents. Electronic submission of documents is done in major ports.

White Bill of Entry is for home consumption. Imported goods are cleared on payment of customs duty.

Bill of Entry for warehousing

Yellow Bill of Entry is for warehousing. It is also termed as ‘into bond Bill of Entry’ as bond is executed. Duty is not paid and imported goods are transferred to warehouse where these are stored. Green Bill of Entry is for clearance from warehouse on payment of customs duty. It is for ex-bond clearance.

Noting, examination and assessment

Bill of Entry is noted, Goods are assessed to duty, examined and pre-audit is carried out. Customs duty is paid after assessment.

Bond Bond is executed if required if assessment is provisional (PD bond) or concessional rate of customs duty is subject to certain post import conditions.

Out of customs charge order

Goods can be cleared outside port after ‘Out of Customs Charge’ order is issued by customs officer. After that, port dues, demurrage and other charges are paid and goods are cleared.

Demurrage if clearance from port delayed

Demurrage is payable if goods are not cleared from port/airport within three days. Goods can be disposed of if not cleared from port within 30 days.

EXPORT PROCEDURES

Entry Outward Loading in conveyance can start after ‘Entry Outward’ is given by customs officer.

Export manifest/Export report

Person in charge of conveyance is required to submit ‘Export Manifest’ or ‘Export Report’.

Registration with DGFT and EPC

Exporter has to be obtain IEC number from DGFT is advance. He should be registered with Export Promotion Council if he intends to claim export benefits.

Third party exports Export can be by manufacturer himself or third party (i.e. by exporter on behalf of another). Merchant exporter means a person engaged in trading activity and exporting or intending to export goods [para 9.40 of FTP]

Registration of documents under Export Promotion Scheme

Advance authorization, DEPB etc. should be registered if exports are under Export Promotion Scheme.

Shipping Mill Export is required to submit Shipping Bill with required documents for obtaining permission to export. There are five forms : (a) Shipping Bill for export of goods under claim for duty drawback - these should be in Green color (b) Shipping Bill for export of dutiable goods - this should be yellow color (c) Shipping bill for export of duty free goods - it should be white color (d) shipping bill for export of duty free goods ex-bond - i.e. from bonded store room - it should be pink color (e) Shipping Bill for export under DEPB scheme - Blue color.

FEMA formalities GR/SDF/Soft ex form (under FEMA) is required to be submitted.

Noting, assessment, examination

The shipping bill is noted, goods are assessed and examined. Export duty is paid, if applicable.

Certification of documents for export incentives

If export is under export incentives, relevant documents are checked and certified. Then proof of export is obtained on ARE-1.

Let export order Conveyance can leave only after ‘Let Export’ order is issued.

INTERNATIONAL SHIPPING TERMS

AQISAustralian Quarantine and Inspection Service.

ATAActual Time of Arrival, or Airport-To-Airport, or Air Transport Association of America.

ATDActual Time of Departure.

Air Way BillAn AWB is a bill of lading which covers both domestic and international flights transporting goods to a specified destination. Technically, it is a non-negotiable instrument of air transport which serves as a receipt for the shipper, indicating that the carrier has accepted the goods listed therein and obligates it to carry the consignment to the airport of destination according to specified conditions. Normally AWB refers to the Air Waybill issued by carrying airlines and also called Master Air Waybill (MAWB) which comes with three digits of numeric airline identification codes issued by IATA to non-U.S. based airlines and Air Transport Association of America to U.S. based airlines. However, air freight forwarders also issue HAWB(House Air Waybill) to their customers for each of the shipments.

Aircraft ContainerA unit load device (ULD) which links directly with the airplane cargo handling and restraint system.

All RiskAll Risks Coverage, a type of marine insurance, is the broadest kind of standard coverage, but excludes damage caused by war, strikes, and riots.

AllotmentA term used to describe blocked space by airlines on behalf of forwarders/shippers.

AlongsideA phrase referring to the side of a ship. Goods to be delivered alongside are to be placed on the dock or lighter within reach of the transport ship's tackle so that they can be loaded aboard the ship. Goods are delivered to the port of embarkation, but without loading fees.

BAF (Bunker Adjustment Factor)An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel.

Bill of Lading (B/L)Bills of lading are contracts between the owner of the goods and the carrier. There are two types. A straight bill of lading is nonnegotiable. A negotiable or shipper's order bill of lading can be bought, sold, or traded while goods are in transit and is used for many types of financing transactions. The customer usually needs the original or a copy as proof of ownership to take possession of the goods.

Bonded WarehouseThe Customs Service authorizes bonded warehouses for storage or manufacture of goods on which payment of duties is deferred until the goods enter the Customs Territory. The goods are not subject to duties if re-shipped to foreign points.

Break Bulk (B/B)For consolidated air freight, it is moved under one MAWB and each consignment designated to specific consignee or recipient is under one HAWB. When freight forwarder receives the consolidated cargo from carrier, they will break the consolidation apart per HAWB then precede customs clearance along with associated shipping and import documents. Such Break-Bulk is normally handled by airlines or their contracted ground handling agent.

Break-bulk VesselA general cargo vessel designed to efficiently handle un-containerized cargo. Vessels are usually self-sustaining in that they have their own loading and unloading machinery.

CAF (Currency Adjustment Factor)It is a freight surcharge or adjustment factor imposed by an international carrier to offset foreign currency fluctuations. In some cases an emergency currency adjustment factor (ECAF) may be applied when a charge or rate has been originally published in a currency that is experiencing sustained or rapid decline. The CAF is charged as a percentage of the freight.

CarnetA customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, demonstration or other purposes without paying import duties or posting bonds.

Clean Bill of LadingIt is a receipt for goods issued by a carrier with an indication that the goods were received in apparent good order and condition, without damages or other irregularities.

Combi AircraftAn aircraft configured to carry both passengers and cargo on the Main Deck.

Commercial InvoiceThe commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods for the assessment of customs duties and are also used to prepare consular documentation. Governments using the commercial invoice to control imports often specify its form, content, and number of copies, language to be used, and other characteristics.

ConsigneeThe person or firm named in a freight contract to whom goods have been consigned or turned over. For export control purposes, the documentation differentiates between an intermediate consignee and an ultimate consignee.

ConsignmentIt is a delivery of merchandise from an exporter (the consignor) to an agent (the consignee) under agreement that the agent sell the merchandise for the account of the exporter. The consignor retains title to the goods until sold.

The consignee sells the goods for commission and remits the net proceeds to the consignor.

ConsolidationIn order to handle small lot of consignment efficiently and competitively, freight forwarder usually put many consignments into one lot then tender to carrier for forwarding. In this case, each consignment will be shipped with one HAW respectively and all of them will be under one master AWB.

Cost and Freight (C&F)Cost and Freight (CFR) to a named overseas port of import. Under this term, the seller quotes a price for the goods that includes the cost of transportation to the named point of debarkation. The cost of insurance is left to the buyer's account. (Typically used for ocean shipments only. CPT, or carriage paid to, is a term used for shipment by modes other than water.) Also, a method of import valuation that includes insurance and freight charges with the merchandise values.

Cost, Insurance and Freight (CIF)Cost, insurance, and freight (CIF) to a named overseas port of import. Under this term, the seller quotes a price for the goods (including insurance), all transportation, and miscellaneous charges to the point of debarkation for the vessel. (Typically used for ocean shipments only. CIP, or carriage and insurance paid to, is a term used for shipment by modes other than water.)

CustomsThe government authorities designated to collect duties levied by a country on imports and exports.

Customs BrokerAn individual or company licensed by the government to enter and clear goods through Customs. The U.S. Customs Service defines a Customs Broker, as any person who is licensed in accordance with Part III of Title 19 of the Code of Federal Regulations (Customs regulations) to transact Customs business on behalf of others. Customs business is limited to those activities involving transactions with Customs concerning the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges

assessed or collected by Customs upon merchandise by reason of its importation, or the refund, rebate, or drawback thereof.

Customs ClearanceThe procedures involved in getting cargo released by Customs through designated formalities such as presenting import license/permit, payment of import duties and other required documentations by the nature of the cargo such as FCC or FDA approval.

Customs InvoiceA document, required by some foreign countries' customs officials to verify the value, quantity, and nature of the shipment, describing the shipment of goods and showing information such as the consignor, consignee, and value of the shipment.

DDPDeliver Duty Paid.

DDUDeliver Duty Unpaid.

Dangerous GoodsCommodities classified by IATA according to its nature and characteristic in terms of the effect of its danger to carrier's flying safety.

Delivery InstructionsProvides specific information to the inland carrier concerning the arrangement made by the forwarder to deliver the merchandise to the particular pier or steamship line. Not to be confused with Delivery Order which is used for import cargo.

DemurrageExcess time taken for loading or unloading a vessel, thus causing delay of scheduled departure. Demurrage refers only to situations in which the charter or shipper, rather than the vessel's operator, is at fault.

Dimensional WeightAlso called measurement weight. This is the size of consignment calculated by total square feet by 6000. Carrier charge for freight based on the dimensional weight or actual gross weight whichever is higher.

Direct ShipShipment without consolidation and under one MAWB i.e. non-consolidation.

DrawbackDrawback is a rebate by a government, in whole or in part, of customs duties assessed on imported merchandise that is subsequently exported. Drawback regulations and procedures vary among countries.

DutyA tax imposed on imports by the customs authority of a country. Duties are generally based on the value of the goods, some other factors such as weight or quantity (specific duties), or a combination of value and other factors (compound duties).

EDIEDI, Electronic Data Interchange for Administration, Commerce, and Transportation, is an international syntax used in the interchange of electronic data. Customs usesEDI to interchange data with the importing trade community.

ETAEstimated Time of Arrival. Then, It normally takes 3 hours for carriers to Break Bulk then ready to be picked up by forwarders along with customs release notification.

ETDEstimated Time of Departure. The cut-off time for carriers' cargo ramp handling is normally two hours ahead of ETD. However, the freight forwarders' consolidation cut-off time may vary depending on each forwarder's operations respectively.

Ex Works (...named place) (EXW)

A term of sale in which for the quoted price, the seller merely makes the goods avaliable to the buyer at the seller's "named place" of business. This trade term places the greatest responsibility on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included.

CL or CYFull Container Load, also known as CY. CY is the abbreviation of Container Yard. When the term CY to CY, it means full container load all the way from origin to destination.

Federal Maritime CommissionThe FMC is an independent agency’s which regulates ocean borne transportation in the foreign commerce and in the domestic offshore trade of the United States.

Flat Rack ContainersEspecially for heavy loads and over-dimensional cargo. Containers do not have sides or a top. This allows easy fork-lift and crane access.

Forty-Foot Equivalent Unit (FEU)FEU is a measure of a ship's cargo-carrying capacity. One FEU measures forty feet by eight feet by eight feet -- the dimensions of a standard forty-foot container. An FEU equals two TEUs.

Free Alongside ShipFree alongside Ship, FAS, at a named port of export. Under FAS, the seller quotes a price for the goods that includes charges for delivery of the goods alongside a vessel at the port of departure. The seller handles the cost of unloading and wharfage; loading, ocean transportation, and insurance are left to the buyer. FAS are also a method of export and import valuation.

Free Carrier (FCA)Free Carrier, FCA, to a named place. This term replaces the former "FOB named inland port" to designate the seller's responsibility for the cost of loading goods at the named shipping point. It may be used for multimodal transport, container stations, and any mode of transport, including air.

FREE ON BOARD (FOB)Common price term used in international trade meaning sellers responsible for the cost of goods is to the point of loading it to the vessel deck or aircraft loading deck. The risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods have been so delivered. FOB normally comes with port of loading either airport or sea port.

Freight Carriage ... and Insurance paid toThis term is the same as "Freight/Carriage Paid to ..." but with the addition that the seller has to procure transport insurance against the risk of loss of damage to the goods during the carriage. The seller contracts with the insurer and pays the insurance premium.

Freight Carriage ... paid toLike C & F, "Freight/Carriage paid to ..." means that the seller pays the freight for the carriage of the goods to the named destination. However, the risk of loss of or damage to the goods, as well as of any cost increases, is transferred from the seller to the buyer when the goods have been delivered into the custody of the first carrier and not at the ship's rail. The term can be used for all modes of transport including multi-modal operations and container or "roll on-roll off" traffic by trailer and ferries. When the seller has to furnish a bill of lading, waybill or carrier's receipt, he duly fulfills this obligation by presenting such a document issued by the person with whom he has contracted for carriage to the named destination. (Also see incoterms)

Freight ForwarderAn independent business which handles export shipments for compensation. At the request of the shipper, the forwarder makes the actual arrangements and provides the necessary services for expediting the shipment to its overseas destination. The forwarder takes care of all documentation needed to move the shipment from origin to destination, making up and assembling the necessary documentation for submission to the bank in the exporter's name. The forwarder arranges for cargo insurance, makes the necessary overseas communications, and advises the shipper on overseas requirements of marking and labeling.

Freight for All Kinds (FAK)

FAK is a shipping classification. Goods classified FAK are usually charged higher rates than those marked with a specific classification and are frequently in a container which includes various classes of cargo.

GatewayIn the context of travel activities, gateway refers to a major airport or seaport. Internationally, gateway can also mean the port where customs clearance takes place.

GSTGoods and Service Tax, GST in relation to importing, is payable on the landed cost of the goods, known as the CIF value. The GST is calculate thus: (Purchase price of goods + Duty + Insurance + Freight) x GST

HAWBHouse Air waybill issued by carrying airlines' agent, normally freight forwarder.

Harmonized SystemThe Harmonized Commodity Description and Coding System (or Harmonized System, HS) is a system for classifying goods in international trade, developed under the auspices of the Customs Cooperation Council. Beginning on January 1, 1989, the new HS numbers replaced previously adhered-to schedules in over 50 countries, including the United States.

iATAInternational Air Transport Association (IATA), established in 1945, is a trade association serving airlines, passengers, shippers, travel agents, and governments. The association promotes safety, standardization in forms (baggage checks, tickets, weigh bills), and aids in establishing international airfares. IATA headquarter is in Geneva, Switzerland.

IATA DesignatorTwo-character Airline identification assigned by IATA in accordance with provisions of Resolution 762. It is for use in reservations, timetables, tickets, tariffs as well as air waybill.

Import Certificate

The import certificate is a means by which the government of the country of ultimate destination exercises legal control over the internal channeling of the commodities covered by the import certificate.

Import LicenseA document required and issued by some national governments authorizing the importation of goods. Also referred as import permit. With such documentation, customs clearance can be conducted.

Import RestrictionsImport restriction, applied by a country with an adverse trade balance (or for other reasons), reflect a desire to control the volume of goods coming into the country from other countries may include the imposition of tariffs or import quotas, restrictions on the amount of foreign currency available to cover imports, a requirement for import deposits, the imposition of import surcharges, or the prohibition of various categories of imports.

IncotermsMaintained by the International Chamber of Commerce (ICC), this codification of terms is used in foreign trade contracts to define which parties incur the costs and at what specific point the costs are incurred. (Also see incoterm section)

Insurance CertificateThis certificate is used to assure the consignee that insurance is provided to cover loss of or damage to the cargo while in transit.

Integrated CarriersCarriers that have both air and ground fleets; and other combinations, such as sea, rail, and truck. Since they usually handle thousands of small parcels an hour, they are less expensive and offer more diverse services than regular carriers.

Intermediate ConsigneeAn intermediate consignee is the bank, forwarding agent, or other intermediary (if any) that acts in a foreign country as an agent for the exporter, the purchaser, or the ultimate consignee, for the purpose of effecting delivery of the export to the ultimate consignee.

IntermodalMovement of goods by more than one mode of transport, i.e. airplane, truck, railroad and ship.

Irrevocable Letter of CreditA letter of credit in which the specified payment is guaranteed by the issuing bank if all terms and conditions are met by the drawee. It is as good as the issuing bank.

LCLLess than Container Load, consolidated container load.

LD3Lower deck type 3 container. This is the most commonly used container in passenger aircraft.

Letter of CreditA financial document issued by a bank at the request of the consignee guaranteeing payment to the shipper for cargo if certain terms and conditions are fulfilled. Normally it contains a brief description of the goods, documents required, a shipping date, and an expiration date after which payment will no longer be made. An Irrevocable Letter of Credit is one which obligates the issuing bank to pay the exporter when all terms and conditions of the letter of credit have been met. None of the terms and conditions may be changed without the consent of all parties to the letter of credit. A Revocable Letter of Credit is subject to possible recall or amendment at the option of the applicant, without the approval of the beneficiary. A Confirmed Letter of Credit is issued by a foreign bank with its validity confirmed by a U.S. bank. An exporter who requires a confirmed letter of credit from the buyer is assured payment from the U.S. bank in case the foreign buyer or bank defaults. A Documentary Letter of Credit is one for which the issuing bank stipulates that certain documents must accompany a draft. The documents assure the applicant (importer) that the merchandise has been shipped and that title to the goods has been transferred to the importer.

Lower DeckThe compartment below the Main Deck (also synonymous with lower hold and lower lobe).

Main DeckThe deck on which the major portion of payload is carried, normally known as Upper Deck of an airplane. The full cargo freighter aircraft has it entire upper deck equipped for main deck type of containers/pallets while Combi aircraft uses it rear part of the upper deck for cargo loading. There is no upper deck or main deck type of container/pallet at passenger aircraft.

Ministry of Agriculture and ForestryMAF or Ministry of Agriculture and Forestry has now changed its name to The newly formed Ministry for Primary Industries. It is charged with leadership of the New Zealand biosecurity system. This encompasses facilitating international trade, protecting the health of New Zealanders and ensuring the welfare of our environment, flora and fauna, marine life and Maori resources.

Marine Cargo InsuranceBroadly, insurance covering loss of, or damage to, goods at sea. Marine insurance typically compensates the owner of merchandise for losses in excess of those which can be legally recovered from the carrier that are sustained from fire, shipwreck, piracy, and various other causes. Three of the most common types of marine insurance coverage are "free of particular average" (f.p.a.), "with average" (w.a.), and "All Risks Coverage."

NVDNo Value Declared.

PODProof of Delivery, or a cargo/package receipt with the signature of recipient. This term has been widely used in courier and express industry and also gaining more attention and implementation at air cargo industry..

Packing ListA shipping document issued by shipper to carrier, Customs and consignee serving the purposes of identifying detail information of package count, products count, measurement of each package, weight of each package, etc.

Pro Forma Invoice

An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, and similar characteristics). When an importer apply's for Letter of Credit as the means of payment, a Pro Forma Invoice from the beneficiary of such Letter of Credit, usually the exporter, is required by the L/C issuing bank.

Project CargoThis is a term normal referred to when shipping cargo air or sea, which does not fall within standard methods. I.e. over-height or oversize cargo which requires special equipment and handle.

Roll-on, Roll-off (RORO)A type of ship designed to load and discharge cargo which rolls on wheels or tracks.

Shipping MarkThe letters, numbers or other symbols placed on the outside of cargo to facilitate identification.

Shipping WeightShipping weight represents the gross weight in kilograms of shipments, including the weight of moisture content, wrappings, crates, boxes, and containers (other than cargo vans and similar substantial outer containers).

TACTTACT stands for The Air Cargo Tariff. It is published by IAP -- International Airlines Publications, an IATA company.

Tare WeightThe weight of a ULD and tie down materials without the weight of the goods it contains.

Temporary Importation under BondWhen an importer makes entry of articles and claimed to be exempt from duty under Chapter 98, Subchapter XIII, Harmonized Tariff Schedule of the United States, a bond is posted with Customs which guarantees that these items

will be exported within a specified time frame (usually within one year from the date of importation). Failure to export these items makes the importer liable for the payment of liquidated damages for breach of the bond conditions.

Through Bill of LadingA single bill of lading covering receipt of the cargo at the point of origin for delivery to the ultimate consignee, using two or more modes of transportation.

TransshipmentTransshipment refers to the act of sending an exported product through an intermediate country before routing it to the country intended to be its final destination.

Twenty-Foot Equivalent Unit (TEU)TEU is a measure of a ship's cargo-carrying capacity. One TEU measures twenty feet by eight feet by eight feet -- the dimensions of a standard twenty-foot container. An FEU equals two TEUs.

ULDUnit Load Device, Any type of container, container with integral pallet, aircraft container or aircraft pallet.

Ultimate ConsigneeThe ultimate consignee is the person located abroad who is the true party in interest, receiving the export for the designated end-use.

Value for Customs Purposes OnlyThe U.S. Customs Service defines "value for Customs purposes only" as the value submitted on the entry documentation by the importer which may or may not reflect information from the manufacturer but in no way reflects Customs appraisement of the merchandise.

War/Strike ClauseAn insurance provision that covers loss due to war and/or strike.

Wharf age

A charge assessed by a pier or dock owner for handling incoming or outgoing cargo.

Without ReserveA term indicating that a shipper's agent or representative is empowered to make definitive decisions and adjustments abroad without approval of the group or individual represented.

SEA FREIGHT TERMS (short)

B.A.F. Bunker adjustment factor (balance for changing fuel costs) B/LBill of Lading (transport document listing the sea transport from departure to destination) C.A.F. Currency adjustment factor (balance for fluctuations in rate of the various currencies) C.F.S.Container freight station (warehouse where the consolidation containers are loaded or unloaded) C.S.C.Container service charge (transit costs for containers in Europe) C.Y.(Container Yard) Place where loaded containers are delivered to be shipped or forwarded C/SCongestion surcharge (surcharge for waiting time in the ports) Conference LineConference Line Shippers which are members of a committee DEMURRAGERent of container, if the container is not picked up at the port within a set time DETENTIONRent of container if the empty container is not returned on time

E.C.B.Express Cargo Bill of Lading (a freight document, not an ownership document)

E.T.A.Estimated time of arrival (planned arrival of ship) E.T.D.Estimated time of departure (planned departure of ship) F.C.L.Full container load (full container service) FCL/FCLFull container service from door to door FCL/LCLConsignments in one container from a sender for several recipients FEUForty foot equivalent unit (40 foot container unit) L.C.L.Less than container load (partial deliveries) LCL/FCLConsignments in one container from several senders for one recipient LCL/LCLPartial deliveries, which are put into one container in the container freight station and then separated at the destination M.S.Motor Ship

M.V.Motor Vessel (High-sea ship)

Non Conference Line (Outside) Shippers which are not members of a committee Non-Negotiable -Bill of LadingUnsigned B/L copies, which are not originals and therefore have no permit allowances NotifyAdditional to notified address P.O.D.Port of discharge P.O.L.Port of loading

StrippingUnloading of container Stuffingloading of container T-B/LThrough Bill of Lading T.A.A.Trans Atlantic Agreement (Committee in the Trans Atlantic Service)

T.H.C.Terminal handling charge (Handling costs for container) T/TTransit time TEUTwenty foot equivalent unit (20 foot container unit) W/MWeight or Measurement (calculation of sea freight based on tones or cubic meters, depending which is higher)

INCOTERMS

Language is one of the most complex and important tools of International Trade. As in any complex and sophisticated business, small changes in wording can have a major impact on all aspects of a business agreement.

Word definitions often differ from industry to industry. This is especially true of global trade. Where such fundamental phrases as "delivery" can have a far different meaning in the business than in the rest of the world.

For business terminology to be effective, phrases must mean the same thing throughout the industry. That is why the International Chamber of Commerce created "INCOTERMS" in 1936.INCOTERMS are designed to create a bridge between different members of the industry by acting as a uniform language they can use.

Each INCOTERM refers to a type of agreement for the purchase and shipping of goods internationally. There are 11 different terms, each of which helps users

deal with different situations involving the movement of goods. For example, the term FCA is often used with shipments involving Ro/Ro or container transport.

INCOTERMS also deal with the documentation required for global trade, specifying which parties are responsible for which documents. Determining the paperwork required to move a shipment is an important job, since requirements vary so much between countries. Two items, however, are standard: the commercial invoice and the packing list.

INCOTERMS were created primarily for people inside the world of global trade. Outsiders frequently find them difficult to understand. Seemingly common words such as "responsibility" and "delivery" have different meanings in global trade than they do in other situations.

In global trade, "delivery" refers to the seller fulfilling the obligation of the terms of sale or to completing a contractual obligation. "Delivery" can occur while the merchandise is on a vessel on the high seas and the parties involved are thousands of miles from the goods. In the end, however, the terms wind up boiling down to a few basic specifics:

It is essential for shippers to know the exact status of their shipments in terms of ownership and responsibility. It is also vital for sellers & buyers to arrange insurance on their goods while the goods are in their "legal" possession. Lack of insurance can result in wasted time, lawsuits, and broken relationships.

INCOTERMS can thus have a direct financial impact on a company's business. What is important is not the acronyms, but the business results. Often companies like to be in control of their freight. That being the case, sellers of goods might choose to sell CIF, which gives them a good grasp of shipments moving out of their country, and buyers may prefer to purchase FOB, which gives them a tighter hold on goods moving into their country.

In this glossary, we'll tell you what terms such as CIF and FOB mean and their impact on the trade process. In addition, since we realize that most international buyers and sellers do not handle goods themselves, but work through customs brokers and freight forwarders, we'll discuss how both fit into the terms under discussion.

INCOTERMS are most frequently listed by category. Terms beginning with F refer to shipments where the primary cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the seller pays for shipping. E-terms occur when a seller's responsibilities are fulfilled when goods are ready to depart from their facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive at some specific point. Because shipments are moving into a country, D terms usually involve the services of a customs broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at virtually all ports and determining who is responsible for each charge.

Recently the ICC changed basic aspects of the definitions of a number of INCOTERMS, buyers and sellers should be aware of this. Terms that have changed have a star alongside them.

EXW (EX-Works)One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller with greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for pickup at the shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is released to the consignee's freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance, export clearance and handling all other paperwork.

FOB (Free On Board)One of the most commonly used-and misused-terms, FOB means that the shipper/seller uses his freight forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods. "Delivery" is accomplished when the shipper/seller releases the goods to the buyer's forwarder. The buyer's responsibility for insurance and transportation begins at the same moment.

FCA (Free Carrier)In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk and the expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in FCA the seller chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a

predetermined port or destination point and the buyer is responsible for Insurance.

FAS (Free alongside Ship)*in these transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS require the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these terms will ordinarily use their freight forwarder to clear the goods for export. "Delivery" is accomplished when the goods are turned over to the Buyers Forwarder for insurance and transportation.

CFR (Cost and Freight)This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing with the actual cost of merchandise "C" and the other "F" refers to the freight charges to a predetermined destination point. It is the shipper/seller's responsibility to get goods from their door to the port of destination. "Delivery" is accomplished at this time. It is the buyer's responsibility to cover insurance from the port of origin or port of shipment to buyer's door. Given that the shipper is responsible for transportation, the shipper also chooses the forwarder.

CIF (Cost, Insurance and Freight)This arrangement similar to CFR, but instead of the buyer insuring the goods for the maritime phase of the voyage, the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the forwarder. "Delivery" as above, is accomplished at the port of destination.

CPT (Carriage Paid To)In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the seller has to buy cargo insurance, naming the buyer as the insured while the goods are in transit.

CIP (Carriage and Insurance Paid To)This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the shipper/seller is only required to purchase minimum coverage. When this particular agreement is in force, Freight Forwarders often act in effect, as carriers. The buyer's insurance is effective when the goods are turned over to the Forwarder.

DAT (Delivered At Terminal)This term is used for any type of shipments. The shipper/seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

DAP (Delivered At Place)DAP term is used for any type of shipments. The shipper/seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

DDP (Delivered Duty Paid)DDP term tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is responsible for dealing with all the tasks involved in moving goods from the manufacturing plant to the buyer/consignee's door. It is the shipper/seller's responsibility to insure the goods and absorb all costs and risks including the payment of duty and fees.

PARTIAL SHIPMENT

If an L/C calls for partial shipments to be "allowed", this means that the supplier may ship the order in as many shipments as he likes until the latest shipment date on the L/C. If you have ordered say a total 100units of a commodity and the latest date of shipment on the L/C is the 30/04/09, then your supplier may ship for example 10units on the 02/04/09 then another 50units on 15/04/09 and then the remaining 40units on 24/04/09. If partial shipments are "not allowed", then the supplier must ship the total 100unit (give or take tolerance amount) in one single lot on any given day before the 30/04/09.

TRANSSHIPMENT

Bear in mind that transshipment is a physical condition, whereas the credit is a documentary process. Accordingly what a transshipment ‘is' depends upon whether you mean in the contract of the physical world at large or only in the narrow context of the credit;

When cargo moves from point A to point B, it may involve a single device (vehicle, aircraft, vessel etc) or several devices. Sometimes the use of more than one

device may be intentional, such as in the case of multimodal transport; sometimes it can be necessary due to unforeseen events - such as rail cargo transferring to road due to a problem with the rail track or bad weather. Equally, transit may involve a single type of transport (such as sea freight), but may be accomplished using more than one device (i.e. two vessels.) Depending on your point of view, each example in this paragraph could be classed as transshipment or none of them could be.

Lots of parties involved in trade have opinions on what the word transshipment means but the only parties to have a uniformly clear and documented opinion on the subject are the banks. The banks have an interest in transshipment as it creates risks that need to be considered and managed, in that a broken journey could involve cargo leaving country ‘A' but being diverted in transit away from country ‘B', subsequent to payment having been made. It may also involve the presentation of documents (under a documentary credit for example) that govern only a portion of the journey.

Banks are able to offer a clear definition of transshipment through the work of the International Chamber of Commerce banking committee and their publication in respect of the Uniform Customs and Practices for Documentary Credits (UCP.)

Prior to the 1993 publication (UCP 500), earlier versions of the UCP defined transshipment very narrowly. The exact definition was;

‘...the transfer and reloading during the course of carriage...from one conveyance or vessel to another conveyance or vessel, within the same mode of transport or from one mode of transport to another mode of transport...'

This effectively meant that every multimodal event involved transshipment as did every hub and spoke movement in airfreight or any sea freight event that involved a feeder service.

The main problem with this view arose in instances of containerized cargo, where multimodal movement is the central intention and is virtually unavoidable. Under this pre-1993 UCP definition, multimodal cargo was always ‘transshipped' and if a documentary credit was drawn up with the common clause ‘transshipment not allowed', there was an automatic discrepancy which lead to problems. The likely reason that the applicant prohibited transshipment in the first place was because

their own ‘physical' understanding of what transshipment means was at odds with the banks documentary concept.

With the revision of the UCP in 1993, the definition of (sea freight) transshipment was changed. In that publication it reads;

‘...unloading and reloading from one vessel to another vessel during...carriage from the port of loading to the port of discharge.'

The airfreight equivalent clause substitutes ‘aircraft' for ‘vessel', whereas the road and rail definitions describe transshipment as the movement from one of these modes (road or rail) to the other (road or rail). Thus, containerized cargo moving from road to rail before shipment or subsequent to shipment is no longer seen as transshipment in terms of the documentary credit.

But as the name emphasizes, a documentary credit is a ‘documentary' event and is distinctly detached from the physical event of the sale and movement of cargo. The definitions of transshipment, however, rely heavily on an understanding of the physical underlying event of movement. So, the UCP went further and allowed the banks to accept any (conforming) document which indicates that transshipment will or may take place, provided the entire journey is covered by one transport document.

With this codicil, the bank's concept of transshipment remains documentary as cargo loaded on a vessel in port ‘A', removed in port ‘B' and placed onto a second vessel for carriage to port ‘C' does not involve transshipment in the bank's view. Provided one transport document is issued for the entire journey.

With the UCP 600 2007 revision, the text used to define documentary transshipment has been revised and reads

Sea freight - "reloading to another means of conveyance (whether or not in different modes of transport) during the carriage from the place of dispatch, taking in charge or shipment to the place of final destination stated in the credit. (However, a) transport document may indicate that the goods will or may be transshipped provided that the entire carriage is covered by one and the same transport document. (Further a) transport document indicating that transshipment will or may take place is acceptable, even if the credit prohibits

transshipment. If the goods have been shipped in a container, trailer or LASH barge as evidenced by (the sea freight transport document)

Airfreight - "transshipment means unloading from one aircraft and reloading to another aircraft during the carriage from the airport of departure to the airport of destination stated in the credit. (However an) air transport document may indicate that the goods will or may be transshipped, provided that the entire carriage is covered by one and the same air transport document. (Further, an) air transport document indicating that transshipment will or may take place is acceptable, even if the credit prohibits transshipment.

Road and Rail - "transshipment means unloading from one means of conveyance and reloading to another means of conveyance, within the same mode of transport, during the carriage from the place of shipment, dispatch or carriage to the place of destination stated in the credit. (However a) road, rail or inland waterway transport document may indicate that the goods will or may be transshipped provided that the entire carriage is covered by one and the same transport document. (Further) a road, rail or inland waterway transport document indicating that transshipment will or may take place is acceptable, even if the credit prohibits transshipment.

As stated, this concept of transshipment represents the bank's point of view. There are other views flowing from the physical condition of transshipment, but as none of these are uniformly applied (unlike the banks), they are therefore difficult to comment on.

Prepaid= whoever is shipping Collect =whoever it is delivered to

FREIGHT PREPAID

Air or ocean freight charges that are paid at the port of origin or loading, and are billed to the importer in the exporter's invoice. It is not refundable even if the shipment fails to arrive at its destination.

FREIGHT AS ARRANGED

"Freight Collect" is a term used in the freight moving business that means that the freight will be paid by the person receiving the freight. The alternative would be "Freight Prepaid". If you order something, and you pay the shipper for shipping, then they will pay the charges the trucking company charges to move the item. This amount could be more or less than what you give the shipper. If you tell the shipper that you will pay the cost when it arrives, then they will ship it "freight collect", meaning the trucking company will need a check payable to them when they deliver your item. If you have an account with a certain trucking company, then you can request that the shipper use that company so that you may be billed. It will still be "Freight Collect", but will be automatically billed to you by the company that you use.

Duty Entitlement Pass Book DEPB.

Duty Entitlement Pass Book Scheme in short DEPB is an export incentive scheme. Notified on 1/4/1997, theDEPB Scheme consisted of (a) Post-export DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book Scheme at a pre-determined credit on the FOB value. The DEPB rates is allows import of any items except the items which are otherwise restricted for imports. Items such as Gold Nibs, Gold Pen, Gold watches etc. though covered under the generic description of writing instruments, components of writing instruments and watches are thus not eligible for benefit under the DEPB scheme.

The DEPB Rates are applied on the basis of FOB value or value cap whichever is lower. For example, if the FOB value is Rs.700/- per piece, and the value cap is Rs.500/- per piece, the DEPB rate shall be applied on Rs.500/-. The DEPB rate and the value cap shall be applicable as existing on the date of exports as defined in paragraph 15.15 of Handbook (Vol.1).

DEPB Scheme is issued only on post-export basis and pre/export DEPB Scheme has been discontinued. The provisions of DEPB Scheme are mentioned in Para 4.3 and 4.3.1 to 4.3.5 of the Foreign Trade Policy or Exim Policy. One significant change in the new DEPB Scheme is that in terms of Para 4.3.5 of the Exim Policy evenexcise duty paid in cash on inputs used in the manufacture of export product shall be eligible for brand rate of duty drawback as per rules framed by Department of Revenue which was not mentioned in the earlier DEPB Scheme.

Benefits of DEPB Rates

The benefit of DEPB schemes is available on the export products having extraneous material up to 5% by weight. In such cases, extraneous material up to 5% shall be ignored and the DEPB rate as notified for that export product is be allowed.

Review of DEPB Rates

The Government of India review the DEPB rates after getting the appropriate a export import data on FOB value of exports and CIF value of inputs used in the export product, as per SION. Such data and information is usually obtained from the concerned Export Promotion Councils.

Implementation of the DEPB Rates

Some additional facilities as listed below have been provided for better implementation of the DEPB Rates

DEPB rates rationalized to account for the changes in Customs duties.

Caps fixed on certain items but there would be no verification of Present Market Value (PMV) on such items.

A number of ports have been added for availing facilities under the Duty Exemption Scheme, including DEPB.

The threshold limit of Rs. 200 million for fixing new DEPB rates removed.

Provisional DEPB Rate

The main objective behind the provisional DEPB rates is to encourage diversification and to promote export of new products. However, provisional DEPB rates would be valid for a limited period of time during which exporter would furnish data on export and import for regular fixation of rates.

Maintenance of Record

It is necessary for Custom House at ports to maintain a separate record of details of exports made underDEPB Schemes.

Port of Registration

The exports/imports made from the specified ports given shall be entitled for DEPB.

Sea Ports: Mumbai, Kolkata, Cochin, Dahej, Kakinada, Kandla, Mangalore, Marmagoa, Mundra, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam, Surat (Magdalla), Nagapattinam, Okha , Dharamtar and Jamnagar.

Airports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.

ICDs : Agra, Ahmedabad, Bangalore, Bhiwadi, Coimbatore, Daulatabad, (Wanjarwadi and Maliwada), Delhi, Dighi (Pune), Faridabad, Guntur, Hyderabad, Jaipur, Jallandhar, Jodhpur, Kanpur, Kota, Ludhiana, Madurai and the land Customs station at Ranaghat Mallanpur, Moradabad, Meerut Nagpur, Nasik, Gauhati (Amingaon), Pimpri (Pune), Pitampur (Indore), Rudrapur (Nainital), Salem Singanalur, Surat, Tirupur, Udaipur, Vadodara, Varanasi, Waluj, Bhilwara, Pondicherry ,Garhi-Harsaru, Bhatinda, Dappar, Chheharata (Amritsar), Karur, Miraj and Rewari.

LCS: Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and Mahadipur.

The exports made to the following Special Economic Zones (SEZ) are also entitled to DEPB.

SEZ : Santacruz , Kandla, Kochi, Vishakhapatnam, Chennai, FALTA, Surat, NOIDA

Credit under DEPB and Present Market Value

In respect of products where rate of credit entitlement under DEPB Scheme comes to 10% or more, amount of credit against each such export product shall not exceed 50% of Present Market Value (PMV) of export product. During export, exporter shall declare on shipping bill that benefit under DEPB Scheme would not exceed 50% of PMV of export product.

However PMV declaration shall not be applicable for products for which value cap exists irrespective of DEPB rate of product.

Utilization of DEPB credit

Credit given under DEPB Schemes is utilized for payment of indian customs duty including capital goods, which are free to import.

Re-export of goods imported under DEPB Scheme

In case of return of any exported goods, which has been found defective or unfit for use may be again exported according to the exim guidelines as mentioned by the Department of Revenue.

In such cases 98% of the credit amount debited against DEPB for the export of such goods is generated by the concerned Commissioner of Customs in the form of a Certificate, containing the amount generated and the details of the original DEPB. On the basis of certificate, a fresh DEPB is issued by the concerned DGFT Regional Authority. It is important to note that the issued DEPB have the same port of registration and shall be valid for a period equivalent to the balance period available on the date of import of such defective/unfit goods.