10 Tips in Export Business Documentation and Registration

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10 Tips in Export Business Documentation and Registration in Nigeria

10 Tips in Export Business Documentation and Registration in Nigeria | The exportation process can seem daunting at first when one sets out for it.

The series of processes implemented by different countries to monitor goods coming into their territory must be followed closely to avoid hitches during exportation.
Therefore, the Nigerian exporter should seriously consider having the freight forwarder.

Handle the formidable amount of documentation that exporting requires; freight forwarders are specialists in this process.

The following documents are commonly used in exporting.

Which of them is actually used in each case depends on the requirements of both the Nigerian government and the government of the importing country.

1. Commercial invoice:

As in a domestic transaction, the commercial invoice is a bill for the goods from the buyer to the seller.

A commercial invoice should include basic information about the transaction.

Including a description of the goods, the address of the shipper and seller, and the delivery and payment terms.

The buyer needs the invoice to prove ownership and to arrange payment.

Some governments use the commercial invoice to assess customs duties.

2. Bill of lading:

Bills of lading are contracts between the owner of the goods and the carrier (as with domestic shipments).

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 letter-of-credit transactions.

The customer usually needs the original or a copy as proof of ownership to take possession of the goods.

3. Consular invoice:

Certain nations require a consular invoice, which is used to control and identify goods.

The invoice must be purchased from the consulate of the country to which the goods are being shipped and usually must be prepared in the language of that country.

4. Certificate of origin:

Certain nations require a signed statement as to the origin of the export item.

Such certificates are usually obtained through a semi-official organization such as a local chamber of commerce.

A certificate may be required even though the commercial invoice contains the information.

5. Inspection certification:

Some purchasers and countries may require a certificate of inspection.

Attesting to the specifications of the goods shipped, usually performed by a third party.

Inspection certificates are often obtained from independent testing organizations.

6. Dock receipt and warehouse receipt:

These receipts are used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the international carrier for export.

7. Destination control statement:

This statement appears on the commercial invoice, ocean or air waybill of lading.

And Shippers Export Declaration (SED) to notify the carrier and all foreign parties that the item may be exported only to certain destinations.

8. Insurance certificate:

If the seller provides insurance, the insurance certificate states the type and amount of coverage.

This instrument is negotiable.

9. Export license:

Before you start any export business in Nigeria.

It is advisable you obtain a license from relevant government agencies saddled with the issuance of licenses to exporters.

Having a license allows you to legally carry out shipment of commodities approved by government.

There are two government agencies vested with the power to grant export licenses in Nigeria.

They are: The Nigerian  Export Promotion Council (NEPC) and Federal Ministry of Solid Minerals Development.

NEPC is saddled with the responsibility of issuing out export license for agricultural commodities and manufactured goods.

While the Federal Ministry of Solid Minerals Development is responsible for granting licenses for extraction and exportation in Nigeria.

10. Export packing list.

Considerably more detailed and informative than a standard domestic packing list.

An export packing list itemizes the material in each individual package and indicates the type of package; box, crate, drum, carton, and so on.

It shows the individual net, legal, tare, and gross weights and measurements for each package.

Package markings should be shown along with the shipper’s and buyer’s references.

The packing list should be attached to the outside of a package in a waterproof envelope marked “packing list enclosed.”

The list is used by the shipper or forwarding agent to determine:
1. The total shipment weight and volume and
2. Whether the correct cargo is being shipped. In addition, customs officials (both local and foreign) may use the list to check the cargo.

These are the ten documents any exporter must prepare and arrange before proceeding with shipment process for exporting goods.

It can be said that, preparing this documents and having them intact means, half of the general exportation process has been fulfilled.
Export Business Documentation and Registration

Export Business Documentation

An obvious question arises is: why is documentation needed in export business?

Answer to this question lies in the nature of the business relations between the exporter and the importer operating from two countries.

One knows, unlike the domestic business, the commercial practices and legal systems are different in the two countries the exporter and importer are operating from.

Therefore, in order to protect the respective interests of the exporter and the importer involved in export business, certain documentary formalities become essential.

Such documentation facilitates the smooth flow of goods and payments thereof across national frontiers.

Classification of  Export documents

  1. Commercial Documents
  2. Regulatory Documents
  3. Export Assistance Documents
  4. Documents required by Importing Countries.

Let us now discuss the specific documents and functions performed by them under each category.

Commercial Documents:

1.     Commercial Invoice:

This is the first basic and the only complete document in an export transaction.

It is, in fact, a document of contents containing information about goods.

Harmonized System Nomenclature (HSN), price charged, the terms of shipment and marks and numbers on the packages containing the merchandise.

Other documents are:

(i) Obtaining export inspection certificate

(ii) Getting excise clearance

(iii) Getting customs clearance and

(iv) Securing such incentives as cash compensatory support (CCS) and import license.

This document is prepared at both the pre-shipment and post-shipment stages.

Besides commercial invoice, there is a proforma invoice also.

It is a temporary commercial invoice which is sent by the exporter to the importer.

It covers contemplated shipment which may or may not be made in future.

The importer requires this document for obtaining an import license and opening a letter of credit in favour of the exporter.

With such obvious importance of proforma invoice, the exporter should cultivate a habit of sending proforma invoice to the importer, even if the same is not demanded.

2. Bill of Lading:

Bill of lading (B/L) is a document which is issued by the shipping company acknowledging that the goods mentioned therein are either being shipped or have been shipped.

This is also an undertaking that the goods in like order and condition as received will be delivered to the consignee, provided that the freight specified therein has been duly paid.

Functions of Bill lading serves

(i) It is an evidence of the contract of affreightment (transport).

(ii) It is a receipt given by the shipping company for cargo received by it.

(iii) It is a document of title to the goods shipped.

The bill of lading gives the details about the exporter, carrying vessel, goods shipped, port of shipment, destination, consignee and the party to be notified on arrival of the goods at destination. Bill of ladings is made the sets.

3. Airway Bill:

In air carriage, the transport document is known as the airway bill.

This document performs three functions of a forwarding note for the goods, receipt for the goods tendered, and authority to obtain delivery of goods.

Since it is non-negotiable, so it does not carry the same validity as a bill of lading for sea transport carries.

4. Bill of Exchange (B/E):

Bill of exchange is an instrument or draft used for the payment in international / export business.

It is an instrument in writing containing an unconditional order, signed by the marker, 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.

The person to whom the bill of exchange is addressed is to pay either on demand or at a fixed or a determinable future.

5. Bill exchange parties

(i) The Drawer (Exporter):

The person who makes and executes the B/E or say, the person to whom payment is due.

(ii) The Drawee (Importer):

The person on whom the B/E is drawn and who is required to meet the terms of the document.

(iii) The Payee (Exporter or Exporter’s Bank):

The party to receive the payment.

6. Letter of Credit:

It is a written instrument issued by the buyer’s (importer’s) bank, authorising the seller (exporter) to draw in accordance with certain terms and stipulating in a legal form that all such bills (drafts) will be honoured.

Letter of credit provides the exporter with more security than open accounts or bills of exchange.

A commercial letter of credit involves the following three parties:

(i) The opener or importer – the buyer who opens the credit

(ii) The issuer – the bank that issues the letter of credit.

(iii) The beneficiary – the seller in whose favour the credit is opened.

Based on differing conditions, letters of credit may be of the following types:

(a) Revocable and Irrevocable:

In case of revocable letter of credit, the buyer or issuer can cancel or change an obligation at any time prior to payment without prior notice to the exporter or seller.

When the letter is irrevocable, the buyer cannot cancel or change obligation without the exporter’s permission.

(b) Confirmed and Unconfirmed:

In case of confirmed letter of credit, the payment is guaranteed by the issuing bank.

When the letter is unconfirmed, no such guarantee is given by the bank.

(c) With and Without Recourse:

With recourse means if the buyer fails to pay the bank after a specified period, the bank can have recourse on the exporter. There is no such provision in the letter of credit without recourse.

Regulatory Documents:

1. Legal Documents for Export:

There are two types of regulatory documents:

(i) Documents needed for registration, and

(ii) Documents needed for shipment.

The first category documents include applications and other supporting documents for obtaining:

(i) Code number from the Reserve Bank of Nigeria (RBN),

(ii) Importers and exporters’ code numbers from the Chief Controller of Imports and Exports,

(iii) Registration-cum-membership certificate (RCMC), etc.

Documents for shipment of goods:

(i) GR Form:

It is required to be filled in duplicate for all exports other than by post.

Both of the copies have to be submitted to the customs authorities at the port of shipment.

They will retain the original copy to be sent to the Reserve Bank of Nigeria directly.

They will return the duplicate copy which is submitted to the negotiating bank along with other documents after shipment of goods.

The negotiating bank sends the duplicate copy to the RBN after the export proceeds have been released.

(ii) PP Form:

Exports to all countries by parcel post (PP), except when made on ‘value payable’ or ‘cash on delivery’ basis should be declared on PP forms.

(iii) VP/COD Form:

It is required to be filled in one copy for exports to all countries by post parcel under arrangements to realize proceeds through postal channels on ‘value payable’ or ‘cash on delivery’ basis.

(iv) EP Form:

Shipment to Afghanistan and Pakistan other than by post should be declared on EP forms.

(v) SOFTEX Form:

It is required to be prepared in triplicate for export of computer software in non-physical form.

2. Shipping Bill:

The shipping bill is the main document on the basis of which the custom’s permission for export is given.

Post parcel consignment requires customs declaration form to be filled in.

There are three types of shipping bills available with the customs authorities.

Export Business Documentation & Registration

These are:

(i) Free Shipping Bill:

It is used for export of goods for which there is no export duty.

(ii) Dutiable Shipping Bill:

Printed on yellow paper, it is used in case of goods which are subject to export duty/cess.

(iii) Drawback Shipping Bill:

It is usually printed on green paper and is used for export of goods entitled to duty drawback.

Export Business Documentation & Registration

3. Marine Insurance Policy:

It is the basic instrument in marine insurance.

A marine policy is a contract and a legal document which serves as evidence of the agreement between the insurer and the assured.

The policy must be produced to press a claim in a court of law.

An exporter must also put up the marine insurance policy as a collateral security when he gets an advance against his bank Credit.

Exports Assistance Documents:

For availing of a number of incentives and assistance, an exporter is required to fill in a number of documents.

Some of the important ones of these are discussed here:

1. Application Form for Registration:

Exporters desirous of availing themselves of the benefits of the import policy are required to register themselves with the appropriate registering authority such as Export Promotion Councils (EPC), Commodity Boards and Chief Controller of Imports and Exports (CCIE), New Delhi.

The application for registration should be accompanied by a certificate from the exporter’s bankers in regard to his financial soundness.

In case of a firm having branches, the application for registration shall be submitted only by the Head Office.

Export Business Documentation & Registration

2. Allotment of Indigenous Raw Materials on Priority Basis:

Manufacturer- exporters may apply to the Director of Export Promotion, Ministry of Commerce, for replenishment of the indigenous materials used in the manufacture of goods for export.

3. Duty Drawback:

For claiming this incentive, the main document is the customs attested drawback copy of shipping bill.

This is to be accompanied by other documents such as drawback payment order, final commercial invoice and a copy of bill of lading or airway bill, as the case may be.

Export Business Documentation & Registration

4. REP License and CCS:

For claiming REP license and cash compensatory support (CCS), the exporter is required to prepare and file a number of documents.

The main documents in this regard are:

(i) Application in the prescribed form

(ii) Acknowledgement slip

(iii) Bank challan issued by the treasury for the application fee paid.

(iv) Advance receipt for cash assistance amount

(v) A duly certified copy of shipping bill.

(vi) Non-negotiable copy of bill of lading/airway bill.

Export Business Documentation & Registration

Documents required by importing Countries:

In case of export business, the importing countries need some documents because of the legal necessity.

These documents are obtained by the exporter and are sent to the importer.

Some of the well-known documents are as follows:

1. Consular Invoice:

It is usually issued on the specified form by the consulate of the importing country situated in the exporting country.

It gives a declaration about the true value of goods shipped.

The customs authorities of importing company charge valorem based on the value mentioned on consular invoice.

Export Business Documentation & Registration

2. Certificate of Origin:

This certificate is issued by the independent bodies like chamber of commerce or export promotion council in the exporting country.

This is a certification that the goods being exported were actually produced in that particular country.

Export Business Documentation & Registration

3. GSP Certificate of Origin:

Goods which get the benefit preferential import-duty treatment in countries which implement the Generalised System of Preferences (GSP) should be accompanied by the GSP certificate of origin.

This certificate is given on the forms prescribed by the importing countries.

Export Business Documentation & Registration

4. Customs Invoices:

It is also made out on a specified form prescribed by the customs authority of the importing country.

The details given on the document will enable the customs authority of the importing country to levy and charge import duty.

5. Certified Invoice:

This is the self-certified invoice by the exporter about the origin of the goods. Learn More, Click Here.

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