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The Significance of Shipping Bills in International Trade-IndiaFilings

Last updated: July 20th, 2023 3:15 PM

The Significance of Shipping Bills in International Trade: A Guide for Exporters

Successful export businesses rely on meticulous planning, adherence to regulations, and seamless logistics in the complex world of international trade. The shipping bill is a crucial document for exporters in India, enabling customs clearance and confident international shipping. This article explores the importance of shipping bills, their role in smooth trade, and essential steps for customs clearance and successful deliveries. Understanding shipping bills is vital for exporters expanding their global reach and overcoming shipping challenges. Let's uncover the significance of shipping bills in international trade.

What is a shipping bill?

A shipping bill is a mandatory application submitted by exporters to obtain customs clearance for exporting goods from one country to another. It is a crucial part of the formalities involved in the export process, which includes submitting various applications, acquiring licenses, and paying duties. Without filing the shipping bill, the exporter cannot load the goods onto the transportation mode, whether by air, vehicle, or vessel. Goods can only be taken on board for export if they are accompanied by specific documents, which vary based on the location and nature of the export:

At seaports/airports: The required document is the "Shipping Bill."
At land customs stations: The necessary document is the "Bill of Export."
For goods undergoing transshipment: The essential document is the "Bill of Transhipment."

The shipping bill ensures legal compliance and facilitates seamless international trade by obtaining the necessary clearance from Customs.

The Significance of Shipping Bills in International Trade

In the International Trade process, shipping and delivery ensure that products reach the importer or end customer safely and without damage. For a successful export business, paying close attention to this step is essential. One of the key documents involved in the process is the shipping bill, which the Customs Service Centre issues. The shipping bill is a vital tool for exporters, allowing them to obtain customs clearance and initiate the shipping process. When products are sent from one country to another, exporters must complete various formalities, such as submitting applications, obtaining licenses, and paying duties. Among these requirements, applying for a shipping bill is critical to ensure a smooth export process and avoid any shipping challenges. The customs authorities carefully examine the shipping bill, and once it has been verified and approved, the exporter receives a 'Let Export Order' and a 'Let Ship Order.' These orders indicate that the customs authorities have cleared the products for export and that they can proceed with the shipping process.

Key Contents of a Shipping Bill

The shipping bill typically includes the following information:

Details of exporter, buyer or importer, and customs agent.
Name of the vessel used for transportation.
Port of loading and discharge, along with transportation details.
Cargo particulars, including gross and net weight and the nature of the goods.
Invoice details include the number of commercial invoices, nature of payment, and invoice value in both currencies.
Information related to GST (Goods and Services Tax) and export duty.
FOB (Freight on Board) price and insurance amount of the exported items.
Container numbers used for shipping.
Duty Drawback details, if applicable.
Description of the nature of the exported goods.
Country of destination and the specific port where goods will be discharged.
Addresses of the exporter and the importer.
Package details, including the number of packages and their marks for identification

Types of Shipping Bills in Export:

Dutiable Shipping Bill: This type of shipping bill is used when the exporter needs to pay export duty on the goods being exported.
Drawback Shipping Bill: Drawback shipping bills are filed for goods eligible for a refund (drawback) of customs duties.
Ex-bond Shipping Bill: Ex-bond shipping bills are used for goods previously imported and stored in bonded warehouses but are now being re-exported.
Coastal Shipping Bill: Coastal shipping bills are required when goods need to be transported from one port to another within the same country.

A specific color scheme represents each. This tabular format provides a clear overview of the different forms of shipping bills, along with the associated colors that denote each type during the export process.

Form Name	Description	Color
Dutiable Goods	For goods subject to export duties.	Yellow
Duty-free goods	For goods exempt from export duties.	White
Goods with drawback claims	For goods eligible for a refund of customs duties (drawback).	Green
Goods allowed to be exported as duty-free ex-bond	Goods previously imported and stored in bonded warehouses are now being re-exported.	Pink
Export goods under DEPB Scheme	For goods exported under the Duty Entitlement Passbook (DEPB) Scheme, a duty credit-based program.	Blue

Understanding the Shipping Bill Process in Export Transactions

The shipping bill process works as follows:

Vessel/Ship Entry Outwards: Before filing the shipping bill, the specific vessel, ship, or transportation mode intended for export must be granted an "entry outwards" permission. This permission allows the vessel to move out of the country.
Submitting the Shipping Bill: The exporter can file the shipping bill once the vessel has been granted entry outwards. The shipping bill contains all the details about the exported goods and the intended destination.
Physical Verification and Assessment: After submitting the shipping bill, customs authorities physically verify the goods and assess their value to ensure compliance with export regulations.
Endorsement and Clearance: Upon successful verification and assessment, the customs authorities endorse the shipping bill with a 'LET EXPORT ORDER' and a 'LET SHIP ORDER.' These endorsements indicate that the goods are cleared for export and can be loaded onto the designated vessel or transportation mode.

Documents Required for shipping bill

In India, the shipping bill is obtained through Indian Customs and Central Excise Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway, known as ICEGATE. To obtain the shipping bill, exporters need to provide the following documents:

Forms for Shipment: Required for exports to all countries.
Packing List: Contains details of each package's content, quantity, gross and net weight.
Export License: Authorization for exporting specific goods.
Indent: A formal order for goods placed with suppliers.
Acceptance of Contract: Document confirming acceptance of export contract terms.
Invoices: Contain comprehensive information such as package number, quantity, price, and accurate goods specifications.
Purchase Order: Placed by the buyer, specifying the purchase details.
Letter of Credit: A financial document guaranteeing payment to the exporter.
Examination or QC Certificate: Ensures the quality of the goods.
Port Trust Document: Relevant for shipment from port trust authorities.

Procedure for obtaining a shipping bill for export

The procedure for obtaining a shipping bill for export is as follows: Application: The exporter's Importer-Exporter Code (IEC) should be registered with Electronic Data Interchange (EDI). Their authorized representative can then apply for an export shipping bill at the Customs Service Center. The exporter must provide the original invoice copies and packing list to file the shipping bill. The Indian Customs Electronic Gateway offers an online service for applying for the shipping bill. To obtain a shipping bill from ICEGATE, exporters can follow these steps:

Register with Customs: Exporters must register on the ICEGATE website using their IEC (Import Export Code) or Customs House Agents license number and the AD Code of their respective bank.
Sign in to ICEGATE: Log in to ICEGATE with the provided credentials after registration.
Fill out the Application: Complete the shipping bill application in the prescribed format, providing all necessary details and attaching the required documents.
Submit the Application: Once the application is filled, submit it through the ICEGATE portal.
Checklist: Once the application is submitted, a checklist is generated and given to the exporter or the Customs House Agent (CHA). The CHA or exporter verifies the checklist and informs the service center to generate the final shipping bill.
Shipping Bill Number: The verified details are submitted to the EDI system by the service center, and the system issues an automatic shipping bill number, which is endorsed on the checklist.
Assessment: If the value of exports exceeds INR 10,00,000, the consignment contains samples worth more than INR 20,000, or the drawback amount exceeds INR 1,00,000, the Assistant Commissioner evaluates the consignment.
Status Check: The exporter can check the status of the shipping bill with the service center. In case of any queries raised, the exporter needs to provide the necessary replies through the center.
Let Export Order (LEO): After completing the process, the required original documents are submitted to the docks. The "Let export" order is issued, and the exporter receives the hard copy of the shipping bill.

To check the status of a shipping bill, follow these steps:

Log in to ICEGATE with your credentials.
Click on the 'Job Status' link in the available services menu.
Select 'Shipping Bill (24 Hrs)' and choose the appropriate location from the drop-down menu.
Provide the required details and submit the request.

By following these procedures, exporters can obtain the necessary shipping bill from ICEGATE, ensuring a smooth and compliant export process. In conclusion, a shipping bill plays a crucial role in facilitating the export of goods from a country. It serves as a certificate for customs clearance, ensuring that the necessary formalities are completed before the goods can be moved out of the country. According to RBI guidelines, exporters need to map all foreign remittances received with the corresponding shipping bills of their export shipments. This mapping is necessary to generate the Bank Realisation Certificate (BRC). Exporters must submit the shipping bill and other relevant documents to the bank to obtain the BRC. Compliance with these requirements is vital to prevent RBI's blacklisting of the IEC code of the exporting company. Ensuring adherence to these regulations is essential for maintaining a smooth and legally compliant export process.