Q.1:- Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Limited located in Australia. Discuss the procedure that Rekha Garments would need to go through for executing the export order.
Steps involved in executing the export order are as follows
(i) Assessing Creditworthiness of Swift Imports Limited and Securing a Guarantee for Payments After receiving the receipt of indent, Rekha Garments should make necessary enquiry about the Creditworthiness of Swift Imports Limited, in order to assess the risks of nonpayment by the importer.
(ii) Obtaining Export License After assuring about payments, the exporting firm Rekha Garments would initiate the steps relating to compliance of export regulations which demand that the export firm must have an export license before it proceeds with exports.
(iii) Obtaining Pre-shipment Finance Rekha Garments would then approach its banker for obtaining pre-shipment finance to undertake export production, for procuring raw materials and other components, processing and packing of goods and transportation of goods to the port of shipment.
(iv) Production or Procurement of Goods Rekha garments would proceed to get the goods ready as per the specifications of the importer. Either the firm would itself produce the goods or else buy them from the market.
(v) Pre-shipment Inspection If the product to be exported comes under the category of compulsory inspection, Rekha Garments needs to contact the Export Inspection Agency (EIA) or the other designated agency for obtaining inspection certificate.
(vi) Excise Clearance Rekha Garments would then have to apply to the concerned Excise Commissioner in the region with an invoice. If the Excise Commissioner is satisfied, he would issue the excise clearance. Rekha Garments may get the refund of excise duty known as drawback as it is exporting the goods.
(vii) Obtaining Certificate of Origin Some importing countries provide tariff concessions or other exemptions to the goods coming from a particular country. If such benefits are available, the importer may ask the exporter to send a certificate of origin.
(viii) Reservation of Shipping Space The exporting firm applies to the shipping company for provision of shipping space. It has to specify the types of goods to be exported, probable date of shipment and destination, the port of destination. On acceptance of application for shipping, the shipping company issues a shipping order.
(ix) Packing and Forwarding The goods are then properly packed and marked with necessary details such as name and address of the importer, gross and net weight, port of shipment and destination, country of origin, etc. Rekha Garments would then have to make necessary arrangement for transportation of goods to the port.
(x) Insurance of Goods The exporter would then get the goods insured with an insurance company to protect against the risks of loss or damage of the goods due to the perils of the sea during the transit.
(xi) Customs Clearance The goods must be cleared from the customs before these can be loaded on the ship. For obtaining customs clearance, Rekha Garments would have to prepare the shipping bill. Five copies of the shipping bill along with the other required documents would then be submitted to the Customs Appraiser at the customs house.
(xii) Obtaining Mates Receipt The goods are then loaded on board the ship for which the mate or the captain of the ship issues mate’s receipt to the port superintendent.
(xiii) Payment of Freight and Issuance of Bill of Lading After the receipt of freight, the shipping company would issue a bill of lading which serves as an evidence that the shipping company has accepted the goods for carrying to the designated destination.
(xiv) Preparation of Invoice After sending the goods, an invoice of the dispatched goods would be prepared. The invoice states the quantity of goods sent and the amount to be paid by the importer and would be presented to Swift Imports limited for payment.