Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Ltd., located in Australia. Discuss the procedure that Rekha Garments would need to go through for executing the export order.
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Answer:
Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Ltd., located in Australia.
The procedure that Rekha Garments would need to go through for executing the export order are as follows :
(1) Accepting importer's creditworthiness and securing a guarantee for payments :
After receiving the order or intend, the exporter Rekha Garments undertakes an enquiry regarding the creditworthiness of the importer Swift Imports Ltd.
(2) Obtaining export licence :
When the exporter Rekha Garments is assured about the payment, then they initiate the steps relating to fulfillment of export formalities.
(3) Obtaining pre shipment Finance :
After obtaining the export licence the exporter Rekha Garments approaches his banker in order to obtain pre-shipment finance for carrying out production. This finance is required for obtaining raw materials and other components, processing, packing and transportation of goods to the port of shipment.
(4) Production or procurement of goods :
Exporter,Rekha Garments after obtaining the pre shipment finance from the bank, proceeds to the get the goods ready as per the orders of the importer Swift Imports Ltd.
(5) Pre shipment inspection :
Several steps have been initiated by Government of India to ensure that only good quality products are exported from India.
(6) Excise clearance :
According to Central excise traffic act, excise duty on the materials used in manufacturing goods is to be paid. For this purpose exporter, Rekha Garments contact the concerned excise commissioner with an invoice. When the concerned excise officer is satisfied , he issues the Excise clearance certificate.
(7) Obtaining certificate of origin :
In order to obtain traffic concessions or other exemptions the importer ,Swift Imports Ltd.
may ask the exporter , Rekha Garments to send certificate of origin.
(8) Reservation of shipping space :
The exporter , Rekha Garments applies to the shipping company for provision of shipping space. The shipping company issues a shipping order after accepting application for shipping.
(9) Packing and marking :
After packing , goods will be marked . If indent contains some specific mark, it should be placed by any otherwise any other mark may be placed.
(10) Appointment of forwarding agent :
Forwarding agent generally perform the following functions negotiation of shipping contract, custom formalities, marine insurance policy, loading of goods, securing of bill of lading etc.
(11) Dispatch of goods :
After appointment of forwarding agent the exporter, Rekha Garments will dispatch the goods by rail to the port town. The forwarding agent will take delivery of goods from railway and take necessary steps for its shipment.
(12) Customs clearance :
The forwarding agent apply to the custom authorities for permission to export the said goods . If there are no restrictions on its export , the custom authorities will give permission . Such permission is known as custom permit.
(13) Shipping order :
It is an order of the shipping company to the exporter that he should bring his goods on the board of ship.
(14) Payment of export duty :
After the arrangement of the ship the forwarding agent will fill up the prescribed form for export duty.
(15) Dock challan or warrant :
Permission of dock officer is necessary for taking the goods to the dock. The forwarding agent has to submit copies of shipping order and bill of lading with the dock authorities.
(16) Loading of goods :
At the time of loading of goods custom officers are present at a dock and they satisfy themselves that export duty has been paid and the goods being loaded conforms to the good detailed in the form.
(17) Mate's receipt :
After the loading of goods the captain of the ship issues mate receipt which proves that the goods have been received.
(18) Bill of lading :
In this the shipping company agrees to carry goods to the destination port against the payment of freight.
(19) Marine insurance :
There are many perils in the journey, so marine insurance is must. Goods can be insured either by the exporter , Rekha garments and importer Swift Imports Ltd.
(20) Forwarding agents advice :
After completing the above formalities the forwarding agent will prepare a statement of expenses incurred by him on behalf of the exporter, Rekha garments.
(21) Preparation of invoice :
The exporter,Rekha garments will prepare an invoice for the dispatched goods.
(22) Securing payment :
After this the exporter , Rekha government will try to secure the payment.
(23) Advice to importer :
After handling over the documentary bill to the bank, the exporter ,Rekha garments will inform importer, Swift Imports Ltd. about the dispatch of goods . A copy of export invoice will also be sent along with the advice.
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