Export Shipping Bill: Types, Meaning, & Comprehensive Documentation Guide
When an exporter intends to export goods from India, the next step is to prepare a shipping bill for export, which is part of the customs process for clearing goods from India.
The exporter must prepare this shipping bill and then submitted to Indian customs) before the goods actually leave the shipping or delivery location.
Any shipment that enters the shipping or delivery warehouse and intends to leave India cannot be exported without having a "Shipping Bill".
The Shipping Bill for Export will be processed through the ICEGATE system, which stands for Indian Customs Electronic Gateway and hence becomes an electronically integrated process connecting Exporter, Indian Customs Offices, Freight Receiver, and Recipient in one integrated flow. This book explains everything about the shipping bill: definitions, classifications, procedures (step by step), and all documentation involved in the shipping bill.
Comprehension of the Primary Function of Shipping Bill in Exporting
What Does Shipping Bill Mean? Legal Considerations of the Term
Other than being used as a clarifying concept, a shipping bill definition also falls under the purview of a legal document based on the Customs Act of 1962. The use of such a document will allow the Indian Customs Authorities to determine if the products being exported comply with all criteria prior to export.
Information collected using the shipping bill (product description and amount, value of exported goods, transportation process, and duty drawback claims) has serious legal implications, and may even undergo scrutiny at the hands of a customs authority.
After the inspection of the shipping bill, the exporter will receive a Let Export Order (LEO).
As far as the matters of the following are concerned, the date stated in the shipping bill becomes the date of issuance of LEO: GST reimbursement, Duty drawback - reimbursement claim; NESP application approvals.
Relationship between the Customs Shipping Bill and the entire process of Export
The Customs Shipping Bill is related to the Commercial Invoice/ Packing List/ IEC/ GSTIN as this will provide information that can then be used in preparing the Customs Shipping Bill. The Customs Shipping Bill helps in linking the activities of the exporter as stipulated in the commercial invoice to those that should be followed according to the Government's regulations and permissions before any export can take place.
In ICEGATE, the Customs Shipping Bill should be prepared in electronic format to form the electronic shipping bill and this would automatically link up with the GST portal in refund processing and finally, with the DGFT for permission to use it.
As the above connections show, if any mistakes are made when filling out the Customs Shipping Bill, it will certainly result in problems with the refunding process. It follows, therefore, that the preparation of the Customs Shipping Bill must be precise.
Shipping Bills for Exporting Items Available in India
Types of Shipping Bills Used in Exporting in India
Various types of shipping bills are available for exporters in India, and depending on the type of export done and how they are viewed by the custom department, certain bills will be utilized. Some of the commonly available bills include Free Shipping Bill, Dutiable Shipping Bill, Drawback Shipping Bill, DEPB Shipping Bill, and the Ex-bond Shipping Bill.
This is a list of some important shipping bills and can help in identifying the amount of duty charged. This will help identify whether the exporter will enjoy any benefits while exporting, such as the recovery of duties paid while importing items.
The Free Shipping Bill will be used when the items being exported are not subject to any export duty. This is a basic shipping bill that will be used when shipping items that do not carry any charge.
Dutiable Shipping Bill applies to the items which will carry the export duty charge. Most of these charges will result from the export tariffs placed on these commodities in order to control exports.
Drawback, DEPB, and Ex-Bond Types
If you are shipping your goods as an entrepreneur, you might consider using various types of shipping bills, depending on your particular requirements. The Drawback Shipping Bills are one of the most common variants used for exporters to refund customs or central excise duties on imported exported goods.
The processing of your Drawback Shipping Bills would include submitting to Customs Drawback a series of receipt data in relation to the value of exported goods and drawback rates established by the CBIC.
Ex-Bond Shipping Bills is another variant of shipping bills used only for exports of goods from the bonded warehouse without any declarations of entering into the domestic tariff zone.
As a rule, Ex-Bond Shipping Bills are applied in re-export of the goods stored at FTWZ's, and which cannot gain access to the Canadian market. To know which types of shipping bills will suit your export operations is crucially important.
Shipping Bill Process Step by Step: How It Works in Practice
Filing the Shipping Bill on ICEGATE
The process of filing the shipping bill could be broken down into different stages. Each exporter (or CHA) would submit the bill to ICEGATE and file their shipping bills electronically with the Department of Customs.
The exporter would be mandated to supply accurate data when filing their shipping bill (IEC, GST registration no, invoice details, HSN codes, FOB value, loading port country, destination port country, among others). Once submitted, the shipping bill is compared with master data at ICEGATE and in case of inconsistency between the bill and master data, an error would be rectified before the submission.
Submission of the shipping bill would generate the shipping bill number, which is unique and used for identifying any customs, port, and bank transactions done following the submission of the shipping bill.
After submitting, the system will then send the bill to the Risk Management System (RMS).
This system will assess the risk involved in the bill and instruct the customs officer whether to inspect the cargo physically, check the shipping bill and all documents, or pass through LEO by the facilitation process.
From RMS Assessment to Let Export Order
One of the following is the final stage of the export shipping billing process through the Risk Management System, depending on whether the exported goods are: (a) "facilitated," which means that the exporter will get "Leave of exportation" immediately after receipt of goods without any inspection of the goods or; (b) inspected based on documents or by inspection of the goods themselves.
If the goods are facilitated, then once received in the shed and registered with their respective shed superintendent, the exporter will get Leave of Exportation (LEO) within hours of receipt of the goods in the shed.
If the goods require inspection, then the officers will inspect the goods so as to ensure that the information provided in the shipping bill is consistent with what is discovered during the inspection of the goods.
After issuance of LEO, the shipper will stamp the shipping bill with the Export General Manifest (EGM) reference number (as provided by the shipping line or airline) as soon as the aircraft or vessel departs from the port or airport. This marks the completion of the entire exporting process in the customs system.
Documents Required for Shipping Bill: Complete Compliance Checklist
Core Export Documents That Support the Filing
For compliance within the export transaction, all documents that are necessary for filing of the shipping bill have to be completed before the commencement of the export transaction.
As the documents will be evaluated by the customs authorities, the consistency of documents with respect to the information provided in the shipping bill has to be ensured at all times. Non-conformity with the shipping bill is the most common reason for investigations carried out by the customs authority, leading to customs queries and examination orders, and ultimately delaying the LEO.
All required documents have to be available to the exporter and CHA, and they have to be valid and accurate in all respects. In any case, minimum requirements include digitally signed invoice and packing list, along with latest information on IEC and GSTIN.
Essential documents required for shipping bill processing include:
- Commercial Invoice – Value FOB, Currency, Party details of buyer and seller
- Packing List – Per individual items basis with gross weight and net weight, number of packages
- IEC (Import Export Code) – Obtained from DGFT
- GSTIN – Mandatory for filing GST refund claim
- Letter of Credit/Purchase Order (wherever applicable)
- Bill of Lading/Air Waybill – Issued by Carrier
- Phytosanitary/Health Certificate – If agricultural or food product
- Origin Certificate – According to destination requirement or trade agreement
- Drawback/DEEC/EPCG License Details (Wherever applicable)
- ARE-1 Form – To exempt central excise duty (Wherever applicable)
- GST Invoice – In prescribed format
- Permission for stuffing in factory premises (wherever applicable)
- Fumigation Certificate (Wherever applicable for specific Agricultural products)
- Pre-shipment Inspection Certificate – Product requires pre shipment inspection
Ensuring Documentation Readiness Before Filing
It is important that you properly fill out your freight bill forms since it is necessary for the customs authorities to process your shipments. To prevent any delays when clearing shipments through U.S. Customs, it is important that the values of your shipping bills agree with the item invoices that you are sending into the country.
It is also important that the H.S.N. codes indicated on your GST invoices agree with those codes that you declare on your customs documents for importation into the United States.
It might also slow down the LEI process as customs would need to manually assess the cargo. CHAs can help exporters file properly in advance using a pre-filing checklist for each export to new markets or each shipment under the benefits of the export promotion program.
Under the new rules, CHAs will have to conduct a comprehensive cross-checking of all the shipping documentation before filing.
Working with an experienced CHA will greatly reduce the likelihood of mistakes when filling out your freight paperwork, especially since a CHA will be familiar with both the DGFT and ICEGATE.
Shipping Bill Documentation for Exports: Practical Guidance on Compliance
How Can an Error-Free Shipping Bill be Drafted?
The primary requirement for consistency in the creation of a shipping bill on the ICEGATE portal is the accuracy of the data being entered. The data entered in all the fields in the electronic form must match those in the invoicing documents; this includes the invoice number, date of invoice, invoicing currency, FOB value, HSN code, and details of the buyer of the goods. Minor errors in spellings or values of data can lead to an assessment query by the assessing officer.
In ICEGATE, there is a service called Message Exchange, which enables the CHA to submit the shipping bills in the required EDI format. Most of the customs automation software companies have access to ICEGATE and can perform bulk filing and validations of the data entered leading to less manual errors.
Handling the Shipping Bill Across Different Export Mechanisms
When shipping goods abroad based on the EPCG, Advance Authorisation or RoDTEP Scheme, it is essential to ensure that the number of the respective scheme appears in the shipping bill. This is because the same will be used by the DGFT to track the fulfillment of the export obligation under the scheme. It will also help credit RoDTEP scrips into the exporter’s ledger through the custom process.
The custom-based shipping bill system is formulated in such a manner that it is capable of identifying the respective scheme. This enables formulating the criteria under which, upon declaration while submitting the shipping bill, it becomes easy to recover the benefits. The scheme code or drawback claim can be corrected later, but it is advisable to do it right from the beginning.
Shipping Bill as an Export Compliance Strategy
However, although a shipping bill for exports is merely a statutory requirement, in reality, it forms the core of the whole export clearance and drawback claim procedures. Indeed, all the GST refund or drawback claim and EPCG liabilities pending are nothing but based on shipping bill information.
The companies which recognize the significance of the shipping bill as an essential piece of paperwork and maintain it accordingly definitely have an edge over other companies from a compliance perspective. They will not just face smooth processing but will have better relationships with the customs authority. Moreover, audit processes will be much easier for them.
In the case that the volume of Indian exports rises in the coming years and customs become more advanced due to ICEGATE and NTR, the direction to go is clear. There is only one solution – more automation of handling shipping bill information. The preparation for this future should start right now.
FAQs: Export Shipping Bill
Q1. What do you mean by a Shipping Bill?
It is an official document that must be used in case of exports outside India according to the provisions of the Customs Act, 1962.
Q2. What are the types of Shipping Bills?
Free Shipping Bill, Dutiable Shipping Bill, Drawback Shipping Bill, DEPB Shipping Bill, and Ex-bond Shipping Bill.
Q3. What is Let Export Order (LEO)?
An order of permission from customs authority after the verification of Shipping Bill that allows the exportation of cargo from India. The date of LEO is important as it decides the refund of GST and drawback facilities.
Q4. What are the essential documents to be submitted while preparing a Shipping Bill?
These include Commercial Invoice, Packing List, IEC, GSTIN, Bill of Lading, and GST Invoice. Additional certificates may vary depending upon goods and destination countries.
Q5. What happens if there are errors in a Shipping Bill?
Customs inspection and examination orders can result in the delay of the issuance of the LEO. The errors in HSN and FOB value are the most common mistakes made in a shipping bill.