Before the ship arrives the importer will usually have received the shipping document either from the exporter himself or through the agent, possibly a bank acting for him in the importer’s country. The documents include the following:
An Advice of Shipment
it gives particulars of the merchandise and the name of the ship by which it has been sent. It is similar to advice note used in home trade.
Bill of Lading
This is a very important shipping document which accompanies the bill of exchange evidencing the fact that goods have been dispatched by the supplier. It gives the buyer the title to the goods and enables him to claim delivery on arrival at destination.
The document is prepared by the shipping agent on the forms supplied by the company showing the date, place of shipment, name of vessels, the names of the consignor and consignee, the ports of embarking and destination, the number, content and identification marks and the amount of freight ‘to pay’ or paid. The document is a negotiable instrument, thus it can be transferred by endorsement to another or to order, in which case the title to the goods passes to the endorsee on delivery. It is used for clearing goods imported into a country.
It is usually prepared in four copies with the original copy to the seller, a second copy to the master of ship conveying the goods, the third copy is sent in advance to the buyer, while the fourth copy accompanies the ship.
Invoice and Certificates of Origin and Weight
Other documents which accompany the bill of exchange are commercial and consular invoice and certificates of origin of the country and weight. A pro-forma invoice is sent if the goods are on consignment rather than against an order. A consular invoice is the type of invoice signed in the presence of the consular of the importers’ country by the supplier and is also countersigned by the consul as evidence of the correct value of the goods shipped. The invoice is used by customs officials of the country of entry to verify the value, quantity and nature of merchandise imported
List of Packaging and Marketing
A detailed list of packages and marketing on packages serve to indicate the nature, quantity and contents of each package, which help the importer to identify the goods and check them against his order.
Documents of marine insurance policy and letters of credit
The Ships Manifest
This is a document used in import business and shows the particulars of goods on board a ship for various destinations. It is usually made out from the information supplied by the Bill of Lading which cover the cargoes shipped as given by the shipper.
It contains the name of the vessels, its master and flag, the port at which the goods were consigned and possible date of sailing or departure, the port of discharge of cargo, the number of the Bill of Lading, the marks or distinguishing marks and numbers for identifying the goods, the number of packages or cases which is covered by a Bill of Lading as well as their description, the name of the suppliers as well as that of the consignees or notify party, the weight and measurement (size) of the goods and finally the ocean freight
Bill of Sight
This is a document used in import and export business and which is given to the customs officer when a full description of the goods cannot be provided. This will enable the goods to be landed.
Indent
This is a term used in foreign trade or of orders from abroad, more particularly when such orders are placed with agents or exporters. The indent can either be ‘open’ or ‘closed’. It is open when the agent has the express right to obtain the goods from any source of his choice or from any manufacturer he pleases.
It is closed indent when the foreign buyer specifies the manufacturer/suppliers from whom the goods are to be purchased
Letter of Hypothecation
This is a letter of authority given to a banker by an importer authorizing the banker to claim ownership of goods for which the banker has either lent money or stood surety in event of importer defaulting
Form ‘M
It is a form for imports only and which requires importers to apply for the purchase of foreign currency. It provides control on the purchase of foreign currency and is guided by the Federal Republic of Nigeria Exchange Control Act, 1962. It is usually completed in set of duplicate and made to a bank of importers choice in Nigeria.
When the ship arrives, the importer’s first step to obtain ‘release’ for the bill of lading. To do this, he must observe the following:
He must first add his endorsement to the bill of lading and then present the bill of shipping company or their representatives at the port. If the bill of lading has gone astray or not arrived, the shipping company will normally release the goods against a certificate of indemnity given by the importer and signed jointly by himself and his banker
He must pay the freight and any other charges due to the shipping company, unless the freight has been prepaid, as for CIF contract. He must prepare and submit the necessary customs entries.
Warehousing the Goods
If the importer does not wish to take immediate delivery of his goods and this is often so when the goods are on consignment, he may arrange with the dock authorities to place them in warehouse, in which case he must complete and submit to the customs authorities an entry for warehousing.
When he receives the goods, the warehouse keeper will issue a warehouse warrant to the importer. The warrant serves as a receipt for the goods and, like the bill of lading, is also a document of title by which ownership of the goods may be transferred from one merchant to another by endorsement and delivery. When the time comes for the importer (or other owners of the goods if they have been transferred) to take delivery of the goods he must produce the
warehouse warrant as evidence of ownership. If he wants to take delivery of only part of the goods, or to deliver various portions of them to different buyers, he deposits the warrant with the warehouse keeper and against it issues delivery orders, instructing him to deliver specified goods to the persons named in the orders. Like the warehouse warrant itself, delivery order is a document.of title.
Import Duties And Tariffs
Duties and tariffs affect import and export prices. Whether one is importing, exporting or entrepoting, one must take duties and tariffs into account in determining the “total cost”.
Duties
These are indirect taxes imposed on imports or exports. It is aimed at protecting the home manufactured goods and also serves as means of revenue to the country. Duties are of two kinds, specific and ad-valorem. Specific duties are levied in proportion to weight, volume or number without regard to value, while ad valorem duties are levied into the value of the commodities taxed. classification of goods subject to duty, and the rates charged differs in each country.
Tariffs
These are applied by countries or groups of countries and is based on economic reasons. They may be to protect the economies in different trading areas (such as ECOWAS, EEC, etc), or to equate prices across a number of trading areas.
They are political rather than financial in their application. Such countries may form custom or tariff unions and the treaty may be to do away with custom duties between themselves and to adopt a similar policy or tariff regulations with nations not a party to the customs union.
In certain circumstances duties paid on goods imported may be recovered should those goods be re-exported. Quantitative tariffs are called quota (i.e specify the upper limit or ceiling for the number of items that may be imported).
Customs Duties
This is also called import duties. They are levied on a wide range of imported goods. They may be levied on goods exported, but the practice is rare. While essential foodstuffs and raw materials may be duty-free, manufactured and semi-manufactured goods are dutiable. Custom duties are of two kinds. They may be levied either.:
i. As revenue raising taxes:
Taxes on imported wines, spirit, tea and hydrocarbon oils are of this kind
OR
ii. As protective duties:
The purpose is to protect home producers from the effect of foreign competition, and this applies to a wide range of manufactured goods.
Excise Duties:
When applied to goods, excise duties are a form of indirect tax levied on certain classes of produce in the home country. Their purpose is to raise revenue (e.g the duty on beer or cigarette) or to offset customs import duty on similar goods. Where the tax is imposed to offset customs duty it removes the protection which the home producer would otherwise enjoy, though it is often found that the level of the custom duty is slightly higher than that of the corresponding excise duty to give a small margin of protection to the home producer.
Excise tax is not necessarily applied to goods, it may also represent a tax levied on the right, privilege or permission to engage in a certain business, trade occupation, or even sport.
Excise Drawback:
This is a refund or return to an importer of the duties collected on imported goods which were intended for and are re-shipped to another country.