Required papers of a new importer for Import Registration Certificate (IRC).

After submission of the application by the intending importers for IRC alongwith the papers in mentioned above (a) and deposit of requisite fees, on being satisfied the Chief Controller of Import & Export (CCI&E) issue IRC to the Industrial Consumers or Commercial importers with their half yearly/yearly entitlement mentioning item of commodities.

Requirements:
+ Application in a prescribed form.
+ Valid Trade license.
+ Membership certificate of the respective trade organization or Membership from the Chamber of Commerce & Industry.
+ Registered partnership deed/Memorandum and Articles of Association alongwith Certificate of Incorporation.
+ Two copies attested photograph of the applicant(s).

+ Regular Bank Account.
+ Affidavit from 1st class Magistarte.
+ Asset Certificate of the applicant(s).
+ Ownership deed or Lease deed of the office premises alongwith rent receipt.
+ Bank solvency certificate.
+ Tax Identificate Number (TIN) Certificate.
+ Money receipt of requisite fee.
+ Any other document as required.

INCOTERMS 2010 published by The International Chamber of Commerce (ICC).

INCOTERMS mean   International Commercial Terms. These terms prepared by "The International Chamber of Commerce (ICC)". First the INCOTERMS were published by the ICC in 1936. These terms are accepted and used throughout the world as simple and reliable terminology for avoiding misunderstanding between buyer and seller. The purpose of INCOTERMS is to provide a set of International rules for the interpretation of the important terms used in Foreign Trade Contracts i.e. Export & Import. It is a set of uniform rules codifying the interpretations of trade terms defining the rights and obligations of both the buyer and seller in an international transaction. It defines the commercial, legal and insurance responsibilities of the exporter & importer during an international trade. The INCOTERMS 2010 publication came in to effect on 1st January, 2011.

There are mainly 13 (thirteen) INCOTERMS. These are:

1. EXW = Ex Works

Seller’s duties: i. Only deliver the goods at his factory premises.
ii. If the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale.
Buyer’s duties: i. Take delivery of the goods at the seller’s factory.
ii. All cost & risk at his own.

2. FCA = Free Carrier

Seller’s duties: i. Deliver the goods at the named point into the custody of the carrier mentioned by the importer.
Buyer’s duties: i. Contract for the carriage and pay the freight.

A. FOR = Free on Rail

Seller’s duties: i. Responsibility up to loading the wagon.
Buyer’s duties: i. Pay the freight.
ii. Delivered the goods from Railway.

B. FOT = Free on Truck

Seller’s duties: i. Deliver the goods to the truck.
ii. Truck receipt prepared and advance copy despatch to the buyer.
iii. Pay loading cost according to the custom of the port not include in the freight.
Buyer’s duties: i. Nominate Carrier, Pay the freight, Pay un-loading cost.
ii. Freight paid upto destination point.
iii. Delivered the goods from the truck.

C. FOB Airport = Free on Board

Seller’s duties: i. Deliver the goods to the Air Carrier at the Air port of departure.
Buyer’s duties: i. Accept delivery of the goods at the Air port of departure.
ii. Pay the Air Freight.

 

3.  FAS = Free Alongside Ship

Seller’s duties: i. Deliver the goods alongside the ship.
ii. Provide on “alongside” receipt.
Buyer’s duties: i. Contract for the carriage.
ii. Pay the freight.

4. FOB = Free on Board :   

Seller’s duties:  i. Deliver the goods on board.
ii. Provide a clean on board receipt.    

Buyer’s duties: i. Accept delivery of the goods at the Airport of arrival.
ii. Pay the freight.
 

5. CFR = Cost & Freight     :    

Seller’s duties: i. Contract for the carriage.
ii. Pay the freight to the named destination.
iii. Deliver the goods on board.
iv. Pay loading costs.
v. Provide clean on board bill of lading.
vi. Pay unloading cost.    

Buyer’s duties: i. Receive the goods at the port of destination.
ii. Pay the duty, sale tax, DSC & I.P. Fees etc.
iii. Pay the load conveyance/carrier charge upto buyers’ godown.
 

6. CIF = Cost Insurance and Freight    :    

Seller’s duties: i. Contract for the Carriage.
ii. Pay the freight to the port of destination.
iii. Contract for the insurance of the goods.
iv. Pay the insurance premium.
v. Provide clean on board Bill of lading and cargo insurance policy or certificate.
vi. Pay loading cost.
vii. Pay un-loading cost.    

Buyer’s duties: i. Accept delivery and receive the goods as per B/L, invoice and insurance policy.
ii. Pay the duty & sale taxes etc.
iii. Pay the local carriage charges.
 

7. CPT = Freight Carriage paid to    :    

Seller’s duties: i. Contract for the carriage and pay the all freight to the final destination.
ii. Deliver the goods into the custody of the first carrier.
iii. Furnish to the buyer the usual transport documents.    

Buyer’s duties: i. Accept delivery and receive the goods.
ii. From that named point pay local conveyance Charges upto his custody.
 

8. CIP = Freight Carriage and Insurance paid    :    

Seller’s duties: i. Contract for the carriage.
ii. Pay the freight to the named point of destination.
iii. Deliver the goods into the custody of the first carrier.
iv. Pay export taxes and fees.
v. Contract for insurance of the goods and pay the insurance premium.    

Buyer’s duties: i. Take delivery of the goods.
 

9. DAF = Delivered at Frontier    :    

Seller’s duties: i. Deliver the goods upto custom border.
ii. Up to this point sellers will pay all freight.    

Buyer’s duties: i. Take delivery of the goods from that point.
ii. Pay duty and other taxes.
iii. Pay for carriage.
 

10. DES = Delivered Es Ship    :    

Seller’s duties: i. Deliver the goods on board the ship at the port of destination.    

Buyer’s duties: i. Take delivery of the goods from the ship at the port of destination.
ii. Pay un-loading costs.
iii. Pay duty and others taxes.

11. DEQ = Delivered Ex Quay     :    

Seller’s duties: i. Deliver the goods on the quay at the port of destination.
ii. Pay unloading costs.
iii. Pay duties, Taxes and other charges if required.Buyer’s duties: i. Take delivery of the goods from the quay at the port of destination.
 

12. DDU = Delivered Duty Unpaid    :    

Seller’s duties: The sellers has to bear the costs and risks involved in bringing the goods there to excluding duties, taxes and other official charges payable upon importation as well as the costs and risks of carrying out customs formalities.Buyer’s duties: The buyer has to pay any additional costs and to bear any risks caused by his failure to clear the goods for import in time.
 

13. DDP = Delivered Duty Paid    :    

Seller’s duties: i. Deliver the goods to the named place.
ii. All freight paid by the seller.
iii. Pay the duty, Taxes & other charges.
iv. Clear the goods from the port of destination.    

Buyer’s duties: i. Receive the goods at the named place of their godown.

Export Development Fund (EDF)

As per request of Bangladesh Government to promote non-traditional manufactured items export business of Bangladesh, International Development Association (IDA) in 1989 arranged an Export Development Fund (EDF) primarily with US$ 31.2 million and the present balance of EDF is US$100.00 million.

Objectives for creating EDF and preconditions for avail EDF:

The objectives for creating Export Development Fund (EDF) and pre-conditions for avail EDF are as follows:

The main objectives of creating an Export Development Fund (EDF) at the Bangladesh Bank is assure a continued availability of foreign exchange to meet the import requirements of non-traditional manufactured items. This facility is available to the non-traditional exporters, particularly new exporters, exporters diversifying into higher value exports and exporters diversifying into new markets. An exporter identify above is eligible to avail of EDF facilities on the conditions stated below:

(i)    He must be an exporter of non-traditional manufacturing items.
(ii)    The value added of these products could be 20% except in the case of garments where it has to be 30% and above.
(iii)    The loan should be utilized in the case of importing raw-materials for manufacturing the exportable products.
(iv)    The exporter must have an Export L/C.
(v)    He must create a Back to Back L/C for importing raw materials.
(vi)    The period of loan is 180 days.
(vii)    The exporter can borrow as many times in a year on revolving basis.
(viii)    The interest rate of EDF is LIBOR + 1%.
(ix)    An exporter can borrow an amount not exceeding US$5,00,000/- in a single case, but outstanding should not be more than US$10,00,000/-
(x)    He has to have an Export Credit Insurance through Export Credit Guarantee Scheme (ECGS).

Purposes of EDF:

(i)    To make the payment of import bill against Back to Back sight L/Cs. For export of goods Bangladesh Bank arrange pre shipment credit by EDF.
(ii)    To increase the working capacity of Export administration and financial institutions.
(iii)    To encourage the motive of the foreign supplier. Foreign guarantee conferring institutions and foreign commercial banks who provide short time loan to the Bangladeshi exporters.

Modes of Export Finance in Islamic Banking.

(i) Bai-Muajjal (Export): Under this arrangement a Credit is sanctioned against hypothecation of raw materials or finished goods intended for export. Such facility is allowed to first class exporters. As the bank has got no security in this case, except charge documents and lien of export L/C or contract, bank normally insists on the exporter in furnishing collateral security. The letter of hypothecation creates a charge against the merchandise in favour of the bank.

(ii) Bai-Murabaha (Export) : Such Credit facility is allowed against pledge of exportable goods or raw materials. In such cases, Lien of export L/C or Firm contract and Murabaha facilities are extended against pledge of goods to be stored in godown under Bank’s control by signing letter of pledge documents. The exporter surrenders the physical possession of the goods under bank’s effective control as security for payment of bank dues. In the event of failure of the exporter to honour his commitment, the bank can sell the pledge merchandise for recovery of the credit.

(iii) Murabaha Trust Receipt (Export): In this type, Credit limit is sanctioned against Trust Receipt and lien of export L/C or firm contract. In this mode the exportable goods remain in the custody of the exporter. He is required to execute a stamped Export Trust Receipt in favour of the bank, wherein a declaration is made that goods purchased with financial assistance of Bank are held by him in trust for the bank. This type of Credit is granted when the exporter wants to utilize the Credit for processing, packing and rendering the goods in exportable condition and when it seems that exportable goods cannot be taken into bank’s custody. This facility is allowed only to the 1st  class party of the bank and collateral security against this type of investment may be obtained.

(iv) Musharaka Pre-shipment (ECC): It is a type of investment provided by a bank to an exporter for purchase of raw materials, Cost of processing the same to finished goods against lien of specific L/C or firm contract. Collateral security may be obtained against this type of investment considering banker – customer relationship and reputation/track record of the exporter. This type of investment must be adjusted out of the export proceeds within 180 days.

(v) Musharaka Pre-shipment (PC): Investment allowed to a customer against specific L/C or firm contract for packing and despatching of goods to be exported is called Musharaka Pre-shipment (PC). This type of investment allowed against lien of export L/C or firm contract and collateral security may be obtained on the basis of Banker-Customer relationship. This type of investment must be adjusted from the export proceeds within 180 days.

(vi) Foreign Documentary Bill Purchased (FDBP): Payment made to a customer through purchase/negotiation of a Foreign Documentary Bill is FDBP. Temporary investment is adjustable from the proceeds of shipping/export documents.

(vii) Local Documentary Bill Purchased (LDBP): Payment made against documents representing sell of goods to export oriented industries that are deemed as exports and which are denominated in local currency/foreign currency is called LDBP. This temporary liability is adjustable from the proceeds of the bill.

(viii) Back to Back Letter of Credit (BTB L/C): Under the arrangement of Back to Back L/C, the bank finances export business by opening Letter of Credit on behalf of the exporter who has received export L/C from the Overseas buyer. To execute the export order, the exporter have to procure raw materials from outside or inside the country by making lien of the master export L/C. This type of financing is called Back to Back Letter of Credit. BTB L/C must not exceed 75% of the FOB value of the master export L/C and this type of investment to be adjusted from the export proceeds.

Bill of Exchange

Bill of Exchange is one of the important negotiable instruments in the mercantile world and used as a vital document facilitating settlement of payments between buyer/importer and seller/exporter at home and abroad.

As per Section 5 of Negotiable Instrument Act, 1881 defines Bill of Exchange as, “A Bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay on demand or at a fixed determinable future time a certain some of money only to, or to the order of a certain person or to bearer of the instrument.”

Essential characteristics of a Bill of Exchange:

(i)    It must be writing with date.
(ii)    It must contain an order to pay on demand or at fixed or determinable future time.
(iii)    The order must be on unconditional.
(iv)    It must be signed by the drawer.
(v)    The drawer, drawee and payee must be certain.
(vi)    The amount must be certain.
(vii)    It should be properly stamped.

Parties of a Bill of Exchange:
There are usually three parties of a Bill of Exchange. They are Drawer, Drawee and Payee. But sometimes additional two parties Acceptor and Endorser includes in a Bill of Exchange.

(i) Drawer: The maker of a Bill of Exchange (B/E) is called the drawer. The drawer is the person to whom debt is due. The drawer of a B/E by drawing it engages that on due presentment it shall be accepted and paid according to its tenor and if it is dishonoured, he shall compensate the holder or any endorser who is compelled to pay it.

(ii) Drawee: The person thereby directed to pay is called the drawee. He is to accept the B/E to make it a legal one and he is not liable until and unless he has accepted it.

(iii) Payee: The payee is the person or to whose order the amount of instrument is payable. When the payee is the same as the drawer and his rights and objections as payee are merged with his rights and obligations as drawer. But if the payee is a person other than the drawer, the payee has the right of recourse to the drawer until the bill is paid by the drawee.

(iv) Acceptor: After the drawee of a Bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the Acceptor.

(v) Endorser: The endorser is a person who endorses the Bill by signing his name usually on the back of it. He may be the payee or a subsequent endorser to whom the payee has assigned the bill. The endorser is liable to subsequent endorser or to any future holder of the bill and his obligations are the same as those of the drawer.

Specimen

(i) Specimen of Demand Bill of Exchange:

Tk.10,000/-                                                                                            Dhaka                                                                                                             28.8.2007 On demand pay to Mr. Karim or order a sum of Taka Ten thousand only, value received. To Mr. X                                                                                                         Stamp Address                                                                                                 Sd/-Mr. Y

(ii) Specimen of Time Bill of Exchange:

Tk.10,000/-                                                                                            Dhaka                                                                                                             28.8.2007 Three months after date pay to Mr. Karim a sum of Taka Ten thousand only, Value received. To Mr. X                                                                                                         Stamp Address                                                                                                 Sd/-Mr. Y

Classification of Bills:

(i)    Inland and Foreign bills
(ii)    Time and Demand bills
(iii)    Trade and accommodation bills
(iv)    Clean bill and Documentary bills
(v)    Domiciled bill
(vi)    Maturity/Due date of bill.

Inland bill: As per section 11 of N.I. Act, “A promissory note or bill of exchange or cheque drawn or made in Bangladesh and made payable in, or drawn upon any person resident in Bangladesh shall be deemed to be an inland instrument.

Foreign bill: As per section 12 of N.I. Act, “Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument.” For example, a bill drawn in Bangladesh but accepted in England or vice versa is a foreign bill.

Time bill: A bill is said to be time bill which is payable at a determinable future time. It is also termed as Document against acceptance (D.A bill). Time bill also called Usance bill.

Demand bill: A bill is said to be demand bill which is payable on demand or at sight or on presentation and when no time for payment is specified in it. Demand bill also termed as Sight bill.

Trade bill: A bill drawn and accepted for a genuine trade transaction is termed as trade bill.

Accommodation bill: A bill drawn and accepted not for a genuine trade transaction but only to provide financial help to some party is termed as an accommodation bill.

Clean bill: A bill which has no documents attached is called clean bill.

Documentary bill: A bill which has documents attached is called Documentary bill.

Domicile Bill: A domicile bill is one which is payable at a place other than the acceptors usual residence or business place.

Maturity or Due date of bill: Maturity date is the date on which a Bill of Exchange is payable. In calculating the due date of a bill calendar months are reckoned.

Invoice

Proforma Invoice

After negotiation over phone/fax/letter/e-mail or any other mode between exporter and importer offer directly issued by the exporter to importer is called Proforma Invoice. It includes the specifications of the product, price, quantity, delivery period and other terms of sale of a particular product.

Commercial Invoice
Invoice means a list of articles containing particulars and prices. There is no prescribed form of Commercial invoice. Each exporter designs his own Commercial invoice forms. Commercial invoice is a set of five papers or as desired by the importer which should bear the date, full address of exporter (beneficiary) and importer, currency, quantity and amount as per credit, description of the goods, name of the vessel/carrier, port of shipment, port of destination, shipping marks, L/C and Indent or Proforma invoice references, freight, Insurance, origin of goods etc. Normally exporter signed the copies of Commercial invoice. As per Article 18 a(iv) of UCP-600, Commercial invoice need not be signed by the exporter.

Consular Invoice
This is a special type of invoice which is required by some countries. It is a invoice made out in a specially printed form and is sworn as, being correct in all respect before the Consul of importing country stationed in the exporters country. A consular invoice may also contain a declaration about the place of origin of the goods. The consul of the importing country then certifies the invoice. The principal function of the consular invoice is to enable the authorities of the importing countries to have an accurate record of the types of merchandise shipped to that country, their quantity, grade and value, both for the purpose of fixing and for assessing import duties and for general statistical purposes. It helps in clearing of the goods through the customs of the importing country without undue delay. Any false declaration in the consular invoice involves heavy penalty.

Modes of Import financing by Islami Bank.

(i) Import of goods by Letter of Credit: A Letter of Credit (L/C) is a conditional undertaking to the exporter (Seller) by a bank on behalf of his customer (Importer/buyer) to pay the bill amount, if all the terms & conditions of the L/C are fulfilled. By issuing a L/C, a bank undertakes the full responsibility of payment, if otherwise in order. Since bank takes the liability of payment against some percentage of margin from the importer, which may be in cash or collateral or both cash & collateral depending upon banker customer relationship – so it is an Import financing.

(ii) Murabaha Import Bill (MIB): Payment made by the bank against lodgement of transport documents of goods imported through L/C is called MIB. It is an interim investment for a maximum period of 21 days connected with import and is generally liquidated against payment usually made by the party for retirement of the documents for release of imported goods from the customs authority. In conventional banking this type of investment is called Payment Against Document (PAD).

(iii) Mudaraba Post Import (MPI): Normally importer pay the duty & sales tax of the impoted goods after arrival at the port. Due to shortage of fund or some other reasons, sometimes importer approach the L/C opener bank to assist him for retirement of the imported goods. In some cases importer do not come forward to retire the goods. In these cases the L/C opener bank themselves arrange to retire the goods by pledge in Godown under bank’s lock & key. This type of payment (forced loan) is called MPI. This is a temporary arrangement for a maximum period of 90 days. Within this time limit, the importer borrower will release the goods at a time or gradually after making payment to the bank. In traditional banking this type of investment is called LIM (Loan against Imported Merchandise) or LAM (Loan Against Merchandise)

(iv) Murabaha Trust Receipt (MTR): It is a type of investment allowed by a bank on trust to his experienced, reliable & reputed importer for retirement of shipping documents and release the imported goods. Under this arrangement the importer borrower will deposit the sale proceeds of imported goods which are under his control at a time or gradually within a maximum period of one year. In traditional banking this type of facility is called Trust Receipt (TR).