DOCUMENTS INVOLVED IN IMPORT TRADE
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The inquiry:
This is the request for information on type of goods condition of delivery and payments
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The quotation or (price list and catalogue)
Is the reply of inquiry, it can be defined as an offer to all certain goods under conditions that are started on it.
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The order:
After the inquiries examines the quotation and find out that he is being offered reasonably terms he accepts it in a form of order.
Acceptance may be oral or by letter or by any official order form
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Invoice
This is the document showing the records of transaction of a buyer including the value of goods being bought.
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Advice note:
This is the document showing that the goods have been dispatched or sent by a seller informing the buyer/ importer date on which are listed goods were sent or dispatched
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Delivery note:
A document which usually accompanied the goods being delivered/sent providing the importer/buyer the list of items in that particular consignment.
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The statement:
This is a document sent by a seller to his customer showing the number of transaction done by the customers and the supplier. It is sent at a specific period of time e.g. a month or a year.
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Credit note:
This is document sent by a seller to an importer or buyer when gives credit for an over charge in invoice.
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Debit notes:
Is the document used to correct an invoice when an item has been admitted or undercharged.
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Payment and receipts:
When payment are made the buyer should be given a document known as a receipt
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Certificate of origin:
It is a document showing the originality of goods; it shows where the goods have made. Certificate of origin is prepared by the seller and signed by the local chamber of commerce or other government authority and send it to buyer or importer who present it to the customs officers with the invoices so that customs duty can be calculated.
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Indent:
Is a request to the agent to place order and behalf of the importer.
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Perform invoice:
Document which shows the quantity value and all details of goods so that an importer can use it to obtain license from the central bank
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consular invoice:
This is an invoice that has been seen and signed by the consulate or embassy of the country to which the goods are being exported. This provides the consul an opportunity of ensuring that goods are reasonably priced and no under viable goods enter the country
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Letter of credit:
This is a document, written by the importers bank to exporter’s bank to assure the payments to the exporter it works as follows:
i) The importer asks the exporter to supply goods, the exporters agree provided that the importer opens a letter of credit.
ii) The importer approaches his bank for a letter of credit; if his credit is good his bank will issue a letter of credit straight away otherwise the bank will ask for a deposit of the full value of the imports
- The importer bank is called “The assuring bank” The issuing bank writes a letter of credit to its associate in the exporter’s bank (corresponding bank).
- The latter of credit signifies that the issuing bank will pay to the corresponding bank the amount started there in.
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TERMS OF PAYMENTS IN IMPORT TRADE
The payments for the goods from foreign countries before the goods are transported the seller make sure that the payments are going to be affected without difficulties; the payments are affected in the following ways;
By opening a Bankers credit
In this case the importers bank guarantees payments for the goods being bought i.e. letter of credit.
By using sight Draft
This requires the buyer to make payment at sight i.e. before departing with goods from customs authorities
By using Bankers Draft
These are cheque drawn on bank and the bank guarantees payment against it. This occur when a person find a supplier or seller unwilling to accept a personal cheque especially when a remittance is to be made to a distant town or place
Telegraphic transfer
Money is transferred from one bank of one country to one bank in another country by cable
Air mail transfer
Transfer by using air
A documentary credit
These methods of paying require the opening of a credit at a bank in the country of a seller.
Normally the shipping or transporting of payment documents is sent to the buyer through the bank which is responsible for collecting the payment. The local home bank forwards these documents to its corresponding bank in the importing country. When the documents arrive the bank sends to the importer of the goods a memorandum of payment, after the importer has remitted the amount required to the bank the shipping documents are passed over to him to enable him to collect the goods from customs authorities.
TERM OF DELIVERY OR INTERNATIONAL COMMERCIAL TERM (INCOTERM)
Term of delivery decide who will pay the cost of transportation and other charges. This divides whether the transport payments should be made by a buyer or a seller.
The following are the international commercial term in selling goods;
EX WORKS OR SALE EX GO DOWN OR LOCO PRICE OR EX-WARE HOUSE OR EX-FACTORY.
It means that buyer is responsible to collect the goods from the go down, ware house or works of the seller. In this contract of sale a buyer shoulders all the risks involved immediately after the goods leaves the sellers warehouse or Go down
F.o.r (Free on rail) or (F.O.T) Free on trucks.
The price of goods includes the cost of carriage to a nearest railway station. Therefore the seller undertakes to deliver the goods to the railway station but the further charges are the responsibility of the buyer.
DELIVERY DOCK (D.D) OR (Free on wharf)
The price of goods includes the cost of carriage to the docks. Docks are place where ships wait for cargo.
The seller is responsible to transport the goods to the dock then the buyer should continue with other expenses.
F.A.S (Free Alongside Ship)
The price of goods quoted includes cost of carriage to the docks, dock handling charges and dock duty but not loading expenses.
F.O.B (Free on Board)
The price of goods includes carriage charges dock duty and loading expenses. It means that the buyer will pay (F.O.B) enabling a seller to pay for the carriage charges dock handling charged dock duty and loading expenses of goods into a ship.
[DOCKS=Wharf=Wharves]
C and F (COST AND FREIGHT)
The price quoted goods includes carriage charges to the docks, dock handling charges, docks duty, loading expenses and shipping freight charges.
C.I.F (Cost, insurance and Freight)
The cost of goods includes the carriage to the docks, dock handling charges, dock duty, loading charges, Shipping freight charge and insurance premium to cover the goods against marine risks.
LANDED OR LOADED
The price quoted includes all costs to the part of destination, plus unloading charges i.e. it includes (C.I.F) plus unloading charges.
INBOND
The cost of goods bought includes all the cost to the port of destination plus unloading charges and the cost of handling into a bonded warehouse.
DUTY PAID
The price of goods includes all expenses that is carriage charges handling charges, loading expenses, freights insurance premium, unloading, handling charges in the bonded warehouse and the payment of any customer duty.
FRANCO, REND OR FREE OF EXPENSES
The price quoted includes all the charges up to the premises of the buyer, Therefore the seller transport the goods up to the buyers ware house.
CARR. P.D (CARRIAGE PAID)
This price does include the cost of transport to the buyer especially in land trade.
CARR.FWD (CARRIAGE FORWARD)
The price does not include the cost of transport which can be paid in addition by the buyer, the abbreviation “Carr extra”. It is sometime used to mean the something.
F.O.Q (Free on quay)
This price includes all cost in delivering the goods to the quay at the port. It differ from F.A.S quotation where for example the goods have to be transported by higher from the quay to the ship anchored in deeper water
Quay-Is a landing place built of stone or iron alongside which ships can be tired up for loading and unloading.
Lighters are quickest ships (express)
LOCO
Is a price quotation of goods implying that it is the responsibility of the buyer to collect goods from where they are and transmit them (ex-warehouse), ex-works e.t.c.
THE ROLE OF CLEARING AGENT
Clearing agents are specialist person dealing with forwarding and clearing of goods from abroad. The first task of clearing agent is to certain whether goods are:
- Duty free
- Dutiable goods
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After them they fill the respective forms (entry form). The goods then are handled to Tanzania Harbor Authority (THA) and it’s paid for that.
CUSTOMS AND EXCISE DUTIES
Duties are specific or Advertorial
- Specific duties
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These are duties charged on quantity of some goods like petrol, tobacco, cotton etc being imported
- Advalorem duties
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These are duties charged on value of manufactured goods motor vehicles, watches, cameras etc.
- Custom duties
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Refer to the import duties charged on imports as well as exports of goods. But in case of export the practice in rare. There are two reasons of levying duties.
- As a revenue
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Rising taxes i.e. taxes on imported goods e.g. Tea, tobacco, wine etc. so as to get money or revenue.
- As a protective duties
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Levied from imported goods in order to protect home produced goods from effect of foreign competition.
EXCISE DUTIES
These refer to taxes imposed on home produced goods. The purpose of this tax is to raise revenue or income and to offset customs import duty a similar goods i.e.
- raise revenue
- Protecting local industries e.g. the duty on tobacco through the amount of home grown tobacco for example custom duty is higher than excise duty therefore they form protective to home industries.