BILL OF LADING & CERTIFICATE OF ORIGIN

Introduction:
Export trade involves a systematic and lengthy procedure. In this
whole procedure, export documents play an important part. An
exporter has to prepare different documents while exporting goods to
other countries. Some export documents are required to be prepared
before the shipment of goods while some others are required to be
prepared while completing customs formalities. The shipping
companies also issue some documents.

Every export document has a specific meaning and use. Export

documents include shipping documents, regulatory documents,
export assistance documents and finally foreign documents.

Bill of Lading is a very important export document, which is a

receipt given by the shipping company to the consignor that the
goods have been received on board the ship for conveyance to the
named place of delivery. A Certificate of Origin declares that the
goods, which are being exported, are manufactured in a specific
country.

Bill Of Lading:
A Bill of lading is an important shipping document. It is a
document of title to the goods. The term derives from the noun
"bill", a schedule of costs for services supplied or to be
supplied, and from the verb "to lade" which means to load a
cargo onto a ship or other form of transport.

The bill of lading is a document issued by the shipping company

or its agent acknowledging the receipt of goods on board the vessel,
and undertaking to deliver the goods in the like order and condition as
received, to the consignee or his order provided the freight and other
charges as specified in the bill have been duly paid. Bill of lading is, in
addition to a receipt for the delivery of goods, a contract for their
carriage and a document of title to them. Its terms describe the
freight for identification purposes; state the name of the consignor

1
and the provisions of the contract for shipment; and direct the cargo
to be delivered to the order or assigns of a particular person, the
consignee, at a designated location. This document must accompany
the shipped goods, no matter the form of transportation, and must be
signed by an authorized representative from the carrier, shipper and
receiver.

Bill of lading is usually made out in signed set of two originals, any
one of which can give title to goods. The shipping company also
issues non-negotiable copies which are not documents title to goods
but are normally used for record purpose. The reverse side of the bill
of lading bears the terms and conditions of the contract of the
carriage.

A bill of lading should be clean i.e. it should not contain any

adverse remarks by the shipping company as to the quality and
conditions of goods.

Features of the Bill of Lading

The bill of lading has the following features:

1. Document of title to the goods: The bill of lading gives the right to
the goods covered by it. It can be transferred by endorsement and
delivery.

2. Receipt for goods: It serves as a receipt by the shipping company

stating that the goods have been received for transportation.

3. Proof of contract of carriage: Bill of lading serves as a proof of the

terms and conditions under which goods are carried by the
shipping company.

Contents of the Bill of Lading

The bill of lading normally contains the following details:

• Name and logo of the shipping line.

• Name and address of the shipper/exporter.

2
 • Name of the ship, voyage number and date of loading of goods
on the ship.
• Name of the port of loading.
• Name of the port of discharge and place of delivery.
• Marks and container number.
• Packing and container description.
• Total number of container and packages.
• Description of goods in terms of quality and quantity.
• Container status and seal number.
• Gross weight in kg. and volume in terms of cubic metres.
• The number of originals issued.
• Amount of freight paid or payable.
• Shipping bill number and date.
• Signature and initials of the Chief Officer.

Types of Bill of Lading

There are different types of bill of lading.

1. Clean Bill of Lading: A bill of lading acknowledging receipt of

goods apparently in good order and condition and without any
qualification is termed as a clean bill of lading. A clean bill of
lading, simply put, is when the goods received by the carrier
(Transportation Company) are in appropriate condition with no
defects or damage to goods and/or packaging. If, for example, the
container received by the carrier was damaged, the carrier makes
a notation that expressly declares the defective condition of the
container. However, a clean bill of lading does not contain any
adverse remarks as to the condition and quality of goods. An
importer always insists for a clean bill of lading.

2. Claused Bill of Lading: A claused bill of lading is a bill of lading

with a notation that indicates damage or shortage. A bill of lading
qualified with certain adverse remarks when goods are not
properly packed and show signs of damage is called a claused bill
of lading. For example, remarks such as ‘Goods Damaged’, TWO
CASES DAMAGED’ or ‘goods insufficiently packed in accordance
with the Carriage of Goods by Sea Act’, etc. It is also called as

3
 ‘foul bill of lading’ and are the opposite of clean bills of lading.

3. Stale Bill of Lading: A bill of lading that has been held too long
before it is passed to a bank for negotiations or to the consignee is
called a stale bill of lading. The bill of lading must be presented to
the banks as soon as possible, or else it creates undue difficulties
for the importer as well as the exporter.

4. Straight Bill of lading: This bill states that the goods are
consigned to a specific person and it is not negotiable free from
existing equities, i.e. any endorsee acquires no better rights than
those held by the endorser. So, for example, if the carrier or
another holds a lien over the goods as a security for unpaid debts,
the enndorsee is bound by the lien although, if the endorser
wrongfully failed to disclose the charge, the endorsee will have a
right to claim damages for failing to transfer an unencumbered
title.It is also known as a non- negotiable bill of lading.

5. Freight Paid Bill of Lading: When freight is paid at the time of

shipment or in advance, the bill of lading is marked ‘freight paid’.
Such bill of lading is known as freight bill of lading.

6. Frieght collect bill of lading: When the export contract is on

F.O.B terms and the freight is not paid and is to be collected from
the consignee on the arrival of goods, the bill of lading is marked
‘freight collect’. Such a bill is known as freight collect bill of lading.

7. Order Bill of Lading: This bill uses express words to make the bill
negotiable, e.g. it states that delivery is to be made to the further
order of the consignee using words such as "delivery to A Ltd. or
to order or assigns". Consequently, it can be endorsed by A Ltd. or
the right to take delivery can be transferred by physical delivery of
the bill accompanied by adequate evidence of A Ltd.'s intention to
transfer. Also known as a negotiable bill of lading.

8. Transhipment or Through Bill of Lading: When the carrier uses

other transport facilities, such as rail, road, or another steamship
company in addition to his own, the carrier issues a through or
transhipment bill of lading. It covers goods being transshipped on
route. It covers the whole voyage, etc.

4
9. On Board & Received Bill of Lading: The bill of lading can be
either the shipped/ board or received for shipment depending upon
whether the goods are loaded on board the ship or received by the
shipping company for storing.

10. Direct Bill of Lading: When the same ship carries goods from the
port of destination, shipping company issues direct bill of lading.

11. Container Bill of lading: This bill of lading is issued by the

container shipping lines when the cargo is transported from an
inland place of the shipper to the final place of its arrival.

12. Bearer Bill of Lading: This bill states that delivery shall be made
to whosoever holds the bill. Such bill may be created explicitly or it
is an order bill that fails to nominate the consignee whether in its
original form or through an endorsement in blank. A bearer bill can
be negotiated by physical delivery.

Benefits of the Bill of Lading

A bill of lading is beneficial to the exporter, importer and the
shipping company in many ways. The benefits of the bill of lading with
reference to three of them can be explained as follows:

Benefit to the Exporter:

• It is an acknowledgement indicating that the goods mentioned in

the document have been received on board for the purpose of
shipment.
• A clean bill of lading certifies that the goods received on board
the ship are in order and good condition.
• It enables the exporter to send a shipment advice to the importer.
• It is a legal document. In the event of dispute the exporter can
present it in a court of law.
• An exporter can claim damages from the shipping company if the
goods are lost or damaged after the issue of a clean bill of lading.
• It is useful for claiming incentives offered by the government to
exporters.

5
 • It helps exporter to calculate exact amount of freight while
submitting CIF quotation.

Benefits to Importers:

• It acts as a document of title to goods, which is transferable by

endorsement and delivery.
• The exporter sends the bill of lading to the bank of the importer
so as to enable him to take the delivery of goods.
• It enables the importer to pay exact amount of freight under FOB
quotation.
• The exporter can give an advance intimation to the foreign buyer
about the shipment of goods by sending him a non- negotiable
copy bill of lading.

Benefits to the Shipping Company:

• It is useful to the shipping company for the collection of freight

from either the importer or exporter.
• It safeguards the interest of the shipping company against the
wrong claims by the exporter or importer in respect of damage to
goods prior to loading of goods because any such damage is
reflected in the Bill of Lading.

Thus, a bill of lading is a document issued on behalf of the carrier

describing the kind and quantity of goods being shipped, the shipper,
the consignee, the ports of loading and discharge and the carrying
vessel. It serves as a document of title, a contract of carriage, and a
receipt for goods. This is your contract with the carrier. It is your
receipt for your goods and the contract for their transportation.

CERTIFICATE OF ORIGIN

6
 The importers in several countries require a certificate of origin
from the exporter, certifying the origin of goods, without which
clearance to import is refused.

A Certificate of Origin (CO) is a document which is used for

certification that the products exported are wholly obtained,
produced or manufactured in a particular country. It is generally
an integral part of export documents. It is a document attesting that
goods in a particular shipment are of a certain origin. This certificate
is required by a countries customs authority in deciding whether the
imports should benefit from preferential treatment in accordance with
special trading areas or customs unions. The certificates are issued
under the ambit of the Rules of Origin of any importing country that
grants concessions to tariffs or merely stipulates a non preferential
certificate without granting any tariff concession.

Features of Certificate of Origin

The following features characterize the certificate of origin:

1. To claim concessions: Certificate of origin is sent by the

exporter to the importer and is useful for claiming special concession
on the import duty charged.
2. Declaration of origin of exports: When imports from certain
countries are favourably treated in the matter of levy of import duties,
the Custom Authorities of the concerned country insist on some proof
of the fact that the goods are genuine products of such countries. It is
a sort of declaration testifying the origin of exports.
3. For taking advantage of preferential duty: The certificate of
origin needs to be produced before the custom authorities for the
assessment of duty and clearance of goods with concessional duty. It
is mainly useful for taking advantage of a preferential duty, if
available.
4. Ensures that there is no reshipping: The certificate of origin
ensure that the goods have not been reshipped by the exporter after
importing from some other country.

Contents of the Certificate of Origin

The certificate of origin contains the following details:

7
 • Name and logo of chamber of commerce.
• Name and address of the exporter.
• Name and address of the consignee.
• Name and the number of Vessel of Flight.
• Name of the port of loading.
• Name of the port of discharge and place of delivery.
• Marks and container number.
• Packing and container description.
• Total number of containers and packages.
• Description of goods in terms of quantity.
• Signature and initials of the concerned officer of the issuing
authority.
• Seal of the issuing authority.

Types of Certificate of Origin

Certificate of origin are of different types. They are given as
follows:

1. Non- Preferential certificate of origin: Non-Preferential

certificate of origin is required in general by all countries for clearance
of goods by the importer, on which no preferential tariff is given. It
merely evidences the origin of goods from a particular country and
does not bestow any tariff benefits for exports to the importing
nations. These are generally issued by the authorized chamber of
commerce and the trade associations of the exporting country.
2. Certificate of origin for availing concessions under GSP:
Generalized System of Preferences (GSP) is a non-contractual
instrument by which industrialized (developed) countries unilaterally
and on the basis of non-reciprocity extend tariff concessions to
developing countries. The countries which extend tariff preferences
under GSP scheme are France, Japan, USA, Germany, Italy,
Canada, Australia (only to LDCs), Norway, Switzerland, Bulgaria,
etc.GSP schemes of these countries details the sectors/ products and
tariff lines under which these benefits are available, besides the
conditions and the procedures governing the benefits. These
schemes are renewed and modified from time to time. The list of
agencies authorised to issue GSP Certificate of Origin is given in
Appendix-35 of the Exim Policy. It can be obtained from specialized

8
agencies like Export Inspection Agencies, Jt. Director General of
Foreign Trade, Commodity Boards and their regional offices,
Development Commissioner-Handicrafts, Textile Committees for
textile products, Marine Products Export Development Authority for
marine products, Development Commissioners of EPZs.
3. Certificate for availing concessions under Commonwealth
Preferences (CWP): Certificate of origin for the purpose of
Commonwealth Preference is also known as ‘Combined Certificate of
Origin and Value’. It is required by two member countries, i.e.,
Canada and New Zealand of the Commonwealth. For concession
under Commonwealth preferences, the certificates of origin have to
be submitted in special forms obtainable from the High Commission
of the country concerned.
4. Cetificate for availing concessions under other Systems of
Preferences: Certificate of origin is also required for tariff
concessions under:
Global System of Trade Preference (GSTP): In the GSTP trade
concessions are exchanged among developing countries, who have
signed the agreement. Presently, there are 46 member countries of
GSTP and India has exchanged tariff concessions with 12 countries
on a limited number of products. Export Inspection Council (EIC) is
the sole agency authorised to issue Certificate of Origin under GSTP.

SAARC Preferential Trading Agreement (SAPTA):The Agreement

establishing SAPTA was signed by the seven SAARC countries
namely India, Pakistan, Nepal, Bhutan, Bangladesh, Sri Lanka and
Maldives.
Bangkok Agreement:The Bangkok agreement is a preferential trading
arrangement designed to liberalise and expand trade in goods
progressively in the Economic and Social Commission for Asia and
Pacific (ESCAP) region through such measures as the relaxation of
tariff and non tariff barriers and use of other negotiating techniques.

Export Inspection Council (EIC) is the sole authority to print blank

Certificates of Origin under BA, SAPTA which can be issued by
such agencies as EPCs, DCs, of EPZs, EIC, APEDA, MPEDA, FIEO,
etc.

Significance of Certificates of Origin:

9
 A certificate of origin is a very significant export document, which
is beneficial to both exporter and importer. The benefits of certificate
of origin with respect to exporter and importer are as follows:

Benefit to the Exporter:

1. It acts as a proof that the goods are of Indian origin.

2. It is to be submitted to the customs for the assessment of duty
and clearance of goods with concessional duty.

Benefit to the Importer:

1. Importer can claim concessional tariff rates extended to

products from India under CWP and GSP agreements.
2. An importer gets quick delivery of goods from the customs.
3. It helps the importer in adhering to the import regulations of the
country.
4. It ensures the importer that the goods are not re-shipped by the
exporter.

A certificate of origin is a document that helps improve the

competitive edge of exports. It enables the buyers to claim
preferential tariff treatment when importing their products under many
schemes of preferences. It is also beneficial to exporter since it gives
the goods recognition.

Conclusion:
Bill of Lading and certificate of origin are important documents of
the whole export procedure. They are beneficial to both exporter and
importer in many ways. The bill of lading acts as a proof that the
goods received on the ship are in good condition and the certificate of
origin is proof that the goods are manufactured in the exporting
country only. Exports document would have been incomplete without
these two documents.

10