What is a Commercial invoice?

A commercial invoice is a legal document that provides a detailed description of goods or services sold in an international transaction. It serves as a bill for the buyer and a receipt for the seller, documenting the terms of the sale and providing crucial information for customs clearance to assess duties and taxes, and it facilitates the smooth movement of goods across international borders. It is a crucial document in international trade transactions and helps ensure that both parties comply with legal and regulatory requirements.

Commercial invoice format

The definition for each term in the invoice:

1)

Invoice No: An "Invoice Number" refers to a unique identifier assigned to a specific invoice issued by a seller to a buyer for goods or services provided. It is a crucial component of the invoicing process. Typically, an invoice number is a combination of letters, numbers, or both, assigned sequentially or using a specific format. 

Invoice date: The invoice date helps both the seller and the buyer easily identify and reference the specific transaction. It provides a point of reference for tracking and managing financial records.

2)

IEC NO: IEC NO stands for Importer Exporter Code Number. It is a 10-digit code issued by the Directorate General of Foreign Trade (DGFT) in India to individuals or businesses that are involved in importing or exporting goods and services. The IEC is a mandatory requirement for any person or entity seeking to engage in cross-border trade in India.

AD Code: Authorised Dealer Code (AD Code)In the context of international trade and banking, an AD Code is a unique code assigned to entities (usually businesses) by the Reserve Bank of India (RBI) in India. This code is used for all transactions related to foreign exchange. Authorized Dealers, typically banks, use this code to report and monitor foreign exchange transactions of businesses.

GSTIN: GSTIN stands for Goods and Services Tax Identification Number. It is a unique alphanumeric 15-digit code assigned to businesses and individuals registered under the Goods and Services Tax (GST) system in India. 

Country of origin: It refers to the country in which a product or good was produced, manufactured, or assembled. It is often used in international trade and commerce to indicate the source or place of origin of a particular item.

Country of final destination:  It refers to the last country or location where Cargo is intended to reach or arrive. 

Mode of shipment: It refers to the method by which goods or products are transported from one location to another. It describes the specific way in which items are moved during the shipping or transportation process.

Eg: Land Transportation, Water Transportation, Pipeline Transportation, Air Transportation, Multimodal Transportation

Port of Loading: The term "port of loading" refers to the specific location where goods are loaded onto a vessel or other mode of transportation for shipment. It is a crucial aspect of international trade and shipping logistics.

Port of discharge: The term "port of discharge" refers to the specific port where a ship or Airline unloads its cargo or passengers. It is the destination port where goods are unloaded from an Airline and released to the local customs authorities for further transportation or distribution.

Final destination: It represents the endpoint of the transportation process, where the goods are meant to reach the last location to which a shipment or cargo is intended to be delivered. 

Shipment terms: It generally refers to the process of transporting goods or items from one location to another. 

The common terms are: FOB (Free On Board), CIF (Cost, Insurance, and Freight), EXW (Ex Works), DAP (Delivered at Place), and DDP (Delivered Duty Paid)

These terms are part of international commercial transactions and are specified in the sales contract between the buyer and the seller. They define the obligations, risks, and costs associated with the transportation and delivery of goods. The International Chamber of Commerce (ICC) publishes standardized Incoterms that are widely used to define shipment terms in international trade.

Payment Term: The "payment term" refers to the conditions under which a buyer is expected to pay a seller for goods or services. It outlines the agreed-upon terms between the two parties regarding the timing and method of payment. Payment terms are typically specified in a contract, invoice, or other agreement and can vary based on the nature of the business relationship and industry practices.

1)Net 30, Net 60, Net 90: These terms indicate that the payment is due 30, 60, or 90 days after the invoice date.

2)Advance Payment: The buyer pays for the goods or services before receiving them.

3)Letter of Credit: A financial instrument issued by a bank, guaranteeing that the seller will receive payment once the terms of the agreement are met.

3)

Exporter Address: It refers to the address of a business or individual that is involved in exporting goods or services from one country to another.

The exporter's address typically includes details such as the street address, city, country, postal code, and any other relevant contact information. This information is used for documentation, customs clearance, and communication between the parties involved in the export transaction.

Ensuring accurate and complete exporter address details is important for the smooth flow of international trade and compliance with regulatory requirements in both the exporting and importing countries.

Consignee address: The consignee address is crucial information on shipping labels and documentation as it specifies where the merchandise should be delivered. It typically includes details such as the recipient's name, street address, city, state or province, postal or ZIP code, and country. Providing accurate consignee information is essential for smooth and successful transportation and delivery of goods.

Importer on record: The importer on Record plays a crucial role in international trade, ensuring that the importation process is conducted legally and in compliance with the regulations of the destination country. This role becomes necessary whenever goods are imported across borders, and it is typically assumed by the buyer or the party responsible for bringing the goods into the country.

4)

HSN code:HSN code stands for (Harmonized System of Nomenclature code.) Each HSN code is an eight-digit number, It is an internationally standardized system of numbers for classifying traded products. The HSN code is used for the classification of goods under the Goods and Services Tax (GST) regime. It helps in determining the appropriate tax rates for different products and streamlines the taxation process for businesses.

HTS code: HTS code stands for (Harmonized System Code). The Harmonized System is a standardized system developed by the World Customs Organization (WCO) to facilitate the uniform identification and classification of products across borders. Each product is assigned a unique code known as an HTS code, which is used by customs authorities to determine applicable tariffs, regulations, and other trade-related measures. The code typically consists of ten digits, Number

Marks & Nos: It refers to markings and numbers on packages, cartons, or containers used to identify and track them during transportation. Marks & Nos play a crucial role in the Shipment process, helping to ensure that the right goods reach the right destination in a timely and organized manner. Properly labeled Marks & Nos facilitate efficient handling, tracking, and sorting of shipments throughout the transportation and delivery process.

Description of goods: The term "Description of goods" typically refers to a detailed account or representation of a product or commodity, outlining its characteristics, specifications, and features. In various contexts, such as trade, commerce, or legal documents like invoices, contracts, or shipping manifests, a description of goods is crucial for accurately identifying and conveying information about the items being bought, sold, transported, or otherwise dealt with.

Rate In USD: it refers to the exchange rate between an Indian currency and the United States Dollar (USD). Exchange rates represent the value of one currency in terms of another. 

Total No, of Boxes: It refers to the overall quantity of boxes or packages included in a shipment. When goods or items are being transported from one location to another, especially in the context of shipping or logistics, they are often organized and packed into individual boxes or containers. The total number of boxes in a shipment indicates how many separate units or packages are being sent as part of that particular shipment.

Total Qty: The total quantity refers to the overall amount or number of units of that product. It is a measure of the total physical volume or quantity of a particular item Packed in cartons for shipment. This can be expressed in various units depending on the nature of the product, such as liters, pieces, SKUs, etc.

Product Value: It refers to the overall worth or monetary value of all the goods or products included in that particular shipment. It represents the total economic value of the items being transported from one location to another. The calculation of the total product value typically involves the individual prices of products multiplied by the quantity of each item in the shipment.

FOB:  "Free On Board," It is a shipping term that indicates the point at which the seller's responsibility for the shipment ends and the buyer's responsibility begins.  The term is commonly used in international trade to define the location where the seller fulfills their obligation to deliver the goods, and the buyer assumes responsibility for the cost and risk of transportation.

Freight: Freight refers to goods, cargo, or merchandise that is transported from one place to another, typically in large quantities. The term is often associated with the transportation of goods by various modes, such as ships, airplanes, trains, trucks, or other vehicles. Freight can include a wide range of items, from raw materials and finished products to bulk commodities.

Insurance:  insurance refers to a financial arrangement in which a party, typically the shipper or cargo owner, pays a premium to an insurance provider in exchange for coverage against specified risks or losses associated with the transportation of goods by sea or Air. This type of insurance is known as marine insurance or cargo insurance.

Gross total: refers to the total amount or quantity of something before any deductions, expenses, or adjustments are made. It is the overall or complete figure without taking into account any subtracted factors. It provides a comprehensive view of the entire amount before considering any reductions or exclusions.

5)

Net Weight: Net weight refers to the weight of a product excluding any packaging or other materials. It represents the actual amount of the product itself, often measured in terms of mass or weight. 

Gross Weight: It refers to the total weight of a shipment, including the weight of the goods being transported as well as the weight of any packaging materials, containers, pallets, and other materials used for packaging. It represents the overall weight of the entire shipment, including both the product and its packaging.

6)

Bank details: These refer to the information associated with a bank account, such as the account number, routing number, and other relevant details. 

Account Number: A unique numerical identifier assigned to a specific bank account.

Bank Name: The name of the financial institution where the account is held.

Branch or Location: The specific branch or location of the bank associated with the account.

IFSC No or Routing Number: A set of numbers that identifies the particular branch of a bank.

Account Number: A unique numerical identifier assigned to a specific bank account.