| [1] Definition |
| - When the transportation documents are arrived, the opening bank reimburse it with L/C payment, and the importer accepted the documents receive a cargo arrival notice from a vessel company. Then the importer present the transportation documents (B/L) to the vessel company and accepts the imported cargo. |
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[2] Procedure |
(1) Arrival notice of the shipping documents--The importer settles imported goods payment within 7 days of the shipping documents arrival notice by the opening bank.
(2) B/L receipt--B/L receipt after payment settle by the opening bank.
(3) customs clearance--Duplicate B/L will go through a customs clearance process.
(4) Present B/L--After presenting the original B/L to the transportation company, receive D/O(delivery order) from the transportation company and present it to the warehouse manager to accept goods. |
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[3] L/G(letter of guarantee) |
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- If documents are not arrived when the cargo arrival notice came from a vessel company.
-If importer presents L/G request document to the opening bank to expedite cargo acceptance, the opening bank will issue L/G after necessary procedure and when the importer presents the L/G to the vessel company, the cargo may be released to the importer without the B/L.
- L/G is kind of a payment certificate or a memorandum issued by a opening bank to a vessel company. |
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| (1) Required documents when requesting L/G issuance |
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<1> Application form to request L/G issuance
<2> L/G
<3> T/R(trust receipt) (If needed)
<4> B/L
<5> Duplicate commercial invoice
<6> A/N(arrival notice)
<7> Other required documents |
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| (2) Considerations when issuing L/G |
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- Once L/G is issued, a claim can not be made even if vice is found from documents arrived.
- For at sight usance L/C, the period of term of starting point is the L/G issuance date.
- All the risks of cargo accepted by L/G is a shipper and the guarantee bank's responsibility.
- A importer must pay all the fees including freight fee from discharging location, other expense and non-paid payment from the shipping location as well. |
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| (3) Import cargo L/G issuance for Non-L/C method transaction |
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- Issue either the imported cargo is not arrived, or the original transportation document is not arrived or if the transportation document is arrived but with installment paying method.
- If import cargo is to be partial, a collection bank will issue L/G for the said installment payment. |
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| - Issue L/G when collection requested bank notifies that the transportation documents are dispatched or confirmed to dispatch the documents when import cargo is arrived within the country. |
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| (4) Partial issuing of L/G and the recovery |
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- Issuing L/G is per B/L unit in principle however, if the goods are wheat or raw cotton,
they can issue partially for the clearance convenience which is exceptional.
- If original B/L is arrived after issuing L/G, the prior issued L/G should be recollected. |
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| (5) The importance of L/G |
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- Soon as B/L arrives, a promise wording to present it to a vessel company.
- A promise wording by a bank that the bank will be responsible for all the risk due to the cargo acceptance.
- A promise wording that a bank will also pay for entire expense occurred by the cargo acceptance (Prior default, warehousing fee, unloading fee etc). |
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| (6) Preparing method for L/G |
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1. Shipping Co.--It should be consistent to the said import good's international
transportation broker and with the contents to the B/L or Airway Bill.
2. Shipper--A shipper is someone sho shipped the said goods. It has to be same as the
shipper of B/L but it is not necessary to be consistent to the beneficiary of the L/C.
3. Invoice Value--Goods price indicated on B/L
The price on this invoice has to be exactly same as the invoice that of importer
presented.
4. Nos. & Marks--Indication mark of import goods. It has to identical to the Nos. &
Marks of C/I, P/L, B/L or AWB that was presented by the importer to receive L/G.
5. Packages--Indicated on B/L as goods' package quantity. Indicate on the package
column of the certificate.
6. Number of Credit--Indicate the unique number of issued L/C for the said import.
For D/P or D/A, indicate the said contract's number
7. L/G No.--Reference No.. for the bank's L/G issuance. Number needed for L/G ex
post facto management /
8. Number of B/L--B/L or AWB's unique number. Indicate the number on the L/G
application form.
9. Vessel Name--The name of vessel that shipped the cargo. It has to match with the
vessel name on the B/L.
10. Arrival Date--Indicate cargo arrival date of the arrival notification.
11. Voyage No.--Vessel's number (Airline number) of the cargo shipped. It has to match
with the number on the B/L.
12. Port of Loading--Indicate on B/L as a port that executed cargo shipping.
The shipping port has to be match with the L/C term.
13. Port of Discharge--Indicate on B/L as a domestic port which a cargo would arrive. The arrival port has to match with the L/C term.
14. Description of Goods--The details of goods has to match with the indication on the incidental documents.
If the goods are inconsistent to the L/C, L/C must be amended accordingly. |
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- There are problems whether a importer can take over a cargo without the original AWB from using air transportation or if issuing L/G is possible with air transport.
- Since AWB is not marketable securities the cargo can be take over as long as the person retrieving cargo is same as the consignee as AWB without presenting the orignal AWB.
- Since IATA regards AWB as a simple express evidence of cargo ( Because it is not marketable securities) there is no L/G issuance compromise.
- If a opening bank is marked as a consignee, there is only one document to evident which is "Cargo delivery approval form" and the purpose of the "Cargo delivery approval form" can be regarded as a letter of attorney. |
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[4] T/R(trust receipt) |
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- After a opening bank settle L/C payment, the bank notified of documents arrival to the importer and request to take over the documents however, if the importer has to settlement, T/R system as a part of international finance can be presented to resolve the mater.
- When a importer conclude T/R agreement with a opening bank, the right of possession of th cargo can be transfer to importer while holding the ownership of the cargo, and a importer may take over the cargo with the shipping documents without settling import earning and settle L/C payment after disposing the cargo. |
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1. With At Sight transaction, transportation documents can be received when the transportation fee is paid but with usance transaction using finance, the import earning can be paid after certain period of time.
2. Since L/C opening bank handle import cargo as security according to the so called function of self-liquidating, a bank will only reserve the ownership and let the importer to process the imported goods to clear the customs, manufacture, process and sales to achieve the orignal purpose an his is an act of loan for a importer to settle import earning. |
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1. T/R according to the raw materials for exporting
- Receive benefit from trade finance (Raw material importing fund) and reimburse import earning when executing counter export.
2. T/R according to factor banking
- Import using Usance L/C or D/A and reimburse on the usance period maturity date. (Domestic import Usance)
3. T/R for installment payment
- Import equipments and materials for foreign currency acquiring using installment payment and reimburse according to the installment payment method.
4. Loans in foreign currency and loan fund of T/R
- When granting loans in foreign currency and loan fund, reimburse according to reimbursing period on the said loan or of the loan fund.
5. T/R for T/R Loan
6. Importing usance restricted goods using at sight |
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| (4) Required documents to request T/R |
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1. Trust receipt application form
2. Trust receipt disposal agreement(A notary's confirming date is required)
3. B/L copy
4. Commercial Invoice copy
5. P/L copy
6. Trust Deed (A notary's confirming date is required)
7.
Import L/C, Duplicate import license form. |
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| (5) Legal character of T/R |
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- A popular view to translate the legal character of T/R is as "Trustable deed of cargo".
- If a importer dispose a cargo voluntary not as a trust contract, it could be concluded as "crime of job disloyalty" according to the criminal law.
- The owner of a cargo will be a bank and a importer will reserve only the right to disposal of a cargo.
- A bank may not appose to third parties in good faith. |
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| (6) Type of import of T/R |
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- Since T/R can be only occurred with a L/C transaction and when a bank has payment therefore, there is no T/R with non-L/C transaction unless a bank guarantee payment.
- With L/C transactions, T/R is likely to occur only with At sight transaction but with Usance transaction as well. |
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Ex)
- When importing raw materials for export - Import using loans in foreign currency and loan fund.
- If importing usance restricted goods using at sight. |
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Trade Helper 
Ex-Import Procedure(to Way of Payment)
Export-Import procedure according to the Irrevocable Documentary Credit method
Accepting Import Goods 
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