Importers and exporters worldwide go through documentation processes to legally ship or secure their cargo through cross-border trade. It is essential to initiate the shipment from the origin port and then receive the goods at the destination port. Bill of lading and entry hold extreme relevance in trade business and help carry out a prosperous career. A bill of lading is an existing document between the exporter and shipping carrier, while the bill of entry is between the importer and customs. The bill of lading is filed to mention cargo specifications to initiate shipping and clarify terms, conditions, and payment. A bill of entry is filed to claim the imported shipment. In this blog, we will learn the difference between bill of lading and bill of entry.
What is a Bill of lading?
The bill of lading in shipping is a legal document that acts as a contract between the shipper and the shipping agency or carrier. In the shipping industry, it is an agreement that concerns cargo specifications such as type of goods, quantity and the destination for shipment. Therefore, it is also considered a shipping receipt acknowledging the receiver of goods, their value and other terms and conditions. It helps in the legal and seamless movement of freight by the transportation company and is a mandatory document in shipping. International traders immensely benefit from it during customs clearances and at checkpoints. All modes of transport, national and international, require a bill of lading. A letter of credit is another essential document to be submitted alongside the bill of lading for initiating the shipment process.
What is a Bill of entry?
A bill of entry is a legal document of a declaration by the importer or customs clearance authorities filed on or before the arrival of goods. It is counted as one of the necessary documents in the global trade market that the importing country requires as a legal procedure. It is to be submitted to the customs department. After filing the bill of entry, the goods proceed for further examination by the customs officer to ensure that the imported goods are up to standards. It is followed by the importer paying the needed taxes for importing goods into their country.
Apart from being filed by different shipping parties, the main difference between bill of lading and bill of entry lies in their purpose.
What is the purpose of a bill of lading in shipping?
The importance of the bill of lading in international shipping is immense because-
- It signifies that a contract has been signed between the shipper and the transportation company and that the shipper has carefully read and agreed with the carrier’s terms.
- It attests that the goods being shipped are legal in the importing country and the goods inside the container are accurate to the enlisted goods in the bill.
- The bill of lading works as a receipt that the shipping company received the cargo as per the contract in good condition.
- It helps prevent asset theft as the list of cargo is enlisted in the bill of lading.
What is the importance of a bill of entry?
- It’s easier to get customs clearance with the bill of entry.
- The customs officials use the information stated in the BOE to determine the relevant amount of import duties and taxes the importer needs to pay.
- The bill of entry also ensures that all the regulations and standards concerning consignment import following the importing country’s guidelines have been met.
- Inaccuracy or fraud in the details and information listed in the bill of entry can lead to fines, penalties and significant delays in the procurement of consignment.
Another difference between bill of lading and bill of entry exists in the document’s contents.
What is written in the bill of lading?
The bill of lading enlists the following details-
- Name and address of the exporter
- Name and address of the importer
- Shipment date
- Type of goods
- Quantity of goods
- Weight of goods
- Value of the goods
- Taxes and duties
- Origin and destination ports
What is written in the bill of entry?
The bill of entry enlists the following details-
- Name and business address of the importer and exporter.
- Customs house agent (CHA) code
- Import-export code (IEC)
- Name of the destination port.
- Importer’s license number
- Description of goods inbound
- Value of the consignment
- Rate and value of payable import duties
- Port code
What are the types of bills of entry?
The Central Board of Indirect Taxes and the Customs Department classify the bill of entry into three types.
- The bill of entry for house consumption – Comes under section 46 of the Customs Act, 1962, and the bill in white colour is described as a BOE for house consumption. Under this bill, the importer of goods imports goods mainly for personal use. The commodities procured can also be consumed in some business processes meant for the personal gains of the importer.
- The bill of entry for warehousing – Falls under sections 40 & 60 of the Customs Act, 1962; the type of BOE is issued in buff colour. It is also known as a bond bill of entry. This type of BOE is rolled out when the importer of the consignment cannot or isn’t willing to pay the entire sum of import duties to the authorities at the time of import. In such a case, the authorities allow the importer to store the consignment in a dedicated warehouse. The importer can take charge of the goods upon clearance of all due taxes.
- The bill of entry for Ex-Bond goods- It lies under section 68 of the Customs Act, 1962, and is green. This type of BOE clears out the warehouse goods by overruling the bill of entry for warehousing. After clearance, the importer can take away the goods for home consumption.
What are the types of bills of lading?
- Straight bill of lading– When the shipper plans to directly transport the shipment to the consignee without any third-party involvement, a bill of lading is framed. It is a non-negotiable document that specifies that it cannot be transferred to any party.
- Order bill of lading– Unlike the straight bill of lading, the order bill is negotiable and can be transferred to any shipping party if necessary. By the end, the bill holder will have the authority to claim the goods at their destination.
- Clean bill of lading– It is issued once the carrier has received the shipping company and is in the proper condition. This bill implies that the goods are of the correct quality and quantity and safe for shipment.
How do you submit a bill of lading?
- The exporter of the shipment submits the details to the shipping carrier to issue a bill of lading.
- The process begins by filling in the bill of lading form with required and accurate information, including cargo specification and the name and address of the exporter and importer.
- Submit a copy of the bill of lading to the shipping carrier by faxing or providing a physical copy.
- Upon framing the legal bill of lading, the shipment can be packed for transit to its destination.
How do you submit a bill of entry?
- The importer or shipping carrier must collect relevant and accurate details about the consignment from the exporter to file a bill of entry. The details include the monetary value of goods, quantity, IEC, etc.
- The importer or the shipping company must analyse the type of bill of entry needed before filing.
- Obtain a bill of entry form and fill it out accurately and completely, attaching the required documents, such as licenses and permits.
- The importer or carrier can then submit the completed form to the customs department.
- The importer or shipping carrier must pay the taxes and duties to procure the consignment.
What is the difference between a bill of lading and bill of entry?
To distinguish between the bill of lading and the bill of entry, we must consider the following –
- While the bill of lading is a part of export transactions required to initiate shipping, the bill of entry is a part of import transactions necessary to procure imported goods.
- The exporter or shipping company files the bill of lading, while the importer or the shipping carrier files the bill of entry.
- The bill of lading is a contract between the exporter and the shipping company, while the importer’s bill of entry is a declaration to procure the incoming goods.
- The shipping company issues the bill of lading to the exporter, which implies that the company has taken the contract and will comply with the terms enlisted. The customs department issues the bill of entry to the importer or shipping carrier that enlists the taxes and duties to be paid.
These differences between bill of lading and bill of entry explain their purpose and importance in the global trade market.
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