Author: Ozgur Eker (CDCS)

Certificate of Origin not Issued by the Chamber of Commerce Discrepancy

Ozgur Eker (CDCS) Certificate of Origin Discrepancies, Letter of Credit Discrepancies , , ,
certificate of origin not issued by chamber of commerce discrepancy

The certificate of origin verifies the country in which the goods to be exported
were originally manufactured.(1)

The issuing body of the certificate of origin could be the government authority or a body empowered by the government.

Furthermore, the producer, manufacturer or exporter could also issue a certificate of origin by himself, either in self-issued certificate of origin or declaration of origin format.(2)

In regards to letter of credit rules, a certificate of origin is to be issued by the entity stated in the credit.

If the issuing bank determines that the certificate of origin is not issued as per letter of credit terms, then the issuing bank raises a discrepancy, which is known as certificate of origin is not issued by the entity as indicated in the letter of credit.

Discrepancy Example: Certificate of Origin not Issued by the Chamber of Commerce

A letter of credit has been issued in SWIFT format, subject to UCPURR latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Motor Vehicle Parts 3500 pieces. As stated on order sheet 101, dated 20th April 2014. Delivery Terms: DAT Port of Bangkok Incoterms 2010.

Field 46A: Documents Required:

  • Signed and stamped commercial invoices in three originals issued by the beneficiary stating this letter of credit number.
  • 1 Original Certificate of Origin issued by the chamber of commerce
  • Full set of original bill of lading shipped on board established to the order of Bangkok Bank Public Company Limited notify applicant company marked freight prepaid.

The beneficiary presented a Combined Certificate of Origin and Value as shown on the below picture.

certificate of origin not issued by chamber of commerce discrepancy

Discrepancy: Certificate of Origin should have been issued by the chamber of commerce as per letter of credit terms, but the Combined Certificate of Origin and Value presented by the beneficiary has been issued by beneficiary’s himself.

Reason for Discrepancy: A certificate of origin must be issued by the organization specified in the letter of credit.

When a credit requires the presentation of a certificate of origin issued by a Chamber of Commerce, a certificate of origin would be acceptable which is issued by

  • Chamber of Commerce,
  • Chamber of Industry,
  • Association of Industry,
  • Economic Chamber,
  • Customs Authorities,
  • Department of Trade or the like…

But certificate of origin issued by the beneficiary instead of a chamber of commerce is not acceptable.

Certificate of Origin Presented Instead of a GSP Form A Discrepancy

Ozgur Eker (CDCS) Certificate of Origin Discrepancies, Letter of Credit Discrepancies , ,
certificate of origin discrepancy

The certificate of origin verifies the country in which the goods to be exported
were originally manufactured.

The certificate of origin could be issued on paper or electronic form.

The issuing body of the certificate of origin could be the government authority or a body empowered by the government.

Furthermore, the producer, manufacturer or exporter could also issue a certificate of origin by himself, either in self-issued certificate of origin or declaration of origin format.

Certificates of origin can be classified under two main groups:

  • Ordinary Certificates of Origin
  • Preferential Certificates of Origin

When a credit requires the presentation of a specific form of certificate of origin such as a GSP Form A, only a document in that specific form is to be presented.

Examples of Preferential Certificates of Origin: (Specific Form of Certificates of Origin)

  • Certificate of Origin GSP Form A
  • CAFTA-DR Certificate of Origin
  • North American Free Trade Agreement (NAFTA) Certificate of Origin
  • EUR1 Form Movement Certificate
  • ATR Movement Certificate

As per letter of credit rules and international standard banking practices a certificate of origin must be presented as outlined in the letter of credit.

If a beneficiary of a letter of credit presents a certificate of origin, which is not prepared in that specific form, banks raise a discrepancy, which is known as certificate of origin not presented in a specific form; such as that an ordinary certificate of origin presented instead of a GSP Form A.

Discrepancy Example: Certificate of Origin Presented Instead of a GSP Form A:

A letter of credit has been issued in SWIFT format, subject to UCPURR latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Soccer uniforms 12500 pieces. As stated on order sheet 41, dated 10th March 2014. Delivery Terms: FOB Port of Chittagong Incoterms 2010.

Field 46A: Documents Required:

  • Signed commercial invoices in two originals showing letter of credit number and certifying that the merchandise is as per purchase order.
  • Original GPS FORM A Certificate of Origin signed by the exporter, authorized by the appropriate customs authorities under their stamp and signature dated not later than the transport document date and free of any remark such as “Simplified procedure” or words similar effect.
  • Full set of original bill of lading clean on board established to the order of The Australia and New Zealand Banking Group Limited notify applicant marked freight collect.

The beneficiary presented a certificate of origin as shown on the below picture.

Certificate of Origin

certificate of origin discrepancy gsp form a

Discrepancy: The letter of credit clearly requests a special form of a certificate of origin, which is GSP Form A. The beneficiary should have presented a specific GSP Form A certificate origin, whereas ordinary certificate of origin has been presented, instead.

Reason for Discrepancy: When a credit requires the presentation of a specific form of certificate of origin such as a GSP Form A, only a document in that specific form is to be presented.

Commercial Invoice Discrepancies

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , ,
commercial invoice discrepancies

On this page, you can find most common discrepancy examples related to the commercial invoice.

Invoice is a commercial document. A commercial invoice is a required document for the export and import clearance process. It is sometimes used for foreign exchange purposes.

In the buyer’s country, it is the document that is used by their custom officials to assess import duties and taxes. (Source: Export Information and Documentation: A Guide for New Exporters Page: 18)

A commercial invoice should be issued by the beneficiary of the letter of credit, according to the letter of credit rules and standard banking practices.

UCP 600 Article 18 explains specific requirements for commercial invoices.

Commercial invoice is one of the main documents in letters of credit transactions, for that reason almost all letters of credit request presentation of a commercial invoice.

Commercial Invoice Discrepancies

Important Definitions Regarding the Commercial Invoice Under Latest Letter of Credit Rules:

  • According to UCP 600, latest letter of credit rules, a commercial invoice need not to be signed, but almost all custom authorities require manually signed commercial invoice. As a result, make sure that commercial invoice is signed and stamped properly.
  • When a credit demands presentation of an “invoice” without further description, this will be satisfied by the presentation of any type of invoice (commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc.) except invoices titled with “provisional”, “pro‐forma” or the like.
  • An invoice should be issued by the beneficiary. In a transferable letter of credit, the second beneficiary could issue the commercial invoice.
  • The invoice should show exact description of the goods, services or performance shown in the letter of credit. The description of goods, services or performance on an invoice is to reflect what has actually been shipped, delivered or provided.
  • A commercial invoice should indicate the value of the goods shipped or delivered and the unit prices, when stated in the credit.
  • Invoice should be issued in the same currency as that shown in the letter of credit.

Short Shipment Discrepancy

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , , , ,
commercial invoice short shipment discrepancy

Partial shipment can be defined as shipping the goods not whole at once, but in smaller consignment(s).

Partial Shipment Examples: Let us assume that letter of credit requires shipment of 10 buses.

If the shipper dispatches;

  • 8 buses under 1 shipment, makes a partial shipment
  • 4 buses under 1st shipment and 5 buses under 2nd shipment, makes a partial shipment
  • 5 buses under 1st shipment and 5 buses under 2nd shipment, makes a partial shipment.

Letter of credit rules allow partial shipments and partial drawings, which means that an exporter could make partial shipments under a letter of credit as long as the credit terms do not dictate the contrary.

In order to understand, whether or not partial shipments are allowed under a documentary credit, you need to look at “Field 43P: Partial Shipments” within the swift message body.

  • Field 43P: Partial Shipments: “Allowed” means that partial shipments are permitted
  • Field 43P: Partial Shipments: “Not Allowed” means that partial shipments are not permitted.

If a letter of credit prohibits partial shipments, the beneficiary must ship the goods in full quantity under a single shipment. (Please be noted that there are some tolerances exist in the letter of credit rules. Refer UCP 600 Article 30-c).

Contrary acts will be punished by banks either with partial shipments effected or short shipment effected discrepancies.

Discrepancy Example: Short Shipment Discrepancy Under a Letter of Credit:

A letter of credit has been issued in SWIFT format, subject to UCP 600, with the following details:

Letter of Credit Conditions

Field 50: Applicant : Auto Paint Importer Co. Ltd. 1800 Arnold Industrial Place 94520 CA USA

Field 43P: Partial Shipments: Not Allowed

Field 43T: Transhipment: Allowed

Field 45A: Description of Goods and or Services: Supply of 100% Acrylic Premium Quality Latex (Water Based) paints packed in 55 Gallon Drums. Price : 300 USD / drums Quantity: 80 Drums. As per Proforma Invoice No 100 dated 10.02.2014. Delivery Terms: CIF Long Beach Seaport California Incoterms 2010.

Field 46A: Documents Required: 3 original signed commercial invoices and 3 copies.

The beneficiary presented a commercial invoice as shown on the below picture.

Commercial Invoice

short shipment discrepancy letter of credit

Discrepancy: Short shipment effected. Letter of credit prohibits partial shipments. As a result, the beneficiary should have shipped 80 drums of paints in 24.000,00 USD full amount, but instead the beneficiary shipped 70 drums of paints corresponding to 21.000,00 USD, which is a partial letter of credit amount.

Reason for Discrepancy: Letter of credit prohibits partial shipments. Beneficiary should have shipped the goods in full quantity as called for in the credit under a single shipment.

Commercial Invoice Not Issued by the Beneficiary Discrepancy

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , , ,
commercial invoice discrepancy issuer of the document

A commercial invoice is a trade document, which is generally prepared during the shipment stage.

A commercial invoice is a required document for the export and import clearance process. It is sometimes used for foreign exchange purposes.

In the buyer’s country, it is the document that is used by their custom officials to assess import duties and taxes. (Source: Export Information and Documentation: A Guide for New Exporters Page: 18)

A commercial invoice should be issued by the beneficiary of the letter of credit, according to the letter of credit rules and standard banking practices.

A commercial invoice must appear to have been issued by the beneficiary or, in the case of a transferred credit, the second beneficiary.

A commercial invoice must appear to have been made out in the name of the applicant.

If the beneficiary of a letter of credit presents a commercial invoice, which has been issued by an entity other than the beneficiary, the issuing bank raises a discrepancy, which is known as invoice not issued by the beneficiary.

Discrepancy Example: Commercial Invoice Not Issued by the Beneficiary

A letter of credit has been issued in SWIFT format, subject to UCP 600, with the following details:

Letter of Credit Conditions

Field 59: Beneficiary – Name & Address: Himmel Konig Sondermaschinen GmbH Auguste-Kessler-Str. 10 72100 Aalen Germany

Field 45A: Description of Goods and or Services: Supply of 1 pcs erosion and tool grinding machine as per Proforma Invoice No 120 dated 12.03.2014. Delivery Terms: CFR Apapa Seaport Lagos Incoterms 2010.

Field 46A: Documents Required: 2 original signed commercial invoices and 3 copies.

Field 47A: Additional Conditions: Third party documents are acceptable which means that all documents, excluding drafts and invoices, may be issued by a party other than the beneficiary.

The beneficiary presented a commercial invoice as shown on the below picture.

Commercial Invoicecommercial invoice beneficiary discrepancy

Discrepancy: Invoice should have issued by “Himmel Konig Sondermaschinen GmbH”, but it is actually issued by “Maschinen Handels GmbH” .

The additional condition, which is included in field 47-A, would have no effect on determination of the discrepancy, because the draft and the commercial invoice have been excluded from the scope of this clause.

Reason for Discrepancy: Commercial invoice not issued by the beneficiary. A commercial invoice must appear to have been issued by the beneficiary or, in the case of a transferred credit, the second beneficiary.

Commercial Invoice Shows Merchandise Not Called For Discrepancy

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , , ,
commercial invoice disrepancy

A commercial invoice should not indicate goods, services or performance not called for in the credit.

As per letter of credit rules and international standard banking practices, an invoice is not to indicate goods, services or performance not called for in the credit.

This letter of credit rule applies, even when the invoice shows additional quantities of goods as required by the credit or samples are declared to be shipped free of charge.

If the beneficiary of a letter of credit presents a commercial invoice, which contains goods not indicated in the letter of credit, the issuing bank raises a discrepancy, which is known as commercial invoice shows merchandise not called for in the letter of credit.

Discrepancy Example: Commercial Invoice Shows Merchandise Not Called For

A letter of credit has been issued in SWIFT format, subject to UCP latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Shirts – long sleeve – 980 pieces, shirts – short sleeve – 1510 pieces, long pants – 980 pieces, shorts – 250 pieces. As stated on order sheet 4750 revised – dated 10th January 2014. Delivery Terms: CPT Barcelona Spain Incoterms 2010.

Field 46A: Documents Required: Signed commercial invoices in two originals showing letter of credit number and certifying that the merchandise is as per purchase order.

The beneficiary presented a commercial invoice as shown on the below picture.

Commercial Invoicecommercial invoice discrepancy example

Discrepancy: Commercial invoice shows merchandise not called for in the letter of credit. If you look at the last column of the description of goods part, you will see that “10 Pcs of Shirts – long sleeve (Free of Charge)” is not called for in the letter of credit.

Even if they have been shipped “Free of Charge“, it is against letter of credit terms.

Reason for Discrepancy: An invoice is not to indicate goods, services or performance not called for in the credit.

This applies even when the invoice includes additional quantities of goods, services or performance as required by the credit or samples and advertising material and are stated to be free of charge.

Proforma Invoice Presented Instead of a Commercial Invoice Discrepancy

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , , , ,
proforma invoice discrepancy

A proforma invoice is a commercial document, usually prepared during the negotiation stage of the order.

A proforma invoice is a quote in an invoice format that may be required by the buyer to apply for an import license, contract for pre-shipment inspection, open a letter of credit or arrange for transfer of currency. (Source:Export Information and Documentation: A Guide for New Exporters Page: 16)

A commercial invoice is also a commercial document, but unlike the proforma invoice, it generally prepared during the shipment stage.

A commercial invoice is a required document for the export and import clearance process. It is sometimes used for foreign exchange purposes.

In the buyer’s country, it is the document that is used by their custom officials to assess import duties and taxes. (Source:Export Information and Documentation: A Guide for New Exporters Page: 18)

The letter of credit rules and international standard banking practices do not allow presentation of a “provisional”, “proforma”, “performa” invoice instead of a commercial invoice.

If the beneficiary presents a proforma invoice instead of a commercial invoice, the issuing bank raise a discrepancy, which is known as “Proforma Invoice Presented Instead of a Commercial Invoice”.

Discrepancy Example: Proforma Invoice Presented Instead of a Commercial Invoice

A letter of credit has been issued in SWIFT format, subject to UCPURR latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Electrical Equipment as per proforma invoice no 40000 of 2014/04/10 mention to be indicated on the definitive invoice.

Field 46A: Documents Required: Signed commercial invoice in six copies issued by beneficiary, original of which must be certified by the chamber of commerce and legalized by the consulate of Jordan, if available at beneficiary’s location, if not, legalization should be effected by any other Arab Consulate.

The beneficiary presented a proforma invoice as shown on the below picture.

Commercial Invoice

proforma invoice discrepancyDiscrepancy: Proforma invoice has been presented instead of a commercial invoice.

Reason for Discrepancy: Letter of credit rules prohibit presentation of a proforma invoice instead of a commercial invoice.

When a letter of credit requires presentation of an “invoice” without further description, this will be satisfied by the presentation of any type of invoice (commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc.). However, an invoice is not to be identified as “provisional”, “proforma” or the like.

Description of Goods Discrepancy

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , , , ,
description of goods discrepancy commercial invoice

According to the letter of credit rules and international standard banking practices, the description of the goods, services or performance shown on the commercial invoice is to correspond with the description stated in the letter of credit.

Commercial invoice, which is the only document as defined in the UCP 600, that must show the full description of goods as quoted in field 45-A Description of Goods and or Services.

On other documents, the description of the goods, services or performance, if stated, may be in general terms not conflicting with their description in the credit.

If the commercial invoice states a description of goods and services not indicated in the letter of credit, banks raise a discrepancy which is known as description of goods on the commercial invoice is not as per L/C terms.

Discrepancy Example: Description of Goods on the Commercial Invoice is not as per L/C 

A letter of credit has been issued in SWIFT format, subject to UCPURR latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Evening dress as per proforma invoice dtd 19.05.2014 for goods delivered CIF Stockholm Port, Sweden Incoterms 2010.

Field 46A: Documents Required: Signed commercial invoices in one original and three copies, certified by the chamber of commerce in the exporting country and bearing this clause: ”We certify that invoices are in all respects correct and true both with regard to the price and description of goods referred to therein and as per Proforma Invoice no.010 dated 09/05/2014 indicated in this credit and that the country of origin or manufacturer of the goods is Spain” and must be made out in the name of l/c applicant indicated in field 50.

The beneficiary presented a commercial invoice, which is indicated an inconsistent description of goods with the letter of credit.

Commercial Invoice

description of goods discrepancyDiscrepancy: Description of goods not per L/C terms on the commercial invoice. As per letter of credit terms, the commercial invoice should have shown “Evening dress” as a description of goods.

But the invoice shows “Used Evening Dress (30% Defected)” under Description of Goods column.

Reason for Discrepancy: The description of the goods, services or performance shown on the invoice is to correspond with the description shown in the letter of credit.

Incoterms Discrepancy

Ozgur Eker (CDCS) Commercial Invoice Discrepancies, Letter of Credit Discrepancies , , , ,
incoterms discrepancy

The Incoterms are a standard set of trade terms used worldwide mostly in international trade. It is also possible to use them in domestic contracts of sale.

The rules define the obligations, costs and risks of sellers and buyers in connection with the delivery of goods.

When exporters and importers mutually agreed on the trade terms by stipulating them on a sales contract or proforma invoice, they are bound by these terms as a material part of the contract.

As a result, issuing banks often include these trade terms in to the letters of credit, generally under field 45-A: Description of Goods and Services.

Examples: FOB Shanghai Port, Incoterms 2010, FCA New York Container Terminal, Incoterms 2010 etc.

If the letter of credit incorporated a trade term, as mentioned above, the commercial invoice must indicate them precisely. Otherwise, banks raise a discrepancy, which is known as Incoterms not stated on the commercial invoice.

Sample Incoterms not Stated on the Commercial Invoice Discrepancy under a Letter of Credit:

A letter of credit has been issued in SWIFT format, subject to UCPURR latest version, with the following details:

Letter of Credit Conditions

Field 45A: Description of Goods and or Services: Kitchen cabinets as per applicant’s purchase order no. D12020 dtd 01.06.2014, Ex-works Montelabbate Italy, Incoterms 2010.

Field 46A: Documents Required: Manually signed commercial invoice in one original plus one duplicate, the original must be certified by chamber of commerce. The commercial invoice must show 100 pct. value of goods shipped, less pro-rata deduction of advance payment made as per clause no. 1.

The beneficiary presented a commercial invoice without stating the trade terms on it.

Commercial Invoice

commercial invoice discrepancy incoterms

Commercial invoice does not indicate trade term as required by the letter of credit. Presentation is discrepant. “Ex-works Montelabbate Italy, Incoterms 2010.” is missing on the invoice.

Discrepancy: Trade term not identified on the commercial invoice. As per letter of credit conditions commercial invoice should have shown “Ex-works Montelabbate Italy, Incoterms 2010.”

Reason for Discrepancy: When a trade term is stated as part of the goods description in the credit, an invoice is to indicate that trade term.

Bill of Lading Discrepancies

Ozgur Eker (CDCS) Bill of Lading Discrepancies, Letter of Credit Discrepancies , , ,
bill of lading discrepancies

On this post, you can find most common bill of lading discrepancy examples.

Discrepancy can be defined as an error or defect, according to the issuing bank, in the presented documents compared with the documentary credit, the UCP 600 rules or other documents that have been presented under the same letter of credit.

Bill of lading is a transport document. UCP 600 defines 4 types of bills of lading:

  • Multimodal Transport Document: Multimodal transport document is covering shipments by at least two different modes of transport. This document should be treated as a multimodal bill of lading, only when one transportation leg is carried out by sea.
  • Ocean Bill of Lading: Issued by container liners for port-to-port sea shipments.
  • Charter Party Bill of Lading: Shippers may, when large or bulk cargoes are concerned, lease the carrying vessel for a stated time or specific voyage under a charter party contract with the owner. Goods carried are then covered under a form of bill of lading issued by the charterer and indicate as being shipped, subject to the term and conditions of the charter party.
  • Non-Negotiable Sea Waybill: Works just like the ocean bill of lading, other than that this transport document is not a title of property.

The discrepancies on this post are related to ocean bill of lading.

Bill of Lading Discrepancies

Tips to Prepare Discrepancy Free Bills of Lading:

  • According to latest UCP 600 letter of credit rules a marine bill of lading should not bear any indication that it is subject to a charter party.
  • A bill of lading should indicate the number of originals that have been issued. All original marine bills of lading issued by the carrier must be presented to the issuing bank by the beneficiary.
  • Transshipment is defined as the unloading and reloading of goods from one vessel to another during the carriage of goods from the port of loading to the port of discharge. A bill of lading indicating that transshipment will or may take place is acceptable, even if the credit prohibits transshipment, if the goods have been shipped in a container, trailer or lash barge as evidenced by the bill of lading.
  • Bill of lading should be regarded as a negotiable transport document unless it is consigned to a named consignee.
  • More than one notify parties could be stated in a bill of lading without any problem.
  • ‘To Order’ or ‘To the order of shipper’ means that bill of lading should be endorsed by the shipper as per letter of credit instructions.