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Insurance Policy not Issued and Signed by an Insurance Company or its Agent Discrepancy

By
Ozgur Eker (CDCS)
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0

Cargo insurance, also referred to as a marine cargo insurance, in general, means the insurance on goods being shipped in international trade by vessel, aircraft or overland conveyance. (1)

An insurance policy, an insurance certificate or a declaration under an open cover will be regarded as an insurance document under current letter of credit rules. (UCP 600 at article 28)

An insurance document must appear to be issued and signed by an insurance company, an underwriter or its agents or proxies, and that any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter.

If the issuing bank finds out that an insurance document has not been signed as per UCP 600 article 28, then the issuing bank will raise a discrepancy, which is known as insurance policy not issued by an insurance company or its agent discrepancy.

Discrepancy Example: Insurance Policy Not Issued and Signed by an Insurance Company or Its Agent:

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: 20 mtons of %100 Pure Tunisian Dates. Delivery Terms: CIF Port of Barcelona, Spain Incoterms 2010.

Field 46A: Documents Required:

  1. Beneficiary’s hand-signed and dated commercial invoice in 3 originals bearing full description of goods and its quantity, net and gross weight, unit and total price.
  2. Certificate of Origin issued and certified by the Chamber of Commerce in Beneficiary’s country indicating Tunisian origin of the goods.
  3. Insurance policy in assignable form and endorsed in blank for 110% invoice value (CIF value) covering all risks showing claim payable in Spain in invoice currency.
  4. Full set original clean on board, marine bills of lading marked freight prepaid and made out to order and blank endorsed, marked notify applicant stating the name, telephone and fax numbers of carrier’s agent in port of discharge. Bill of lading should evidence shipment in 20′ closed containers.

The beneficiary presented an insurance policy as shown on the below picture.

Insurance Policy

marine insurance policy discrepancy example

Insurance Policy Discrepancy: Although insurance policy indicates the name of the insurance company, insurer, it is not signed by the insurance broker on behalf of the insurance company.

Reason for Discrepancy: An insurance document, such as an insurance policy, an insurance certificate or a declaration under an open cover, must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies.

Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter.

Packing List Discrepancies

By
Ozgur Eker (CDCS)
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0

Packing list is a commercial document, in broad perspective.

It is a detailed listing of the contents of the shipment and acts as a supporting document of both commercial invoice and bill of lading.

The packing list (abbreviated as P/L) gives great deal of information regarding the incoming cargo without mentioning the value of the goods.

Gross weight, net weight, packing type, container number, seal number, number of packages, description of goods are the key points of an ordinary packing list.

It is required for customs clearance and most of the times accompanying the commercial invoice.

A packing list is expected to be issued by the exporter.

Packing list is one of the key documents in a typical commercial letter of credit. It is requested under almost all of the letters of credit.

On this page you can find most common discrepancies related to a packing list.

Packing List Discrepancies

Important Definitions Regarding the Packing List under Latest Letter of Credit Rules:

  • According to letter of credit rules the content of the document is much more important than the title of the document. As an example, a requirement for a “Packing List” will be satisfied by a document containing packing details whether it is titled “Packing List”, “Packing Note”, “Packing and Weight List”, etc., or bears even no title.
  • A packing list is to be issued by the entity stated in the credit. When a credit does not indicate the name of an issuer, any entity may issue a packing list.
  • Banks only examine total values, including, but not limited to, total quantities, total weights, total measurements or total packages, to ensure that the applicable total does not conflict with a total shown in the credit and on any other stipulated document.
  • When a credit contains a non‐documentary condition, compliance with such condition need not be evidenced on any stipulated document. However, data contained in a stipulated document are not to be in conflict with the non‐documentary condition. For example, when a credit indicates “packing in plastic cases” without indicating that such data is to appear on any stipulated document, a statement on the packing list indicating a different type of packing is considered to be a conflict of data.

Container Number not in Accordance with the Bill of Lading Discrepancy

By
Ozgur Eker (CDCS)
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0

Container number is a unique reference number assigned to a freight container so that the container can be traced and tracked by the government authorities, carriers, shippers and freight forwarders throughout its journey.

Determining the correct container number which belongs to a specific shipment is very important to the custom authorities and other governmental institutions.

As a result a container number will be mentioned on several documents including commercial invoice, consular invoice, bill of lading, packing list, health certificate and other shipping documents.(1)

In a commercial letter of credit transaction the container number indicated on the packing list and bill of lading must not conflict with each other.

The mention of a wrong container number on the packing list, which is inconsistent with the container number indicated on the bill of lading, is a reason for a valid discrepancy and rejection of the presentation.

According to the latest version of letter of credit rules a data in a document must not conflict with, data in that document, any other stipulated document or the credit.

As a result every container number indicated on each document must be identical to one another.

If the issuing bank finds out that the container number indicated on the packing list and bill of lading do not match, then the issuing bank will raise a discrepancy, which is known as packing list and bill of lading show different container number discrepancy.

Discrepancy Example: Container Number on the Packing List is not in Accordance with the Container Number on the Bill Of Lading

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: 20 mtons of Pure Polyester Powder Coating. Delivery Terms: CIF Port Metro Vancouver, Canada Incoterms 2010.

Field 46A: Documents Required:

  • Signed commercial invoice in triplicate issued by the beneficiary
  • Certificate of origin issued by a local chamber of commerce or any official trade organization confirming that goods are new brand and first hand and originated in China plus 3 copies.
  • Packing list in triplicate indicating quantity and gross weight, net weight, vessel name and container number.
  • Full set clean on board port-to-port marine bill of lading marked freight prepaid issued or endorsed to the issuing bank’s order in 3 originals and 3 non-negotiable copies.

The beneficiary presented a Packing List as shown on the below picture.

Packing List

packing list container number discrepancy

Discrepancy : Packing list states “Container Number: MSCU 120870-8”. On the other hand bill of lading states “Container Number: CMAC 400300-6”. Packing list and bill of lading are indicating different container numbers.

Reason for Discrepancy: The mention of wrong container number on the packing list which is inconsistent with the container number indicated on the bill of lading is a reason for discrepancy and rejection of the presentation.

Sources:

  1. What is a container number? | www.advancedontrade.com

Packing List and Certificate of Origin Show Different Net Weight or Gross Weight Discrepancy

By
Ozgur Eker (CDCS)
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0

Packing list and certificate of origin are two important trade documents.

The packing list is a detailed listing of the contents of the shipment and acts as a supporting document.

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

According to the letter of credit rules, the documents that reference to net weight or gross weight must not conflict with each other.

Along with a packing list and a certificate of origin, bill of lading, commercial invoice, weight list, inspection certificate, vessel certificate and insurance policy are the documents that are expected to contain a reference to the weight of the cargo.

According to the latest version of letter of credit rules a data in a document must not conflict with, data in that document, any other stipulated document or the credit.

As a result every gross weight and net weight values indicated on each document must be identical to one another.

If the issuing bank finds out that the gross weight or net weight indicated on the packing list and certificate of origin do not match, then the issuing bank will raise a discrepancy, which is known as packing list and certificate of origin show different net weight or gross weight discrepancy.

Discrepancy Example: Packing List and Certificate of Origin Show Different Net Weight or Gross Weight 

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: 500 pieces of Touch Screen LCD Monitors. Delivery Terms: FOB Port of Kaohsiung, Taiwan Incoterms 2010.

Field 46A: Documents Required:

  1. Signed commercial invoice in three originals and three copies indicating the L/C no. and contract no. 20140418.
  2. Certificate of origin in one original and one copy issued by chamber of commerce or any other competent authority.
  3. Packing list in three originals and three copies issued by beneficiary indicating quantity and gross and net weights.
  4. Full set 3/3 of clean on board ocean bills of lading marked “freight payable at destination” made out to order and blank endorsed notifying applicant with its full name and address.

The beneficiary presented a Packing List as shown on the below picture.

Packing List
packing list discrepancy gross weight not matching

Discrepancy: The packing list states that “Net weight: 10.000 KGS” and “Gross Weight: 12.000 KGS”. On the other hand, the certificate of origin states that “Net weight: 12.500 KGS” and “Gross Weight: 15.000 KGS”.

The packing list and the certificate of origin show both different net weight and gross weight.

Reason for Discrepancy: According to the latest version of letter of credit rules a data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit.

Description of Goods is in Conflict with Other Documents Discrepancy

By
Ozgur Eker (CDCS)
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0

The packing list is a trade document, which shows the contents of the shipment in detail and acts as a supporting document of the commercial invoice.

The packing list may provide a means of quickly identifying merchandise required for customs inspection, give a means of determining accurate weights and measurements, and give a means for inspectors to unpack quickly to check a piece count of the contents. (1)

A packing list should state description of goods in line with letter of credit and other documents presented under the same L/C.

It should be stressed that only commercial invoice must contain exact description of goods stated in the letter of credit.

Other documents including the packing list may indicate a description of goods in general terms but not in conflict with the goods description in the letter of credit.

If the issuing bank finds out that the packing list is showing different description of goods than any other document presented, then the issuing bank raises a discrepancy, which is known as description of goods on the packing list is in conflict with other documents.

Discrepancy Example: Description of Goods is in Conflict with Other Documents

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: 2500 Kgs Mild Dutch Cheese with 25% less salt content. Delivery Terms: FOB Amsterdam Port, Holland Incoterms 2010.

Field 46A: Documents Required:

  • Hand signed commercial invoice in three originals all duly stamped indicating description of goods as per proforma invoice no COMINV12345 dated 05.06.2014.
  • Certificate of origin ‘EUR.1’ in one original and one copy issued by competent authority showing Netherlands origin of the goods.
  • Packing list in three folds evidencing the content of each package of the shipped goods.
  • Full set clean on board bill of lading, issued to the order of applicant (with full address), marked freight collect, notify applicant (with full address – phone ++3122190700) (Bill of lading showing additional freight charges is not acceptable).
  • The beneficiary presented a Packing List as shown on the below picture.

Packing List

packing list description of goods discrepancy

Discrepancy: The letter of credit requires shipment of “Mild Dutch Cheese with 25% less salt content”, but the packing list describes the goods as “Light White French Cheese, Desalted”, the description is representing a change in nature, classification or category of the goods.

Reason for Discrepancy: Description of goods on the packing list should be shown in general terms but not in conflict with that stated in the letter of credit or another document.

Sources:

  1. Transportation Best Practices Manual, Canadian Manufacturers and Exporters Newfoundland and Labrador Division, prepared by PF Collins International Trade Services, 2003, Page:22

Certificate of Origin Discrepancies

By
Ozgur Eker (CDCS)
-
0

Certificate of Origin can be regarded as an official document. The certificate of origin could be issued on paper or electronic form.

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

Although the certificate of origin could be issued by an exporter without requiring any additional certification, in most cases, the customs office in the importing country requires a certificate of origin to be issued either by

  • the chamber of commerce (Ordinary Certificates of Origin) or
  • custom authorities (Preferential Certificates of Origin).

Letter of credit rules allow presentation of all types of certificates of origin.

On this page, you can find most common certificate of origin discrepancies under letter of credit transactions.

Certificate of Origin Discrepancies

Important Definitions Regarding the Certificate of Origin

  • According to UCP 600, latest letter of credit rules, and international standard banking practices a certificate of origin should be issued by the entity specified in the letter of credit.
  • When a letter of credit does not state the name of an issuer of the certificate of origin, any institution could issue a certificate of origin.
  • When a credit requires the presentation of a certificate of origin, this will be satisfied by the presentation of a signed document that appears to relate to the invoiced goods and certifies their origin.
  • When a letter of credit demands the presentation of a specific form of certificate of origin such as a EUR1, ATR or GSP Form A, only a document in that specific form is to be presented. For example if credit calls for a EUR1, beneficiary can not present an ordinary certificate of origin issued by the chamber of commerce.
  • Consignee information, when shown, is not to conflict with the consignee information in the transport document. However, when a credit requires a transport document to be issued “to order”, “to the order of shipper”, “to order of issuing bank”, “to order of nominated bank (or negotiating bank)” or “consigned to issuing bank”, a certificate of origin may show the consignee as any entity named in the credit except the beneficiary.
  • When a credit has been transferred, the first beneficiary may be stated to be the consignee.

Origin of Goods Inconsistent with the Letter of Credit Discrepancy

By
Ozgur Eker (CDCS)
-
0

A certificate of origin should certify the origin of the goods.

When a letter of credit indicates the origin of the goods and requesting presentation of a certificate of origin, any reference to the origin of goods on the certificate of origin or another document, is not to conflict with the stated origin.

For example, when a letter of credit indicates “origin of the goods: Japan”, a certificate of origin or a statement on any stipulated document indicating a different origin of the goods is to be considered a conflict of data, discrepancy.

As per letter of credit rules and international standard banking practices a certificate of origin must certify the origin of the goods as indicated in the letter of credit.

If the issuing bank determines that the certificate of origin is not reflecting correct origin of goods, then the issuing bank raises a discrepancy, which is known as origin of goods inconsistent with the letter of credit.

Discrepancy Example: Origin of Goods Inconsistent with the 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:

Aluminum Round Bars 15000 kgs. Delivery Terms: FOB Port of Jebel Ali, Dubai, UAE Incoterms 2010.

Field 46A: Documents Required:

  • Duplicates of signed and stamped commercial invoices issued by the beneficiary stating this letter of credit number.
  • Certificate of Origin in 1 original and 2 copies issued by any chamber of commerce stating that goods are of United Arab Emirates origin.
  • Full set of original bill of lading clean shipped on board established to the order of issuing bank notify applicant marked freight collect.

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

Certificate of Origin

certificate of origin example of wrong country of origin discrepancy

Discrepancy: Certificate of origin should have shown that the goods are of United Arab Emirates origin, but the certificate of origin shows that the goods are Turkish origin, which is a clear discrepancy.

Reason for Discrepancy: A certificate of origin should certify the origin of the goods as indicated in the letter of credit.

Description of Goods Differs from the Letter of Credit Discrepancy

By
Ozgur Eker (CDCS)
-
0

As per letter of credit rules and international standard banking practices a certificate of origin should not specify description of goods different than what is stated in the letter of credit.

A certificate of origin is to appear to relate to the invoiced goods, for example, by:

  • a goods description that corresponds to that in the credit or a description shown in general terms not in conflict with the goods description in the credit; or
  • referring to a goods description appearing in another stipulated document or in a document that is attached to, and forming an integral part of, the certificate of origin.

If the issuing bank finds out that the certificate of origin is showing different description of goods, the the issuing bank raises a discrepancy, which is known as description of goods on the certificate of origin differs from the letter of credit.

Discrepancy Example: Description of Goods Differs from the 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:

  • Leather Office Chairs 250 pcs. Delivery Terms: FOB Istanbul Port, Turkey Incoterms 2010.

Field 46A: Documents Required:

  • Original commercial invoice and five copies all duly signed in the name of applicant showing all the details of the goods and the prices as per proforma invoice no LY12141516 stating this letter of credit number.
  • Certificate of Origin in one original and two copies issued in the name of the applicant stating that the goods being exported are of Turkish Origin. This certificate of origin must be issued and authenticated by the chamber of commerce or union of industry in Turkey.
  • Full set of shipping company clean shipped on board marine bill of lading made out to the order of issuing bank notify applicant marked freight payable at destination.

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

Certificate of Origin

certificate of origin sample

Discrepancy: The letter of credit requires shipment of “Leather Office Chairs”, but the certificate of origin describes the goods as “Imitation Leather Office Chairs”, which means that the description is representing a change in nature, classification or category of the goods.

Reason for Discrepancy: Description of goods on the certificate of origin should be shown in general terms but not in conflict with that stated in the letter of credit.

Certificate of Origin not Issued by the Chamber of Commerce Discrepancy

By
Ozgur Eker (CDCS)
-
0

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

By
Ozgur Eker (CDCS)
-
0

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.

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