What a commercial invoice is
The commercial invoice is the bill for the goods you ship. It names the seller and the buyer, describes every item, states the quantity, the price and the total in the currency of the sale, and says on which terms the goods are delivered and paid for. Your buyer pays against it, their customs value the goods from it, and your bank uses it to match the money that comes back.
In India it does one more job. Your customs broker files the shipping bill from it, so customs sees your exports through it: the value, the HS codes, the quantities and the Incoterm. The same figures decide your RoDTEP and duty drawback, and the IGST refund if you ship on payment of tax.
What the Indian export invoice carries
The standard layout. Indian exporters, banks and brokers read invoices in one familiar layout. The exporter sits beside the invoice number and references. The consignee sits beside the buyer. Then come pre-carriage, place of receipt, the vessel, the ports and the final destination, then the terms of delivery and payment. Then the goods, with the marks and numbers on the left. This tool keeps that layout, so nobody has to hunt for anything.
Your IEC and GSTIN. Both go on the invoice. The IEC links the export to you at customs and at your bank. The GSTIN links it to your returns, where the export is reported as a zero-rated supply.
The LUT or IGST line. Under the GST rules, an export invoice says either "supply meant for export under LUT without payment of IGST" or "supply meant for export on payment of IGST". When you ship under a Letter of Undertaking, quote its ARN, so that the claim can be traced.
Marks and numbers, and the container. The marks painted on the packages tie each package to this invoice. Customs checks them at examination, and the buyer uses them to sort the goods on arrival. Add the container number once you have it.
FOB, freight and insurance apart. For CFR and CIF sales, show the freight and the insurance as separate lines. Customs needs the FOB value: export incentives are calculated on it, and it is the value shown on the shipping bill.
Commercial invoice, proforma and packing list
The proforma invoice came first. It was the offer your buyer accepted, perhaps the document a letter of credit was opened against. The commercial invoice now has to say the same things, except for what actually changed, such as the final quantity shipped. The packing list travels with it and shows how those goods are packed: packages, weights and volumes. The two must agree on the packages, the description and the marks. Customs and the buyer's bank read them side by side.
Mistakes that cost exporters money
- An invoice that differs from the shipping bill. A different value, quantity or HS code can get the shipping bill queried, and your drawback or IGST refund held up.
- The wrong GST line. Shipping under LUT with an invoice that says IGST was paid, or the other way round, causes trouble with the refund and with your returns.
- Freight folded into the price on a CIF invoice. Without the freight and insurance shown apart, the FOB value has to be worked out after the fact. Incentives are paid on FOB.
- Wording that strays from the letter of credit. The bank compares the invoice with the credit word for word, and a stray abbreviation is a discrepancy.
- Marks on the invoice that do not match the packages. At examination, customs can hold the container until the difference is explained.