BEFORE YOU SHIP / 01

The Commercial Invoice

It Is More Than a Bill for Payment A practical guide to preparing commercial invoices for international shipments, customs clearance and EU trade. Clear information. Correct information. Complete information.

Commercial Invoice: It Is More Than a Bill for Payment

For an international shipment, the commercial invoice is one of the most important documents in the customs-clearance process. It tells the authorities and the customs representative what the goods are, who is involved in the transaction, what the goods are worth and, where relevant, how they should be classified and treated. For air freight arriving from outside the customs territory, the goods remain under customs supervision until they are assigned the appropriate customs procedure and released. A vague or incomplete invoice can therefore create questions at exactly the point where the shipment needs to move. The practical rule is simple: do not make customs guess. Missing or unclear information can lead to requests for clarification, documentary checks, physical inspection, delay and additional handling or storage costs. Storage arrangements and free-storage periods are not universal. They depend on the airport, terminal, warehouse operator, contract and local conditions. The safest approach is to assume that avoidable delay can become expensive quickly. The shipper or exporter should therefore prepare the invoice with customs clearance in mind, not merely with accounts receivable in mind. The following sections show what to check before the goods move. 01 / PRACTICAL GUIDE

Commercial Invoice or Pro Forma Invoice?

Use the document that reflects the actual transaction. A commercial invoice is normally used where goods have been sold and a commercial transaction has taken place. A pro forma invoice is commonly used for non-sale movements, for example certain samples, temporary movements or goods supplied without a sale. A pro forma invoice does not make goods “valueless”. Customs may still require a realistic value for customs purposes. Equally, using a pro forma invoice for a genuine sale can create unnecessary questions because the document may not correspond with the commercial reality of the shipment. 02 / PRACTICAL GUIDE

Invoice Number

Give the commercial invoice a unique invoice number that fits the exporter’s accounting and document-control system. The number should be clear, permanent and consistent across the shipping documentation. Avoid informal alterations or handwritten changes where possible. If an invoice must be corrected, issue a properly controlled corrected version so that the customs representative, carrier and consignee are working from the same document. 03 / PRACTICAL GUIDE

Invoice Date

State the invoice date clearly. The date helps identify the transaction and supports the documentary trail used for transport, customs and accounting purposes. Do not post-date an invoice simply to make the paperwork fit the expected movement of the goods. The document should reflect the real transaction and its timing. 04 / PRACTICAL GUIDE

Seller, Buyer, Shipper and Consignee

Show the complete names and addresses of the relevant parties. Include the postcode, city and country. Where the seller, shipper, buyer and consignee are not the same entities, make the roles clear rather than forcing the reader to infer them. Exhibition shipments need particular care. The exhibition venue is not automatically the consignee. The correct consignee depends on the transaction, customs procedure and logistics arrangement. In practice, it is also useful to identify the exhibition name, dates, hall and stand or booth number so that the shipment can be matched to the event. 05 / PRACTICAL GUIDE

State the Incoterms® Rule Properly

Do not write only “FCA”, “DAP” or another three-letter rule. The named place or port is a critical part of the Incoterms® rule because it helps define delivery, risk and/or the destination to which carriage must be arranged, depending on the rule. A strong format is: FCA 70184 Stuttgart, Germany, Incoterms® 2020. Use the rule that actually reflects the sales agreement. Incoterms® rules allocate important transport obligations, costs and risks between seller and buyer; they are not decorative wording for an invoice. 06 / PRACTICAL GUIDE

Describe the Goods Clearly

The customs representative and customs officer may never have seen your product. An internal model code such as “DT26ik56ZHT” may identify the item perfectly inside your company and mean nothing outside it. Descriptions such as “machine”, “cable”, “parts”, “equipment” or “exhibition material” are usually too vague to support efficient classification and clearance. Better descriptions answer three questions: what is it, what is it made of and what is it used for? Add technical characteristics when they materially affect identification, classification or regulatory treatment.

Avoid Cryptic Abbreviations

Do not assume that an abbreviation used inside your company, by an engineer or by a supplier will be understood by customs. Spell out uncommon abbreviations at least once. Product codes may be added, but they should not replace an intelligible goods description. 08 / PRACTICAL GUIDE

State Material and Composition Where Relevant

Material can be decisive for tariff classification. If the product is made of plastic, identify the polymer where known and relevant: for example polyethylene, PVC or polycarbonate. For textiles, composition percentages may be important. For metal goods, the type of metal or alloy may matter. Do not add technical detail merely for appearance. Add the information that helps identify and classify the product correctly. 09 / PRACTICAL GUIDE

Electrical Goods

Electrical goods often require more than the word “electrical”. State the precise function of the product and include relevant technical specifications where these help determine classification or regulatory requirements. Depending on the product, useful information may include voltage range, power, current, frequency or whether the item is a complete product, component or accessory. Keep a technical data sheet or user manual available. Customs or the customs representative may need supporting product information if the invoice description alone is insufficient. 10 / PRACTICAL GUIDE

Machinery

Avoid the single word “machine”. State what the machine does, what material or process it works with and, where relevant, the principal technical characteristics that distinguish it from other machinery. Do not turn the invoice into an engineering manual. The objective is identification and classification. Detailed technical documentation can be supplied separately when required. 11 / PRACTICAL GUIDE

Model and Serial Numbers

Model and serial numbers are useful identifiers and can become especially important for temporary movements, demonstration equipment, testing, repair and re-export. They help demonstrate that the goods leaving a country are the same goods that entered it. 12 / PRACTICAL GUIDE

Quantity and Units

State a meaningful quantity and unit. “One set” is often insufficient unless the set is clearly described. A better entry might read “1 set consisting of 1 control unit, 2 sensors and 2 connecting cables”. Use the unit appropriate to the goods: pieces, pairs, metres, square metres, cubic metres, litres, kilograms and so on. Some tariff classifications also use supplementary units. 13 / PRACTICAL GUIDE

Net Weight

Provide the net weight of the goods - the weight excluding packaging - where required for the customs declaration and tariff line. The customs representative cannot reliably derive it from the gross weight. State the unit clearly, normally kilograms for EU customs work. A packing list may carry detailed weight information, but the figures must agree with the invoice and the actual shipment. 14 / PRACTICAL GUIDE

Value: “No Commercial Value” Is Not a Customs Value

Samples, gifts, exhibition goods and other non-sale items may still require a value for customs purposes. “No commercial value” by itself does not tell customs what value should be used for the declaration. Where there is a sale, the customs valuation rules generally begin with the transaction value, subject to the applicable conditions and adjustments. Where there is no sale, another permitted valuation method may be required. Do not invent a nominal value merely to complete the form; use a defensible value and seek specialist advice where necessary. 15 / PRACTICAL GUIDE

Currency and Line Values

State the currency unambiguously, preferably using the ISO currency code such as EUR, USD or GBP. Show unit values and line values clearly and make sure the total invoice value reconciles with them. Use consistent decimal notation throughout the document. Avoid mixing currency symbols or leaving the currency to be inferred. 16 / PRACTICAL GUIDE

Country of Origin

Do not confuse the country from which the goods are shipped with the country of origin. Goods may be dispatched from one country while originating in another. Origin can affect duty rates, trade-policy measures, preference and other customs requirements. State origin information when it is required for the transaction or procedure and ensure that any claim of preferential origin is supported by the correct rules and evidence. Do not treat “country of dispatch” as a substitute for origin. 17 / PRACTICAL GUIDE

HS Code – Practical Freight Terminology

In everyday freight communication, clients, suppliers and freight professionals commonly use the term “HS code” for the commodity code requested for a shipment. This guide follows that familiar practical terminology. Technically, different levels of customs classification exist, including the international Harmonized System (HS), the EU Combined Nomenclature (CN) and TARIC. Those distinctions become important when the precise customs classification is being determined, but they need not complicate the shipper’s first task: providing the correct code and accurate product information. A supplier’s code or a code found through a search engine is a starting point, not proof that the classification is correct. Never add zeros, remove digits or otherwise alter a commodity code simply because a customer, supplier or computer system expects a particular number of digits. The number of digits encountered can depend on the classification system, country and customs procedure. Classification depends on the product’s objective characteristics and the applicable nomenclature and legal rules. For EU imports and exports, the customs declaration must use the classification required for the particular procedure. If the classification is uncertain or commercially significant, obtain specialist advice or consider Binding Tariff Information (BTI), which provides a binding EU classification decision for the product described in the decision. A fuller explanation of HS, CN and TARIC belongs in the dedicated SUPATH TARIC guide. 18 / PRACTICAL GUIDE

Wood, Wooden and Plant-Based Products

For wood and plant-based products, identify the material precisely enough for classification and any applicable plant-health, species-protection or other regulatory measures. A scientific botanical name can be necessary or highly useful where the exact species matters, but it is not a universal invoice requirement for every wooden article. Where species identification is relevant, use the accepted genus and species, for example Quercus robur, rather than relying only on a common name such as “European oak”. 19 / PRACTICAL GUIDE

Leather and Other Animal-Derived Materials

Identify the animal source and material accurately where this is relevant to tariff classification or regulatory controls. Certain animal-derived products may be subject to species-protection, veterinary or other requirements. A scientific species name may be necessary in particular regulated cases, but it should not be presented as a universal requirement for every leather product. Check the measures that apply to the specific goods and origin. 20 / PRACTICAL GUIDE

Preferential Origin

Preferential origin can allow qualifying goods to receive reduced or zero customs duty under the relevant trade arrangement. This is not the same as simply stating a country of origin on the invoice. The goods must satisfy the origin rules of the relevant arrangement, and the importer must have the required proof or statement where applicable. The form of proof varies between arrangements. 21 / PRACTICAL GUIDE

REX, Statements on Origin and Other Proofs

Do not assume that every preferential shipment requires a REX number. The required proof depends on the relevant preference scheme or trade agreement, the exporter’s status and, in some cases, the value of the consignment. Under arrangements that use the Registered Exporter (REX) system, an eligible exporter may make a statement on origin on an invoice or another commercial document identifying the goods. Other arrangements may use an origin declaration, invoice declaration, movement certificate or another prescribed proof. Use the exact wording and procedure required by the applicable arrangement. Keep origin statements legible and do not obscure them with stamps or other markings. 22 / PRACTICAL GUIDE

Give Each Type of Goods Its Own Line

List materially different goods separately. Each line should allow the reader to understand the description, quantity, value, origin and classification information that belongs to that item. “Exhibition material” is not an adequate description of a mixed shipment. An exhibition shipment may contain machinery, displays, cables, lighting, tools, printed matter, samples and furniture. Customs needs to know what is actually crossing the border. 23 / PRACTICAL GUIDE

Temporary Admission and Exhibition Goods

Temporary admission can allow non-Union goods to enter the EU for a limited period with total or partial relief from import duty, subject to the conditions of the procedure. Trade-fair and exhibition goods are a common practical example. Temporary does not mean undocumented. The goods must be identifiable and the conditions of the procedure must be met. Depending on the arrangement, useful or required information can include:

Check the Invoice Against the Actual Goods

The paperwork and the physical shipment must tell the same story. Check descriptions, quantities, model and serial numbers, net and gross weights, package count, values, origin information and technical details against the goods and packing list before collection. A technically perfect invoice is still wrong if it describes last month’s shipment. 25 / PRACTICAL GUIDE

Avoid Copy-and-Paste Invoices

Reusing an old invoice can save time and also reproduce old errors. A changed material, model, origin, value or product function may alter classification or customs treatment. Use templates for structure, not as a substitute for checking the current shipment line by line. 26 / PRACTICAL GUIDE

Do Not Expect the Freight Forwarder to Open the Cargo

The freight forwarder and customs representative normally rely on the shipper’s documents and product information. They should not be expected to open packed goods simply to discover what the exporter has shipped. Opening cargo can involve security, liability, warehouse, customs and repacking issues. If the description is unclear, the correct response is usually to obtain accurate information from the shipper or manufacturer. 27 / PRACTICAL GUIDE

Documentary Checks and Physical Inspection

Customs may verify a declaration and the documents supporting it and may examine the goods where appropriate. If the description, value, classification, origin or other information raises questions, customs may request additional documents or inspect the cargo. A physical inspection can require the shipment to be made available, packages to be opened and goods to be identified. This takes time and may generate handling, repacking and storage costs. Clear documentation cannot guarantee that a shipment will not be inspected, but it reduces avoidable uncertainty.

The Five-Question Test

Before releasing the commercial invoice, ask:

Final Pre-Shipment Checklist

Four Points to Remember

Final Word

Successful international shipping begins with correct documentation before the goods move. This guide is a practical introduction, not legal or customs advice for a particular shipment. Customs treatment depends on the goods, origin, destination, value, customs procedure and current legislation. Where classification, origin, valuation, licensing or a special customs procedure is uncertain, obtain advice appropriate to the transaction. The practical guidance in this booklet draws on twenty-five years of continuous hands-on experience in freight forwarding, including air freight, import and export shipments, exhibition logistics and customs-clearance work. © Mantralayam Srinath (Surendranath Pillai) | SUPATH