QA Series - No 32 - LC Part 2

 

The Banking Tutor

Question Answer Series 2025

S No 32                                                                   02-08-2025

Letters of Credit – Part 2 

28. What is the difference between Commercial Invoice and Consular Invoice? 

A commercial invoice is a standard document detailing a sales transaction, while a consular invoice is a specific type of commercial invoice certified by the consulate of the importing country. 

29. What is the importance of Certificate of Origin? 

A Certificate of Origin (CO or COO) is a crucial document in international trade that verifies the origin of goods, ensuring they meet the requirements for customs clearance and potentially qualify for preferential tariffs under trade agreements. It essentially acts as a passport for goods, proving their authenticity and origin, and plays a vital role in facilitating smooth cross-border transactions. 

30. Who issues Certificate of Origin ? 

A Certificate of Origin (COO) is typically issued by authorized bodies such as Chambers of Commerce, trade associations, or designated government agencies. In India, key authorities include the Indian Chamber of Commerce, the Trade Promotion Council of India (TPCI), and the Federation of Indian Export Organisations (FIEO). These entities verify the origin of goods and ensure the accuracy of the information provided.

31. What is a Clean On Board Bill of Lading ? 

Clean On Board Bill of Lading is one which is issued by Shipping companies evidencing shipment of goods on board the vessel and do not contain any clauses expressly declaring the defective conditions of the goods and/or packing. 

32. What is a Conference Vessels Bill of Lading ? 

Conference Vessels Bill of Lading are Bills of Lading covering goods shipped on a vessel that belongs to a conference line or having a regular voyage route or schedule. 

33. What is a Tramp Vessel Bill of Lading ? 

Tramp Vessel Bills of Lading are Bills of Lading covering shipment per a vessel, which does not have a regular route/schedule. Normally shipment of large quantity of merchandise like coal, ore, etc., may not be accommodated in conference line  vessel but only in Tramp Vessel. 

34. What is a Short Form Bill of Lading ? 

Short form Bills of Lading are  Bills of Lading, which do not contain all the conditions of the carriage of goods. They require the shippers to refer to rules and regulations available at the office of the Shipping Company. 

35. What is a Through Board Bill of Lading ? 

Through Bills of Lading are Bills of Lading covering the entire voyage of the goods in more than one vessel from the port of loading to the port of ultimate destination despite transhipment.

36. What is a Combined Transport Board Bill of Lading ?

Combined Transport Bills of Lading, also known as Multimodal Transport Document is a  Bills of Lading covering the entire voyage including overland journey of the goods. 

37. What is a Direct (Straight) Bill of Lading ? 

Direct (Straight) Bills of Lading is a  Bills of Lading made out in the name of the consignee. In such cases, title to the goods passes directly to the consignee from the consignor. 

38. What is a Country Crafts Board Bill of Lading ? 

Country Craft Bills of Lading is a  Bills of Lading issued by Tindal or a Country Craft, generally involving shipments to neighbouring countries like Sri Lanka, Pakistan, Bangladesh etc.

39. What is a Sailing Vessel Bill of Lading ? 

Sailing Vessel Bills of Lading is a Bills of Lading covering goods shipped per vessel sailing with the aid of sails. 

40. What is a Charter Party Bill of Lading ? 

Charter Party Bills of Lading are Bills of Lading issued by the parties who charter (hire) the vessels. The vessel may belong to a regular liner; but if it is chartered, the Bills of Lading will be issued by the `charter party' and the liner i.e., the shipping company does not accept any liability for non-delivery of merchandise by the charter party. 

41. What is a Received for Shipment Bill of Lading ? 

Received for Shipment Bills of Lading are Bills of Lading which are issued by the Shipping Companies or their Agents prior to loading of the goods `on board' of the vessel. However, after actual shipment of the goods on board of the vessel, `Received for shipment' Bills of Lading will be affixed with `on board' endorsement, which should bear a date and signature of the official of the Shipping Company. 

After affixing such `on board' endorsement, the `received for Shipment' Bills of Lading are deemed as `On Board' Bills of Lading. 

42. What is a Forward Agent’s Bill of Lading ? 

Ordinarily, Bills of Lading are issued in the prescribed form of the concerned Shipping Company. Such Bills of Lading will be either signed by the Shipping Company or by their Agents. At times forwarding agents issue Bills of Lading in their own form covering shipment by a vessel belonging to regular liner, which are a called `Forwarding Agent's Bills of Lading'. 

43. What is LASH Bill of Lading ? 

`LASH' (Lighters Aboard the Ship) Bill of Lading is a Bill of Lading covering shipments by non-mechanized barges (treated as containers), which are later, loaded in a ship. Under this arrangement ship, known as Inter lighter or feeder or mother vessel, will not call at the ports. They wait in high seas where the nonmechanized barges filled with goods will be pulled by a tug from the shore. These barges will be lifted by a crane by the ship (Inter-lighter vessel) and kept in its hold. Nearer to the port of discharge, in an arranged place in the overseas, the barges will be unloaded which will be pulled by a tug to the shore. 

LASH BL will be given immediately after the containers are loaded on the barges. 

However after actual shipment of containers on board the inter-lighter vessel, shipping company will affix endorsement to that effect under their stamp and signature. After affixing such endorsement LASH BL shall be deemed as regular "On Board Bill of Lading" as stated in (a) above. 

44. What is Offshore Bill of Lading ? 

Offshore Bill of Lading is a Bill of Lading covering shipments to be unloaded at a place other than the regular ports. At an agreed place the consignee will arrange to receive the goods. Such types of shipment are in vogue due to port congestion. 

45. What is a Stale Bill of Lading ? 

A "stale bill of lading" refers to a bill of lading that is presented to the consignee, bank, or other relevant party after a certain period of time has passed since the shipment date or the date specified in the letter of credit. This delay can render the bill of lading invalid or subject to extra scrutiny, potentially causing issues with payment or delivery. 

46. What is a On Deck Shipment Bill of Lading ? 

Bill of lading evidencing shipment of the goods `over board' (on deck) of the vessel are known as On Deck Bill of Lading, As per normal practice goods are carried in the hold (on board) of the vessel. 

47. What is an Order Bill of Lading? 

An order bill of lading is a negotiable document used in shipping that allows for the transfer of ownership of goods during transit. It typically includes the phrase "to order of [name of a party]" and can be endorsed to transfer title. This makes it useful when the buyer is not yet determined at the time of shipment or when goods are being sold multiple times while in transit. 

48. What is Bearer Bill of Lading? 

A bearer bill of lading is a type of negotiable shipping document that allows for the transfer of ownership of goods simply by physically transferring the document. Unlike other bills of lading that name a specific consignee, a bearer bill of lading is made out to the "bearer" or "holder". This means that whoever possesses the physical bill of lading has the right to claim the goods from the carrier. 

49. What is Through Bill of Lading ? 

A through bill of lading is a shipping document that covers the entire journey of goods from the point of origin to the final destination, even if multiple modes of transportation (like road, rail, and sea) are involved. It's essentially an umbrella document that encompasses the various legs of the journey and the different carriers involved. 

50. What is the difference between Multi Modal BL and Through BL? 

A through bill of lading typically covers a single mode of transport (usually ocean) with distinct legs, like inland and ocean transport. A multimodal bill of lading, also known as a combined bill of lading, covers at least two or more different modes of transport, such as sea and land. 

51. What is House Bill of Lading ? 

A House Bill of Lading (HBL) is a shipping document issued by a freight forwarder or Non-Vessel Operating Common Carrier (NVOCC) to a shipper, acknowledging receipt of goods and acting as a contract for their transportation. It's essentially a receipt and a contract of carriage between the shipper and the freight forwarder, detailing the goods, their quantity, destination, and other relevant information. 

Unlike the Master Bill of Lading (MBL) issued by the main shipping line, the HBL is issued by an intermediary like a freight forwarder or NVOCC. 

Next Issue  will be shared on 4^th  August  2025.

Sekhar Pariti

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