incoterms 2020 FOB CIF CNF CHA HS code terms in export & import business

Table of Contents

What is CIF (Cost Insurance and Freight) Incoterms?

Defining the CIF Incoterm (Cost Insurance and Freight): Seller responisbility for shipment + insurance and courier charges until the destination but import duty has to paid by buyer. check image below for different incoterms.

CIF vs. Other Incoterms

FOB (Free On Board): Under FOB, the seller is responsible for delivering the goods to the named port of shipment. The buyer assumes responsibility and risk once the goods are on board the vessel. FOB is often used for goods transported by sea and is more seller-friendly than CIF.
CIP (Carriage and Insurance Paid To): CIP is similar to CIF but provides a higher level of insurance coverage. Under CIP, the seller is responsible for delivering the goods to a destination and purchasing insurance. The risk transfers to the buyer once the goods are handed over to the first carrier.
EXW (Ex Works): In an EXW agreement, the seller’s responsibilities are minimal. The buyer is responsible for all transportation, insurance, and risk from the seller’s location. EXW places a higher burden on the buyer for logistics and risk management.

Incoterms (11)

The Incoterms or International Commercial Terms are a series of predefined commercial terms published by the International Chamber of Commerce relating to international commercial law.

Incoterms 2020 EN

Cost: This refers to the cost of the goods themselves, including their price, production, and any other related expenses incurred by the seller before the goods are loaded onto the transportation vessel.
Insurance: CIF requires the seller to purchase insurance coverage for the goods during transit. This insurance safeguards against potential damage, loss, or theft that may occur while the goods are in transit to the buyer’s final destination.
Freight: The term freight encompasses the cost of transporting the goods from the seller’s location to the agreed-upon destination port or location.

EXW (Ex Works place)
FCA (free carrier AI place
FAS free along ship port
FOB Free on board Port
CFR /CNF: COnst & freight Port
CIF: Cost & insurance & freight Port
CPT: carriage Paid place
CIP: carriage & ins Ppaid place
DAT: Delivered at Terminal (Port/place) / DPU : Delivery at Place Unloaded
DAP: delivered at place
DDP: delivery duty paid

services:

warehouse services
loading @origin
inland transportation
forwarder & customs
terminal charges
loading on vessel
ocean/Air freight
insurance
unloading & loading
transport to destin
customs clearance
Import duties

Cost, Insurance, and Freight (CIF) :

seller to buyer port with insurance. (however import duty born by importer not exporter or seller)

Free on Board (FOB) :

seller warehouse to seller’s port (importer responsibility to bear the expense from seller port his warehouse).

CNF: Cost No insurance and Freight.

Best for white importing (to avoid other country insurance claim)

seller to buyer port without insurance.

Custom House Agent:

These Customs House Agents act on behalf of you with customs officials to undergo necessary export and import clearance procedures and formalities. In an export, a customs broker delivers documents to exporter after completing necessary export formalities with customs

HS CODE:

every product has unique code. You can find your country trade portal. It helps identify & calculate tax.

“ex-factory” price, EXW

Products available at seller’s warehouse, buyer has to take care from seller warehouse to end.

DDP (Delivered Duty Paid)

price of goods + export taxes + shipping charges + Import duty + local courier Paid by seller.

Delivered at Place (DAP).

price of goods + export taxes + shipping charges + Import duty + local courier Paid by buyer.

DAT – Delivered At Terminal (named terminal at port or place of destination)

VAT / GST

GST on Imported duty.

Reimbursement of gst on export available in india.