Consular Invoice Details

A Consular Invoice contains the Consignor, Consignee, the port of loading, the port of discharge, carrier, exporter, the total amount of charges applied, and the shipment value. The company exporting it must obtain the invoice through a consular representative of the destination country, who then certifies it by stamping and authorizing the invoice, with a witness on the site.

A consular invoice is an authoritative document that, apart from facilitating tax collection, also provides an authoritarian control over imports by countries using it. It also avoids the misrepresentation of a shipment that can occur due to under-invoicing or over-invoicing. The manufacturer or exporter must submit the invoice to the embassy where the country to which the merchandise is being shipped. After submission, the invoice is then authorized by the consul or a representative from the consul, and the process must be complete before the goods are allowed to be sent to the receiving end.

It enhances the accurate payment of adequate export duty on the shipment and also prevents dumping. Dumping is considered an unethical practice in the shipment industry, and countries have strict regulations against it. This is achieved through scrutinizing export prices relative to the market price of the original country. With dumping, an exporter may sell goods in a foreign market at far less expense than what they cost at home to gain a competitive advantage over the other market traders.

Hypothetic Example of a Consular Invoice

For instance: on September 12, Customer A, located in Kenya, agrees to buy goods worth $1,200,000 from Company Z located in New Zealand. Customer A also makes payments for another product from the same Company Z worth $800,000. These goods have to be shipped from New Zealand to Kenya using MV Amani Cargo carrier.

Once the seller (Company Z) has agreed to send the goods, the officials will first obtain a consular invoice. A consular representative from Kenya (the destination country) certifies it by stamping and authorizing the invoice with a witness on site. One copy of the invoice will be sent with the goods, while the consular will send the other copy to New Zealand's embassy in Kenya.

The customs officials will use the consular invoice to confirm the shipment, the total number of goods, cost and use it to determine the import duty. The primary purpose is to provide the foreign customs authority with complete and detailed information about the goods to levy the correct import duty.

Significance of a Consular Invoice

To the exporter, the consular invoice has the following advantages:

  • It enhances quick clearance of goods from customs in the consignor's country and the consignee's country.
  • The importing country's consulate certification indicates that the importer has fulfilled all the procedural requirements and the licensing formalities for importation.
  • There's a payment assurance from the importing country once the consular invoice has been certified by the consulate.

To the importer, the consular invoice has the following advantages:

  • It enhances faster clearance of goods from the customs at the importer's port hence quick delivery.
  • There's an assurance that the goods imported are not banned in the country.

Significance of consular invoice to the customs office:

  • It makes service provision and other tasks of the customs authority a bit easier to carry out.
  • It enhances faster calculation of duties as the value of goods is determined by the consulate and is considered.

Consular Invoice vs. Customs Invoice

An invoice is an authenticated hard copy document that specifies a sales transaction's terms and conditions between a seller and a buyer. They contain details regarding the quantity, type, and description of the goods, cost, perhaps parties involved, addresses, and other information. They are typically prepared by the manufacturer or exporting company that is the seller. When there's a sales transaction between two countries with customs duties and import-export laws, we have consular invoices and customs invoices.

The consular invoice is prepared by the consulate office or a representative from the consulate office in the country of export. They receive the commercial invoice from the exporter and then verify the details like cost, description of the goods, amount, quantity, mention but a few, and then prepare a new authentic invoice. The importing country's customs department accepts this consular invoice, but they do not receive the commercial invoice directly from the exporter.

In some countries, the customs at the port of import or the loading port require that their consular invoice format and language be used for providing all the details of the transaction. This gives them absolute authority over the importation process, and that document being used is what we call the customs invoice. Instead of a regular commercial invoice (which is a form owned by the seller), this invoice is sent along with the goods and customs using the format dictated by the customs department, allowing them to charge and assess the correct customs duties and taxes.