Actual freight and insurance should be declared on shipping bills: Expert

On our exports on CIF basis, we are required to declare the freight and insurance on the shipping bill so that the correct FOB amount is available to work out the drawback amount. At the time of export, we do not know the actual freight or insurance amount. So, we declare on an approximate basis. Is there any specific legal provision regarding how to work out the amount of freight and insurance?

CBEC Circular no.44/2000-Cus dated May 15, 2000, says that “it is highly improbable that the exporter would not be aware of the freight that is required to be paid by him for the export goods even at the time of presenting the goods for shipment. It has, therefore, been decided that the exporter must declare the actual freight paid or payable by him on the shipping bill or when the goods are presented for examination. This declaration of freight must reflect the freight charges borne by the exporter irrespective of the amount received by the shipping lines or by the consolidating agents or any other person engaged in the shipment of the goods. In the exceptional cases, when the exporter is not able to ascertain the actual freight payable by him at the time of export, the exporter must file a declaration of the freight payable for the consignment on the basis of standard published freight schedule. However, the exporter should review each case of shipment after export has taken place and if the freight borne by him is higher than the one declared in the shipping bill, he would immediately on his own pay back to the customs the excess amount of drawback claimed/received or any other export incentives claimed thereon. Any mis-declaration of freight paid or payable which results in loss of revenue by way of excess drawback payment, is liable to be proceeded against under the Customs Act, 1962.” This circular should equally apply for insurance charges paid/payable by the exporter.

We export almost all our goods under legal undertaking and claim refund of unutilised credit under Rule 89 of the CGST Rules, 2017. The refund is granted only on the basis of supplies reported in the GSTR-1 uploaded by the suppliers that show up on our GSTR-2A statement. Also, we export on CIF basis but the refunds are adjusted on FOB basis. That leaves us with credit balances in the electronic credit ledger that we are unable to utilise. What is the way out?

You may explore legal options to redress your grievance. It is better to persuade your suppliers to upload all details in their GSTR-1 promptly.  You may also consider making some domestic sales with intent to utilise the available credit for payment of output tax that you can collect from the buyers.

What is the time limit for realisation of export proceeds in case of services?

The normal time limit is nine months but for exports made till July 31, 2020, the time limit is fifteen months.
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