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Chatroom: 'Export duty is not part of the price paid or payable for goods'

You must show the export duty amount separately in the invoice and collect the aggregate amount from the buyer (whether in one or more instalments)

Topics
Exports | Customs duty

TNC Rajagopalan 

Exports, global exports, supply chain
Photo: Bloomberg

Q. Our client regularly raw rice, which attracts 20 per cent export duty now. How can we recover this duty amount from our buyer? Should we raise a separate invoice for the duty amount, or can we show it as a separate item in our USD invoice to the buyer? If we show the duty as a separate item, we fear it may add confusion in preparing the Shipping Bill. If the duty is shown as a separate item, will there be differences in the amount outstanding in EDPMS and actual realisations, especially when the buyer chooses to settle the invoice amount in parts?

In your case (per Section 14 of the Customs Act, 1962) the transaction value is the price paid or payable for the export goods when sold for export from India, for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale. The export duty is not part of the price paid/payable for the goods.

It is paid to the government by you and collected from the buyer, the same way that in a domestic transaction, the buyer is charged a certain sum for the supply of goods and the GST amount is shown separately in the invoice and the aggregate amount including the GST amount is collected from the buyer. Similarly, you must show the export duty amount separately in the invoice and collect the aggregate amount from the buyer (whether in one or more instalments). Your Customs broker should have no difficulty in filing the shipping bill.

Q. Our foreign buyer has settled long-outstanding dues along with an additional amount towards interest for late payment on their own. This extra interest amount is not backed by any invoice from our (ie, the exporter’s) side. How can we give disposal instructions to the bank for foreign inward remittance and what about the Purpose Code?

You can use the purpose code P0104, which is for “receipts against export of goods not covered by the GR/PP/SOFTEX/EC copy of shipping bill etc.” I can’t think of a more appropriate code.

Q. Our foreign buyers want multiple invoices but a single consolidated Bill of Lading. The issue is that one shipment has a FOB term and the other two invoices bear CFR and CIF Incoterms. Possibly they will resell to different end-users at the discharge port country. Could we (the Indian exporter) make it a reality?

The bill of lading (BL) is issued by a shipping company or its agent to evidence receipt of goods and contract of carriage. It can act as a title to the goods depending on how it is made out. An invoice is evidence of the description and quantity of goods sold, the unit price and the amount payable. There is no requirement that there must be a separate BL for each invoice. A BL can cover a number of invoices.


Business Standard invites readers’ queries related to GST, export and import matters.

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First Published: Mon, January 23 2023. 17:53 IST
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