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'Under FCA, CIP, CPT, seller must provide proof of cargo delivery to buyer'

In FCA/CIP/CPT, the seller is only required to provide proof that he has delivered the cargo to the buyer

TNC Rajagopalan 

cargo

You had explained (Chatroom, October 22, 2019) why the terms FAS/FOB/CFR/CIF should not be used for container shipment (even if carried by ships), other modes of transport (e.g. air or road) or multi-modal transport, for which other terms such as FCA/CIP/CPT must be used. How, then, can we meet the requirements of the buyer that we present the transport documents under letter of credit?

In FCA/CIP/CPT, the seller is only required to provide proof that he has delivered the to the buyer or carrier named by the buyer, in whatever form agreed between the buyer and seller -- may be a receipt from the buyer or his agent or the carrier. The buyer must accept that proof. Of course, the buyer can agree to instruct the carrier to issue a transport document, for example, an airway bill or bill of lading in multiple or single originals, in a negotiable “to order” form or consigned straight to a named party, with on-board notation or otherwise.

In that case, the seller must assist, at buyer’s risk and cost, in issue of the document for presentation under the letter of credit along with other documents. The ICC has recognised the documentation requirements explicitly in Incoterms 2020 and incorporated necessary clauses in the text. The key point is that under FCA/CIP/CPT, the risk passes upon the seller delivering the to the buyer or his agent or carrier (or his agent) named by the buyer. Also, all the costs after the cargo is so delivered are to the account of the buyer, except that in CPT/CIP the seller bears the costs on freight and freight plus insurance premium respectively.

As an EOU, can we utilise the accumulated ITC to pay on export product under refund claim, instead of exporting under LUT?

If you have neither imported the inputs used in the manufacture of export product without payment under notification 78/2017-Cus dated October 13, 2017, nor procured from domestic sources such inputs under deemed export benefits under notification 48/2017-CT dated October 18, 2017, then you can export on payment of under refund claim under Rule 96(10) of CGST Rules, 2017. Otherwise, you have to export under LUT and claim refund of the unutilised credit under Rule 89 of the CGST Rules, 2017.

Can we import pollution control equipment under the EPCG scheme?

As per Para 5.01(a) of FTP, the EPCG Scheme allows import of (except those specified in negative list in Appendix 5F) for pre-production, production and post-production at zero customs duty. Para 9.08 of FTP defines “Capital goods” as any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological upgradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control. So, you can import pollution control equipment under EPCG scheme.


Business Standard invites readers’ queries related to excise, VAT and exim policy. You can write to us at smechat@bsmail.in

First Published: Mon, November 04 2019. 21:24 IST
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