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Q 393: : Can the export consignment for a buyer at a particular destination be diverted to another buyer at some other destination in case of cancellation of Order/Sales Contract or non-acceptance by the first buyer?
A: 1. Yes, sometimes it happens that after the goods have been shipped, the overseas buyer refuses to accept the documents and/or goods.
2. In that case the exporter is in trouble.
3. He has the following options:
A- To bring the goods back to India.
1. The exporter has to bear the cost of return freight from the destination to India.
2. Once the goods have reached the destination, exporter has to request the shipping company to bring goods back to India.
3. The exporter has to complete the paperwork for re-import into India to enable the shipping company to bring goods back.
4. Sometimes assistance of the logistics company is required at destination.
5. The exporter will now be an importer of his own goods.
6. Re-import is also an import.
7. Most of the provisions will be equally applicable to re-import as they are applicable to fresh import.
8. With the help of Customs Broker, he has to complete the formalities of import into India.
9. It is always advisable to use the same Customs Broker whose services were availed at the time of export.
10. There’s an exemption notification for import duty; the same must be used.
11. Copy of Bill of Entry should be given to the bank so that export Shipping Bill EDPMS entry gets knocked off with import IDPMS entry.
12. Exporter should calculate the cost and other formalities before deciding to bring goods back to India.
13. This decision also largely depends upon nature of the goods.
14. ECGC reimburses approved expenses of bringing goods back to India.
B- To find an alternative buyer in the same country.
1. Depending on the product, the exporter should make an attempt to find out an alternative buyer for the same goods.
2. If the goods are customised or specification oriented, branded, etc., this becomes more difficult.
3. In other words, general goods and/or commodities are easily sellable to another buyer.
4. Exporter should efficiently work to find new buyer. For this purpose, his contacts and his knowledge of that market will be of great help.
5. He can also use local agent, advertisement and/or digital communication, etc.
6. Generally, the new buyer will ask for reduction in price because of the situation.
7. RBI permits reduction up to 25% of the original invoice value in such cases.
8. However, the total period of realisation is calculated from the original date of shipment (9 months as per RBI Circular No. 37).
9. If the goods at destination has incurred certain expenses, then the new buyer will deduct the same and will be ready to pay only remaining amount.
10. The exporter will be required to make a new set of documents to enable new buyer to clear the goods.
11. Your bank must be informed accordingly.
12. Export incentives will also be reduced to the extent there is a shortfall in realisation.
C-To sell the goods to another buyer in another country.
1. In case the exporter fails to get new buyer in the destination country and he doesn’t want to bring goods back to India, then this is the last option.
2. Under this situation, all the above provisions will be equally applicable.
3. Since the new buyer is in another country than the original, there will be additional formalities to transfer the goods from the original destination to new destination.
4. Exporter must consider the time taken for the transit and the cost of this movement.
5. Exporter must provide all the export documents to the new buyer.
6. Any specific documents, if required by that country specifically, it will be the responsibility of the exporter to comply.
7. Shipping Bill filled at the time of export will not see any change.
These options have merits and demerits which an exporter should consider before selecting a specific option.
4. ECGC has also designed the provisions supporting the exporter in this situation.