You Ask We Answer
Q 401: Can the export shipment made to a buyer at a particular destination be diverted to another buyer in some other destination in case of cancellation of Order/Sales Contract or non-acceptance by the first buyer?
A: 1. Refer to Para C.18 of FED 16 dated 01.01.2016, which provides the guideline under FEMA for change of the buyer.
2. If an exporter has shipped goods to a Buyer “A” in Dubai and this buyer is not willing to accept the goods and or cancels the order/sales contract after the shipment is made.
3. The exporter will be in difficulty.
4. The option available with Indian exporter is to call back the cargo by following the laid down procedure, or to find another buyer in Dubai and or in any other country.
5. If the exporter has identified new buyer “B” then, a fresh order/contract should be entered into, giving full details of the transaction.
6. There are enabling provisions in above Circular to do so.
7. However, in practical real-life situation, new buyer “B” will ask for some reduction/discount in the price.
8. For exporter, it is frustrated sales and, therefore, he will agree to terms and price other than the original terms/price (adverse).
9. FEMA provision states that prior approval of the RBI is not required if, after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 25 per cent of the invoice value. This is subject to the following:-
a) It does not relate to export of commodities subject to floor price stipulations.
b) The exporter is not on the Exporter’s Caution list of the RBI.
10. The realisation of export proceeds is not delayed beyond the period of 9 months from the date of export (refer RBI Circular No. 37 dated November 20, 2014).
11. Exporter will require preparing new set of export documents and submitting the same to the bank for sending to the banker of buyer “B”.
12. Necessary changes are also to be done in Bills of Lading to enable the new buyer “B” to take delivery of the goods.
Q 402: What is the procedure to amend the Shipping Bill with change of consignee, buyer, unit price, destination etc.?
A: 1. Technically speaking, there is no need to amend/change the Shipping Bill in this case.
2. The details in the Shipping Bill refer to the information at the time of shipment.
3. The bank will take care of the difference based on exporter’s request covering the change in situation supported by documents including full set of new documents and return of earlier documents.
4. The bank will require correspondence including emails to verify the transaction and changes thereof.
Q 403: What if the export is against Drawback and RoDTEP?
A: 1. Duty Drawback and RoDTEP benefits will be as per the actual foreign exchange realised.
2. If you are going to receive fewer amounts, you will be eligible for lesser drawback.
3. In case you have received higher amount of drawback, you must refund the same immediately along with the interest.
4. RoDTEP you have received in excess should also be refunded.
Q 404: Will changes in the Shipping Bills be reflected in the EDPMS portal?
A: 1. In EDPMS, the original Shipping Bill data must have been transmitted when the shipment was made.
2. The bank will knock off the EDPMS entry by appropriate noting in remark column to give effect of change in buyer and amount.
3. e-BRC is to be generated for the actual amount realised.
4. Exporter is advised to keep proper correspondence and keep the bank informed about the entire transaction.
5. Exporter should provide required information to the bank to handle the transaction.
6. Bank may ask for any FEMA Declaration, which exporter will require to submit.