The export of components by the Indian party to the foreign supplier against receipt of payment in foreign exchange for full value of components
We imported some goods from a Chinese supplier on CIF basis at 60 days’ credit. We accepted the bill of exchange drawn by the supplier sent through our bank and took the transport and insurance documents. However, the ship sank and we withheld the payment. Later, we claimed marine insurance and received the payment from the insurance company. Now, we are unable to send this money received from insurance company to the supplier as our Chartered Accountant says he cannot issue Form 15 CA-CB. What is the way out?
First, under the Negotiable Instruments Act, 1881, you cannot withhold payment against a bill of exchange accepted by you. Even under the Incoterms 2020, once the buyer has discharged his obligations under the CIF terms, the buyer has an obligation to pay the seller. So, in my opinion, you can remit payment against the accepted bill of exchange and give your insurance claim settlement details to your bank in lieu of bill of entry. RBI instructions do not specifically deal with the situation. However, the RBI does say that “where goods are short-supplied, damaged, short-landed or lost in transit, fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided the insurance claim relating to the lost goods has been settled in favour of the importer. AD bank should ensure that proper remark/indicator is entered for ORM mark-off/closure of Bills in IDPMS etc., as per extant IDPMS guidelines.”
Last year, we bought some goods from an Indian party (original importer) on high-seas basis, against full payment in Indian rupees as per the high-seas sale contract. As final importer, we filed bill of entry and cleared the goods. In the bill of entry, we gave the Authorised Dealer Code of the original importer, as the foreign exchange remittance against the import was to be made by that party. We understand that the party has not yet remitted the payment. Will we be made accountable for that?
I don’t think you need worry about the remittance. It is the obligation of the original importer to remit the payment to the foreign supplier.
We had placed an order for some equipment from a foreign supplier. We understand that the equipment contains certain components exported by another Indian party by claiming export incentives. Will there be any impact on us, when we import the equipment?
The export of components by the Indian party to the foreign supplier against receipt of payment in foreign exchange for full value of components, and your import from the foreign party against payment in foreign exchange for full value of the equipment, are independent transactions. So, I do not see any impact on you, when the equipment is imported.
How to resolve a mismatch in Import General Manifest vis-a-vis the import documents?
The reasons or nature of mismatch are not clear and so, I suggest that you approach the shipping company and get the issue resolved.