• What is High Seas Sale
To understand what is high sale it is needed to understand the meaning of ‘high sea’. The term ‘High Sea’ means any location in the Sea/Air which is not covered in the territorial limit of India. When any sale or purchase is taken place by transfer of documents of title of the goods which is in transit but not within the territorial limit of India it is called ‘High Seas Sale’.
When an importer, due to any reason, wish to sale the goods which is loaded on the ship/aircraft from any place outside India but, not come within the territorial limit of India he may do so and save the liability of Sales Tax/Vat. Such type of sale and purchase is called High-Sea-Sale transaction. In this transaction the seller is called high sea seller and the buyer is called the high sea buyer. For doing so the high sea seller and the high sea buyer have to execute an agreement which is called High Sea sale Agreement. The agreement should be on the non-judicial stamp paper of Rs. 100/- or of the applicable value (as per the applicable Stamp Act) and the same be notarised. The agreement should be executed before the subject goods inters in the territorial limit of India.
In the High seas sale transaction it is required that the goods should be in transit because, the sales is effected by transfer of documents of title of the goods mentioned therein which is Bill of Lading in case of the Sea consignment. The Bill of Lading, which is a Negotiable Document, is issued by the shipping Company only after loading of the goods on the Vessel.
In case of Air shipment since the Air way Bill is not considered as the Negotiable Document so it is not the document of title of the goods mentioned therein and hence in case of Air shipment the High sale is effected by a letter addressing to the Airline and informing about the sale of the goods of the Air way Bill on the High Sea mentioning the requisite details of the buyer of the high sea sale. But considering the Air as mode of transportation of goods the sale is effected immediately upon dispatch of the goods from the shipper’s country.
There can be numbers of possible high seas sales of a single consignment between the times of dispatch of the consignment from the shipper’s country till the time of entry in the territorial limit of India.
The main purpose of the High Seas sale is to avoid incident of Sales tax/VAT because, if the original buyer sales goods within the territorial limit of India it will be said that the sales to have been taken place in course of sales India and hence it is liable to Sales tax /VAT.
• Documents Required
1. Original copy of all high Seas sale agreements are required If there are more than one high sea sale is effected of the same consignment.
2. All documents of imports issued by the shipper of the goods.
3. Letter address to the Customs authorities signed by the both parties buyer and seller on their letter head stating that the buyer has purchased from the seller the goods on high sea sale basis and the seller has sold the goods to the buyer on the high seas sale basis.
4. Letter by the seller addressing to Airline in case of Air cargo informing that the goods has sold to the buyer on high sea sale basis and requesting to hand over the delivery of the cargo to the buyer in case of high Sea Sale of Air Consignment .
5. Invoice issued by the Seller(s) of the goods on the high sea which is called High Seas sale Invoice (All original High Seas sale Invoices are required, if more than one sale is effected on high sea sale basis).
6. Self certified copy of Importer Exporter Code,(IEC number) of Seller of the goods on the high sea (the original importer) .
• Procedures for clearance
The last buyer of the high sea sale consignment who wish to clear the consignment will submit all the above documents to the Customs authorities at the port of discharge of the cargo for filling of the Bill of entry to clear consignment. The Customs authorities will, after scrutiny of the High Sea Sale agreement (s), make entry of the high sea sale in the register maintained by the Customs Authorities.
The Customs Authorities will consider the value of the actual high –seas-sale price if it is more than ‘the CIF value plus 2%’ otherwise, 2% will be added to the CIF value towards high sea commission as a general practice. Moreover, if there are more than one high seas sales, then high seas sales commission @ 2% has to be added to the CIF value for each such transaction.
Thereafter, the normal procedure is followed for clearance as applicable to other consignment. The Original exchange control copy of the Bill of Entry will have to be sent by the last buyer of the consignment to the original importer as the original importer is required to submit the same to his banker through whom he has made payment to the foreign supplier/shipper in foreign currency. The Original Exchange control copy of the Bill of entry is a proof of import made as per the requirement under Foreign Exchange Management Act.1999 (FEMA).
• What is sale of Goods by Transfer of Ownership
When an importer keeps the imported goods in ware house and wants to sale either the whole of the goods or part thereof he may do so under Section 59 (3) of the Customs Act, 1962. For selling of the goods by this way the importer and the buyer are required to execute an agreement on non-judicial stamp paper of Rs.100/- or applicable value (as per the applicable Stamp Act) which is called Agreement of Sale of goods by Transfer of Ownership. The buyer will execute a fresh bond with the Ware housing authority in respect of the goods purchased by him.
The Purchaser will submit the requisite documents to the Customs authorities for filing of Ex - Bond Bill of Entry for clearance of the goods from the ware house.
• Documents Required
1. Agreement on the non-judicial stamp paper of Rs.100/- or applicable value is to execute by the buyer and seller and should be notarized.
2. All documents of imports issued by the shipper of the goods.
3. Letter address to the Customs authorities signed by the both parties’ buyer and seller on their letter head stating the buyer has purchased from the seller the goods on the basis of Transfer of Ownership.
4. Letter by the seller addressing to Airline in case of Air cargo informing that the goods has sold to the buyer on the Transfer of Ownership basis and requesting to hand over the delivery of the cargo to the buyer.
5. Invoice issued by the Seller(s) of the goods which is called Sales Invoice.
6. Self certified copy of Importer Exporter Code, (IEC number) of Seller of the goods on the Transfer of Ownership, (the original importer).
• Procedures for clearance
As per the Circular issued by the Central Board of Excise & Customs dt. June 3, 2010 the original import value should be considered for assessment of the goods for calculation of Customs duty. Further there is no need to add 2% as high sea sale commission as the sale by transfer of ownership is not sale on high sales. Therefore, the Original Import value is to be taken as value for assessment.
Thereafter, the normal procedure is followed for clearance as applicable to other consignment. The Original exchange control copy of the Bill of Entry will have to be sent by the last buyer of the consignment to the original importer as the original importer is required to submit the same to his banker through whom he has made payment to the Foreign supplier/shipper in foreign currency as proof of import made as per the requirement under Foreign Exchange Management Act.1999 (FEMA).
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