Advance received from overseas customers

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 October 2015 We have received advance from overseas customers for supply of goods and now we are not in a position to supply goods within one year.And we are not interested in refunding the above mentioned money. What are the consequences or penalty we will face if we supply goods after one year.

Prashanth

Prashanth (Expert)
Follow

06 October 2015 Hi,

Pls. refer this for your query:

B.8 Advance Payments against Exports
(1) In terms of Regulation 16 of Notification No. FEMA 23/2000-RB dated May 3, 2000, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure that the shipment of goods is made within one year from the date of receipt of advance payment; the rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points; and the documents covering the shipment are routed through the AD Category – I bank through whom the advance payment is received.
Provided that in the event of the exporter’s inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank.

Querist : Anonymous

Querist : Anonymous (Querist)

07 October 2015 Thanks for Reply
but our query is not Resolved.
What is the consequences for goods supplied after Expiry of one year from the date of advance receipt.

Upgrade to CAclubindia Pro. Subscribe Now!

Querist : Anonymous

Querist : Anonymous (Querist)

07 October 2015 Please anyone Explain the Terminal Excise Duty(Excise duty Levied on What type of Products & how it is levied) and Refund of Terminal Excise duty

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

14 July 2024 Let's break down each part of your question regarding consequences for goods supplied after the expiry of one year from the date of advance receipt, terminal excise duty, and refund of terminal excise duty:

### Consequences for Goods Supplied After Expiry of One Year from Advance Receipt:

1. **Tax Implications**:
- In many jurisdictions, including India, there are provisions related to the tax treatment of advances received for goods or services. If goods are supplied after the expiry of one year from the date of advance receipt, it may impact the timing of when taxes (such as GST, VAT, or sales tax) are payable.
- For income tax purposes, the timing of revenue recognition may also be affected, depending on the accounting standards followed.

2. **Legal and Contractual Obligations**:
- The contract terms between the supplier and the buyer usually specify the consequences of delayed supply. This could include penalties, interest on delayed payments, or even cancellation of the contract in extreme cases.
- From a legal standpoint, parties may also be subject to contractual liabilities for non-compliance with agreed-upon delivery schedules.

### Terminal Excise Duty (TED):

1. **Definition**:
- Terminal Excise Duty (TED) is a type of duty levied on goods produced within the country and is typically payable at the final stage of production or before the goods leave the factory premises. It is a form of indirect tax.

2. **Levied On**:
- TED is usually levied on specific goods or products deemed suitable for this duty by the government. The types of goods subject to TED can vary widely depending on national tax policies and regulations.
- In India, for instance, TED was historically levied on certain goods like textiles, tobacco products, and certain types of machinery.

3. **How It Is Levied**:
- TED is typically calculated based on the quantity or value of goods produced. It is imposed at the point of manufacture or production and is included in the overall cost of the goods.
- Manufacturers or producers are responsible for collecting and remitting TED to the government.

### Refund of Terminal Excise Duty:

1. **Eligibility**:
- Refunds of Terminal Excise Duty may be applicable under specific circumstances, such as:
- Export of goods manufactured in India.
- Goods used in the production or packaging of exported goods.
- Excess duty paid due to calculation errors or adjustments.

2. **Procedure**:
- To claim a refund of TED, manufacturers or exporters typically need to submit an application to the relevant tax authorities along with supporting documentation.
- Documentation may include proof of export, invoices, shipping documents, and other relevant paperwork.

3. **Timeframe and Process**:
- The timeframe and process for refund vary by jurisdiction and specific circumstances. In India, the procedure for claiming TED refund is governed by the Central Excise Rules and regulations.

4. **Compliance and Verification**:
- Tax authorities may verify the claims for TED refund to ensure compliance with applicable laws and regulations.
- It is essential for claimants to maintain accurate records and comply with procedural requirements to facilitate timely processing of refund claims.

### Conclusion:

Understanding the consequences of delayed supply after advance receipt is crucial for both tax compliance and contractual obligations. Terminal Excise Duty (TED) is levied on specific goods at the final stage of production or before leaving the factory, with provisions for refund under certain conditions, particularly for exported goods or overpaid duties. For specific details and eligibility criteria regarding TED and its refund, consulting with a tax advisor or legal expert familiar with local regulations is advisable.