Letter of credit - accounting treatment

This query is : Resolved

Mallika Shah (Querist)
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15 September 2013 An assessee has purchased a imported machinery on letter of credit.
on due date of opening of LC, assessee could not make the payment hence bank fulfilled the obligations and all interest charges were debited to assessee. Assessee received the machinery. But bank gave another due date to assessee for fulfillment of LC and again charged the interest and other charges to assessee.
What to do of interest debited to assessee's account prior to machinery received and after it is received?

C.A. HIREN

C.A. HIREN (Expert)
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16 September 2013 Dear Sir / Medam,
In practical, when assesse has opened the LC then bank cannot charge interest rather they charged USANCE and Commitment charges for import LC then we have pay or to take BC depending on terms and types of LC.

Then after, we have to see the types of LC. I mean at sight or 180days or etc.

For more details you can contact on +91 9909164320.

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