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CIF Value?

Learner (Student) (409 Points)

06 July 2010

Should High Sea Sale value be considered for CIF valuation?

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2 Replies

CA Amit Kanani (Practicing CA) (338 Points)
Replied 07 July 2010

When u purchase goods in High sea sale then that purchase price shall b assessebale value and duty shall charge on that and seller has no liability. So, CIF value has no relevance in this case. CIF value means FOB price at port/airport outside india +frieght+Insurance upto indian port/airport.

If u pur. goods in between then that price shall b Value of goods. u can say it CIF Value. And Add 1% landing charges as per rule 10(2) of custom valuation rule.

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RAMESH KUMAR VERMA ( CS PURSUING ) (43853 Points)
Replied 07 July 2010

MR. SKS,

1. High Sea sales (HSS) is a sale carried out by the carrier document consignee to another buyer while the goods are yet on high seas or after their dispatch from the port/ airport of origin and before their arrival at the port / airport of destination.

2. HSS is accepted under the import trade control regulation. Refer para - of export import policy.

3. HSS contract/ agreement should be signed after dispatch of goods from origin & prior to their arrival at destination. The agreement should be on stamp paper.

4. On concluding the HSS agreement, the B/L should be endorsed in favour of the new buyer. In respect of air shipment, HSS seller should write to the airline / consol agent informing that a HSS agreement has been established with the HSS buyer and that the carrier document should therefore be considered as endorsed in favour of the HSS buyer and further the IGM should be filed by the carrier in the name of the HSS buyer.

5. If the EDI system allows name of HSS buyer to be entered in the system, then there may not be any need to amend the IGM. In this case the B/E is filed in the name of the original importer as the IGM is in this importer name. However , the B/E shows the name of HSS buyer under a separate head in the B/E format. If the system has no provision for showing the name of HSS buyer on the B/E ,then the IGM should be got amended and B/E filed in the name of the HSS buyer.

6. In the case of HSS, the CIF value for calculation of duty is taken to be the HSS value.

7. There is practice followed in customs that in case the HSS transfer takes place at import invoice value only , the custom would add 4% of CIF value as HSS loading factor . There have been cases where HSS sellers have sold at two percent more than import CIF but custom have added 4% of CIF as HSS value addition. Such practice of customs can be challenged at the customs duty is chargeable on genuine transaction value.

If the HSS does not mind disclosing original import values to HSS buyer, in such case it is better from custom clearance point of view for the seller to endorse the B/L, invoice, packing list in favour of the HSS buyer. The endorsement should read "Transferred on High Sea Sales basis to M/S -------- for a sales consideration of Rupees --------". Such endorsement should be stamped and signed by the HSS seller.

REGARDS