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Export goods credit note

HBJ Mumbai (Director) (125 Points)

20 April 2011

When we export goods we are making a local invoice in Rs. We also make an invoice in foreign currency for sending with shipment and we make ARE1. Our customer has returned some goods as defective and we have not informed the local excise authorities. Can we send these back with an invoice/ARE1 and then issue credit note? What is the procedure for credit note?

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3 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 20 April 2011

your customer has returned some goods .....................means you had to "import back" the goods..right?

then u were eligible to pay the customs / vat and port charges

if you have paid all such things, then you dont have to take tension ,.

but if you have imported against bond and obligation to re-export then u had to inform R/O immediately after receipt of goods. however you have to take the matter in notice of R/O immediately

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HBJ Mumbai (Director) (125 Points)
Replied 21 April 2011

Thank you for the reply. However I am still not clear. Let me put the questions properly

Suppose we export some goods, 10 pcs @ US$ 10 = US$ 100 under LUT. We make the local invoice, export invoice and ARE1. Say customer rejects 5pcs = US$50. Now my questions are :

1) If customer wants to debit US$50 from the invoice, he asks us for credit note. What is the procedure for this, assuming the goods are scrapped at customers end?

2) In case the customer sends us back the goods, does he have to declare full value (US$50) and we have to pay full taxes on this?

3) If the items are found to be scrap after receipt what do we do?

4) If we correct the items and want to send back, what is the procedure?

5) In case customer does not demand credit note and asks for replacement, how do we do this?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 April 2011

Originally posted by : H.B.Jesrani

Thank you for the reply. However I am still not clear. Let me put the questions properly

Suppose we export some goods, 10 pcs @ US$ 10 = US$ 100 under LUT. We make the local invoice, export invoice and ARE1. Say customer rejects 5pcs = US$50. Now my questions are :

1) If customer wants to debit US$50 from the invoice, he asks us for credit note. What is the procedure for this, assuming the goods are scrapped at customers end?

- you have to book such amount in bank charges,

2) In case the customer sends us back the goods, does he have to declare full value (US$50) and we have to pay full taxes on this?
- if you have to receive the goods back then you have to pay full customs duty and taxes on full value or value assessed by customs.
3) If the items are found to be scrap after receipt what do we do?
- you have nothing to do but to absorb the amount in indirect expenses.

4) If we correct the items and want to send back, what is the procedure?
- if you want to bring the goods for rectification then u have to import the same under bond procedure subject to re-export, u have to discuss the matter with your R/O in this regard for field formalities, and bond execution.

5) In case customer does not demand credit note and asks for replacement, how do we do this?

- you have to send another materials under note " replacement" and clear the goods under bond from factory.