Two Separate Invoices for One Shipment

Introduction

A documentary credit normally requires a commercial invoice, but does UCP 600 limit the presentation to only one invoice when a single shipment contains goods of different origins?

Dani raises an interesting practical question concerning a shipment containing both Country A-origin goods and goods of other origins. Because the importer needs preferential-origin treatment for the Country A goods, the buyer wants two separate commercial invoices, while the packing list and CMR will cover the entire shipment.

The question is whether the LC can expressly require two invoices and whether such an arrangement is consistent with UCP 600 and ISBP 821.

Question

Dear Mr. Old Man,

I hope you are well. I read most of your articles on your website and they are very valuable to me.

I have a question regarding UCP 600 and ISBP 821.

The beneficiary will export goods consisting of both Country A-origin goods and goods of other origins. For the Country A-origin goods, the beneficiary will provide a copy of an EUR.1 certificate as preferential proof of origin.

To comply with the importer’s country regulations, the buyer has requested that the commercial invoice be divided into two separate invoices for one shipment: one covering the Country A-origin goods, for an amount of X, accompanied by the EUR.1 certificate, and another covering the goods of other origins, for an amount of Y. The combined value of the two invoices will not exceed the amount of the credit.

There will be only one shipment by road, and partial shipments are not permitted. All other documents, such as the packing list and CMR, will cover the entire shipment.

Since we are drafting the LC, can we write in the LC, as part of the documents to be presented at the issuing bank:

Manually signed and stamped commercial invoice, showing description of goods, quantity and total value of goods in X amount for Country A origin (preferential origin) and Y amount for foreign countries?

Or is it better, for a complying presentation, to require each invoice as a separate document and specify the amount of each, in order to make it easier for the bank when examining the documents? The total quantity and value of the goods shown in the invoices would not conflict with other documents, such as the packing list or CMR showing the gross weight. All other documents are the same; only the invoices would be separate as a result of the preferential trade agreement.

Is this acceptable under UCP 600 and ISBP 821?

Kind regards and thank you,

Dani

_____

Answer

Dear Dani,

Thank you for your detailed question.

Given the circumstances you describe, I would recommend that the documentary credit expressly require two separate commercial invoices, rather than requiring one invoice containing two sections.

1. UCP 600 does not limit the credit to one commercial invoice

UCP 600 Article 18 sets out the requirements applicable to a commercial invoice. It does not state that a documentary credit can require only one commercial invoice in respect of a shipment.

Therefore, where the commercial circumstances require the goods to be invoiced separately according to their origin, the credit may stipulate two invoices.

2. One shipment does not mean there must be only one invoice

The fact that there is only one shipment by road, evidenced by one CMR, does not mean that there must be only one commercial invoice.

The CMR is a transport document, whereas the commercial invoice is a commercial document. There is no inherent inconsistency in one transport document covering goods represented by two commercial invoices.

I would suggest the following wording in Field 46A:

1. Signed commercial invoice covering the Country A-origin goods, showing their description, quantity, unit price and total value.
2. Signed commercial invoice covering the goods of other origins, showing their description, quantity, unit price and total value.
3. CMR covering the entire shipment.
4. EUR.1 certificate covering the Country A-origin goods.
5. Packing list covering the entire shipment.
6. …

In Field 45A, the goods can likewise be clearly divided according to their origin. For example:

COUNTRY A-ORIGIN GOODS:

Quantity: 5,000 PCS
Unit price: USD 10.00
Sub-total: USD 50,000.00

GOODS OF OTHER ORIGINS:

Quantity: 2,000 PCS
Unit price: USD 15.00
Sub-total: USD 30,000.00

TOTAL AMOUNT: USD 80,000.00

This makes the relationship between the two invoices and the total shipment value clear.

3. ISBP 821 paragraph A40 is not relevant here

It is worth noting that ISBP 821 paragraph A40 is not relevant to this particular issue.

A40 states that documents required by a credit are to be presented as separate documents. It then gives the example of a credit requiring an original packing list and an original weight list, which may be satisfied by two original combined packing-and-weight lists, provided that each document contains both packing and weight details.

That paragraph deals with the presentation of documents required by the credit and the possibility of one document fulfilling two documentary requirements.

This case is different. The issue here is whether the credit may require two commercial invoices covering different categories of goods forming part of one shipment. There is nothing in UCP 600 or ISBP 821 that prevents the credit from doing so.

Conclusion

Accordingly, I would prefer the credit to expressly require the two separate commercial invoices, rather than requiring one invoice divided into two sections.

The fact that there is one shipment under one CMR does not prevent the presentation of two invoices. As long as the two invoices, together with the other stipulated documents, do not contain conflicting data and otherwise comply with the credit, the presentation should be acceptable.

Best regards,

Mr. Old Man