Uncategorized INVOICE SHOWING FREE OF CHARGE GOODS AND … By Mr Old Man Posted on March 6, 2014 9 min read 9 0 6,478 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTIONS Dear Mr. Old Man Could you please give me your opinions on the following questions? QUESTION 1 L/C requires: – Commodity : Pharmaceutical products – Description: Details of quantity and unit price as per contract no. 123 – Total amount: USD100,000.00 (+/-10%) Invoice presented shows: – Commodity: Pharmaceutical products – Description: Details of quantity and unit price as per contract no. 123 # GETINO-B Quantity: 30 boxes Amount: USD49,623 # CLARITEK Quantity: 10 boxes Amount: USD4,753 # GETINO-B Quantity: 30 boxes FREE OF CHARGE The issuing bank refuses the documents stating the discrepancy: Invoice: Goods (30 boxes of GETINO-B FREE OF CHARGE) not called for in the LC. Is the discrepancy valid? QUESTION 2 According to UCP600 Sub-article 19(c) (ii), Sub-article 23(c) (ii), Sub-article 24(e) (ii):” a transport documents indicate transshipment will or may take place is acceptable, even if the credit prohibits transshipment”. Does the provision “prohibits transshipment” in the LC take no effect on MMTD, AWB, Road, Rail, Inland waterway transport documents and these transport documents can show evidences of transshipment, example transshipment from truck A to Vessel A, Truck A to Truck B, Airplane No.1 to No. 2… even if the credit prohibits transshipment? Are these transport documents always allow transshipment in any cases? QUESTION 3 Must packing list, weight list, certificate of quantity, certificate of quality, certificate of fumigation…. show descriptions of goods in general term? Is there a need for such documents to show description of goods? QUESTION 4 According to UCP 600 sub-article 16 (e), can a bank can return the documents to the presenter at any time after it has advised that it is holding the documents pending further instructions from the presenter WITHOUT PRIOR TO ADVISING THE PRESENTER that it will return the documents ? QUESTION 5 When an invoice shows deduction amount, is the discrepancy “short drawn” valid if the LC prohibits partial shipment? For example, LC states: LC amount: USD1,000; Partial shipment: Prohibited Invoice presented shows: Total amount: USD1,000 Deduction: USD200 Claim amount: USD800 Can we raise the discrepancy “short drawn”? Thank you very much. Your sincerely LHC ——————- ANSWER Hi, In order to receive my answer earlier, you are encouraged to submit question by question. I do not have much time to answer a lot of questions at one time. 1. Invoice showing goods not called for in the LC Paragraph C12 (b) clearly states that an invoice is not to indicate goods, services or performance not called for in the credit. THIS APPLIES EVEN WHEN THE INVOICE INCLUDES ADDITIONAL QUANTITIES OF GOODS, SERVICES OR PERFORMANCE AS REQUIRED BY THE CREDIT or samples and advertising material and are stated to be free of charge. It is understood that para C12 (b) not only applies to the goods not called for in the LC but also to the additional quantities of goods called for in the credit. I treat 30 boxes of Getino-B FREE OF CHARGE shown on the invoice as the ADDITIONAL QUANTITIES OF GOODS, hence, I say it’s discrepant as per para C12 (b).The discrepancy raised by the issuing bank is valid. What’s more? An invoice should not include goods free of charge because the buyer may have problem with the customs who may refuse to clear all the goods shipped or at least the quantities of the additional goods shipped free of charge. A contract that includes goods free of charge may not be acceptable by the customs. Just imagine a contract showing 3 Rolls Royces free of charge. I don’t think the customs will agree to clear those free of charge Rolls Royces. 2. Transshipment It is understood from sub-article 19 (c) (ii), sub-article 23 (c) (ii) and sub-article 24 (e) (ii) that transshipment must be allowed, even if prohibited by the LC. 3. Description of goods in documents other than the commercial invoice The following can help answer your question: Sub-article 14 (e) says: “In documents other than the commercial invoice, the description of the goods, if stated, may be in general terms not conflicting with their description in the LC”. ICC Opinion R364 says: “There is no specific requirement for a good description to appear on any document other than the commercial invoice. A bank, faced with a document with no description of goods, should be satisfied that the document and its content relate to the transaction in hand. The inclusion of the invoice number on the beneficiary certificate would be sufficient information to relate this to the other documents”. 4. Disposal of documents According to sub-article 16 (e) a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may, after providing required by sub-article 16 (c) (iii) (a) or (b), return the documents to the presenter at any time. So, such a bank may, at a matter of courtesy, inform the presenter of its intention of returning the documents, but it is not obliged to do so. 5. Short drawn or not? According to paragraph C7 ISBP 745, an invoice may indicate a deduction covering advance payment, discount, etc., that is not stated in the LC. The deduction in your case is a form of discount which could be up to any amount. There’s no discrepancy. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?