I’ll ride here again tomorrow morning!
QUESTION
Dear Mr. Old Man,
May I ask for your comment of the following query:
L/C states:
45A Description of Goods
THREE ELEVATORS HS 84.28.10.20 , KRONE MONOSPACE 500 AS PER P.I. NO. 1234 DATED 07/07/2014
TRADE TERM: FOB
46A Documents required:
+ SIGNED COMMERCIAL INVOICE IN 4 COPIES SPECIFYING COST OF GOODS …
Invoice presented shows as follows:
DESCRIPTION OF GOODS
ELEVATORS HS 84.28.10.20 , KRONE MONOSPACE 500 AS PER P.I. NO. 1234 DATED 07/07/2014
ELEVATOR 1: EUR48,113.00
ELEVATOR 2: EUR47,105.00
ELEVATOR 3: EUR25,606.00
Inland freight costs for pre-carriage: EUR1,400.00
__________
EUR122,224.00
Total value FOB (Incoterms 2010): EUR122,224.00
Can we raise the discrepancy “Invoice not showing cost of goods”?
Thank you for your comment and assistance in this issue.
Regards,
Leung KS
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ANSWER
Hi,
There may be divided opinions, but in my opinion, there is no discrepancy.
FOB (Free On Board) value is understood as the price paid for the goods plus the cost of transportation, loading, unloading, handling, insurance, and associated costs incidental to delivery of the goods at the port or place of export in the country of export. In other words, FOB value is the cost of goods on board the vessel at the port of loading. This is a common knowledge that all document checkers know.
The invoice showing as described is deemed to satisfy the LC requirement, hence, it should be acceptable.
By the way, if the trade term is CIF, e.g., CIF Hong Kong, and the LC requires invoice to indicate cost of goods, insurance and freight, then the invoice should so indicate.
For example,
ELEVATOR 1: EUR48,113.00
ELEVATOR 2: EUR47,105.00
ELEVATOR 3: EUR25,606.00
Inland freight costs for pre-carriage: EUR1,400.00
——————–
Cost of goods: EUR122,224.00
Insurance: EUR250.00
Freight: EUR20,000.00
———————
Total: EUR142,474.00 CIF Hong Kong
Kind regards,
Mr. Old Man
