INCOTERMS
Md.Saiful Islam,CDCS
|
Senior Assistant Vice President
|
SIBL,CTPU,Dhaka
|
INCOTERMS
INCOTERMS are a set of standard terms used in contracts for international sales and utilized to determine the obligation of the parties. They clearly set out the duties, costs and transfer of risks involved in the delivery of goods from sellers to buyers. These rules provide a wide choice to sellers and buyers as to how they wish to share those duties, costs and risks. Each rule represented by 3 letters. The word “INCOTERM” is an abbreviation of “International Commercial Terms”
The seller will issue the quotation of pro-forma invoice which will provide the buyer with important information such as name and address of seller, description of goods and unit price and a total price which will be based on the INCOTERM agreed between seller and buyer. The pro-forma invoice also specify the method of payment and some other related information.
One of the challenge in any sales contracts is to ensure that both parties understand their responsibilities .These include the payment of carriage , insurance, loading and unloading costs, import and export taxes, and any other associated cost. Each of these will be the responsibility of either the seller or buyer. The buyer needs to understand these responsibilities to be able to calculate the full purchase price; the seller, to provide an accurate sales price. The chance of dispute is minimised when the parties share the same understanding of their respective responsibilities.
One of the best ways in which to minimise the chance of dispute, in both domestic and international trade, is to use Incoterms but there is no obligation to use incoterms under the UCP . The primary benefit of using Incoterms is that the exporter and the importer need not undergo a lengthy negotiation about the condition of each transaction. Once they have agreed on a commercial term like CIF, they can sell and buy at CIF without discussing who will be responsible for the freight, cargo insurance and other costs and risks. Any obligation that does not appear in a particular Incoterm is the responsibility of the buyer unless the sales contract states otherwise.
The ICC first published its Incoterms in 1936, and over time they have become the accepted international standard for trade terms referred to in sales contracts.
The rules have been updated and revised in the following years:
1936-1957-1967-1974-1980-1990-2000-2010
The current version of Incoterms, Incoterms 2010, came into effect on 1 January 2011. The full version is provided in ICC publication NO.715.
These rules were created in the framework of the international Chamber of Commerce (ICC),Paris, whose validity is recognized internationally.
Incoterms “ do”:
· Divide costs,risks and responsibilities between seller and buyer
· Reduce potential misunderstandings between buyer and seller
· Reflect actual trade practice and that is why in recent years Incoterms have been updated regularly to reflect changing trade practice around the world.
Incoterms do not:
· Deal with transfer of property rights (convey title)
· Include all of the duties of the buyer and seller in a transaction
· Automatically apply
· Speak about payment disputes between buyer and seller.
· Deal with unit price.
· Deal the method of payment
INCOTERMS clearly define:
ü Who has to take care and pay for the transport of the goods
ü Who has to take care and pay for the insurance of the goods
ü Who has to take care and pay for other costs like, e.g. customs, handling, loading, unloading
ü Define the place where the seller has to deliver the goods to the buyer, carrier or any other nominated person.
ü Define clearly the place and time when the risk is transferred from one party to another
INCOTERMS are not:
Ø Law – Incoterms need to be specified in sales contracts in order to apply that means incoterms rules become part of the contract of sale by express incorporation. No international trader is obliged to use them in their sales contracts with other traders.
Ø All-Inclusive - Detailed situations beyond the scope of incoterms must be covered elsewhere in sales contract.
In a sales transaction between a seller and a buyer a typical sequence of steps in the carriage of the goods may be outlined as follows:
Ø The goods are made available for export
Ø local transport of goods in exporting country
Ø export clearance, if applicable
Ø loading
Ø main transport
Ø unloading
Ø import clearance, if applicable
Ø local transport in importing country
For learning purposes :
The incoterms can be broken down into 4 groups, consisting of E Terms, F terms, C Terms and D Terms.
v Group 1-The E Term
This group has only one term: Ex Works (EXW) and under this term the exporter provides the goods for collection by the importer at the exporter ‘s own premises.
v Group 2-The F Terms (Free)
This group has three terms all starting with the letter F- FCA,FAS and FOB, where the exporter must delivery the goods to a carrier appointed by the importer and located in the exporter’s country.
v Group 3-The C Terms (Cost or Carriage)
This group has four terms all starting with the letter C- CFR,CIF,CPT and CIP. In this group the exporter assumes the responsibility for the contract of carriage but is not responsible for the risk of loss of , or damage to , the goods or any other costs caused by events arising after the goods have been delivered by the exporter into the custody of the carrier as evidenced by the appropriate transport document.
v Group 4-The D Terms (Delivered)
This group has 3 terms all starting with the letter D- DAP, DAT, and DDP. In this group the exporter has to bear all costs and risks of bring the goods to the named place of destination.
Incoterms 2010
Group Type
|
ICC Abbreviation
|
Full Term
|
E Group (Departure)
|
EXW
|
Ex works
|
F Group
|
FCA
|
Free carrier
|
(Main carriage is obligation of
|
FAS
|
Free alongside ship
|
the importer)
|
FOB
|
Free on bord
|
C Group
|
CFR
|
Cost and freight
|
(Main carriage is obligation of
|
CIF
|
Cost,insurance and freight
|
the exporter)
|
CPT
|
Carriage paid to
|
CIP
|
Carriage and insurance paid to
|
|
Group D
|
DAP
|
Delivered at place
|
(main carriage is obligation of the exporter and risk remains
|
DAT
|
Delivered at terminal
|
exporter to named place of destination)
|
DDP
|
Delivered duty paid
|
The 11 Incoterms rules are divided into 2 distinct classes:
· Rules for any mode of transport, also known as the omni-moodal Incoterms rules
· Rules for sea and inland waterway transport, also known as the Maritime Incoterms rules
ü The 7 omni-modal Incoterms rules can be used irrespective of the mode of transport selected and whether or not one or more mode of transport is used.
ü The Maritime Incoterms rules are used for port to port shipment for both sea and inland waterway.
RULES FOR ANY MODE OR MODES OF TRANSPORT
|
RULES FOR SEA AND INLAND WATERWAY TRANSPORT (Both the point of origin and destination are ports)
|
EXW
Ex Works
EXW (insert named place of delivery)
Incoterms 2010
|
FAS
Free alongside Ship
FAS (insert named port of shipment)
Incoterms 2010
|
FCA
Free carrier
FCA( insert named place of delivery)
Incoterms 2010
|
FOB
Free on Board
FOB (insert named port of shipment)
Incoterms 2010
|
CPT
Carriage paid to
CPT( insert named place of destination)
Incoterms 2010
|
CFR
Cost and freight
CFR(insert named port of destination)
Incoterms 2010
|
CIP
Carriage and insurance paid to
CIP( insert named place of destination)
Incoterms 2010
|
CIF
Cost,Insurance and Freight
CIF(insert named port of destination)
Incoterms 2010
|
DAT
Delivered At Terminal
DAT( insert named place of destination)
Incoterms 2010
|
|
DAP
Delivered AT Place
DAP( insert named place of destination)
Incoterms 2010
|
|
DDP
Delivered Duty Paid
DDP( insert named place of destination)
Incoterms 2010
|
EXW-Ex works
Carriage of goods
|
||||||||
Delivery/Risk
|
||||||||
Cost
|
||||||||
Export Clearance Import Clearance
EXW -Ex Works is one of the Incoterms which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. It is suitable for domestic trade as well as for international trade.
Under “Ex works” the critical point of delivery occurs when the seller places the goods at the disposal of the buyer at the seller’s premises or at the another place such as a works,factory or an agreed warehouse.
The primary duties of the seller and buyer:
ü The seller delivers when the goods are placed at the disposal of the buyer,Typically at the sellers premises or at the another agreed placed.
ü The seller do not load the goods in the means of transport (truck) sent by the buyer.
ü The seller bears the cost until the goods placed at the disposal of the buyer at the named place of delivery.
ü All further costs have to be borne by the buyer including any costs incurred for export or security clearance.
ü The risk transfers from the seller to the buyer when the goods are placed at the buyers disposal at the named place of delivery.
ü The seller must provide the buyer, at the buyer’s request, risk and expense, assistance in obtaining any export licence, or other official authorization necessary for the export of the goods
ü The seller has no obligation to the buyer to make a contract of carriage or of insurance and the buyer has no obligation to the seller to make a contract of carriage or of insurance .
Once the goods are delivered to the name place of delivery in accordance with ex works then all obligations that may arise in respect of the any contract of carriage, all risks and any related costs are for the account of the buyer.
FCA-Free Carrier
Carriage of goods
|
||||||||
Delivery/Risk
|
||||||||
Cost
|
||||||||
Export Clearance Import Clearance
FCA –Free Carrier is one the Incoterms which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed.
Under “FREE CARIER” the critical point of delivery occurs when the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
The primary duties of the seller and buyer:
Ø The seller delivers when the goods are either:
ü placed at the disposal of the carrier or another person nominated by the buyer on the sellers means of transport ready for unloading if the named place of delivery is other than seller’s premises. Or
ü loaded on the means of transport provided by the buyer if the named place is the seller’s premises. In either case the seller has no obligation to the buyer in respect of the contract of carriage.
ü The seller bear the cost until the goods have been delivered at the named place of delivery including any costs incurred for export or security clearance.
Seller bear loading cost of local transport if the named place of delivery is seller’s premises.
Buyer bear cost from unloading of local transport to onward all cost if the named place of delivery is other than seller’s premises.
ü The risk transfers from the seller to the buyer when the goods have been delivered to the carrier or other nominated person at the named place of delivery. Alternatively, if the means of transport is provided by the buyer at the seller premises then when delivered loaded on the buyers means of transport.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
Once the goods are delivered to the name place of delivery in accordance with FREE CARRIER including costs for export and security clearance then all obligations that may arise in respect of the any contract of carriage, all risks and any subsequent costs are for the account of the buyer.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
FAS-FREE ALONGSIDE SHIP
Carriage of goods
|
||||||||
Delivery/Risk
|
||||||||
Cost
|
||||||||
Export Clearance Import Clearance
FAS-FREE ALONGSIDE SHIP is one of the Incoterms used for sea and inland waterway transport.
FAS means that the seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment/loading.
The primary duties of the seller and buyer:
ü The seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment.
ü The seller bears the cost until the goods are delivered alongside the vessel nominated by the buyer at the named port of shipment/loading.
ü The seller also bears the cost incurred for export or security clearance in country of export.
ü The risk of loss or damage to the goods passes from seller to buyer when the goods are placed alongside the ship (the quay) and the buyer bears all costs and risk from this point.
ü The buyer must contract at its own expense for the carriage of goods from the named port of shipment except where the contract of carriage is made by the seller at buyer’s request.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
FOB-FREE ON BOARD
Export Clearance Import Clearance
FOB-FREE ON BOARD is one of the Incoterms used for sea and inland waterway transport.
FOB involves one critical point when the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment/loading.
The primary duties of the seller and buyer:
ü The seller delivers when the goods are delivered on board the vessel nominated by the buyer at the named port of shipment.
ü The seller bears the cost including loading until the goods are loaded on board the vessel nominated by the buyer at the named port of shipment/loading. The seller also bears the cost incurred for export or security clearance in country of export.
ü The seller bears the risk until the goods are delivered on board the vessel nominated by the buyer at the named port of shipment/loading.
ü The risk of loss or damage to the goods passes from seller to buyer after the goods are loaded on board and the buyer bears all costs and risks from this point.
ü The buyer must contract at its own expense for the carriage of goods from the named port of shipment except where the contract of carriage is made by the seller at buyer’s request.
The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract. (including any transit fee/charge, if any).
CFR-COST AND FREIGHT
Delivery/Risk
|
||||||||
Export Clearance Import Clearance
CFR-COST AND FREIGHT is one of the Incoterms used for sea and inland waterway transport.
CFR involves two critical points, one being the delivery point and the other being the destination port. Under CFR the seller delivers the goods when the goods are on board the vessel at the port of loading but the seller must also contract, or procure a contract, for the carriage of goods to the named destination port.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named port of destination.
ü The seller bears the cost of carriage including the loading (and unloading if included in contract of carriage) to the named port of destination. The seller also bears the cost incurred for export or security clearance in country of export.
ü The seller bears the risk until the goods are delivered on board the vessel at the named port of loading.
ü The risk of loss or damage to the goods passes from seller to buyer after the goods are loaded on board and the buyer bears all risks from this point.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
CIF-COST INSURANCE AND FREIGHT
Carriage of goods
|
||||||||
Export Clearance Import Clearance
CIF-COST INSURANCE AND FREIGHT is one of the Incoterms used for sea and inland waterway transport.
CIF involves two critical points, one being the delivery point and the other being the destination port. Under CIF the seller delivers the goods when the goods are on board the vessel at the port of loading but the seller must also contract, or procure a contract, for the carriage of goods to the named destination port.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named port of destination.
ü The seller bears the cost of carriage including the loading (and unloading if included in contract of carriage) to the named port of destination together with any cost incurred for export or security clearance.
ü The seller will also pay the cost of insurance of the goods with minimum cover up to the port of destination. The insurance shall cover at a minimum, the price provided in the contract plus 10%, that is 110%, and shall be in the currency of the contract. This insurance shall entitle the buyer or any other party with an insurable interest in the goods to claim directly from the insurer.
ü The seller bears the risk until the goods are delivered on board the vessel at the named port of loading.
ü The risk of loss or damage to the goods passes from seller to buyer after the goods are loaded on board and the buyer bears all risks from this point.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
CPT-CARRIAGE PAID TO
Carriage of goods
|
||||||||
Export Clearance Import Clearance
CPT-CARRIAGE PAID TO is one of the Incoterms which may be used irrespective of the transport and may also be used where more than one mode of transport is employed.
CPT involves two critical points, one being the delivery point and the other being the named place of destination. Under CPT the seller delivers the goods when the goods are delivered to the carrier or another person nominated by seller.
Under CPT the seller fulfils its obligation to deliver when it hands the goods over to the carrier and not when the goods reach the place of destination.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named place of destination.
ü The seller bears the cost of carriage including the loading (and unloading if included in contract of carriage) to the named place of destination together with any cost incurred for export or security clearance.
ü The seller bears the risk until the goods are delivered to the carrier or another person nominated by the seller at an agreed place or point.
ü The risk of loss or damage to the goods passes from seller to buyer after the goods are delivered to the carrier or another person nominated by the seller at an agreed place or point and the buyer bears all risks from this point.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
CIP-CARRIAGE AND INSURANCE PAID
Carriage of goods
|
||||||||
Delivery/Risk
|
||||||||
Export Clearance Import Clearance
CIP-CARRIAGE AND INSURANCE PAID is one of the Incoterms which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed.
CIP involves two critical points, one being the delivery point and the other being the named place of destination. Under CIP the seller delivers the goods when the goods are delivered to the carrier or another person nominated by seller at the agreed palace.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named place of destination.
ü The seller bears the cost of carriage including the loading (and unloading if included in contract of carriage) to the named place of destination together with any cost incurred for export or security clearance.
ü The seller will also pay the cost of insurance of the goods with minimum cover during carriage. The insurance shall cover at a minimum, the price provided in the contract plus 10%, that is 110%, and shall be in the currency of the contract. This insurance shall entitle the buyer or any other party with an insurable interest in the goods to claim directly from the insurer.
ü The seller bears the risk until the goods are delivered to the carrier or another person nominated by the seller at an agreed place or point.
ü The risk of loss or damage to the goods passes from seller to buyer after the goods are delivered to the carrier or another person nominated by the seller at an agreed place or point and the buyer bears all costs and risks from this point.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
Note: The use of terms FOB,CFR and CIF is not recommended for container traffic. This is simple because the seller loses physical control over the consignment at a point prior to the goods reaching the vessel under containerised shipment. For containerized shipment it is recommended to use FCA,CPT, or CIP Incoterms.
DAP –DELIVERED AT PLACE
Export Clearance Import Clearance
DAP –DELIVERED AT PLACE is one of the Incoterms which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed.
DAP means that the seller delivers the goods, once they are placed at the disposal of the buyer on the arriving means of transport ready for unloading at a named place of destination.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named place of destination.
ü The seller bears the cost of carriage including loading for carriage plus the costs for the transport of the goods through any country (including any transit fee/charge, if any), prior to delivery at the named place of destination together with any costs incurred for export or security clearance in country of export.
ü The seller does not bear the costs of unloading at the destination point unless such unloading costs are included in the sellers contract of carriage.
ü The seller bears the risk until the goods are delivered ready for unloading at the agreed point at the named place of destination.
ü The risk of loss or damage to the goods passes from seller to buyer when the goods are ready for unloading at the agreed point at the named place of destination.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
DAT –DELIVERED AT TERMINAL
Carriage of goods
|
||||||||
Export Clearance Import Clearance
DAT –DELIVERED AT TERMINAL is one of the Incoterms which may be used irrespective of the transport and may also be used where more than one mode of transport is employed.
DAT means that the seller delivers the goods, once they are unloaded from the arriving means of transport and placed at the disposal of the buyer at a named terminal located at the named port or place of destination.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named terminal at the agreed port or place of destination.
ü The seller bears the cost of carriage including loading for carriage plus the costs for the transport of the goods through any country (including any transit fee/charge, if any), prior to delivery at the named destination terminal.
ü The seller also bears the costs of unloading at the destination terminal together with any costs incurred for export or security clearance in country of export.
ü The seller bears the risk until the goods are delivered unloaded and placed at the disposal of the buyer at the named terminal at the agreed port or place of destination.
ü The risk of loss or damage to the goods passes from seller to buyer after the goods have been unloaded and placed at the disposal of the buyer at the named terminal at the agreed port or place of destination.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
ü The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
In the context of the Incoterms “terminal” includes any place, whether covered or not such as a quay warehouse, container yard or road rail or air cargo terminal.
Main difference between DAT and DAP :
In DAT-The seller delivers the goods at the named terminal once unloaded from the means of transport used.
In DAP-The seller delivers the goods at the named place, ready to unload from the means of transport used, but without unloading it.
DDP –DELIVERED DUTY PAID
Carriage of goods
|
||||||||
Delivery/Risk
|
||||||||
Cost
|
||||||||
Export Clearance Import Clearance
DDP –DELIVERED DUTY PAID is one of the Incoterms which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed.
DDP means that the seller delivers the goods, once the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
The primary duties of the seller and buyer:
ü The seller must contract for the carriage of the goods to the named place of destination.
ü The seller bears the cost of carriage including the loading for carriage plus the costs for the transport of the goods through any country (including any transit fee/charge, if any), prior to delivery at the named place of destination. The seller also bears the cost of all customs formalities and payment of duties on export and import up to the named place of destination.
ü The seller does not bear the costs of unloading at the destination point unless such unloading costs are included in the sellers contract of carriage.
ü The seller bears the risk until the goods are delivered cleared for import and ready for unloading at the agreed point at the named place of destination.
ü The risk of loss or damage to the goods passes from seller to buyer when the goods are ready for unloading at the agreed point at the named place of destination.
ü The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance.
ü The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may required by the contract.
v Import policy order says regarding using Incoterms -
Ø Import using Incoterms-
Goods can be imported through water, land and airways on the basis of defined Incoterms:
Provided that in case of import on FOB basis, the concerned importer shall have to properly comply with foreign exchange regulation act,1947 and rules made there under;
(i) Goods can be imported by using other Incoterms except DDP,CIF and CIP ; if freights and other charges are payable according to the Incoterms, imports shall be complied with the Foreign Exchange Regulation Act,1947 and rules made there under so that no additional payment is required for imports;
(ii) Unless there is specific provision in the relevant loan agreement or project agreement concluded with the foreign donors for import on CIF or CIP basis, no import shall be allowed on CIF or CIP basis without prior approval from the Ministry of Commerce;
(iii) Any expatriate Bangladeshi with income earned abroad and any foreign investor with his share of equity can send capital machineries & raw- materials on CIF or CIP basis;
(iv) Goods from foreign countries free of cost or gift items are importable on CIF or CIP basis;
(v) Food items can be imported by Ministry of Food and Ministry of Relief and Rehabilitation Management on CIF or CIP basis;
v Guideline For Foreign Exchange Transaction says regarding using Incoterms as follows :
Appropriate Incoterms should be incorporated in the letter of credit/purchase contract in compliance with the IPO in force. Import shall usually be made on CFR / CPT basis (as the case may be). However, import on FOB basis shall be subject to the provisions mentioned bellow-
Ø Imports on FOB basis:
In case of import on FOB basis, the AD banks may at the request of their importer clients make payments of freight/transportation charges in Taka or in equivalent foreign exchange to shipping companies/airlines/eligible licenced freight forwarders, out of the total value of LCAF issued for the import covering costs of goods and transportation charges. The receipts in foreign exchange will be used through foreign currency accounts maintained by the shipping companies /airlines/eligible licenced freight forwarders as mentioned in Para 1(ix), Chapter 10 & Para 33, Chapter 13 of GFET . In case of FOB imports the AD should endorse, beside FOB value, the transportation charges payable in foreign currency and in equivalent Taka as indicated in the bill of lading etc. along with miscellaneous. charges, if any as mentioned in para 7, chapter -7of GFET, as indicated in the airway bill. The ADs should also issue a certificate to the importers in the form given in Appendix-5/13 to the effect that the amount of transportation charges etc. have been endorsed on the relative LCAF. The issue of this certificate is essential as the shipping companies/airlines etc. are under instructions not to accept payment of freight in Taka or FC unless the above mentioned certificate is produced to them. Moreover, ADs shall not deposit the amount in their FC accounts designated for outward payment on account of surplus earnings/foreign liabilities without producing this certificate. However, payment of transportation charges against FOB import through chartered ship is subject to compliance of relevant instructions mentioned in Para 12, Chapter 10 of GFET. In cases where the FOB value and the amount of transportation charges payable in Taka or FC exceeds the value of the LCAF, the application should be referred to the Bangladesh Bank for consideration with full particulars and supporting documentary evidence.
Freight on Imports in Bangladesh Currency: Freight on imports on FOB basis against LCAFs issued on CFR/CPT/CIF basis shall be accepted in Bangladesh in the local currency by the shipping companies/airlines/freight forwarders provided a certificate from the AD as mentioned in Appendix 5/13 is produced by the importer to the airline/shipping company concerned. The AD should ensure that in the case of imports on FOB basis against LCAF issued on CFR/CPT/CIF basis, a reasonable margin within the overall limit of the LCAF is reserved to cover the amount of freight so that the overall total cost does not exceed the amount of the LCAF. With a view to ensuring compliance with the above requirement, the AD should endorse on the LCAF the amount of freight payable in Bangladesh currency as stated in the bill of lading/airway bill and to issue a certificate in the form prescribed in Appendix 5/13 for presentation to the shipping company/airline in Bangladesh at the time of payment of freight in Bangladesh currency. Shipping companies/airlines are advised that while accepting payment of freight in Bangladesh currency on such imports they should invariably insist on production of the certificate from the ADs prescribed in Appendix 5/13 which should be enclosed with the freight manifest/return at the time of applying for remittance of surplus freight collections. However, 'freight/transportation charge on FOB basis import may be accepted in foreign currency also as per instructions mentioned below:
Accepting freight on FOB imports in foreign currency by shipping companies/ airlines, eligible freight forwarders Shipping companies/airlines may accept freight charges on FOB imports in foreign currencies from the importers/eligible licenced freight forwarders while importers' banks may at the request of their importer clients make payments of freight charges in foreign exchange to airlines/shipping companies/eligible licenced freight forwarders, out of the total value of the LCAF issued for the import covering costs of goods and freight (Para 16, Chapter 7). The receipts in foreign exchange shall be used through the foreign currency accounts maintained by shipping companies/airlines/eligible licenced freight forwarders as mentioned in Para 33, Section-VI Chapter 13. However, payment of freight in FC shall be supported by certificate as per appendix 5/13 while crediting the FC account concerned which should be enclosed with the freight manifest/return at the time of applying for remittance of surplus freight collections.
v Guideline For Foreign Exchange Transaction says regarding Incoterms in export LC as follows :
Using appropriate incoterms In EXP form, ADs shall use appropriate incoterms issued by the International Chamber of Commerce. ADs are allowed to use any of the terms as EXW, FCA, FOB, FAS, CFR, CIF, CPT and CIP provided those are stipulated in the relevant LCs or sales contracts. ADs are however, strongly advised to inform the exporters about the risk and responsibility involved in such cases. While certifying the EXP Forms, the ADs must show the FOB or its equivalent value and cost of freight, insurance and other charges separately on the EXP forms.
The ADs, while certifying realisation of the export proceeds will in addition to the certificate in the appropriate column, also indicate on the reverse of the second original form the FOB equivalent value, insurance and freight separately. For this purpose they may use a rubber stamp as appropriate. This is to mention that, FCA Incoterm will be used in LC/contract if goods are to be delivered by exporters to the buyer’s nominated person prior to loading on board a vessel. Exporters may face additional risks and incur extra costs if FOB term is used in such cases instead of FCA. ADs are therefore, advised to satisfy themselves that contracts/LCs reflect accurate terms and conditions of the Incoterm stipulations before advising the same to the beneficiaries. Inconsistency, if any, should be informed immediately to the LC issuing bank for necessary amendment with intimation to the beneficiary. ADs shall also keep their exporter customers informed of the appropriate terms and conditions against applicable Incoterms for export so that they can insist foreign buyers to get LCs issued/contract accordingly.
Freight on Exports: Freight on exports from Bangladesh in local currency/foreign currency shall be accepted only when a certificate from the exporter's bank is produced to the Shipping Companies/Airlines in the following form:
"Certified that EXP Form ....................in respect of shipment to be made by M/s.( name of the exporter) has been stamped to the effect that the documents in respect of the shipment under this EXP form shall be negotiated/accepted only when these are drawn on CFR/CIF/CPT/CIP basis and not on FOB/FCA/FAS/EXW basis. Before issuing the above certificate, the ADs will invariably endorse the relative EXP form in the following manner:
"Certified that documents in respect of the shipment under this EXP form shall be negotiated/accepted only when these are drawn on CFR/CIF/CPT/CIP basis and not on FOB/FCA/FAS/EXW basis.
While submitting the applications for remittances to the AD, the Shipping Companies will invariably submit therewith the aforesaid bank's certificate along with a copy of the relevant bill of lading duly arranged according to the entries appearing on the freight manifest. In case of Airlines, Airway bill is to be submitted together with the certificate of the AD as mentioned above.
v Shipments on FOB basis :
In cases, where exporters arrange insurance cover and freight in Bangladesh but prepare invoices on FOB basis, the ADs should verify from the bills of lading that freight has not been prepaid in Bangladesh. All cases where freight or insurance has been paid in Bangladesh but export documents are on FOB basis should be reported to the Bangladesh Bank.
EXW
|
FCA
|
FAS
|
FOB
|
CFR
|
CIF
|
CPT
|
CIP
|
DAT
|
DAP
|
DDP
|
|
Warehouse/storage
|
seller
|
seller
|
seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Loading charge
|
buyer
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
Inland freight
|
buyer
|
Buyer/seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
Export clearance
|
buyer
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
Loading on vessel
|
buyer
|
buyer
|
buyer
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
seller
|
Ocean/Air freight
|
buyer
|
buyer
|
buyer
|
buyer
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Seller
|
Insurance
|
-
|
-
|
-
|
-
|
-
|
seller
|
-
|
seller
|
-
|
-
|
-
|
Unloading
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
seller
|
buyer
|
Seller
|
Import clearance
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
seller
|
Delivery to destination
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
buyer
|
seller
|
INCOTERMS 2010
From the standpoint of the seller Extent of obligations
Goods available to the buyer, is seller warehouse
And unloaded
|
Ø EXW
|
Deliver the goods to the carrier chosen by the buyer
|
Ø FCA-FAS-FOB
|
Deliver the goods to the carrier selected by seller
|
Ø CFR-CPT
|
Deliver the goods to the carrier chosen by seller
Dealing and paying the insurance.
|
Ø CIF-CIP
|
Maximum obligation. Delivering the goods at destination ...named place.
Group E –Minimum obligation.
Group F-Seller must hand over the goods to a nominated carrier free of risk and expense to the buyer.
Group C-seller must bear costs even after the delivery to carrier where risk transfers.
Group D- Maximum obligation.Goods must arrive at a stated destination.
|
Ø DAT-DAP-DDP
|
No comments:
Post a Comment