Bank Charges deducted from Foreign Payment

[Ashok Chopra]

Respected Forum,

I am manufacturer-exporter receiving short foreign payment of $ 25.00 on account of Bank Charges of Foreign Bank. and in another case i am discounting bill from foreign bank, they are sending me payment after deducting their charge and interest.

It is not clear to me whether i should return back proportionate drawback to custom department on account of deduction made by foreign bank on account of bank charges and bank interest.

Please guide me accordingly. Also please provide me any clarification/guidlines/notification of any department or court order in this regard.

Thanks and regard

AI Summary

Duty drawback liability may arise where foreign bank deductions reduce export proceeds; conservative view advises repayment with interest.
Whether exporters must return proportionate duty drawback when foreign remittances are reduced by remitting bank charges or discounts is disputed. One view cites Rule 16A recommending conservative repayment of drawback with interest; alternate views treat bank deductions as post receipt expenses (bank charges/interest) recorded in the exporter's books and not a basis for reversal.