Payments to Importer

[ARUN KARWA]

Sir, my query is with regard to import payments made to the foreign party nett of discount / credit notes. To be precise, say the Invoice is raised for ₹ 100 and the said amount is declared in Bill of Entry and accordingly custom duty, GST etc. is paid at the time of actual imports.

Now, subsequently, we receive credit note on the said invoice from the foreign supplier which amounts to approx. 9% of the invoice amount as we make imports on frequent and regular basis during the year. We adjust 9% of the credit note at the time of import payments. However, our Banker says that as per RBI guidelines we can not adjust more than 5% or else it should be mentioned in the Bill of Entry. However as we resale the imports on High seas basis, it is not feasible to mention the same on Bill of Entry as we do not want our customer to know the credit notes received by us.

Kindly opine in terms of the related RBI guidelines, if any.

[YAGAY andSUN]

Please check the Master Direction as issued RBI on Import of Goods and Services. Link is provided below

FED Master Direction No. 17/2016-17 Dated January 1, 2016

AI Summary

RBI import payment adjustment limit restricts netting of supplier credit notes unless disclosed in the bill of entry. Importer seeks to net supplier credit notes against import payments after customs assessments on full invoice value; banker contends RBI permits only a 5% adjustment limit without disclosure in the Bill of Entry. The reply refers the importer to RBI Master Direction No. 17/2016-17 on Import of Goods and Services for the governing foreign exchange and banking rules on permissible adjustments and Bill of Entry disclosure requirements.