Partial Payment of Invoice for Raw Materials to Oversea Supplier

[Danish Azfar]

Dear Experts, 

We’ve one situation in which need your help.

We have imported some raw materials from oversea supplier. We have found some pcs of Raw material NG at the Incoming quality check and supplier agree to not pay for that NG Qty.

Now we are doing the payment to Supplier after the deduction of the NG material Value, but bank is not processing the partial payment, they are saying we need to do Full invoice value payment.  

But as per our understanding, various other companies is importing the material from oversea suppliers and facing the same issue and obviously need to do the payment after deduction.

Please help us on this situation by providing your guidance.

[Sadanand Bulbule]

Obtain a formal Credit Note from the overseas supplier for the rejected (NG) quantity, duly referring to the original invoice. On submission of the invoice, credit note and bill of entry, the bank is legally empowered to process net remittance after deduction. In the absence of a supplier-issued credit note or revised invoice, partial payment is impermissible under FEMA, and the bank is justified in insisting on full invoice value payment. 

[Danish Azfar]

Dear Sir, 

Thanks a lot for your reply and providing the way forward on the matter. Thanks.

[Shilpi Jain]

Ideally the banker should not insist for payment of full amount since there is no provision under FEMA that the payment has to be done for the full invoice value. Though there is a time limit for making the import payment, which needs tobe adhered to

As suggested by sir above, do take a credit note and basis that this payment can be made without hassel.

AI Summary

Partial payment of import invoices requires a supplier-issued credit note or revised invoice before banks will process net remittance. Adjusting an import payment for rejected goods requires a formal credit note or revised invoice referencing the original invoice; without such supplier-issued documentary evidence submitted with the bill of entry, banks are justified in insisting on payment of the full invoice value, and import payments remain subject to FEMA timing and compliance requirements.