Reimbursement of Custome Duty/CHA and other import charges

[KOHINOOR MITRA]

Sir,

My query is as below :

H Co a Hong Kong based company received a global order from S International Bank for supply of machines to different branches of the bank spread across different countries.

H Co wants B Co, an Indian Public limited company to act as H Co's agent  in India to carry out all the import facility for them like

1. payment of custom duty utilising the IEC code of B Co, ( which later will be reimbursed by H Co), here it is expected that the BOE will be in the name of the S international bank India.

2. Get the imported materials cleared through customs in India and send the same to S International Bank in India . The presumption is that as per H's order on B Co., H co will again reimburse all the expenses done in this respect by B Co., additionally H co may also pay a commission for this service done by B Co.

3. Please note that there is no evidence of any locus standi between S bank and B Co.

Kindly advise whether the above transaction is possible and what are the precautions to take if any?

Regards

Kohinoor  Mitra

[YAGAY andSUN]

This transaction would not be legal since,  IEC pertains to B Company and Bill of Entry would in the Name of B company it can't be in the name of S international bank in India.

Reason is very clear that at the time of filing of IGM, the name of the IEC hold incorporated and the consignment should be cleared by that particular person.

Further, FEMA regulation will also apply at the time of Foreign Remittance out of India.

Please share more facts to us to enable us to revert after analysis of legal position.

[KOHINOOR MITRA]

Dear Sir,

Payment of Custom Duty if done by B Co by utilising the IE Code of S International Bank , but B Co chooses to pay the Custom Duty thru' its bank. Here even though the BOE is in favour of S international Bank, the custom Duty is paid and goods cleared.

The idea is that H co wants B co to shoulder the responsibility of payment of all the custom and clearing formalities on behalf and B Co and  gets reimbursemnt of the expenses .

S International Bank will pay H co its dues on account of purchase of the materials from the latter.

Bill of Entry will be in the name of S international Bank since they are purchasing the goods from H Co.

It is suggested that H co will issue a work order on B co for effectuating all these customs payments and work done and suitably refers to the order it received from S International Bank in that WO it places on B Co so that this facilitates immediate connectivity of the Custom Duty payments.

Regards

Kohinoor  Mitra 

AI Summary

Importer of record restrictions may bar using an agent's IEC to clear imports; use agency work orders instead. Use of an intermediary to effect imports for a third party purchaser is constrained by customs rules that fix the importer of record shown in the IGM and the Bill of Entry, and by FEMA considerations for foreign reimbursements. An intermediary cannot lawfully substitute its IEC to create a Bill of Entry in another party's name without addressing these formalities. If an agent will pay duties and obtain reimbursement, a clearly drafted agency or work order linking the agent to the principal's order and specifying payment and reimbursement terms is essential, and parties must ensure customs filings and cross border remittances comply with law.