High Sea Sale is a sale of goods by Importer, who imports the good from other country, before goods entering in Indian Territory. Here, the actual Importer of cargo makes a contract with a local Buyer in the same country of importer who intends to purchase these imported goods by a High Sea Sale Agreement. Actual buyer who is the importer of cargo is to be a Consignee/ Notify Party of the bills of lading for the goods which is being imported. This high seal Sale contract is made when cargo is in High Sea means cargo is loaded from the load port and ship sailed for destination port. The date of High Sea Sale must be in between the date of departure of ship from the load port and the date of arrival of ship at the discharge/ destination port. If the ship is arrived at discharge port High Sea Sale agreement can not be made. High Sea Sale agreement date should be before vessel filing her IGM (Import General Manifest) at the port of discharge. This High Sea Sale agreement should be made on stamp papers with signature of Importer and the buyer.
We can explain it by taking an example. If A has imported some goods and he wants to sale it to B on High Sea Sale Basis. In this case before arrival of vessel in importing country and before filing of IGM, A and B enters into High Sea Sale Agreement and A makes a High Sea Sale invoice in the name of B in local currency after adding his profit margin. A handovers original Bill of lading to B after endorsing it in the name of B. B submits all relevant document in the Customs where cargo is arrived generally by their clearing agents. Here all the charges related to Duties/Taxes will be paid by B. A is not liable to pay any duty/taxes of the imported goods. Custom clearance is done in the name of B. Bill of entry is filed in the name of B. But the IEC code of A will be also mentioned in the Bill of Entry. As this will be required for A for his bank to settle this transaction.
General Terms of High Sea Sale Agreement:
- Name and complete address of both the party i.e. Original buyer and the importer.
- Description of Product Total Quantity in Net Weight and Gross Weight (as per Bills of Lading)
- Bills of lading number and date
- Container numbers (for Containerized Shipments)
- Vessel name and Voyage number (as indicated in the bills of lading)
- High Sea Sale invoice with invoice number and amount.
- Payment terms as mutually agreed between the original buyer and importer.
- Vessel Name & Voyage Number.
- Taxes and Duties terms.
- Other clauses like (Arbitration, legal, force majeure) etc
Documents required to be submitted in customs for clearance of cargo :
- High Sea Sale Agreement between Original Buyer and Importer,
- Invoice and Packing List,
- Endorsed Bills of Ladin
- Certificate of Origin
- Other certificates required like Quality, Weight etc.
- Insurance certificate.
Advantage of High Sea Sale :
- Importer can import large quantity of cargo and sale it to the buyer in small quantities,
- Importer is exempted for IGST and other taxes as it will be paid by the final buyer.
- Final buyer do not have to enter into negotiation with foreign buyers.
- Final buyer has option for taking smaller quantity of cargo depending on their financial capability.
- Importer gets better margin for selling product on high sea sale.
- Final buyer has advantage to get the goods in short period of time.
Disadvantage of High Sea Sale
- The documentation and process is lengthy and cumbersome. As it require a lot of documentation and formalities with customs.
- If there is any demurrage or detention, that will be paid by the final buyer,
- Taxes are based on assessed value of customs which is generally on upper side.
We have tried to explain it in very easy way, however there are complicacy associated with High Sea Sale. If you have and queries and need clarification, please contact us on : accuviseassociates@gmail.com
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