Now we have export valuation rules under Customs Act 1962.You have to be careful now to declare your export price of the goods.If you over-invoiced the export cargo then also your violating law and you do the same if you declare low price .
Earlier there was rule that the domestic market value of the goods can be much lower than the selling price to the international market.But now there is sequence to follow for determining export value of the goods.Further, you have should have all documents to justify your price.
The sequences to follow to determine export value .First it is transactional value(rule 3),second by comparing price(rule4),third computed method(rule5) fourth Residual method by adopting principal of reasonableness.If the customs officer has doubt about export value,then he may reject the export price it self.[source:NOTIFICATION No. 95/2007-Customs (N.T.) ].
There is fine,penalty and adjudication process for export violation.At time department may launch prosecution against exporter as the case may be.
Tuesday, September 18, 2007
Export price in foreign currency is to be converted with RBI notified exchange rate
Every month The RBI issue exchange rate for export and import for a month. We have different rate for Export and import.Even though both are part of international business.But in day to day business we have fluctuating exchange rate.It changes almost every day.Therefore, it may be poosible that price paid to your buyer or importer may be different in rupee terms .In dollar or other foreign currency,it may be same.The invoice price and remittance paid to foreign person is same.The loss or gain may be in rupees terms to you.
Most of company hedge the foreign currency payment but they have to pay hedging charge to the bank.The recent rise in rupee became loss of profit margin in rupee payment for export cargo.However,the import into India is becoming cheaper on account of rupee rising.
Other option is receive price in more stable currency with respect to Rupees.
Most of company hedge the foreign currency payment but they have to pay hedging charge to the bank.The recent rise in rupee became loss of profit margin in rupee payment for export cargo.However,the import into India is becoming cheaper on account of rupee rising.
Other option is receive price in more stable currency with respect to Rupees.
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