What is High Sea Sales?

Question

Want to know What is High Sea Sales & export procedures

Answer 1

High Sea sales (HSS) is a sale carried out by the carrier document consignee to another buyer while the goods are yet on high seas or after their dispatch from the port/airport of origin and before their arrival at the port / airport of destination.

An HSS contract/ agreement should be signed after dispatch of goods from origin & prior to their arrival at destination. The agreement should be on stamp paper.

On concluding the HSS agreement, the bill of lading (B/L) should be endorsed in favor of the new buyer. In respect of air shipment, HSS seller should write to the airline / consol agent informing that an HSS agreement has been established with the HSS buyer and that the carrier document should therefore be considered as endorsed in favor of the HSS buyer and further the Import General Maniface (IGM) should be filed by the carrier in the name of the HSS buyer.

If the electronic data interchange (EDI) system allows name of HSS buyer to be entered in the system, then there may not be any need to amend the IGM. In this case, the bill of entry/exchange (B/E) is filed in the name of the original importer as the IGM is in this importer name. However, the B/E shows the name of HSS buyer under a separate head in the B/E format. If the system has no provision for showing the name of HSS buyer on the B/E, then the IGM should be got amended and B/E filed in the name of the HSS buyer.

In the case of HSS , the cargo in freight (CIF) value for calculation of duty is taken to be the HSS value.

There is a practice followed in customs that in case the HSS transfer takes place at import invoice value only , the custom would add 4% of CIF value as HSS loading factor . There have been cases where HSS sellers have sold at two percent more than import CIF but custom have added 4% of CIF as HSS value addition. Such practice of customs can be challenged at the customs duty is chargeable on genuine transaction value.

In HSS contracts, the HSS seller may not like to disclose the import value to the HSS buyer. However, the customs can call for the original import invoice, in which case the HSS seller may have to part with this information. To overcome this, HSS seller should take on the responsibility of custom clearance and site delivery. After custom clearance, the HSS seller could withdraw import invoices and only hand over clearance documents with HSS agreement to the HSS buyer. The custom bill of entry does not indicate original import value and is prepared on HSS value.

There is no bar on same goods being sold more than once on high seas. In such cases, the last HSS value is taken by customs for purposes of duty levying. The last HSS agreement should give indication of previous title transfers. The last HSS buyer should also obtain copies of previous HSS agreement as such documents may be called upon by the customs.

HSS is considered as a sale carried out outside the territorial jurisdiction of India. Accordingly, no sales tax is levied in respect of HSS. The customs documents (B/E) is either filed in the name of HSS buyer or such B/E has an endorsement indicating HSS buyer's name.

The title of goods transfers to HSS buyer prior to entry of goods in territorial jurisdiction of India. The delivery from customs is therefore on account of HSS buyer. The CENVAT credit in respect of CVD paid on import is entitled to HSS buyer.

HSS goods are entitled to classification, rates of duty and all notification benefits as would be applicable to similar import goods on normal sale.

HSS is also applicable to goods imported by air. Sea appearing in HSS should not be constructed by its grammatical meaning. As long as the sale is formalized after dispatch from airport / port of origin and before arrival at the first port of discharge / airport at destination, such sale is considered as HSS.

Sometime HSS buyers buy goods after their arrival. Such sale are not HSS. The stamp paper on which the HSS agreement is executed must not bear the stamp paper purchase date as being post cargo arrival date. Such a case can easily be detected by customs as being a post arrival sale.

If the HSS does not mind disclosing original import values to HSS buyer, in such case it is better from custom clearance point of view for the seller to endorse the B/L, invoice , packing list in favour of the HSS buyer. The endorsement should read "Transferred on High Sea Sales basis to M/S -------- for a sales consideration of (currency and amount in that currency) ". Such endorsement should be stamped and signed by the HSS seller.

Answer 2

High Sea Sales

Answer 3

`High seas sale' perhaps conjures up visions of something done hush-hush in the placid waters of ocean, a la our films. Which is why you have instinctively raised doubts about its bona fides and legality. Let me assure you, `high seas sale' is a perfectly legal transaction though the term might have a sinister ring to it. Under the Central Sales Tax (CST) Act, sales tax is payable when goods are sold inter-State. Suppose a producer in Delhi needs a raw material which, if imported, would be more economical for him. But he cannot directly import, as the volumes simply do not justify such direct effort. He, therefore, decides to buy them from trading houses in this country whose main business is import/export. Suppose further that the trading house is in Mumbai where it normally unloads the goods imported. The Delhi trader now will have to pay CST, as the transaction is evidently an inter-State sale. You may note that the trading house would have already paid the import duty on the same goods. `High seas sale' enables one to avoid the second dose of taxation. In the example on hand, the Delhi party could have approached the trading house much before the goods reached the Mumbai port. In other words, the trading house could have sold the goods to the Delhi party while the goods were in the `high seas'. This is possible by suitable endorsement to the document of title to the goods. The goods having been sold in high seas, the Delhi party becomes the importer. It now has to pay the Customs duty which it would have paid in any case even had it bought the goods from the trading house after they had landed at Mumbai, as the trading house would have passed on the duty liability to it. But now it does not have to pay the CST as the movement of goods from Mumbai to Delhi is not on account of inter-State sale but on account of stock transfer, that is, from one location to another of the same person without involving any sale. The rationale behind the whole exercise, therefore, is to knock of the sales tax liability. The technique of high seas sale comes handy even where both the trading house and the manufacturer are located in the same State because what is successfully and legally avoided in this case is the local sales tax which often is much steeper than the rate of CST.

Answer 4

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SALE OF GOODS AFTER DEPARTURE AND BEFORE ARRIVAL OF VASSEL/AEROPLANE TO CONSIGNEE COUNTRY. YES ANY COMPANY CONTAINS THE IEC CODE CAN MAKE HSS AGREEMENT. THE AGREEMENT OF HSS IS TO BE DONE IN CONSIGNEE COUNTRY BEFORE THE ARRIVAL OF THE VASSEL IN CONSIGNEE COUNTRY. THE DUTY IN THE CUSTOM WILL BE PAID 2% ADDITIONAL ON SUPPLIER INVOICE VALUE. SO THERE IS NO OTHER BENEFIT EXCEPT THE GOODS WILL BE PROVIDED BY IST CONSIGNEE TO 2ND CONSIGNEE.