NEW DELHI : The Directorate General of Systems and Data Management, CBIC has issued an Advisory dated October 06, 2023, for Trade regarding the Check introduced for the Shipping Bill in reference to the Nature of the Contract.
A check has been introduced for Shipping bills in reference to ‘Nature of Contract’ that wherever an exporter/ CHA declares “Nature of Contract” for invoice as CIF, the unit value at item level for that invoice would be treated as inclusive of freight and invoice, and system would calculate the correct FOB value accordingly.
This check shall ensure that the same nature of contract is declared at invoice level and item level during export.
Export related incentives or export duty, if applicable on export goods, are calculated on the FOB Value. Therefore, it is to be noted that wherever “Nature of Contract” for invoice is declared as CIF, FOB value at item level would be derived by the system after deducting declared insurance and freight amount proportionately among the items of that invoice. Similarly, if “Nature of Contract” is declared as “CF” or “CI”, unit value at item level would be treated as inclusive of freight and inclusive of insurance respectively and thereafter FOB value would be derived by the system.
Points to be noted by Trade
1. For different types of “Nature of Contract”, trade to ensure to correctly declare “whether unit price include” or “add freight” field in the shipping bill message format, at the time of filing of shipping bill, as per following conditions:
- CIF : only B is allowed.
- CI : only I is allowed.
- CF: only F is allowed.
- FOB: only N is allowed.
2. Trade to ensure that amount and currency of “freight” and “insurance” has been declared correctly, since FOB value would be derived by the system, wherever “Nature of Contract” has been declared as “CIF”, “CF” and “CI”.
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