LC Terms vs. Customs Regulations

[PattySpaven]

An LC from Nigeria required the following document:

"ONE ATTESTED ORIGINAL AND AT LEAST ONE COPY OF FINAL INVOICE WITH DESCRIPTION OF GOODS. THE ORIGINAL TO BE DULY ENDORSED AND AFFIXED WITH THE SECURITY LABEL/SEAL OF SWEDE CONTROL/ INTERTEK, ITS AGENT OR AFFILIATE, BEARING THE CLEAN REPORT OF INSPECTION NUMBER AND SHALL ATTEST THAT THE GOODS HAVE BEEN SATIFACTORILY INSPECTED BY SWEDE CONTROL/INTERTEK, ITS AGENT OR AFFILIATE IN ACCORDANCE WITH THE IMPORT REQUIREMENT OF FEDERAL REPUBLIC OF NIGERIA."

The invoice was presented to us covering goods valued at $366,000.00, with a final invoice value of $317,000.00 (due to a pre-payment outside the credit). The endorsement from Intertek on the invoice stated all of the required as per above, but quoted the amount of $317,000.00 i/o $366,000.00 along with the statement that "Amount for customs purposes may differ from this amount".

The I/B refuses to pay based on the fact that the amount on the endorsement is less than the value of the goods. They have indicated that this will cause a problem for customs and possibly result in fines to the I/B and requested a revised invoice. Our bene does not want to have another invoice issued because he feels that the invoice is in accordance with the L/C terms and the L/C should have specified what the actual requirements for the endorsement would be. In addition, it specifies that the amount quoted is not for customs purposes.

Is there anything that covers the beneficiary in this case, or must he concede to presenting a revised invoice (incurring further fees and delay in payment)?

[NigelHolt]

Patty,

Personally and without liability/responsibility:

It is difficult for me to say if there is a discrepancy based on the info you’ve provided. If Intertek’s endorsement suggests the goods ‘value’ is USD317K but the invoice suggests their (gross) ‘value’ is USD366K, this would seem to me to be an internal inconsistency and thus a discrepancy, even though I accept there is not any apparent breach of the express terms of the credit, the UCP or Publication 645.

Incidentally, I appreciate I have not directly answered your question. This is because the answer would depend on a number of variables.

Jeremy

[larryBacon]

Dear Patty,

I welcome your first posting on the Discussion Forum. I hope you continue to make good use of it.

I agree with Jeremy that it is difficult to give a good response based on the information so far.

I also agree that it is certainly discrepant because of the inherent inconsistency. This is equivalent to an invoice incorporating additional FOC goods to the value of $49,000, which is not to be found in the LC (only chargeable goods are found in the LC).

Laurence

[HenryGuo]

Hi Patty

I personally agree with you that this is a not a discrepancy because of below reasons:

1. l/c has on specific stipulation for the endorsement
2. the endorsement doesn't mention that the amount is goods value and meanwhile it mentions that the amount for customs purposes may differ from this amount
3. there is no content conflict on the face of documents.

I think that if applicant foresees that there will be a problem for customs if the endorsement amount is different from the actual goods value, he should give clear requirement in his L/C.

[NigelHolt]

Unusual that someone should post a response to a query posed apparently by someone from the same bank, not -I would stress- that I consider there is anything wrong with this.

[larryBacon]

Henry,

welcome to the Forum.
You will often find that strongly held and opposite views are expressed here and it is not always possible to decipher which is correct.
You may have access to more information than we have seen in the forum, but based on what I have seen, this presentation is discrepant.
LC calls for goods valued $317k but docs presented for $366k - discrepancy. Even if the invoice is only chargeable at $317k, this does not alter anything. The difference between the two values could only be regarded as FOC goods which are not included in the LC.

IMPORTANT
The LC cannot take account of the presumed prepayment of the difference in values, but take note that such a prepayment is likely to be illegal in Nigeria, where most imports/currency movements are controlled by the Central Bank by means of authorised LCs.
Please verify this independently yourself.

Laurence

[edited 1/20/2005 9:56:52 PM]

[PattySpaven]

I'd like to make one further point that may not have been clear in my original post. The deduction for prepayment is not the issue as this was arranged as part of the L/C. The issue is that the invoice has an attestation on the back that quotes the invoice value ($317,000.00) instead of the value of the goods ($366,000). As per the terms above, the stipulation for the attestation does not indicate what amount (if any) should appear on this 'attestation' and cleary indicates it may differ from the customs value. In addition, the agent that endorsed this document is working on behalf of the Nigerian customer and would (should) know the requirements, as they are not otherwise indicated in the L/C.

[NigelHolt]

Patty,

I agree the deduction of the pre-payment is not an issue of itself. I also agree the issue is that the invoice has an attestation on the back that apparently quotes the NET invoice value ($317,000.00) as being, I assume, the ‘VALUE’ OF THE GOODS instead of the GROSS invoice value ($366,000). Thus, the document would appear to be internally inconsistent and therefore discrepant. The fact that the credit did not require a value to be quoted in the attestation, that the attestation states that it may differ from the customs value or that the agent is working for the Nigerian customer etc seems to me to be immaterial to its (non-) compliance.

The above is my personal opinion and given without any responsibility or liability on my part.

Jeremy