High seas sales
The open seas of the world outside the territorial waters of any nation are referred to as High Seas. As such, the High Seas sales can happen only before the vessel enters into the territorial waters of India. If the sale takes place after the vessel enters into the territorial waters of India, it would no longer be High Seas Sale. [Appropriate sales tax too may become payable.]
- Only the person who holds valid title to the goods [before the cargo crosses into the Indian territorial waters] can make High Seas Sale and sign the sale invoice .
- Only after the documents are retired from Bank, HSS cannot happen.
- Appropriate Purchase Order (PO) should emanate from the HSS buyer agreeing to the price, terms and conditions.
- Agreement to sale does not transfer title. [e.g. Sale Agreement is executed for sale of a land and then Sale Deed is executed transferring the title to the land to the buyer.]
- Debit Note do not confer title to any goods. [Debit Note is issued with reference to an invoice already issued for any deficiency noticed later].
- Proforma Invoice or Quotation or Price List or Agreement cannot be basis for valuation because none of these are sale documents under the Sale of Goods Act, 1930.
- Endorsement of the BL in favour of the prospective buyer is valid sale. However, it cannot be accepted for Customs purposes since transaction value [as well as terms and conditions of sale where they are different from those as per the invoice] is absent in such document.
After the introduction of the concept of Transaction Value, adding up of a percentage as margin of profit to the invoice value would be contrary to the law.
Ø HSS seller must instruct his foreign supplier to deliver the cargo to the HSS buyer
Ø OR the title to the goods be endorsed to the HSS buyer
Ø HSS buyer is required to provide the declaration of value under Rule 10 A of Customs Valuation Rules and also obtain necessary data from the seller for the said declaration. Mumbai CPN No.33/99, dt 4.3.1999, 1999 (107) E.L.T. T11.