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FOB Value and Freight charges

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Wed, 07/21/2010 - 22:33
georgefernandas
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Joined: 07/21/2010
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We have received one l/c from one of our buyer in Ethiopia. Please note that in this L/c 47A Filed II say's that  "NEGOTIATION UNDER THIS L/C IS RESTRICTED TO FOB VALUE OF USD 966,150.00 AND THE ACTUAL FREIGHT AMOUNT SUBSTANTIATED BY THE CARRIER'S OR ITS AGENT SIGNED FREIGHT INVOICES". For your information at the time of order booking the freight was USD 25.00 per Mt and now the freight increase up to 32.26 per Mt. Now my doubt is can we issue the freight invoice as per current market (i.e $32.26 per MT) and can we show the FOB price after deducting the freight charges which comes under restricted fob value.

Kindly adivce.

Thanks & Regards,

George

AL Ghurair Iron and Steel LLC

Abu Dhabi

‹ FIATA MULTIMODAL TRANSPORT B/L Direct Pay Letter of Credit ›
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Thu, 07/22/2010 - 02:19
#1
sairam
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Joined: 07/21/2010
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Hello, in my view Article 4

Hello,

in my view Article 4 of UCPDC 600 should be applicable in the case cited. In terms Art 4 of UCP 600, documentary credit is a separate and independent transaction.  Banks are not concerned with the commercial contract between the applicant and the beneficiary even if it is referred in the credit.

 

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Thu, 07/22/2010 - 00:04
#2
phill doran
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Joined: 02/10/2009
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excess amounts

Hello
Bearing in mind that you will not issue the ‘freight invoice’ but rather you have to produce the invoice raised on you by the carrier, and the credit is worded that the draw down value may be exceeded to cater for freight, are sure you have a problem really;

As long as your commercial invoice bottom line customs FOB value is consistent with the credit and all other papers tally etc, why do you foresee problem? The credit is calling only for the supporting voucher (the carrier’s invoice) of your disbursement, it is not a valued clause i.e. it has no upper or lower limits – but should this not have been supported by a statement in field 39c “the credit amount may be exceeded to cater for the following” etc

just some thoughts...
cheers

phill doran

 ...thus: another step on the road to mercantile enlightenment...

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Wed, 07/21/2010 - 23:38
#3
Abrar
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Joined: 03/12/2009
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FOB value

Could you please advise the LC value; I assume it is more than $966,150?

Incidentally, is this a "C" or ""D" incorterm contract?

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