Letter of Credit Forum

Hello KS
(I have a very strong opinion against the inclusion of commercial terms on commercial invoices and I maintain that what is actually required is the customs valuation symbols (which by coincidence, although unrelated, happen to be “FOB” and “CIF” (among others)).
What is actually being asked it the customs statistical value for the last export price (represented by the symbol FOB) and the first import value (including insurance in this case) and represented by the symbol “CIF”.)

Following this logic, the phyto’ certificate would form part of the ‘last export price’ in that it is incurred prior to loading on the vessel and accordingly should correctly and validly appear after the ‘ex works’ customs value but before the customs FOB value: i.e. not as per the invoice you have quoted.
I think if the typist (of the invoice) had gone to a new line after the statement of the trade term and it thus read;
“SHIPPING TERM: CIF BREMERHAVEN, INCOTERMS 2000
10 SETS POWER UNIT ENGINES       EUR9600.00”
...on two separate lines, Arber’s objection (which is valid as it stands) would be resolved. Although Customs will look for the valuation symbol at the ‘bottom line’ of the invoice, there is nothing to say it cannot be stated also at the top line, by way of a general description as in your example.
However, the matter remains that the certificate costs are stated incorrectly and should either appear before the FOB value and be part of its composition (with the correct grand total FOB value of  9600) or be unmentioned included within it or stated as existing but as an unvalued part of the inclusive FOB value.

(One final point (and I apologise for flogging the same old horse); Incoterms are the dialogue between SELLERs and BUYERs. There are no sellers or buyers in a commercial invoice – only exporters and importers. Equally, there are no sellers and buyers in a credit, only beneficiaries and issuing banks. Commercial terms are the sales contract language and have no bearing when used on invoices or in credits, whereas Customs symbols are material to international values and must certainly be used on invoices accordingly.
The amount of energy spent (and unrewarding frustration harvested), by bankers alone, simply because of this one point – and its utter pointlessness in the context of the credit - is a fitting testament to the stubbornness of unthinking man.)

Read all about it! http://letterofcreditforum.com/content/credits-v-contracts

I wish you well...I am going for a kip

cheers

phill doran

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

I believe this would constitute a discrepancy.

The sanitary/phtosanitary cost would be considered to be a cost outside the scope of "CIF INCOTERMS 2000", unless it could be demonstrated that such costs are part of the necessary customs formalities at the sellers end.

However, in your example an invoice showing EUR 9,600 as a CIF value, instead of an FOB value appears to be incorrect. Should the CIF value not be shown as EUR9,900, with the freight charges being included within the overall CIF value? 

It is not uncommon for a beneficiary to "hide", or absorb additional costs, such as the phytosanitary costs, into the FOB value, and in this case, the banks would be none the wiser.