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Question ID : 38061

SEZ raising a debit note in INR

We X ltd, purchase goods from a SEZ unit, Y ltd and exports the same to our customers. Since we buy from a SEZ unit, there is a pink shipping bill against which we buy the goods and then export the said goods by filing shipping documents. There is no customs duty involved in the both the legs of the transaction. During the course of transactions with the supplier, he had noticed that, the goods have been invoiced at a lower cost, owing to charging of lower Overhead expenses. The volumes promised by Xltd in the beginning of the year was more than 50 Cr, and negotiated the purchase price based on the said volumes. The supplier also had prepared the cost sheets, absorbing the Overheads based on the said volumes but unfortunately, we could not buy so much from the them, and hence the supplier revised the cost sheets with the actual volumes sold to us and realised that, a total of Rs. 1 cr should be the fall (estimate amt). The supplier is planning to raise a debit note(s) to that extent, since the original billing happened in USd and he is located in SEZ unit, the debit note amount will also be in USD. Question : 1) What is the procedure to make the payment against this debit note(s). 2) Can Y ltd, located in SEZ unit raise a debit note for rate difference in INR, the value could be Rs. 2 Cr. (for the short price charged for FY 2018-19 supplies, which were originally invoiced in US dollars) Comment: All the payment invoices and export bills are settled in with the same AD bank.

Posted by AVINASH GARIGANTI on Mar 29, 2019

Filed Under MISC.

Answer ID : 76432

The supplier should raise the debit note denominated in the currency in which the bills for supply had been raised. The debit note should be settled in the way the bill of supply were settled. Since the bill of supply were raised in USD. Therefore debit not cannot be raised in INR.

Posted by CA. JHA SHANKAR KUMAR on Mar 29, 2019