HIGH SEA SALES

What is High Sea Sales?

High Sea sales (HSS) is a sale carried out by the actual consignee (ie, the
consignee shown in the Bill of Lading) to another buyer while the goods are
yet on high seas or after their dispatch from the port of loading (POL) and
before their arrival at the port of discharge (POD). (Under Central Sales
Act,1956)

What is the agreed Who bears the risks

Value of the Sale?
In the case of High Sea Sales, the
cargo in freight (CIF) value for
calculation of duty is taken to be the
High Sea Sales value.
of the goods?
It should further confirm that the
buyer will bear all the risk and cost of
clearance of goods.
The Agreement is normally prepared
by seller and Buyer signs the same as
a mark of acceptance.
Is it only for transactions
on the sea? Like Sea, sea?
No, High Sea Sales is also applicable to goods imported by air. Sea appearing in High Sea
Sales should not be constructed by its literal meaning. As long as the sale is formalized after
dispatch from dispatch/ airport at destination, such sale is considered as High Sea Sales

Ok. Then how actually does the sale

occur? Is there some important
paperwork?
Yes.
HSS contract/agreement should be signed after dispatch of goods from origin &
prior to their arrival at destination.
The agreement should be on stamp paper.
 What is an HSS
Agreement?
• This is a agreement where seller do the import by means of sea and sell
the same to buyer before the consignment reaches port of destination.
• Seller will raise a invoice of at least 3% higher amount in comparison to
foreign invoice.
• Need to endorse the bill of lading and all necessary documents.

Documents Required
• High Sea Sales Agreement Copy on Non-Judicial Stamp Paper of requisite
value as per State Stamp Duty Act.
• Copy of Import Bill, Bill of Lading & Airways Bill, Insurance Papers.
• Dr. Note issued by importer/seller for his profit margin.
• Bill of entry specifying the name of Importer and proof of payment of
Custom Duty.
Ok, Ok, Tell me all about it?
• On concluding the High Sea Sales agreement, the bill of lading (B/L)
should be endorsed in favor of the new buyer.

• In respect of air shipment, High Sea Sales seller should write to the airline
/consol agent informing that a High Sea Sales agreement has been
established with the High Sea Sales buyer and that the carrier document
should therefore be considered as endorsed in favor of High Sea Sales
buyer and further the Import General Manifest (IGM) should be filed by
the carrier in the name of the High Sea Sales buyer.

• If the electronic data interchange (EDI) system allows name of High Sea
buyer to be entered in the system, then there may not be any need to
amend the Import General Mainfest (IGM).

• In this case, the bill of entry/exchange (B/E) is filed in the name of the
original exporter as the IGM is in this importer name. However, the bill of
entry/exchange (B/E) shows the name of High Sea buyer under a separate
head in the B/E format. If the system has no provision for showing the
name of High Sea buyer on the B/E, then the IGM should be got
amended and B/E filed in the name of the High Sea buyer.
Ok Ok Stop, I get it. Is there anything more I
should know about?
Same goods can be sold more than once on high seas.

In such cases, HSS agreement should give indication of previous title

transfers. The last HSS buyer should also obtain copies of previous HSS
agreement as such documents may be called upon by the customs.

Payment Terms and Role of Bank

Any one copy of Bill of lading that is not marked

as “not negotiable” can be endorsed.

The copy is first endorsed by Bank, then by the importer. Once the bill of lading is
endorsed, all the import documents must be retired from Bank. Even the
correspondence with Bank helps to establish the dates at times. All the
documents along with original bill of lading duly endorsed should be handled over
to the High Sea buyer under acknowledgement. This acknowledgement must have
date.

In fact, it is this date that is crucial. This date can be any date after the documents
are retired and before the duty is assessed.
Procedure of High Sea Sales
Step 1: After Completion of Export Procedures, the Exporter submits all necessary documents to
his bank.

Step 2: HSS Seller enters into an Agreement of Sale (High Sea Sale Agreement) with HSS Buyer after the
movement of goods from the territorial border of exporter but before arrival of goods at the
territorial border of India.

Step 3: HSS Seller accepts documents from his bank which has been sent by Exporter through
his bank. If the payment terms with Exporter and HSS Seller are on Letter of Credit or Payment
against receipt of Documents, HSS Seller remits invoice value of goods to Exporter before
collecting documents from bank. In case of credit arrangements with Exporter, HSS Seller remits
invoice value of goods to Exporter as per the arranged credit period. The Bill of Lading (or airway
bill) is endorsed by HSS Seller and transfers the title of goods in favor of HSS Buyer.

Step 4:HSS Seller prepares invoice to HSS Buyer in local currency (INR). HSS Seller delivers
endorsed original Bill of lading (or airway bill), his invoice in local currency along with import
invoice, packing list, certificate of origin, insurance certificate and other necessary documents if
any for import clearance duly endorsed. Exporter retains a copy of all documents which HSS
Seller delivers to HSS Buyer.
Step 5: HSS Buyer files Bill of entry along with other import documents delivered by Exporter
with customs authorities. HSS Buyer pays necessary import customs clearance charges with import duty
if any. HSS Seller can also under take customs clearance and delivery to HSS Buyer, if HSS Seller
does not want the HSS buyer to know the actual contract price of Exporter and HSS Seller. In this
case, HSS Seller is filing documents on behalf of HSS Buyer to hide the selling price between
Exporter and HSS Seller.

Step 6: Once after completion of import customs clearance procedures, HSS Buyer delivers a
copy of bill of entry to HSS Seller. HSS Seller files the said bill of entry and other copies of import
documents and high sea sale documents with his bank.
Benefits of High Sea Sales
• HSS is considered as a
sale carried outside the
territorial jurisdiction of
India. No Central/Local
Sales Tax is levied as a
result.
• Had the sale happened after
the goods arrived in the
country, it would be a resale
within the jurisdiction of India
and would attract a sales tax.
Impact of
GST on HSS
Inter-state Trade - when the location of the supplier and the buyer are in different states.

Integrated Goods and Services Tax (IGST) is levied on inter-state supply of goods and services.
As per Section 7(2) of the IGST Act, supply of goods in the course of import into the territory of
India, till they cross the customs frontiers of India shall be deemed to be a supply in the course of
Interstate trade or commerce. As a result, all high seas sale transactions are covered within definition of
interstate supply.

In case of HSS, IGST is levied only once. This happens when the import declarations are filed
before the Customs authorities for customs clearance purpose for the first time.

The last buyer in the entire chain of transactions is liable to pay the IGST and submit documents
like original invoice, HSS contract, details of service charges etc. which serve to create a link
between the first contracted price of goods and the last transaction.

IGST is payable on the final amount arrived at after including all value additions accruing in each
such high sale.
Example
• Goods have been imported from France by a company incorporated and registered in Nasik
which have landed at Mumbai port but during their clearance are supplied by the Nasik
company to a company in Pune. This supply continues to be in the course of inter-State trade
or commerce.

• In the above example, supply by Nasik company to recipient of Pune is high sea sale
transaction and is not subject to levy of IGST. When Pune recipient files bill of entry, IGST has to
be paid by the Pune recipient on the assessable value which shall include the margin charged
by Nasik supplier also.
Thank You!!