8/18/2019 High Sea Sales[1]

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   JAYESH SANGHRAJKA & CO.Chartered Accountants 

From the Research esk

 ______________________________________

1

his letter is for private circulation only. The letter is brought by a group of professionals – Batgach. These

professionals represent several well established Chartered Accountancy Firms. The letter is being brought

only with the intention to give information & not to solicit clients or business against the guidelines issued byThe Institute of Chartered Accountants of India. 

Brief Overview High Sea Sales

Meaning of high Sea Sales

High Sea sales (HSS) is a sale carried out by the carrier document consignee to another

buyer while the goods are yet on high seas or after their dispatch from the port/ airport of

origin and before their arrival at the port / airport of destination.

In Simpler Words, It means sale of goods after crossing the Custom barriers of the Foreign

Nation but before crossing (entering) the Custom frontiers of India by way of transfer of

documents of title of goods, that is, While it is in transit.

High Sea Sale Agreement:

This is an agreement where the HSS seller do the import by means of sea and sell the same

to the HSS buyer before the consignment reaches port of destination.

For Example,A from America sells goods to B of India at some price .Now B, in this case is

called the Importer B , further sells the goods to C of India by entering into a HSS

agreement-transaction between B & C is called High Sea Sales where B is called HSS seller

& C as HSS Buyer.

Benefit / Objective of High Sea Sales:

No Central Sales Tax/ Local Sales Tax is chargeable which would have to be paid on the re-sale if the importer was involved as a middle man.Moreover, a high sea sale is considered

as a sale carried outside the territorial jurisdiction of India.

Procedure of High Sea Sales

Step 1:  After Completion of Export Procedures, the Exporter submits all necessarydocuments 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

8/18/2019 High Sea Sales[1]

2/2

   JAYESH SANGHRAJKA & CO.Chartered Accountants 

From the Research esk

 ______________________________________

2

his letter is for private circulation only. The letter is brought by a group of professionals – Batgach. These

professionals represent several well established Chartered Accountancy Firms. The letter is being brought

only with the intention to give information & not to solicit clients or business against the guidelines issued byThe Institute of Chartered Accountants of India. 

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 ofgoods 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 actualcontract 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.

Documents Required to Prove High Sea Sales:

The following is the checklist of documents that would be required to prove a High Sea Sale

Transaction:

  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.

  Debit Note issued by importer/seller for his profit margin.

  Bill of entry specifying the name of Final Importer and proof of payment of Custom

Duty.