Before going to wards Sale on Consignment basis or Consignment sale in Import and Export let's understand what consignment sale is. Consignment sale is an arrangement in the trade in which a seller or a consignor send or hand over his goods to a buyer or consignee without getting or receiving and consideration of the said goods then itself. The buyer or the consignee pays the consideration when the goods are sold. So, in the consignment sale an arrangement is made between the seller of the goods and the buyer or the consignee of the goods that the buyer or the consignee will not pay for the goods until the goods are sold by the buyer or the consignee of the goods.
The consignment sale is normal sale of the goods in the trade but the payment of the goods is postponed till the goods are again sold by the buyer or consignee of the goods. The consignment sale arrangement is an agreement which may be oral or written between the seller and buyer of the agreed goods. In some cases of consignment sale there may be a condition that if full or part of the goods are not sold within agreed period say six months or twelve months from the date on which the buyer or the consignee receives goods from the seller the unsold goods will be returned to the seller. The Consignment sale is not a normal transaction in the indigenous trade only but such type of transactions also takes place in the international trade i.e.in Export and Import transaction.
• Consignment Sale in Import
Anybody want to import any cargo on Consignment sale basis is allowed. The shipping documents should be in the name of the importer. The importer shall follow requisite formalities of Customs and including payment of applicable Customs duty. The importer will submit the agreement made with the supplier that the import is on Consignment sale basis to the Customs and his/its banker. As per present provisions of FEMA the importer is required to remit the money of the cargo imported within the specified time period from the date of shipment or within the extended period as may be granted by the Reserve Bank of India. If any imported item imported on consignment basis is lying unsold with the importer and if he returns to the supplier by re-exporting the item the importer may claim Duty drawback of the Customs duty paid at the time of Import on the items which are being re-exported.
• Consignment Sale in Export
When the goods are exported on the consignment basis at the risk of the exporter for the eventual risk that the agent/ consignee abroad will remit the sale proceeds of the goods or not. The authorized dealer while forwarding the original shipping document to his branch office abroad or correspondent should normally instruct that the original shipping documents be released only against trust receipt or undertaking that the agent or consignee will send or deliver the sales proceeds by the specified date as may be prescribed in the applicable governing Law of the exporting county.
There are certain benefits of the Export on the consignment basis, the buyer may inspect the goods personally and if he satisfies himself only then he has to pay the value of the goods in such case the goods may realize more realizations. The agent or consignee may deduct the expenses incurred for storage charges of the goods, landing charges, warehousing charges, handling charges from the sale proceeds and remit the remaining amount.