Hi,
XYZ company in India has received US$100,000 from a foriegn company ABC in USA as advance towards supply of goods. But after goods are produced, the ABC company has instructed XYZ to delay the shipment indefinitely due to their internal issues. They kept on delaying the shipment citing various reasons.
Now, after a period of 3.5 years the ABC company has settled its issues and asks to ship the goods to DEF company in Hong Kong who is their distributor. However, according to the Notification No.FEMA 23 /2000-RB dated 3rd May 2000, the rule says that the export should be made within 1 year of receiving the advance.
Please note here that the XYZ company is only acting upon instructions from its customer ABC company, USA who went on delaying the shipment. No agreement extending beyong 1 year period pre-existed for obtaining the prior approval from RBI as mentioned in the above said FEMA notification.
Luckily, the exchange rate fluctuations are such that XYZ company has gained extra exchange profit.
What are the consequences if the export is being made after 3.5 years of receiving the advance?Is there is any penalty for the delay in exporting? If so what is the quantum of this penalty?
CAclubindia
