High Sea sales (HSS) is a sale carried out by the consignee to purchaser after their dispatch from the port/airport of origin and before their arrival at the port / airport of destination.
An HSS contract/ agreement is to be signed after dispatch of goods from origin & prior to their arrival at destination.
In the case of HSS , the cargo in freight (CIF) value for calculation of duty is taken to be the HSS value.
There is a practice followed in customs that in case the HSS transfer takes place at import invoice value only , the custom would add 4% of CIF value as HSS loading factor.
In HSS contracts, the HSS seller may not like to disclose the import value to the HSS buyer. However, the customs can call for the original import invoice, in which case the HSS seller may have to part with this information. To overcome this, HSS seller should take on the responsibility of custom clearance and site delivery. After custom clearance, the HSS seller could withdraw import invoices and only hand over clearance documents with HSS agreement to the HSS buyer. The custom bill of entry does not indicate original import value and is prepared on HSS value.
HSS is considered as a sale carried out outside the territorial jurisdiction of India. Accordingly, no sales tax is levied in respect of HSS. The customs documents (B/E) is either filed in the name of HSS buyer or such B/E has an endorsement indicating HSS buyer's name.
The delivery from customs is therefore on account of HSS buyer. The CENVAT credit in respect of CVD paid on import is entitled to HSS buyer.
