How Does A Debit Note In LC Work?

[Sharif]

Dear All

It would be great if someone clear the idea of debit note at DC i.e. how the debit notes works. For example, I got a DC (DC value EUR7539.93). Here a DC clause is mentioed as "Commercial invoice must indicate the following debit note
Debit note no - SSS
Debit note reason - Quality problem
Debit amount - EUR550.00"

Now how the DC would work. Say for Bangladesh shipment - EXP must certify for the Export value. But showing the debit note at commercial invoice will make the export value less.

Again as per Our central bank regulation commission more than 5% of the export value must be approved by the regulatory authority - Will this debit notes goes under the above regulation.

Pls comments.

[jmitra]

dear sharif,

Debit notes is a document that provide a debtor with information regarding outstanding debt. it serves as either notification of a debt that is to be invoiced or as a reminder of a debt that was previously invoiced and is currently outstanding. While invoice is also an official notification of a debt owed, it is not considered to be a debit note.

the letter of credit in your hand says;

"Commercial invoice must indicate the following debit note
Debit note no - SSS
Debit note reason - Quality problem
Debit amount - EUR550.00"

it seems that any earlier shipment, under some different letter of credit, did not meet the requirement for the buyer and thus the buyer now wants a discount on this one.

i am not sure about your last part of the question. better check with the local custom people.

regards

mitra

[Sharif]

Dear Mitra

Thanks for your answer. But i am confused that if is it wise to use debit notes on the DC. I thinks as per Article 4 a DC does not support debit notes. BUt now a days i find some buyers who are using the debit notes are at DC very often.

Pls comments.

Thanks
Sharif

[shahriar]

dear sharif,

the following quote from ISBP may help

The invoice must show any discounts or deductions required in the credit. The invoice may also show a deduction covering advance payment, discount, etc., not stated in the credit.

regd

shahriar