issuing bank demanding postage charges

[jabra]

dear sir,

we forwarded a set of document under a credit to the issuing bank. the issuing bank found it discrepant. the beneficiary acknowledged the discrepancies. the applicant did not waive the discrepancies and the issuing bank returned the document. in the forwarding letter, the issuing bank requested us to remit the postage charges. but there was not such clause in the LC. in fact there was a clause that all charges outside the issuing country is on beneficiary's account. doesn't it mean that all charges inside the issuing country on the applicant account? should we debit the beneficiary's account to pay the charges? is there any requirement to seek the beneficiary's permission first?

[Navi]

Hi Friend,

Postage charges of the returned documents, in my opinion, should be regarded as part of discrepancy fee and it is to be for the account of the beneficiary unless there is a term contrary to this.

Regards

[cristiand969]

Dear Jabra
Besides the charges of the L/C, any issuing bank will usually insert a special condition when handling discrepant documents.
If the issuing bank stated that discrepancy fees of USD.... and ANY RELATED CHARGES shall be for the account of beneficiary, it means it included also the postal charges for returning documents.
In case issuing bank states ONLY ' a discrepancy fee of USD ... plus any related swift charges it did not include that postal charges to be for the account of beneficiary and postal charges as per L/C terms shall apply (for the account of applicant as they are charges occured at the issuing bank counter).
The issuing bank must be specific in stating for whose account any charge shall be.
It should be noted that a simple query without stipulating the terms of L/C, particularly statement of discrepancy fees and any other charges may lead to unexpected replies in spite of the fact that respondents want to help you out. So, be more specific for the future.
Thanks for understanding
Cristian

[iLC]

i agree with your dear cristian. but my thoughts are going to another direction. returning the document, is it a part of LC cycle? i mean we always say holding the document at your risk and responsibility. isnt it similar to collection status? if there are 10 presentations and all of them are discrepant, i really dont think that issuing bank will pay 10 postage charges just because it didnt mention it in the LC? after all a discrepant document has no coverage under LC. why should it get a "special postal" service? however it will be a good question why the discrepancy charges is for. have your got my thought? sorry for not being able to be clear at this point.

[cristiand969]

Dear ILC,
I agree with your point of view that returning documents is [undesirable - I say] part of the LC cycle. This is because the LC is ultimately a payment mechanism and not a non-payment one.
But this has nothing to do with party responsible with charges unless the LC states the contrary otherwise UCP makes clear how the charges will be applied in absence of any of such instructions.
To cover this void, I clearly wrote that the issuing bank must be specific in this respect when opening every single LC so as there will be no room for interpretation, and ultimately as per ISBP the issuing bank will bear the risk of amibiguity when issuing the credit (refering also to your 10 discrepant presentations).
By the way: Can you name an article dealing with charges for discrepant documents?
If not, I hope you understand that absence of any specific instructions will lead to different interpretations as it was this case, each of us claiming that it is a customary practice what we mentioned before. But where is to be applied this practice: to your counters or to my counters? The purpose of issuance and revision of UCP has been made on the strenght of the same principle: to have an uniform interpetation. Prudence is one of the primary task and responsability of every bank and it does not stop at the LC department door. But I'm sure you are already aware of:)
best regards
Cristian

[shahriar]

i agree that there is no uniform structure on discrepancy charges. i have seen discrepancy charges from 20 USD to 400 USD!! some banks go even further; all charges other than lc issuing charges are on beneficiary's account.

in my bank, we say USD 50 discrepancy charges and related cable charges.... what will be the extent of cable charges? i hardly charge for discrepancy if i get applicant acceptance without struggle.

anyway, i think the charges, even the discrepancy charges if remain unpaid, should be on applicant account. we must consider UCP 600 article 37 here