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Dear Friends
Please advise me.

One of my customer wants to open a Documentary Credit. He submits the Proforma Invoice which value is 09 million Dollar.
But Now he wants to open a Credit which value will be 06 million Dollar.Due his margin Problem importer will open another 03 million Credit afterwords.

Though Proforma Invoice and Documentary Credit is different thing and separate Contract.My question is whether any problem would arise in future from any body(Regulator)?

since u mentioned that , I would like to add to ur question , can't banks accept a contract to issue L/C instead of proforma invoice , and why ?

Dear Zakir Bhaia,

it depends on the design of the Letter of credit. without having the profoma invoice its also bit tough to answer. is there a single goods with single unit price? anyway, you have rightly said that proforma invoice and letter of credit are two separate things. if you dont make the Proforma invoice an integral part of the credit, there should be no problem within UCP 600. as far as regulatory body is concerned, there should be no problem either since goods are coming as per LC, not the Proforma. better check with the local custom authority.

dear raseen,

personally i see no problem accepting a contract instead of a proforma invoice. in fact proforma invoice is a part of a contract. if you consider UCP 600, you will see that article 4 mainly talks about contract. so if the contract includes sufficient details of the goods to be imported, i see no problem at all.

regd

shahriar

Hi,

I though you will need only a contract (and an PI is one form of contract, and for it being a proper PI it actually needs to fulfill/contain all the basic requirement of a contract) to open an LC. Now the question remains -

1. whether the local authority (say for example BB for BD) is okay with the concept of contract instead of PI. I guess they are okay with it (other wise for Standby LC [the one repeated automatically or as advised after a specific interval, isnt it Standby LC?] a PI would not fit the requirement, a proper contract is more suited.).

2. Whether the customs authority are okay with a PI or a contract. CUSTOMS AUTHORITY!!!! I mean they have mind of there own. Customs of different port act differently. (example benapole vs ctg port customs, I will be asking one question on that). Our competent customs officials may fail to notice the suitability of contract instead of PI.

Tell me if I am wrong.

Thank you all.

Zia.