Agency Commission - Limit for payment of agency commission on exports.

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Circular No. 64/2003-Cus 21st July, 2003 F.No.605/142 /2002-DBK Government of India Ministry of Finance Department of Revenue Sub: Limit for payment of agency commission on exports - reg. for their export securing including Duty Drawback and DEPB, It has been observed that some Indian exporters appoint agents such contracts abroad agents are paid agency commission as a percentage of the f.o.b. value by the Indian exporters. For various Export Promotion Schemes f.o.b. value is reckoned for granting the export benefits. In terms of the Policy Circular the Director General No.55(RE-98) 98-99, dated 10.12.98 of of Foreign Trade, foreign agent’s commission upto the specified limit prescribed by the Reserve Bank of India be included in f.o.b. value for calculating DEPB entitlement. In this regard the Department of Revenue permits duty drawback benefits to the exporters on the element of agency commission. it has been prescribed that the and the 2. Customs field far have been permitting agency commission to the extent of 12.5% of the f.o.b. value by following RBI’s Circular No. AD (MA Service) 17, dated 19.5.1999. formations so 3. However, of late, instances have been noticed where the Indian exporters are paying agency commission much higher than the above limit, which in some cases has exceeded even 50% of the f.o.b. value. Doubts have arisen in the minds of the field officers whether in the wake by the RBI, the limit of 12.5% of the f.o.b. value regarding payment of agency commission is superseded. Circular No. 9.9.2000, dated issued 12, of the examined in is 4. The issue has been observed that RBI has not revised its earlier instructions as regards the limit of payment of agency commission. Therefore, it is clarified that the field formations may continue to permit export benefits on f.o.b. value without deducting agency commission if such commission is upto the limit of 12.5% of f.o.b. value. Agency commission exceeding this limit should be deducted from the f.o.b. value for granting export benefits under Drawback/DEPB/Advance Licences /DFRC Schemes. Board. It 5. Suitable standing orders for guidance of the staff may kindly be issued accordingly. 6. The receipt of this Circular may kindly be acknowledged. S.S. Renjhen Joint Secretary to the Government of India Telfax.No.3341079

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