Article 30 C UCP

Article 30 C UCP states that a tolerance of 5% less then the amount of the drawing is permissible, Provided that the credit prohibits partial shipments and that the entire quantity covered by the credit has been shipped. The purpose of this provision is to ensure that a reduction in, for instance, the cost of freight or the insurance premium does not prevent the honouring of documents under the credit.


ICC Official Opinion R367 says:
Sub-article 30 (c) covers the situation where the terms are CFR or CIF and the price quotation is based on a hypothetical or soft quotation on the insurance premium and/or the freight charges. Upon presentation of the documents, the beneficiary invoices for the actual insurance and freight costs, which conceivably are less than those quoted originally in the purchase order. Therefore, a 5% tolerance is allowed in the beneficiary’s invoice, always provided that the quantity of the goods, if stipulated in the credit, is shipped in full, and a unit price, if stipulated in the credit, is not reduced.

Example to illustrate the point:

LC details:
Credit amount: Not exceeding USD150,000
Goods: 10 Cars
Unit price: USD12,000/unit
Delivery term: CFR Mundra Port, India 
Freight charges as per actual freight invoice but not exceeding USD30,000

• Invoice presented:
Goods: 10 Cars
Unit price: USD12,000/unit
Freight charges: USD23,000.
Total invoice amount: USD143,000 Mundra port, India 
• Conclusion:
Draft drawn for USD143,000 is acceptable as per UCP 600 sub-article 30 (c).
.
Here the freight is deducted which was undecided but quantity and unit price remain same.

Comments

  1. RajniSeptember 2, 2022 at 10:30 PM

    Nice, can u provide questions paper for cdcs

    ReplyDelete
  2. Chandan Kumar YadavSeptember 2, 2022 at 11:42 PM

    Hi kindly connect to me thru email given on home page as chandan_199125@yahoo.co.in

    ReplyDelete
  3. Jonathan MatitiDecember 23, 2022 at 11:25 AM

    It's a great job, really thank you.

    ReplyDelete

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Chandan Kumar Yadav
My name is Chandan Kumar Yadav CDCS, CSDG, CITF, PGDIBO,AML-KYC, CCFE, MLIBF, CSF, 6SIGMA a trade finance professional with an experience of 11 years whereas worked with several stages of letter of credit, bank guarantee and on other payments methods of trade transactions such as documentary collection, open accounts, SBLC etc., I have a fair understanding of Trade Based Money Laundering as well, Blogging related to Trade Finance is my passion and I want to share which I know and learn from others, I have worked with Wells Fargo, Yes Bank Limited and Bank of America, India which helped me to gain knowledge, view of Trade Finance and importance of International Trade in world's economy. Trade Finance is thumping product, everyday we are learning something new so in order to keep learning I started this as one of the platform. . Let's Learn Together

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