Customs Entries dispute – what are responsibilities under ex works?

Question

We’re in dispute with our Turkish distributor over customs entries, whereby their freight forwarder claims that we have not provided them with the required information in order for them to complete the entries, specifically a total weight by commodity code.

The Incoterms applied to all our distributors in ex works (our warehouse/location).

Would appreciate some clarification on the extent of our responsibilities under ex works terms and and those our distributor/their appointed freight forwarder.

Thanks in advance.

Answer

By setting your INCOterm as Ex Works your (presumably UK) warehouse location you have stated that you are not taking any part whatsoever in the export of the product.

You have no obligation to provide export documentation such as the export invoice, clear the goods for export through UK customs, act as the exporter of record, instruct their freight agent or anything else.

Hopefully this does not conflict with any of the other terms in your contract!

By trading ex works you are requiring your Turkish buyer to be tax registered in the UK so that he/she can be the exporter of record, submitting the export customs entry in their name to UK Customs and creating their own export invoice (with or without weights per commodity!).

If this is not the commercial situation in which you are trading you should not be using ex works. You should be using FCA your UK warehouse. Under FCA you undertake to be the exporter of record, complete an export invoice and submit the customs entry to UK customs via any means that suits you. Your Turkish buyer therefore does not have to be tax registered in the UK but you need to be conversant with UK export law and to make sure your processes and documentation is compliant.

As an exporter under FCA your obligation is to make sure your documents comply with UK law. You can of course facilitate sales by also making them compliant to the law of the country of import but that is your choice not an obligation.

Remember INCOterms do not have anything to do with the point of sale (transfer of title) or the terms of sale e.g. payment at 30 days from….

Hopefully this helps explain the situation.

From what you say it seems your Turkish customer thinks you are trading on FCA terms rather than Ex Wks.

Regards,
Susan

email: enquiries@morley-consulting.co.uk
www.morley-consulting.co.uk

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