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Thread: International Trade on ebay India - Is it legal ?

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    International Trade on ebay India - Is it legal ?


    Hello,

    I was just wondering to know that whether trading on ebay India is legal or not.

    Today hundreds of Individuals are Selling goods Nationally and Internationally through ebay India.

    Selling goods within India is FINE but selling goods Internationally is FISHY.

    ebay India receives payments from International Buyers through Credit Card and forward a cheque to Indian Sellers in Rupees.
    Indian Sellers ship the goods out of Country as "GIFT" and do the necessary adjustments in their accounting.

    This, I feel is totally Illegal.

    ebay India does not provide any FIRC or any other document to the Indian Seller to prove that Foreign currency has been received for shipping the Goods out of the Country.

    As far as I know that RBI guidelines say that not a single rupee worth of goods can be shipped out of the Country without receiving foreign currency.

    Goods worth crores of rupees are being shipped out of the Country marked as GIFTS .... although all such transactions are COMMERCIAL.

    I would like know the comments of other members on this issue and how I can file RTI so that the facts are known.

    Also, whether ebay India is allowed to function in this manner ?
    Is it legal on ebay India behalf to function in this way.

    Innocent Individual Sellers would one day find themselves behind bars because of un-awareness.

    best regards



  2. #2

    Re: International Trade on ebay India - Is it legal ?


    Quote Originally Posted by umangmidha View Post
    Selling goods within India is FINE but selling goods Internationally is FISHY.

    ebay India receives payments from International Buyers through Credit Card and forward a cheque to Indian Sellers in Rupees.
    Indian Sellers ship the goods out of Country as "GIFT" and do the necessary adjustments in their accounting.

    This, I feel is totally Illegal.
    Dear umangmidha,

    You have raised a very interesting point here. RBI regulations permit GIFTs of goods not exceeding the value of Rs. 5.00 lacs, do not require any prior approval of RBI. Likewise, there is no need for submission of any declaration in the prescribed control format like GR/PP/SOFTEX if the export value does not exceed USD 25000/- or its equivalent. I think these two guidelines are fully utilised by these internet marketing groups.

    But gifts cannot be sent to all and unconnected sundry on a regular basis. The regularity of such transactions makes it an export for which the seller needs an IE(importer-exporter) Code number from RBI. It will be really interesting to find out how the RBI is monitoring such transactions. Another important point is the mechanism of handling/permitting such gifts by the customs authorities at the exit points.
    Quote Originally Posted by umangmidha View Post
    ebay India does not provide any FIRC or any other document to the Indian Seller to prove that Foreign currency has been received for shipping the Goods out of the Country.

    As far as I know that RBI guidelines say that not a single rupee worth of goods can be shipped out of the Country without receiving foreign currency.
    If the payments are routed through the "gateway" provided by ebay, then technically ebay becomes the order-holder for all the goods advertised in their site and the other sellers become sub-suppliers only. In that event the onus is on the part of ebay to ensure the inflow of foreign exchange for the goods shipped outside the country. Hence there is no scope for an individual seller to hold FIRC in respect of such remittances. From the ebay-india site I observe that the sellers are provided only an invoice every month by the ebay(after adjusting its commission).

    Hence it should be interesting to find out from RBI :

    1.The conditions under which ebay is permitted to operate in India
    2. Whether ebay has been allotted any IE Code
    3. The mechanism that is adopted by RBI to monitor the inflow of foreign exchange through such transactions.
    4. Whether customs authorities have been issued any guidelines by RBI in monitoring these "exports".

    This being a very peculiar topic, I will discuss this with a few more specialists in forex and find out if any additional points emerge.

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    Re: International Trade on ebay India - Is it legal ?


    Ganpat,

    I can clear some of the points raised by you:

    1. Every exporter has to have a IEC and a BIN number of customs irrespective of whether he is exporting above US$ 25000 or less.
    2. The limit of US$ 25000 has been specified only for not submitting a SDF form (Self Declaration Form) promising that the exporter will make sure that he gets the foreign exchange into the country and that these exports are not individually reported to RBI (they however are reported as a part of the "total exports"). There is no other significance of this limit.
    3. Whenever exports take place from India by Land, Sea or Air, the Customs issues a Shipping Bill which contains the exporters IEC code and BIN number apart from all other details.
    4. The major point to be considered is who gets the foreign exchange..is it Ebay or the Exporter ? If exporter exports under his name than he should get the foreign exchange into his account. Someone else cannot get it.

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    Re: International Trade on ebay India - Is it legal ?



    It seems that both Seller as well as ebay are going against the RBI guidelines. But Individual Seller with limited resources is helpless and following the footsteps of other Experienced Co-Sellers who are cheating the system.

    But the point is that ebay has all the means and resources with best of the legal guidance at their hand. They have a complete legal division and not even an inch forward is moved without ensuring all the legalities involved.
    The point is that the Sellers are being made the scape-goat and they (ebay India) themselves are doing everything within the frame work of the law of the land.
    What procedure they are following is a mystery.

    I must say that RBI must look into the matter as this International trade on ebay is taking leaps & bounds and growing at a much faster pace than anybody can expect.
    Many Indian Sellers are even heard of hitting International Sales of over Rupees 10 lakhs per month on ebay. Now since the money received by them is through cheque, they must be manupulating their Account Books.

    Indians at the root level have got the opportunity to sell at International level and RBI's intervention can really help clear the air and save many Individual Sellers who are taking law into their hand.

  5. #5

    Re: International Trade on ebay India - Is it legal ?


    Quote Originally Posted by karira View Post
    3. Whenever exports take place from India by Land, Sea or Air, the Customs issues a Shipping Bill which contains the exporters IEC code and BIN number apart from all other details.

    4. The major point to be considered is who gets the foreign exchange..is it Ebay or the Exporter ? If exporter exports under his name than he should get the foreign exchange into his account. Someone else cannot get it.
    Karira,
    I agree with you that regular merchant-exporters resort to the normal course mentioned by you regarding obtention of IE code, BIN no. SDF etc. and for their exports a SB is issued by the customs.

    But in the case of sale through ebay in many cases, even individuals without any IE code resort to the practice of selling abroad and shipping the goods under the guise of gift to avoid the customs formalities. Most of these consignments are small parcels or packets and sent through international courier companies and they do not attract the attention of the customs at the exit point. The courier companies also do not demand an IE code from the shipper for such small packets. The problem will start only if the customs happen to detect the shipment during their random checking and the shipper will find himself in one big mess.

    In my earlier post I had mentioned that ebay should be deemed as an order-holder in respect of such exports. Now after going through the various terms and conditions of ebay, I stand corrected on this. Ebay has clearly distanced itself away from any type of litigation by proclaiming that it is only a web-site to promote interaction between the buyer and seller. Hence the best way for the seller is to ask for a direct advance payment to his account through TT/DD before effecting the shipment, instead of seeking recourse to Paypal/Paypaisa to get the payment. By this process, the seller is also assured of an FIRC from his bank.

    Until we reach the stage of full convertibility, the FEMA guidelines will remain in force and any violation of it will result in serious consequences. So it’s better that NO sellers should practice illegal ways to send items as a Sample/Gift.The outcome may be very dangerous. since it is a clear cut case of fraud on the nation.

    This discussion has already gone beyond the scope of RTI. The only thing that remains for our purpose is to find out through RTI how the RBI is effecting its control on the inward remittances of ebay through international card transactions.

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    Re: International Trade on ebay India - Is it legal ?


    Quote Originally Posted by ganpat1956 View Post
    In my earlier post I had mentioned that ebay should be deemed as an order-holder in respect of such exports. Now after going through the various terms and conditions of ebay, I stand corrected on this. Ebay has clearly distanced itself away from any type of litigation by proclaiming that it is only a web-site to promote interaction between the buyer and seller.
    Hello ganpat1956,

    Yes, ebay has washed it's hands by saying that it provides only a platform for such trades. But I would like to mention that 95% of International Buyers pay either through PaisaPay or through PayPal. That's because ebay provides a Buyer Protection of around Rs.50,000 if paid through these channels.
    PaisaPay & PayPal are ebay's own Payment Processors.

    The most important questions to be looked into are ....

    1. How can ebay accept Foreign currency meant for exporting goods and forward it to Individual Sellers in Rupees without an advise / details of payment attached to it .

    2. How can ebay provide a combined weekly cheque in rupees for Domestic & International Sale without any certificate / FIRC.

    3. How can ebay wash it's hands by saying that it provides only a platform for such Sales .... if the International Payments are routed through ebay's own Payment Processor.

    Yes, if payments are not routed through ebay then ebay can definitly wash it's hands. Then all payments would be routed through an Authorised Foreign Currency Dealer (BANK) and all Sellers would have no choice but to comply with the RBI guidelines.

    The only solution to this is that ebay should seggregate the International Payment from Domestic Payment and issue an FIRC to all Sellers. The advice should mention the details of the Authorised Dealer (BANK) through which the Foreign currency has been received.

    A monthly report of payments received from overseas Buyers and paid to Indian Sellers must be submitted to RBI via Authorised Dealer. The Sellers would then automatically export through proper channel and submit the report of exported goods to the specified Authorised Dealer.

    RBI guidelines states that Foreign currency must be received within a specified timeframe against all exported goods .... and VICE-VERSA ..... If advance payments have been received from Foreign Buyer then RBI ensures that agreed amount of goods has been exported in a specified time frame.

    This is monitored so that the balance is maintained and there are no irregularities to effect the economic stability of our Country.

    Sellers are definitely doing a Fraud (knowingly or unknowingly) but how much ebay is Party to it can only be known by filling a RTI.

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    Re: International Trade on ebay India - Is it legal ?


    Hello,

    This Topic of mine was posted in June 2007 but am unable to know the facts.
    Can some one let me know how and where to file an RTI to get all the details.

    regards

    Umang Midha

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    Re: International Trade on ebay India - Is it legal ?


    thread is intresting and i like to get update if any body reply on that.


    thanks

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