Export Procedure, Central Excise

[varun arora]

Dear Experts

Please reslove my query

If a Manufacturer is supplying goods to Merchant Exporter and ME will export the goods, In this case ME is not providing the CT 1 certificate and Our officer is advising us(Manufacturer who is supplying goods) that Execute the bond on the behalf of ME and in this case no need to have CT-1 and Excise officer will be satisfied after receiving ARE- 1 copies endorsed by custom officer.

Further If Manufacturer execute Bond then How will Mnfrer get ensured that goods will be exported??

And secondly while supplying goods to ME, Mfrer will prepare ARE-1 copies or ARE-3 copies?? i mean what kind of AR set will be prepared??

Thanks in advance.

Posts / Replies

[Mahir S]

Where export is effected by merchant-exporter, the bond has to be necessarily furnished. It is open for the manufacturer to furnish bond on behalf of the merchant exporter. In such circumstances, the application in Form ARE.1 will be in the name of the manufacturer who executes the Bond.

It should be noted that once a manufacturer furnished bond for exports by the merchant exporters, it would be his responsibility to account for the export goods.

The goods gets exported directly from the manufacturer factory premises on behalf of the merchant exporter, hence Manufacturer thereby gets ensured that goods have been exported.

[varun arora]

Thanks for your valuable reply sir, This means Mfrer can not supply to ME in this case He has only option to remove directly from his premises to the custom port on the behalf of ME. And In this case if i am not wrong ARE1 copy will be prepared by Mfrer and after endorsement and verfied officer with whom bond was executed will cancel the bond after endorsing copy.

Futher clarify ME is ready to provide ct1 certificate then in this case Mfrer will supply goods to ME after preparing ARE3 and receiving ct 1 and ME will remove goods on the basis of ARE 1 ??

Thanks for your valuable reply and time..

[Mahir S]

(i) A ME can export goods either directly from the premises of Manufacturer factory, with or without sealing of export consignments; or through his premises under claim for rebate of duty or under bond.

W.r.t to your query with regards to ensure that the goods were being exported by the ME, it was therefore suggested esterday to export the goods directly from the premises of manufacturer’s factory.

(ii) The ME shall provide the CT-1 and the ARE-1 to the manufacturer, thereafter the manufacturer exporter can clear the goods without payment of duty by quoting the CT-1 reference No on Excise Invoice and ARE-1 counter signed by the Manufacturer.

[Mahir S]

Sir,

Looking to your interest in the topic and for your clarification, I provide procedure generally being carried out by Merchant Exporters, as detailed below :-

1. Merchant exporter execute B-1 Bond with its jurisdictional excise authorities.

2. Obtain CT-1 form and debit the running Bond register for the duty amount

3. Prepare ARE-1 form at transaction value (at the price agreed between manufacturer and Merchant exporter in local currency) and sign it.

4. Forward CT-1 and ARE-1 form to manufacturer

5. Manufacturer raises local sales invoice on Merchant exporter at the same rate/value which is mentioned on CT-1 and ARE-1 without charging Excise Duty and Sales tax with a remarks that goods being supplied against CT-1 and Form-H.

6. Duty Forgone based on local sales invoice is mentioned on ARE-1 to complete it.

7. Local sales invoice to carry name of end customer (foreign buyer to whom Merchant exporter is going to ship the product)

8. After excise examination and sealing inform the Merchant exporter about it.

9. Merchant exporter raises Export Sales Invoice on its foreign buyer in foreign currency and prepare Packing List and provide it to Manufacturer and ask him to load the material on lorry and move it to Indian custom port from where goods will be physically shipped abroad

10. In the meantime, based on export Invoice, Merchant exporter file the shipping bill with the help of its CHA

11. Manufacturer load the material and send it to custom port alongwith Export Invoice (in foreign currency) as provided by Merchant Exporter + Packing List + required copies of ARE-1.

12. Merchant exporter’s CHA take over the goods at custom port and complete the export formalities

13. Goods are physically exported

14. Merchant exporter submit the proof of export (ARE-1 copy, HBL, Export Invoice (in foreign currency + Local purchase Invoice) to its own jurisdictional excise office to discharge the bond and also send copy of the same to Manufacturer who inturn submit the same to their excise office to close the transaction.

15. Merchant exporter provide the Form-H to manufacture.

[CA. Varun Arora]

Thank you so much Mahir Sir, You have resolved my query by your valuable replies.

I studied Export procedure And still there were two doubt regarding this procedure kindly correct me if i am wrong.

EXPORT BY MERCHANT EXPORTER

1.) If Mfrer is supplying goods to Merchant exporter(Bond is executed by Merchant exporter) against CT-1 then Mfrer will not prepare ARE copies (1,2,3 and all) and just after receiving CT-1 Hi will clear the goods.

2.) this case is the same as point no. 1 But in this case Bond will be executed by Mfrer on the behalf of ME and in this case no need to CT-1 and Mfrer will prepare ARE 1 copies as a principle agent on the behalf of Merchant exporter.

In both points is there any need to file LUT by Mfrer who is supplying the goods to Merchant exporter, because if we consider Mfrer point of view then He is safe on CT-1 and can clear the goods no need to file LUT and cancell the LUT??

EXPORT BY MANUFACTURER

1.) If Mfrer Exporter is procuring the goods with Excise duty and availing the cenvat credit then in this case If hi will export then he will prepare ARE -1

2.) If Mfrer Exporter is procuring the goods without paying excise duty then in this case he will follow procedure laid down in removal of excisable goods at concessional rate rules 2001 then in this case He will file file application to Excise officer and hand over it to Mfrer supplier then Mfrer supplier will remove the goods to Mfrer exporter on the basis of this application signed by suprintendent

And in this case Mfrer exporter will prepare ARE-2 copies.

In this case also is there any need to file LUT by Mfrer Supplier who is supplying the goods to Mfrer exporter, because if we consider Mfrer supplier point of view then He is safe on the point of Application as received by MFrer Exporter and can clear the goods no need to file LUT and cancell the LUT??

DEEMED EXPORT

If case if of Deemed export like supply to SEZ and 100% EOU then in this case supplier will prepare ARE-3 copies and receives CT-3 from these units.

Kindly correct if i am wrong.

Thanks a lot for your consideration.