Supply of material under Invalidation letter ( Advance Authorisation Scheme), Customs - Exim - SEZ

[Atul Deshmukh]

Dear Experts,

Please advise in the following situation :

Company A, who is a holder of Advance Authorisation (AA) wish to invalidate their AA for sourcing their raw material domestically from Company B.

Company B becomes Intermediate supplier. They too are now entitled for their AA based on Invalidation letter being given by Company A.

However, Company A wants the material to be delivered at some different company, say Company C (having all together different IEC and legal entity). More importantly, the invalidation letter will not have name and address of this company C , where the material would be supplied by Company B.

Company C is ready to give excise attested Statement of Invoices and Invoices to Company B so that they can close their Advance Authorisation.

Can you please guide on the below :-

1. Firstly, in such type of transaction, will Company B able to close their AA based on excise attested documents given by Company C ? Because Company C is not at all in the picture as far as Invalidation letter is concerned.

2. Is it not mandatory for Company B to supply the material only to the company whose name and address is mentioned in the Invalidation letter.

3. Tomorrow DGFT will ask Company B to establish the nexus between Company A, B and C. In such situation, how Company B will handle the transaction ? Will they be able to close their AA ?

4. According to me, Para 4.30 of HBP does not allow such transaction. Am I correct ?

Please guide whether Company B should accept such Invalidation letter or not.

Thanks in advance.

Atul Deshmukh

 

Posts / Replies

[MUKUND THAKKAR]

For closing of advance authorisation, such type of internally documents are not allow by DGFT,

Invalidation issued by Company A to you, On the basis of you are entitle for getting the advance authorisation,

now A is asking to delivered goods to company C. this is only possible when company A initallly mention the name of C as supporting manufacurter.

supply under the invalidation letter TED is applicable and your buyer can get it refund from DGFT. This is my view.