Supplier under 40/2017-C.T. (Rate) vs Imports on Adv Authorisation, Customs - Exim - SEZ

[Ganesh S]

Dear Experts,

I have a scenario wherein the raw materials are imported under advance authorization without payment of Customs and IGST. The finished goods manufactured using such imported raw materail is supplied to a merchant exporter following the procedure of notification 40/2017-CT (Rate) at 0.5% + 0.5% GST. Will such transactions be considered towards fulfillment of export obligation for procurement of raw materials under advance authorization?

Thanks,

Ganesh

Posts / Replies

[Ganesh S]

Dear Experts,

Any views? To add to the question. The Merchant Exporter is not a AA or DFIA holder.

Thanks,

Ganesh

[Rajagopalan Ranganathan]

Sir,

Advance Authorization can be availed by manufacturer exporters or merchant exporters who are linked with supporting manufacturers for physical exports (including exports to SEZ), intermediate supplies, and supply of ‘stores’ on board of foreign going vessel/aircraft (conditions apply). The conditions are prescribed by FTP or DGFT through notifications.

In view of the above, in my opinion, such transactions are considered towards fulfilment of export obligation for procurement of raw materials under advance authorization.

[Ganesh S]

Dear Sir,

In the given scenario, the merchant exporter (without AA/DFIA) is a third party. The manufacturing unit having AA is not a supporting manufacturer of the the Merchant Exporter. Can such exports through merchant exporter still be considered for EO of the manufacturer against it's AA.

Thanks

Ganesh

[Rajagopalan Ranganathan]

Sir,t

If the merchant exporter does not have a tie-up with the manufacturer who is holding the AA, then exports made through the merchant exporter will not be taken into account to arrive at the export obligation of AA holder.

[Ganesh S]

Thanks Sir.

Ganesh.