FTP allows exports through third party
We are advised by our GST consultant that when we make exports in discharge of export obligation against advance authorisation, we should send the goods under LUT and not on payment of IGST on export goods under a refund claim. Is that correct?
Rule 96(10) of the GST Rules, 2017 (relevant part) says that the person claiming refund of integrated tax paid on export goods should not have availed the benefit under notification no.79/2017-cus dated 13th October 2017except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme. The said notification 79/2017 allows IGST exemption on imports under advance authorisation. The explanation to that Rule 96(10) says that the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid IGST and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications. So, where the imports under advance authorisation have been made availing the exemption of only the BCD and on payment of IGST, the benefit of the said notification 79/2017-Cus is considered as not availed. It means that where you have paid IGST on your imports under advance authorisation, you can pay IGST on your export goods and claim a refund of that. However, if you have availed the IGST exemption on your imports under advance authoristion, you must export under LUT without payment of IGST on the export goods.
We have an order from a merchant exporter who is asking us to ship, on his behalf, the goods that we manufacture. Can we do so under our own IEC and if so, how will the shipping bill details will go in the EDPMS to the bank of the merchant exporter who will realize the payment against the exports?
Para 9.60 of FTP says that "third-party exports" means exports made by an exporter or manufacturer on behalf of another exporter(s). So, you can export on behalf of the merchant exporter. You can use your own IEC to ship the goods and state in the shipping bill that the export is on behalf of the merchant exporter giving his name and address. However, you must furnish the pre-shipment invoice value of the merchant exporter and give his AD Code so that the shipping bill details go to his bank in the EDPMS.
We are manufacturer exporters holding advance authorisation, where name of merchant exporter is not mentioned. Still, can we export through any merchant exporter?
Yes. Para 2.42 of FTP says that third party exports (except Deemed Export) as defined in Chapter 9 shall be allowed under FTP. In such cases, export documents such as shipping bill shall indicate name of both manufacturing exporter/manufacturer and third party exporter(s). Bank Realization Certificate (BRC), Export Order and Invoice should be in the name of third party exporter. You must mention the advance authorisation number and date in the shipping bill.