Actual User Condition

[Arti Gupta]

What does the 'Actual User Condition' phrase means.Can a raw material imported under Actual User Condition be used to manufacture a finished product to be sold to a final customer?

[Mahir S]

A Introduction

The actual user condition is a important mechanism to control imports and restrict the identity of the importer to the manufacturers or those who use the goods for their own use and not for trading. The purpose of the condition is to keep the traders as well as trading activities out of the import operations.

The importer will have to prove to the customs that he or she is an "Actual User" of the goods covered by the condition. Evidence like registration certificate with the appropriate government agencies, sale and purchase invoices and other records like registration under the Factories Act or Labour Commissioner may have to be produced as evidence of "Actual User".

"Actual User" means an actual user who may be either industrial or non-industrial.

"Actual User (Industrial)" means a person who utilises imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit.

"Actual User (Non-Industrial)" means a person who utilises the imported goods for his own use in

(i) any commercial establishment carrying on any business, trade or profession; or

(ii) any laboratory, Scientific or Research and Development (R&D) institution, university or other educational institution or hospital; or

(iii) any service industry.

B Transfer of Imported Goods

Freely importable goods can be transferred by sale or otherwise by importer freely. Transfer of imported goods, which are subject to Actual User condition and have become surplus to needs of Actual User, shall be made only with prior permission of RA concerned. Following information alongwith supporting documents shall be furnished with request for grant of permission for transfer, to RA concerned:

(i) Reasons for transfer of imported material;

(ii) Name, address, IEC number and industrial Authorisation registration, if any, of transferee;

(iii) Description, quantity and value of goods imported and those sought to be transferred;

(iv) Copies of import Authorisation and bills of entry relating to imports made;

(v) Terms and conditions of transfer as agreed upon between buyer and seller.

C Actual User Condition

Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods, which are importable without any restriction, may be imported by any person.

However, if such imports require an Authorisation, the Actual User alone may import such goods unless Actual User condition is specifically dispensed with by RA.

[YAGAY andSUN]

The Actual User Condition means the importer of the goods will use the goods in manufacturing of finished goods and after that sell the finished goods to a customer.

Yes, you can use the raw material in manufacturing of finished goods and thereafter, you can sell the finished good to your customer.

But you cannot transfer the raw-material as such on which actual user condition is applicable.

[PAWAN KUMAR]

Dear sir,

Actual user condition means the user which is importing the goods to India under a specific scheme, shall only use those goods into manufacturing of final products either exported or removed under deemed export procedure. 

 

[DEEPAK SHARMA]

Excise Duty on Mobile Battery effected 2% (W/o Cenvat) & 12.5% (with Cenvat). Manufacturer imported parts of Mobile battery w/o Pymt of whole of duties (BCD+CVD+SAD) under annexure-III "Customs (Import of inputs under Concessional rate of duty) Rule 2016 issued by AC/DC Excise. and manufactured the mobile battery in his factory (Regd with CE Dept.). now the manufacturer wanted to sale the said battery in open market.

is they require to discharge excise duty @ 2% or 12.5% ?????

AI Summary

Actual user condition restricts import of inputs to end users, permitting manufacture and sale of finished goods but limiting transfers. The Actual User Condition limits importation to persons who will use imported goods themselves; importers must evidence user status. Industrial and non industrial actual users are defined by the nature of own use. Raw materials imported under the condition may be used to manufacture finished goods which can be sold, but the imported inputs cannot be freely transferred without prior permission of the relevant authority, who requires reasons, transferee details, import documents, and terms of transfer. Where authorisation is required, only the Actual User may import unless the condition is waived.