export related

[Anil Jangid]

1. Company A is a manufacturer paying excise duty on final product. 2. Company B is a trader/ service provider 3. Agreement entered into between Company A & B: a) Company A will sell final product to Company B b) Company B will export the product Query: - Is any exemption for excise duty leviable on final product available to Company A or Company B?

[YAGAY and SUN]

Dear Anil,

Goods can be procured by B as Merchant Exporter and on submission of CT-1.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[CSSANJAY MALHOTRA]

In addition to the reply of Yagay & Su, please note following.

Alternatively, Company B can give his ARE-1 and Company A has the option to debit duty from his Bond account and take re-credit afterwards on receipt of Proof of Documents. Similarly, Company A can also debit the duty from his CENVAT account and apply for Duty rebate on receipt of proof of export from Company B. It has been assumed that the product is excisable.

[Rajagopalan Ranganathan]

Sir,

Since B is a dealer and service provider, he can procure excisable goods on payment of duty from A. The duty paid excisable goods receive by B can be exported by availing draw back under Customs and Central Excise Duty Drawback Rules. This will be easier than procuring CT-1 Certificate and submitting poof of export etc.

[YAGAY and SUN]

Dear Anil,

Working capital would not be blocked if goods are being procured by Company B on CT-1. Further, Benefit of AIR Duty Drawback can be availed either by the Manufacturer Exporter or Merchant Exporter as the case may be on producing a no objection certificate to the Customs Authority by any of the both and mentioning the name of manufacturer exporter on shipping bill.

However, submission of proof of export is mandatory.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

Anil ji,

Your query is nothing but export of goods by a Merchant exporter.

Yes, exemption of duty on final product is available to company A ( manufacturer ) on clearance to company B ,who can thereafter export the goods without payment of duty, subject to submission of proof of export.

[Suryanarayana Sathineni]

In my view, CT1 procedure would be the ideal one which will help avoiding payment of duty.

Regards

Surya

AI Summary

Export exemption for excisable goods: merchant procurement under CT-1 or ARE-1/bond with mandatory proof of export.
Exemption from excise duty is available where a merchant exporter procures excisable goods on CT-1, permitting clearance without working capital blockage, subject to proof of export. Alternatively, exporter may use ARE-1 with the manufacturer debiting duty to bond and re-crediting on proof, or manufacturer may debit CENVAT and seek rebate. Duty drawback remains an available mechanism for exported duty-paid goods, and a no-objection certificate and naming of the manufacturer on the shipping bill allow either party to claim drawback; proof of export is mandatory.