Getting Steel from Steel Mill under Nil Duty against Invalidation letter issued by DGFT

[Vijaya Bhaskar N]

Dear Experts

WE want to procure raw material from domestic market agst.Advance licence without payment of central excise duty. The Finished goods produced will be SUPPLIED OUR CUSTOMER WHO IS THE ULTIMATE EXPORTER Pls.guide us in the following points.

1. what will the document to be given to Raw material supplier by us . WE ARE NOT DIRECT EXPORTER

2.What remarks to be mention in the invoice by Raw material supplier.

3. whether manufacturer supplier of material can supply the material without payment of duty

agst. Advance licence.

Pls give any refrence of Notification /Circular for Export under advance licence.

REGARDS,

N VIJAYA BHASKAR

[Suryanarayana Sathineni]

Dear Bhaskar,

Please note the following :

1. Along with your Purchase Order, you have attach th copy of invalidation letter to the steel mill

2. Based on such Invalidation letter issued by DGFT, the Steel Mill will apply for an advance intermediate licence or to get a Receipt number based on which the wind mill can supply the material to you

3.For exemption from payment of duty, the steel mill can avail the exemption notification No. 44/2001-CE(NT) Dated 21.06.2001 amended by Notification NO. 23/2009-CE(NT)

4. Since the above Notification, is subject to pay duty.certain conditions and procedures, generally suppliers will not prefer claiming exemption and rather pay duty.

5. The Steel mill while supplying the material against the invalidation letter. irrespective whether he avails the exemption or pay duty, he has to mention on the invoice that the said supply is against his intermediate advance authorization or the receipt obtained for his application as the case may be for his accounting the said supplies against such authorization.

6. After receipt of the material, the receiver need to get the endorsement on the invoice that the material was duly received in his factory. This can also be taken in form of a certificate for all supplies instead of taking certification on every invoice depending on the receiver.

Hope the above clarifies your query.

Regards

Suryanarayana

[Vijaya Bhaskar N]

Dear Suryanarayana Garu ,

So Kind of you for giving detailed reply.Further bring to your Notice as under

We are Manufacturers of Purlins & Roll form sections by using Steel Coils .We received one order from one customer at hyd who is exporter .

Against their order on us we applied to DGFT for Advance License for Buying the Steel from JSW/Uttam Steel . We received INVALIDATION LETTERS FROM DGFT on this both suppliers .

Now by giving the Invalidation letters to JSW/UTTAM , we want to buy the Steel with NIL duty .

Apart from this Invalidation letter what are all other documents to be given to JSW/UTTAM Steel for procuring the steel under NIL duty against the INVALIDATION LETTERS ISSUED BY DGFT TO US . WE RECEIVED SEPARATE LETTERS FROM DGFT ONE FOR JSW & ANOTHER FOR UTTAM QUOTING OUR PO NO & GIVING THE COMPLETE DISRUPTION OF THE MATERIAL .

Our supplier says only based on invalidation letter they can not supply the material UNDER NIL DUTY & require a letter FROM OUR EXCISE RANGE , PLEASE ADVISE WHAT ARE ALL THE DOCUMENTS TO BE GIVEN TO OUR SUPPLIER ALONG WITH INVALIDATION LETTER .

On receipt of the material , we produce components & supply to our customer who is actual exporter under NIL duty which will be again different procedure .

AT PRESENT PLEASE ADVISE ON GETTING STEEL FROM OUR SUPPLIER WITH NIL DUTY WHAT ARE ALL DOCUMENTS WE HAD TO GIVE APART FROM INVALIDATION LETTER.

Regards,

N.Vijaya Bhaskar

[MUKUND THAKKAR]

Dear Vijay,

please remeber one thing revalidation letter issued by DGFT which has under MOC (Ministry of Commerce) and Excise duty exemption availibilty is decided by MOF. in your case your supplier will be charging the excise duty to you and latter on you have applied for refund with the DGFT. nature of duty is know as TED (terminal excise duty). Range or Division office will not giving any letter to you for duty exemption.

AI Summary

Advance licence invalidation permits nil-excise supply if supplier holds intermediate authorization and invoices against it. An advance licence invalidation letter enables supply of domestic raw material under nil excise duty only after the supplier obtains an intermediate advance authorization or receipt number; the supplier must state on the invoice that supply is against that authorization or receipt, and the receiver must endorse the invoice or provide a receipt certificate to substantiate nil-duty accounting, while practical application of the exemption follows Notification No. 44/2001-CE(NT) as amended and may result in suppliers preferring to pay duty and seek refund.