Determination of Export

[Guest]

DELIVERY OF GOODS MADE IN INDIA BUT INVOICE RAISED TO A FIRM OUT SIDE INDIA AND PAYMENT ALSO RECEIVED FROM OUT SIDE INDIA IN US DOLLARS. WHETHER IT IS EXPORT OR DOMESTIC SALES ?

[Ganeshan Kalyani]

Sir in my view it is domestic sale. Thanks.

[KASTURI SETHI]

Sh.Ramesh Chand Gupta Ji,

I endorse the views of Sh.Ganeshan Kalyani, Sir. In support of his views, I add as under:-

1. Goods have been manufactured in India and used/consumed in India.

2. Goods have not left India.

3. Foreign exchange not received in India.

4. Only invoice raised to a foreign based company.

Hence it cannot be export sales. It is domestic sales.

[MADAN RAHEJA]

Dear Sir, While fully endorsing views expressed by esteemed members of this forum herein above, I would like to bring to your notice the statutory provisions in this regard, which are contained in Sections 2(18) and 2(19) of Customs Act, 1962 which read as under: --

(18) “export”, with its grammatical variations and cognate expressions, means taking out of India to a place outside India;

(19) “export goods” means any goods which are to be taken out of India to a place outside India;

[KASTURI SETHI]

Agreed with Sh.Madan Raheja, Sir.

For knowledge sake ; Clearance made to SEZ is an exception. Clarified vide Board's Circular No. 1001/8/2015-CX.8, dated 28-4-2015.

[Suryanarayana Sathineni]

Dear Friend,

Due to various changes in procurement strategies across geographies lot of changes are taking place in supply of goods and this is one of such kind. The aspect involved in this type of transactions generally cover the following :

1. Indian manufacturer receives teh Purchase Order from foreign customer for supply of some material at a particular price in USD or Foreign currency.
2. In terms of place of delivery - He may instruct the supplier to deliver the goods in an Indian facility may of his affiliate or a jobwork / R&D location.
3. In this situation, while executing the export order, the supplier need to raise an Excise Invoice on payment of duty + VAT or CST as the case may be by arriving at the assessable value on back calculation after converting the Foreign currency into Indian Rupees. While supplying the goods, the supplier need to invariably mention the address of the indian facily on account of foreign Buyer.
4. After delivery, the Supplier need to raise a commercial invoice in USD/FC by enclosing the proof of delivery of goods to the indian facility and send the same to the foreign buyer who will then release the payment which will receive in the normal banking channel.
5. In view of this I feel , this is an export transaction and the exporter needs to submit the relevant details to RBI.
6. However, since the goods not physically left India and no Shipping Bill raised and processed by Customs, the supplier cannot get any export incentives and DBK.

Hope this will give required insight

Best Regards

Suryanarayana

AI Summary

Export classification: goods remaining in India are domestic sales; customs processing required to claim export incentives. Whether goods manufactured and delivered within India but invoiced to and paid by a foreign entity qualify as export depends on physical removal and customs processing; absent removal, such transactions are domestic sales. Clearance to a Special Economic Zone is an exception. Suppliers may invoice in foreign currency and report foreign receipts to the central bank, but without a shipping bill and customs export formalities they cannot claim export incentives or duty drawback.