Supply of material under Invalidation letter ( Advance Authorisation Scheme)

[Asked by Guest]

Dear Experts,

Please advise in the following situation :

Company A, who is a holder of Advance Authorisation (AA) wish to invalidate their AA for sourcing their raw material domestically from Company B.

Company B becomes Intermediate supplier. They too are now entitled for their AA based on Invalidation letter being given by Company A.

However, Company A wants the material to be delivered at some different company, say Company C (having all together different IEC and legal entity). More importantly, the invalidation letter will not have name and address of this company C , where the material would be supplied by Company B.

Company C is ready to give excise attested Statement of Invoices and Invoices to Company B so that they can close their Advance Authorisation.

Can you please guide on the below :-

1. Firstly, in such type of transaction, will Company B able to close their AA based on excise attested documents given by Company C ? Because Company C is not at all in the picture as far as Invalidation letter is concerned.

2. Is it not mandatory for Company B to supply the material only to the company whose name and address is mentioned in the Invalidation letter.

3. Tomorrow DGFT will ask Company B to establish the nexus between Company A, B and C. In such situation, how Company B will handle the transaction ? Will they be able to close their AA ?

4. According to me, Para 4.30 of HBP does not allow such transaction. Am I correct ?

Please guide whether Company B should accept such Invalidation letter or not.

Thanks in advance.

Atul Deshmukh

 

AI Summary

Advance Authorisation invalidation: delivery must be to the named supporting manufacturer or closure may be rejected by DGFT.
Supply under an Advance Authorisation invalidation requires delivery to the supporting manufacturer named in the invalidation; excise attested invoices from an unnamed third party consignee are not sufficient for closure, and DGFT verification demands that the original authorisation or invalidation expressly identify the receiving supporting manufacturer.