Indirect Export through Merchant Exporter

[Varun Arora]

Dear Experts,

Please resolve my query !!

We supplies hospital furniture to Merchant Exporters against CT1 and now i want to know whether we are eligible to take any benefits from the government like duty drawback or something else.

Please suggest, Thanks in advance.

[Ganeshan Kalyani]

Sir, have you paid any Duty while removing goods from your premises. Thanks.

[KASTURI SETHI]

Yes. You can take benefit. Merchant Exporter can take benefit only if you issue disclaimer certificate

Merchant Exports - Rebate of duty paid on inputs used in manufacture of export goods to merchant exporters also when goods cleared from factory of manufacturer - Clarifications

Circular No. 604/41/2001-CX, dated 29-11-2001

[Suryanarayana Sathineni]

In my view, Export benefits like DBK and other export incentives under FTP are predominantly to the account of Merchant exporter only since he is the ultimate exporter and will be receiving the foreign exchange for that export where he pays the agreed price in INR to the supplier in India.

However, with regard to Rebate of duty iof any paid on the consignment by the manufacturer supplier at the time of clearance from factory, such rebate can be claimed predominantly by the manufacturer supplier and if the supplier gives a disclaimer certificate then the merchant exporter can claim the rebate.

Best Regards

Surya

[YAGAY and SUN]

Following are the benefits which can be availed either by the Manufacturer Exporter or Merchant Exporter provided they issue a NOC to each other in case any one of them intent to avail the export incentives. Further, as per mutual understanding any one can get the benefit and share accordingly.

1. Duty Drawback
2. MEIS
3. Service Tax Refund (Notification 41/2012)

[Ganeshan Kalyani]

Sir, while appreciating the views of experts my concern is when goods are supplied in CT1 then whether duty was paid. The querist is requested to cast his reply. Thanks.

AI Summary

Export incentive entitlement depends on duty payment and a disclaimer/NOC to transfer rebate or drawback rights.
Entitlement to duty-linked export incentives depends on whether duty was paid on removal and which party is the exporter of record; rebates or drawback for duty actually paid at factory belong to the manufacturer who paid the duty unless the manufacturer issues a disclaimer certificate or NOC permitting the merchant exporter to claim them. Other incentives like MEIS and service-tax refunds can be claimed by either party if they issue mutual NOCs and agree allocation consistent with scheme rules.