Dear Sir,
We had exported some goods under LUT and we received the payment for the same. But after some months the customer raised question that our material are rejected so they want same quantity of material replacement on FOC basis. We don't bring material back to our factory from the customer because these material are not good and also transportation cost will be high compare to this material.
My query is can we send these replacement material to customer on Free of cost basis under LUT.
and the above transaction which we takes place for replacement is correct or not ?
Regards
Swapneswar Muduli
Exporting Replacement Goods FOC Under LUT Is Permissible; Ensure Proper Documentation and Obtain GR Waiver for Compliance A user inquired about exporting replacement goods on a free-of-cost (FOC) basis under a Letter of Undertaking (LUT) after a customer rejected the initial shipment. Three respondents confirmed that exporting replacement goods FOC is permissible. However, they advised careful documentation, including marking invoices as FOC and addressing valuation issues since no sale occurs. Additionally, they highlighted the necessity of obtaining a GR waiver from the Reserve Bank of India (RBI) or an authorized dealer bank due to value limits on FOC exports. The discussion emphasized compliance with relevant regulations and careful handling of export documentation. (AI Summary)
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