Export directly form UK to UAE via Indian company

[Ezudheen P]

One of our foreign Buyer located in UAE want to import a Machinery form United Kingdom through our company

1. Buyer located in UAE want to do the transaction through Letter of Credit

2. We have to buy the item from an Indian subsidiary of an MNC located in United Kingdom

3. We have to pay the amount in to Indian subsidiary in INR

4. The Indian subsidiary then arrange the shipment directly form United Kingdom to UAE

5. Once the shipment reaches in UAE we will get paid in Dollar

Does this transaction is legal/valid in India?

How can we execute this transaction without violating rules and regulations?

[MUKUND THAKKAR]

It’s call Merchandise export. As per RBI guide line 10% profit margin is require, but you are doing the payment s in Indian rupees to subsidiary company of UK. In this transactions you need raised the bills after receiving the documents from your UK supplier. Please ask your UK supplier to raise the invoice in following manner

Bill to ABC LTD –UAE address A/c your company name India . LC No. PO No.

Giving by your LC reference number On the body of Invoice and BL raised by your UK supplier. BL details remain same as per Invoice , BL need to in Three copy (original) . After receiving the documents from your UK supplier, you need to raise Invoice in US$ In favour of your UAE customer by giving LC number and Purchase order number. And submitted to bank along with the copy of BL for realization of FC. Documents, You will be not eligible to take any export advantage because goods are not exported from India.

Before doing this transactions you need to approach your bank to avoid confusion. Because in transactions, you have not any shipping bills or any other documents related to Indian custom.

[Ezudheen P]

Hi Mukund,

Thanks very much for your valuable answers. I have few more doubts about this trade.

1. What are the taxes applicable to this trade?

(The trade merchandise is: SMART Payout with 1000 notes cashbox and standard plastic bezel)

2. Our buyer from UAE needs the Certificate of Origin issued and attested by Indian Authorities

2.1 Who can issue the certificate of Origin?

2.2 Whether this Certificate of Origin can be signed by "Indian chamber of commerce"?

Thanks

Ezudheen

AI Summary

Merchandise export compliance: ensure invoice, bill of lading and LC referencing for foreign currency realisation and documentation integrity.
Advised procedure: require the UK supplier's invoice and bill of lading to show the UAE buyer as bill-to, cite the Indian intermediary as account party, and reference the LC and purchase order; after receiving UK shipping documents the Indian intermediary must raise a US dollar invoice in favour of the UAE customer with LC/PO references and submit those documents to its bank for foreign currency realisation. The transaction is treated as merchandise export for documentation but is ineligible for Indian export benefits because goods are not exported from India; consult the bank due to absence of Indian shipping bills or customs documents.