Advance Authorization and GST

[Kaustubh Karandikar]

XYZ Ltd. Importing raw material under ‘Advance Authorization’. These goods will be directly sent to PQR (Supporting manufacturer) to manufacture finished goods. These finished goods will be purchased by XYZ from PQR where PQR will be charging 0.1% GST since XYZ will be exporting these goods as merchant exporter. XYZ will be showing these exports as fulfillment of export obligation against Advance authorization against which the raw material was imported by them. Is this transaction correct?

[Rajagopalan Ranganathan]

Sir,

In my opinion the procedure followed by XYZ is correct.

[DR.MARIAPPAN GOVINDARAJAN]

In my view also it is correct.

[MUKUND THAKKAR]

First check the application done by XYZ and need to showing the supporting manufacturer PQR in application. if directly sending material to PQR. if basic condition is meet than XYZ can eligible for claim export obligation.

XYZ need to mention name of supporting manufacturer in shipping bill.as per application details with the DGFT.

[YAGAY andSUN]

4.35 Facility of Supporting Manufacturer/ Jobber/co- licensee

(a) Imported material may be used in any unit of holder of Advance Authorization subject to condition of paragraph 4.10 of this Handbook or jobber / supporting manufacturer provided same is endorsed on authorization by Regional Authority. If applicant desires to have name of any manufacturer or jobber added to authorization, he may apply. Such endorsement shall be mandatory where prior import before export is a condition for availing Advance Authorization scheme and authorization holder desires to have material processed through any other manufacturer or jobber.

(b) Upon such endorsement made by Regional Authority, authorization holder and co-authorization holder shall jointly and severally be liable for completion of EO. Any one of co-authorization holders may import goods in his name or in joint names. BG/LUT shall also be furnished in their joint names.

(c) If authorization holder is registered with Central Excise, he has an option of getting names of jobber endorsed by Central Excise as per Central Excise Rules in lieu of Regional Authority’s endorsement. In case manufacturer exporter holding authorization is not registered / not required to be registered with Central Excise authority, job work may be allowed as per Central Excise Rules and regulations without insisting for endorsement of supporting manufacturer’s name. However, authorization holder shall be solely responsible for imported items and fulfillment of EO.

AI Summary

XYZ Ltd. and PQR Must Include Each Other in Export Documents for GST Compliance Under Advance Authorization Scheme. XYZ Ltd. imports raw materials under an Advance Authorization and sends them to PQR, a supporting manufacturer, to produce finished goods. PQR charges 0.1% GST to XYZ, which exports these goods as a merchant exporter, fulfilling export obligations linked to the imported raw materials. Respondents in the discussion agree that the procedure is correct, provided XYZ includes PQR in their application and shipping documents. The process must comply with guidelines from the Directorate General of Foreign Trade (DGFT), ensuring all necessary endorsements and conditions are met for the Advance Authorization scheme.