SubContracting of Imported Raw Materials outside India

[Mohideen A]

Dear all,

Client is a 100% EOU and is planning to import raw materials from Germany and will be directly dispatched to USA for a sub-contracting process. After process is complete, the semi-finished goods is dispatched to India for further processes by the EOU unit and the finished goods are exported back.

1) Whether the EOU unit can undertake such activity?

2) How can the EOU unit pay for the raw material supplier in Germany when the goods are shipped from US after completion of the subcontracting process. Whether BOE can be filed in the name of both the raw material supplier and subcontractor.

3) whether the abovesaid transaction is a Merchant transaction as per RBI?

the abovesaid transaction falls under Merchant transaction. Whether the

AI Summary

Client Queries Import-Export Process: Clarification on Merchant Transactions, Payment Handling, and GST for 100% EOU Activities A client, a 100% Export Oriented Unit (EOU), plans to import raw materials from Germany, send them to the USA for subcontracting, and then bring the semi-finished goods to India for further processing before exporting the finished products. The client seeks clarification on whether such activities are permissible, how to handle payments to the German supplier, and if the transaction qualifies as a Merchant transaction under RBI guidelines. The response advises keeping the Development Commissioner and customs authorities informed and notes that GST is applicable on the initial import from Germany to the USA.