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

[YAGAY and SUN]

Keep the Development Commissioner and customs authorities in loop and inform them in writing about this transaction. GST will be payable on the first leg of this transaction i.e. import from Germany and shipped to US.

AI Summary

GST liability on first leg of imported raw materials dispatched abroad for subcontracting, with customs and regulator notification required.
A 100% Export Oriented Unit proposes importing raw materials from Germany to be subcontracted in the United States, with semi finished goods returned to India for further processing and export. The response advises keeping the Development Commissioner and customs authorities informed in writing and notes that GST is payable on the first leg of the movement - the import from Germany dispatched to the United States - while implying customs and regulatory coordination is required for payment and documentation arrangements.