Proof of Export required by Registered Manufacturer from Merchant Exporter

[NISHANT SHAH]

Dear All Experts,

My firm is doing Deemed Export under 0.1% IGST to Merchant Exporter by virtue of Notification No. 41/2017 DATED 23 OCT 2017 but for which no documentary evidences received from Merchant Exporter..

I want to ask below questions;

1) What documents are required to be collected from Merchant Exporter by Manufacturer for confirming whether Merchant Exporter genuinely do export or not?

2) If no documents are collected, what consequences arise in such case to Manufacturer?

3) What if Merchant Exporters are not willing to submit proof of exports to Manufacturer?

[KASTURI SETHI]

(1) (i) Shipping Bill or Bill of Export (ii) Export General Manifest (EGM).(iii) Tax Invoice

2. The manufacturer (supplier) will not be eligible for concessional rates. In other words, no export benefit to the manufacturer.

3. Basic liability is yours. Both will be deprived of export benefits. In addition to this, the possibility of action under FEMA.

[NISHANT SHAH]

My question is also from Departmental audit point of view as well becuase if in audit, they demand documents and if we can't present such documents, can department ask for 18% IGST along with interest ??

Secondly, Our Client is hesitating to show us Shipping bill filed by him since he might have impression that we can see his buyer details and he is not interested in disclosing same to us.

[KASTURI SETHI]

Answer to your first query is yes. If you don't produce proof of export along with export proceeds and all other related docs, the department will raise demand along with interest and penalty.

[KASTURI SETHI]

It is not merchant exporter's sweet will. He is legally bound to hand over all docs related to proof of export. No question of secrecy at all.

[NISHANT SHAH]

Ok Sir

Thank you for your valuable guidance.

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,

When they need for concessional rate of tax to be charged on buying point, obviously they have to provide all the supporting documents to the sellers otherwise let them buy @ actual rate of tax and claim the refund from the government after submitting the proof of export.

[KASTURI SETHI]

I agree with you, Sir. Well explained.

[NISHANT SHAH]

Thanks all experts

[YAGAY andSUN]

EGM has been changed to Export Declaration.

[NISHANT SHAH]

Ok noted sir..

[Malay pota]

Which type of action under FEMA can be taken is such case?

[PRASAD MVS]

An ancillary query on the subject issue, please

Goods were cleared for export under the concessional rate of Tax vide Notification No. 41/2017 IT (R). The Merchant Exporter exported the goods and furnished copies of Shipping Bills and other documents. But, GSTIN and invoice details of the supplier were not indicated in the SB, apparently because of an inadvertent error, while filing SB.

However, corroborative evidence such as an endorsement on invoices by warehouse keeper at the Port of export and endorsement by Customs Officer regarding GSTIN of the supplier and invoice number made on the SB is available. Whether we can take such evidence as substantial compliance of the conditions of the said Notification. (Other conditions satisfied). Please inform, whether there are any instructions /decisions on the subject.

[Kalpana Patel]

Hi!
I want to know whether a registered trader(not manufacturer exporter) can supply goods at concessional gst rate of 0.1% to merchant exporter.As introductory part mentions only manufacturer exporter but additional point refers registered supplier.Also there is no exclusive definition of registered supplier in context of manufacturer exporter or So question is procurement by merchant exporter from trader and not manufacturer exporter is eligible for this rate

Also if merchant exporter fails to supply in terms of export consequences shall pass to manufacturer as per law therefore i am not sure can he procure from non manufacturer i.e. a registered trader.

[Raghunandhaanan rvi]

HI

In my view, the answers to the queries are as follows

Query 1: Whether a registered trader(not manufacturer exporter) can supply goods at a concessional GST rate of 0.1% to merchant exporter?

Ans: Yes. A registered supplier can supply taxable goods to another registered recipient at a concessional rate of 0.1% IGST only for export as per Notification No. 41/2017-IGST (R) dated 23.10.2017 subject to the conditions mentioned therein are fulfilled. However, this Notification does not contain the words “ Manufacturer or Merchant and the words used are "Registered Supplier and Registered Recipient.

Query 2: The question is procurement by merchant exporter from trader and not manufacturer exporter is eligible for this rate?

Ans: Notification used the word “ Registered Supplier and Registered recipient” only. Thus any registered entity can supply taxable goods to a registered person for export at a concessional rate provided the recipient undertakes fulfills the conditions mentioned in the said Notification No. 41/2017.

Query 3: If merchant exporter fails to supply in terms of export, consequences shall pass to the manufacturer as per law therefore I am not sure can he procure from a non-manufacturer i.e. a registered trader

Ans: The registered supplier shall not be eligible for the above-mentioned exemption if the registered recipient fails to export the said goods within ninety days from the date of issue of the tax invoice. Thus in such situations, in my view, the registered supplier shall require to remit tax at a normal rate to the Government and recover it from the registered recipient resulting in his failure to export.

AI Summary

Manufacturer Must Provide Shipping Bill, Export Manifest, Tax Invoice for Export Benefits Under Notification 41/2017; Risk of 18% IGST Penalty A registered manufacturer inquired about the necessary documentation to confirm exports by a merchant exporter under Notification No. 41/2017. Experts advised that essential documents include the Shipping Bill, Export General Manifest, and Tax Invoice. Without these, the manufacturer cannot claim export benefits and may face penalties, including action under FEMA. Concerns were raised about departmental audits demanding proof of export, potentially leading to a demand for 18% IGST with interest. It was clarified that merchant exporters are legally required to provide these documents. Additionally, discussions covered whether registered traders can supply goods at concessional GST rates for export.