Trading activities for export by an E.O.U.

[Amresh kumar]

Respected Sir

As per New F.T.P. Policy 2023

Para 6.01(a) An E.O.U. may export all kind of Goods And Services except Items that are prohibited in ITC(HS)

Para 6.01(d)(i)(iii) may procure all types of Goods from D.T.A. on payment of applicable G.S.T.

Para 6.07 (a)(i) E.O.U. may sell finished goods manufactured by them as specified in L.O.P.

After Combined reading of Para 6.01(a) and 6.01(d)(i)(iii) can the E.O.U. do the trading activities for Export i.e. procure Goods from D.T.A. in terms of Para 6.01(d)(i)(iii) avail ITC and export in terms of Para 6.01(a) even if it is not specified in L.O.P.

Example:

An E.O.U. (XYZ) gets an order from overseas buyers and then places an order to a local D.T.A. unit (ABC) who is manufacturing/ supplier of the same product.

The D.T.A unit (ABC) supplies the goods to E.O.U.(XYZ) after payment of G.S.T.

The E.O.U. unit avails I.T.C. and after relabelling Exports to the Overseas buyer.

Is the above procedure correct and allowed post G.S.T. or is it mandatory to have the said product specified in L.O.P.

AI Summary

EOUs Must Reverse ITC for GST-Free Exports, Need Pre-Approval for DTA Goods Under New Foreign Trade Policy 2023 An Export Oriented Unit (EOU) inquired about the legality of engaging in trading activities for export under the New Foreign Trade Policy 2023. Specifically, the EOU wished to procure goods from a Domestic Tariff Area (DTA) and export them, questioning if such goods need to be specified in the Letter of Permission (LOP). Responses included: EOUs must reverse Input Tax Credit (ITC) if exporting without paying GST; EOUs can avail ITC on GST paid by DTA units; pre-approval of goods from the Development Commissioner is mandatory; and relabeling might qualify as manufacturing under the policy.