Import of goods in bill to ship to model in FEMA

[Shravan Gehlot]

In the context of a bill-to-ship-to model where goods have been ordered and imported from a foreign country for our customers, with the payment made by us, but the goods have not been received by us (they have been received directly by our customers), what are the implications under the FEMA (Foreign Exchange Management Act) regulations?

[Raghunandhaanan rvi]

In a Merchanting trade transaction, goods are not physically brought into India. Instead, a seller in a foreign country sends them directly to a buyer in another country as per the instructions of a buyer in India.

The Indian buyer pays the supplier and receives the export proceeds from the buyer in the third country against their invoice.

For more information on the relevant FEMA conditions, please refer to AP (DIR Series) Circular no. 115 dated 28.04.2014.

[Shravan Gehlot]

The goods are received in India only but not by the buyer, it is sent to our customers in india. So, it wont come under Merchanting Trade.

[Raghunandhaanan rvi]

Please refer to ID 114954 in this portal. I hope you may find the answer to your question

[KASTURI SETHI]

Are you not  putting a question mark on the legal validity of 'Bill-to-ship-to model' for import of goods ?

You have so many documentary evidences prescribed under FEMA  in your support. 

AI Summary

Merchanting trade classification under FEMA may differ from bill-to-ship-to import arrangements, affecting documentary compliance.
The issue is whether a bill-to-ship-to arrangement-where an Indian entity orders and pays for foreign goods that are delivered directly to its Indian customers-qualifies as merchanting trade under FEMA or as an import, with reference to AP (DIR Series) Circular No. 115 and FEMA's documentary and compliance requirements.