Sale-Repurchase of Raw Material-Finished Goods under Advance License.

[Pradeep Singhi]

Hello, I'm having a query regarding raw material imported under advance authorization.

Scenario : - Party A has Advance license which has authorized supporting manufacturer as Party B. Party A then enters into agreement with Party B to manufacture finished goods to be transferred exported by Party A only. Party A imports raw material under AA & sells the same to Party B for manufacturing. Party A then re-purchases the Finished goods from Party B. Party A carries out the Export Obligation of Finished goods and closes the advance license.

P.S: GST has been duly paid on raw material sale from Party A to Party B and again when Party B sells finished goods to Party A.

Query: What are the customs law default & exposure in such cases? These advance licenses were for 2018-2022 period and up to what period customs can raise queries?

AI Summary

Advance Authorization Scheme: Customs & GST Issues in Raw Material Imports and Export Obligations Compliance A discussion on a forum addressed the customs and GST implications of a transaction involving raw materials imported under an Advance Authorization (AA) scheme. Party A, holding the AA, imports raw materials duty-free, sells them to Party B for manufacturing, and repurchases the finished goods to fulfill export obligations. Key concerns include meeting export obligations, correct utilization of raw materials, and maintaining proper documentation. Customs can raise queries until 2027, five years from the last import under the license. Replies highlighted the importance of compliance with the Foreign Trade Policy (FTP) and ensuring proper endorsements and documentation.