Purchase Order from Oversea customer and Delivery to Customer Warehouse in FTW In india

[Danish Azfar]

Hello Experts, 

If we receive a purchase order from an overseas customer, the customer also arranges the material for production, and we import the material under MOOWR benefits. 

After the production customer asked us to deliver the finished goods to FTW in India. Will this transaction be fully compliant? As the upfront duty on the import will not be there under MOOWR and supply to FTW (SEZ) is also treated as a export. 

From FTW, overseas customers will sell to its final customer in India, and duty and IGST will be paid by the final customer in India.  Will this transaction also be fully compliant? 

Thanks. 

[Sadanand Bulbule]

 in terms of Sl No. 8(aa) of Third Schedule to the CGST Act, goods sent to FTWZ are not treated as supply of goods.

In my opinion, the subject transaction structured is legally valid and compliant, subject to the satisfaction of all documentary evidences.

 

[Danish Azfar]

Thanks, Sir, for your reply. 

The overseas company itself does not have its setup in SEZ, but they will register itself as a client in FTW (SEZ). By doing so, also the transaction is compliant? 

Thanks.

[Sadanand Bulbule]

in the situation indicated by you, the key feature is the ownership of goods can remian with the overseas entity even when stored in FTWZ, created under SEZ Act, 2005 to facilitate import/export of goods, warehousing and logistic services. So if an overseas company registers as a client in FTWZ(SEZ) and follows the prescribed proceedure for storage and clearance of such goods to DTA, the transaction is legally compliant with SEZ/Customs laws in India

[Shilpi Jain]

Also from the perspective of claiming duty benefits under MOOWR, these need not be paid back by you as there is no clearance by you for home consumption.

[Danish Azfar]

Hello Experts, 

Thanks a lot for your feedback. 

Need your expert opinion on the below

An overseas company having no presence in India registers itself as a client in FTW. When our company bills the Goods to an overseas company and ships the Goods to the overseas company but in the FTW warehouse where they registered as a client, will able to fulfill the export obligation for us? 

How will the bill of export show this Bill to and Ship to Transaction, and whether there will be any issue in receiving the payment from the oversea company? 

Thanks. 

AI Summary

Overseas Buyers Can Use MOOWR Benefits for Goods Stored in FTWZ Without CGST Liability When an overseas customer provides a purchase order and supplies raw materials imported under MOOWR benefits, and the finished goods are delivered to a Free Trade Warehouse (FTW) in India, the transaction is compliant if all documentary requirements are met. Goods stored in FTWZ, created under the SEZ Act, are not treated as a supply of goods under the CGST Act. An overseas company without a physical presence in India can register as a client in the FTWZ and retain ownership of goods stored there. The transaction remains compliant with SEZ and Customs laws, provided prescribed procedures for storage and clearance to the Domestic Tariff Area are followed. Duty benefits under MOOWR apply as there is no home consumption clearance. Export obligations can be fulfilled with proper billing and shipping documentation reflecting the overseas customer as the buyer, and payment receipt should not face issues if these conditions are satisfied.