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

FTWZ storage not treated as supply, allowing imports under MOOWR to be warehoused by overseas clients if procedures met.
Goods imported under MOOWR and delivered to an FTWZ are not treated as a supply for GST purposes, so the arrangement is legally permissible if documentary evidence and prescribed SEZ/FTWZ procedures are followed. Ownership can remain with the overseas principal if the overseas entity registers as a client in the FTWZ and storage, invoicing and DTA clearance processes under SEZ/Customs rules are observed. MOOWR benefits need not be repaid where there is no clearance for home consumption.