Merchant exporter does have manufacturing unity

[Dinesh kumar]

Why does a merchant exporter obtain an advance license when he exports raw materials even though he doesn’t have a manufacturing unit? How does he use the raw materials?

AI Summary

Merchant exporters may use supporting manufacturers under advance authorization for duty-free inputs while retaining control and export obligation An advance authorization under the Foreign Trade Policy permits duty-free import of inputs physically incorporated into exported goods; the holder must fulfill an export obligation by exporting the finished product. A merchant exporter without a factory may obtain such authorization by declaring a supporting manufacturer who physically consumes the inputs and supplies finished goods to the merchant for export. Merchant exporters retain the license to control sourcing, contract manufacturing, and benefits. Duty-free inputs are sent to the supporting manufacturer under bond/challan or CT-3/ARE-3 procedures; finished goods are returned for onward export. A recent Supreme Court judgment on customs benefits was cited.