Can I deemed export under advance authorisation?

[Dinesh kumar]

I took advance authorisation under custom Notifications 21/2023 (for physical export) and without pre-import, I exported to SEZ on fulfilment of export obligation against the license. 

now can I import under this licenses ? 

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

An Advance Authorisation is issued with an "Actual User" condition. This means the imported materials cannot be transferred or sold to another party and must be used by the license holder to manufacture the export product. 

The import of inputs is allowed without payment of duties, including Integrated Tax (IGST) and Compensation Cess.

The above submission is for educational purposes only.

[KASTURI SETHI]

Dear Querist,

You have mentioned the words, "Deemed Export" in the Heading of your query. Supply to SEZ is NOT deemed export. It is zero rated supply.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

The query mentioned in the heading is ‘deemed export ‘. But in the details of the query, it is enquired about the import. In case of export to SEZ Sector,  under the GST law, supplies from the domestic area to a Special Economic Zone (SEZ) units are treated as zero-rated supplies, not as "deemed exports" as Kasturi Sethi Ji has clarified in Point No. (2). However, you have stated that supplies were made to SEZ units.

[Shilpi Jain]

The querist is asking in the context of FTP and customs and not GST.

As per para 4.05(c)(i) of FTP, Advance authorisation for physical exports includes supplies to SEZ as well.

Pre-import condition would mean that the inputs be physically incorporated in the export product.

Since your license is not having pre-import condition you can import subsequently though actual user condition has to be fulfilled.

[Shilpi Jain]

Para 4.16 of FTP is relevant

"i. Advance Authorisation and / or material imported under Advance Authorisation shall be subject to ‘Actual User’ condition. The same shall not be transferable even after completion of export obligation. However, Authorisation holder will have option to dispose of product manufactured out of duty free input once export obligation is completed."

AI Summary

Zero rated supply to SEZ units allows duty free inputs under Advance Authorisation, subject to Actual User condition. Advance Authorisation permits supplies to SEZ units as physical exports and is treated as zero rated supply, not deemed export. If the authorisation lacks a pre import condition, inputs may be imported subsequently, subject to the Actual User condition that imported materials be used by the licence holder and remain non transferable. Duty relief covers customs duties including integrated tax and compensation cess, and after export obligation completion the holder may dispose of products made from duty free inputs in accordance with policy conditions.