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

Advance authorisation: inputs for SEZ exports may be imported if actual-user condition and export obligations under Foreign Trade Policy met A licensee obtained an advance authorisation for physical exports, exported goods to an SEZ, and asks if inputs can be imported under that licence. Respondents note supplies to SEZ are zero-rated supplies, not deemed exports, and that advance authorisations carry an actual-user condition prohibiting transfer of duty-free inputs. Because the authorisation lacked a pre-import condition, inputs need not be pre-imported and may be imported subsequently, provided the actual-user requirement and export obligation conditions under the Foreign Trade Policy are complied with.