TaxTMI 
TaxTMI 
Merchant exporter does have manufacturing unity
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....erchant exporter does have manufacturing unity<br> Query (Issue) Started By: - Dinesh kumar Dated:- 10-9-2025 Last Reply Date:- 11-9-2025 Customs - Exim - SEZ<br>Got 3 Replies<br>Customs<br>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? Reply By Sadanand Bulbule: The Reply: ....
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....1. What is an Advance Authorization (Advance License)? It is a duty exemption scheme under the Foreign Trade Policy (FTP). Allows duty-free import of raw materials/input items that are physically incorporated in the export product. Export obligation: The exporter must export the resultant product (finished goods) within a prescribed time. 2. How can a Merchant Exporter (without factory) o....
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....btain it? Even if he doesn't have a factory, a merchant exporter can apply for an advance license by associating with a supporting manufacturer. In the application, he declares the supporting manufacturer's details. The supporting manufacturer actually consumes the duty-free raw materials in production and supplies finished goods to the merchant exporter. The merchant exporter then ex....
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....ports those finished goods to meet his export obligations. 3. Why does he take the license in his own name? Merchant exporters often prefer to hold the license themselves so that: Control remains with them - they can source raw materials, get goods manufactured on job work/contract basis. * They can negotiate better with multiple supporting manufacturers. Export benefits (e.g., duty ....
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....exemption, faster clearances) accrue to them directly, not to the manufacturer. 4. How does he "use" the raw materials if he has no unit? He doesn't literally use them; instead: Imports raw materials duty-free under the license. Sends them to a supporting manufacturer/job worker under bond, challan, or CT-3/ARE-3 procedure. The manufacturer converts raw materials into finished export....
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.... products. Finished products are returned to the merchant exporter for onward export. Thus, the merchant exporter facilitates the flow - he owns the materials, but the manufacturer consumes them Reply By Shilpi Jain: The Reply: Advance license is given to a merchant exporter tied to a supporting manufacturer. So the goods exported are manufactured goods and not raw materials. Reply By Sa....
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....danand Bulbule: The Reply: Refer the following judgement as regards to the Customs benefits to the Merchant Exporters: 2025 (5) TMI 1695 - Supreme Court <br> Discussion Forum - Knowledge Sharing ....