Advance Authorization and GST

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This query is : Resolved

Kaustubh Ram Karandikar (Querist)

27 December 2019 XYZ Ltd. Importing raw material under ‘Advance Authorization’. These goods will be directly sent to PQR (Supporting manufacturer) to manufacture finished goods. These finished goods will be purchased by XYZ from PQR where PQR will be charging 0.1% GST since XYZ will be exporting these goods as merchant exporter. XYZ will be showing these exports as fulfillment of export obligation against Advance authorization against which the raw material was imported by them. Is this transaction correct?

Rajesh Kumar

Rajesh Kumar (Expert)

31 December 2019 Finished goods are being purchased by XYZ from PQR; however imported raw materials are not being sold to PQR! PQR ought to supply these goods to XYZ on job work basis, on payment of GST; which can later be exported by XYZ.

CS M Pota

CS M Pota (Expert)

31 December 2019 In my view there should not be any GST not even 0.1% because XYZ Ltd are importing raw material under advance authorisation and as per the FTP there should be name of the supporting manufacturer in the advance autorisation if any process is to bedone by other other than the person to whom the authorisation is issued.The Imported item imported under the advance authorisation is non transfarable so here if the imported raw material cleared under advance authorisation is sent to the supporting manufacturere and and processing the authorisation exports the same of final products made by him after getting processed by the supporting manufacturer is is said to be in line of the manufacturere of the goods which are being exported.

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