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Kunal Vanjare   15 June 2021

Courier Mode or Commercial Mode for export shipments?

First time exporter here!

I have taken two quotes from courier companies who have given me two options :-

  1. Courier Mode

  2. Commercial Mode

Courier mode is cheaper but I will have to undervalue my invoice, whereas Commercial mode will be expensive and will require a lot of documentation. What are the documentation required for Commercial Mode? I have my IEC and will apply for LUT.

And will there be any pitfalls in my accounting by choosing Courier mode by undervaluing the Invoice?

Also what about GST credit? I will be buying raw material by paying GST.


Kunal Vanjare

 5 Replies

gopal dhangar

gopal dhangar   15 June 2021

Valuation of your goods will be done by CBIC through shipping invoice FOB.

Gst credit can be claimed , refund under LUT without payment of tax, as you have been exporting those goods.
Kunal Vanjare

Kunal Vanjare   15 June 2021

Exactly. The courier guy told me that for eg.. if my consignment invoice value is 50K, you can undervalue it by either declaring a lower amount, or dividing the consignment into different parts (for eg.. 50K invoice split into 5 invoices of 10K each).

This sounds like a lot of trouble!

refund under LUT without payment of tax : Could you elaborate please? After getting the LUT, I will still buy raw material by paying GST. Do I have to separate my purchase bills for this export order with my usual domestic orders?

Pankaj Rawat

Pankaj Rawat (GST Practitioner)     16 June 2021

Dear Kunal
If the Value of Export is Higher then you should better to export it via proper channel , by Proper Custom Clearance.
It's better for fast & smooth clearance procedure under export , appoint/hire CHA (custom House agent)
He will get prepare all the necessary documents, like Invoice, commercial invoice, packing list , EDF etc So in my view you should export through proper Custom clearance.

Now come your 2nd leg of query about LUT .
In term Rule 96A , you can supply goods or services for Export without payment of IGST (GST) . So LUT only exempt you paying GST on export , hence required to pay GST on your Inward Supply.
Note : Can claim Refund of GST paid on inward supply against export .
Kunal Vanjare

Kunal Vanjare   16 June 2021

Dear Pankaj,

What is the procedure to claim refund of GST paid on inward supply for export orders? For example, to execute an order of 50000, I purchase 15000 worth of raw material by paying GST to suppliers.

How do i claim this refund of 15000?


Pankaj Rawat

Pankaj Rawat (GST Practitioner)     20 June 2021

file Rfd 01 online on portal, subject to condition prescribed in section 54 r/w rule 89 of gst act or can refer circular 125/44/2019 gst  dtd 18/11/2019

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