Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Import and Export without movement of goods

08 June 2009

Hi Friends

I have a query about effecting an International trasaction.

There is a company A in India. It receives a PO for supply of goods from Company B in China. Company A in turn places an order to manufacture those goods on Company C in Singapore. Company C manufactures and ships the goods directly to Company B in China, however it raises invoice on Company A in India. Company A raises sales invoice on Company B in China.

In effect, A has imported from C and exported to B, however the movement of goods happened from sigapore to china, without coming into India.

Is this transaction Valid, and if so what are teh Customs procedures to be followed.

Reply
Follow
Share

10 Replies

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 16 July 2009

The transaction is perfectly valid.

However, this is not export or import withing meaning of Custom Act, as physical movement of goods across custom frontier is required in Custom Act, no need to follow any Custom procedure.

Yes. you need to explain the movement of foreign exchange to your bank, where you will be receiving money and sending money.

1 Like

sanjay (CFO) (31 Points)
Replied 16 July 2009

Originally posted by :T R Venkateswaran
"	.	"

Such transactions are called 'Merchandising Trade' transaction and are governed by FEMA

ref MASTER CIR NO. 08 DTD. 01.07.2008-IMPORT OF GOODS AND SERVICES. all rules and regulations of import/export to be adhered except that of Bill of entry and shipping bill. you need to ensure export leg and import leg i.e. receipts and payments for this transaction are routed through AD (bank) in India. the transaction also has to be at profits. the time limits are set for receipts and payments of the transaction and need to the adhered to avoid any litigities. if possible such transation to be done backing LC from customer and back to back LC to supplier. LCs, of course, has to be in foreign currencies.

Sachin Adsul (HOD Excise dept) (178 Points)
Replied 24 November 2009

Dear Rajesh sir,

we r also goig from same condition for export but our material is import from china but still it is in port & now we want this material export to Brazil directly from port. we dont want to take material in factory but can it is possible? wht is role of excise department? which document require?

plz expalin sir.

Sachin adsul

Mithilesh Jindal (Partner) (21 Points)
Replied 04 May 2011

The Same Condition is going with me but my Question is what about the indian Taxes???

is there any Tax to be charged ?

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 May 2011

Originally posted by : Mithilesh Jindal
	The Same Condition is going with me but my Question is what about the indian Taxes??? is there any Tax to be charged ?

as export is tax free, no tax in goods transactions, but incidental service oriented transactions viz banking, documention and certification would attract service tax.

sunny (ASST MGR) (333 Points)
Replied 06 May 2011

As per Custom Act 1962 ,

SECTION 50. Entry of goods for exportation. – (1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form.

(2) The exporter of any goods, while presenting a shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration as to the truth of its contents.

We have export the import goods at the port of entry of the goods without paying at custom duty. We have to warehouse the goods for export after getting goods at destination port. No excise involved, no Tax procedure.

alpana (EXCISE OFFICER) (25 Points)
Replied 04 July 2013

Dear sir,

We need your help on below ASAP.

We shall be received one order from Australia, same shall manufacture in our china factory.

We need the procedure for import clearing along with BE without physically material moment, the material shall be export directly from our china factory to Australia.

We shall pay the payment against LC so BE shall be must.

Please confirm all procedure and provide list of docs which required form our end.