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merchant export sales

Santhosh Kumar K C (Asst.Accounts Manager) (144 Points)

28 October 2017

Sir,
as per notification 40/2017 gst reduced for merchant export procurement to 0.1%. it is mentioned in this notification the material should supplied directly to port or registered warehouse. Can i supply the goods to the received factory? or the receiver require a separate leased warehouse for export. also inform whether we can get the gst paid on raw materials for finished goods supplied to merchant exporter.

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3 Replies

Santhosh Kumar K C (Asst.Accounts Manager) (144 Points)
Replied 28 October 2017

please reply

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 28 October 2017

Query: Can I supply the goods to the recipient factory?

Reply: The notification provides two options:

Option1: Supply goods directly to port/Airport/ICD/LCD

Option 2: Supply goods to a registered warehouse

The notification is not allowing the merchant exporter to receive goods to its factory. Further, in the second option, the term used is a registered warehouse. The term warehouse is not defined under CGST Act, 2017. In my view, it must be construed as a warehouse under section 57 or 58 of the Customs Act, 1962 (i.e. Private or public warehouse).

Query: Credit of GST paid on inputs?

Reply: There is no restriction on claiming the credit. You can avail the credit on inputs.

Interestingly this would be an inverted duty structure situation and refund can be claimed for unutilized credit available at the end of any tax period under section 54 (3) of the CGST Act, 2017. Here it must be noted that there are certain goods on which even there is inverted duty structure situation, no refund is available. For list of goods, you can refer notificaiton no 5/2017 Central Tax(Rate).