merchant export sales

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).