Merchant exporter and EOU
This query is : Resolved
06 October 2016
Dear experts,
what is the procedure if a merchant exporter wants to export the goods manufactured in EOU.
12 October 2016
Merchant exporter will have to buy the goods at concessional duty from EOU under DTA sales and then export.
12 October 2016
6.10 of FTP 2015-20(export through others) read with 6.19 of HBOP is saying something else.
Please elaborate sir,
12 October 2016
This refers to third party exports. The definition of third party exports may be seen at paragraph 9.60 of FTP 2015-20. The merchant exporter should have export order / LC on his name.
Message likes :
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12 October 2016
1. If Merchant exporter will buy goods from eou under DTA sale.....
how is it possible
Could you refer any notification/circular
2. Is'nt export done bymerchant exporter included in the definition of third party export.
03 August 2024
Exporting goods manufactured in an Export Oriented Unit (EOU) through a merchant exporter involves several procedures and compliance with specific regulations. Here's a detailed explanation based on the Foreign Trade Policy (FTP) 2015-20 and related guidelines:
### **1. Understanding EOU and Merchant Exporter**
- **EOU (Export Oriented Unit):** An EOU is a unit that is set up to export goods or services and enjoys certain benefits and exemptions under the Foreign Trade Policy (FTP). These units can procure raw materials and inputs without paying duties, provided they fulfill their export obligations.
- **Merchant Exporter:** A merchant exporter is an entity that does not manufacture goods but exports them. They typically purchase goods from domestic suppliers or manufacturers and then export them.
### **2. Exporting Goods from EOU through Merchant Exporter**
#### **Procedure:**
1. **Purchase of Goods:**
- **DTA Sale:** EOUs can sell goods in the Domestic Tariff Area (DTA) under certain conditions. If a merchant exporter buys goods from an EOU under DTA sale, it means that the goods are sold in the domestic market at domestic prices but with certain benefits.
- **Notification/Circular Reference:** The relevant regulations are covered under various notifications issued by the Directorate General of Foreign Trade (DGFT) and the Ministry of Commerce. For instance:
- **Notification No. 52/2003-Customs** and **Notification No. 22/2003-Customs** provide guidelines on DTA sale from EOUs.
- **Circular No. 54/2003-Customs** clarifies the procedures for DTA sales and related compliance.
2. **Export by Merchant Exporter:**
- **Third-Party Export:** Exporting goods through a merchant exporter falls under the category of third-party exports. In this case, the merchant exporter acts as an intermediary, purchasing goods from the EOU and then exporting them.
- **FTP Reference:** According to **Paragraph 6.10 of the FTP 2015-20**, merchant exporters can export goods through others. This is consistent with the concept of third-party exports.
- **HBP Reference:** **Paragraph 6.19 of the Handbook of Procedures (HBP)** also supports third-party exports, detailing procedures for such exports.
3. **Compliance Requirements:**
- **Shipping Bill:** The shipping bill should indicate that the goods are being exported under the merchant exporter’s name, even if they are purchased from an EOU.
- **Export Documentation:** Ensure that all export documentation, including invoices, purchase orders, and certificates of origin, reflect the correct details.
- **E-Way Bill and GST Compliance:** Ensure compliance with GST regulations, including the issuance of e-way bills if applicable.
### **3. Key Points to Consider**
- **Export Obligation:** EOUs must fulfill their export obligations as per their EOU agreement. DTA sales are permitted but may have certain limits and conditions.
- **Documentation Accuracy:** Ensure all documentation accurately reflects the transaction details, including the role of the merchant exporter and the origin of the goods.
- **Taxation and Duties:** Be aware of any applicable duties, taxes, and exemptions related to both DTA sales and export transactions.
### **References and Further Reading**
- **Foreign Trade Policy (FTP) 2015-20:** The comprehensive guide to India’s foreign trade regulations.
- **Handbook of Procedures (HBP):** Detailed procedural guidelines for compliance.
- **Notifications and Circulars:** Look for specific notifications and circulars issued by DGFT and Customs for detailed regulations and updates.
### **Summary**
Yes, a merchant exporter can export goods manufactured in an EOU by first purchasing them through a DTA sale. This process is in line with the regulations for third-party exports. Ensure compliance with all relevant FTP, HBP guidelines, and other regulatory requirements for a smooth export process.
### **1. Understanding EOU and Merchant Exporter**
- **EOU (Export Oriented Unit):** An EOU is a unit that is set up to export goods or services and enjoys certain benefits and exemptions under the Foreign Trade Policy (FTP). These units can procure raw materials and inputs without paying duties, provided they fulfill their export obligations.
- **Merchant Exporter:** A merchant exporter is an entity that does not manufacture goods but exports them. They typically purchase goods from domestic suppliers or manufacturers and then export them.
### **2. Exporting Goods from EOU through Merchant Exporter**
#### **Procedure:**
1. **Purchase of Goods:**
- **DTA Sale:** EOUs can sell goods in the Domestic Tariff Area (DTA) under certain conditions. If a merchant exporter buys goods from an EOU under DTA sale, it means that the goods are sold in the domestic market at domestic prices but with certain benefits.
- **Notification/Circular Reference:** The relevant regulations are covered under various notifications issued by the Directorate General of Foreign Trade (DGFT) and the Ministry of Commerce. For instance:
- **Notification No. 52/2003-Customs** and **Notification No. 22/2003-Customs** provide guidelines on DTA sale from EOUs.
- **Circular No. 54/2003-Customs** clarifies the procedures for DTA sales and related compliance.
2. **Export by Merchant Exporter:**
- **Third-Party Export:** Exporting goods through a merchant exporter falls under the category of third-party exports. In this case, the merchant exporter acts as an intermediary, purchasing goods from the EOU and then exporting them.
- **FTP Reference:** According to **Paragraph 6.10 of the FTP 2015-20**, merchant exporters can export goods through others. This is consistent with the concept of third-party exports.
- **HBP Reference:** **Paragraph 6.19 of the Handbook of Procedures (HBP)** also supports third-party exports, detailing procedures for such exports.
3. **Compliance Requirements:**
- **Shipping Bill:** The shipping bill should indicate that the goods are being exported under the merchant exporter’s name, even if they are purchased from an EOU.
- **Export Documentation:** Ensure that all export documentation, including invoices, purchase orders, and certificates of origin, reflect the correct details.
- **E-Way Bill and GST Compliance:** Ensure compliance with GST regulations, including the issuance of e-way bills if applicable.
### **3. Key Points to Consider**
- **Export Obligation:** EOUs must fulfill their export obligations as per their EOU agreement. DTA sales are permitted but may have certain limits and conditions.
- **Documentation Accuracy:** Ensure all documentation accurately reflects the transaction details, including the role of the merchant exporter and the origin of the goods.
- **Taxation and Duties:** Be aware of any applicable duties, taxes, and exemptions related to both DTA sales and export transactions.
### **References and Further Reading**
- **Foreign Trade Policy (FTP) 2015-20:** The comprehensive guide to India’s foreign trade regulations.
- **Handbook of Procedures (HBP):** Detailed procedural guidelines for compliance.
- **Notifications and Circulars:** Look for specific notifications and circulars issued by DGFT and Customs for detailed regulations and updates.
### **Summary**
Yes, a merchant exporter can export goods manufactured in an EOU by first purchasing them through a DTA sale. This process is in line with the regulations for third-party exports. Ensure compliance with all relevant FTP, HBP guidelines, and other regulatory requirements for a smooth export process.
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