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Deemed Export - Taxability

Prakash (Professional) (211 Points)

17 December 2010

Can anyone help on following situation.
Company ABC Ltd. (Indian) company has received a purchase order from XYZ Ltda. (Brazil) on the terms that a machinery will be developed (manufactured) by ABC Ltd. and will be retained at the premises of ABC Ltd. itself for next 15 years. Some product will be manufactured by ABC ltd. and will be exported to Brazil for next 15 years. Some of the parts produced may be sold in DTA to other customers. The cost of machinery is borne by XYZ Ltda. and corresponding inward foreign remittance will be received from 15 days of Proforma Invoice of ABC Ltd.
Now the question is for raising Proforma Invoice to XYZ Ltda (Brazil) whether excise duty shall be charged or not as there is no Physical Movement of Machinery for the export?
Also advise the taxability of Maharashtra VAT?

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2 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 17 December 2010

Originally posted by : Prakash
	Can anyone help on following situation. Company ABC Ltd. (Indian) company has received a purchase order from XYZ Ltda. (Brazil) on the terms that a machinery will be developed (manufactured) by ABC Ltd. and will be retained at the premises of ABC Ltd. itself for next 15 years. Some product will be manufactured by ABC ltd. and will be exported to Brazil for next 15 years. Some of the parts produced may be sold in DTA to other customers. The cost of machinery is borne by XYZ Ltda. and corresponding inward foreign remittance will be received from 15 days of Proforma Invoice of ABC Ltd. Now the question is for raising Proforma Invoice to XYZ Ltda (Brazil) whether excise duty shall be charged or not as there is no Physical Movement of Machinery for the export? Also advise the taxability of Maharashtra VAT?

Mere receipt of payment from brazil does not qualify the machine for overseas trade, its local transaction and all central excise duties and vat is applicable,
on a later date when u intend to clear the goods for export out of india, u can claim the duty payable / refund of vat as applicable on that time.

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Vijay K. Agrawal (Service) (608 Points)
Replied 22 December 2010

Dear Prakash,

is this real problem or hypoticated one. because here applicability of FEMA is much important than the excise. it looks like indian party is getting loan for machine to be developed.

regards,.