About Third-Party Export
EPCG authorization holder may export either directly or through a third party (ies).
Third-party export refers to the export that is made by a manufacturer or an exporter on behalf of another manufacturer. So basically, a third-party export is a transaction in which the export of goods occurs but it pans out with the help of another person. The person who supplies the goods is also called the manufacturer exporter. The names of the third-party exporter and manufacturer exporter are separately mentioned in all the documents related to export.
Under the Exports Promotion Capital Goods (EPCG) Scheme, an exporter can take the help of another Exporter to fulfill the export obligation.
Terms and conditions for the fulfillment of Export Obligation
- The legal documents must exhibit the names of both the manufacturer as well as the exporter.
- The EPCG License holder has two options in hand. The first one is to export directly, whereas the second one is to export through a third party.
- If an exporter wants to export the goods via a third party, then he/she must mention the names of both the license holder and the manufacturer in all the documents related to the export procedure like the Bill of Export. The Bank Realization Certificate (BRC), Guaranteed Remittance (GR) declaration invoice, and export orders should be sent in the name of the exporter.
Documents required for Third-Party Export
The authorization holder must submit a few additional documents if he/she is exporting the goods through a third party apart from the shipping bill. The documents required for completing the process is as follows:
1. A copy of the agreement between the EPCG License holder and the manufacturer who is going to export the goods. All the rules and regulations of the licensing authority must be followed to fulfill the export obligation.
2. Evidence that shows goods have been manufactured by the authorization holder at his/her working premises to the port of export.
3. There should be a Letter of Undertaking (LUT) Certificate attached to your file. This letter is sanctioned by the Goods and Services Tax (GST) department. It is a certificate with the help of which the exporters can file to export their goods and services. The exporter must fulfill the criteria mentioned in the letter to export goods. If you will have a letter of undertaking with you, then you will be exempted from paying off integrated tax.
4. A copy of the invoice that consists of the EPCG authorization number along with the date and time at which goods have been shipped. This is required in case you are not registered with the Central Excise.
5. Lorry Receipt (LR) will play the role of proof regarding when the goods were transported from the factory premises of the exporter to the third party.
6. A written document by the third-party exporter with a stamp on it that states the goods which are exported fulfill all the guidelines of the process of export obligation.
7. There should be financial evidence that shows the financial transactions taken place between the EPCG License holder and manufacturer. It will set forth the banking statements of both the license holder as well the manufacturer. All the transactions between the authorization holder and the manufacturer regarding the third-party exports should be included in the document.
8. The exporter must attach a disclaimer certificate received from a third party. This certificate displays that these proceeds should not be utilized for completing any other export obligation in the EPCG authorization owned by them.
For many exporters, third-party export seems like an ideal choice. The use of third-party export varies from case to case. Third-party export can be beneficial for exporters as they get a helping hand from the side of the manufacturer to complete the procedure of export obligation.
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