Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion

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Issue

Clarification

1

Whether any records are required to be maintained by registered person for sending / taking specified goods out of India?

• The registered person dealing in specified goods shall maintain a record of such goods as per the format at Annexure to this Circular.

2

What is the documentation required for sending / taking the specified goods out of India?

1. The activity of sending / taking specified goods out of India is not a supply.

2. The said activity is in the nature of “sale on approval basis” wherein the goods are sent / taken outside India for the approval of the person located abroad and it is only when the said goods are approved that the actual supply from the exporter located in India to the importer located abroad takes place. The specified goods shall be accompanied with a delivery challan .

3. The activity of sending / taking specified goods out of India is not a zero-rated supply. That being the case, execution of a bond or LUT, is not required.

3

When is the supply of specified goods sent / taken out of India said to take place?

1. The specified goods sent / taken out of India are required to be either sold or brought back within 6 months from the date of removal.

2. The supply would be deemed to have taken place, on the expiry of 6 months from the date of removal, if the specified goods are neither sold abroad nor brought back within the said period.

3. If the specified goods are sold abroad, fully or partially, within 6 months, the supply is effected, in respect of quantity so sold, on the date of such sale.

4

Whether invoice is required to be issued when the specified goods sent / taken out of India are not brought back, either fully or partially, within the stipulated period?

1. When the specified goods sent / taken out of India have been sold fully or partially, within 6 months, the sender shall issue a tax invoice in respect of such quantity of specified goods which has been sold abroad.

2. When the specified goods sent / taken out of India have neither been sold nor brought back, either fully or partially, within 6 months, the sender shall issue a tax invoice on the date of expiry of 6 months from the date of removal, in respect of such quantity of specified goods which have neither been sold nor brought back.

5

Whether the refund claims can be preferred in respect of specified goods sent / taken out of India but not brought back?

1. The activity of sending / taking specified goods out of India is not a zero-rated supply. That being the case, the sender of goods cannot prefer any refund claim when the specified goods are sent / taken out of India.

2. It has further been clarified in answer to question no. 3 above that the supply would be deemed to have taken place:

1. On the date of expiry of six months from the date of removal, if the specified goods are neither sold nor brought back within the said period; or

2. On the date of sale, in respect of such quantity of specified goods which have been sold abroad within the specified period of six months.

3. The sender can prefer refund claim even when the specified goods were sent / taken out of India without execution of a bond or LUT, if he is otherwise eligible for refund, in respect of zero rated supply of goods after he has issued the tax invoice on the dates as has been clarified in answer to the question no. 4 above. Further, refund claim cannot be preferred as supply is taking place at a time after the goods have already been sent / taken out of India earlier.