QUESTION

XYZ(EOU) will be “Billing” the supply of API (Raw Material) to PQR (U.K.) and physically “Shipping” the supply to ABC(India). XYZ will receive the money in foreign currency from PQR. The formulation of the said goods viz. capsules will be directly exported to PQR by XYZ for which XYZ will get foreign currency. 1) Is XYZ require to charge BCD + GST for such supply since ‘Bill To” is U.K. but ‘Ship To’ is India? 2) For the formulation directly exported, will there be any export benefit available to XYZ?

ANSWER

The definition of Export is given in IGST Act Section 2(5). The same is as follows:
'export of goods' with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India.

If we are going through the definition, then sending material to the Domestic Destination (ABC India) is not considered as Export of goods, disregarding the fact that the payment is received in convertible foreign exchange. Under these circumstances, the material can be delivered to the Domestic Destination against Advance Authorization. So ABC (India) should take Advance Authorization for purchase of material from PQR with direction of supply by XYZ.
For taking material from XYZ you have to get the Advance Authorization invalidation letter in favour of the domestic supplier. (Reply dt. 31-12-2019)