QUESTION

a) rule 46 of SEZ rules allow a SEZ unit to manufacture on behalf of merchant exporter. whetehr this shall be deemed as export or not for sez unit as this shall be directly send to port from sez unit. the sez unit shall bill to merchant exporter at .1% igst as correct.pl confirm b) merchant exportershall bill to foreign buyer with specifying that manufacturer is sez unit.hopefully merchant exporter shall not pay any custom duty, pl confirm. merchant banker to declare that it shall not take any drawback c)whether merchant exporter can claim benefit of circular no 20/2015-2020 dated 22 nd february , 2019 of DGFT

ANSWER

Facts of the case:Goods manufactured by SEZ unit on behalf of merchant exporter directly send to port from SEZ unit. The SEZ unit shall bill to merchant exporter.

Law Applicable: Rule 46 of SEZ Rules:
(11) The procedure for export through a merchant exporter or status holder shall be the following,.-
(i) goods shall be exported directly from the Special Economic Zone or through any other port where the merchant exporter files his shipping bill, in which case the goods shall move directly from the Special economic Zone to the said port of export on the basis of pink shipping bill as if these were movement of goods from one Warehouse to another;

(ii) export document shall contain the name of the merchant exporter or the status holder and the Unit;

(iii) merchant exporter or status holder, as the case may be, shall export goods under a free Shipping Bill and submit a disclaimer that no Drawback, Duty Exemption Pass Book credit or fulfillment of export obligation under any export promotion scheme under the Foreign Trade Policy shall be availed by him on the goods so exported.

SCHEDULE III OF CGST ACT
(a) Supply of warehoused goods to any person before clearance for home consumption

Interpretation:

In case the goods shall move directly from the Special economic Zone to the said port of export on the basis of pink shipping bill will be considered as if these were movement of goods from one Warehouse to another.

Further as per Schedule III  Supply of warehoused goods to any person before clearance for home consumption is not a supply under GST.

Conclusion:

 As supply of goods directly from SEZ unit to port of export is considered as movement of goods from one warehouse to another and the same is not a supply under GST as per Schedule III, so no GST will be charged.

So far as drawback is concerned, merchant exporter is required to  submit a disclaimer that no Drawback, Duty Exemption Pass Book credit or fulfillment of export obligation under any export promotion scheme under the Foreign Trade Policy shall be availed by him on the goods so exported.
 

(Reply dt.24-06-2020)