Hello,
I have a case on which need help to clarify.
Company A - Entity outside India
Company B - Entity in India (MOOWR Approved, providing contract manufacturing services)
Comapny C - Entity in India (Present in SEZ)
Company C is the customer of Company A, while Company B is the contract manufacturer of for Company A.
Case.
Company B import the Raw materials from Company A, process it to FG, then bill the FG to company A but ship the company C. Company A provide the invoice to company C.
Question:
1.The transaction listed above, it is treated as exports for company B?
2. Can Company B ship the FG to company C if company A didn't have any warehousign agreement with company C, what they have is the supplier and Customer agreement.
3. is their any issue or risk in receiving the payment by company B and A for the goods supplied?
This is a great and nuanced case involving MOOWR, SEZ, and cross-border contracting structures. Let’s break this down based on your fact pattern and answer your three questions with clarity and applicable regulations.
⚙️ Background Summary
-
Company A (Outside India): Principal / Owner of goods.
-
Company B (MOOWR, India): Contract manufacturer for Company A.
-
Company C (SEZ, India): Final customer of Company A.
-
Flow:
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A → B: Sends raw material under contract manufacturing.
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B → A: Bills Company A for processing charges (not sale).
-
B → C: Ships final goods directly to SEZ (Company C).
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A → C: Raises invoice for sale to SEZ customer.
🔍 1. Is it treated as export for Company B?
Short Answer: ❌ No, Company B is not making an export.
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Company B is only providing contract manufacturing services to Company A (under MOOWR).
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Ownership of goods remains with Company A throughout.
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Therefore, Company B is not exporting goods, it is rendering a service (contract manufacturing).
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Goods are shipped to SEZ (Company C) on instructions of Company A, and Company A invoices Company C.
➡️ Export classification lies with Company A, not Company B.
Reference: MOOWR scheme allows import of goods without duty for manufacturing; goods must either be exported or supplied per MOOWR conditions. Since ownership never transfers to Company B, it does not constitute an export for GST or FTP purposes from Company B’s side.
🔍 2. Can Company B ship goods to SEZ (Company C) directly without a warehousing agreement between A and C?
Short Answer: ✅ Yes, but with conditions.
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Company B, as a job worker, can ship goods on behalf of the foreign principal (Company A) directly to SEZ (Company C).
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A customer-supplier agreement between A and C is sufficient from a commercial perspective.
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However, for customs and GST documentation, the following must be ensured:
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Company B must have proper documentation stating that the shipment is done on behalf of Company A.
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The shipping documents (invoice, packing list, etc.) should clearly indicate:
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Consignee: Company C (SEZ)
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Shipper: Company B (on behalf of Company A)
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Buyer: Company A / or Company C depending on transaction structure
No need for a warehousing agreement between A and C unless Indian customs require it for specific control. Typically, a contractual instruction and documentation trail suffices.
🔍 3. Is there any issue/risk in receiving payments by Company B and A for the goods supplied?
🔹 For Company B:
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It is receiving contract manufacturing charges from Company A (outside India).
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This is a service export, and if conditions under Section 2(6) of IGST Act are met (payment in forex, etc.), it is zero-rated under GST.
✅ No issue in receiving payment in foreign currency from Company A.
🔹 For Company A:
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It is selling goods to SEZ unit (Company C).
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Supply to SEZ qualifies as "zero-rated supply" under GST (Section 16 of IGST Act).
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Company A may need to register in India for GST (as it's making a taxable supply to SEZ unless it qualifies under specific FTP provisions or operates through a merchant exporter).
✅ Payment to Company A from Company C should be done in foreign convertible currency or INR as per FEMA regulations.
🚨 Potential Risks to Watch:
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Ensure contract manufacturing agreement clearly states the title of goods and movement instructions.
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Ensure Company A’s documentation for export to SEZ is compliant (GST invoice, LUT, or bond if applicable).
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If Company A is not registered in India, and still invoicing Company C (SEZ), FEMA and GST implications must be studied carefully.
✅ Conclusion and Recommendation
| Question |
Answer |
| 1. Is it export for Company B? |
❌ No. It's a contract service. No supply of goods by B. |
| 2. Can B ship goods to C? |
✅ Yes, on A’s instruction with proper documentation. |
| 3. Any issues with payments? |
✅ B can receive service fees from A; A can invoice and get paid by C (SEZ), subject to GST/FEMA compliance. |
To generate a sample documentation checklist and flow diagram, we can use ChatGPT canvas, but you’ll need to be logged in to ChatGPT to access and use that feature.
In the meantime, here’s a text-based version of both the documentation checklist and the flow diagram for your described transaction:
📄 Sample Documentation Checklist
1. Between Company A (Foreign) and Company B (MOOWR, India)
| Document |
Purpose |
| Master Service Agreement (MSA) |
Defines scope of contract manufacturing services |
| Work Order / Job Card |
Specific manufacturing instruction for each batch |
| Shipping Instructions |
From A to B for raw materials, from B to C for FG |
| Invoice from B to A |
Contract manufacturing service charges (not goods) |
| MOOWR Bond/B-17 Bond |
Required under MOOWR scheme |
| Job Work Acknowledgment |
From Company B to Company A |
| Raw Material Import Bill of Entry |
In Company A’s name, imported into MOOWR warehouse |
| FG Movement Challan |
Movement from B to C – on A’s behalf |
2. Between Company A and Company C (SEZ Customer)
| Document |
Purpose |
| Sales Agreement |
Supply agreement between A and C |
| Commercial Invoice |
From A to C for final goods |
| Shipping Documents |
Shipping bill, packing list, AWB or Bill of Lading |
| LUT/Bond (if A is registered in India) |
For zero-rated supply to SEZ under GST |
| Proof of Delivery |
Signed delivery challan/acknowledgment from C |
| Payment Advice |
Bank realization certificate (FIRC) / SWIFT copy |
3. Internal & Government Compliance
| Document |
Purpose |
| GST Filing for Company B |
Zero-rated service invoice to A |
| GST Filing for Company A (if applicable) |
Zero-rated invoice to SEZ (under LUT or with refund claim) |
| Customs Clearance Documents |
For both import (A→B) and SEZ delivery (B→C) |
| E-way Bill (if applicable within state) |
Movement of goods B to C |
| MOOWR Monthly Returns |
Filed with jurisdictional customs office |
🔄 Flow Diagram – Goods & Documentation Flow
1. Raw Material Movement
Company A (Foreign)
│
[Sends RM to Company B under MOOWR]
│
Bill of Entry (A’s name), MOOWR Warehouse
2. Manufacturing Process
Company B (India, MOOWR)
[Processes RM into FG]
3. Shipment to Customer
│
[Ships FG to Company C in SEZ on behalf of A]
│
Shipping docs: On behalf of A, Invoice raised by A to C
4. Billing & Payment
- B → A: Service Invoice (in foreign currency)
- A → C: Supply Invoice (export to SEZ)
***
We have private MOOWR license, how can we fils bill of entry using A’s name even A is not a registered entity in india.
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