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Know the Difference between Export & Re-Export

Any commodity, article or service, brought into the country from a foreign land, for the purpose of sale and earning a profit, is known as Import. Any commodity, article or service, manufactured in a country and sent out to foreign land for the purpose of the sale is known as Export. Export import training assist with all the technical terms of international trade. Export and import provide a trader a huge market area, more buyer/seller, more profit and many more.

What is Re-export?

So, now that we have understand export let’s now understand about re-export. Re-export means foreign goods exported in the same state as previously imported, from the free circulation area, premises for inward processing or industrial free zones, directly to the rest of the world and from premises for customs warehousing or commercial-free zones, to the rest of the world. The re-export must be subtracted from the normal exports to get the total export of the nation. Since no value addition is done for the re-exported product, it is not usually counted towards a nation’s exports. The re-export of goods can be done to the same countries from where the goods were imported in the first place. The Re-export of goods can be made to other countries too. Generally, re-exports happen as the exported goods are not satisfied with quality measures, goods exported not matching with the buyer’s requirement. The term re-export are been used in international trade. The reason for goods being Re-exported to the same nation can be one of the few mentioned below.

Testing:

Since India is rich in resources, many nations might want India’s testing knowledge for the goods. For example, a country manufactures machinery and sends it to India for testing purposes. When Indian exporters send it back to the same nations after running all the required tests, those goods can be considered as re-exported goods. It also happens, many times, that the machinery sent to India for testing is tested and corrected. Then Indian exporters export the same to different countries as the bond with the importing nation was only to provide with raw machinery.

2

Value addition:

Many goods are sent to India in crude form and then work is done on such goods. India imports raw materials for many goods. These goods when are ready, are put in the market for either re-sale or for re-export. Such goods can be sent to the same country that exported the goods to India. Re-export to another country is also possible. It depends on the deals closing ability of the Exporter and the demand for those particular goods in that nation.There are various terms and conditions for Re-export which must be followed, the goods must be in a specified condition for re-export. Otherwise, the re-export may not earn the estimated profit. Section 74 of the Customs Act provides for the grant of 98% of the Customs duties leviable at the time of importation, by way of Drawback if it is re-exported by the importer, subject to laid down conditions to be satisfied. The re-export is to be allowed within two years from the date of import – (which period can be extended on sufficient grounds being shown) and goods have to be identified with the earlier import documents and duty payments – to the satisfaction of the Assistant Commissioner at the time of export. If such goods have been used in India after importation, refund is granted on a proportionate basis under Notification No.19/95-Cus dated 6.2.1995, as amended, and there being no refund admissible if the goods have been used after the re-importation which have been out of customs control for more than 36 months after the date of clearance for home consumption and the date when the goods are placed under customs control for export. For specific categories of goods as mentioned in the notification if these are used no drawback of the import duty paid is permissible. In respect of motor vehicles imported for personal and private use drawback formula is slightly different and the same is calculated by reducing the import duty paid according to the laid down percentage for use for each quarter or part thereof but up to four years of use.

India is into re-exporting and to support this statement, let me guide you through a News statement. India has allowed the export of imported products to sanction-hit Iran under the rupee payment mechanism provided 15 per cent value-addition takes place in the country. This move aimed at a fuller utilisation of rupee payment in Iran’s account. India, if focuses properly on the re-export of goods and commodities, it may earn Indian Exporters very good revenue. The laws of Re-export works differently. The Experts confirms that the Defective Imported Goods can easily be Re-exported to the same country or to a different country. The question stands that if imported goods are to be re-exported, does the Indian Exporter have to pay Customs duty?  The Madras High Court held that custom duty is applicable on Re-export of imported goods, which are exported beyond the period of 12 months. The expert panel observed that the re-import of goods that had taken place for repair/recondition the goods in question were re-exported beyond the prescribed period of one year. It also includes the period of six months of extended period and therefore, the assessed had admitted the breach of the condition of exemption from customs duty. So it becomes clear that re-exports does not require customs duty to be paid. Re-export is a concept that must be accepted and implemented by Indian Exporters with more enthusiasm. India is very rich in resources and manpower hence both these factors must be used to the advantage of every Indian exporter and should start exporting and re-exporting goods and commodities. If you wish to learn more about the Export Import Trade go with import and export business training for better guidance. You can also pay us a visit to our Ahmedabad head office!

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