We are merchant exporters and have received a transferable LC. As the first beneficiary, we have transferred the LC in favour of our supporting manufacturers, the second beneficiary. They will ship the goods and present the documents to the transferring bank. We will substitute our invoices for negotiation. The negotiating bank will collect the proceeds from the LC-issuing bank and disburse the proceeds between us and the supporting manufacturer. Our question is: who will be treated as the exporter by the authorities -- we or the supporting manufacturer?
As per Article 14(k) of UCP 600, "the shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit." So, you must ask the supporting manufacturer to mention your name as the shipper in the bill of lading. Secondly, you should ask the supporting manufacturer to file the shipping bill giving his name and address and stating that the export is on your behalf and mention your name and address. In that case, the transaction and the documentation will meet the requirements mentioned in the definition of 'third party export' as given in Para 9.60 of the Foreign Trade Policy, and you will be treated as the exporter by the authorities.
We are a 100 per cent Indian company and intend to set up a warehouse where we will import various multi-brand consumer products like garments and electronic goods, and supply them to stores in India. Do we need FDI approval or special permission from any department, since we intend to import multi-brand products? What is the position if a foreign company wants to do it?
FDI approvals apply to foreign companies making investments in India. As an Indian company, you do not need any FDI approval. In any case, this is 'cash and carry wholesale trading' business, where you will be supplying goods to business entities and not retail customers. The FDI policy allows 100 per cent foreign investment in 'cash and carry wholesale trading' under the automatic route. Of course, you or any entity must comply with the local laws, like obtaining registrations under the Shops and Establishments Act, Value Added Tax Act, etc.
Is service tax payable on a foreign remittance for franchise fees for a franchise I intend to take from an organisation in the US? The franchisor would be providing only training programmes and related material and there will be no physical assets provided by them.
If your remittance relates to an agreement wherein the foreign party has granted representational rights to sell or manufacture goods or to provide service or undertake any process identified with him, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved, then service tax is payable under the category 'franchise service'. In accordance with Rule 2(d)(i)(G) of Service Tax Rules, 1994, as the person receiving that 'franchise service', you are the person liable for paying the service tax.