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Question ID : 42192

Import of raw materials at Free of Cost

Hi All, Request clarification and guide lines for following query 1. A Ltd Importing Raw material and components (HSN Codes 8481.90.90 & 4016.90.90 & 7225) free of Cost from T Inc (USA). Material values would be around INR 3 Crores. T Inc and A Ltd are subsidiaries of X Ltd and accordingly they are related parties. Is this transaction possible and what are the guidelines to be followed to import the materials

Posted by CA. BALASUBRAMANIAM P on Dec 13, 2021

Filed Under Customs & Excise

Answer ID : 83614

This can be exported by the suppliers as free sample and the receiver of the sample has to pay the duty at the applicable rates and clear the goods for their home consumption. The samples shall be disclosed in the financial statements of the Company as related party transaction. The Importer can take the GST credit on the payment of custom duty as per the GST provisions and account for the goods as inventory including the cost for bringing the material to their present location and condition.

Posted by CA. JHA SHANKAR KUMAR on Aug 12, 2022