M/s Pioneer Electronics, a manufacturer-exporter holding a valid Advance Authorisation, imports inputs duty-free which are physically incorporated…

CA Final · Indirect Tax Laws · MTP · September 2025
M/s Pioneer Electronics, a manufacturer-exporter holding a valid Advance Authorisation, imports inputs duty-free which are physically incorporated into the export product. Due to a drop in foreign demand, the firm is unable to export the full quantity of goods and decides to sell part of the imported inputs in the domestic market (DTA) after completing 60% of the export obligation. As per the provisions of the Foreign Trade Policy, which of the following consequences will arise due to this action?
(A) M/s Pioneer Electronics can freely transfer the unutilized inputs in the DTA after paying IGST only.
(B) M/s Pioneer Electronics can dispose of the inputs in DTA by paying applicable duties and without any permission.
(C) M/s Pioneer Electronics is prohibited from transferring the unutilized inputs in DTA and must either export the remaining quantity or destroy the inputs.
(D) M/s Pioneer Electronics can sell inputs in DTA only after paying duty and obtaining permission from the DGFT.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

M/s Pioneer Electronics is prohibited from transferring the unutilized inputs in DTA and must either export the remaining quantity or destroy the inputs.

Topics: Place of Supply, Foreign Trade Policy

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