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Oct 28, 2022 at 02:06 PM

Bonded warehouse abroad for an Indian company

807 Views Last edit Aug 26, 2023 at 04:55 PM 3 rev

Requirement: Company manufactures machine as make to order (MTO) in Gujarat, India. This process is divided into two parts.

Part 1:

  1. Machine is exported from Gujarat’s office to Brazil, where the machine is kept in a bonded warehouse. The Bonded Warehouse is owned by the company. Following documents are created to transport the machine from India to Brazil
  2. Eway Bill, Commercial invoice (Sold to party – Warehouse, Indian Currency invoice in (Sold to party – Warehouse), Customs documents (Sold to party – Warehouse)
  3. COGS and Customer accounts are not yet hit

Part 2:

  1. The end customer places an order for machine to the company in India.
  2. Gujarat office creates a sales order for that customer as sold to party,
  3. Then creates a delivery challan, (the machine is physically shipped from Brazil Bonded Warehouse to the customer in Brazil).
  4. Then a final TAX invoice (it is in name of final customer in Brazil, with Company’s Gujarat, India Address)
  5. COGS and customer accounts are now hit.

I have read few threads which suggested to create Bonded warehouse in Brazil as a Plant or Storage Location. I would like to know how the Taxation and customs would impact in both the cases. Please suggest the best option i.e., Bonded warehouse as a Plant or Storage location, which fits the requirement and the process flow.