2.79A

Issue of export authorization for "Stock and Sale" of SCOMET items

Application for grant of authorization for bulk export of SCOMET items (excluding Category 0, Category 3A4001, Category 6 and transfer of technology under any category) from an Indian exporter to an entity abroad (hereinafter referred to as 'stockist') for subsequent transfer to the ultimate end users shall be considered by IMWG, on the following conditions:

Applicability and scope of policy

a. 'Stockist' refers to the entity abroad to whom the SCOMET items are originally exported by Indian principal/wholly owned subsidiary. The Stockist entity should be a subsidiary/principal company abroad of the Indian exporter;

b. Export shall be permitted only from the principal company/the wholly owned subsidiary in India (exporter) to their subsidiaries/principal company abroad (stockist) on the basis of an End Use declaration from the stockist, through the specified End User Certificate (EUC) for 'stock & sale' purpose;

Application for export to stockist abroad and transfer to end users in specific countries

c. The exporter shall submit application in prescribed proforma (ANF-2 0) alongwith following documents from the stockist:

i. Documentary proof regarding corporate relationship between the Indian exporter and stockist;

ii. End-use/End-user Certificate from stockist entity abroad in Appendix-2S (iii);

iii. List of countries (in the EUC) to which the items imported from India would be exported by the stockist;

iv. Purchase Order(s)/Invoice(s) or a document in lieu thereof;

v. Technical specifications of the product(s);

vi. Copy of Internal Compliance Program (if applicant exporter/ stockist entity has one)

In-principle approval for export to the stockist, and, for sale by stockist within the country of the stockist, and, for re-export by stockist to end user in other countries

d. The application would be assessed for grant of authorization for export to the stockist, and, for grant of in-principle approval for re-export to specified countries of ultimate end use approved by the IMWG;

e. No authorization would be required for transfer from the stockist to the ultimate end user(s) within the country of the stockist and for re-export to end users in such approved countries ;

f. Re-export to such approved countries would be subject to the export control regulations of the country of the stockist;

g. Country would denote an independent sovereign entity which is a distinct national entity in political geography. Hence, transfers within an economic union or a customs union would not qualify as "same country transfers";

Post-reporting for same country transfer and re-export to pre-approved countries by the stockist

h. In case of sale/transfer by the stockist within the same country and for re-export/re-transfer to the end users in countries, for which, in-principle approval has been granted, the Indian exporter/licensee shall submit details of all such transfers to SCOMET Division of DGFT(Hqrs) in ANF-2 0(a), including EUCs [Appendix-2S (i) /2S(ii), as applicable] from all ultimate end users and Bill of Entry into the ultimate destination countries(for export outside the country of stockist), within 3 months of every such transfer;

Application for re-export to other countries (other than pre-approved)

i. In respect of re-export/re-transfer of items from the stockist entity to the end users outside the country of the stockist, for which, in-principle approval has not been granted at the initial stage, the Indian exporter (stock and sale authorization holder) shall submit application for re-export/re-transfer to SCOMET Division in DGFT (Hqrs), in ANF 20(a), through email (scomet-dgft@nic.in), after obtaining following documents from the stockist entity:

i) End-use/End-user Certificate from each link in the supply chain as per Appendix-2S (i) /25(ii), as applicable;

ii) Purchase Order(s)/Invoice(s) or a document in lieu thereof ;

iii) Technical specifications of the product to be transferred (only if there is any value addition in the product by the stockist)

j. IMWG shall consider export authorizations for allowing such re-export/re-transfer based on end use/end user verification;

Repeat Order cases

k. Applications for re-export/re-transfer of SCOMET items from the stockist entity to the end-users for repeat orders shall be considered by IMWG in accordance with paragraph 2.79 of HBP;

Annual reporting on inventory of the stockist and transfers/re-exports

l. The Indian exporter (Stock & Sale Authorization holder) shall submit a statement of exports made from India to the stockist, transfers made by the 5.,tockist to the final end-users and inventory with the stockist, as on 31st December of each calendar year, by 31st January of the following year. A failure to do so may entail imposition of penalty and /or cancellation of authorization under the stock and sale policy;

m. The items exported to the stockist entity under the stock and sale authorization should be transferred to the final end-user(s) within the validity period of the authorization as in paragraph 2.16 of HBP;

n. The authorization may be revalidated as per the procedure mentioned in paragraph 2.80 of HBP;

(Above Para 2.79A has been substituted vide PUBLIC NOTICE NO.46/2018, DT. 15/11/2018)

[OLD- 2.79A

Issue of export authorisation for "Stock and Sale" of SCOMET items

Stockist’ refers to the entity abroad to whom the SCOMET items are originally exported by Indian principal/wholly owned subsidiary. The Stockist entity should be a subsidiary/principal company abroad of the Indian exporter. Applications for grant of authorization for export of SCOMET items for 'Stock & Sale' purpose shall be evaluated/considered by IMWG subject to the conditions prescribed as under:

a) Application for Authorization for Export of SCOMET items for ‘Stock & Sale’ purpose to the Stockist

i. Export shall be permitted only from the principal company/the wholly owned subsidiary in India to their subsidiaries/principal company abroad on the basis of an End Use cum End User certificate (EUC) from the latter for 'stock & sale' purposes (as per Appendix 2S(iii)), when considered appropriate from the point of view of security and other critical considerations. The exhaustive list of countries to which exports would be done by the stockist needs to be indicated in the EUC for 'stock & sale' purposes. Documentary proof regarding relationship between exporter and stockist entity needs to be submitted at the time of application.

ii. The Stock & Sale Authorization holder would submit a statement of exports made from India, inventory with the stockist and transfers made to final end-users as on December 31st of each calendar year by 31st January of the following year. A consolidated statement would be required to be submitted within a period of 3 months from the expiry of the Stock & Sale Authorization.

iii. The items exported to the stockist entity under this authorization should be transferred to the final end-user within the validity period of the authorization. The authorization may be revalidated as per the procedure mentioned in Paragraph 2.80 of HBP.

iv. No application for authorisation for export of SCOMET items for ‘stock and sale’ purpose would be considered for items falling in Categories 0 and 6 of the SCOMET list.

(Above iv. has been substituted vide PUBLIC NOTICE NO.19/2018, DT. 03/07/2018)

[OLD- iv. No applications for Authorization for Export of SCOMET items for ‘Stock & Sale’ purpose would be considered for items falling in Category 0, 1C and 6 of the SCOMET list.]

v. No export Authorisation for ‘Stock & Sale’ purpose shall be issued for ‘Technology’ in any category.

(b) Application for permission for re-export/re-transfer from ‘Stockist’ to Ultimate end-user(s)

(i) Applications for re-export/re-transfer of items from the stockist entity to the end-user to be submitted to DGFT(Hq) as per ANF 2O(a) along with the following documents (hereinafter referred to as required documents):-

a) End-use/End-user certificate from each link in the supply chain as per Appendix- 2S (i)/2S(ii), as applicable

b) Purchase Order(s)/Invoice(s)

c) Technical specifications of the product to be transferred (only if there is any value addition in the product by the stockist)

(ii) Re-transfer within the same country by the stockist:-

a) For any further transfer of these items by the stockist entity (to whom the items are originally exported by Indian principal/wholly owned subsidiary) to entity (ies), including end users, in the same country, the former shall obtain the required documents from each link in the supply chain and forward the same to the Indian applicant/licensee for the purpose of submission to DGFT(Hq) for seeking prior permission for such transfer. The IMWG may, however, relax this requirement of prior permission based on a Risk Assessment for such within same country sale/transfer.

b) In case of same country sale/transfer by the stockist entity, where IMWG has agreed to relax the requirement of prior permission, the required documents shall be submitted by the Indian applicant/licensee within 3 months of any such transfer.

In such case, no link in the supply chain should be an entity outside the country and items should remain within the country.

c) Country would denote an independent sovereign entity which is a distinct national entity in political geography. Hence, transfers within an economic union or a customs union would not qualify as “same country transfers”.

iii) Re-export outside the country by the stockist:- Application for reexport by the stockist entity to entity(ies) outside its country, shall be forwarded by the stockist entity to the Indian applicant/licensee, with the required documents from all links in chain of supply for the purpose of submission to DGFT(Hq) for seeking prior permission for such transfer.

(iv) Applications for re-export/re-transfer of SCOMET items from the stockist entity to the end-user for repeat orders shall be considered by IMWG on automatic basis, subject to the condition that the product along with the technical specifications; the foreign buyer; the consignee or the intermediaries, if any; the end user; the end use and the country of destination, shall be the same as the earlier permission.]