Sometimes, locally-made products are sent back after being exported. This re-export of imported goods can happen if an order is cancelled after they’ve been displayed at an exhibition or when a project using them is finished.
Businesses or individuals might need to send imported goods abroad for repairs or upgrades, including personal items under warranty. Some products require special treatments like plating or polishing from other countries.
Thus, certain laws allowing goods to be re-imported and re-exported must be considered. This helps businesses avoid losses on imports that don’t work out. You can ship these items back by sea, air, as luggage, or through the mail.
Re-export activities play a big role for countries involved in global trade. For instance, it’s pretty common in India to re-export imported goods, especially if they’re faulty or don’t meet expectations.
This blog will take you through the procedure and know-how of re-exporting imported goods.
What Is Re-Export?
To understand it better, let’s first clarify the difference between export and re-export.
- Exporting is basically sending items you’ve produced in your country to other countries to sell. For example, you manufacture smartphones in your country and ship them to customers in different countries for them to buy.
- Re-export is the export of goods to the same destination from where it has been previously imported from. For instance, if there are machine parts imported into a country for testing purposes, and after necessary testing, the machine parts are sent back.
How Does Re-Export Work?
Re-export does not contribute to the value of a country’s overall revenue and hence is subtracted from the total exports annually. Although the re-export of goods is mostly done to the same country from which they are imported, it can also be done to other countries as well. Let’s say the laptops you imported from another country didn’t quite meet your requirements, so you’re sending them back to a different country altogether.
Re-exporting Imported Goods:
Sometimes, you need to send imported goods back for several reasons. India’s Customs Act of 1962 makes this easier, as you can get back up to 98% of the customs duties you paid. But here are a few conditions:
- You must re-export within two years (extensions possible).
- The goods must be identifiable as the same ones you imported.
- If you’ve used the goods, you’ll get a smaller refund.
- Some items, like clothing or exposed films, aren’t eligible for refunds.
For defective goods, you can get a full refund if you re-export, abandon, or destroy them within 30 days of clearing customs. You usually can’t use the goods, unless it’s just to find out what’s wrong with them.
Special Cases:
There are specific rules for re-importing jewellery, diamonds, and durable containers. For example, jewellery sent abroad for exhibition can often be re-imported without paying duty.
For goods that need to be repaired abroad, you may need to pay GST on the repair cost, insurance, and freight when bringing them back.
Temporary Imports:
Durable containers (like reusable boxes or crates) can be imported duty-free if you re-export them within six months. You’ll need to provide some paperwork and maybe a bond to ensure compliance.
However, these rules can be complex and change over time. When in doubt, it’s best to check with customs officials or a tax professional for your specific situation.
Why Do Countries Re-Export?
Most countries indulge in it due to various reasons.
Occasionally, imported goods are sent back to the origin country if any of the imported product’s parts need repair. Sometimes, re-exporting is done if the export-import contract between two parties is terminated due to numerous reasons such as political disruptions and shortage of items produced in the origin country, among others.
At other times, the re-export of goods is done if the importing country is a middle ground for the export trade between two nations, and the receiver denies picking up the goods while they’re in transit.
Things To Consider While Re-Exporting Goods
- Zero Alteration In State Of Goods: The condition of the goods during import and re-export should remain the same. There should be no alteration of goods before and after they’ve left the origin port of trade, unless they’ve been delivered for research and analysis purposes.
- Proper Segmentation: All inventory and record details of goods being re-exported must be segmented separately for ease of revenue calculation and analytical uses. This is done because most re-exported goods have additional information on why it is being sent back, and what modifications it needs.
- Customs Duty Exemption: These goods are exempted from duty or duty concession depending on the export circumstances, considering re-exported products are sent within the dictated time frame and to the same country.
- Documentation Requirements: To ensure the re-export of goods is carried out smoothly, the importing country must keep all documentation and bonds ready for declaration of duty exemption at the entry port. This is to confirm that the re-exportation procedure is completed hassle-free within the specified time.
- End-To-End Compliance: Re-export of goods requires additional steps of compliance to be followed, even after the goods are returned to the origin country. If you fail to comply with any of these regulatory requirements, there is a high possibility that you may have to pay the customs duty which was exempted during import.
Summary
A country’s exports are distinguished into two categories – exports of domestic goods and exports of foreign goods. Most commonly, the export of foreign goods is what re-export comprises. While re-export doesn’t directly contribute to a business’s sales, it is the only form of export that requires no payment of basic customs duty and IGST. This is not generally opted in global trade unless there are situations in which the imported products are to be returned to the originating country. Exports make up the majority of the international trade. To make your cross-border shipping seamless, you can partner with a trustworthy international logistics solutions provider like ShiprocketX. Their ShipX service helps customers ship their goods to over 220+ foreign destinations swiftly and securely.
