Typical issues in the Export of Goods through E-commerce platforms – Part I


Due to the opening of economies and the advent of technology, the world has become a very small place for doing business. Earlier due to lack of visibility and oppressive regulations, Micro, Small, and Medium Enterprises (MSMEs) were prevented from going global. However, thankfully due to the presence of online portals/marketplaces like Amazon, eBay, Alibaba, and other MSMEs are now making their footprints across the globe. In particular, India-made leather products, gems, and jewellery, textile products are very much popular with shoppers all over the world.

Though this is a welcome sign, however, such supply transactions throw an interesting challenge when it comes to the intricate issue of establishing the claim of export and availing GST refunds and other incentives thereon. In this article, the paper writer has made an effort to articulate his understanding on such activity/supply and issues likely to be faced while claiming Refunds from GST and other authorities. For the sake of convenience, the paper writer has considered B2C export to the United States of America (hereinafter, ‘US’). Further reference is made to Amazon only for convenience purposes, other marketplace also employs nearly similar modus operandi.

Basic documentation for E-Commerce Export

In addition to quality products, Indian E-commerce exporters (hereinafter, ‘exporter’) needs to have basic documentation in place like Income Tax PAN, Import Export Code (IEC), GST Registration, proof of residence in India, valid mobile/phone number, Registration-cum-membership-certificate(RCMC) and internationally chargeable credit card. Further various tax forms may need to be filed depending upon the tax laws of the countries to which such goods are exported.

Importer on Record (IOR) – Concept

Before we delve into the finer points of E-commerce export to the US, let us pause a little and acquaint ourselves with the concept of Importer on Record (IOR). Any entity that intends to despatch/send/export goods to the Amazon fulfilment center (Amazon-controlled warehouse) in the US must hire an IOR. It is highlighted that Amazon or any other marketplace generally do not act as an IOR for any goods that are sent to their fulfilment center. Inventory despatched without IOR is invariably refused or returned. An entity that is responsible for ensuring import compliance is known as the Importer on Record. This entity assumes legal responsibility for the imports and assumes temporary ownership of the imported goods. 

Following critical compliance are managed by IOR:

  • Assessment of duties on imports based on the value and classification of imports.
  • Secure and provide payment for duties, fees, and taxes on imported goods.
  • Ensure that imported goods have correct entry documents,
  • Secure needed authorization, certifications, or licensing for the import. Special permits and licenses are needed when importing goods subject to regulations by agencies like the FDA etc. 
  • Abide by all local, state, and federal regulations for imported goods
  • Make custom declarations regarding imported goods.
  • Preparation for audits and inspections at the US Border
  • Maintain all import records for at least five years after being imported into the US.
  • Assist with securing custom bond paperwork for imports.

To conclude, IOR plays an invaluable role when it comes to sending goods to the Amazon fulfilment center located in the US. Such an agent acts as a representative of exporters in the US. It is again highlighted that Amazon is not responsible for any taxes, duties, and fees that are levied on the goods stored in the FBA fulfilment center. Any shipment that arrives at the fulfillment center without payment of customs duties due is straight away refused.

Now with the above background let us consider a hypothetical example of Mr Progressive (Indian National) who intends to export his well-known leather products to US-based shoppers (B2C exports). He may explore either of the following options to reach out to US-based shoppers.

Option 1: Fulfilling international orders by the exporter on his own 

Under this option exporter at first, should register on the global marketplace serving intended geographic locations and then make logistics arrangements to fulfil international orders on his own (popularly called ie ‘own shipping’). E.g. Mr Progressive may avail of Amazon Global Selling (AGS) services to promote the sale of his products to the US. AGS services provide access to international seller accounts,2

Amazon Currency Converter for Sellers (ACCS), customer support in local languages, and general guidance in problematic areas like tax & international law etc.  This service also allows e-commerce exporters to create product listings in international marketplaces.  With such a listing shoppers based in the US could find and purchase products listed by Mr Progressive on Amazon.com (US marketplace).

As and when confirmed order is received on the marketplace, Mr progressive can ship ordered products from India to the shoppers. This option provides good control over inventory and avoids various administrative costs.  Courier agencies like DHL and FedEx etc. can pick up the products from India and deliver them directly to US shoppers. Further such courier agencies either themselves serve as IOR or facilitate the nomination of a 3rd party in the US to handle all duties and taxes and other regulatory compliances. Though this option is pretty simple but suffers from the disadvantage of a long time lag in serving customers. This model at best can be an entry strategy but may have a limited scope for growth due to a huge delay of appx 10-15 days in fulfilling orders.

Option 2: Fulfilling international orders through value-added services provided by the marketplace

To offer lightning-fast delivery of his products Mr. Progressive may explore the option of despatching inventory to the US fulfilment centre. Further like many exporters, Mr Progressive may think of availing services of Amazon FBA export. FBA stands for ‘Fulfilled by Amazon’. This service takes care of logistics issues of inventory. In this model, exporters role is limited to organise shipping of their products to various Amazon fulfilment centers located in the US.  Since goods are already in possession of Amazon on receipt of an order from a US-based shopper, Amazon packs, preps, and ships this order to such shopper instantly.  Amazon in this model even deals with customer service issues and return management (order cancellation etc). In short FBA export services relieves Mr. Progressive from setting up his own distribution/fulfilment centre in the US. It is to be highlighted that many exporters avail of AGS services (to facilitate the listing of their products) & FBA export services (to take care of logistics issues in the US) simultaneously. As explained earlier, Mr. Progressive shall have to appoint a customs broker, forwarder or any 3rd party to act as IOR to ensure hassle-free delivery of goods to the US fulfilment center.

Option 3: Setting up LLC in the US

If Exporter is capable of handsome investment in the US and expects regular exports to the US, then the option of setting up a Limited Liability Company (LLC) can also be explored. Such a new entity can open a separate bank account in the US, and hire a fulfilment warehouse and other logistics service providers. Indian entity’s role in such a model is confined to sourcing of products from India and the rest can be taken care of by LLC with the help of third-party service providers. LLC option also facilitates quick visa and other work permits to the investing organisation.

Having understood the operational framework, let us evaluate GST implications of aforesaid arrangements.  However, before we analyse whether any of the above arrangements constitute the export of goods, it is necessary to run through the definition of exports of goods prescribed under various statutes in the next para.

Export of goods – Meaning

Definition of ‘Export’ under the Foreign Trade (Development & Regulation) Act, 1992 and FTP 2015-20 (Foreign Trade Policy) means taking out of India any goods by land, sea, or air. As per section 2 (18) of the Customs Act, 1962, ‘Export’ means taking goods out of India to a place outside India. In Foreign Exchange Management Act, 1999 (FEMA) ‘Export’ includes the taking or sending out of goods by land, sea, or air, on consignment or by way of sale, lease, hire-purchase, or under any other arrangement by whatever name called, and in the case of software, also includes transmission through any electronic media. Section 2(5) of the IGST Act defines export as the export of goods with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India.

When it comes to the intricate issue of establishing a claim of export, harmonious reading of various legislations referred to in the preceding para is very much relevant and thankfully all the above definitions lay down a simple condition to qualify as export of goods i.e., physically taking goods out of India to a place outside India. Hon’ble Supreme Court in the case of UOI v. Rajindra Dyeing & Printing Mills Ltd. 2005 (180) ELT 433 (SC), held that the expression ‘taking of goods to a place outside India’ would also mean a place in high seas. Hon’ble Supreme Court in the case of Burmah Shell [1960] 11 STC 764 (SC) has observed that while all exports involve taking goods out of the country, all goods taken out of the country cannot be said to be exported. The test is that the goods must have a foreign destination where they can be said to be imported.

It is imperative to note that the Central Board of Indirect Taxes and Customs (CBIC) in para 6 of Circular No. 108/27/2019-GST dated 18th July 2019  has clarified that the activity of sending/taking the goods out of India for exhibition or on a consignment basis for export promotion, except when such activity satisfy the tests laid down in Schedule I of the CGST Act, do not constitute supply as the said activity does not fall within the scope of Section 7 of the CGST Act as there is no consideration at that point in time. Since such activity is not a supply, the same cannot be even considered as a ‘Zero-rated supply’ as per the provisions contained in section 16 of the IGST Act.

Whether test of export of goods satisfied?

Let us move to the tricky question, whether the activity/movement of goods from India to the US can be validly categorized as an export of goods. The answer to this question depends upon the facts and circumstances of each case. If goods are moved/exported out of India pursuant to confirmed order from US shopper on the marketplace (Option 1 above) then such activity fulfils conditions of supply in terms of section 7(1) of the CGST Act. Further, all prescribed condition of taking goods from India to a place outside India is also fulfilled, and therefore to the mind of the paper writer such supply/activity squarely falls within the four corners of the phrase ‘export of goods’. Even conditions prescribed in other legislations are all satisfied.

Coming to the second option when goods are despatched to the fulfilment center of Amazon in the US, the test of Section 7(1) of the CGST Act is not satisfied for lack of consideration. Further, such transaction is not covered within Schedule I of the CGST Act and therefore such activity/movement can’t be categorized as supply. Following clarification issued by CBIC in Circular No. 108 (supra) such movement cannot even be categorized as export at the time of despatch of goods from India.

A million-dollar question in such a situation is whether such movement can be considered as an export if subsequently goods are actually sold to US shoppers on the marketplace.  At this juncture, it is pertinent to note that the movement of goods to Amazon fulfillment centre without any confirmed order is typically called “Consignment Export”.  Typically, in such consignment export risk and reward of ownership of goods is retained by the exporter, however, physical possession of goods is transferred to Amazon. Attention is drawn to CBIC Circular No. 108 (supra) to draw an analogy from a situation where goods are sent/taken out of India for exhibition or on a consignment basis for export promotion. Such goods sent/taken out of India may crystallize into exports, wholly or partly, only after a gap of a certain period from the date they were physically sent/taken out of India.

CBIC in the aforesaid Circular has clarified that the said activity is in the nature of ‘sale on an approval basis’ wherein the goods are sent/taken outside India for the approval of the person located abroad and it is only when the said goods are approved that the actual supply from the exporter located in India takes place. Applying this logic, it is possible to take a view that the movement of goods from India to the fulfilment center in the US is not an export supply at the time of taking out of such goods from India. Finer points of such activity are explained subsequently in this write-up.

Coming to the third option is where goods are sent to a US-based LLC unless such goods are sent on a sale or approval basis, on a conjoint reading of the definition of ‘export of goods’ under IGST Act, aforesaid landmark pronouncements of Hon’ble Apex court and CBIC Circular No 108, it would be prudent to conclude that movement of goods from India to LLC located in India tantamount to supply/export of goods.

Other finer points of Consignment Exports through the marketplace

As explained earlier, since consignment export is not a zero-rated supply execution of a bond or LUT, as required under section 16 of the IGST Act, is not required. Further, such goods shall be accompanied by a delivery challan issued in accordance with the provisions contained in Rule 55 of the CGST Rules.

It is worth mentioning that in terms of Section 31(7) of the CGST Act, where the goods being sent or taken on approval for sale or return basis are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier. Therefore, such goods sent/taken out of India are required to be either sold or brought back within the stipulated period of six months from the date of removal. Further, on a harmonious reading of Section 31(7) read with an Explanation to Section 54 of the CGST Act,  the date on which the ship or the aircraft in which such goods are loaded, leaves India ie (date of Export General Manifest or EGM) may be considered as the date of removal.

Accordingly, goods sent/taken out of India on a consignment export basis are required to be either sold or brought back within the stipulated period of six months from the date of removal. Otherwise, supply would be deemed to have taken place, on the expiry of six months from the date of removal. Exporter shall therefore be obligated to issue a tax invoice on the date of expiry of six months from the date of removal, in respect of such quantity of goods which have neither been sold nor brought back, in accordance with the provisions contained in Section 12 and 31 of the CGST Act read with rule 46 of the CGST Rules. It is interesting to note that in such a situation exporter shall be required to pay IGST on deemed supply but may not be able to claim any refund as such deemed supply may not fall within the domain of zero-rated supply.

If such goods are actually sold in the US fully or partially, within the specified period of six months, then supply is concluded, in respect of quantity so sold, on the date of such sale. Further on the date of the actual sale test of Section 7(1) of the CGST Act is also fulfilled and therefore such activity partakes the character of supply and also an export supply. Exporter shall accordingly issue a tax invoice in respect of such quantity of goods which has been sold abroad, in accordance with the provisions contained in sections 12 and 31 of the CGST Act read with rule 46 of the CGST Rules. In such a situation exporter can file a refund claim if he is otherwise eligible for a refund as per the provisions contained in 54(3) of the CGST Act read with Rule 89(4) of the CGST Rules, in respect of the export supply of goods. Further automatic refund under Rule 96 is not permissible in such type of arrangement as no IGST was paid at the time of removal of goods from India.  In terms of Rule 96B of the CGST Rules and proviso to Section 16(3) of the IGST Act (as and when notified) such refund shall also fulfil a condition of realization of sales proceeds within thirty (30) days after the expiry of the time limit prescribed under the FEMA. Failing which department may recover refund granted along with Interest? We also need to keep in mind that in terms of Regulation 9 of the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, the exporter is obliged to realize the pending export proceeds, arising on account of the export of goods/services/software, within a period of 9(nine) months from the date of export.

Consignment Export and FEMA

Relevant extract of Master Direction – Export of Goods and Services is excerpted for a better understanding of this concept.

(i) When goods have been exported on a consignment basis, the AD Category-I bank, while forwarding shipping documents to his overseas branch/ correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export. This procedure should be followed even if, according to the practice in certain trades, a bill for part of the estimated value is drawn in advance against the exports.

(ii) The agents/consignees may deduct from the sale proceeds of the goods, expenses normally incurred towards receipt, storage, and sale of the goods, such as landing charges, warehouse rent, handling charges, etc., and remit the net proceeds to the exporter.

(iii) The account sales received from the Agent/Consignee should be verified by the AD Category – I bank. Deductions in Account Sales should be supported by bills/receipts in original except in case of petty items like postage/cable charges, stamp duty, etc.

(iv) In case the goods are exported on a consignment basis, freight and marine insurance must be arranged in India.

(v) AD Category – I banks may allow the exporters to abandon the books, which remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters may show the value of the unsold books as a deduction from the export proceeds in the Account Sales.

Customs Procedure for E-commerce export through Post by E-Commerce Operators:

CBIC vide its notification No. 48/2018 dated 04.06.2018 has notified regulations namely ‘export by postal regulations’ and also laid down detailed procedure vide CBIC Circular No. 14/2018-Customs dated 04.06.2018 and 18/2018 dated 13.06.2018. Salient features of the Regulations are summarised as under:

(i)  All IEC holders are now permitted to export goods through FPOs (Foreign Post Offices).

(ii)  Further such export by post will be eligible for zero-rating of exports, by way of IGST Refund or execution of LUT.

(iii) Those who do not wish to avail of the benefit of zero-rating or who fall under the exempt or non-taxable category are also allowed to export under the same procedures.

(iv)  Exports under the Merchandise Export from India Scheme 3 (MEIS) through FPOs will be as per the existing procedure for e-commerce exports under MEIS and such export can be made only from FPOs in Delhi, Mumbai, and Chennai. E-commerce exports not involving MEIS may be done through any notified FPOs as per the procedures prescribed in the Circular. In the case of E-commerce export if there is only one consignor and any number of consignees then Form PBE-I (Postal Bill of Export-I) shall be filed in duplicate. However, in case of multiple shipments addressed to multiple consignees Form PBE-II (Postal bill of Export-II) shall be filed in duplicate.

(v)   Respective PBE along with goods shall be presented to the Customs authority at the FPO or any other designated post office. After processing of the PBE by Customs, the goods shall be presented to the Postal Department, which shall acknowledge receipt of the shipment on the PBE. Upon affixation of the tracking number by the postal authorities, PBE shall be brought back to the Proper Officer for grant of the ‘Let Export Order’ (LEO) and affix the tracking number of each shipment on it. The original PBE will be retained by Customs and the duplicate PBE will be handed over to the exporter or their Customs Broker. – The exporter shall be required to attach the invoice(s) with the PBE. There will be no limit on the number of postal shipments which can be effected using a single PBE. In E-commerce export by post, PBE is equivalent to Shipping Bill. Exporters should upload details of such PBE while filing GSTR-1 and Refund claims.

Customs Process for E-commerce Export through Courier by E-Commerce Operators:

Vide Notification No. 69/2018-Customs (N.T.) dated 3rd August 2018, Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 (hereinafter “Regulation”) has been amended. After this amendment commercial shipments up to Rs. INR 5,00,000 is allowed through courier mode, using CSB-V shipping bill.  CSB stands for Custom Shipping Bill. CSB-V mandates the compulsory punching of various details viz GSTIN and IEC of exporters, HSN codes of items exported etc. Shipments going under CSB-V can avail of MEIS benefits if they fall under the eligible category. Para 6 of the Regulations stipulates that the Authorised courier or his agent shall make entry of goods in CSB-V. For detailed process flow for export by courier, one may refer to Public Notice No. 38/2018-19 dated 29.03.2019 issued by the office of the Commissioner of Customs (II) Airport Special Cargo Commissionerate Courier Cell, Mumbai. Needless to say, CSB-V shipping bill plays a pivotal role in disclosing export supply in GSTR-1 and claiming GST Refunds in Form RFD-01.


e-BRC stands for electronic Bank Realization Certificate. An exporter needs an e-BRC to avail of the various export incentives offered by the government as part of its Foreign Trade Policy (FTP). The DGFT also implements the e-BRC platform, which allows banks to electronically upload to the DGFT server all foreign exchange realisation-related information related to exports. eBRC is mandatory to close the shipping bill/PBE/CSB even if exporters don’t want to opt for such incentives. It is equally important to note that keeping SB/PBE/CSB open for a longer period could lead exporters into trouble. It would therefore be advisable for an exporter to get their eBRC earliest even for their E-Commerce shipments.

It is paramount to note that e-BRC is considered proof of payment which the exporter’s bank issues in the form of foreign exchange and is directly received by them. However, in exports using e-commerce, the payment in foreign exchange may be received by Online Payment Gateway Service Providers (OPGSP).  It is worth noting that Banks have been allowed to offer the facility of repatriation of export-related remittances by entering into standing arrangements with OPGSPs subject to the fulfilment of prescribed conditions. Presently for claiming MEIS benefits, exporters have to approach their bank for Foreign Inward Remittance Certificate (FIRC) or similar documents who in turn approach OPGSP for the same. Another aspect to note is that from February 2021 PayPal business account provides monthly digital Foreign Inward Remittance Advice (FIRA) to Indian Exporters. Such advice is sufficient evidence for receipt of foreign exchange.  Further, in the case of small-value e-commerce consignments, a single payment is received by exporters from e-commerce companies. Tracking such payment is quite a tedious task but efforts are worth carrying out to ensure compliance with applicable provisions of the law.  

Up until this point, we have covered different options available to e-commerce exporters and the GST implications of such activity/supply.  Further, we have touched upon the concept of consignment export & importer on record. There are many more vexed issues associated with e-commerce export like whether such e-commerce supply will be eligible for MEIS/ Remission of Duties and Taxes on Exported Products (‘RoDTEP’) benefits. What would be the consequences if such goods are finally returned/rejected by the US shoppers? Would there be any implication of reverse charge on various fees/charges paid to the marketplace abroad? Detailed discussion on such issues will be continued in the concluding part of this paper in the next blog.


The views expressed herein are strictly personal to the author and should not be construed as advice/ legal opinion. The contents of this article are based on the interpretation of the facts, relevant legislation, rules, notifications, circulars, judgments/rulings, etc. on the date of publishing of this article.  One should not act upon the information in this article without obtaining specific professional advice. Author of this blog is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission pertaining to this article. Further, the said article is only for information and guidance purposes and should not be construed as any kind of advertisement or solicitation of work.

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  1. This paper was also published in Monthly GSTPAM magazine in August 2021.
  2. ACCS allows to sell in foreign country without having bank account in that country. If exporter is  unable to open a U.S. bank account, he may need to use Amazon’s Currency Converter for sellers which will allow him to receive the net proceeds of their earnings into their local bank account if that account is located in a different country or region from the marketplace where they are selling).
  3. MEIS is recently replaced with RoDTEP.


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