Facts
- The applicant, a company incorporated in Singapore, is engaged in the business of manufacture and sale of Hard Disk Drives.
- The applicant supplies disks to original equipment manufacturers (OEM) in India. In order to minimise the delays in procurement of inputs, OEM proposed a Vendor Managed Inventory (VMI) model.Pursuant to the VMI model, the applicant would enter into agreements with Independent Service Providers (ISP) in India who will be required to stock Disks in India on behalf of the applicant and deliver the same to OEM in „just-intime? basis. The VMI model will operate as under:
– Based on purchase order raised by OEMs the applicant would ship goods to ISP in India;
– ISP would clear the goods from the customs by acting as Importer on Record and will store goods in a bonded warehouse operated and controlled by him. The ownership of the goods will remain with the applicant;
– On receipt of „pull request? from OEM, ISP will immediately deliver the goods;
– The applicant would raise invoice on OEM for such delivery of goods. The applicant receives payments for invoices outside India;
– ISP would raise invoice on arms length basis on the applicant for services performed in India;
– ISP would also obtain Value Added Tax registration and pay applicable taxes and file returns in connection with delivery of goods to OEM.
The applicant has also proposed to enter into a Third Party Hub Agreement with YCH Logistics (India) Pvt. Ltd. (YCH), a private company in India for delivering the goods to Dell India Pvt. Ltd. on behalf of the applicant.
Issue before the AAR
