While juggling multi-country orders and transacting amid dynamic forex shifts, export compliance aspects sometimes take a backseat. And one such frequently overlooked formality is the issuance of e-way bills for shipments above INR 50,000 in value headed overseas.
However, bypassing this prerequisite can have serious repercussions. Non-conformities pertaining to export documentation can not only stall goods at domestic checkpoints but also risk credibility across borders.
Let’s assess what the e-way bill non-adherence implications look like and how exporters can avoid them.
Consequences of Missing the E-Waybill in Exports
Unlike domestic supplies, where suppliers directly face the audit brunt, export e-way bill gaps manifest as downstream supplier selection barriers or reputation fallouts in foreign markets, as detailed below:
Customs clearances delays.
The absence of an e-way bill supporting an IEC-registered entity’s credibility can lead to stringent verification, resulting in port clearance obstacles.
Container loading setbacks.
In some cases, missing e-way bill compliance has also led to containers being denied loading on vessels by carriers to bypass penalty risks.
Export incentive denial.
Non-conformity with documentation requirements can make exporters ineligible for availing of beneficial schemes under foreign trade policy and FTP agreements.
Loss of input tax credits.
Gaps in reconciling e-way bills with GST returns can mean the denial of legitimate input tax credits, nullifying working capital cushions.
Cancellation of registration.
For habitual offenders showing gaps in reporting export transactions suitably in GST filings, suspension or cancellation of GST registration is also a possibility.
Thus, the spillover effect of even a single non-compliant export shipment can be quite damaging. Hence, it is prudent to be familiar with the exact provisions.
Penalties for Not Using E-Waybill in Exports
The e-way bill mandate for exports above INR 50,000 is governed by Rule 138(14) of the CGST Rules. Further notification no. 39/2018-Central Tax dated September 4, 2018 also affirms this compliance.
As per penal provisions under Section 122 of the CGST Act, 2017, the associated non-compliance risks include:
- Penalty of Rs. 10,000 or 100% of the tax liable, whichever is higher
- For repeat offenses, 100% tax plus full penalty payment
- Interception or seizure of export goods and vehicles
- Released only after tax and penalty payment
- IEC may get blocked for non-compliant exporters.
- Stricter assessments for further clearances
Thus, substantial legal and financial burdens coupled with reputational damage make non-adherence unviable.
Export Compliance and E-Waybill Repercussions
As a newbie exporter, one feels that handing those signed foreign invoices to your logistics partner should suffice for your goods to fly overseas. So why such emphasis on this e-way bill formality before your precious machinery consignment even toes beyond Indian boundaries? Let’s assess why this compliance mandate spans beyond just domestic tax laws.
Now that exports entail a global trade element, the watchdogs monitoring this space are multifold. You have our tax authorities keeping an eye on GST reconciliations, customs checking your IEC dealings, the RBI tracking forex flows, and so on.
In essence, the e-way bill serves as a pivot aligned with guidelines enforced by various agencies. It is no longer just a domestic transit slip but bears relevance across trade stakeholders.
For example, your working capital benefits under export schemes by the Directorate General of Foreign Trade may be tied to documentary duties fulfilled. Or customs incentives may have bank payment submissions seeking reference to the unique e-way bill number.
Thus, any gaps or omissions in this compliance can destabilize confidence levels across monitoring authorities. The risks translate into:
- Delayed realizations of export proceeds
- Obstacles to availing of trade protections like insurance, guarantees, etc.
- Denial of eligible incentives and exemptions
- Difficulty in reconciling tax credits
- Reduced credibility in global supply chain transactions
- Stricter assessment of consignments in future trade
So while you felt the e-way bill was another trivial piece of export paperwork, its relevance cuts across the entire trade value chain. Hence, safeguarding business stability by adhering to compliance norms seems prudent.
Now that we understand why we must generate, let’s see the processes around creating one.
Risks of Not Generating an E-Waybill for Exports
Trade is all about reliability, isn’t it?—timely deliveries, efficient payment realizations, and ethical sourcing practices. And the e-way bill compliance symbolizes this reliability orientation in many ways.
Its absence on key paperwork can almost be inferred as either ignorance of regulation or even raising doubts if goods are genuinely meant for export or diversion. Let’s assess how omitted e-way bills can destabilize operations:
- Firstly, from a productivity standpoint, a stalled consignment implies lost hours of output capacity—machinery lying idle on the shopfloor and daily production targets not being met. Further, these recurrent delays strain buyer relationships, be they with domestic or global customers.
- Secondly, from a liquidity perspective, the absence of e-way bill reconciliation poses the risk of tax authorities disallowing your input credits. This erodes working capital availability for sustaining export-import cycle operations.
- Lastly, deviance from compliance rigor also spurs investigative scrutiny and audits. You may be required to substantiate multiple previous transactions. This consumes administrative bandwidth, affecting growth plans.
In summary, the ripple effect of non-compliance goes beyond just financial penalties. It disturbs the continuity ethos vital for frictionless trade. Hence, safeguarding compliance health seems intrinsic rather than resented policing.
Impact of Non-Compliance on Export E-Waybill
Persistence of any compliance process depends on how well the regulated view this practice. Unless they perceive value in following guidelines, sustaining discipline seems challenging.
In the case of e-way bills too, prolonged unwillingness to furnish documentation not only questions goods movement genuineness but has other pitfalls:
Trade Reliability Deficit
Multiple instances of documentation non-compliance create doubts in the customer’s mind about whether the non-adherence is a deliberate act of revenue evasion or ignorance of updated regulations. This erodes confidence in the exporter’s credibility.
For instance, an EU buyer importing auto components may hesitate to sign annual procurement contracts after seeing the Indian exporter’s persistence in e-way bill misses during in-transit cargo tracking by authorities. They might interpret motives as diversion of goods locally rather than genuineness of export intentions.
Such erosion of reliability makes overseas importers apprehensive for future dealings.
In addition to explicit penalties like fines, detention fees, etc. levied for missing documents, other implicit costs also accumulate due to non-compliance—something a compliant exporter dislikes.
For instance, prolonged engagement with customs officers explaining export authenticity, submitting appeals to waive off penalties, and seeking release of seized goods also consume administrative and legal bandwidth. This diverts the productive time of senior management towards firefighting.
Such diversion of efforts increases hidden operational costs, affecting healthy financials.
Revenue Leakage Risk
For enforcement agencies, the absence of valid e-way bills accompanying cargo movement raises suspicion about whether goods are actually meant for export or diversion locally with the intention to evade applicable taxes.
It becomes difficult for authorities to establish the legitimacy of export intentions and the destination of goods lacking compliance documentation. This poses perceived revenue leakage channels requiring heightened vigilance, scrutiny of traders’ records, and audits to prevent potential GST evasion via clandestine channels.
Procedural Credibility Deficit
The e-way bill documentation symbolizes that preceding processes around procurement, warehousing, invoicing, and consignment dispatch have been fulfilled in a compliant manner as per standards expected of an ethical exporter.
The absence of this paperwork fails to substantiate claims that necessary steps were completed appropriately across the export trade workflow. It erodes the credibility of such processes in the eyes of assessing agencies like customs authorities, overseas regulators, etc.
Gaps in export compliance documentation get captured in the records of monitoring authorities. Consistent non-adherence or negligence towards requirements like e-way bills, in spite of reminders, could land exporters in reputational hot waters.
The chances of blacklisting by Indian agencies and overseas importers increase since it undermines the credibility of trade intentions and the overall governance standards of the non-compliant enterprise.
Thus, the spillover effect goes beyond financial impact, also destabilizing continuity trust vital for frictionless trade.
Legal Consequences of Omitting an E-Waybill in Exports
What if one day your transporter calls frantically, saying your export consignment of engineering instruments has been stalled midway to Nhava Sheva port by enforcement officers for e-waybill verification? As penalties get levied, how could a mere documentation miss lead to such adversity? Let’s analyze the legal viewpoint.
As we know, e-way bill laws for interstate movement are governed under the GST Act. And interestingly, as per existing provisions, even exports are classified as ‘deemed exports’ for taxation purposes.
Hence, CBIC Circular 76/50/2018-GST states: “E-way bill applicable for goods export movement that qualifies as an ‘inter-state’ supply.”
Thus, the revenue lens views non-furnished bills for export items above Rs 50,000 as essentially ’taxes evaded’, applying applicable laws for lapses that provide for:
- 100% tax payment on deemed supply
- Penalty equivalent to tax evasion
- Detention and seizure of goods
So in essence, the legal perspective assumes exports without e-way bills as a potential domestic diversion to evade taxes, thus subjecting offenders to tax plus penalty payments.
Thankfully, for now, the above implications get waived if exports are genuinely destined overseas and reconciled in returns. However, reliance on appeals seems to be best avoided!
In summary, we see how the absence of suitable e-way bill documentation supporting goods meant for exports can severely impact the continuity of compliant exporters. The monetary, operational, and reputational risks are manifold.
However, GST law also offers reasonable relief for minor lapses, like data entry errors, subject to prompt corrections. Relaxations are also provided for LUT/Bond registered exporters in some cases.
Hence, it is important to maintain sound understanding and coordination with partners like customs brokers and logistics partners to ensure compliance hygiene right from order execution to the goods dispatch stage.
Technology aids like accounting and invoicing tools are also equipped with validations around e-way bill generation and reconciliations with shipping bills and GST returns to avoid strenuous manual tracking.
With extrapolations in place, exporting enterprises can channel energies towards fueling and sustaining global ambitions rather than tackling exigencies.
Frequently Asked Questions
What happens if part A is entered and the vehicle breaks down before filling out part B of the export e-way bill?
Post updating vehicle change details Part B, fresh EWB, is not required in such a case. New vehicle details must accompany the goods. If the delay is considerable beyond EWB validity, the concerned officer’s principles will apply on extension.
If exporters export goods in a general LCL consolidation container, how should an e-way bill be created?
Where small LCL cargo gets consolidated while moving to the gateway port in a shared container, the individual e-way bills of the respective exporters with their invoice value specifications should ideally cover the common container movement.
Will the exporter face GST and customs penal action concurrently for not issuing an export e-way bill?
Yes, non-compliance with the export e-way bill under GST will independently attract CGST penalties. Customs authorities may additionally deny clearances or levy customs penalties like confiscation or redemption fines for violations under the Customs Act, 1962.
Can a freight forwarder or customs broker share liability if they miss capturing the exporter’s EWB details during documentation?
Yes, typically export contracts stipulate documentation responsibilities borne by such partners, providing authority to them to create the e-way bills on the exporter’s behalf. Contract terms like indemnity would apply in cases of non-compliance jointly with the individual legal provisions applicable to the exporter.
What are the options if the transporter starts goods movement before the expiry of the 72-hour Part A-B e-way bill updating timeframe in the case of exports?
The ideal recommendation is to generate a consolidated e-way bill combining Part A of the EWB hence providing an aggregate validity period for completing the journey. If feasible, return goods and regenerate fresh EWB. Seek the concerned officer’s discretion based on the circumstances. But data entry mismatches risk a penalty.