Rule 144 — NONCONSULT_MANUAL

12. Illustrative examples of the applicability of the Restrictions under Rule 144

(xi) of GFR 2017 a) A vendor, say, ‘Party A’ from India, is procuring an item from their sister company, say, ‘Party B,’ which is registered in a country not sharing a land border with India. Both the parties, Party A and B, are owned by an entity that does not belong to a country sharing a land border with India. Party B has its production facility in a country sharing land border with India. The manufactured item will be procured by Party A from its sister concern, i.e., Party B from the above-mentioned production facility. The production unit is wholly owned by Party B. The Party A now claims that the provisions of Rule 144

(xi) of GFR 2017 do not apply on it because:

b) Taking an example of IT goods and services: i) if the contractor is only supplying the servers as it is from an OEM that belongs to a country sharing a land border with India, and there is no value addition done by the contractor, then the contractor acts as an agent for the OEM and registration of the OEM and the agent (contractor) both are required as per the provisions of Rule 144

(xi) of GFR 2017. ii) In case the contractor supplies value added services on a hardware, the contractor outsources, in that case the registration of OEM is not required. iii) Where there is deployment of IT services that includes both hardware and software customization, and the contractor has sourced hardware, which is made in the country sharing land border with India, the requirement of registration as per the provisions of Rule 144

(xi) are not applicable.