2020 (2) TMI 1353 - Commissioner - GST

Refund of CGST and SGST - Unutilized ITC - Export of goods - zero rated supply - period July, 2017 - refund of CGST ₹ 6,36,878/-, IGST ₹ 11,219/- was rejected on the ground that the appellant has claimed DBK in Group A and also not submitted invoices - HELD THAT - The appeal filed by the appellant on the ground that the adjudicating authority has rejected the drawback claims for the transition period of one month i.e. July, 2017 on account of that the appellant has claimed DBK in Group A and not submitted the invoices relating to ITC of IGST and SGST - further it is observed that consequent upon implementation of GST with effect from 1-7-2017, Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 were also continued for a transition period of three months i.e. from July, 2017 to September, 2017 vide Circular No. 22/2017-Cus., dated 30-6-2017. According to notes conditions No. 7 to Notification No. 131/2016-Cus., dated 31-10-2016, if the rate indicated is the same in the columns (4) and (6), it shall mean that the same pertains to only Customs component and is available irrespective of whether the exporter has availed of Cenvat Facility or not . I also find that the appellant s commodity are classifiable under Tariff Item No. 6914 Other Ceramic Articles , (Invoice No. 17/25, dated 29-7-2017) under Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 which attracts the same rates of drawback i.e. 1.5% under both the columns (4) (6). Hence, it is evident that the appellant has claimed drawback of Customs component only for their export - Further, as per Circular No. 22/2017-Cus., dated 30-6-2017, which deals with drawback claims for the transition period, clearly provides that While a transition period of three months has been allowed, the exporters shall have an option to claim only Customs portion of AIRs of duty drawback i.e. rates and caps given under column (6) (7) respectively of the Schedule of AIRs of duty drawback and avail input tax credit of CGST or IGST or refund of IGST paid on exports . Furthermore, C.B.E. C. vide Circular No. 37/11/2018-GST in F. No. 349/47/2017-GST, dated 15-3-2018 has also clarified that a supplier availing drawback only with respect to basic customs duty shall be eligible for refund of unutilized input tax credit of Central tax/State tax/Union territory tax/Integrated tax/Compensation Cess under the said provision. The appellant has also submitted the copies of invoices of ITC of IGST which were not submitted at the time of personal hearing held before the adjudicating authority resulting to rejection of refund claim. The appellant is directed to submit all such invoices before the adjudicating authority for verification. The appeal filed by the appellant allowed only to the extent of rejection of refund of IGST amounting to ₹ 2245/- and CGST amounting to ₹ 1,10,755/- subject to verification by the adjudicating authority.

Issues Involved:
1. Rejection of refund claim due to claiming Duty Drawback (DBK) in Group A.
2. Non-submission of invoices relating to Input Tax Credit (ITC) of IGST and SGST.
3. Interpretation of the transition period provisions under GST.

Issue-wise Detailed Analysis:

1. Rejection of Refund Claim Due to Claiming Duty Drawback (DBK) in Group A:

The appellant contested the rejection of the refund claim for CGST ?1,10,755/- and IGST ?2,245/-, totaling ?1,13,000/-. The adjudicating authority had rejected the refund on the grounds that the appellant claimed DBK in Group A and did not submit the necessary invoices.

The appellant argued that under Section 54(3) of the CGST Act, 2017, a supplier availing the drawback of Central tax is not eligible to claim a refund of accumulated ITC. However, the appellant claimed the higher rate of drawback under Column A, which was deemed faulty. The appellant cited Circular No. 22/2017-Cus., dated 30-6-2017, which allowed the continuation of the extant Duty Drawback scheme for a transition period from 1-7-2017 to 30-9-2017. This circular provided that exporters could claim composite rates subject to certain conditions, ensuring they did not claim composite AIRs of duty drawback and simultaneously avail ITC of CGST or IGST.

The appellant further cited Notification No. 131/2016-Cus. (N.T.), dated 31-10-2016, which stated that if the rate of drawback in Column A & Column B is the same, it pertains only to the customs component and is available irrespective of whether the exporter avails the Cenvat credit or not. The appellant claimed that the drawback rate for goods under Chapter 6914 was the same under both columns A & B, i.e., 1.5%, indicating it pertained only to the customs component.

2. Non-submission of Invoices Relating to ITC of IGST and SGST:

The adjudicating authority also rejected the refund due to the non-submission of invoices relating to ITC of IGST ?11,680/- and SGST ?398/-. The appellant contended that these invoices had been submitted but were not considered by the adjudicating authority. Copies of the invoices were again submitted during the appeal.

3. Interpretation of the Transition Period Provisions Under GST:

The adjudicating authority rejected the drawback claims for the transition period of one month (July 2017) on the grounds that the appellant claimed DBK in Group 'A' and did not submit the invoices relating to ITC of IGST and SGST. The appellant argued that during the transition period, exporters were allowed to claim the customs portion of AIRs of duty drawback and avail ITC of CGST or IGST or refund of IGST paid on exports.

The appellant's commodity, classified under Tariff Item No. 6914 "Other Ceramic Articles," attracted the same rates of drawback (1.5%) under both columns (4) & (6). Thus, the appellant claimed the drawback of the customs component only for their export, as per Circular No. 22/2017-Cus., dated 30-6-2017, and Circular No. 37/11/2018-GST, dated 15-3-2018, which clarified that a supplier availing drawback only with respect to basic customs duty is eligible for a refund of unutilized ITC.

Conclusion:

The appeal was allowed to the extent of the rejection of the refund of IGST ?2,245/- and CGST ?1,10,755/-, subject to verification by the adjudicating authority. The appellant was directed to submit all necessary invoices for verification. The appeal was disposed of accordingly.

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