ABCD of IGCR/SEU Rules, 2022

[Navjot Singh]

Brief

Initially, the CBIC has prescribed IGCR, 2017 for the importers who intend to avail of an exemption notification issued under sub-section (1) of section 25 of the Customs Act, 1962 where the benefit of such exemption is dependent on the use of imported goods covered by that notification for the manufacture of any commodity or provision of output service.

Notification No. 07/2022 - Customs (N.T) dated 1 February 2022, Circular No. 04/2022-Customs dated February 27, 2022, and Advisory No: 06/2022 Date: 1st March 2022 and Now, Notification No. 47/2022-Customs | Dated: 7th September 2022 has been issued.

Procedure for claiming benefit

Step 1: One Time Prior Information (ICGR-1) (Rule 4)

Importer to give one-time prior information. – (1) The importer shall provide one-time prior information on the common portal, in Form IGCR-1 containing the following particulars, namely: -

1. Name and address of the importer and his job worker, if any;

2. the goods produced or processed are undertaken at the manufacturing facility of the importer or his job worker, if any, or both;

3. the nature and description of goods imported used in the manufacture of goods at the premises of the importer or the job worker if any;

4. particulars of the notification applicable on such import ;

5. nature of output service rendered utilizing the goods imported;

6. particulars of premises intended to be used in case of unit transfer;

7. details of the end use recipient in cases where goods imported are supplied for specified end use; and

8. the intended ports of import.

On acceptance of the information, an Import of Goods at Concessional Rate of Duty(IGCR) Identification Number (IIN) shall be generated against such information. Any information filed in IGCR-1 can be modified later on on the Common Portal.

Step 2: Submission of Continuity Bond (Rule 4)

Now, the importers must submit a continuity bond with the appropriate surety or security. This must be accompanied by an undertaking to any amount which is equivalent to the difference between the duty leviable on inputs but for the exemption that has already been remitted (if any) at the time of importation, along with the relevant interest.

Step 3: Filing Bill of Entry

1. Mentioning the IIN and continuity bond number and details while filing the Bill of Entry.

2. A proper officer will allow the benefit.

3. Debit entry in Bond automatically.

Maintenance of Accounts & Filing Monthly Return (Rule 6)

1. Maintenance of proper accounts having adequate details of Goods imported, date of receipt, Job work,re-export & closing stock.

2. If any Short receipt of goods, then IGCR-2 will be filed immediately.

3. Monthly Return in IGCR-3 by 10th of Next month.

4. The importer may file IGCR-3A also at any time for the details of "goods consumed" for immediate recredit of Bond, the details of the same will be subsumed in IGCR-3.

The procedure of Job Work

Responsibility of the Importer

1. Maintaining the record of the goods sent for job work.

2. The importer shall send the goods to the premises of the job worker as per relevant rules/laws of GST.

3. The maximum period allowed for Job work is 6 months.

4. If the importer is unable to establish that the goods sent for job work have been used as the rules, then necessary action shall be taken by the Customs Officer.

Responsibility of the job worker shall:-

• Maintain a record of the Receipt of goods, manufacturing process, and the waste generated.

• produce the account details before the jurisdictional Customs Officer as and when required by the said officer;

• after completion of the job, work send the processed goods to the importer or to another job worker as directed by the importer for carrying out the remaining processes, if any, under the cover of an invoice or electronic way bill.

Unit Transfer

As per Rule 8, the Importer shall be allowed to move the goods from one unit to another one and maintain the records of the same.

Procedure for supplying imported goods to the end-use recipient (Rule 9)

• Maintaining Records, Moving goods as per Valid GST invoice & E-Way Bill.

• In case of supply for replenishment or Export against supply, proper documents should be there, as the officer may demand the same.

Re-export or clearance of unutilized or defective goods (Rule 10)

With respect to unutilized or defective goods, so imported, the importer shall have an option to either re-export or clear the same for home consumption, within the said period, namely

• within the period specified in the notification;

• within 6 months from the date of import, where the time period is not specified in the notification: Can be extended further by 3 Months if sufficient reason is proved

Any re-export will be recorded in the Monthly Return and the value to Re-Export should be at least the value at the time of Import.

If the importer wishes to remove the goods for home consumption, then he will have to pay the duty along with interest.

For Capital Goods

The importer shall have an option to clear the capital goods imported, after having been used for the specified purpose, on payment of duty equal to the difference between the duty leviable on such goods but for the exemption availed and that already paid, if any, at the time of importation, along with interest on the depreciated value allowed in straight line method as under -

i. for every quarter in the first year                     4%;

ii. for every quarter in the second year               3%;

iii. for every quarter in the third year                  3%;

iv. for every quarter in the fourth and fifth year    2.5%;

v. and thereafter for every quarter                     2%.

Recovery of duty (Rule 11)

• In case of any violation of any rule, there might be recovery proceedings against the importer.

Our 2 Cents

• Changes made are to increase the scope of IGCR by including cases where imported goods are utilized for specified end use which can be other than manufacturing or providing output services and additional useful data fields in forms.

• Where the time period for utilization of goods is specified in respective notifications, the said period will apply. If the same is not specified, a time period of six months will apply. Jurisdictional Commissioner can extend such period by another three months in cases where the delay in utilization is beyond the importer’s control.

• Procedures have been prescribed for immediate re-credit of Bonds by jurisdictional AC/DC, rather than waiting till the time of filing the monthly statement.

There are a few challenges in implementing the modules of IGCR on the ICEGATE Portal. Let's hope for a seamless resolution of the same.

 

Discussions to this article

[BPCL TaxTeam]

Does this mean, IGCR rules will be applicable when LPG imported for supply to household customers?

[Manjunath Shivanand]

Dear Sir,

Referring to your beautiful article about ABCD of IGCR/SEU Rules, we would request you to know some more information, which is useful for many peoples.

a) Is there any option to close the bond after utilization of imported Material ? and what is the validity of this bond?

b) Re-credit option is only available for SEZ and not for DTA, then we need to keep on making top-up to this same bond and our BG will will be accumulated and it affects our working capital.

Your clarification on the above issues will be highly useful.

Thanks in advance