Clarity required on Export and Imports of EOU units under GST Regime.

[R.S. Mangal]

Under the regime of Central Excise and Customs, the 100% EOU’s have been exporting their products directly as well as through Merchant Exporters. Further, they were also procuring inputs/ Capital Goods without payment of duty in terms of exemption Notification No. 22/2013-CE dated 31.03.2013 and 52/2003-Cus dated 31.03.2003 as amended.

CLARIFICATION FOR BOND FOR IMPORT IS NEEDED IMMEDIATELY

In old Central Excise regime, the 100% EOU’s had executed B-17 Bond which was all purpose Bond for Exports as well as Imports and the same was in the nature of running Bond.

In view of GST Regime, it is clear that no duty free procurements is allowed for domestic procurement but the exemption of BCD and ED Cess & SHEC Cess on such BCD are still exempted under Notification No. 52/2003-Cus read with recent Notification No. 59/2017-Cus dated 30.06.2017.

As per CBEC Circular No. 4/4/2017-GST dated 7^th July, 2017 the issues related to Bond/ Letter of Undertaking for Exports without payment of Integrated were clarified. But, the said circular is silent on issue of Bond for duty free (BCD) Import of inputs / Capital Goods etc. by 100% EOU as these units now are not allowed by the GST Officers to import under B-17 Bond.

In terms of new requirement of exemption Notification No. 52/2003-Cus as amended by Notification No. 59/2017-Cus, EOU unit is required to follow the procedure prescribed under rule 5 of the Customs (Import of Goods at Concessional Rate of Duty) Rule, 2017, for import of goods.

Further in requirement to above, they are required to submit the Continuity Bond with Security/Surety and undertaking.

But the following issues are emerging which requires immediate clarification by the CBEC/ GST Council so that the Bond can be executed.

1. Whether the EOU can use existing B-17 Bond upto 31.07.2017 for Duty Free (BCD) Imports like allowed in case of Exports vide Circular No 4/4/2017-GST dated 07.07.2017, because the units would require some time for completing the formalities for execution of such Bond.
2. The format of Continuity Bond as available in Customs law is meant for Provisional Duty Bond, question is whether it requires any amendments or modifications to suit the EOU requirement.
3. Whether the said Bond to be furnished for Imports is a running Bond (with debit / credit facility) or a One-time Bond (separate Bond for each consignment / Import)?
4. Whether said Bond is required to be executed separately for each of Port of Import from where the EOU is expected to Import their goods?
5. Whether such Bond could be surety Bond or if security then what percentage of security by way of Bank Guarantee is required to be submitted?
6. Whether the functions bestowed upon the Deputy/ Assistant Commissioner of Customs can be continued to be performed by jurisdictional Central GST Commissionerate like before which means such Continuity Bond is to be executed and accepted by the jurisdictional Deputy / Assistant Commissioner of GST. Kind attention is drawn to the Circular No. 25/2017-Cus dated 30.06.2017?
7. Whether procurement certificate( Annexure) still to be issued by GST official for duty free ( BCD) free import  as beore?

II CLARIFICATION FOR EXPORTS THROUGH MERCHANT EXPORTERS

Under the erstwhile Central Excise Regime read with FTP provisions the 100% EOU could export their products through Merchant Exporters without payment of duty, provided the goods were directly exported from the premises of the EOU unit under their B-17 Bond. Now, as per GST Regime the Export through merchant Exporter are not being allowed by the Central GST Officials, therefore, immediate clarification from BBEX/GST Council  is required on the following matter:

1. Whether the EOU unit can still Export without payment of duty under their Bond through Merchant Exporters because as per FTP provisions the Export through Merchant Exporter is allowed provided the goods are directly exported from the premises of EOU unit under their Bond ?
2. In case such Export are not allowed without payment of duty then what duty is to be charged ? whether it will be only IGST ? or Whether it will be Aggregate of Customs Duty i.e. BCD + Ed Cess + SHE Cess + IGST? Or whether it will be IGST + Duty of BCD forgone on Inputs involved on such exported products ?
3. In case, the duty components on such exports comprises BCD element then how the Merchant Exporter would get Refund of such component because as per the GST law such Merchant Exporter can get the credit of IGST portion only which ultimately is entitled for refund under the provisions of Section 54 of CGST Act read with relevant rules ? in such case no Merchant Exporter would like to get his export orders fulfilled through EOU units.
4. Whether EOU can export through Merchant Exporters on the basis of LUT/Bond of such Merchant exporter without payment of duty?

The EOU’s are requested to raise their concerns immediately to CBEC, Development Commissioner and GST Council to clarify the above issues on very urgent basis as their survival is on stake after introduction of GST as field formation of Central GST are not able to provide any suitable solution for want of any clarity on above matters.   

Discussions to this article

[JAIPRAKASH RUIA]

Ref. Circular 29/2017-Custom dated 17.07.2017.

[ROHIT GOEL]

In case exporter opts to charge IGST and raise Tax invoice which as per the scheme of taxation will be refunded to exporter by the department. What will be amount recoverable under RBI records whether including IGST, then how this payment will be settled.

[JAIPRAKASH RUIA]

If this query is for Export under rebate, than IGST will be refunded to Exporter which won't be part of CIF/CFR/FOB value of shipping bill or Commercial or Custom Invoice which will be given to buyer for settling the invoice ( Even if the GST invoice will have the IGST calculated on it) and RBI payment will be settled through E-BRC as per existing practice. That means the IGST won't be exported along with the material value, hence not payable by overseas buyer.

[ROHIT GOEL]

We have generate two separate invoice - one Export Invoice and one Tax Invoice under GST and which invoice is to be given to Custom clearance. Also please suggest the relevant place for reading in details for procedures in this respect

[JAIPRAKASH RUIA]

Custom procedure are as it is. GST invoice as per Chapter VII of CGST act rwr GST-TAX-INVOICE-CREDIT-AND-DEBIT-NOTES-Final-Rules-18-5-2017.

[ROHIT GOEL]

IGST is to be paid against import of Goods but the Clearing agents are depositing IGST under BCD head. Whether payment window under IGST is open?