Import By EOU, Goods and Services Tax - GST

[KrishnaKumar A]

Our company is an EOU. Our company want to export with payment of IGST.

However, Customs officials not permitting to pay IGST in cash and avail exemption of BCD while importing goods. They say 52/2003, the Customs notification don't have provision to opt to PaY IGST only.

Kindly reply in the light of Notification 16/2020-CT dated 23.03.2020 (GST)

Posts / Replies

[YAGAY andSUN]

To avail such import benefits, EOUs will have to follow the procedure under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 as amended from time to time.

Further recently, the Government again took decisions on various suggestions of Special Economic Zones units (‘SEZs’) or Export Oriented Units (‘EOUs’).

Providing ab-initio exemption from payment of GST on procurements by EOUs Providing ab-initio exemption from payment of GST on procurements by EOUs Providing ab-initio exemption from payment of GST on procurements by EOUs - Exemption from payment of GST on imports was provided till March 31, 2021. Further, domestic procurement has been categorized as deemed export supplies and either supplier or EOU can claim refund of GST paid on such supplies. As the process of refund has been made hassle free, there is no need to provide upfront exemption.

[KASTURI SETHI]

Go through the following notifications :-

Notification No. 52/2003-Customs dated 31.3.2003 has been amended vide Notifications No. 59/2017-Cus dated 30-06-2017, 78/2017-Cus. dated 13-10-2017, 33/2018-Cus. dated 23-03-2018, 65/2018-Cus. dated 24-09-2018,79/2018-Cus. dated 05-12-2018, 9/2019-Cus. dated 25-03-2019.

Exemption from payment of IGST and Compensation Cess on imports by EOUs extended till 31-3-2020 - Amendment to Notification No. 52/2003-Cus.

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 52/2003-Customs, dated the 31st March, 2003, published in the Gazette of India, Extraordinary, vide number G.S.R. 274(E), dated the 31st March, 2003, namely :-

In the said notification, in the opening paragraph, in the proviso, for the figures, letters and words “1st day of April, 2019”, the figures, letters and words “1st day of April, 2020” shall be substituted.

[Notification No. 9/2019-Cus., dated 25-3-2019]

Period of exemption extended up to 1.4.2021 vide Notification No. 16/2020-Customs, the 24th March, 2020

[KrishnaKumar A]

Sir,

we would like to Pay IGST in cash while importing and export with payment of IGST in order to get refund without delay. To claim IGST refund we should not take benefit of Notification 78/2017-Cus dated 13.10.2017. There is a recent amendment in Sub Rule 96.10(b) by way of notification No. 16/2020-CT dated 23.03.2020 which enable us to pay IGST only at the time of Import (explanation part with retrospective effect). It reads as follows:-

96. (10) The persons claiming refund of integrated tax paid on exports of goods or services should not have-

(a)- - - - - -

(b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or Notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme.”

“Explanation – For the purpose of this Sub Rule, the benefit of Notification mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said Notifications.”

Issue is, Customs officials are not allowing us to pay IGST in cash while we taking exemption of BCD. If BCD is paid it will be a cost as we are EOU. Under EOU scheme there is no chance to get Duty draw back also.

Kindly advice.

[YAGAY andSUN]

Please confirm whether you are importing goods against Advance Authorization, if yes, then, you can pay IGST to claim refund of IGST paid at the time exports.

[KrishnaKumar A]

No sir, we are EOU. We are not using advance authorisation scheme.

[YAGAY andSUN]

It simple that if you had not paid IGST at the time of import in cash, then, you cannot claim IGST paid on exports.

[KrishnaKumar A]

We would like to export with IGST and get IGST refund.

Filing RFD 01 and getting refund take alot of time eventhough it is online.

[YAGAY andSUN]

In this connection please seek the support/clarification of/from your Jurisdictional Custom Commissioner and GST Commissioner by writing them a letter.

[Spudarjunan S]

Dear Sir,

Yes sir, in the light of the amendment vide notification no.16/2020 CT dated 23.03.2020 and also the validity of Rule 96(10), provided you had paid the IGST at the time of import. The amendment provides you with option payment of IGST and claiming exemption of BCD. Legally also it should have been allowed prior to such amendment as these are levies under different statutes. Now you have a statute backing you for exercising such an option. Further, the relaxation has been given only for inputs and not for Capital Goods which would create additional shambles in the industry.

Issues with Rule 96(10) in my view-

It doesn't infer power from CGST Act to prescribe such conditions/restrictions. Whether the Government can lay a restriction in the guise of manner.

Further, it doesn't clarify whether the restriction is transaction wise or supplier wise. If a supplier receives a single supply from a person who avails the benefit of Merchant exporter, then the former get himself barred by Rule 96(10) for the entire year which is irrational, arbitrary.

[KrishnaKumar A]

Thank you Sir. Very informative.

[RadheyShyam Mangal]

+

As per proviso to Section 5 of IGST Act which provides" that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975.) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975.) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, "

It means that BCD and IGST shall be levied as per Customs Law. For EOU the exemption Notification No 52/2003 Customs as amended is in place, in my view this Notification does not allow partial exemption of BCD only and to pay IGST portion.

Unless the Notification is suitable amended, the view of Customs, in your case, appears to be as per existing provisions of law.