SALES RETURN UNDER EXPORT, Customs - Exim - SEZ

[MAHESHA MS]

Dear Sir,

Please let us know, if exported goods returned for repair.

What is the procedure under gst and what will happen if not re-exported.

Note: Exports with payment of Tax and availed refund also explain with out payment of tax

Posts / Replies

[KASTURI SETHI]

See para no.2.49 of FTP 2015-20.

[KASTURI SETHI]

If not re-exported you will have to return the benefits of export availed.

2.49 Export of Repaired Goods FTP 2015-20

Goods or parts thereof, except restricted under ITC (HS), on being exported and found defective, damaged or otherwise unfit for use may be imported for repair and subsequent re-export. Such goods shall be allowed clearance without an Authorisation and in accordance with customs notification. To that extent the exporter shall return the benefits /incentive availed on the returned goods. If the item is ‘restricted’ for import, the exporter shall require an import license.

However, re-export of such defective parts/spares by the Companies/firms and Original Equipment Manufacturers shall not be mandatory if they are imported exclusively for undertaking root cause analysis, testing and evaluation purpose.”

[YAGAY andSUN]

The time limit to re-export is 6 months from the date of B/E.

[Subhash Modi]

Kindly refer CA, 1962 Section 25 exemption Notification 158/95-Cus dated 14-11-95, as amended.

Vide Sr. No. 1 or 3 under the Table therein if the re-import for repairs is within 3 years/7 years from the exportation date then upon entry into India the whole of the BCD and the IGST applicable on the re-imported goods (like any imported goods vide Section 20/CA, 1962) is exempted subject to re-export bond. The re-export should take place within 6 or extended 6 months period from the date of importation.

If the re-export fails then the duty leviable at the time of re-import i.e. BCD + Cess on BCD plus IGST on the agrregate of CIF + BCD + Cess has to paid (without interest - interest not leviable if Notification or the bond does not say so). This imposition will be in terms of Section 20/CA, 1962.

However, there is a Section 25 exemption Notification pertaining to re-imports for retention viz. 45/2017-Cus dated 30-06-2017 which provides for levy of reduced re-import duty (instead of Sec. 20 duty on merit) in a manner that the Section 12 duty that still needs to be paid will be equal to drawback availed on the relevant export and IGST that was not paid under LUT or was paid but refund availed. Additionally MEIS incentive availed will be recompensed by surrender of any valid MEIS of equal value. This is still payment of import duty by an alternative method and not return of incentives and refunds; it is only a method of calculation. The misconception that incentives and refunds are being returned will trigger interest claim from the date the incentives etc. were availed leading to litigation and only Tribunal will save the litigant importer.

Whether one opts for the slightly less burdensome cost of duty (45/2017) or the slightly more under Section 20; in any case it is payment of import duty on the occasion of an import into India and the taxable event is the entry of goods into India and interest on duty leviable on an import (re-import = import). Even then interest on duty assessed starts only after expiry of 24 hours from the time the assessing authority returns the Bill of Entry for duty payment

Though 45/2017 apparently looks more beneficial in most of the cases the difference being marginal I have always advised my customers to opt for the more friendly Section 20 option without the need to go into what drawback and IGST relief was availed at the time of export as it triggers a number of non-issues. Just finish the job by paying BCD + Cess +import iGST under Section 20 as if it is an import as the Section itself qualifies every re-import as an import subject to imposts like an import.

Al