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TMI Blog2023 (6) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... under RoSCTL scheme issued by Directorate General of Foreign Trade is taxable or exempt under GST schedule I, SI. No.-122A HSN code 4907? (ii) Whether Notification No. 35/2017-Central Tax (Rate) dated 13th October 2017 is applicable to all duty credit scrips or not?" 4. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. The applicant has submitted that- (a) It is a firm engaged in buying and selling of "Duty Credit Scrips". For this purpose it is holder of IEC code issued by Government of India, Ministry of Commerce and Industry. (b) Advance ruling is being sought upon taxability of duty credit scrips issued under RoSCTL scheme issued by Directorate General of Foreign Trade. Notification No. 35/2017-Central Tax (Rate) dated 13th October 2017 has been issued by the Ministry of Finance through which entry no. 122-A has been inserted which clearly exempts the duty credit scrips under HSN Code 4907. (c) Clarification is being sought whether duty credit scrips issued under RoSCTL scheme is issued by Directorate General of For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty, Safeguard Duty, Transitional Specific Safeguard Duty, and Anti-dumping Duty. DCS can be transferred to others, but it cannot be used to set off GST, Compensation cess and Education Cess. * From the date of issue, a DCS remain valid for 24 months. But the benefits don't need to cease after two years. * If the exporter does not have a foreseeable use of the DCS within the validity period, they can always transfer it to another person who can use it against their own outstanding tax liability. * Additionally, the DGFT can also revalidate a DCS if the exporter submits a special request under exigent circumstances. It is clear that the duty credit scrips are the instruments to award incentives to the exporters with the objective of the export promotion by allowing them to set off the Basic Customs Duty against it. It is also to be noted that the duty credit scrips are not allowed to set off the IGST, CGST/SGST liability. (4) That is why a frequently asked question (FAQ) in this regard has been issued by Custom's "ICE GATE" under "RoSCTL" scheme have been clarified. In its page number 4, the following question and answer explains the legal recognition of Duty Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorization in the case in question in which the duty is vested. The important portions are as under:- 4.4 The Appellant also referred to the CBEC Circular issued vide letter dated 06-06-2018 has clarified the GST rate applicable on Priority Sector Lending Certificate (PSLC), Renewable Energy Certificate (REC) and other similar scrips. The relevant para 6 and 7 are reproduced below:- ......................... 6. As such, various certificate likes REC, PSLC, etc. are classified under heading 4907 and will accordingly attract GST @ 12%, through duty paying scrips classifiable under the same heading will attract Nil GST (under Sr. 122-A of the Notification No. 2/2017-central Tax (Rate) dated 28-06-2017, as amended vide Notification No. 35/2017 dated 13-10-2017. 7. Accordingly, in modification of Sr. No. 3 of Circular No. 34/08/2018-GST dated 01-03-2018, hereby clarified that renewable energy certificate (REC) and Priority Sector Lending Certificate (PSLC) and other similar documents are classifiable under heading 4907 and will attract 12% GST. The Duty Credit Scrips, however, attract Nil GST under Sr. No. 122A of Notification No. 2/2017-C.T. (Rate) dated 28-06-2017. 4.5 On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 12% on duty paying scrips classifiable under the same heading will attract Nil GST (under S.No. 122A of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 35/2017-Central Tax (Rate) dated 13.10.2017). The ROSTCL is "not duty paying scrips it is only a pass" so not same as MEIS, SEIS (Duty Credit Scrips). 5.1 The Assistant Commissioner, CGST, Central Excise Div. III, Kanpur, vide his letter C.No. GEXCOM/Tech/2337/2022-Tech-CGST-Divill-KNPR-Comm/53 dated: 09.09.2022 submitted the following: The Duty Credit Scrips was taxable w.e.f. 01.07.2017 to 13.10.2017 i.e. before the insertion of Sl.No. 122A in the Schedule under HSN-4907: Duty Credit Scrips. It is to mention that no nomenclature was provided by the party. The Rebate of State and Central Taxes and Levies (ROSCTL) Scheme is a new scheme introduced by the Ministry of Commerce. Currently, it appears that ROSCTL scheme is only valid for garments and made-ups (i.e., Chapter 61, 62 & 63). As per Public Notice No. 58/2015-20 Dated 29.01.2020, Merchandise Exports from India Scheme (MEIS) has also been withdrawn for Export items falling under Chapter- 61, 62 & 63, w.e.f, 07.03.2019. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umn (3) of the Schedule appended to this Notification, falling under the tariff item, subheading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedule, from the whole of the central tax leviable thereon under section 9 of the Central Good and Services Tax Act, 2017 (12 of 2017). Schedule 2. This Notification shall come into force with effect from the 1st day of July, 2017. [F.No. 354/117/2017-TR U] (Mohit Tewari) Under Secretary to the Government of India In view of the above, the issue raised by the applicant is in affirmative i.e. -Duty Credit Scrips (Specific entry) issued under ROSCTL issued by the Directorate General of Foreign Trade is exempted. The corresponding entry was also Inserted vide Notification No. 36/2017-Integrated Tax (Rate) dated 13.10.2017. Question: Whether Notification No. 35/2017-Central Tax (Rate) dated 13.10.2017 is applicable to all duty credit scrips or not? Answer: Yes. It appears that it is applicable to all the duty credit scrips It is pertinent to mention that only specific entry has been exempted i.e. Duty Credit Scrips. To strengthen the view, it to mention that an entry was ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G.S.R. 374(E), dated the 2nd June, 2021. Earlier it was in the Schedule II, having GST rate of 12% (S.No. 128 of Schedule II-NN 01/2017-Central Tax (Rate) dated 28.06.2017. 6. The applicant was granted a personal hearing on 14.09.2022 which was attended by Mr. Santosh Kumar Gupta and Mr. Shubham Agarwal, Advocate, Authorized Representatives during which they reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 7. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the 'CGST Act'. 8. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issue on which advance ruling required- "1. Whether Duty Credit Scrips issued under RoSCTL scheme issued by D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsport sector and embedded CGST and Compensation Cess on coal used in production of electricity. * The sectors covered under this scheme (apparel/garments and made-ups) would not get benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. However, textiles products which are not covered under the RoSCTL would be eligible to avail the benefits, if any, under RoDTEP along with other products as finalised by the Department of Commerce. 9.2 EXTENSION OF RoSCTL SCHEME Vide notification No. 14/26/2016-IT (Vol.II) dated 07.03.2019, the Ministry of Textiles notified the RoSCTL Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) which was initially in force up to 31.03.2020. * However, vide Notification No 12015/11/2020-TTP dated 17.04.2020 of the Ministry of Textiles, the Government of India decided to continue the RoSCTL Scheme w.e.f. 01.04.2020 until such time that the RoSCTL Scheme is merged with Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme without any change in Scheme guidelines and rates, as notified vide Ministry of Textiles' Notification Nos. 14/26/2016-IT (Vol.II) dated 07.03.2019 and 14/26/2016-IT (Vol.II) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on export documents, embedded SGST paid on inputs such as pesticides, fertilizers etc. used in production of raw cotton, purchases from unregistered dealers, coal used in production of electricity and inputs for transport sector. The Rebate of Central Taxes and Levies shall be understood to comprise central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertilizer etc. used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and Compensation Cess on coal used in production of electricity 9.4 NATURE OF REBATE UNDER RoSCTL SCHEME The rebate under the Scheme shall be in the form of duty credit scrips. The scrips shall be issued electronically on Customs system. The duty credit scrips shall be used for payment of Basic Customs Duty on import of goods. These scrips shall be freely transferable. The manner of utilization of scrip for payment of basic customs duty and other modalities, including conditions relating thereto, consistent with the Scheme, has been notified by the Department of Revenue under Notification No. 77/2021- Customs (N.T.) dated 24.09.2021. Detailed ICEGATE Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi, the 13th October, 2017 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 2/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 674(E), dated the 28th June, 2017, namely:- In the said notification,- (B) in the Schedule,- (i) after S. No. 122 and the entries relating thereto, the following serial number and the entries shall be inserted, namely: - "122A 4907 Duty Credit Scrips"; 12. As per the para 3.02 of the chapter 3 of the FTP, Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for: (i) Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3(1), 3 (3) and 3 (5) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 12015/47/2016-IT dated 03.01.2017. However, certain State as well as Central taxes continued to be present in the cost of exports. Accordingly, in pursuance of the decision of the Government of India to rebate all embedded State and Central Taxes and Levies on garments and made-ups to enhance competitiveness of these sectors, the RoSCTL Scheme was notified by the Ministry of Textiles and the existing RoSL Scheme was discontinued w.e.f. from 07.03.2019. In the above context, Para 3 of notification issued by Ministry of Textiles dated 13th August 2021 is reproduced as under: The Scheme shall be implemented by Department of Revenue with end to end digitization for issuance of transferable Duty Credit Scrip, which will be maintained in an electronic ledger in the Customs system. Duty Credit Scrip under RoSCTL Scheme shall be issued without insisting on realization of export proceeds. Revised guidelines for continuation and implementation of the RoSCTL scheme is Annexed herewith. 13.3 The nature of Rebate mentioned at Para 4 of Annexure issued with notification issued by Ministry of Textiles dated 13th August 2021 says that:- ..................... 4.1. The rebate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de F.No.605/7/2019-DBK is as under: It is to point out that under the RoSCTL, the benefit to exporters shall be given by DGFT in form of Merchandise Exports from India Scheme (MEIS) type duty credit scrips. Detailed procedure for claiming benefit under the RoSCTL, issuance of scrips and their usage is being worked out. Till finalisation of such details, in the transition period, it has been decided that claims filed under the existing scheme codes for the erstwhile RoSL scheme will be treated as claims filed under RoSCTL scheme. 16. Further, Para 6 and 7 of Circular No. 46/20/2018-GST issued vide F. No. 354/149/2017 -TRU Government of India Ministry of Finance Department of Revenue Tax Research Unit Dated the 6 th June, 2018 - .................. 6. As such, various certificates like RECs, PSLCs etc are classified under heading 4907 and will accordingly attract GST @ 12 %, though duty paying scrips classifiable under the same heading will attract Nil GST{under S.No. 122A of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 35/2017-Central Tax (Rate) dated 13.10.2017}. 7. Accordingly, in modification of S.No. 3 of Circular No. 34/8 ..... 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