Calculation of Foreign Currency Goods in India under CGST Rule 34: Exchange Rate Application

The ruling authority determined that the value of goods supplied within India and billed in foreign currency should be calculated under Rule 34 of the CGST Rules, 2017. The exchange rate for imported goods, as specified by the Board under section 14 of the Customs Act, 1962, is to be applied in such instances.

---

---

Issues Involved:
1. Application for advance ruling on valuation issue under CGST/SGST Act, 2017.
2. Determination of exchange rate for billing in foreign currency for goods supplied within India.

Analysis:

Issue 1: Application for Advance Ruling on Valuation Issue
The applicant, M/s. Bharat Heavy Electricals Ltd, sought an advance ruling under Section 97 of the CGST/SGST Act, 2017 regarding the valuation of goods supplied within India. The application was admitted as per Section 97(2)(c) of the Act, which allows for seeking advance ruling on the determination of the time and value of supply of goods or services. The applicant was requested to provide clarification on the provisions of the Foreign Exchange Regulation Act related to billing in foreign currency for domestic clearances. The applicant submitted their defense reply, stating that the foreign currency price in the contract covers the imported content of materials used in setting up the Power Station in India.

Issue 2: Determination of Exchange Rate for Billing in Foreign Currency
The ruling authority examined the legal provisions under Section 15 of the Act, which specifies the transaction value as the basis for valuation of goods and services under the GST Regime. It was noted that when the value of supply cannot be determined under Section 15, the relevant Rules of Chapter IV of CGST Rules, 2017 are to be applied. Specifically, Rule 34 of the Rules deals with the rate of exchange for determination of value of taxable goods. The authority observed that the rate of exchange for imported goods should be applicable in cases where billing is done in foreign currency to cover the imported content of materials used for the intended purpose.

Conclusion:
The ruling authority ordered that the value of goods supplied within India and billed in foreign currency should be determined under Rule 34 of the CGST Rules, 2017. The rate of exchange for imported goods, as notified by the Board under section 14 of the Customs Act, 1962, shall be applicable in such cases.

---