2021 (1) TMI 430 - AAR - GST

Customs duty exemption and IGST payment in imports under Advance Authorization

In Re: M/s. Balkrishna Industries,

The ruling in this case determined that availing exemption under Notification No.79/2017-Cus for additional customs duties and anti-dumping duty, while ... Eligibility to claim refund of IGST - Exemption under N/N. 79/2017-Cus dated 13.10.2017 - instead of additional duty of customs under sub-Section (1), (3) and (5) of Section 3, anti-dumping duty under section 9A, applicant opted to pay IGST on the import of goods under Advance Authorization - export of goods on payment of IGST - refund under Rule 96(10) of CGST Rules, 2017. HELD THAT:- The applicant is a manufacturer of specialized pneumatic tires falling under HS Code 4011 for industrial, mining and agricultural applications of having a prestigious 4-Star Export House Status granted by the Ministry of Commerce. The applicant exports almost 85% of the production to various countries of the world. The applicant imports various raw materials under Advance Authorization scheme in which basic customs duty is exempted in terms of Notification No. 18/2015-Cus dated 01.04.2015 and additional duty of customs under Sub-sections (1), (3) and (5) of Section 3, Integrated GST under Sub-section (7) of Section 3 and anti-dumping duty under Section 9A are exempted under Notification No.79/2017-Cus dated 13.10.2017 - the applicant is opting to pay IGST on their imports, but avails exemption on other applicable customs duties in terms of the Notification No.79/2017-Cus dated 13.10.2017. Thus, the applicant has received (imported) the goods on which the tax (IGST) has been paid and, therefore, according to them, they cannot be held to have availed the ‘benefits of the Notification No.79/2017-Cus dated 13.10.2017’, as contemplated in Rule 96(10) of CGST Rules, 2017. Further, the exemption on additional duties of Customs and anti-dumping duty are governed by the Customs Act, 1962 as well as Customs Tariff Act, 1975 and cannot be denied by the GST Act, 2017 and the Rules made thereunder. Consequently, according to them, they can export the goods on payment of IGST and claim refund thereof under Rule 96(10) of the CGST Rules, 2017. The availing exemption under Notification No.79/2017-Cus dated 13.10.2017 in respect of additional duty of Customs under sub-Section (1), (3) and (5) of Section 3, anti-dumping duty under section 9A, but opting to pay IGST on the import of goods under Advance Authorization, would tantamount to availing the benefits of exemption under Notification No.79/2017-Cus dated 13.10.2017, as contemplated under Rule 96(10) of CGST Rules, 2017. Consequently, the applicant is not eligible to claim refund thereof under Rule 96(10) of CGST Rules, 2017, as amended. Issues Involved:1. Whether availing exemption under Notification No.79/2017-Cus dated 13.10.2017 for additional duty of customs and anti-dumping duty, but opting to pay IGST on the import of goods under Advance Authorization, amounts to availing the benefits of the said notification as per Rule 96(10) of CGST Rules, 2017.2. Whether the applicant can export goods on payment of IGST and claim a refund thereof under Rule 96(10) of CGST Rules, 2017.Issue-Wise Detailed Analysis:Issue 1: Availing Exemption and Opting to Pay IGSTThe applicant, a manufacturer and exporter of specialized pneumatic tires, imports raw materials under the Advance Authorization scheme. They sought clarification on whether availing exemptions under Notification No.79/2017-Cus for additional customs duties and anti-dumping duty, while opting to pay IGST on imports, constitutes availing the benefits of the said notification under Rule 96(10) of CGST Rules, 2017.The applicant argued that since they pay IGST on imports, they should not be considered as availing the benefits of Notification No.79/2017-Cus. They also contended that the exemptions on additional duties of customs and anti-dumping duty are governed by the Customs Act and cannot be denied by the GST Act. The applicant further highlighted the inconvenience of maintaining separate records and obtaining CA certificates for each import consignment, thus opting to pay IGST for simplicity.The Authority noted that Notification No.79/2017-Cus was issued to exempt IGST and other duties on imports under Advance Authorization. Rule 96(10) of CGST Rules was amended to restrict refund claims of IGST paid on exports if the exporter availed benefits under specified notifications, including Notification No.79/2017-Cus. The Authority concluded that availing exemption for additional customs duties and anti-dumping duty, while paying IGST, still constitutes availing the benefits of Notification No.79/2017-Cus under Rule 96(10).Issue 2: Eligibility to Claim IGST Refund on ExportsGiven the affirmative answer to the first issue, the second issue examined whether the applicant could export goods on payment of IGST and claim a refund under Rule 96(10) of CGST Rules, 2017.The Authority referred to multiple amendments and clarifications regarding Rule 96(10), which restricts exporters from claiming IGST refunds if they availed benefits under specified notifications. The applicant, by availing exemptions under Notification No.79/2017-Cus, falls under this restriction.Therefore, the Authority ruled that the applicant is not eligible to claim a refund of IGST paid on exports under Rule 96(10) of CGST Rules, 2017.Ruling:1. Availing exemption under Notification No.79/2017-Cus for additional customs duties and anti-dumping duty, while opting to pay IGST on imports under Advance Authorization, constitutes availing the benefits of the said notification as per Rule 96(10) of CGST Rules, 2017.2. The applicant is not allowed to export goods on payment of IGST and claim a refund thereof under Rule 96(10) of CGST Rules, 2017.