Exported Goods Return with payment of custom duty

[RAM SHARMA]

Dear Experts,We are manufacturer of exported goods. We have sale exported goods under rebate claim of duty and submit final proof of export. After one year the Buyer rejected our goods due to quality problem. Now we have received this consignment for payment of all custom duty & fulfill all import obligation in custom. I want to know your advice that we would reverse all export benefit and treat as export return.However we have paid custom duty. Can we counter our stand that we have paid all custom duty & cvd. Hence there is no requirement of reverese export benefit.Thanks

[YAGAY andSUN]

Dear Ram,

We had submitted our reply on this query.  Further, in our opinion you may while arguing this matter at the time of importing these goods you had paid the customs duty  But you would also paying back them in foreign currency against import or not getting the foreign remittance against your export.

Hence, this could be an issue for the Customs Department.

Regards

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Dear Ram Sharma,

      As per Section 20 of the Customs Act, 1962 if goods manufactured or produced in India which are exported from India, are re-imported restrictions and conditions as applicable to other imported goods are applicable to re-imported good also.

       As per para  2.3 of Chapter 19 of Customs Manual 2014

     (i) on re-import of indigenously manufactured goods under duty Drawback/rebate claims, export under bond or under other claim of export incentives, essentially the duties equivalent to the export incentives etc. availed have to be paid, on re- importation. Thus, if the goods were exported on payment of Central Excise duty, without claiming any rebate, and without claiming any export incentives such as Drawback or benefits of the duty exemption schemes, EPCG schemes, and where the indigenously manufactured goods are being returned then no Customs duties are leviable. Further, were the indigenously manufactured goods are exported for repair and returned without claiming any benefits, duty is to be paid on a value comprising fair cost of repairs including cost of materials used in repairs, insurance and freight charges both ways. Basically the benefit is available if the Assistant/Deputy Commissioner of Customs is satisfied that the goods are the same which were exported earlier and certain other conditions as laid down in the said notification are fulfilled.[Refer Notification No.94/96- Cus, dated 16-12-1996]

(ii) Goods manufactured in India or parts thereof that are re-imported for repairs orreconditioning or reprocessing/refining/remaking etc. are exempt from duty subjecttothe condition that the re-importation takes place within a specified period; the goods are re-exported within six months of re-importation; the Assistant/Deputy Commissioner of Customs is satisfied as regards the identity of the goods; and certain other conditions ensuring re-export including execution of bonds are fulfilled.[Refer Notification No.158/95-Cus, dated 14-11-1995]
                 (iii) Re-imported private personal property, which was imported earlier but exported out for any alteration, renovation, repair free of charge etc. is exempt from duty subject to the condition that the goods are repaired on free of charge basis in accordance with the terms of warranty given by the manufacturers and in accordance with the established trade practice and Drawback or other incentives have not been availed. However, certain Custom duties equivalent to the cost of alterations/renovations/additions/repairs, if any, are payable.[Refer Notification No.174/66-Cus. dated 24-9-1966]​         

AI Summary

Manufacturer Queries Reversal of Export Benefits on Re-Imported Goods Due to Quality Issues and Customs Duty Payment. A manufacturer faced a situation where exported goods were returned due to quality issues, and they had to pay customs duty upon re-import. The manufacturer inquired whether they should reverse export benefits since customs duties were paid. One expert suggested that paying customs duty might not exempt them from reversing export benefits if foreign currency was involved. Another expert explained that under the Customs Act, re-imported goods are subject to conditions similar to other imports. If no export incentives were claimed initially, customs duties might not apply. Conditions for duty exemptions and re-importation requirements were outlined, referencing specific notifications.