refund on accumulated ITC on export of medicine

[BalKrishan Rakheja]

A manufacutrer (Ltd Company) having one unit in Panchkula and another in Baddi (HP) (same name and same PAN) and engaged both are in manufacturing of medicine. Unit situated at Panchkula purchased the medicine from their Badi unit on payment of IGST and exported the same from the Panchkula premises in the same packing on same day after availing the ITC on these finished goods. The party export these goods (medicine) under LUT and now filed refund for accumulated ITC. on perusal of time of clearance invoices it also found that the difference of time of issuance of invoice from Badias well as from Panchkula is only 8-15 Minutes . Now my question is:

1. WHETHER PANCHKULA UNIT CAN TAKE ITC OF FINISHED GOODS I.E. MEDICINE AND EXPORT UNDER LUT ON THE SAME DAY AND CLAIM REFUND FOR ACCUMULATED ITC FOR THE SAME MONTH.

2. IN THE CASE OF MEDICINE THERE MUST BE NAME OF MANUFACURER AND BATACH NO ETC ON THE EACH MEDICINE ITSELF AND THERE MUST BE REQUIREMENT FOR LICENCE FROM DRUG DEPARTMENT FOR MANUFACTURING OF MEDICINE. iN THIS CASE WHETHER IT IS CORRECT THAT ANOTHER UNIT CAN EXPORT THE SAME.

3. IMPACT OF TIMING OF DESPATACH OF GOODS FROM BADDI UNIT AND PANCHKULA UNIT. HOWEVER IT IS NOT POSSIBLE TO REACH THE GOODS FROM BADDI TO PANCHKULA IN 8-15 MINUTS AS THERE IS DIFFERENCE OF TIMING OF 8-15 MINUTES TO REACH FROM BADDI TO PANCHKULA.

[KASTURI SETHI]

Point-wise reply is as under:-

(1) Yes.

(2) Yes.

(3) Sometimes timing set on the computer creates such problem. You are right to the extent that it is practically not feasible to reach the goods between 15-20 minutes. Journey takes more than one hour between Panchkula and Baddi. However, if your transaction is genuine, nothing to worry. Other supporting documents will come to your rescue i.e. Export docs, receipt of goods by foreign buyer, airway bill, foreign exchange, BRC, GR (consignment note) etc. In view of these docs, the error of timing would be treated as procedural/clerical/typographical lapse.

[BalKrishan Rakheja]

Thanks Sethi Ji, Sir I am from Department and my confusion is that the party has submitted 4 claim for four months ( separately for each month ) and timing issue problem is in every invoice. My views is that the goods has been sent directly to port for export as it is not possible to reach the goods in their Panchkula unit and as per condition of the availing of the ITC regarding receipt of goods in the premises of the suppliar is not fulfilled therefore he can not avail the ITC for that goods. There is no vehicle No. mentioned on the invoices.

[KASTURI SETHI]

Then transaction is not genuine. All facts go against the firm. No solution.

[BalKrishan Rakheja]

Thanks sethi ji

AI Summary

Input Tax Credit claims for exported goods upheld despite intra-unit timing discrepancies if supporting export documents substantiate the transaction. A purchaser unit may claim refund of accumulated Input Tax Credit on finished medicines bought from a sister unit and exported under LUT on the same day if the transaction is genuine and substantiated by export documentation; timing discrepancies in invoice timestamps are often treated as clerical lapses when corroborated by export papers, whereas implausible logistics, missing transport details, or lack of supporting records undermine the claim.