Refund of accumulated ITC in case of export under LUT when 95% inputs (imported) received under advance authorisation

[BalKrishan Rakheja]

I imported the inputs under advance authorization before GST implementation. we use 95% imported inputs for manufacturing finished goods and we procure 5% from domestic market on purchase of central excise duty and availed CENVAT credit of this amount. We also purchase goods for manufacturing of similar goods for domestic market and availed cenvat credit of central excise duty paid on it..We exported the finished goods under LUT without payment of GST in the month of July 2017 for obligation under advance authorization and submit the refund claim under GST for unutilised accumulated ITC . The Department is denying on the ground that we had imported the inputs under advance authorizaation without payment of customs and central excise duty and when duty relief has been availed for inputs i.e. equal to refund and therefore we can not claim refund for accumulated ITC in the case of export under LUT. whether the Department is right and if yes then please intimate under which rules departmnet is reight

[YAGAY andSUN]

Yes, Department has the right contention in this matter.

AI Summary

Refund of accumulated ITC denied where inputs received duty-free under advance authorization for exports under LUT. Refund of accumulated ITC on exports under LUT is not available where inputs were received duty free under an advance authorisation; duty relief under the advance authorisation neutralises the tax relief a refund would provide, permitting departmental denial of the refund claim.