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 Denied for Unutilized ITC on Exports with LUT Due to Duty-Free Imported Inputs Pre-GST Implementation. A query was raised regarding the refund of accumulated Input Tax Credit (ITC) for exports under a Letter of Undertaking (LUT), where 95% of inputs were imported under advance authorization before GST implementation. The individual used imported inputs for manufacturing and availed CENVAT credit on domestic purchases. The Department denied the refund claim for unutilized ITC, arguing that since the inputs were imported without paying customs and central excise duty, the duty relief equates to the refund amount. A response confirmed the Department's stance as correct.