Export Of Used Capital Goods

[Asked by Guest]

Dear All,

Greetings !!

We have imported some machinery in Oct 2019 UK & credit taken on based on the bill of Entry filed in same month GSTR-3B. Now due to some issues we are sending back machinery to UK Korea.

Now we want to understand whether 18(6) of CGST Act & 40 (2) CGST Rules will be applicable or Not ??? or With the LUT we can export the machinery without payment of GST ???

Please clarify me which one is correct.

[KASTURI SETHI]

Section 18 (6) of CGST Act read with Rule 40(2) of CGST Rules is applicable. Yes, you can export with LUT.

Dear Kasturi Sir,

Thanks for information further to understand this when i have option to export with LUT thethere is no taxes to pay under GST.

If there is no taxes to pay how Sec 18(6) of CGST act read with Rule 40(2) will apply ??

Please clarify.

[KASTURI SETHI]

Dear Querist,

You have misunderstood. Supply is involved. Tax is involved. You are required to pay tax at depreciated value inasmuch as you have used the said capital goods for about five months. Read carefully again.

AI Summary

Export of Used Capital Goods: proportionate GST payable despite LUT when input tax credit was availed.
Export of used capital goods imported with input tax credit triggers the limitation and adjustment rules for capital goods: export under a Letter of Undertaking does not eliminate the obligation to reverse input tax credit or discharge tax on the depreciated value of goods used domestically prior to supply; the statutory adjustment provisions therefore apply.