Demurrage charges-customs duty-Bill of Entry and IGST

[Guest]

Per Customs valuation rules , Demurrage charges are also part of Value of imported goods and consequently duty on the same would be leviable. Prior to GST, we used to pay the differential duty through TR-6 Challan and was able to take credit of CVD/SAD, as the case may be. , Under GST, should we consider TR-6 Challan as the duty paying documents and If Bill of Entry is reassessed, IGST amount will get reflected in the BOE and upon payment of the said duties, we would be able to take credit of the IGST portion Kindly enlighten the procedure

Regards,

Jayanta Bandyopadhyay

Howrah

7.8.2020

[KASTURI SETHI]

In this scenario, credit of IGST is allowed. CVD and SAD both have been replaced by IGST except a few products which are subject to Central Excise duty.

IGST is not neither Customs duty nor levied and collected under Customs Tariff Act/Customs Act. Bill of Entry is primary document for availment of credit under Rule 36(d) of CGST Rules, 2017 and TR.6 Challan/ E.Challan (documentary proof payment IGST) is supporting/secondary document of Bill of Entry. The particulars of this proof of payment are mentioned in Bill of Entry itself.Both are integrally related. It is pertinent to mention here that CGST Rules have been made applicable to IGST Act vide Section 20 of IGST Act.

SECTION 20. Application of provisions of Central Goods and Services Tax Act. - Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act relating to,

(iv) Input Tax Credit

-shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act :

Hence ITC on TR.6 Challan or other documentary proof of payment of IGST is admissible.

[Rajagopalan Ranganathan]

Sir,

I wish to point out that under Section 3 (7) of the Customs Tariff Act 1975, any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty percent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) or sub-section (8A), as the case may be. Therefore in my view IGST levied under Customs Tariff Act is also a Customs duty.

[KASTURI SETHI]

ONLY machinery of Customs Law is used to collect IGST. IGST CANNOT be Customs duty at all. IGST Act is a separate Act.

[YAGAY andSUN]

If IGST is Customs Duty then ITC would not be available. However, IGST has a separate Act, in GST Laws, therefore cannot be treated as Customs Duty, ITC will be available.

[DR.MARIAPPAN GOVINDARAJAN]

In my view also ITC is available.

[YAGAY andSUN]

Just to add one more point that Ship Demurrage Charges is not includible in Assessable Value of Imported Goods only demurrage charges related to goods at port are includible.

[KASTURI SETHI]

Dear Sir, Thanks for throwing more light on the issue. Very useful information.

[Ganeshan Kalyani]

Bill of entry is a document based on which credit can be taken. If the bill of entry is reassessed as stated in your query and the revised IGST would appear in the same, then the IGST as appearing in the revised bill of entry can be taken as credit.

[Ganeshan Kalyani]

Sir, IGST has to be paid as a part of customs duty, but it is not a customs duty as such. IGST is governed by IGST Act and not by customs Act. So as to determine the rate of IGST one has to see rate notification under IGST Act.

[Raghunandhaanan rvi]

Sir,

I do agree with the view of Mr. YAGAY andSUN Sir.

If demurrage charges are post importation cost, such cost not includible in the assessable value.

Further, IGST on imported goods are being levied under Section 3(7) of Customs Tariff Act 1975 as "Additional Duty of Customs". Thus, ITC available

AI Summary

Input Tax Credit on IGST available when shown in Bill of Entry and supported by challan proof of payment. Input Tax Credit of IGST charged on import is admissible where the Bill of Entry records the IGST and payment is supported by documentary proof (for example, TR 6 challan); the Bill of Entry is the primary document for credit while the challan is supporting. IGST is governed by the IGST Act with CGST rules applying mutatis mutandis; demurrage related to goods at port may be includible in assessable value whereas post importation demurrage is not. A reassessed Bill of Entry showing revised IGST permits taking credit subject to proof of payment.