GST refund on machine imported and being re-exported

[Bharat Garg]

We intend to get an imported machinery replaced from an exporter within the warranty period, due to certain defects identified in the machine. The new machine is proposed to be imported on a DPP basis and hence, all customs and taxes will be borne by the exporter only.

In relation to the old machine which has to go back, we intend to continue to claim GST paid last year. Even if there is no financial consideration involved on the current outward transaction, understand that the same will be subject to GST under Schedule I. Accordingly, we intend to issue an export invoice (with IGST) for such transaction, computing IGST based on remaining life of the asset and include the same in our GST returns.

Please let us know if you agree with the above proposed. Also, will there be a challenge in claiming GST refund if there is no consideration involved.

AI Summary

Company Plans Machinery Replacement; Eligible for IGST Refund on Old Machine, No Credit for New Free Machine A company plans to replace defective imported machinery under warranty, with the exporter covering all customs and taxes for the new equipment. The company intends to claim GST on the old machine being re-exported, issuing an export invoice with IGST based on the asset's remaining life. One respondent confirms the refund eligibility for IGST on the depreciated value of the old machine but notes that no credit can be claimed for the new machine's IGST since it is supplied free of cost. Another respondent advises checking the export policy for specific HSN codes under DGFT regulations.