lut export sale of garments july to sept 17 and dbk itc reversal

[satbir singhwahi]

Sir

Garment exporter made Lut export sale from July to sept.2017. It claimed full drawback and reversed the itc balance after domestic sale. Suppose total itc was 100 then it used 20 for domestic sale and reversed 80 as it claimed full drawback. Custom notification 73/2017 (nt) dt 26.07.2017 was followed. Now central gst audit has raised objection and says to apply rule 43 and allow proportionate claim . Pls guide.

AI Summary

Garment Exporter Challenges GST Audit on ITC Reversal and Drawback Claims; Seeks Clarity on Rule 42 Application A garment exporter conducted LUT export sales from July to September 2017, claimed full drawback, and reversed the ITC balance after domestic sales. The central GST audit objected, suggesting the application of Rule 43 for proportionate claims. One respondent clarified that drawback pertains to taxes on raw materials, while Rule 43 concerns ITC on capital goods, suggesting no need to reverse credit on capital goods. Another mentioned that GST credit cannot be denied if customs duty drawback is claimed. The exporter seeks clarification on whether Rule 42 applies, as all ITC was reversed post-domestic sales.