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

[Satbir singh wahi]

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

Drawback claim and ITC reversal: proportionate ITC apportionment for export sales under dispute, seeking compliance clarity.
Exporter sold garments under LUT July-September 2017, claimed full drawback and reversed remaining ITC after domestic sale (used part for domestic sale, reversed balance). Central GST audit objects, urging proportionate ITC apportionment under the CGST Rules. Advisors state drawback pertains to taxes on raw materials and inputs, apportionment provision cited by audit relates to capital goods, and that if reversals already proportionately covered inputs and input services, the objection may not apply; guidance also notes that customs drawback claim does not automatically deny GST credit and refers to GST circulars.