IGST interest is it applicable during Re Import of Export goods

[Raja Palaniappan]

Dear Sirs

We have done an import for customer where in exports of garments 5 shipments valued approx 5cr, export done under LUT has been found quality defect at destination and due to Covid 19 and not possible travel for any repair, it is returned back. It is not sure of re export so filed as re import only. (not repair and return)

All benefits of export Drawback and Rosctl has been paid along with interest.

IGST 5% customer is ready to pay and will apply for ITC. However customs is asking for interest 18% on IGST applicable from date of export until return of goods. Importer is already under loss due to return, and the sale is incomplete. In that case is it mandatory to pay

IGST during import ?

Interest on IGST applicable ?

Kindly give your comments and reply sir.

AI Summary

IGST on re-importation may be payable with interest unless electronic IGST credit covers the reversal, subject to exemptions.
Re-importation of goods exported under LUT typically requires reversal and payment of the IGST not paid at export and interest from the date of export until reversal. Customs exemption provisions relieve certain duties but expressly make the unpaid IGST payable on re-import unless a specific exemption applies. If the electronic credit ledger contained sufficient IGST credit from the date of availing, interest may not be payable; where ITC was utilized and later exhausted, interest liability can arise from the date of utilization. Exemptions exist for exports under Advance Authorization or EPCG and for exhibition goods, and paid IGST may be claimed as input tax credit if used for business.