DTA sales by Advance Authorization

[Vel Murugan]

Dear Sir/Madam,

We are an Advance Authorization Holders. We had imported our raw materials under the said Scheme without payment of Customs Duty & IGST under Notification No.79/2017. On manufacturing, we had fulfilled our export obligation. There are some excess quantity of finished goods available, after discharging export obligation. So, we have decided to sale in DTA. For DTA sale, we had paid CGST + SGST and also we had reversed Basic Customs Duty. But now the State Jurisdictional Officer says we have to reverse both BCD + IGST on DTA supply. Since, we had made sale within the State, we had already paid CGST + SGST. Please throw some light on the following.

1. Whether we need to pay IGST on sale of DTA supply (manufactured out of raw matrials imported under AA Scheme)?

2. If yes, we had already paid CGST + SGST as it is a intra-state supply. If IGST is also paid, will not it be a double taxation?

AI Summary

Advance Authorization Holder Clarifies Tax Obligations for Selling Excess Goods in DTA, Citing Foreign Trade Policy Para 4.16. An Advance Authorization Holder inquired about the tax obligations for selling excess finished goods in the Domestic Tariff Area (DTA) after fulfilling export obligations. They paid CGST and SGST and reversed Basic Customs Duty but were advised by a State Jurisdictional Officer to reverse both BCD and IGST. Shilpi Jain clarified that imported materials under Advance Authorization must be used in manufacturing, and finished goods can be sold in DTA with tax payment, not liable on import. Kasturi Sethi concurred with Jain's explanation, referencing para 4.16 of the Foreign Trade Policy.