DTA sales by Advance Authorization

[AK ASSOCIATES]

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?

[Shilpi Jain]

Advance authorisation comes with actual user condition. So the imported material even after completion of the export obligation along with requirement of prescribed value addition, cannot be cleared as such to dta. It has to be used in manufacture.

Once used for manufacture, the FG can be cleared to DTA with payment of tax. Tax should not be liable on the import. Have a look at para 4.16 of FTP.

[KASTURI SETHI]

I agree with the views of Madam Shilpi Jain.

AI Summary

DTA sale of goods manufactured under Advance Authorization requires domestic GST payment; import duties are addressed separately. Advance Authorization imposes an actual user condition requiring imported inputs to be used in manufacture. Finished goods made from such inputs may be cleared to DTA on payment of applicable domestic tax-CGST and SGST for intra state supplies-rather than treating the import as subject to IGST; Basic Customs Duty must be reversed where applicable.