Pre-import condition under Advance Authorisation

[VIRAF DEBOO]

Dear Experts,

Prior to introduction of GST, exemption was available for all custom duties including CVD & SAD on imports under Advance Authorisation. The notification also permitted duty free imports even after fulfillment of the export obligation. No one to one correlation of import vis-à-vis corresponding export orders was required as the scheme itself provides for the export in anticipation of benefits under this scheme.

On introduction of GST regime the earlier exemption of CVD & SAD was not extended to IGST, forcing the exporters to pay IGST at the time of imports. Thereafter Notfn No. 79/2017-cus dtd.13.10.17 was issued restoring earlier position i.e. exempting IGST, however with condition of ‘pre-import’, subsequently this condition of ‘pre-import’ was removed vide Notfn 01/2019-Cus dtd. 10.01.2019. However many exporters being unaware of ‘pre-import’ condition continued imports under Advance Authorisation for the intervening period (13.10.2017 to 19.01.2019) and the customs allowed such imports. Now at the time of getting export obligation discharge certificate, office of Jt. DGFT is asking the exporter to pay IGST amount on the imports made.

Honarable HC of Gujarat High Court case of Maxim Tubes Co. Pvt. Ltd. Vs UOI 2019 (2), TMI 1445 has struck down the ‘pre-import’ condition (against Madras HC in case of Vedanta Ltd Vs. UOI 2019 (1) TMI 85)

Our query is :

1. Is Jt. DGFT is correct in demanding payment of IGST in light of Gujarat HC decision. We have imported under Advance Authorisation with IGST payment & made exports under LUT without payment of IGST.

2. If we opt to pay IGST, whether we will be eligible to claim ITC now :

How we should it – through TR-6 challan, then we would not be able to claim ITC if eligible.

Through re-assessed of Bill of Entry.

Your expert advice is solicited.

AI Summary

Supreme Court to Rule on 'Pre-Import' Condition in Advance Authorisation Scheme; ITC Claims Under Debate An individual raised a query about the implications of the 'pre-import' condition under the Advance Authorisation scheme after the introduction of the GST regime. Initially, the exemption from CVD and SAD was not extended to IGST, but a notification later restored the exemption with a 'pre-import' condition, which was eventually removed. Some exporters, unaware of this condition, continued importing without paying IGST, and now the Joint DGFT demands IGST payment. The Gujarat High Court struck down the 'pre-import' condition, but the matter is pending in the Supreme Court. Experts suggest re-assessing the Bill of Entry to claim ITC, though the issue remains debatable.