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

Pre-import condition struck down prompts IGST liability disputes on advance authorisation imports and reassessment for ITC recovery.
The document outlines disputes over IGST treatment of imports under the Advance Authorisation scheme following GST: a contested pre import condition was struck down, but appeals render the issue sub judice while DGFT seeks IGST at export discharge. Contributors recommend re assessment of the Bill of Entry to record IGST determination and support claiming Input Tax Credit, noting TR 6 challan may not be a prescribed basis for ITC and that advance rulings are slow. Reassessment is presented as a procedural safeguard against limitation and coercive action.