Non receipt of BRC

[Rajesh Kumar]

Sir/ Madam,

Please inform what are the adverse effect if Bank Realisation Certificate of some export consignments are not received after lapse of more than one year/ two years. Party has taken Refund against these exports. Now department has raised objection to produce previous BRC.

Can they stop refund and ask BRC ?
Is BRC is mandatory in case of exports ?

Can department ask for the GST on that Export consignment of which BRC not received?

What are exact provisions in GST in this regard ?

Thanks

[KASTURI SETHI]

Dear querist,

Pl. read word for word and especially bold letters of the relevant extract of the undermentioned circular.. Hope your doubt will be cleared.

Circular No. 125/44/2019-GST, dated 18-11-2019

[Rajesh Kumar]

Sir , it's clear that in case of refund on account of export of goods, availability of BRC is not impressive condition but it doesn't mean that BRC is not required anytime. They are asking BRC of those exports against them refund has already been taken .

Now Can they demand GST on those exports or demand refund amount along with interest and penalty ?

[KASTURI SETHI]

W.r.t. your query at serial no.2 above, answer is NO. BRC is not mandatory. You can search easily on DGFT website or Customs website.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir.

[Raghunandhaanan rvi]

Sir,

The amount received as a refund is liable to be paid back with applicable interestunder Section 50 of CGST Act 2017within 30 daysafter the expiry of the time limit prescribed under FEMA if payment for supply is not received in foreign exchange within the specified time limit prescribed under FEMA. Proviso to section 16(3) of IGST Act 2017 substituted vide Section 123(b) of Finance Act 2021. Kindly take note of this change also.

[KASTURI SETHI]

There is no doubt. Export proceeds must be received. Govt. of India has allowed so many benefits to the exporters for the sake of foreign exchange. If export proceeds are not received, the exporter will forfeit all export-benefits allowed under various Acts..

[KASTURI SETHI]

If export proceeds have already been realised (whether in foreign currency or in Indian Currency through Vostro Account wherever permitted by RBI ), you can take the shelter of the following case law but it pertains to pre-GST era. Only case law can help you.

2017 (6) TMI 163 - CESTAT BANGALORE TVS MOTOR COMPANY LTD. Versus COMMISSIONER OF C. EX. & S.T., MYSORE

[KASTURI SETHI]

This case law is relevant for you inasmuch as Customs Act has not been subsumed into GST Acts. IGST Act does not talk of BRC as mandatory. document.

[Raghunandhaanan rvi]

Thank you very much Kasturi Sir for your valuable information.

[Raghunandhaanan rvi]

Thank you very much Kasturi Sir for your valuable information.

[Raghunandhaanan rvi]

Sir

Further to my replies above on the subject matter, it is relevant to refer to Rule 96B of CGST Rules which deals with the recovery of refund of unutilized input tax credit or integrated tax paid on export goods where export proceeds are not realized.

It is said that the refund of IGST paid on export is linked with the realization of export proceeds as per FEMA guidelines. Failure to the realization of export proceeds within the time frame as laid down in FEMA, the exporter is required to return to the department the amount refunded with interest. The documentary proof of realization of export proceeds is the Bank Realization Certificate or Foreign inward remittance certificate issued from the Bank.

[KASTURI SETHI]

Dear Sir,

In other words, as per FEMA, BRC is not mandatory, if the party produces FIRC. . Do you agree ?

Otherwise there is a difference between BRC and FIRC.

[Raghunandhaanan rvi]

Dear Sir,

I agree with you Kasturi Sir. BRC is not mandatory since EDPMS is implemented and e-BRC is introduced. Department can verify the particulars of receipt of export proceeds against a shipping bill through the e- BRC portal. Therefore, no physical copy of BRC is required anymore.

[KASTURI SETHI]

Dear Sir,

Thanks a lot for your clarification and confirmation.

[Raghunandhaanan rvi]

Thank you Kasturi Sir.

[KASTURI SETHI]

Dear Sir,

DR.MARIAPPAN GOVINDARAJAN, Sir has written an article on the issue of 'Bank Realization Certificate' which was published in EXCUS CD This article is worth reading.

[Raghunandhaanan rvi]

Yes Sir I will surely read his article. Thank you do much

[Ganeshan Kalyani]

Discussion enriched my knowledge. Thanks.

AI Summary

Export proceeds realization: lack of BRC can trigger refund recovery and interest unless acceptable proof like FIRC or e BRC is produced. BRC is not strictly mandatory under IGST; refund of IGST on exports is linked to realisation of export proceeds under FEMA timelines, and authorities may demand documentary proof (BRC or FIRC) or recover refunded amounts with interest if proceeds are not realised. Electronic verification via EDPMS/e BRC portals and FIRCs are acceptable substitutes for physical BRCs.