REIMPORT OF EXPORTED GOODS

[Rakesh Gupta]

Goods exported from India to Canada under RODTEP & IGST.

Part of the goods returned back within 20 months as goods were defective.

Filed for import clearance under notification 045/2017, serial no. 1A.

RODTEP & IGST claimed at time of export paid back to customs, as detailed under ntfn 045/17.

Customs is insisting upon payment of interest on RODTEP & IGST refunded, although the notification does not ask for interest, only for refund of drawback, RODTEP, IGST claimed at the time of export.

Please advise.

[Raghunandhaanan rvi]

Sir,

Interest is payable at a rate of 15% per annum on the amount levied on duty not paid or erroneously refunded under section 28AA of the Customs Act 1962, even if "interest" is not mentioned in the notification. Thanks

[Shilpi Jain]

Export under IGST meaning the export was made with payment of IGST?

If so, ideally there should be no interest on IGST since the transaction was a genuine export but was returned only when found defective and under GST realisation of proceeds is not a criteria to consider a transaction to be export of goods.

[Raghunandhaanan rvi]

It appears that you exported goods against payment of IGST and then claimed a refund through Customs. If you received the IGST refund from customs and then re-imported the goods as per the customs notification, you must return the refunded IGST and other benefits obtained.

The question is whether the interest demanded on the repayment of IGST is legally valid. According to Section 50 of the CGST Act of 2017, interest is payable if a taxable person makes an undue claim at a rate notified by the government. When a taxable person has availed of IGST and kept the amount of public money, interest becomes mandatory as it represents the civil liability of the assessee. Furthermore, interest is imposed to bridge the loss of revenue and is payable even if the assessee is not at fault. However, a legal question has arisen since no such requirement was specified in the notification.

[KASTURI SETHI]

  In this scenario, interest is payable.

Para no.5(3) of Notification Nos. 24/23-CUS (NT) and 25/23-CUS (NT) both dated 1.4.23  cannot be read in isolation of above paras. Para No.5 should be read in the whole sequence in both notifications. 

[Raghunandhaanan rvi]

Thank you Kasthuri Ji and Shilpi Mam

[KASTURI SETHI]

Rules and notifications cannot override Act and cannot be derogatory to the object of the Act------held by Hon'ble Supreme Court  in the case of Union of India Vs. Jalyan Udyog  - 1993 (9) TMI 108 - SUPREME COURT

[Sadanand Bulbule]

Dear all 

A pertinent explanation by experts. Clears all doubts.

[Rakesh Gupta]

Dear Shilpi Jain, raghunandhaanan rvi, KASTURI SETHI

First, I would like to thank you for your time & effort in addressing the query.
In this particular scenario, the IGST was neither erronously paid nor was the IGST retained unduly.

1. The IGST was received after the export had been completed. The IGST was promptly refunded as soon as the goods were reimported. So there was no undue delay in refunding the IGST. Furthermore, officers at some custom ports do not ask for interest on IGST, only for interest on other export benefits.

2. IGST is not an incentive. When export is made, only the goods are exported, not the Indian taxes thereon. 

In view of my submission 1 & 2 above, it is my opinion that claim of interest on IGST in case of reimport of exported goods is invalid. Will appreciate your comments.

 

[KASTURI SETHI]

Dear Sir,

How the export had been completed ?

Did you get export proceeds in full ?

Have you earned foreign exchange for Govt. of India in full in respect of this export consignment ?

How you justify the gap between the date of sanction of refund claim of IGST and the date of return (re-import) of exported goods (some quantity being defective) ?

I am of the view that the department is on right track

AI Summary

Debate on Interest Payable for Reimported Goods under RODTEP and IGST: Sections of Customs and CGST Act Discussed A discussion on a forum revolves around the reimport of goods exported from India to Canada under RODTEP and IGST, which were returned due to defects. The initial query seeks advice on whether interest is payable on the refunded RODTEP and IGST, as the notification does not specify this requirement. Respondents debate the applicability of interest under various sections of the Customs Act and CGST Act, with differing opinions on whether interest is mandatory. Some argue that interest is not justified if IGST was promptly refunded upon reimport, while others maintain that interest is due to compensate for revenue loss.