Capital Goods refund on inward supply recevied under deemed export

[Abhijeet Mane]

Certain supplies of goods have been notified as deemed exports vide Notification No. 48/2017-Central Tax dated 18.10.2017 under section 147 of the CGST Act. Further, the third proviso to rule 89(1) of the CGST Rules allows either the recipient or the supplier to apply for refund of tax paid on such deemed export supplies.

One of the situations covered under the above notification is Supply of goods by a registered person to Export Oriented Unit.

Our query is if receipient i.e. EOU unit purchase capital goods domestically under deemed export provisions then whether the recipient can claim refund of this ITC paid to vendor. or the restriction on capital goods refund is applicable

AI Summary

EOUs Eligible for ITC Refund on Capital Goods Under Deemed Export Provisions per Rule 89(1) and Notification 48/2017. A discussion on a forum addressed the issue of whether an Export Oriented Unit (EOU) can claim a refund of Input Tax Credit (ITC) on capital goods purchased domestically under deemed export provisions. The query referenced Notification No. 48/2017-Central Tax and rule 89(1) of the CGST Rules, which allow refunds for deemed export supplies. Responses indicated that, according to the Foreign Trade Policy (FTP) 2023 and the notification, the supply of goods, including capital goods, to EOUs is covered, allowing for a refund application on capital goods as well.