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

[KASTURI SETHI]

Sh.Abhijeet Mane Ji,

In this context, peruse Para No.6.01 of FTP, 2023, particularly, 6.01 (d) (i), (ii) and (iii).  All the conditions are mentioned therein. 

[KASTURI SETHI]

In continuation of my above, my reply should be read with the definition and scope of 'deemed exports' provided under Para Nos. 7.02, 7.01 (i) and (ii) of FTP, 2023.

[Shilpi Jain]

What is covered under said notification is supply of GOODS to EOU.

Goods includes  inputs and capital goods.

So refund can be applied for capital goods as well.

AI Summary

Deemed export refund: capital goods supplied to EOUs can be claimed by recipient subject to FTP and CGST conditions. Refund of tax paid on deemed export supplies to EOUs is available under the third proviso to rule 89(1) of the CGST Rules, permitting either supplier or recipient to apply. FTP 2023 provisions (Paras. 6.01 and 7.01-7.02) set conditions for deemed exports; the notification's reference to 'goods' includes capital goods, so recipients purchasing capital goods domestically under deemed export provisions may apply for refund subject to those conditions.