TaxTMI 
TaxTMI 
Can refund of accumulated cess be claimed/allowed, in case of exports on payment of IGST, where the product is not liable for cess. For ex., Input us liable for cess. Output is not liable for cess. Cess got accumulated. Exports are made on payment of IGST. Refund of IGST is claimed from customs. Can refund claim be filed for refund of accumulated cess, in proportion to exports?
Refund of cess in case of exports on payment of IGST
25 Jan 2025 
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Compensation cess refund denied for exports on payment of IGST under departmental circular, prompting calls for legal challenge.
The departmental view per Circular No.45/19/2018 (para 5.3) denies refund of accumulated compensation cess where inputs were cess liable but exported outputs are not and exports are made on payment of IGST, allowing refund only for exports under bond/LUT; commentators dispute that position, citing Sections 54 CGST and 16 IGST as not prohibiting such refunds, arguing the circular conflicts with the statutory principle against exporting tax burdens and can be subject to legal challenge, while recommending export under LUT as a practical alternative. (AI Summary)
The departmental view per Circular No.45/19/2018 (para 5.3) denies refund of accumulated compensation cess where inputs were cess liable but exported outputs are not and exports are made on payment of IGST, allowing refund only for exports under bond/LUT; commentators dispute that position, citing Sections 54 CGST and 16 IGST as not prohibiting such refunds, arguing the circular conflicts with the statutory principle against exporting tax burdens and can be subject to legal challenge, while recommending export under LUT as a practical alternative. (AI Summary)