IGST Exemption on import of Gold Compound - UAE CEPA ASEAN agreement

[Bhavesh Suthar]

We are a bullion trader. We are planning to import Gold compound (HSN 28433000) from Dubai/ Indonesia. Under the UAECEPA/ ASEAN agreements, .

1) What are the compliances/ statutory requirements to carry out these imports.

2) After importing, we plan to extract the gold from the compound and sell it in the domestic market. Are there any consequences of doing so.

3) What are the conditions to be fulfilled to claim IGST Refund (Inverted duty structure) and roadblocks if any.

[Shilpi Jain]

Trade Notice No. 30/2024-2025-DGFT, Dated: 12.02.2025 is relevant as per which last date for submitting applications for TRQ under the India-UAE CEPA for FY 2025-26 for import of gold bullion is 28.02.2025.

This import can be for manufacturing/trading.

[Fathima Thabsheera]

Facts of the Case:

• The applicant is engaged in the business of bullion trading and proposes to import Gold Compound (classified under HSN 2843 3000) from UAE and/or Indonesia.
• The import is intended to be made under the preferential trade agreements – UAE-India CEPA and the ASEAN-India FTA, as applicable.
•  Post import, the applicant proposes to extract gold from the compound and effect domestic sale of the refined gold.

1. Import Compliance and Preferential Duty under CEPA / AIFTA

The proposed import of gold compound may attract concessional Basic Customs Duty under the TRQ mechanism of the UAE-India CEPA or similar benefits under AIFTA,

It is important to note that the last date for submitting applications for TRQ under the India-UAE CEPA for FY 2025-26 for import of gold bullion is 28.02.2025,

subject to fulfillment of the following conditions:

• Obtain TRQ Allocation (if applicable):

Apply for a Tariff Rate Quota (TRQ) license through the DGFT portal before initiating the import. Ensure your entity meets eligibility criteria.

• Secure Certificate of Origin (COO):

Obtain a valid Certificate of Origin in Form A from the designated authority in the UAE, in compliance with the CEPA Rules of Origin.

• Conduct Due Diligence under CAROTAR, 2020:

Maintain necessary documents such as production process, invoice, exporter details, and proof of originating status. Declare origin claim at the time of filing the Bill of Entry.

• File IGCR-1 (where end-use based exemption is claimed):

Submit prior intimation to the jurisdictional Customs officer via the ICEGATE portal as per Rule 5 of the IGCR Rules, 2022.

• Submit End-Use Undertaking:

Provide a written undertaking to use the imported gold compound exclusively for the specified purpose (e.g., jewelry manufacturing or export).

• Route Through Authorized Channels (if mandated):

If notified, import should be made through Nominated Agencies or Qualified Jewellers registered with the India International Bullion Exchange (IIBX).

• Declare CEPA Claim in Bill of Entry:

At the time of clearance, declare the CEPA duty preference and submit supporting documents including COO, TRQ license, IGCR acknowledgment, and invoice.

• Ensure Proper Payment and FEMA Compliance:

Route payments through an Authorized Dealer (AD) Bank. Make sure your AD Code is registered at the port of import.

• Maintain Post-Import Records:

Keep detailed records of usage, transfers, and reconciliation for at least 5 years. File periodic returns (e.g., IGCR-3) if required.

• In case the compound contains precious metals in significant proportions, an Assay Certificate may be sought by customs or required during downstream transactions to validate purity levels.
• If applicable, the imported material must meet BIS standards, especially if subsequently sold in refined form.

2. Extraction and Domestic Sale of Refined Gold

• Importers availing concessional duty under CEPA must declare the specific end use of the imported gold compounds. This declaration is made through Form IGCR-1, submitted via the ICEGATE portal before importation. The imported gold must be used exclusively for the declared purpose Any deviation from the declared end use is not permitted under the concessional duty scheme
• The refining process would be treated as manufacture or processing, and the refined gold would fall under HSN 7108, attracting GST at the rate of 3%. The sale in the domestic market constitutes a taxable outward supply.

3. Eligibility for Refund under Inverted Duty Structure (IDS)

The Applicant may be eligible to claim refund of unutilized input tax credit (ITC) under the Inverted Duty Structure, subject to the following key conditions:

• Tax Rate on Inputs > Output Supplies:
  • The refund is admissible when input tax rate is higher than the output tax rate.
  • Applies to inputs (goods) only, not input services.
• Claim Through GST RFD-01:
  • Refund is to be claimed by filing Form RFD-01 electronically on the GST portal.
  • Select “refund on account of inverted tax structure” as the reason.
• Timely Filing of Returns:
  • All GSTR-1 and GSTR-3B returns must be filed for the relevant tax period.
• Accurate Matching of Invoices:
  • Ensure matching of input invoices with GSTR-2B and that ITC has been availed in the respective month.
• No Claim of Refund on Output Supply (if exempt/Nil-rated):
  • Refund not allowed if the output supply is exempt or nil-rated.
• No Refund of Blocked Credits:
  • Ineligible ITC under Section 17(5) (blocked credits like motor vehicles, food, etc.) is not refundable.
• Calculation as per Rule 89(5):
• Exclusion of Capital Goods:
  • ITC on capital goods is not included in the refund claim.
• Claim Within 2 Years:
  • Refund must be filed within 2 years from the end of the relevant financial year.

Conclusion
The proposed transactions are feasible under the current legal framework, subject to careful documentation and compliance with customs, FEMA, and GST norms. However last date for submitting applications for TRQ under the India-UAE CEPA for FY 2025-26 for import of gold bullion is 28.02.2025 as per Trade Notice No. 30/2024-2025

 

[YAGAY andSUN]

Import of Gold Compound under India-UAE CEPA / ASEAN-India FTA: Compliance Requirements, Post-Import Processing, and GST Implications – A Legal and Procedural Analysis.

1. Background and Objective

The applicant is a registered bullion trader intending to import Gold Compound (classified under HSN 2843 3000) from UAE and/or Indonesia, for refining and domestic sale of pure gold. The imports are proposed under the preferential trade agreements (PTAs):

• India–UAE CEPA (Comprehensive Economic Partnership Agreement)
• ASEAN–India Free Trade Agreement (AIFTA)

The importer seeks to avail concessional Basic Customs Duty (BCD) through these PTAs under the Tariff Rate Quota (TRQ) mechanism and further claim IGST refund under Inverted Duty Structure (IDS) post-processing.

2. Compliance Requirements for Import under CEPA / AIFTA

A. Application and Eligibility under TRQ

• TRQ is a mandatory requirement to avail concessional duty on gold bullion under CEPA.
• As per Trade Notice No. 30/2024-2025-DGFT dated 12.02.2025, the last date to apply for TRQ for FY 2025–26 is 28.02.2025.
• Applications must be filed on the DGFT portal in prescribed form, and the importer must fulfill eligibility norms (e.g., past turnover, IEC registration, etc.).

B. Proof of Origin (Earlier: Certificate of Origin)

• Imports under CEPA/AIFTA must be supported by a valid Proof of Origin (PoO), replacing the earlier "Certificate of Origin", as per revised guidelines.
• It must be issued by the designated authority in UAE/Indonesia, and conform to the Rules of Origin under the respective agreement.

C. CAROTAR, 2020 Compliance

• Importer must undertake due diligence as per CAROTAR Rules, 2020, including:
  • Production process,
  • Details of exporter,
  • Country of origin documentation.
• These must be maintained for minimum 5 years.

D. End-Use Declaration via IGCR-1

• If concessional BCD is claimed under end-use-based exemption, Form IGCR-1 must be filed in advance on ICEGATE, declaring the intended use (e.g., refining for jewelry, resale, or manufacturing).
• Non-compliance or change in use will render the exemption inapplicable, leading to duty recovery with interest/penalty.

E. Import via Authorized Entities

• If notified, imports may need to be routed through Nominated Agencies or Qualified Jewellers registered with India International Bullion Exchange (IIBX).

F. GST and FEMA Compliance

• Ensure AD Code registration at port of import.
• Route payments only via Authorized Dealer (AD) banks as per FEMA regulations.
• Maintain compliance with GST laws during clearance (e.g., payment of IGST on import).

3. Post-Import Processing and Domestic Sale

A. Extraction of Gold from Compound

• The gold compound will be refined into pure gold (classified under HSN 7108).
• The refining process constitutes “manufacture or processing”, and the resulting gold becomes a taxable supply under GST.

B. GST Implications on Sale

• Refined gold is subject to 3% GST on outward supply.
• Sale in the domestic market post-manufacturing is permissible, provided it aligns with the declared end-use in IGCR-1.

C. Assay Certificate Requirement

• Customs may require Assay Certificates to determine purity and valuation during assessment or at time of sale.

D. BIS Standards Compliance

• If the end-product (refined gold) is sold in the domestic market, it must meet BIS standards, where applicable, under the Legal Metrology or BIS Act.

4. IGST Refund under Inverted Duty Structure (IDS)

A. Eligibility Conditions

• Input tax rate > Output tax rate (e.g., IGST on import is higher than 3% GST on sale of gold).
• Only goods (inputs) are eligible. Input services and capital goods are excluded.
• Output supply must be taxable (not exempt or nil-rated).

B. Refund Filing Process

• File Form RFD-01 on the GST portal under reason: “Inverted Tax Structure”.
• Returns (GSTR-1 and GSTR-3B) must be timely and accurate.
• Ensure invoice matching with GSTR-2B and availability of ITC in ledger.
• File refund within 2 years from end of financial year in which claim arises.

C. Roadblocks and Limitations

• Blocked credits under Section 17(5) (e.g., vehicles, catering) are not refundable.
• Delay in filing TRQ or lack of Proof of Origin can disqualify the import from preferential duty claim.
• Deviation from declared end-use may trigger denial of IGST credit or demand of differential duty.

5. Conclusion and Strategic Recommendations

The proposed import of gold compound under India–UAE CEPA or AIFTA is legally permissible, fiscally beneficial, and aligned with the TRQ-based concessional duty structure, provided strict compliance is followed. The extraction and domestic sale of gold from the compound is treated as manufacturing, attracting 3% GST, and may give rise to input tax credit refund under the Inverted Duty Structure.

However, to avoid procedural disqualification or post-clearance disputes:

• Apply for TRQ before 28.02.2025 (Already lapsed).
• Obtain accurate and compliant Proof of Origin.
• Ensure pre-import filing of IGCR-1 and maintain robust CAROTAR documentation.
• Follow FEMA and BIS guidelines diligently.
• Monitor invoice matching and compliance timelines for a smooth IGST refund claim.

Below is a Compliance Checklist and a Draft Standard Operating Procedure (SOP) tailored to your bullion trading business for the import of Gold Compound under India-UAE CEPA / AIFTA, refining, and domestic sale of gold. This will help ensure full regulatory compliance and support internal governance.

✅ COMPLIANCE CHECKLIST – Import of Gold Compound under CEPA / AIFTA

Sr. No.	Activity	Responsible Department	Deadline / Frequency	Remarks
1.	Apply for TRQ (Tariff Rate Quota)	Regulatory/Trade Compliance	Before 28.02.2025	Apply via DGFT portal; required for concessional duty
2.	Obtain Proof of Origin (PoO)	Supplier / Import Documentation	Before shipment	Issued by UAE/ASEAN authority; submit at Customs
3.	File IGCR-1 Declaration on ICEGATE	Regulatory	Before import	Declare end-use; mandatory if claiming concessional duty
4.	Due Diligence under CAROTAR, 2020	Regulatory / Documentation	Before import and retained for 5 years	Maintain origin documents, production process, exporter details
5.	Check BIS Standards Compliance (if applicable)	Technical / Quality	Before sale	Required for gold sold in refined form
6.	Register AD Code at Port of Import	Finance	One-time / per port	Needed for ICEGATE filings and payment clearance
7.	Ensure Routing Through Authorized Dealer Bank	Finance	Per transaction	FEMA compliance for foreign exchange payments
8.	Arrange Assay Certificate	Quality / Operations	Before clearance or sale	For valuation and purity validation
9.	Ensure Customs Declaration with CEPA/AIFTA Claim	Customs Clearance Agent	At time of import	Include PoO, invoice, TRQ license, IGCR-1
10.	Refine Gold as per Declared End Use	Operations / Manufacturing	Post import	Cannot deviate from declared usage
11.	File GSTR-1 and GSTR-3B Timely	Taxation	Monthly	Mandatory for IGST refund eligibility
12.	File Refund Claim (RFD-01) for Inverted Duty Structure	Taxation	Within 2 years	Match ITC with GSTR-2B; only goods eligible
13.	Maintain Post-Import Records (IGCR-3, usage logs, etc.)	Regulatory / Stores	Ongoing for 5 years	Required for audit/tracing purposes

📄 STANDARD OPERATING PROCEDURE (SOP)

For Import, Refining, and Domestic Sale of Gold Compound

1. Objective

To define standard procedures for importing gold compound under preferential agreements (India–UAE CEPA / AIFTA), refining it to gold, and ensuring tax and regulatory compliance during its domestic sale.

2. Scope

This SOP applies to all teams involved in:

• International sourcing and import,
• Compliance and documentation,
• Refining operations,
• GST and customs handling,
• Domestic sales and inventory management.

3. Procedure

A. Pre-Import Phase

1. TRQ Application:
   • File application via DGFT portal by 28.02.2025.
   • Retain acknowledgment and approval.
2. Coordinate with Supplier:
   • Ensure Proof of Origin is obtained and compliant with CEPA/AIFTA rules.
   • Collect commercial invoice, packing list, bill of lading.
3. File IGCR-1:
   • Submit advance intimation on ICEGATE portal declaring end-use.
   • Keep acknowledgment copy on record.
4. CAROTAR Compliance:
   • Collect production process details and exporter declarations.
   • Maintain these for a minimum of 5 years.
5. Customs Preparation:
   • Submit CEPA claim in Bill of Entry.
   • Attach TRQ license, PoO, invoice, IGCR-1 acknowledgment.

B. Post-Import Phase

1. Quality and Assay Testing:
   • Test gold compound and issue Assay Certificate.
   • Check against BIS norms if gold is sold domestically.
2. Refining Operations:
   • Process the imported compound into refined gold.
   • Ensure usage matches declared end-use.
3. Inventory Accounting:
   • Record movement and conversion in ERP.
   • Reconcile input vs output periodically.
4. Domestic Sale and GST Compliance:
   • Classify under HSN 7108 and charge 3% GST on sale.
   • File GSTR-1 and GSTR-3B timely each month.

C. Refund Claim Under Inverted Duty Structure

1. Eligibility Check:
   • Verify that input tax rate (on imported gold compound) exceeds 3% output rate.
2. Refund Filing:
   • Prepare refund application in Form RFD-01 on GST Portal.
   • Match input invoices with GSTR-2B.
3. Audit and Record Keeping:
   • Retain all supporting documents.
   • Ensure refund is filed within 2 years of relevant FY.

4. Roles and Responsibilities

Department	Responsibilities
Regulatory Compliance	TRQ filing, IGCR-1, CAROTAR records
Finance	AD Code registration, FEMA compliance
Operations	Refining as per declared end use
Taxation	GST returns, RFD-01 filing
Procurement	Supplier liaison, document verification
Quality	Assay testing, BIS compliance checks

5. Records to Maintain

• TRQ license and approval
• Proof of Origin (PoO)
• IGCR-1 and IGCR-3 filings
• Assay Certificates
• Bill of Entry and Invoices
• GSTR returns and RFD-01 copies
• Stock register and usage log

***

[YAGAY andSUN]

India- UAE CEPA

ANNEX 2A Schedule of Specific Tariff Commitments of India on Trade in Goods (Referred to in Chapter 2).

Sr.No. - 2323,  HSN Code - 28433000,  Description - Gold compounds, Standard Rate % Customs Duty - 10,  Effective Rate % Customs Duty - 10,  Tariff Modality Offered -  TEI, Schedule of Tariff Rate Concessions (%) from year 1 to 10 (i.e. no concession for next 10 years) - 0, 0, 0, 0, 0, 0, 0, 0, 0, 0.

*** 

[YAGAY andSUN]

In the context of the India–UAE Comprehensive Economic Partnership Agreement (CEPA), the term TEI stands for:

✅ Tariff Elimination Implementation

🔍 Meaning of TEI in India–UAE CEPA:

TEI refers to the schedule or timeline for phased elimination or reduction of tariffs (customs duties) on goods traded between India and the UAE under CEPA. It is mentioned in the Tariff Schedule of Commitments of each country as part of the agreement.

📘 How to Interpret TEI in CEPA Documents:

In tariff schedules, products are often listed with TEI codes like:

• TEI-1

• TEI-2, and so on.

These codes correspond to the number of years over which the import duties will be reduced or eliminated. For example:

• TEI-1: Full tariff elimination in 1 year (i.e., immediate or next financial year).

• TEI-5: Tariff will be gradually eliminated over 5 years.

• TEI-0 or “Exclusion List”: Product is not subject to any tariff reduction or elimination under CEPA.

Each TEI code thus indicates how and when customs duty reductions apply to a product under the CEPA regime.

📌 Example in Practice:

Let’s say you’re importing gold compound (HSN 2843.30.00) from UAE under India–UAE CEPA:

• If this item is marked with TEI-1 in the UAE Schedule, it means India will eliminate tariffs on this product within 1 year of CEPA coming into effect.

• You would be eligible for preferential duty, subject to conditions like TRQ, Proof of Origin, etc.

*** 

[YAGAY andSUN]

In the context of the India–UAE Comprehensive Economic Partnership Agreement (CEPA), the term TEI stands for Tariff Elimination Immediate. This designation indicates that the customs duty on a particular product is eliminated immediately upon the agreement's implementation.

For the product classified under HSN 2843 3000 (gold compounds), the specific tariff treatment under the CEPA would depend on the detailed tariff schedules and rules of origin stipulated in the agreement. Generally, products falling under the TEI category benefit from zero customs duty upon import, provided they meet the Rules of Origin requirements, which typically involve criteria such as:

• Wholly Obtained or Produced: The product must be entirely produced or obtained in the exporting country.

• Sufficient Transformation: The product must undergo sufficient processing or transformation in the exporting country to qualify for preferential treatment.

To determine the exact tariff treatment for HSN 2843 3000 under the India–UAE CEPA, it is advisable to consult the official Tariff Schedule of Commitments published by the Indian government or the Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between India and the United Arab Emirates) Rules, 2022. These documents provide detailed information on the tariff elimination schedules and the rules of origin applicable to specific products.

[YAGAY andSUN]

https://commerce.gov.in/wp-content/uploads/2022/03/Chapter-2-Annex-2A-Copy-of-India-UAE-CEPA-Final-Offer-to-UAE-Schedule-of-Tariff-Concessions-As-shared-on-20.12.21-1045AM.pdf

[Sadanand Bulbule]

Very useful information for academic visitors as well.

[Rangrita goldtesting]

Hello sir what is the firm type for this products import. 

AI Summary

Gold Import Strategy: Navigating Complex Trade Agreements and Regulatory Compliance for Bullion Extraction and Domestic Sales A bullion trader seeks to import gold compound from Dubai or Indonesia under UAE-CEPA or ASEAN agreements, with plans to extract and sell gold domestically. The import requires careful compliance with tariff rate quotas, origin certificates, customs regulations, and GST procedures. Key considerations include obtaining proper documentation, filing end-use declarations, paying applicable taxes, and potentially claiming input tax credit under the inverted duty structure. Strict adherence to regulatory requirements is essential to successfully execute the proposed import and sale strategy.