Export of goods on payment of IGST | Goods Return

[Nikunj Kishorbhai Tosar]

Fact of the case:

Export of goods made with payment of IGST, and refund received of it against the unutilized ITC. Subsequently the customer returned the partial goods due to quality issues. the rejected goods were imported and IGST paid on filing the Bill of Entry.

Question 1: whether the refund received is required to be paid back with interest considering the Rule 96B - "Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where export proceeds not realised".

Question 2: to record the rejected goods imported - a credit note (export with payment of tax) can be generated, and liability can be reduced in GSTR-1

Export of Goods	Amount
Export Invoice With payment of tax	Liabilty Increased	5,00,000
Impact on ITC	ITC Decreased	-5,00,000
Refund Received	Cash Increased	5,00,000
	Total (A)	5,00,000
Goods Retuned	Amount
Credit note with payment of tax	Liab Decreased	-5,00,000
Impact on ITC	ITC Increased	5,00,000
Refund to be paid back	Cash Decreased	-5,00,000
	Total (B)	-5,00,000
Net Impact	(A) - (B)	-

Thanks in Advance.

AI Summary

Export refund adjustment: returned goods re imported with IGST support credit note treatment and avoid Rule 96B recovery.
Whether an export refund obtained on goods exported with payment of IGST must be repaid with interest where those goods are later commercially returned and re imported with IGST paid. Rule 96B targets non realisation of export proceeds under FEMA and does not apply to documented commercial returns with re importation. A credit note should be issued to reduce outward liability and IGST paid on re import may be claimed as input tax credit, with proportionate adjustment to avoid unjust enrichment.