TaxTMI 
TaxTMI 
2019 (2) TMI 194
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....quality crust and finished leather in its industrial facilities. The Applicant specializes in high quality bovine leather for the most demanding footwear, leather goods and upholstery industries. The Sadesa Group operates a global network of offices and commercial alliances in 18 countries across five continents. The Group has been currently supplying leathers to Indian Shoe manufacturers mainly from Thailand and Argentina. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. The Applicant has sought Advance Ruling on:- 1. Whether sale of tanned bovine leather stored in Free Trade Warehousing Zone (FTWZ) by a foreign supplier which is cleared to Domestic Tariff Area (DTA) customer in India would result in supply subject to levy under sub section 1 of section 5 of the IGST Act 2017 or under the provisions of CGST Act, 2017 or Tamil Nadu GST Act, 2017 and the rules made there under. 2. Whether the foreign supplier being the applicant, located outside the taxable territory and supplying goods to D....
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....red in the FTWZ unit on behalf of Sadesa Macau. The title to the goods stored in FTWZ unit remains with Sadesa during storage. 2.4 The Applicant has also informed that they would identify customers and finalize the price and quantity of goods to be sold. Upon finalization, Sadesa would raise a sale invoice on the customers in foreign currency. Based on the said invoice and instruction to dispatch the goods, LSP would prepare a BOE, in customers name detailing the duty payable, and the list of documents necessary for clearance and send to the customer for payment of Basic Customs Duty ('BCD') & IGST. The Customer would pay the applicable customs duty including IGST duly computed on the value as under the customs provisions as per the BOE raised by LSP, Chennai, and clear the goods accordingly under section 30 of Special Economic Zone ('SEZ)' Act, 2005 and read with the Customs laws as regards duties payable. 2.5 The Applicant has submitted that under the pre GST regime the transaction of trans-shipment of goods from Customs port to FTWZ were not taxable, since FTWZ unit was exempted from taxes as specified in section 26(1) (a) of SEZ act 2005 vide Rule 27 of SEZ ru....
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.... hazardous wastes and SCOMET items) for ware housing. As far as bond towards customs duty on import is concerned, the units would be subject to similar provisions as are applicable to units in SEZs. These goods shall also be permitted to be sold in the DTA on payment of customs duties as applicable on the date of such sale. Payment of duty will become due only when goods are sold/delivered to DTA and no interest will be charged as in the case of bonded warehouses. In the present case, the applicant is storing the imported goods in FTWZ which is a Customs bonded warehouse. Now, the applicant has raised the question whether IGST under section 5(1) read with Section 7(2) of the IGST Act on removal of goods from the FTWZ unit i.e. the customs bonded warehouse. 4.2 We find that the above issue has been raised and discussed in the 27th meeting of the GST Council as under: Agenda Item 5: Clarification regarding applicability of Integrated Goods and Services Tax on goods supplied while being deposited in a warehouse Goods imported into India are subjected to customs duties and integrated tax under sub-section (7) of section 3of the Customs Tariff Act, 1975 (hereafter referred to as "CT....
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.... supply of warehoused goods within the Customs bonded warehouse as 'no supply' under Schedule III of the CGST Act, 2017 so as to ensure that no integrated tax is paid at the time of supply of warehoused goods by the importer to the buyer. Since the amendment of the law would take time, it is proposed that such intention/ decision of the GST Council may be effected through a circular. 5. In view of the above, it is proposed that Circular No. 46/2017-Customs dated 24.11.2017 may be rescinded and a fresh circular may be issued clarifying that supply of warehoused goods before their clearance from the warehouse would not be subject to levy of integrated tax and the same would be collected only when the warehoused goods are cleared for home consumption from the customs bonded warehouse. This clarification would be applicable from 1st of April, 2018. Accordingly, a draft circular as at Annexure-I is placed for approval of the GST Council. Accordingly, Circular No.3/1/2018-IGST dated 25th May 2018 was issued re-examining the issues of Circular No. 46/2017 Customs dated 24.11.2017. The Circular clarifies the applicability of IGST on goods supplied while being deposited in customs bonded ....