Nar Spice Products Vs Union of India (Kerala High Court)
The petitioner, a partnership firm engaged in processing and exporting spices and food products, exported 20 pallets of Curcumin to a buyer in the USA on 13.07.2025. While the goods were in transit, the US Government increased tariffs on Indian goods, leading the buyer to refuse the consignment. Consequently, the petitioner re-imported the goods, supported by relevant shipping and entry documents.
Upon re-import, a Bill of Entry dated 29.12.2025 imposed IGST amounting to Rs. 1,03,46,656/-. The petitioner challenged this levy, contending that since the goods were merely re-imported and no taxable event occurred, the imposition of IGST was unjustified. The petitioner sought quashing of the assessment and a declaration of non-liability to pay IGST.
In response, the authorities stated that during processing, a query was raised asking whether the petitioner had claimed any IGST refund, as the original export was made under a Letter of Undertaking (LUT). This was to ensure reversal of any input tax credit (ITC) availed. The petitioner responded that no refund had been claimed and requested appropriate assessment for release of goods. Based on this explanation, the demand was raised.
The authorities further submitted that under Notification No. 45/2017-Cus., where goods are exported under LUT or bond, the importer is required to repay the applicable IGST if any refund of unutilized ITC has been claimed. They also stated that if no ITC had been availed, the petitioner was required to produce a certificate from the jurisdictional assessing officer to that effect for clearance without IGST payment. If ITC had been availed, the liability would be limited to repayment of such credit.
