Case Law Details
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.
After hearing both sides, the Court observed that there appeared to be a mistake by the petitioner or its clearing agent during the process. The Court clarified that the petitioner’s liability is confined to reversal of input tax credit only if such credit had been availed. It held that the petitioner must establish whether ITC was availed by obtaining a certificate from the jurisdictional assessing officer.
Accordingly, the Court disposed of the writ petition by permitting the petitioner to submit a fresh response to the query raised by the officer, instead of the earlier reply. The authorities were directed to process the response and consider the certificate to be furnished by the petitioner. The Court further directed that appropriate orders be passed within two weeks. To facilitate this process, the impugned Bill of Entry was set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a partnership firm and is engaged in the business of processing and exporting spices and food products. As part of the business activities of the petitioner, the petitioner had exported 20 pallets of Curcumin, packed in 260 HDPE drums, to JSA International, USA on 13.07.2025 as evidenced by Ext.P9. During the time when the aforesaid goods were in transit, a policy decision was taken by the US Government to increase the tariff on export of Indian goods upto 50%. Consequently, the JSA International, USA refused to accept the said consignment, and accordingly, the petitioner was constrained to re-import the said consignment. Ext.P10 is the bill of lading dated 14.11.2025 and Ext.P11 is the Check List-Bill of Entry for Home Consumption submitted by the clearing agency. Ext.P12 is the Bill of Entry dated 29/12/2025. According to the petitioner, in Ext.P12, the total IGST imposed is Rs. 1,03,46,656/-, which, according to the petitioner was not justifiable in view of the fact that this is only a re-import, where, no taxable event has occurred. The reliefs sought by the petitioner are as follows:
“i) issue a writ of certiorari, or any other appropriate writ, order or direction to quash A item details- Sl. No. 30, which mentions total duty assessed as Rs. 1,03,46,656/- and B item details, Sl. No. 5, which mentions IGST imposed as Rs. 1,03,46,656/- in Exhibit P12, issued by the 2nd respondent, to the petitioner.
ii. to declare that the petitioner is not liable to pay any IGST/duty for the 20 pallets of re-imported goods, as evident from Exhibit P10, P11 and P12.
iii. issue such other appropriate writ, order or direction as this Hon’ble Court may deem fit, just, and proper to grant on the facts and circumstances of the case.
iv. to dispense with the filing of English translations of the vernacular documents.”
2. In response to the averments contained in the writ petition, a statement has been submitted by the 4th respondent, wherein, it is averred that, in connection with the processing of the re-import, the FAG officer raised a query on 23.01.2026 seeking clarification from the petitioner as to whether any IGST refund had been claimed from the Jurisdictional Range, since the Shipping Bill was filed under LUT. This query was made to ensure that, the input tax credit, if any, claimed by the petitioner is reversed while re-importing the goods. In response to the aforesaid query, the following reply was given by the petitioner:
“DEAR SIR THE ORIGINAL EXPORT WAS UNDER LUT WITHOUT PAYING IGST THUS NO CLAIM FROM RANGE MADE BY THE EXPORTER UNDER NOTIFICATION 45/2017 THE IGST REQUIRED TO PAY AS PER IMPORT DUTY THAT WAS NOT PAID AT THE TIME OF EXPORT DUTY AND APPLICABLE INTEREST IS PAYABLE AS PER BELOW MENTIONED HENCE, WE KINDLY REQUEST YOU TO ASSESS THE BE APPROPRIATELY TO RELEASE THE CONSIGNMENT AS SOON POSSIBLE. IGST WORKINGS WITH APPLICABLE INTEREST ON AV Rs 52040086/- IGST 18 PERCENTAGE Rs. 9367215/- APPLICABLE INTEREST ON IGST FROM SB DATE 04.07.2025 TO 31.01.2026 -212 DATY RS 979440/-.”
3. According to the respondent, the amount was demanded consequent to the said explanation. It is further averred in the statement that, as per the Notification No.45/2017- Cus., the importer is required to repay the applicable IGST, which may have been claimed as a refund of unutilized input tax credit of CGST,SGST/UTGST and IGST as per Section 16(3) of the IGST Act, 2017, if goods were exported under LUT/Bond.
4. It is also averred in the statement that, in case the petitioner did not avail the input tax credit, they ought to have obtained a certificate to that effect, from the jurisdictional assessing officer to get the goods cleared without paying the IGST amount. If the input tax is claimed, goods could be cleared only upon payment of the amount of input tax credit which they have availed.
5. After hearing the learned counsel for the petitioner and the learned standing counsel for the respondents, I find that apparently there is a mistake on the part of the petitioner or his clearing agent, while completing the process. Evidently, the liablity of the petitioner is confined to reverse the input tax credit, if the petitioner has already availed the same. Therefore, as averred in the statement, it is for the petitioner to establish the said fact by obtaining a certificate from the jurisdictional assessing officer to the effect that, the petitioner did not avail input tax credit. In case, the petitioner has availed the same, the liability of the petitioner shall be confined to the refund of the amount that was availed as input tax credit.
In such circumstances, this writ petition is disposed of permitting the petitioner to submit a fresh response to the query raised by the FAG Officer on 23.01.2026, instead of the reply already given on 27.01.2026. Upon submitting such a response, the officer concerned shall process the same, and upon the petitioner furnishing the necessary certificate from the jurisdictional assessing officer, the same shall be considered and appropriate orders shall be passed within a period of two weeks. To enable the respondents to do so, Ext.P12 is set aside.
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