In re Khaitan Chemicals and Fertilizer (GST AAR Chhattisgarh)
Payment of IGST under reverse charge mechanism (RCM) on deemed Ocean freight on import of goods (raw material) on CIF basis?
In terms of prevailing provisions of the IGST Act, 2017 and the Rules made there under as discussed above, the applicant in addition to IGST on import of goods levied under the Customs Act, 1962 read with the Custom Tariff Act, 1975 would also be liable to pay IGST on deemed ocean freight under reverse charge mechanism as stipulated under Notification No.10/2017-I.T.(Rate) read with Notification No.8/2017-I.T.(Rate).
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
M/s Khaitan Chemicals and Fertilizer, Farhad, Somni, Rajnandgaon Chhattisgarh [hereinafter also referred to as the apolican1] has filed an application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 seeking advance ruling as to payment of IGST under Reverse Charge Mechanism (RCM) on deemed Ocean Freight on import of goods (raw material) on CIF basis. However, IGST has already been paid on total CIF value which includes the value of ocean freight.
2. Facts of the case:-
2.1 Khaitan Chemicals Fertilizers Ltd. is mainly engaged in the manufacturing of Single Super Phosphate (Fertilizer), Sulphuric Acid Chemical). For the manufacture of Single Super Phosphate (SSP), the major raw material required is Pock Phosphate which is imported from various countries like Egypt, Jordan & Morocco and also procured locally within country. The company is registered under the GST laws for payments of GST/IGST besides being paying the customs duty on import of Pock Phosphate.
2.2 Rock phosphate and other materials is imported only on CIF (sum of Cost, Insurance & Freight) basis. In CIF basis purchases, the freight invoice is issued by the foreign shipping line to the foreign exporter. The importer (i.e. Khaitan Chemicals Z. Fertilizers Lid.) is concerned only with the purchase of goods and the suppliers of rock phosphate are responsible for transportation of goods upto the custom frontier of India. The company neither has any invoice of ocean freight nor has any idea of payments and the amount of ocean freight by the foreign exporter.
2.3 Reference to various acts for levying IGST on imported goods and determining the value for calculation of IGST:
