IGST Refund for exporters who initially imported without paying IGST & Cess

Circular No. 233/27/2024-GST, issued by the GST Policy Wing of the Central Board of Excise and Customs, addresses the regularization of Integrated Goods and Services Tax (IGST) refunds under sub-rule (10) of Rule 96 of the CGST Rules, 2017. This rule restricts the refund of IGST paid on exports if the exporter has availed concessional or exemption benefits on imported inputs. The circular clarifies that exporters who initially imported inputs without paying IGST and compensation cess under Notifications No. 78/2017-Customs and 79/2017-Customs can regularize their IGST refunds. This is applicable if the exporters subsequently paid the IGST and compensation cess, along with interest, on the imported inputs or are willing to do so.

The explanation inserted into sub-rule (10) of Rule 96 by Notification No. 16/2020-CT, effective retrospectively from October 23, 2017, states that the benefits of the relevant exemption notifications are not considered availed if IGST and compensation cess have been paid on inputs, even if only the Basic Customs Duty (BCD) exemption was used. Applying this explanation, the circular clarifies that if the inputs were initially imported without IGST and compensation cess, but the taxes were paid later with interest, the refund of IGST on exports would not be in violation of Rule 96(10). The exporters need to have their Bill of Entry reassessed by the jurisdictional Customs authorities to reflect this payment.

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing, New Delhi

Circular No. 233/27/2024-GST; Dated: September 10, 2024

To,
The Principal Chief Commissioners /Chief Commissioners/Principal Commissioners/Commissioners of Central Tax and Central Tax (Audit) (All)
The Principal Directors General/Directors General (All)

Subject: Clarification regarding regularization of refund of IGST availed in contravention of rule 96(10) of CGST Rules, 2017, in cases where the exporters had imported certain inputs without payment of integrated taxes and compensation cess – regarding.

Sub-rule (10) of rule 96 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) provides for a bar on availment of the refund of integrated tax (IGST) paid on export of goods or services, if benefits of certain concessional/exemption notifications, as specified in the said sub-rule, have been availed on inputs/raw materials imported or procured domestically. In this regard, references have been received from the field formations and trade/ industry wherein clarification has been sought on whether refund of integrated tax paid on exports of goods by a registered person can be regularized in a case where the registered person had initially imported inputs without payment of integrated tax and compensation cess, by availing the benefits under Notification No. 78/2017-Customs dated 13.10.2017 or Notification No. 79/2017-Customs dated 13.10.2017, but subsequently, at a later date, the said person has either paid the IGST and compensation cess, along with interest, on such imported inputs or is now willing to pay such IGST and compensation cess, along with interest.

2. The issue has been examined and in order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the following:

2.1 Vide Notification No. 16/2020-CT dated 23.03.2020, an Explanation was inserted in sub-rule (10) of rule 96 of CGST Rules retrospectively with effect from 23.10.2017, which reads as follows:

“Explanation. – For the purpose of this sub-rule, the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.”

2.2 A bare perusal of the said Explanation, which was inserted with retrospective effect, reveals that in cases where the benefits of these exemption notifications have not been availed in respect of IGST and compensation cess, it shall be deemed that benefit of the said notifications has not been availed for the purpose of sub-rule (10) of rule 96 of CGST Rules. Therefore, extension of logic given in the said Explanation may lead to a view that in cases where inputs were initially imported without payment of integrated tax and compensation cess but subsequently, IGST and compensation cess on such imported inputs is paid at a later date, along with interest, then in such cases, it can be considered that the benefits of notifications mentioned in clause (b) of sub-rule (10) of rule 96 of CGST Rules have not been availed for the purpose of said sub-rule. Accordingly, refund of IGST claimed on exports made with payment of Integrated tax in such cases may not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules.

2.3. In view of the above, it is clarified that where the inputs were initially imported without payment of integrated tax and compensation cess by availing benefits under Notification No. 78/2017-Customs dated 13.10.2017 or Notification No. 79/2017-Customs dated 13.10.2017, but subsequently, IGST and compensation cess on such imported inputs are paid at a later date, along with interest, and the Bill of Entry in respect of the import of the said inputs is got reassessed through the jurisdictional Customs authorities to this effect, then the IGST, paid on exports of goods, refunded to the said exporter shall not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules.

3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

4. Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.

[F. No. CBIC-20001/6/2024-GST]

(Sanjay Mangal)
Principal Commissioner (GST)

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