IGST Applicable
where no pre-import in Advance Authorisation
·
Customs Implements Cosmo
Films Case Order by SC
·
GST to be Paid where
pre-import Condition not met, ITC to be available
[CBIC Circular No. 16 dated 7th
June 2023]
Civil
Appeal No. 290 of 2023 (UOI and others vs. Cosmo Films Ltd.)
Subject: Implementation of Hon'ble Supreme Court direction
in judgment dated 28.04.2023 in matter of Civil Appeal No. 290 of 2023 relating
to 'pre-import
condition.
Attention is invited to Honble Supreme Court judgment dated 28.04.2023
in matter of Civil Appeal No. 290 of 2023 (UOI and others vs. Cosmo Films Ltd.) relating to mandatory fulfillment
of a 'pre-import condition' incorporated in para 4.14 of FTP 2015-20 vide the Central Government (DGFT) Notification
No. 33/2015-20 dated 13.10.2017, and reflected in the Notification
No. 79/2017-Customs dated 13.10.2017, relating to Advance Authorization scheme.
2. The FTP amended on 13.10.2017 and in existence till 09.01.2019 had provided that imports
under Advance Authorization for physical exports are also exempt from whole of the
integrated tax and compensation cess, as may be provided in the notification
issued by Department of Revenue, and such imports shall be subject to pre-import
condition.
3. Honble Supreme Court has allowed the appeal of Revenue directed
against a judgement and order of Hon'ble Gujarat High Court which had set aside
the said mandatory fulfillment of pre-import condition. As such, this implies that the relevant
imports that do not meet the said pre-import condition requirements are to pay IGST
and Compensation Cess to that extent.
4. While allowing the appeal of Revenue, the Hon'ble Supreme Court has however
directed the Revenue to permit claim of refund or input credit (whichever applicable
and/or wherever
customs duty was paid). For doing so, the respondents shall approach the jurisdictional commissioner, and apply with documentary
evidence within six weeks from the date of the judgment. The claim for refund /credit, shall be examined on their
merits, on a case by-case basis. For the sake of convenience,
the revenue shall direct the appropriate procedure to be followed, conveniently, through a circular in this
regard.
5.1
The matter has
been examined in the Board for purpose of carrying forward the Honble Supreme Court's directions. It is noted that-
(a)
ICES does not have a functionality for payment of customs duties on
a bill of entry (BE) (unless it has been provisionally assessed) after giving the
Out-of-Charge (OOC) to the goods. In this situation, duties can be paid only through a TR-6 challan.
(b)
Under GST law, the BE for the assessment of
integrated tax/ compensation cess on imports is one of
the documents based on which the input tax credit may be availed by a registered
person. A TR-6 challan is not a prescribed document for the purpose .
(c)
The nature of facility
in Circular No. 11/20 15-Cus (for suo moto payment of customs
duty in case of bona fide default in export obligation) is not adequate to ensure
a convenient transfer of relevant details between Customs and GSTN so that ITC may
be taken by the importer.
(d)
The section 143AA
of the Customs Act, 1962 provides that the Board may, for the purposes of facilitation
of trade, take such measures for a class of importers-exporters or categories
of goods in order to, inter alia, maintain transparency in the import documentation.
5.2
Keeping above aspects
in view, noting that the order of the Hon'ble Court shall have bearing on
importers others than the respondents, and for purpose of carrying forward the
Honble Court 's directions, the following procedure can be adopted at the port
of import (POI):-
(a)
for the relevant
imports that could not meet the said pre-import condition and are hence
required to pay IGST and Compensation Cess to that extent,
the importer (not limited to the respondents) may approach the concerned assessment
group at the POI with relevant details for purposes of payment of the tax and cess along with applicable interest.
(b)
the assessment
group at POI shall cancel the OOC and indicate the reason in remarks. The BE shall be assessed again
so as to charge the tax and cess, in accordance with the
above judgment.
(c)
the payment of
tax and cess, along with applicable interest, shall be made against the electronic
challan generated in the Customs EDI System.
(d)
on completion of
above payment, the port of import shall make a notional OOC for the BE on the Customs
EDT System [so as to enable transmission to GSTN portal of, inter alia, the IGST
and Compensation Cess amounts with their date of payment
(relevant date) for eligibility as per GST provisions].
(e)
the procedure specified
at (a) to (d) above can be applied once to a BE.
6.1
Accordingly, the
input credit with respect to such assessed BE shall be enabled to be available subject
to the eligibility and conditions for taking input tax credit under Section 16, Section 17 and Section 18 of
the CGST Act, 2017 and rules made thereunder.
6.2
Further, in case such input tax credit
is utilized for payment of IGST on outward zero rated supplies, then the benefit
of refund of such IGST paid may be available to the said registered person as per
the relevant provisions of the CGST Act, 2017 and the rules made thereunder, subject
to the conditions and restrictions provided therein.
7. The Chief Commissioners are expected to proactively guide the Commissioners
and officers for ironing out any local level issues in implementing the broad procedure
described in para 5 and 6 above and ensuring appropriate convenience to the trade
including in carrying out consequential actions. For this, suitable Public Notice and
Standing Order should be issued. If any difficulties are faced that require attention
of the Board, those can be brought to the notice.
F. No. 605/11 /2023-DBK/569