Advance Authorisation
Holders of Raw Sugar Must Get BE Reassessed, Pay 5%
IGST to Release the Raw Sugar for Domestic Market after Conversion to White
Sugar. No IGST Set Off if Sugar Sold without GST!
·
CBIC has prescribed a procedure for payment of IGST on
quantities of Raw Sugar imported under Advance Authorisation (AA) where
IGST is required to be paid.
·
The clarification follows DGFT Notification No.
31/2026-27 dated 20 August 2026 and Public Notice No. 27/2026-27,
relating to:
o
Import policy for Raw Sugar under Exim Code
170114.
o
Allocation of 10 lakh MT Tariff Rate Quota (TRQ)
for Raw Sugar.
o
One-time conversion from Advance Authorisation
to TRQ Scheme.
Procedure
at Port of Import
1.
Importer approaches assessment group:
The AA holder must approach the concerned assessment group at the Port of
Import (POI) with relevant import details.
2.
Cancellation of OOC:
The assessment group will cancel the Out of Charge (OOC) and record the
reason in the remarks.
3.
Re-assessment of Bill of Entry:
The Bill of Entry (BE) will be reassessed to levy the applicable IGST.
4.
Electronic payment:
IGST must be paid through the electronic challan generated in the Customs
EDI System.
5.
Notional OOC:
After payment, the port will make a notional OOC in the Customs EDI
System.
6.
GSTN transmission:
This will enable transmission to GSTN of the IGST amount and date of
payment, allowing the importer to claim input tax credit subject to GST
provisions.
7.
Interest waived:
Any interest liability arising from the IGST payment will be waived.
8.
One-time facility:
The procedure from cancellation/reassessment through payment and notional OOC can
be used only once for a particular Bill of Entry.
Input Tax
Credit
·
Input Tax Credit (ITC) on the
assessed Bill of Entry will be available, subject to the eligibility and
conditions under Sections 16, 17 and 18 of the CGST Act, 2017 and the
relevant rules.
Important
Clarification
·
Importers must not use the Voluntary Payment
Challan module for paying this IGST.
·
Payment through the Customs EDI-generated
electronic challan is required because it ensures transmission of the relevant
tax details from Customs to GSTN, facilitating subsequent ITC claims.
Implementation
·
Chief Commissioners have been asked to guide field
formations and resolve local implementation issues.
·
Commissioners are expected to issue appropriate Public
Notices and Standing Orders.
·
Any difficulties in implementation are to be
brought to the notice of the Board.
Key
takeaway: CBIC has created a specific Customs EDI-based
mechanism to pay IGST on eligible Raw Sugar imports under Advance Authorisation,
while ensuring the tax payment is transmitted to GSTN for input tax credit,
and has specifically waived interest on such IGST payments.
[CBIC
Circular No. 37/2026 -Cus dated 27 August, 2026]
Subject: Modalities for payment of exempted GST at the time of import of Raw Sugar actually
imported under Advance
Authorisation (AA) Scheme
to be converted
into Tariff Rate Quota (TRQ) Scheme.
1.
Kind reference is invited to Notification No. 31/2026-27 dated 20.08.2026 issued by DGFT amending
the import policy
condition for Raw Sugar classified under Exim code 170114 of chapter 17 of ITC(HS), 2022 Schedule I and Public Notice No. 27/2026-27 dated 20.08.2026 detailing
the modalities for the allocation of the 10 Lakh MT Tariff Rate Quota (TRQ) for Raw Sugar along with the Modalities for one time conversion from Advance Authorisation (AA) Scheme to Tariff Rate Quota (TRQ) Scheme.
2.
The matter
of payment of IGST in respect of the quantity
of Raw Sugar actually imported
under Advance Authorisation (AA) Scheme, has been examined in the Board.
3.
The following procedure for payment
of IGST shall be adopted
at the port of import (POI):-
(a)
for the relevant imports where the AA holder is required to pay IGST, the AA holder may approach
the concerned assessment group at the POI with relevant details for purposes of payment of the tax.
(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.
(c)
the payment
of tax 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 EDI System [so as to enable transmission to GSTN portal of, inter alia, the IGST amount with their date of payment (relevant
date) for eligibility as per GST provisions].
(e)
interest liability, if any, on account of payment of IGST shall stand waived
off.
(f)
the procedure specified at (a) to (d) above can be applied
once to a BE.
4.
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.
5.
Further, it is clarified that the payment
of IGST should not be made through the Voluntary
Payment Challan module as the process is not adequate to ensure a convenient transfer of relevant details between Customs
and GSTN so that Input Tax Credit of GST may be taken
by the importer.
6.
The
Chief Commissioners are expected to proactively guide the Commissioners and officers to iron out any local level issues in implementing the broad procedure
described in para 3 and 4 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.
Difficulties, if any, in the implementation of the above Circular may be brought
to the notice of the Board.
F. No. 140605/6/2026-DBK