Clarification on IGST refunds for exporters who imported Inputs without payment of IGST &Compensation Cess under notification no. 78/2017 & 79/2017 customs

Circular No.: 233/27/2024

Circular date: 10 September, 2024

Relevant Act/ Rule: Central Goods and Service Tax Rules, 2017

Relevant Section/Rule: Sub-rule (10) of Rule 96

Relevant authority: CBDT

Rule 96(10) of CGST rules, 2017 provides a restriction on availment of refund of integrated tax paid on exports of goods and services.

It was laid down that refund of integrated tax paid on export of goods and services cannot be claimed if exporter has utilized the benefits of certain concessions or exemptions on inputs or raw materials, whether imported or procured domestically.

In this context, clarification has been given on whether a registered person can regularize their refund of IGST paid on exports if they initially imported inputs without paying IGST and compensation cess by using the benefits under Notification No. 78/2017-Customs or Notification No. 79/2017-Customs dated October 13, 2017.

The Explanation was added retrospectively suggesting that if the benefits of the exemption notifications for IGST and compensation cess haven’t been availed, then it will be treated as if those benefits were never claimed according to sub-rule (10) of rule 96 of the CGST Rules. This means that if inputs were initially imported without paying IGST and compensation cess but were later paid with interest, it can be considered that the benefits of the mentioned notifications were not availed. Therefore, in such cases, refund claims for IGST on exports made with payment of IGST should not be seen as violating the rules.

In light of the above, it is clarified that if inputs were initially imported without paying integrated tax and compensation cess by using benefits from Notification No. 78/2017-Customs or Notification No. 79/2017-Customs, but IGST and compensation cess are later paid with interest, and the Bill of Entry for these inputs is got reassessed, then any IGST refunded on exports made by the exporter will not be considered to be in violation of sub-rule (10) of rule 96 of the CGST Rules.

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