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Dated: 03.08.2022

Customs authority cannot deny IGST refund to the Exporters against a higher drawback rate claimed

It has been lately observed that lot of Indian exporters are not getting their IGST refund from customs. The exporters are facing a harrowing time to get their bonafide IGST amount refunded from the Customs authorities.

It is also learnt from the letters/communications received from Customs department that they are unable to refund the bonafide IGST amount to the exporters, for which they are taking a plea by citing para 2.5 of circular no. 37/2018 dtd 09.10.2018.

In relation to this particular issue, it is imperative to bring to the attention of the exporters about the order issued by the Hon’ble Madras High court in the matter of VSG EXPORTS PVT LTD Vs THE ASSISTANT COMMISSIONER OF CUSTOMS (DRAWBACK).

The court made the following observation as stated below-

“As seen from the aforesaid circular, the said circular applies only to cases where the exporters had availed option to take drawback at higher rate in place of IGST refund out of their own volition. In the instant case, the petitioner had never availed the option to take drawback at higher rate in place of IGST refund and therefore, the said Circular No.37/2018, dated 09.10.2018 is not applicable to the facts of the instant case. Further, the Circular No. 37/2018, dated 09.10.2018 issued by CBEC has also did not rescinded the earlier Circular No.08/2018, dated 23.03.2018. It is clearly inferred from the aforesaid court observation that by claiming a higher drawback rate the IGST refund cannot be rejected on this ground as both (IGST & Drawback) are 2 different subjects all together.

The judgment relied upon by the learned counsel for the petitioner referred to supra in 2004 (165) E.L.T. 257 (S.C.) is squarely applicable for the facts of the instant case as Circular No. 808/18/23.03.2018, has not been rescinded by the subsequent circular and therefore, it is binding upon the respondents to follow the Circular No.8/18, dated 23.03.2018, wherein, an alternative mechanism has been provided to the respondents for processing http://www.judis.nic.in refund of IGST claim whenever, there is an inadvertent error in the shipping bills submitted by the exporters or any other documents submitted by the exporters.

It is equally important to bring to the kind attention of the exporters about the decision of the Hon’ble Gujarat High court, which was upheld by the Hon’ble Supreme Court in Special Leave to Appeal (C) No.7095/2021 (Arising out of impugned final judgment and order dated 15-12-2020 in SCA No.1014/2020 passed by the High Court of Gujarat at Ahmedabad) between UNION OF INDIA & ORS. Vs AWADKRUPA PLASTOMECH PVT. LTD dtd 30/07/2021 (copy attached below in Download section below).

The Hon’ble Gujarat High court had made the following observation-

Earlier, the claim of the petitioners was rejected by the department under Section­ 54 of the Central Goods and Service Tax Act, 2017 read with Section­16 of the Integrated Goods and Service Tax Act, 2017 on the ground that they claimed higher duty drawback. Aggrieved, the petitioners approached the High Court to sanction the refund of Integrated Goods and Service Tax (IGST) paid in respect of the goods exported i.e. ‘Zero Rated Supplies’ vide the shipping Bill.

As provided in Rule­ 96 of the CGST Rules, 2017, the shipping bill filed by an exporter of goods shall be deemed to be an application for refund of the Integrated Tax paid on the goods exported out of India and such application shall be deemed to have been filed only when the person in charge of conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export and the applicant has furnished a valid return in the Form – GSTR­3 or Form GSTR­3B.

The division bench of the High Court while allowing the refunds said that if the refund of the principal amount is not sanctioned and actually paid to the writ applicant within the period of six weeks from the date of the receipt of this order, then interest would start accumulating at the rate of 9% and the amount shall be paid. Upholding the High Court order, Justice D Y Chandrachud and Justice M R Shah held that “there is a clear finding of fact which has been recorded by the Division Bench of the High Court of Gujarat in its order dated 15 December 2020 that the respondent had claimed an IGST export refund only to the extent of the customs component. We see no error in the finding of the High Court.” 

Other Refund Issues:

For rejection’s at PFMS, please refer to Public Notice No 26/2021 dtd 25.05.2019 (copy attached in the Download section below)

Download Section:

 

1. PN 26-2021 PFMS Error list-Delhi Customs
2. Gujarat High Court
3. VSG Exports Vs Asst Commissioner of Customs-Madras HC
4. Union_Of_India_vs_Awadkrupa_Plastomech_Pvt_Ltd_on_30_July_2021

 

 

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