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Dated: 08.04.2025

CESTAT Ahmedabad concluded the demand for IGST was unjustified due to prematurity and revenue neutrality

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, delivered a favorable decision for AMNS Ports Hazira Ltd., formerly known as Essar Bulk Terminal Pvt Ltd., regarding the exemption from Integrated Goods and Services Tax (IGST) under the Export Promotion Capital Goods (EPCG) scheme.

Case Background:

AMNS Ports Hazira Ltd. imported capital goods such as a Ship Unloader, Barge, and Railmount equipment under an EPCG authorization, availing exemption from IGST under Notification No. 16/2015-Cus. Subsequently, the customs authorities challenged this exemption, alleging non-compliance with certain export obligation conditions, particularly concerning payments received in rupee terms.

Tribunal’s Key Observations:

• The appellant’s EPCG authorization clearly stipulated a six-year period to fulfill the export obligation, expiring on January 20, 2025. The tribunal recognized the department’s initiation of proceedings before this date as premature.
• AMNS Ports had effectively provided port services to foreign vessels, meeting obligations through earnings indirectly received in convertible foreign exchange via Indian agents.
• The appellant proactively sought reassessment to address compliance, demonstrating a clear intention to rectify any inadvertent errors related to IGST payments.

Revenue Neutrality and Input Tax Credit:

• The Tribunal noted the IGST amount, even if payable, was available to AMNS Ports as Input Tax Credit (ITC), thereby creating a revenue-neutral scenario. It found that the appellant had already paid significant GST amounts in cash exceeding the disputed IGST, further reinforcing the revenue-neutral aspect.

Tribunal’s Final Verdict:

• The tribunal concluded the demand for IGST was unjustified due to prematurity and revenue neutrality.
• It set aside the confiscation order and penalties imposed, granting complete relief to AMNS Ports Hazira Ltd. and its representative.

Implications:

This ruling underscores important procedural fairness for businesses operating under EPCG authorizations, emphasizing proper timelines and the principle of revenue neutrality. Companies involved in similar compliance issues can leverage this judgment to advocate for equitable treatment in customs matters.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: CESTAT Ahmedabad

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