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Cases where IGST refund have not been granted due to claiming higher rate of drawback OR where higher rate and lower rate were identical

Circular No.ES/ 246 / 2018-19                                                                             10th October, 2018

To: Members of the Council

Sub. : Cases where IGST refund have not been granted due to claiming higher rate of drawback OR           where higher rate and lower rate were identical

Dear Member,

We wish to bring to your kind notice the problem faced by some of our members where IGST refund have not been granted due to claiming higher rate of drawback OR where higher rate and lower rate were identical.

In this connection, the Council along with other Associations took up the matter with various Custom Houses. The issue has been examined by the Board and the legal provisions related to Drawback claims are given in Circular No.37/2018-Customs dated 9th October, 2018 are as under:

  • Notes and condition (11) of Notification No.131/2016-Cus(NT) dated 31.10.2016 (as amended by Notification No.59/2017-Cus(NT) dated 29.6.2017 and 73/2017-Cus(NT) dated 26.7.2017), prescribed that

‘The rates and caps of drawback specified in columns (4) and (5) of the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is –

....

(d) exported claiming refund of the integrated goods and services tax paid on such exports.’

  • Notes and Condition (12A) of Notification No.131/2016-Cus(NT) dated 31.10.2016 (as amended by Notification No.59/2017-Cus(NT) dated 29.6.2017 and 73/2017-Cus(NT) dated 26.7.2017) prescribed that

‘The rates and caps of drawback specified in columns (4) and (5) of the said Schedule shall be applicable to export of a commodity or product if the exporter satisfies the following conditions, namely:-

... ... ...

(ii)   If the goods are exported on payment of integrated goods and services tax, the exporter shall declare that no refund of integrated goods and services tax paid on export product shall be claimed;…..’.

  • In terms of Rules 12 and 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, the shipping bill itself is treated as claim for drawback in terms of the declarations made on the shipping bill.
  • The declarations required in terms of above Notes and Conditions and provisions of the Drawback Rules are made electronically in the EDI System. When composite drawback rate was claimed (by declaring suffix A or C with Drawback serial number), exporter was required to tick DBK002 and DBK003 declarations in the shipping bills. In fact, for period 1.7.2017 to 26.7.2017, a manual declaration was also required to be given as the changes made on 26.7.2017 were made applicable for exports made from 1.7.2017 onwards.
  • By declaring drawback serial number suffixed with A or C and by making above stated declarations, the exporters consciously relinquished their IGST/ITC claims.

The Board has observed that –

  • Exporters had availed the option to take drawback at higher rate in place of IGST refund out of their own volition.
  • Considering the fact that exporters have made aforesaid declaration while claiming the higher rate of drawback, CBIC has decided that it would not be justified allowing exporters to avail IGST refund after initially claiming the benefit of higher drawback.

Please note that there is no justification for re-opening the issue at this stage.

Members may kindly make a note of the above.

Thanking you,

Yours faithfully,

S. BALARAJU
EXECUTIVE DIRECTOR

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