Circular No.ES/67/2019-20 June 18, 2019
To: Members of the Council
CBIC has issued Circular No.16/2019–Customs dated 17th June, 2019 regarding IGST refunds mechanism to verify IGST payments.
As you may be aware, the procedure for claiming IGST refunds is fully automated as Instruction No. 15/2017-Cus dated 09.10.2017.
Board has noticed the following instances by exporters for claiming IGST –
For availing IGST refund exporters use fraudulent ITC claims.
Avail ITC on the basis of ineligible documents or fraudulently and utilize that credit for payment of IGST on goods exported out of India.
In many cases, there is a huge variation between the FOB value declared in the Shipping Bill & Taxable value declared in GST Return apparently to effect higher IGST pay out leading to encashment of credit.
In view of above, CBIC has now decided to verify the IGST payments through the respective GST field formations. Therefore, the procedure specified in the Instruction No. 15/2017-Cus dated 09.10.2017 has been modified as under:
Identification of Suspicious cases:
Suitable criteria shall be worked out by DG (Systems) to identify risky exporters at the national level & forward the list of said risky exporters to Risk Management Centre for Customs (RMCC) & respective Chief Commissioners of Central Tax.
DG (Systems) shall inform the respective Chief Commissioner of Central Tax about the past IGST refunds granted to such risky exporters (along with details of bank accounts in which such refund has been disbursed).
Inserting Alert in the System:
RMCC shall insert alerts for all such risky exporters & make 100% examination mandatory of export consignments relating to those risky exporters.
Alert shall be placed to suspend IGST refunds in such cases.
Examination of the export goods:
Customs officers shall examine the consignment as per the RMCC alert.
In case the outcome of examination tallies with the declaration in the Shipping Bill subject to no other violation of any of provision of the Customs Act, 1962 or other laws being observed, the consignment may be cleared as per the regular practice.
Suspension of IGST refunds:
Despite the clearance of the export consignments as per para C above, such Shipping Bills shall be suspended for IGST refund by the Deputy or Assistant Commissioner of Customs dealing with refund at the port of export.
Verification by GST formations:
Chief Commissioner of Central Tax shall get the verification of the IGST refund claims and other related aspects done in accordance with the Standard Operating procedure to be issued by the GST policy wing.
The GST formation shall furnish a report to the respective Chief Commissioner of Central Tax within 30 days specifying clearly whether the amount of IGST paid and claimed/ sanctioned as refund was in accordance with the law or not.
Chief Commissioner of Central Tax shall compile and forward report of all cases to RMCC & concerned customs port of export within 5 working days thereafter.
Action to be taken by customs formations on receipt of verification report from GST formations:
Cases where no malpractices have been reported on verification
Cases where malpractices have been reported on verification
Upon verification if it is found that the ITC availed by the exporter was in accordance with the GST Law and rules, the Customs officer at the port of export shall proceed to process the IGST refund to the extent verified by the GST Authorities.
Upon verification if it is found that the exporter has availed ITC fraudulently or on the basis of ineligible documents and utilized the said ITC for payment of IGST claimed as refund, the customs officer will not process the refund claim.
The detailed advisory in this regard shall be issued by DG (Systems) for the benefit of customs officers handling refunds.
Members may kindly make a note of the above.