CBIC Clarifications on Refunds of IGST paid on import in case of risky exporters

Circular No.ES/101/2019-20 July 25, 2019

To: Members of the Council

Sub.: CBIC Clarifications on Refunds of IGST paid on import in case of risky exporters

Dear Member,

This has reference to Circular No.22/2019-Customs dated 24/7/2019 issued by CBIC, Ministry of Finance clarifying the ongoing issue faced by exporters due to the opening of export containers for 100% examination.

In this regard, as you are aware, CBIC had issued Circular No.16/2019-Customs dated 17/6/2019 modifying the automated procedure for claiming IGST refund, due to the rising number of fraudulent ITC claims filed by exporters.

The procedure involved :

Identification of suspicious cases;
Inserting alert in the system;
Examination of the export goods;
Suspension of the IGST refund; and
Verification by GST formations.

As per the modified procedure, the Customs Officer shall not process the refund claim in case malpractices are observed during verification.

In this regard, the Council had received representations from our members informing us that the above procedures delayed their shipment and they had to incur additional costs for carrying out re-packing.

Subsequently the Council took up the issue with various Govt. authorities conveying the concerns of the exporting community.

CBIC has now clarified the issue :

Circular No.16/2019-Customs dated 17/6/2019 was issued as a preventive measure against fraudulent refund of IGST on the basis of ineligible or fraudulently availed input tax credit (ITC).
Only a miniscule percentage of export consignments are being selected for examination on account of risk associated with fraudulent availment of IGST refunds.
Requirement of 100% physical examination of each export consignment shall be gradually relaxed provided no irregularity was noticed in earlier examinations of export consignments of export entities in terms of Circular No.16/2019-Customs dated 17.06.2019.
Risk Management Centre for Customs (RMCC) shall take into consideration the feedback received from field formations with regard to the 100% examination conducted on exports of risk based identified entities.
Wherever the examination has validated the declaration made in the shipping bill, RMCC may review the risk assessment and gradually taper down the percentage of physical examination.
Suitable alerts based on re–evaluated risk may accordingly be inserted in the system by RMCC in such cases.