Duty drawback Even govt official were also not prepared/ ready for this automatic process. There was no self declaration given to ports by the exporters on this. 2%. Refund of IGST on exported goods couldn't be withheld due to excess claim of duty drawback: High Court [Amit Cotton Industries v. Principal Commissioner of Customs [2019] 107 taxmann.com 167 (Gujarat)] The applicant was a registered person who was running a cotton ginning mill. Under GST, exports and supplies to SEZ are zero rated as per Section 16 of the IGST … Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. The Shipping Line had generated as the Taxpayer exports the supplies outside of India, the supplies are Dear Member eligible to be considered as ‘Zero Rate Supply’ in accordance with Section 16 We are exporting goods to USA without payment of IGST after GST implementation. In the case of exports under Refund of IGST , the shipping bill filed by the exporter shall be deemed to be an application for refund if IGST paid on goods exported out of India. Considering the fact that exporters have made aforesaid declaration while claiming the higher rate of drawback, it has been decided that it would not be justified allowing exporters to avail IGST refund after initially claiming the benefit of higher drawback. Dear Member By declaring drawback serial number suffixed with A or C and by making above stated declarations, the exporters consciously relinquished their IGST/ITC claims. this is totally unacceptable, government is not there to collect taxes only, they have to help us out. And even it was not asked as the people approving the shipping were also not aware of this. The IGST paid on the import is admissible as Input tax credit (ITC). As per the regular practice of CHA, they have filled shipping bill with higher rate of drawback. still we have not received due to higher dbk rate selection. Introduction: IGST refund inspite of duty drawback on higher rate. , I argued before *Madurai Bench of Madras Highcourt *, an issue relating to IGST refund being refused by the department because of claim of Higher duty drawback. 2.0 The issue has been examined extensively in this Ministry. Where the government contemplates expanding the scope of the restrictions for grant of refund, the same may have to be brought only by way of an amendment to the existing provisions of GST laws on of which is related to IGST Refund where Higher drawback claimed on Exports. Drawback Claim : The Drawback as being claimed should not contain the Componenet of Excise/Service tax. This facility is available for all registered persons except those registered under TDS, TCS and Non-resident Tax payers (NRTP). 29000) and we have paid IGST 18% (357000) as we wanted to claim refund after export procedure done. The rejection of the IGST refund was automatically done by the system as a higher drawback was claimed. Despite the repeated follow-ups, the GST Being an undisputed fact that IGST refund is payable to the petitioner, the petitioner is absolutely entitled to the IGST refund from the respondents. A.R.E-1 which is being submitted presently shall be dispensed with. This facility will enable a taxpayer (whether supplier or recipient) to send a message to another registered person (whether supplier or recipient) through the GST portal itself. The GST authorities directed to immediately refund under Section 54(10) or 54(11) of the CGST Act. This rule came into affect from 1.7.2017 and it was published on 29.06.2017. As the circular suggests, if an exporter consciously asks for a refund of the higher rate of duty drawback, he is not supposed to be entitled to IGST or ITC claims. The circular, reviewed by The Hindu, reads thus: “It has been noted that exporters had availed the option to take drawback at higher rate in place of IGST refund out of their own volition. Where the drawback rates are the same, it represents only the Customs elements, which did not get subsumed in the GST and thus, the writ­applicant cannot be said to have availed double benefit i.e. Further, the duty drawback scheme shall continue and exporters undertaking exports during this period can claim a higher duty drawback. Drawback Center Locations; Drawback Reminder for Manual Filers; Publication/Forms IGST refund mechanism is an electronic process: IGST refund mechanism is system-based and processed electronically in accordance with the declaration given in the Shipping Bill filed by Taxpayer and the details mentioned in the GST … Held that relying on the decision of this court in case of G.Next Power Corp vs Union of India, the refund is allowed after deduction of the amount of Higher Duty Drawback from the refund amount claimed. No.59/2017-Cus(NT) dated 296.2017 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; 2.3 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. No.59/2017-Cus(NT) dated 29.6.2017), under which All Industry Rates of Drawback had been notified and which were applicable for availing composite rates during period in question (i.e. Counterparty can send his reply using the same feature. Refund of excess duty drawback is a unilateral action: Refund of the differential duty drawback by the Taxpayer is a unilateral act by the Taxpayer not recognized under the law. The The objection pointed out by Sri Sreejith is that the petitioner has already drawn or availed the higher rate of duty drawback and therefore while ordering refund of IGST the petitioner is required to refund the higher rate of duty drawback already availed by the petitioner with interest. No exporter would prefer to take benefit of 0.85% Duty Drawback against refund of IGST/ Input GST which was at least 5%. If my understanding is correct, after 01.07.17, if a person is claiming ‘All Industry Rate’ of Duty Drawback, still he can claim refund of accumulated ITC on account of continuous exports. It is a relief by way of refund/ recoupment of custom and excise duties paid on inputs or raw materials and service tax paid on the input services used in the manufacture of export goods. However, it may apply certain conditions such as no input tax credit of CGST/IGST when claimed, no refund of IGST paid on export goods when claimed and no CENVAT credit when carried forward. The Commerce Ministry has taken note of exporters’ complaints that the input duty refund under the duty drawback scheme claimed by some last year was much lower than the IGST (Integrated Goods & Services Tax) refunds due to them and it may ask the Finance Ministry to address the issue. ICAI Results: Certificate Course on Ind AS held on 27/12/2020, MSME Mentorship Programme & 100 Facilitation Centers for MSME/ GST, launched by ICAI, ICAI Clarification on Auditor Sharing Client Information with Credit Rating Agencies, ICAI Announcement 04/01/2021: CPE Hours Compliance Deadline Extended, Gutkha Manufacturer arrested for GST evasion of 831.72 cr, CBIC Central Tax Notification 01/2021: CGST (1st Amendment) Rules 2021, ICAI Announcement 01/01/2021: CBDT to allow validations of certain UDINs upto 15/02/2021, CBDT Press Release 31/12/2020: IT Search in Kolkata, CBDT Income Tax Notification 92/2020: Vivad se Vishwas Scheme Extension, CBDT Notification 93/2020: ITR/ TAR Due Dates Extension. Duty Drawback and ITC Refund, Goods and Services Tax - GST. Re Export can be sent on payment of IGST/LUT/Bond. While the intention of the CBIC and GST authorities by applying the provisions of the Circular about IGST Refund where Higher drawback claimed on Exports was to ensure that no exporter is doubly benefitted for the same transaction, the same does not have authority under the existing provisions of GST law. No. After conversion of Shipping Bills they will be eligible to claim refund of IGST paid. Members of the Council. It is a totally wrong practice. F. No. (B) Duty Drawback Scheme Happy to Share for the benefit of all, that today in the matter of Petitioner is M/s Precot Meridien Limited. 2.2 Notes and Condition (12A) of Notfn. REFUND MECHANISM UNDER GST ... - The Committee recommends that the Government provide for a duty drawback rate which would encompass all the taxes including the GST/IGST levied as well as embedded/blocked tax and give a choice to the exporters to either claim the Duty Drawback or follow the Input Tax Credit route. Our forwarder claimed Drawback & ROSL in shipping bills, when shipment going. in our plastic product, DBK rate is 1.8% (Rs. The legal provisions related to Drawback claims are as under: 2.1 Notes and condition (11) of Notf. , I argued before *Madurai Bench of Madras Highcourt *, an issue relating to IGST refund being refused by the department because of claim of Higher duty drawback. 20126 of 2018], the Gujarat High Court (‘HC’) has ruled that claim of duty drawback is not a valid reason for unreasonably withholding IGST refunds. Under new scheme of drawback only one rate has been prescribed which is limited to custom portion of inputs. Duty Drawback has been one of the popular and principal methods of encouraging export. Blog » Goods and Service Tax » GST Refund » Can IGST Refund be seek, where Higher drawback has been claimed on Exports, Gujarat of the IGST refund and higher duty drawback. High Court rules that claim of higher rate of duty drawback is not a valid But they were not knowing it. Unreasonable delays in grant of refund of Integrated Goods and Services Tax (‘IGST’) has impacted several exporters in the recent past. Actually an opportunity should be given to pay back higher drawback amount with interest to avail refund of GST. What ignorance you are talking about, you must accept that GST was applied in hurry mode, no one was prepared for it. In the 'Special Refund and Drawback Disposal Drive', the CBIC officers have cleared over 1.07 lakh Goods and Services Tax and IGST refund claims worth Rs 9,818.12 crore. Circulars of CBIC binding on GST authorities: Circulars of the CBIC are binding on the GST authorities and hence, the GST authorities could not take a different stance than what was directed to be followed by the CBIC. The Cabinet Committee on Economic Affairs has given its approval for introducing a new Scheme namely Remission of Duties and Taxes on Exported Products (RoDTEP). Rate of Duty Drawback available was 0.15% if they wanted refund of IGST or Inputs GST. was not a permitted reason under the GST law to withhold refunds. Why so short notice. IGST refund not applicable where higher DBK was claimed. The HC held that the IGST Refund where Higher drawback claimed on Exports should be processed immediately without any delay along with a simple interest of 7% per anum. Overview of Duty Drawback This video introduces the duty drawback. It should purely be for Customs portions (Drawback - When Cenvat Credit is not available - Its option B on shipping Bill). delay. As per the policy Customs Duty paid earlier can be take back as Duty Drawback under Section 74 of the Customs Act,1962 to 95% extent if re export is within prescribed time limit otherwise slab wise rate of duty drawback would applicable. They stated that the petitioner has claimed a higher duty drawback. order to claim refund, the Shipping Bill filed the Taxpayer shall be deemed to After a number of exporters opted for the duty drawback option, they discovered that the IGST paid by them on inputs was much higher and opting for refunds would have been a better deal Circular on duty drawback: As per Circular No.37/2018 – Customs dated 9 October 2018, the Central Board of Indirect Taxes and Customs (‘CBIC’): Exporters avail the option to take drawback at a higher rate in place of IGST refund on their own volition as part of the prescribed documentation/ forms. This is wrong stand taken by CBIC. The outward supplies made by the Taxpayer Rule 96 of the CGST Rules is very clear and Taxpayer is a Cotton Ginning Mill, engaged the business of procuring raw cotton paid on goods exported to Bangladesh even if duty drawback was claimed. Foreign Trade Policy. The Commerce Ministry has taken note of exporters’ complaints that the input duty refund under the duty drawback scheme claimed by some last year was much lower than the IGST … Wide Notification No. jurisdictional GST officer to withhold the IGST refund payment due to claim of During the processing of the refund claim, the value of the goods declared in the GST invoice and the value in the corresponding shipping bill / bill of export should be examined and the lower of the two values should be sanctioned as refund. of the Shipping Bill till the date of actual refund. How each and everyone will be aware of this? 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. In terms of Section 16 of the IGST Act, a registered taxable person shall have the option either to export goods/services without payment of IGST under bond or letter of undertaking and claim refund of ITC or he can export goods/services on payment of … from farmers, ginning the same, pressing the same, carrying out necessary You cannot decide only to take from the Govt. sanction the refund of the IGST along with a 7% simple interest from the date per Section 16(3)(b) read with Section 54 of the IGST Act, the Taxpayer has an The contents of this article are solely for informational purpose. Where exporters avail such option and provide a declaration while claiming the higher rate of drawback, it would not be justified allowing exporters to avail IGST refund after initially claiming the benefit of higher drawback. option to claim refund on the exported goods to the extent of the IGST paid on 01.01.2021, Auto population of E-Invoice details in GSTR-1/2A/2B/4A/6A, Online communication on GST portal | Facility between Supplier and Recipient, Uploading Show Cause Notice and Order on GST Portal is Mandatory | SCN and order sent via email only is invalid, Analysis of New RBI Monetary Policy, 2020 & few recent changes by RBI. rates and caps given under column (6) and (7) respectively of the Schedule of AIRs of duty drawback and avail input tax credit of CGST or IGST or refund of IGST paid on exports. The exporter first get the Shipping Bill amended and revert back the claim if any taken or make the shipping Bill free shipping Bill by converting the same. No IGST refund to exporters if initially claimed benefit of higher drawback or where higher rate and lower rate were identical- CBIC. absolute’ i.e., order to be enforced at once and immediately, without any CLE-HO/POL/CIRCULAR/18-19 Sept. 18, 2018. Export General Manifest and Bill of Lading. Introduction: IGST refund inspite of duty drawback on higher rate. The drawback of the input duty refund under the duty drawback scheme is that it is lower as compared to last year’s IGST refund as claimed by the exporters which further noted by the Commerce Ministry.. Circular No 37/2018-Customs. IGST refund mechanism is an electronic process: IGST refund mechanism is system based and processed electronically in accordance with the declaration given in the Shipping Bill filed by Taxpayer and the details mentioned in the GST … Being an undisputed fact that IGST refund is payable to the petitioner, the petitioner is absolutely entitled to the IGST refund from the respondents. Yes. However, the same It exported its goods and claimed refund of the IGST paid in respect of such… IGST refund not Allowed to Exporters after claiming benefit of higher duty drawback rate: Keywords: cbic, clarification, circular, igst refund, higher duty drawback rate benefit Created Date: 10/9/2018 8:41:11 PM 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. authorities had not released the IGST refund to the Taxpayer. We should get the options to refund the drawback amount along with interest to the government and to claim refund of the IGST. a request has been received from the The judgment of the HC has clarified the legal position that the IGST Refund where Higher drawback claimed on Exports could be withheld only in circumstances permitted under law and shall not be withheld unreasonably. is one of the export incentives provided by the Government of India under the Gujarat HC directs Revenue to “immediately sanction” IGST refund on export of Rope Making Machine [HSN Code 84794000] i.e. process, converting it into bales and then exporting these cotton bales out of Dear Sir, Yes, you can very well claim GST Refund but subject to following conditions and as under, 1. According to a government official, “exporters have said that they are willing to pay back the drawback with interest and they should be instead given IGST refund which is a much higher amount. unambiguous. 01.10.2017. The We claimed drawback of 88,000 rupees and GST stuck is more than 15 lac. There are many such victims who’ve got peanuts like duty drawback and got substantial amount of IGST paid and stuck! Amit Cotton Industries [R/ Special Civil Application No. No exporter would prefer to take benefit of 0.85% Duty Drawback against refund of IGST/ Input GST which was at least 5%. 1962. Exporters have to provide details of GST Invoice in the Shipping Bill. Frequently Asked Questions on IGST refunds on goods exported out of India Q.l What is zero rated supply under GST? Because in the initial period of operation of GST, exporters were not aware that if they claimed 1% Duty Drawback then they would not be allowed refund of IGST on Inputs. 01.07.2017 and during the intervening period the rate of drawback was same for lower rate and higher rate i.e. 1. Numerous representations have been received from exporters/ export associations, regarding cases where IGST refunds have not been granted because higher rate of drawback has been claimed or where higher rate and lower rate were identical. No IGST refund – No refund of output GST paid on the final export product if import of inputs against AA has happened using exemption Several exporters were oblivious to these clauses, and have been executing imports considering IGST is exempted if an export obligation is already met. 229 A, North Block DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. What will happen for the duty that has been paid by the exporter. IGST refund not Allowed to Exporters after claiming benefit of higher duty drawback rate: CBIC Clarification Circular No.37/2018 Customs dt. Pre GST, exporters were enjoying all benefits, exemption from VAT (against H Form) and Customs duty draw back of 1%. Further, the new all industry rates of duty drawback have also been notified which are effective from 1st October, 2017. Administration. The same was required to be done w.e.f. In 450/ 119/2017-Cus IV Government of India Ministry of Finance Department of Revenue (Central Board of Indirect Taxes & Customs) Room No. Save my name, email, and website in this browser for the next time I comment. Under such a scheme, reimbursement of such taxes/duties/levie, paid at the central/ state/ local level, shall be granted which is not refunded in any other mechanism. IGST refund mechanism is an electronic process: IGST refund mechanism is system-based and processed electronically in accordance with the declaration given in the Shipping Bill filed by Taxpayer and the details mentioned in the GST return. 9 Oct. 2018, Sub: Cases where IGST refunds have not been granted due to claiming higher rate of drawback OR where higher rate and lower rate were identical. relevant export details in the monthly returns in Form GSTR-3B. 2.4 The declarations required in terms of above Notes and Conditions and provisions of the Drawback Rules are made electronically in the EDI System. Bill(s). the exports were in violation of the relevant provisions of the Customs Act, If they cannot grant refund then in such case the exporter should be allowed re-credit in the Electronic Credit ledger. No.131/2016-Cus(NT) dated 31.10.2016 (as amended by Notf. the proper Customs officer determines that For exports during this period, exporters can claim higher rate of duty drawback (composite AIR) subject to conditions that no input tax credit of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward. Further, IGST refund is dealt by GST law, hence drawback and IGST refund operates independently . The application for IGST refund for exports shall be deemed to have been filed, when the conveyance carrying the export goods leaves India, i.e. However, The customs duty and interest … Ans. The reason is that drawback is limited to customs portion only resulting in repayment of customs duty . In the case of M/s. When CBIC own people were not aware of this rule then how they can expect exporters and their CHAs to know this. Refund of excess duty drawback is a unilateral action: Refund of the differential duty drawback by the Taxpayer is a unilateral act by the Taxpayer not recognized under law. The Taxpayer is entitled to refund of IGST Over 1.86 lakh customs and duty drawback refund was processed totalling Rs 915.56 crore, the CBIC said. There have been several instances where taxpayers had to resort to litigation in the High Court in order to obtain specific relief and direction for grant of IGST refunds and also in cases of IGST Refund where Higher drawback claimed on Exports. CBIC clears Rs 10,700 cr GST, customs duty refund in 16 days 26 Apr, 2020, 05.37 PM IST. CBIC has clarified that where exporters have opted/ preferred to take drawback at higher rate in place of IGST refund for the period 1 July 2017 to 30 Sept. 2017, there is no justification in re-opening the issue at this stage and the exporters will not be allowed to avail IGST refund after initially claiming the benefit of higher drawback. 1. Who is required to  Generate E-invoice? CLE-HO/POL/CIRCULAR/18-19 Sept. 18, 2018. The Taxpayer has also furnished the Leave your Name, email, Phone number along with what you are looking for in message box or you can call us at 011-41715118, Copyright (c) 2014-2020 | All Right Reserved | VJM & Associates LLP, Can IGST Refund be seek, where Higher drawback has been claimed on Exports, 405-406, 4th Floor, Raja House, Nehru Place, New Delhi - 110019, Financial Structuring & Restructuring Services, CLARIFICATION ON ISSUES RELATING TO REFUND, RoDTEP (Remission of Duties and Taxes on Exported Products) | Applicable w.e.f. drawback may not be eligible for refund of IGST on exports. It’s like want the cake and eat it too. Totally wrong practice done by govt and CBIC. Now exporters have paid GST of at least 5% on inputs or would have charged 5% IGST. the exported goods. Export General Manifest (EGM) is filed, and The applicant has furnished a valid Return in Form GSTR- 3 under Section 54 of GST Act, read with Rule 96 of CGST Rules. IGST Paid Differences GSTR-1 and 3B are taxable under the GST law. Taxpayer is registered under the GST law. Rate of Duty Drawback available was 0.15% if they wanted refund of IGST or Inputs GST. Services Tax Rules, 2017 (‘CGST Rules’). Otherwise, for just 1.5% to 2% drawback amount, we will loose the 18% IGST. Read more on CLARIFICATION ON ISSUES RELATING TO REFUND. Now small exporters are struck with working capital funds blocked by ITC in GST. It is unfair to claim ignorance when the CBIC has published the notification, blaming the GST advisor and shipping agents. In erstwhile Drawback Rules of 1995, the customs duty, excise duty, and service tax were repaid through drawback mechanism whereas after coming into force of GST law , as both the latter taxes have subsumed in GST, therefore entitlement of drawback is limited to custom duty only and excise duty, and service tax which are subsumed in GST are refunded through IGST refund mechanism. Dear Sir, Drawback amount is 1.8 percent in column A and B both for granite. While a transition period of three months has been allowed, the exporters shall have an option to claim only Customs portion of AIRs of duty drawback i.e. It does not constitute professional advice or recommendation of firm. reason for rejection of IGST refund on exports. 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. Duty Drawback and Refunds This article includes a series of videos to help you, the exporter, understand the background and history of duty drawbacks, the types of duty drawbacks that can be claimed, and upcoming changes to the duty drawback program. Drawback is the refund of certain duties, internal revenue taxes and certain fees collected upon the importation of goods. To ease this communication, the GST system has added a new Facility of “Communication Between Taxpayers” on the GST portal. Taxpayer had issued Commercial Invoice(s), Export Invoice(s) and Shipping Read more about 'IGST paid on imported inputs is excluded in definition of duty drawback' on Business Standard. It has been noted that exporters had availed the option to take drawback at higher rate in place of IGST refund out of their own volition. 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. Once GST regime started, most of small exporters were not aware of the anomalies in the GST rules. Any resolution of the issue? decision taken by the Government of India, exporters availing higher rate of duty IGST refund not applicable where higher DBK was claimed. By declaring drawback serial number suffixed with A or C and by making above stated declarations, the exporters consciously relinquished their IGST/ITC claims. No.131/2016-Cus(NT) dated 31.10.2016 (as amended by Notfn. Legally the CBIC clarification is right, but still ways are open for claiming the drawback. Because relevant circulars were not brought to their notice either by their GST advisers or Shipping Agents. Held that refund of IGST would be allowed after deducting the higher rate of duty drawback for the refund amount along with the interest @ 7% In a Writ Petition filed before the High Court of Kerala by Nilamer Exports reported in 2019(29) G.S.T.L 692 (Ker). [Para 9,9.1 of Circular 37/11/2018 dated 15- 03-2018] 3. Such refunds are only allowed upon the exportation or destruction of goods under U.S. Customs and Border Protection supervision. Introduction. The point is we claimed GST refund claim and its also received in our bank. 2.5 By declaring drawback serial number suffixed with A or C and by making above stated declarations, the exporters consciously relinquished their IGST/ ITC claims. Drawback & ROSL amount automatically credited to our bank account. India. Sub: Cases where IGST refunds have not been granted due to claiming higher rate of drawback OR where higher rate and lower rate were identical -reg. As Sub: Cases where IGST refunds have not been granted due to claiming higher rate of drawback OR where higher rate and lower rate were identical -reg. Refund of excess duty drawback is a unilateral action: Refund of the differential duty drawback by the Taxpayer is a unilateral act by the Taxpayer not recognized under the law. Petitioner has made certain exports with payment of IGST and has availed higher duty drawback and claimed the refund of IGST paid.