Duty-free inputs used in export output are not export benefits/incentives

Last year, we obtained an advance authorisation and imported our inputs without payment of BCD, SWS, and IGST. Can we export the goods manufactured from such inputs on payment of IGST under a refund claim? Our GST office says that we cannot do so.

It depends on when you obtained the advance authorisation and under which notification you claimed exemption from payment of BCD, SWS and IGST. If you had obtained the authorisation under the FTP 2015-20 and cleared the goods under the notification no.18/2015-cus dated April1, 2015, you cannot export the goods on IGST payment under refund claim because the IGST exemption is granted under that notification through the amending notification 79/2017-Cus dated October 13, 2017 and Rule 96(10) of the CGST Rules, 2017 specifically denies you the facility of export on IGST payment under refund claim, if you have claimed the benefit of the said notification 79/2013-Cus. However, the said Rule 96(10) does not deny that facility in case you have cleared the goods under notification no.21/2023-cus dated April 1, 2023 which applies to advance authorisation issued under the FTP 2023.

We had exported certain goods and under advance authorisation. The buyer has, however, paid only the part value and despite our best efforts, we could not recover the rest. Our bank had allowed write-off of the balance amount due on the condition that we should surrender proportionate export incentives/benefits. Now a government audit team is asking us to surrender the proportionate duty exemption we availed under advance authorisation. Is the audit team’s demand correct?

In my opinion, ‘No’. Para 4.49(b) of HBP requires you to pay only a certain composition fee if the export obligation is fulfilled in quantity terms but there is a shortfall in value terms that results in non-achievement of prescribed value addition. Secondly, duty free raw materials were used in the manufacture of products that were exported and so, you are left with no export benefits or incentives in hand. However, if you have obtained any benefits or incentives under any reward scheme under Chapter 3 of the FTP, you have to surrender those proportionate benefits. Also, if you had taken any RODTEP or DBK benefits, you have to surrender the proportionate amount as the RODTEP and DBK schemes have specific provisions to that effect.

We had exported certain goods under claim of refund of IGST paid. We also got the DBK and RODTEP. The full advance from the buyer was adjusted against our exports in the EDPMS. Now, the buyer has rejected the goods and is sending them back. Do we have to pay back the GST, DBK and RODTEP taken? How to return the money to the buyer?

When you re-import the goods under notification 45/2017-Cus dated June 30. 2017, you have to pay the GST, DBK and RODTEP amounts at the time of clearance. Your bank can remit the money tom the buyer on the basis of the bill of entry for the reimported goods.