Covid-related imports not exempt from IGST if payment made: Expert

We had exported certain medical equipment under the classification 9021. These were rejected by the buyers and so, have to be re-imported.  Now, we want to claim exemption under notification 45/2017-Cus dated June 30, 2017, which is applicable for re-import of exported goods. Health cess is applicable on the items in question, if imported. Is health cess applicable when exported goods are re-imported?

As per Section 20 of the Customs Act, 1962, “if goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof”. Therefore, unless the re-imported goods are exempted specifically under any notification, the levies applicable on imported goods will equally apply on re-imported goods.

Now, notification 45/2017-Cus exempts only the basic customs duty, IGST and Compensation Cess. It does not exempt health cess. So, you have to pay the health cess. I suggest you highlight this matter to the authorities and ask them to include exemption from health cess in notification 45/2017-Cus.

We are an export oriented unit (EOU). We want to destroy certain goods imported duty-free under notification 52/2003-Cus dated March 31, 2003, as they have deteriorated and are unusable. Do we have to pay customs duty on them?

As per Para 6.15 (b) of FTP, “no duty shall be payable other than the applicable taxes under GST laws in case capital goods, raw material consumables, spares, goods manufactured, processed or packaged, and scrap/waste/remnants/rejects are destroyed within the unit after intimation to Customs authorities, or destroyed outside the unit with permission of Customs authorities”.  Condition no.8 in the opening paragraph of notification 52/2003-Cus dated March 31, 2003 also makes a similar provision. However, this dispensation is not available for EOUs engaged in manufacture and export of gold, silver, platinum, diamond, precious and semi-precious stones.

We are a company manufacturing chemicals. We want to play our role as a responsible corporate citizen at this difficult time. We want to import oxygen generators, ventilators, etc. and distribute them free of charge to various hospitals. Can we get exemption from IGST? Also, if we purchase these items locally on GST payment and supply free of charge to hospitals, will we have to forego ITC on these items?

The ad hoc exemption order no.4/2021-Cus dated May 3, 2021 exempts IGST only on goods imported free of charge for Covid relief. So, if you pay for the imported goods, exemption from IGST will not be available. Thus, GST will be payable whether you buy from a party abroad or from a local supplier. When you donate (i.e. dispose of the imported or domestically procured goods by way of gifts), you cannot take ITC of the GST paid, due to restrictions under Section 17(5)(h) of the CGST Act, 2017.

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