Chatroom: 'Drawback of IGST also available on re-export of imported goods'

This is subject to submission to Customs a certificate from the local GST officer that input tax credit has not been taken, and no refund of such ITC or IGST paid on the goods has been claimed

Q. We had imported certain goods on payment of full duty including IGST. Finding them defective, we have not used them. The supplier has agreed to take the goods back. So, we want to re-export them. Can we get a drawback of 98 per cent of the duty we paid, including IGST, under Section 74 of the Customs Act, 1962?

Yes, provided you submit to the Customs a certificate from your jurisdictional GST officer that the input tax credit (ITC) of IGST paid on imported goods has not been taken, and that no refund of such ITC or IGST paid on the goods has been claimed. Please refer to CBEC Circular no.21/2017-Cus dated June 30, 2017, which clarifies this matter.

Q. Para 3.12 of the HBP (2015-20) says that when goods imported using duty credit scrips are found defective and re-exported, the Customs will issue a certificate containing particulars of scrip used, date of import of re-exported goods and amount debited while importing such goods, and that based on this certificate, upon application, a fresh scrip will be issued by the concerned RA to the extent of 98 per cent of the debited amount, with the same port of registration and valid for a period equivalent to the balance period available on date of import of the goods. Our CHA, however, says that the Customs’ certificate itself can be used for payment of duty on other imported goods, and that there is no need to take a fresh scrip from the RA. What is the correct position?

The provision for re-export of defective/unfit goods and issue of fresh scrip by the RA at Para 3.11.6 of the HBP 2009-14 was amended through DGFT Public Notice No. 22/2009-14 (RE-2010), dated January 14, 2011, allowing the use of a re-credit certificate issued by the Customs to the extent of 98 per cent, within six months from the date of the re-credit certificate. The CBEC had issued circular no. 45/2011-Cus dated October 13, 2011, giving effect to that change. It appears the Customs are following the same circular, as it has not been changed or withdrawn.

Q. Is it a discrepancy if an insurance policy presented under a letter of credit states that the cover is subject to a franchise or excess (deductible)?

Article 28(j) of Uniform Customs and Practices for Documentary Credits 2007, ICC Publication no. 600 (UCP 600), says that “an insurance document may indicate that the cover is subject to a franchise or excess (deductible)”.  However, Clause 177 of International Standard Banking Practice for Examination of Documents under Documentary Credits, 2007, ICC Publication no.681 E (ISBP 681E), says that “if a credit requires the insurance cover to be irrespective of percentage, the insurance document must not contain a clause that the insurance cover is subject to a franchise or excess deductible.”

So, there is no discrepancy if the insurance policy says that the cover is subject to a franchise or excess deductible, provided the LC does not call for an insurance policy stating that the cover should be irrespective of percentage.
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