We are merchant exporters. We exported certain goods without GST payment under letter of undertaking. Some of these were purchased on payment of excise during pre-GST era and some after July 1, 2017 on payment of GST. On export of these goods we have claimed duty drawback at higher composite rates for exports made between July 1, 2017 and September 30, 2017. We have not claimed refund of unutilised input tax credit. Is that OK?
As per CBEC Circular no. 22/2017-Cus dated June 30, 2017, the conditions imposed for claiming composite rates aim to ensure that exporters do not claim composite AIRs of duty drawback and simultaneously avail input tax credit of Central Goods and Services Tax (CGST), or Integrated Goods and Services Tax (IGST) on export goods, or on inputs and input services used in the manufacture of export goods, or claim refund of IGST paid on export goods. Further, an exporter claiming composite rate shall also be barred from carrying forward Cenvat credit on the export goods or on inputs or input services used in manufacture of export goods in terms of the CGST Act, 2017. For all exports made with effect from July 1, 2017 for which higher rate of drawback is claimed, exporters have to submit the self-declaration in the format given in CBEC Circular no.32/2017-Cus dated July 27, 2017.
We refer to notification 3/2018-Central Tax dated January 23, 2018, which amends the GST Rules, 2017. The amended Rule 96(10) says that the persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the supplier has availed the benefit (besides other notifications) of notification No. 79/2017-Customs dated October 13, 2017. Now, the notification 79/2017 amends many notifications applicable to several types of advance authorisations and even EPCG authorisations. Does it mean that if a supplier has taken the benefit of any of the notifications mentioned in notification 79/2017, the exporter cannot pay IGST on his export goods and claim refund?
Yes. The essence of the part of GST Rules amendment that you refer to is that as an exporter, if you procure goods from a supplier who takes the benefit of advance authorisation or EPCG authorisation as provided in notification 79/2017, you must export under LUT. There is more in that amendment. If the supplier claims refund of GST paid on deemed export supplies made to you or if he happens to be an EOU who takes the benefit of notification 78/2017-Cus dated October 13, 2017, then also you cannot export on payment of IGST under a refund claim. Also, a merchant exporter who procures export goods at 0.1 per cent GST must export under LUT. There is lots of confusion in the trade on account of this amendment to the said GST Rules made with retrospective effect from October 23, 2017. The status of exports already made on payment of IGST is not known. If you have received refund of it, you may be asked to surrender the same with interest.
 "Exporters claiming higher drawback must submit self-declaration")
