We are merchant exporters. We export under AIR drawback scheme. Our supporting manufacturer uses inputs on which the customs duty incidence is much higher than what the AIR drawback scheme gives us. Is it possible to claim the difference?
If the AIR of drawback gives you less than four-fifth of the actual customs duty incidence on the inputs, then you can claim the difference through special brand rate route as per Rule 7 of the Customs and Central Excise Duties Drawback Rules, 2017. You have to make appropriate declarations in the shipping bill and then file the brand rate fixation application to your jurisdictional authorities. They will send it to the Customs authorities having jurisdiction over the factory of the supporting manufacturer for necessary verification and notify the brand rate based on the verification report.
We are in the oil and gas sector having a manufacturing unit in Gujarat and a service unit in software technology park (STP) in Maharashtra. We have taken separate GST numbers for STP in Maharashtra and manufacturing unit in Gujarat. Now, we want to start a testing facility (testing of engineering goods) in a leased premise at Maharashtra. We want to know whether we need to take a separate GST registration for new testing facility or we can add the facility as additional place of business in the existing GST registration number of STP. Secondly, if we add the new testing facility under existing GST number of Maharashtra, can we utilise the ITC of the STP unit for the payment of GST liability of the testing facility? Third, if the testing services are rendered to a foreign entity, whether the same is liable to GST. Finally, can we get the new testing facility as a separate standalone STP unit according to existing FTP instead of under specified cluster of STP in term of Para 6.15 (b) of FTP?
The first proviso to Section 25(2) of the CGST Act, 2017 allows you to take separate registrations for your testing facility. So, it is entirely up to you whether you want to add the testing facility as an additional place of business in your existing registration, or take a separate registration. If you have a single registration for both your units in Maharashtra, you can take input tax credit of the tax paid on inputs and input services received in both the units and utilise the credit in either of the units.
The testing services rendered to a foreign entity will be treated as export of services if the conditions mentioned at Section 2(6) of the IGST Act, 2017 are fulfilled. Exports of services are zero rated, in accordance with Section 16(1) of the IGST Act, 2017. However, you must receive the export proceeds within the time limit stipulated. You can set up a testing unit in accordance with Para 6.15 (b) of the FTP either in a designated STP area or as a standalone STP unit, according to the IMSC approval.