The Customs Authority of Advance Ruling (AAR), Mumbai ruled that 5% IGST payable on import of footwear having sale value not exceeding Rs.1000 per pair.
The applicant, M/s Skechers South Asia Private Ltd is a wholly-owned subsidiary of trd/s Skechers USA, Inc. They are engaged in the business of import and distribution of footwear, apparel, and accessories in India. The footwear imported by the applicant is of two categories namely footwear having transactional value not exceeding Rs. 1000 per pair and footwear having a transaction value exceeding Rs.1000 per pair.
The present application pertains to footwear having a transaction value not exceeding Rs.1000 per pair. As per proviso to section 5(1) of the Integrated Goods and Services Tax Act, 2017, IGST on imported goods is to be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975. In terms of section 3(7) of the Customs Tariff Act, 1975, an article imported into India is liable to IGST at a rate leviable under section 5 of the IGST Act, on a like article when it is supplied in India. IGST will be required to be discharged on the value of the imported article determined in terms of sections 3(8) or 3(8A) of the Customs Tariff Act, 1975, as the case may be. Therefore, IGST is to be levied and collected as a duty of customs at the time of import. The applicant stated that they are eligible for benefits of reduced rate of IGST at the rate of 5% as per Sr. No. 225 of Schedule-I of the Notification No. 1/20178-Central Tax (Rate). In the said notification, footwear of sale value not exceeding Rs. 1000 per pair attracts IGST at the rate of 5%.
The applicant has sought the advance ruling on the issue of whether the impugned imported goods are eligible for a concessional IGST rate at 5%.
The coram of M.R.Mohanty observed that in the 45th GST Council meeting GST rate changes in order to correct inverted duty structure in footwear were discussed. The fitment committee has proposed increasing the rate on footwear having sale value less than Rs 1000 to 12% from 5%. These rate changes are scheduled to be implemented with effect from 01.01.2022. Therefore, the present ruling will be valid till such changes in the GST rate are implemented.
“I rule that the imported footwear of sale value of Rs. 1000 per pair are liable to Integrated Goods and Service Tax at the rate of 5%,” the AAR said.
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