The Central Board of Indirect Taxes and Customs (CBIC) Drawback Division has published the circular to implement the decision of the Supreme Court in the judgment dated 28.04.2023 in a matter of Civil Appeal No. 290 of 2023 relating to ‘pre-import condition’.
As per Circular No. 16 /2023, the authority was to implement the decision in the case of UOI and others vs. Cosmo Films Ltd relating to mandatory fulfilment of a ‘pre-import condition’ incorporated of FTP 2015-20 vide the Central Government (DGFT) Notification No. 33/2015-20 dated 13.10.2017, and reflected in the Notification No. 79/2017-Customs dated 13.10.2017, relating to Advance Authorization scheme.
The Foreign Trade Policy (FTP) amended on 13.10.2017 and in existence till 09.01.2019 had provided that imports under Advance Authorization for physical exports are also exempt from the whole of the integrated tax and compensation cess, as may be provided in the notification issued by the Department of Revenue, and such imports shall be subject to pre-import condition.
The Supreme Court has allowed the appeal of Revenue directed against the judgement and order of the Gujarat High Court which had set aside the said mandatory fulfilment of a pre-import condition. As such, this implies that the relevant imports that do not meet the said pre-import condition requirements are to pay IGST and Compensation Cess to that extent.
While allowing the appeal of Revenue, the Supreme Court has directed the Revenue to permit a claim of refund or input credit (whichever is applicable and/or wherever customs duty was paid). For doing so, the respondents shall approach the jurisdictional commissioner, and apply with documentary evidence within six weeks from the date of the judgment.
Procedure Adopted at the Port of Import (POI):
(a)for the relevant imports that could not meet the said pre-import condition and are hence required to pay IGST and Compensation Cess to that extent, the importer may approach the concerned assessment group at the POI with relevant details for purposes of payment of the tax and cess along with applicable interest.
(b)the assessment group at POI shall cancel the OOC and indicate the reason in remarks. The BE shall be assessed again to charge the tax and cess.
(c)the payment of tax and cess, along with applicable interest, shall be made against the electronic challan generated in the Customs EDI System.
(d)on completion of the above payment, the port of import shall make a notional OOC for the BE on the Customs EDI System [to enable transmission to GSTN portal of, inter alia, the IGST and Compensation Cess amounts with their date of payment (relevant date) for eligibility as per GST provisions].
(e)the procedure specified at (a) to (d) above can be applied once to a BE.
Further, in case such input tax credit is utilized for payment of IGST on outward zero-rated supplies, then the benefit of refund of such IGST paid may be available to the said registered person as per the relevant provisions of the CGST Act, 2017 and the rules made thereunder, subject to the conditions and restrictions provided therein.
The CBIC directed the Chief Commissioners to proactively guide the Commissioners and officers in ironing out any local-level issues in implementing the broad procedure and ensuring appropriate convenience to the trade including in carrying out consequential actions.
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