CBIC issues Circular on Implementation of Section 16(4) of IGST Act related to Restriction on Export of certain goods on Payment of IGST and Coverage under Refund Mechanism [Read Order]

On September 30, 2023, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 24/2023-Customs, notifying the circular regarding the implementation of Section 16(4) of the Integrated Goods and Services Tax (IGST) Act. This circular pertains to restrictions on the export of specific goods with IGST payment obligations and their inclusion in the refund mechanism.

Referring sub section (4) of section 16 of IGST act 2017 and Notification No. 01/2023-Integrated Tax dated 31.08.2023, vide Notification No. 27/2023-Central Tax dated 31.07.2023, Section 16(4) of IGST Act, 2017 will be effective from 01.10.2023. Further, in terms of above provision, vide Notification no. 01/2023-Integrated Tax dated 31.08.2023, it has been notified that all goods or services (except the goods specified in column (3) of the TABLE in Notification) may be exported on payment of integrated tax on which the supplier of such goods or services may claim the refund of tax so paid. In effect, Goods mentioned in the Table annexed to the above notification may be exported only under LUT.

To enforce the aforementioned restrictions on exporting goods or services with IGST payment requirements, DG Systems CBIC has created a backend feature. This functionality is designed to prevent IGST refunds for the specific goods mentioned in the notification. As a result, adjustments have been introduced to the shipping bill filing process and its amendments for the mentioned commodities. These checks are now active at the shipping bill level since IGST refunds are processed at that stage.

It may be noted that, in cases where a shipping bill contains single or multiple invoices for which IGST have been paid and even if one invoice contains an item which is restricted for export on payment of IGST under section 16(4) of the IGST Act, the shipping bill containing such items will not be allowed to be filed.

In view of the above, it is requested that the concerned officers under your jurisdiction may be sensitized, especially for manual Shipping Bills in Non-EDI ports or even at EDI ports, or for export through posts/courier, to not allow export of such notified goods on payment of IGST so as to ensure that no undue benefits are taken by exporting such notified goods in accordance with the provisions of section 16(4) of the IGST act 2017.

The department also requested that suitable trade notices/ public notices may be issued in this regard to sensitise the trade for the same. The difficulties, if any, in the implementation of this circular may be brought to the notice of the Board on email id- dircus@nic.in.

To Read the full text of the Order CLICK HERE

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