The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has set aside the order, ruling that the Extended Period of Limitation cannot be invoked to raise a demand for the Integrated Goods and Service Tax ( IGST ) portion of Customs Duty, as it is available as Input Tax Credit (ITC).
The appellant was engaged in the business of manufacture of Coal Tar Pitch, Carbon Black etc., for sale in India as well as by way of export outside the country and is duly registered with the GST authority. The appellant is availing the benefit of input tax credit under GST law for payment of output tax CGST/SGST/IGST
The appellant would be entitled to import input materials by claiming exemption from payment of customs duty. The said imported inputs would be used in the manufacture of output goods for ultimate export by Hindalco. In the present case, the goods imported by the appellant have been used for manufacture of final products which have been exported by Hindalco and the DGFT authority have duly issued the discharge/redemption certificate dated 02.03.2022 confirming the completion of the export obligation arising out of the Advance Authorisations referred to herein above. Thus, whatever input goods were imported have been used in the final output which have been ultimately exported outside India which is an admitted fact
The only dispute in the present case is with regard to claiming of IGST exemption at the time of import of input materials by the appellant. It is the contention of Revenue/Custom Authority that the appellant is entitled to claim exemption under Notification No. 21/2015–CUS (which grant exemption of basic customs duty only) and not the benefit under Notification No. 18/2015–CUS (which grants both the exemption of basic customs duty as well as IGST)
Mr. Rajeev Kumar Agarwal, representing the appellant, urged that revenue have only contended that since Notification No. 21/2015–CUS, does not provide for IGST exemption, but only exemption of basic customs duty, the demand is liable to be sustained. It was also contended that merely because appellant was entitled to credit, the demand of IGST cannot be waived on this ground alone.
The bench found that it was not disputed that, had the appellant paid the IGST at the time of import they would have been eligible for input tax credit. Further, admittedly the goods have been used as inputs for manufacture of other goods which have undisputedly been exported to Hindalco.
The two member bench of the tribunal comprising Anil Choudhary (Judicial member) and A.K Jyotishi (Technical member) found that it was a case of contributory negligence on the part of Revenue also, as in spite of having registered the Advance Authorisation and the entitlement of the appellant to exemption under Notification No. 21/2015–CUS, have allowed the exemption of IGST also as applicable under Notification No. 18/2015– CUS.
Further held that the demand was not invokable by invocation to extended period of limitation. Accordingly, CESTAT allowed appeal and set aside the impugned order. The appellant shall be entitled to consequential benefits in accordance with law.
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