Time Limit to Avail ITC of Import IGST paid via Re-assessed Bill of Entry is governed by Section 16(4) CGST Act: AAR in Becton, Dickinson India’s Case [Read Order]

 The applicant, Becton Dickinson India Private Limited, is a private limited company engaged in the manufacturing and trading of medical equipment and devices. They also import and trade the same.

These imports were made on payment of customs duties at the time of filing the Bill of Entry for home consumption. The company operates under a limited risk distributorship agreement (LRD agreement), with an annual true-up pricing adjustment performed after the financial year end based on arm’s length margins reviewed by the Special Valuation Branch (SVB) of Customs.

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When the actual profit margin exceeded the prescribed arm’s length, the applicant paid differential customs duties, including IGST, to align with the SVB order. This payment of differential duties became necessary after each year’s review and resulted in either reassessment of the original bill of entry payment through TR-6 challans.

The applicant approached the Chennai Sea Customs authorities, and they allowed payment of differential duties through reassessed bills of entry.

The AAR observed that the applicant determined the import price involving differential customs duties including import IGST, and the same happened in FY 2023-24. The Chennai Sea Customs authorities allowed reassessment of bills of entry, which meant that the differential duties would be payable through the reassessed bills of entry.

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The AAR clarified that the availment of ITC based on a bill of entry, whether original or re-assessed, is governed by the time limit as prescribed under Section 16(4) of the CGST Act.

The Authority bench comprising Balakrishnan S (CGST Member) and B Suseel Kumar (SGST Member) held that the time limit for availing ITC would ideally begin from the date of re-assessment of bill of entry, as the payment of differential duties of customs including IGST, is necessitated only when an upward price revision takes place at a later date.

In conclusion, the AAR ruled that in cases where the applicant paid import IGST through a re-assessed bill of entry, the time limit to avail ITC is governed by Section 16(4) of the CGST Act, and this limitation period commences from the date of the re-assessment and not the date of the original bill of entry.

The applicant was represented by K Sivarajan.

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