2019 (2) TMI 194 – AUTHORITY FOR ADVANCE RULING, TAMILNADU – TMI – Levy of IGST – removal of goods from the FTWZ unit i.e. the customs bonded warehouse – requirement of registration under IGST – applicability of Circular No.3/1/2018-IGST dated 25th May 2018 – Held that:- In the case at hand, the Applicant stores the goods in the FTWZ for which the LSP in the FTWZ, file 'into bond Bill of Entry' with a nominal value. The Applicant on identifying the purchaser, raise commercial invoice and thereafter the DTA purchaser files the 'ex-bond BOE' for the Commercial Invoice value and pays the appropriate BCD and IGST. The invoice price is paid to the applicant by the DTA purchaser – the supply of goods before their clearance from the warehouse would not be subject to the levy of integrated tax and the same would be levied and collected only when the warehoused goods are cleared for home consumption from the customs bonded warehouse, under the provisions of Customs Act. Circular No.3/1/2018-IG
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3/ 1/2018-IGST dated 25th May 2018, the payment of IGST again at the point of clearance from the FTWZ to DTA do not arise for supply of warehoused goods, while being deposited in a customs bonded warehouse/FTWZ on or after 01.04.2018. In the event the Applicant is exclusively conducting the activity described in their Application of exporting goods to FTWZ and which are subsequently sold to Indian customers who clear the same on payment of appropriate customs duties, they are not liable to registration under Section 23(1) of CGST Act and TNGST Act. – Order No. 24/AAR/2018 Dated:- 31-12-2018 – MS. MANASA GANGOTRI KATA AND THIRU S. VIJAYAKUMAR, M.SC. MEMBER Note: Any appeal against the advance ruling order shall be filed before the Tamilnadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated. At the outset, we would like to mak
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n Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of ₹ 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. The Applicant has sought Advance Ruling on:- 1. Whether sale of tanned bovine leather stored in Free Trade Warehousing Zone (FTWZ) by a foreign supplier which is cleared to Domestic Tariff Area (DTA) customer in India would result in supply subject to levy under sub section 1 of section 5 of the IGST Act 2017 or under the provisions of CGST Act, 2017 or Tamil Nadu GST Act, 2017 and the rules made there under. 2. Whether the foreign supplier being the applicant, located outside the taxable territory and supplying goods to DTA customers on the goods stored in third party FTWZ unit is required to get registered under the IGST ACT 2017 or under the provisions or CGST ACT 2017 or the Tamil Nadu Goods and Service Tax Act, 2017 and the Rules made thereunder: 2.1 Sadesa has informed that they are contempla
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price of Sadesa as per the Bill of Entry f ('BOE') filed by the customer and clear the goods accordingly. 2.3 Sadesa has also informed that they would enter into an agreement with FTWZ unit of LSP, Chennai for Clearing /handling of goods from customs port and for storage of goods until the goods are sold to customers in India of Sadesa on need basis. Sadesa would place a purchase order for import of goods (i.e. tanned bovine leather) from Sadesa Group (entities situated in Thailand, Argentina & Uruguay) to India (Chennai). Based on the said PO, Sadesa Group would export goods to India by mentioning M/s. Sadesa Macau c/o LSP as Shipping address in all export documents including export invoice. Prior to arrival of goods in the customs port, Sadesa would intimate the LSP in Chennai and on arrival of goods, the FTWZ unit of LSP would file 'BOE' in the name of M/s. LSP, on account of M/s. Sadesa Macau and the trans-shipment permission is stamped on the fifth copy of the
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and read with the Customs laws as regards duties payable. 2.5 The Applicant has submitted that under the pre GST regime the transaction of trans-shipment of goods from Customs port to FTWZ were not taxable, since FTWZ unit was exempted from taxes as specified in section 26(1) (a) of SEZ act 2005 vide Rule 27 of SEZ rules 2007 and the same is continued under the GST regime. As per Section 7(2) of IGST Act, sale through FTWZ units should be considered as interstate supply. However, as per proviso to Section 5(1) of IGST Act, imported goods would be subject to IGST at the point where Customs duty is levied, in this case clearance from FTWZ to DTA which is import of such goods. They stated that if there is no levy of GST on such supplies, they are not liable for registration as per Section 23(1) of CGST Act. The Applicant has stated that there is no clarity on the taxability of sale from the Applicant through FTWZ units to the DTA customers, hence SADESA has sought Advance ruling to clari
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the case at hand, the Applicant stores the goods in the FTWZ for which the LSP in the FTWZ, file 'into bond Bill of Entry' with a nominal value. The Applicant on identifying the purchaser, raise commercial invoice and thereafter the DTA purchaser files the 'ex-bond BOE' for the Commercial Invoice value and pays the appropriate BCD and IGST. The invoice price is paid to the applicant by the DTA purchaser. 4.1 Chapter 7A of the Foreign Trade Policy 2015-2020 states that Free Trade 8s Warehousing Zones (FTWZ) are a special category of Special Economic Zones with a focus on trading and warehousing. The scheme envisages duty free import of all goods (except prohibited items, arms and ammunitions, hazardous wastes and SCOMET items) for ware housing. As far as bond towards customs duty on import is concerned, the units would be subject to similar provisions as are applicable to units in SEZs. These goods shall also be permitted to be sold in the DTA on payment of customs duti
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the goods in the Customs bonded warehouse. During the storage of imported goods in warehouse, the importer has the option to supply such goods to any other person even before clearance from the bonded warehouse. It has been clarified vide Circular No. 46/2017-Customs dated 24.11.2017 that integrated tax will be payable on such supplies and buyer will also pay the deferred customs duty at the time of clearance of goods from the warehouse. It has been represented that in this scenario, the buyer is being saddled with double taxation. 2. Kind attention is drawn towards sub-section (2) of section 7 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act ) whereby supply of goods imported into the territory of India, till they cross the customs frontiers of India, is treated as a supply of goods in the course of inter-State trade or commerce. Further, proviso to sub-section (1) of section 5 of the IGST Act provides that integrated tax on goods imported i
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enue concerns that might arise on account of non-capturing of value addition happening when the warehoused goods are sold before clearance from warehouse. 4. It is pertinent to mention here that GST Council in its 25th Meeting held on 18th January 2018, has given an in-principle approval to declare the supply of warehoused goods within the Customs bonded warehouse as no supply under Schedule III of the CGST Act, 2017 so as to ensure that no integrated tax is paid at the time of supply of warehoused goods by the importer to the buyer. Since the amendment of the law would take time, it is proposed that such intention/ decision of the GST Council may be effected through a circular. 5. In view of the above, it is proposed that Circular No. 46/2017-Customs dated 24.11.2017 may be rescinded and a fresh circular may be issued clarifying that supply of warehoused goods before their clearance from the warehouse would not be subject to levy of integrated tax and the same would be collected only
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ouse would not be subject to the levy of integrated tax and the same would be levied and collected only when the warehoused goods are cleared for home consumption from the customs bonded warehouse, under the provisions of Customs Act. This circular was made applicable for supply of warehoused goods, while being deposited in a customs bonded warehouse on or after 01.04.2018. 4.3 From the foregoing, it is evident that removal from the FTWZ to DTA is the point of deferred levy/payment of Customs Duty, i.e., at the time of clearance for home consumption from FTWZ. Further, as explained in the Circular referred above, the goods are not to be subjected to IGST when bonded and the payment of integrated tax is to be effected when the goods are removed for home consumption from the bonded warehouse, under the Provisions of Customs Tariff Act. Therefore, there is no requirement to pay IGST under the provisions of GST law at the time of clearance from the FTWZ. In the case at hand, the Applicant
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