2017 (9) TMI 674 – DELHI HIGH COURT – 2017 (4) G. S. T. L. 439 (Del.) – Additional Levy of IGST – Advance Authorization scheme – The grievance of the Petitioner is that it holds export orders placed on it prior to 1st July 2017 for the fulfilment of which it has to undertake imports of inputs. The Petitioner seeks to explain that, with the change brought about by the GST regime, the Petitioner would have no option but to pay IGST out of its sources causing a working capital blockage.
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Held that: – The exporter prices the export commodity on the basis of the extant FTP. The Indian exporters, in order to remain competitive in the global market, account for the exemptions/concessions given to such exporter under the FTP. Export orders are usually placed several months in advance and the price fixed is not variable beyond a point – If an additional levy is imposed, after the acceptance of such export orders, the resultant burden cannot possibly be passed on by the exporter to the buy
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C.M. No. 27111/2017 Dated:- 11-9-2017 – S. Muralidhar And Prathiba M. Singh, JJ. For the Petitioner : Mr. Abhishek Rastogi, Mr. Rashmi Deshpande, Mr. Ayush A.Mehrotra, Ms. Anjali Krishnan, Mr. Tushar Talwar, Advocates For the Respondents : Mr. Sanjeev Narula, CGSC with Mr. Abhishek Ghai, Advocate for CBEC ORDER 1. The present writ petition is by Narendra Plastic Private Limited, which is engaged in the business of manufacturing and exporting plastic products and has its registered address at Goregaon (East), Mumbai. 2. The Foreign Trade Policy ( FTP ) 2015-2020 was notified by Trade Notification No. 1/2015-2020 dated 1st April 2015 and operationalised by Notification No. 18/2015-Cus dated 1st April 2015. In terms thereof, an Advance Authorization Scheme (AAS) was made available as a duty exemption scheme under Chapter 4. Exporter manufacturers, like the Petitioner, were entitled to duty free import of the input which is physically incorporated in the export product. Imports under the
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g those duties which are exempt from payment for holders of Advance Authorizations. One significant change is that while many of the earlier exemptions listed out hereinbefore continue, for imports made after 1st July 2017, there is an additional levy of an Integrated Goods and Service Tax ( IGST ). Section 3 (7) of the Customs Tariff Act, 1975 ( CTA 1975 ) now provides that: (7) any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent, as is leviable under Section 5 of the Integrated Goods and Service Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section(8) 5. The grievance of the Petitioner is that it holds export orders placed on it prior to 1st July 2017 for the fulfilment of which it has to undertake imports of inputs. One such export order placed on the Petitioner by Walmart Inc., USA has been enclosed as Annexure-P/3 to C.M. No. 28923/
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ior to 1st July 2017. The Petitioner prays that it should not be asked to pay the additional IGST on such imports as that would make the levy arbitrary and unreasonable. 7. This Court first issued notice in the petition on 1st July 2017 proposing to hear the petition on 30th October 2017. However, the Petitioner filed C.M. No. 28923/2017 seeking an interim order to permit it to make the imports without payment of the additional levy of IGST and also to seek advancement of the date of hearing. On 11th August 2017, while the Court declined interim relief at that stage, it considered it appropriate to advance the hearing of the petition to today. 8. Although the Court had granted the time to the Respondent till 31st August 2017 to file a reply to the petition, it is only today that Mr. Sanjeev Narula, the learned Senior Standing Counsel for the Customs Department, has handed over, to the Court, the counter affidavit dated 11th September 2017 sworn to by Mr. Himanshu Gupta, Principal Commi
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the Ministry of Commerce. 10. The working of the AAS is such that, for the import of inputs made by exporter towards fulfilment of export orders, the credit of customs duty, as specified in the Advance Authorization licenses issued to the exporter, is permitted to be availed of at the time of import. For instance, in the present case, one of the Advance Authorizations issued to the Petitioner specifies the period for which such authorization is valid, i.e. 18 months. It also specifies the quantity and value of the items that are permitted to be imported in order to fulfil the export obligation. In other words, at the time of import of inputs for fulfilment of export obligations, the verification is undertaken by the Customs Department to ensure that the quantity and value of the consignment imported matches what is stated in the Advance Authorization license. 11. The exporter prices the export commodity on the basis of the extant FTP. The Indian exporters, in order to remain competitiv
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3. The Court is of the view that the Petitioner has made out a prima facie case for grant of Prayer (b) in the writ petition, i.e. a direction to the Respondents to allow the Petitioner to continue making the imports under the Advance Authorization licenses issued prior to 1st July, 2017in terms of their quantity and value subject to terms. It is accordingly directed as under: (i) The Petitioner will be permitted to clear the consignments of imports constituting inputs for the fulfilment of its export orders placed on it prior to 1st July 2017 without any additional levies, and subject to the quantity and value as specified in the advance authorization licenses issued to it prior to 1st July 2017. (ii) The above clearance would be subject to (a) verification by the Customs Department that it is in conformity with the quantity and value as mentioned in the Advance Authorization license and (b) ensuring that the extent of credit is available vis-a-vis such Advance Authorization licenses
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