Supreme Court Clause Allows Exporters To Claim Credit

Published: April 29, 2023

The Supreme Court confirmed on Friday that a “pre-import condition” that permitted exporters to claim credit for raw materials purchased prior to actually exporting the product must be fulfilled.

It overturned the Gujarat High Court’s judgement that found it arbitrary and unreasonable to claim exemption from the Integrated Goods and Services Tax (IGST) and GST compensation cess on inputs imported for the production of goods to be exported on the basis of an advance authorization (AA). The Foreign Trade Policy of 2015–2020 (FTP), the Handbook of Procedures (HBP), and numerous 2017 notifications all included the plan. However, a bench presided over by Justice S Ravindra Bhatt ordered the revenue to allow exporters, who benefited from temporary orders until the high court, to do business. the final say on whether to request a refund or input credit (where appropriate and/or wherever customs duty was paid).

The court instructed exporters to accomplish this by approaching the jurisdictional commissioner and submitting an application with supporting documentation within six weeks. The merits of each refund or credit request will be considered on an individual basis. According to the Supreme Court’s ruling, the revenue must simply direct the right method to be followed through a circular in this regard.

The maintaining of the constitutional part of the condition does not necessarily imply demand and recovery, according to Abhishek A. Rastogi, the founder of Rastogi Chambers, who spoke on behalf of Indian exporters. “Notices must be answered to with accurate facts and numbers, as well as pertinent import data to Describe how the pre-import requirement was met. Some of the bills of entry may have fulfilled with pre-import requirements in some circumstances, he suggested.

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