Rule 96(10) of the CGST Rules, 2017, prospectively amended to allow exporters who have received capital goods under the EPCG scheme to claim refund of the IGST paid on exports

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The Central Government vide Notification No. 53/2018 – Central Tax dated October 09, 2018 (“Notification No. 53”) has first amended Rule 96(10) of the CGST Rules, 2017 to restore the position that existed before the amendment carried out in the said rule by Notification No. 39/2018- Central Tax dated September 4, 2018 (“Notification No. 39”), in the following manner:

“(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the supplier has availed the benefit of the Government of India, Ministry of Finance, notification No. 48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1305 (E), dated the 18th October, 2017 or notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 or notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017- Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E) dated the 13th October, 2017.”

Earlier Notification No. 39 amended Rule 96(10) of the CGST Rules, 2017 retrospectively from October 23, 2017 to divide the sub-rule (10) in two clauses (a) and (b). Clause (b) provided that the exporter who has availed the benefit of following Notifications:

  • Notification No. 78/2017-Customs, dated the 13th October, 2017 – Seeks to exempt goods imported by EOUs from IGST and compensation cess
  • Notification No. 79/2017- Customs, dated the 13th October, 2017 – Seek to amend various Customs exemption notifications to exempt IGST/Cess on import of goods under Advance Authorisation/EPCG schemes.

cannot export with payment of IGST. He has to compulsorily export under LUT and claim refund of the accumulated input tax credit.

Now, with Notification No. 53, the impact of this notification has been withdrawn to restore the position as was existed prior to issuance of Notification No. 39. Notification No. 53 is also made applicable retrospectively from October 23, 2017.

But, at the same time another Notification No. 54/2018 – Central Tax dated October 09, 2018 (“Notification No. 54”) is issued which again amends Rule 96(10) of the CGST Rules in the same manner as was done vide Notification No. 39. But carves out an exception that “except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme”, in the following manner:

“(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have –

 (a) received supplies on which the benefit of the Government of India, Ministry of Finance notification No. 48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1305 (E), dated the 18th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme or notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 has been availed; or

 (b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme.”

Further, Rule 89(4B) of the CGST Rules is also aligned to make it consistent with Rule 96(10).

In nutshell: Rule 96(10) of the CGST Rules has not been restored completely but has been prospectively amended to allow exporters who have received capital goods under the EPCG scheme to claim refund of the IGST paid on exports.

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