Applicability of Integrated Goods and Services Tax on goods supplied while being deposited in a customs bonded warehouse

We invite your attention to Circular No 3/1/2018-IGST dated 25th May, 2018 (‘Circular) issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs with regards to applicability of Integrated Goods and Services Tax (IGST) on goods sold while being deposited in a customs bonded warehouse. Please find attached the circular issued for your ready reference.

·         As per the said circular, it is clarified that IGST shall be levied and collected at the time of final clearance of the warehoused goods for home consumption i.e., at the time of filing the ex-bond bill of entry for clearance of the warehoused goods for home consumption.   The value of such IGST payment shall be the value of goods at the stage of clearance inclusive of any value addition that occurred at the bonded warehouse. 

·         In other words, any sale of goods before their clearance from the warehouse would not be subject to the levy of IGST. 

·         This Circular would be applicable for supply of warehoused goods, while being deposited in a customs bonded warehouse, on or after the 1^st of April, 2018.

Position before issuance of above referred clarificatory circular:

·         This circular supersedes earlier CBEC Circular No. 46/2017-Customs dated 24^th November 2017, which was with regards to the applicability of IGST / GST on goods transferred / sold while being deposited in in customs bonded warehouse. As per the said earlier circular, sale from a bonded warehouse was subject to potential dual GST levy. (i) at the stage of bill of entry filing by purchaser and (ii) on in-bond sale by seller of goods.