Government extends the scope of Customs IGCR Rules

 In our update dated September 12, 2022, we apprised you about the introduction of new Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 [‘IGCRS Rules’]

 

·                In this update, we wish to apprise you that the new IGCRS Rules is applicable even where the observance of IGCRS Rules is not provided in the notification.

 

·                Rule 2 of the IGCRS Rules provides as under:

 

These rules shall apply where:

 

1. A notification provides for the observance of these rules;

 

2. an importer intends to avail the benefit of any notification and such benefit is dependent upon the use of the goods imported being covered by that notification for the manufacture of any commodity or provision of output service or being put to a specified end use.

 

·                The point a. and b. in the above Rule 2 are separated which makes it applicable on either of the case.

 

·                Thus, the new IGCRS Rules shall apply for all the notification where following end uses of imported goods are provided:

 

-               Manufacture of any commodity; or

 

-               Provision of output services; or

 

-               Being put to specified end use

 

 | Remarks

 

·                The new IGCRS Rules have become a great concern for many taxpayers from the following perspective:

 

(i)            Where the exemptions claimed under Advance Authorisation/EPCG scheme but the exemption provides for use of goods in manufacture of goods:

 

For EPCG – Notification No. 16/2015-Customs dated April 1, 2015

For AA – Notification No. 18 to 22/2015-Customs dated April 1, 2015

 

(ii)          Where the use is specified for claiming the benefit, however, observance of IGCRS is not a pre-condition. Following are few instances:

 

Serial No. 468 of Notification No. 50/2017-Customs dated ………………………

 

“Fingerprint reader/scanner other than Fingerprint reader/scanner for use in manufacturing of cellular mobile phones”

 

Serial No. 527A of Notification No. 50/2017-Customs dated ………………………

 

“Lithium-ion cell for use in the manufacture of battery or battery pack of cellular mobile phone”

 

·                Therefore, it becomes imperative for all the importers to revisit their exemption notifications and check for end use condition.