Denied duty deferment benefit of Integrated Tax (‘IGST’) and Compensation Cess on import of goods

 In an important update, the Government has proposed amendment to Finance Bill 2023 to deny duty deferment benefit of Integrated Tax (‘IGST’) and Compensation Cess on import of goods.

 

Proposed Amendment

 

Relevant Sections – Section 59, 65, 65A, 157 and 159 of the Customs Act, 1962

 

·                Section 59 has been amended to provide that an ex-bond Bill of Entry (‘BE’) shall be filed directly at customs station. Thus, the process of filing In-bond BE first and then ex-bond BE is done away with. This may be a relief from a compliance standpoint.

 

·                A new provision Section 65A is inserted. It provides that at the time of filing ex-bond BE, importer will be required to pay IGST and Compensation Cess, if applicable, but may not pay the Customs Duties like BCD, SWS, ADD, SD etc. For this, a triple duty bond shall be filed with the proper officer.

 

·                Section 65A also provides that only for the purpose of payment of deferred Customs Duties, the imported goods shall be considered as ‘warehoused goods’. For IGST and Compensation cess standpoint, the goods shall be considered as ‘cleared for home consumption’.

 

·                The deferred customs duties, in terms of new provision, shall be paid before removal of goods from the warehouse as per the mechanism to be prescribed.

 

·                The new provisions shall not be applicable to those goods for which In-bond BE has already been filed and out of charge order is given by the proper officer, before the applicability of new provisions.

 

·                The Government also has power to notify certain goods on which the new provisions will not apply.

 

. | Remarks

 

·                If enacted, the amendment will surely impact the decision of importers for taking MOOWR license. However, it won’t apply to goods already imported.

 

·                Although the benefit of IGST is denied, however, it seems that compliance may ease up at bit since there will be no mapping of In-bond BE and Ex-bond BE.

 

·                Further, the Government should now allow RoDTEP and Drawback benefit on exports from MOOWR units. Therefore, representation should be filed by exporters in this regard.