Importers challenge notices seeking duty on EOU imports

The tax notices have been issued under Rule 96 (10) of the Central Goods and Service Tax (CGST) Act introduced in 2017. The rule initially allowed for refund of integrated tax if the supplies of goods or services meant for exports have been cleare...

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NEW DELHI: Several importers are going to court to challenge notices issued to them by the Directorate of Revenue Intelligence seeking customs duty payments on goods imported under the advance authorisation scheme or export-oriented units scheme since 2017, lawyers and tax experts said.

The tax notices have been issued under Rule 96 (10) of the Central Goods and Service Tax (CGST) Act introduced in 2017. The rule initially allowed for refund of integrated tax if the supplies of goods or services meant for exports have been cleared on payment of the tax. However, amendments made to the Act in 2018 disallowed refund of Integrated Goods and Services Tax (IGST) paid on exports if advance authorisation license holders avail input tax credit.

“The provisions of rule 96(10) are still subject to judicial review as Gujarat High Court will decide the review petition while other courts will test the constitutionality in the new set of petitions filed recently,” said Abhishek Rastogi, partner at Khaitan & Co, who challenged one of the orders in the Bombay High Court last week.


About a dozen such cases have been filed in High Courts of Delhi, Punjab and Haryana and Gujarat, and more are expected to take legal recourse, lawyers said. “This particular provision has been amended and re-amended numerous times,” said Rajat Mohan, senior partner at AMRG Associates. “Many exporters are expected to...file similar petitions in other high courts seeking relief from DRI notices.”

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A senior official said the department was sure to defend its stand since as many as 2,000 notices have been issued. “This is a critical issue, department will continue to go after those fraudulently availing benefits through illegal routes,” he said, asking not to be named.

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ET had reported last month that DRI had asked various importers to pay up customs duty on goods imported under advance authorisation or export oriented units (EOU) scheme since 2017. It had sought the payments retrospectively after it found that many have taken double benefit of exemption of IGST and refunds on goods exported.
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