No ITC allowed on payment of BCD, CVD, SAD on non-fulfilment of EPCG obligation [Read Order]

The Authority for Advance Ruling (AAR Tamilnadu) in the matter of Vijay Flexi Packaging Industries has ruled No ITC is allowed on payment of BCD, CVD and SAD on non-fulfilment of EPCG obligation.

M/s Vijay Flexi Packaging Industries, 726A, Anuppangulam, Sivakasi, Virudhunagar District (hereinafter referred to as ‘the Applicant’ hereinafter) are registered taxpayers under GST Act with GSTIN: 33AAIFV5002F1ZK.

The Applicant has stated that they are a partnership concern engaged in the manufacture of printed poly packing materials. During 2011 they imported certain machinery under the EPCG Scheme and availed concessional duty benefits under the EPCG Scheme for the import of capital goods under an Authorisation letter issued by Asst. Director General of Foreign Trade, Madurai for a period of 8 years ending 2019. Due to unforeseen circumstances, they could not fulfil the export obligation under the EPCG scheme. Therefore, they have remitted the duty amount along with interest.

The Question and Ruling are as follows:

Whether payment of Basic Customs Duty (BCD), Countervailing Duty (CVD) and Special Additional Duty (SAD) made on non-fulfilment of EPCG obligation can be taken as an Input tax credit under GST.

RULING

Payment of Basic Customs Duty (BCD), Countervailing Duty (CVD) and Special Additional Duty (SAD) made on non-fulfilment of export obligation under the EPCG scheme, cannot be claimed as Input Tax Credit under the GST Act, 2017.

For Official Judgment Download PDF Given Below: