M/s XYZ, manufacturer of textiles article. The rate of GST on Inputs is 18% and output Tax is 12%. His product is under HSN 5402 i.e. Polyester Filament YARN. Apart of Polyester Yarn, he is manufacturer of Cotton / manmade fabrics falling under HSN 5208,5407,5515,6001 & 5907. Whether he is eligible for refund on account of input rate higher than output supply?


Amended Notification No. 05/2017-Central Tax (Rate),dt. 28-06-2017notifies supplies of goods with HSN in respect of which refund of unutilized input tax credit on account of inverted tax rates shall not be allowed under section 54 (3) i.e. woven fabrics of 5007; 5111 to 5113; 5208 to 5212; 5309 to 5311;5407,5408; 5512 to 5516;5608,5801,5806,60; Railway related 8601 to 8608.

On the basis of above notification no refund of unutilized ITC available on product produced by M/s XYZ under HSN 5208,5407,5515,6001. 

But as this notification will not restrict refund claim on unutilized ITCon product with HSN 5402 and 5907. So the M/s XYZ can claimed the refund on unutilized ITC on account of inverted tax rates under section 54 on these product.

Refund of tax against export and refund of unutilized credit are two different things If you are exporting textile product you can claim refund of tax.