QUESTION

We have exported one container to Canada which has been rejected by Canadian authorities at the port for the reason that the container is not hygienically good. The container is required to be brought back to India. In this context, following queries arise: 1. Can we import the goods without payment of customs duty with the condition of re-export within 6 months? (We are not carrying out any reprocessing on the goods). 2. Can it be exported to some other country? 3. Can the container be de-stuffed at the portand goods stuffed in another container at the port only and exported directly from the port without bringing back to the factory? 4. In that case, how the return of goods shall be accounted for at the factory? Can we issue credit note under GST without payment of IGST (being goods exported under LUT)? 5. Since the goods are not being brought back to the factory, no eway bill shall be prepared. Similarly, goods are not moving from factory to the port for re-export, and therefore, again no eway bill shall be prepared. Is it allowed under the law? 6. Since the goods are not moving from the factory gate, can we issue GST invoice for export under LUT from the factory, and no eway bill is generated? 7. Since, credit note under GST is being issued, will it have an impact on the refund of ITC claimed on the earlier export?

ANSWER

Facts of the case: one container has been exported to Canada which has been rejected by Canadian authorities at the port for the reason that the container is not hygienically good. The container is required to be brought back to India.

Interpretation: The procedure of re import of goods which were earlier exported for the purpose of repairs, reconditioning, re processing, refining, remaking etc has been clarified in Circular 127/95-Cus read with Notification no. 158/95- Customs. The same is enclosed for your reference.

Point wise reply to your query is as follows:
1. Yes, you can import the goods without payment of duty by following the procedure given in Notification 158/95.

2. There is no restriction on exporting of goods to the same country, therefore you can export the goods to some other country also.

3. Yes, the container can be de-stuffed and goods stuffed in another container at the warehouse after completing formalities of warehousing.

4. For accounting goods in factory, create a Stock A/c of warehoused goods. You can issue credit note.

5. Rule 138(14) Notwithstanding anything contained in this rule, no e-way bill is required to be generated'
(h) where the goods are being transported'
(i) under customs bond from an inland container depot or a container freight station to a customs port, airport, air cargo complex and land customs station, or from one customs station or customs port to another customs station or customs port, or
(ii) under customs supervision or under customs seal;

As per the above mentioned provision No E Way Bill is required for moving goods from Warehouse to port.

6. You can issue GST invoice, but GST will not be charged. It will be zero rated supply. It will be better to clear it against LUT.
Please note that you can clear goods on payment of GST and take refund of the same. But your case is very technical and refund may stuck up because this may be a new case for the GST officer.

7. If the goods are exported out of country, you have done export as per the definition of export of goods given in section 2(5) of IGST Act. But the definition of supply given in section 7 is not fulfilled because you are not getting consideration against earlier exports. The goods are re-exported and the consideration is received after re-export.
It is a case of litigation. The Revenue Officer may issue SCN for recovery of refund. But if you are going through the sanctity of law and Principle of Natural justice the SCN will be dropped and the earlier refund may not be recovered by the Revenue. (with attachments notification & Circular)(Reply dt. 25-01-2020)