Eou- payment of duty on rejects after destruction as scrap

This query is : Resolved

Balajay (Querist)
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16 May 2019 Para 6.15 (b)of FTP permits disposal of destroyed materials from EOU into DTA upon payment of applicable taxes under GST laws.

We (100% EOU) had some imported raw materials, which were rejected due to quality issues and as per the above FTP provision, we destroyed the same after intimation to Customs authorities and were about to sell it as scrap in the DTA on payment of GST on scrap value.

While checking on this, the DC, MEPZ is of the opinion that we need to discharge the Import Customs Duties (duty foregone) applicable on the Imported items, even if they are destroyed. The FTP says "........No duty shall be payable other than the applicable taxes under GST laws.......".

The FTP Para is for "Sale of Unutilized material", which confirms material can be sold or removed.

Please confirm if the Customs Duty has to be discharged, even if the imported material (rejected) is destroyed beyond use. We are willing to pay applicable GST on the scrap value.

Please let me know if any further details are required. Thanks very much and would appreciate an immediate response from the experts.

Rgds,
JB

Rajesh Kumar

Rajesh Kumar (Expert)
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29 June 2019 Custom duty is not payable. You are required to pay GST only. In case of any doubt, please send me the complete issue on rajesh@rklegal.org