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Aman Thakur (Sr. Asstt. in Warehouse) (39 Points)

09 June 2016

We are manufacturer and exporter of pharmaceutical products. We have export material on duty payment and claim rebate under rule 18. The department has sanctioned the rebate amount by cheque. Now the materials exported have been rejected by the overseas buyers and consequently no foreign exchange (export proceeds) has been realized. Now, considering the fact that no foreign exchange has been realized against export and the issue in hand is revenue neutral, the Company has paid back the rebate amount received in cash to deptt. by depositing cash by GAR-7. My query is are we eligible to take credit against GAR-7 challan or not. I am confused.

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CA Anant Tyagi (CA) (283 Points)
Replied 09 June 2016

Dear,

In case of re-import of earlier exported goods by whatever reason, normal custom duty will be payable on re-imports. However, some concession and exemption are available for re-imports. These are summarised in Chapter 19 para 2 of Custom Manual 2011. Summary is as under:

Basic principle is that export incentives obtained at the time of export will be recovered and If duty was paid at the time of export of goods, no custom duty is payable when goods are re-imported.
So as you avail the rebate by cheque and refund after rejection of goods may avail the duty paid earlier at the time of export while claiming exemption of duty at the time of re-import.
You should keep all the relevant documents with you like payment details, Bill of export, Bill of entry.
Further, as you have already repaid the rebate claimed earlier, so you no need to pay the import duty again.
But it does not mean that there is whole exemption from custom duty on import. As per CASE of Birla NGK Insulators vs. CC (2014) SAD is payable on re-import of goods.