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Narendra Plastic Private Limited Versus Union of India & Others

Additional Levy of IGST - Advance Authorization scheme - The grievance of the Petitioner is that it holds export orders placed on it prior to 1st July 2017 for the fulfilment of which it has to undertake imports of inputs. The Petitioner seeks to explain that, with the change brought about by the GST regime, the Petitioner would have no option but to pay IGST out of its sources causing a working capital blockage. - Held that: - The exporter prices the export commodity on the basis of the ext .....

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ers placing the exporter in a piquant situation. - The Petitioner-Exporter is not questioning the legislative competence to levy the additional IGST. It is only questioning the applicability of such levy even to imports that are made for fulfilment of export orders that have been placed on and accepted by the Petitioner prior to 1st July, 2017. Also, the Petitioner is seeking to only avail the credit outstanding in respect of advance authorizations issued to the Petitioner prior to 1st July .....

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Singh, JJ. For the Petitioner : Mr. Abhishek Rastogi, Mr. Rashmi Deshpande, Mr. Ayush A.Mehrotra, Ms. Anjali Krishnan, Mr. Tushar Talwar, Advocates For the Respondents : Mr. Sanjeev Narula, CGSC with Mr. Abhishek Ghai, Advocate for CBEC ORDER 1. The present writ petition is by Narendra Plastic Private Limited, which is engaged in the business of manufacturing and exporting plastic products and has its registered address at Goregaon (East), Mumbai. 2. The Foreign Trade Policy ( FTP ) 2015-2020 wa .....

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l Customs Duty, (iii) Education Cess, (iv) Anti-dumping duty and (v) Safeguard Duty and (vi) Transition Product Specific Safeguard Duty, wherever applicable. 3. The Advance Authorization licence is issued to a manufacturer exporter or merchant exporter having past export performance in at least two preceding financial years. In the present case, having fulfilled the conditions prescribed in para 4.03 of the FTP, the Petitioner was issued an Advance Authorization. Annexure P4 to the petition list .....

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orizations. One significant change is that while many of the earlier exemptions listed out hereinbefore continue, for imports made after 1st July 2017, there is an additional levy of an Integrated Goods and Service Tax ( IGST ). Section 3 (7) of the Customs Tariff Act, 1975 ( CTA 1975 ) now provides that: (7) any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent, as is leviable under Section 5 of the Integrated Goods a .....

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t by the GST regime, the Petitioner would have no option but to pay IGST out of its sources causing a working capital blockage. The Petitioner would have to rely upon borrowings as it has already exhausted its overdraft limits with the banks. The prospect of the IGST being ultimately refunded some time in future is of little consolation to the Petitioner who seeks liquidity to discharge the additional levy of IGST failing which its imports will get blocked. 6. According to Mr. Abhishek Rastogi, .....

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o pay the additional IGST on such imports as that would make the levy arbitrary and unreasonable. 7. This Court first issued notice in the petition on 1st July 2017 proposing to hear the petition on 30th October 2017. However, the Petitioner filed C.M. No. 28923/2017 seeking an interim order to permit it to make the imports without payment of the additional levy of IGST and also to seek advancement of the date of hearing. On 11th August 2017, while the Court declined interim relief at that stage .....

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a misconception regarding withdrawal of the exemption earlier granted under the Notification dated 1st April 2015. He states that all those exemptions relevant to the Petitioner s imports for the discharge of its export orders continue as such. He, however, does not dispute that for imports made after 1st July 2017, the Petitioner would be required to pay the additional IGST which is now been made mandatory by virtue of amendment to Section 3 of the CTA, 1975. He points out that the Petitioner .....

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he import of inputs made by exporter towards fulfilment of export orders, the credit of customs duty, as specified in the Advance Authorization licenses issued to the exporter, is permitted to be availed of at the time of import. For instance, in the present case, one of the Advance Authorizations issued to the Petitioner specifies the period for which such authorization is valid, i.e. 18 months. It also specifies the quantity and value of the items that are permitted to be imported in order to .....

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such exporter under the FTP. Export orders are usually placed several months in advance and the price fixed is not variable beyond a point. If an additional levy is imposed, after the acceptance of such export orders, the resultant burden cannot possibly be passed on by the exporter to the buyers outside India. This might lead to the cancellation of such export orders placing the exporter in a piquant situation. 12. It requires to be reiterated that, in the present case, the Petitioner-Exporter .....

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ie case for grant of Prayer (b) in the writ petition, i.e. a direction to the Respondents to allow the Petitioner to continue making the imports under the Advance Authorization licenses issued prior to 1st July, 2017in terms of their quantity and value subject to terms. It is accordingly directed as under: (i) The Petitioner will be permitted to clear the consignments of imports constituting inputs for the fulfilment of its export orders placed on it prior to 1st July 2017 without any additional .....

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