TMI Blog2019 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms bonded warehouse on or after 01.04.2018. Removal from the FTWZ to DTA is the point of deferred levy/payment of Customs Duty, i.e., at the time of clearance for home consumption from FTWZ. Further, as explained in the Circular, the goods are not to be subjected to IGST when bonded and the payment of integrated tax is to be effected when the goods are removed for home consumption from the bonded warehouse, under the Provisions of Customs Tariff Act. Therefore, there is no requirement to pay IGST under the provisions of GST law at the time of clearance from the FTWZ. Registration - Held that:- In the case at hand, the Applicant proposes to effect sale when the goods are bonded and then DTA customer files Bill of Entry for Home Consumption and clears the goods from the FTWZ on payment of appropriate Custom duties (BCD & IGST). Therefore, as clarified in the Circular No.3/ 1/2018-IGST dated 25th May 2018, the payment of IGST again at the point of clearance from the FTWZ to DTA do not arise for supply of warehoused goods, while being deposited in a customs bonded warehouse/FTWZ on or after 01.04.2018. In the event the Applicant is exclusively conducting the activity describe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable territory and supplying goods to DTA customers on the goods stored in third party FTWZ unit is required to get registered under the IGST ACT 2017 or under the provisions or CGST ACT 2017 or the Tamil Nadu Goods and Service Tax Act, 2017 and the Rules made thereunder: 2.1 Sadesa has informed that they are contemplating to make supplies to its Indian customers on just in time basis. Towards this, they are exploring the option of entering into a service agreement with a Logistics Service Provider ('LSP'), for clearance /handling of goods from customs and for storage of goods in the warehousing unit of the LSP situated in a FTWZ unit at Chennai, India from where the goods would be cleared by the customers in India, on need basis. The title to the goods stored in FTWZ unit remains with Sadesa during storage of goods in FTWZ. 2.2 The Applicant has submitted that they propose to export goods (i.e., tanned bovine leather) to India. Such goods would be cleared from the Customs port and stored in the FTWZ unit. In the warehousing facility of LSP no manufacture or processing activities are done. Upon identifying the customers, goods would be sold by the applicant from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 26(1) (a) of SEZ act 2005 vide Rule 27 of SEZ rules 2007 and the same is continued under the GST regime. As per Section 7(2) of IGST Act, sale through FTWZ units should be considered as interstate supply. However, as per proviso to Section 5(1) of IGST Act, imported goods would be subject to IGST at the point where Customs duty is levied, in this case clearance from FTWZ to DTA which is import of such goods. They stated that if there is no levy of GST on such supplies, they are not liable for registration as per Section 23(1) of CGST Act. The Applicant has stated that there is no clarity on the taxability of sale from the Applicant through FTWZ units to the DTA customers, hence SADESA has sought Advance ruling to clarify the same. 3. The Authorized Representative of the Applicant was personally heard. They stated that the goods will be imported by LSP in the FTWZ. LSP is a unit of FTWZ. However, title of goods do not change and it remains with the Applicant. The Applicant submitted a flow chart of various transactions. They stated that the FTWZ unit imports the goods of the applicant on a free of charge invoice which indicates a nominal value. The goods are finally claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 3of the Customs Tariff Act, 1975 (hereafter referred to as CTA ). The importer has the option to defer the payment of duty on such imports by storing the goods in the Customs bonded warehouse. During the storage of imported goods in warehouse, the importer has the option to supply such goods to any other person even before clearance from the bonded warehouse. It has been clarified vide Circular No. 46/2017-Customs dated 24.11.2017 that integrated tax will be payable on such supplies and buyer will also pay the deferred customs duty at the time of clearance of goods from the warehouse. It has been represented that in this scenario, the buyer is being saddled with double taxation. 2. Kind attention is drawn towards sub-section (2) of section 7 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act ) whereby supply of goods imported into the territory of India, till they cross the customs frontiers of India, is treated as a supply of goods in the course of inter-State trade or commerce. Further, proviso to sub-section (1) of section 5 of the IGST Act provides that integrated tax on goods imported into India would be levied and coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies the applicability of IGST on goods supplied while being deposited in customs bonded warehouse effective from 01.04.2018 and states that Integrated tax shall be levied and collected at the time of final clearance of the warehoused goods for home consumption i.e., at the time of filing the ex-bond bill of entry and the value addition accruing at each stage of supply shall form part of the value on which the integrated tax would be payable at the time of clearance of the warehoused goods for home consumption. In other words, the supply of goods before their clearance from the warehouse would not be subject to the levy of integrated tax and the same would be levied and collected only when the warehoused goods are cleared for home consumption from the customs bonded warehouse, under the provisions of Customs Act. This circular was made applicable for supply of warehoused goods, while being deposited in a customs bonded warehouse on or after 01.04.2018. 4.3 From the foregoing, it is evident that removal from the FTWZ to DTA is the point of deferred levy/payment of Customs Duty, i.e., at the time of clearance for home consumption from FTWZ. Further, as explained in the Circular ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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