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TMI Blog2019 (4) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA BRIEF FACTS OF THE CASE A. The Appellant preferred an application under Section 97 of the CGST Act, 2017, seeking an advance ruling to decide whether GST is applicable on sales and /or purchase of DFIA (Duty Free Import Authorisations) as serial no. 122a of the Notification No. 2/2017 - C.T. (Rate) inserted vide Notification No. 35/2017-C.T. (Rate) dated 13/10/2017 exempts duty credit scrip. B. During the proceedings before the learned advance ruling authority, it was submitted that both DCS (Duty Credit Scrips), and DFIA are export incentives, which exporters are entitled to under Foreign Trade Policy of Government of India. Both are covered by Chapter 4907 for GST purpose. The rationale, involved in exempting DCS from GST was clarified in terms of minutes of the 22nd meeting of GST council and Press brief issued as fall out of the said meeting. It was brought to the kind attention of the learned advance ruling authority the response received from Mr. Manish Modi to the Email sent seeking clarification with regard to scope of exemption notification 2/2017. The said response is stated below verbatim "I am directed to inform you that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.T. (Rate) dated 28.06.2017 as amended by the Notification No. 35/2017-C.T. (Rate) dated 13.10.2017 vide which the entry, bearing heading 4907, and having the description as Duty Credit Scrips was inserted in the said exemption notification. It is observed that the definition or meaning of the Duty Credit Scrips is not provided under the GST law. Therefore, we will resort to the Foreign Trade Policy (FTP) 201520 formulated by the DGFT, from where this term 'Duty Credit Scrips' has emerged and conceptualised. 5. As per the para 3.02 of the chapter 3 of the FTP, Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for: (i) Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3 (I), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DOR Notification, except certain specified items. From this, it is clear that the duty credit scrips are the instruments to award incentives to the exporters with the objective of the export promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the article which identifies it in his mind. In the case of glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror." The apex court further stated that if there was one principal fairly well settled, it was that the words or expressions must be construed in the sense, in which they are understood in the trade, by the dealer and the consumer. They, further quoted," it is they who are concerned with it, and it is the sense in which they understand it, that constitutes the definitive index of the legislative intention when the statute was enacted." 9. Coming to the present case, the appellant have argued that the DFIA is known as duty credit scrips in trade parlance. They further submitted that in the trade, various schemes issued under the Foreign Trade Policy, such as MEIS, SEIS, DFIA are understood as same, since such schemes are used for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrips such as MEIS was losing value due to its reduced usability as it could no longer be used to pay IGST/GST. Hence, in order to restore the lost incentive on sale of duty credit scrips, the GST on sale or purchase of these scrips was being reduced from 5% to 0%. Thus, the intention of the law maker was crystal clear in that they wanted to give immediate relief to the exporters, who were facing great deal of difficulties due to the existing GST policies along with other technical glitches in the implementation of the GST provisions, by incentivizing their export related activities. It is under this vision and objective that the GST, on the treading of the duty credit scrips, was reduced from 5% to 0% for the promotion of the export, thus restoring the incentives held by the duty credit scrips and adding potential to the marketability of such scrips. All these proposals and recommendations made in the 22nd GST council meeting is comprehensibly and rightfully applicable in the case of DFIA for the reason that the DFIA is also issued by the DGFT for the benefit of the exporters by awarding them incentives on the exports done by them. Thus, the objectives behind issuance of duty cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changeably in para 6 & respectively. Thus, assuming the significance and relevance of the each word and phrase, that the legislation contains and on the belief that each and every word or phrase in any legislation has to be given the significance and weight that they deserve, we are compelled to interpret that the both the words duty paying scrips and duty credit scrips are to be construed same. 15. Thus, from the above discussion, we conclude that the DFIA, also popularly known as duty paying scrips in the trade parlance, as discussed above, is equivalent to the duty credit scrips, as far as the tax treatment thereon, are concerned and accordingly, there will be nil rate of GST on the sale or purchase of DFIA as provided in Sr. 122A of the Notification 02/2017-C.T. (Rate) dated 28.06.2017 as amended by the Notification No. 35/2017-C.T. (Rate) dated 13.10.2017. Hence, we pass the following order: Order We, hereby, set aside the ruling pronounced by the AAR and hold that the No GST is applicable on the sale or purchase of DFIA, as provided in Sr. 122A of the Notification 02/2017-C.T. (Rate) dated 28.06.2017 as amended by the Notification No. 35/2017-C.T. (Rate) dated 13.10.2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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