TMI Blog2019 (4) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... sting 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. The DFIA, also popularly known as duty paying scrips in the trade parlance 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. - MAH/AAAR/SS-RJ/23/2018-19 - - - Dated:- 13-3-2019 - Smt. Sungita Sharma, Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Even the circular no 46/20/2018-GST dated 6th June 2018 issued by Technical officer Dr. Ajay K Chikara of Tax research Unit which vide para 6 Clarifies that duty paying scrips classifiable under chapter heading 4907 will attract NIL GST, and was, and are covered by Sr. No. 122A of Notification No. 2/2017 - Central Tax rate dated 28th June 2017 as amended vide notification No. 35/2017 Central Tax ( Rate) dated 13th October, 2017. D. The learned advance ruling authority, not agreeing with the submissions of the appellant and citing that the DCS are issued under chapter 3 of FTP whereas DFIA are issued under Chapter 4, and thus observing other procedural differences between DSC and DFIA opined that DFIA are liable to GST. This appears to be the sole ground for the advance ruling authority to hold that DFIA are not entitled to the exemption from GST. Aggrieved by the above ruling of the AAR, the Appellant has preferred appeal on the grounds mentioned below: Grounds of Appeal 1. The Appellant submitted that the ruling pronounced by the Advance Ruling Authority in so much as the sale or purchase of the DFIA will attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motion by allowing them to set off the basic customs duty against it. It is also to be noted that the duty credit scrips are not allowed to set off the IGST/CGST/SGST liability. 6. Now, we intend to comprehend the meaning of DFIA. It is observed that the meaning of the DFIA is also not provided in the GST Law. Hence, we resort to the same FTP, which has dealt with this term, DFIA. DFIA is mentioned at para 4.25 of the Chapter 4 of the FTP, which stipulate that Duty Free Import Authorisation is issued to allow duty free import of inputs. The quantity of the inputs to be imported under DFIA is governed by the SION, issued by the DGFT. Thus, it is clear that DFIA is the instrument to incentivize the exporters by entitling them to import the goods specified under the import authorization, without the payment of customs duty. 7. Thus, it can decisively be inferred that though the duty credit scrips and DFIA have been envisaged under different chapters, and under different schemes of the export of the FTP followed by DGFT, the basic nature and functionality of both the instruments are the same i.e. to set off the Basic Customs Duty on the import of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEIS, DFIA are understood as same, since such schemes are used for the purpose of payment of customs duty at the time of import of the goods in India. To substantiate their contention, they enclosed the letters from importers, exporters and traders of the license/scrips, and also from the association of the traders of such licenses. On perusal of the various letters issued by the importers, exporters and traders such as M/s. Ram Narayan Company (importer of goods), M/s. Klick impex Pvt. Ltd. (Exporter dealing regularly under the schemes like MEIS and DFIA granted by DGFT), M/s. Mahesh Overseas (Exporter of goods from regularly availing the benefit of various schemes granted under DGFT, both MEIS and DFIA), M/s. Swastik Traders (Traders of various schemes(MEIS/SEIS/DFIA) granted under DGFT, involved in trade of various export incentive schemes granted to exporters since 1987), M/s. Turf Textile Export Pvt. Ltd. (Exporter of goods from India since 18 years, regularly exporting under the schemes like MEIS DFIA), M/s. Sheroy International (engaged in trading of various export incentive schemes like MEIS/SEIS/DFIA granted by DGFT), as well as letter from the association of the trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding them incentives on the exports done by them. Thus, the objectives behind issuance of duty credit scrips and DFIA by the DGFT are same. Thus, it would be unfair to discriminate between the two licenses. Therefore, the tax treatment meted out to the two licenses must invariably be the same. 12. The Appellant also referred to the CBEC circular issued vide letter dated 06.06.2018 has clarified the GST rate applicable on Priority Sector Lending Certificates (PSLC), Renewable Energy Certificate (REC) and other similar scrips. The relevant para 6 7 are reproduced below: (6) As such, various certificates like REC, PSLC, etc. are classified under heading 4907 and will accordingly attract GST @ 12%, though duty paying scrips classifiable under the same heading will attract Nil GST (under Sr. 122A of the Notification No. 2/2017 -Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 35/2017 dated 13.10.2017.) 7. Accordingly, in modification of Sr. No. 3 of Circular No. 34/08/2018-GST dated 01.03.2018, it is hereby clarified that Renewable Energy Certificate (REC) and Priority Sector Lending Certificates (PSLC) and other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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