Refund of ITC when Duty drawback is claimed

The Madurai Bench of honourable Madras High Court has thrown light in case of ITC refunds when the duty drawback is claimed by the assessee. The court in the matter of Numinous Impex (I) Pvt. Ltd. Versus The Commissioner of Customs has held that the refund of Input Tax Credit can not be denied if the assessee claims duty drawback under certain conditions . Some relevant observations of the court are as under :

“Refund of the input tax credit under Section 16(3) of Integrated Goods and Services Tax Act, 2017 r/w Section 54 of the Central Goods and Services Tax Act, 2017 and Rules 89 and 96 of Central Goods and Services Tax Rules, 2017 cannot be denied, merely because the petitioner has claimed duty drawback under the provisions of Customs and Central Excise Duties and Service Tax Drawback Rules, 2017. It does not mean that the petitioner is not entitled to refund under Section 16(3) of the Integrated Goods and Services Tax Act, 2017 r/w Section 54 of the Central Goods and Services Tax Act, 2017 and Rules 89 and 96 of Central Goods and Services Tax Rules, 2017”

As far as the duty drawback under Notification No.131/2016- Cus (N.T) dated 31.10.2016 is concerned, there are two rates of duty drawback. Column No.4 in Schedule to the said Notification deals with the situation where the CENVAT facility has not been availed. Column No.5 in Schedule to the said Notification deals with the situation where the CENVAT facility has been availed.

There are two rates of All Industry Duty Drawback (AIR) under the Notification No.131/2016-Cus (N.T) dated 31.10.2016 namely:-

i. where input tax credit is availed.

ii. where no input tax credit is availed.

As far as the goods falling under Customs Heading No. 8483-40-00 of the Customs Tariff Act 1975 are concerned, the rate of duty for goods both covered under these two Columns is only at 2%. Thus, there is no variation as far as the rate of duty is concerned. In this case, admittedly, the petitioner is entitled to duty drawback at 2% irrespective of the fact that whether the petitioner has availed input tax credit under the provisions of the Central Goods and Services Tax Act, 2017 or under the provisions of the State Goods and Services Tax Act, 2017.”

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