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IGST payment for goods cleared from Customs bonded warehouse

No. CLE-HO/POL/GST/18-19

May 31, 2018

Members of the Council,

Sub :    Applicability of Integrated Goods and Services Tax (IGST on goods supplied while being deposited in Customs bonded warehouse

Dear Member,

As you are aware the Central Board of Indirect Taxes and Customs (CBIC) had issued a Customs Circular No.46/2017-Customs dated 24th Nov. 2017 regarding applicability of IGST/GST on goods transferred/sold while being deposited in a warehouse. The CBIC has now issued IGST Circular No.3/1/2018-IGST dated 25th May 2018 stating the following.

A. It is seen that the “transfer/sale of goods while being deposited in a customs bonded warehouse” is a common trade practice whereby the importer files an into-bond bill of entry and stores the goods in a customs bonded warehouse and thereafter, supplies such goods to another person who then files an ex-bond bill of entry for clearing the said goods from the customs bonded warehouse for home consumption.

B. It is therefore, clarified 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

C. The valuation for the purpose of levy of integrated tax on warehoused imported goods at the time of clearance for home consumption would be either the transaction value or the value as per sub-section (8) of section 3 of the CTA (i.e. valuation done at the time of filing the into-bond bill of entry), whichever is higher

D. This Circular would be applicable for supply of warehoused goods, while being deposited in a customs bonded warehouse, on or after the 1 st of April, 2018.

Members may kindly note the above.

Thanks and regards
R. Selvam, IAS
Executive Director