Missing Shipping Bills Cannot Deny IGST Refund For Bhutan Exports: CESTAT Kolkata

On 10 August, the Kolkata Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that failure to file Shipping Bills for exports to Bhutan, particularly during the initial implementation of the Goods and Services Tax (GST) regime, could not justify denial of Integrated Goods and Services Tax (IGST) refund where the actual export of goods and payment of IGST were undisputed.

A Single Member Bench comprising Justice (Retd.) R. Muralidhar set aside the rejection of refund and Rs. 1 lakh penalty imposed on Multiplex Corporation, which had exported three consignments to Bhutan in July and August 2017.

It held “If this procedure followed was not correct, the appellant should have been guided to follow the new correct procedure, which has not been done in this case.” It further observed, “Therefore, the lapse, if any, the same is required to be equally attributed to the CGST and Customs officials also.”

Multiplex Corporation had claimed a refund of Rs. 1,56,510 towards IGST paid on the exported goods. The adjudicating authority rejected the claim on the ground that the exporter had not followed the revised procedure requiring Shipping Bills for exports to Bhutan and also imposed a Rs. 1 lakh penalty. The Commissioner (Appeals) upheld the rejection, following which Multiplex Corporation approached the Tribunal.

It submitted that it had made the exports immediately after the GST regime came into force on 1 July 2017, when the new export procedures were still not properly understood. It said that it had therefore followed the procedure prescribed for exports to Bhutan before the GST regime came into force. It also pointed out that it had prepared tax invoices and separate Bhutan invoices, while CGST officials had examined and sealed the consignments at its factory. The goods were subsequently cleared through the Customs Check Post, while the Bhutan authorities certified the import declarations after receiving the consignments.

The Revenue, however, contended that the revised procedure applicable from 1 July 2017 required exporters to file Shipping Bills and linked the IGST refund to the entries made in those Shipping Bills.

The Tribunal examined the tax invoices, Bhutan invoices, CGST sealing endorsements, Customs Check Post records and import declarations issued by the Bhutan authorities. It found that the documents collectively established that Multiplex Corporation had actually exported the goods to Bhutan. It observed that although the exporter had not followed the new procedure requiring Shipping Bills, it had complied with the documentation required under the earlier procedure.

Further, the Bench it noted that CGST officials had themselves sealed the containers and that the border Customs officials had allowed the consignments to leave India without raising any objection regarding the absence of Shipping Bills. It also considered the documentary evidence relating to all three consignments, including the tax invoices, Bhutan invoices, examination and sealing endorsements by CGST officials, examination by the Land Customs Station and import declarations issued by the Bhutan authorities.

Finding no justification for the penalty, it set aside the Rs. 1 lakh penalty. On the refund issue, it noted that there was no dispute that Multiplex Corporation had actually paid IGST on the exported goods. Moreover, the Tribunal held that Multiplex Corporation was eligible for the refund and directed the Revenue to grant the Rs. 1,56,510 IGST refund along with applicable interest within eight weeks from receipt of the order.

It further directed that interest would be payable from three months after Multiplex Corporation filed the refund claim on 6 February 2019 until the date on which the refund is actually paid.

Accordingly, the CESTAT allowed the appeal.

Appearances for the Appellant: Shri A.Bhatt, Advocate 

Appearances for the Revenue: Shri S.Debnath, Authorized Representative for the Revenue