Question21: As you Opined that, Refund of accumulated ITC can be claimed under Section 54 of the CGST Act, 2017 as the export of goods is zero rated under Section 16 of IGST Act, 2017. As goods exported by you are NIL rated, you are not entitled to claim refund of the accumulated ITC. But, according to us In terms of Section16 Of IGST act, clause (2) if export of goods which attract exempt / Nil rate, also cover under zero rated supply. Para of the same reproduce below, Section 16: Zero rated supply
(1)     'zero rated supply' means any of the following supplies of goods or services or both, namely:''

         (a)     export of goods or services or both; or

         (b)     supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

(2)     Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

(3)     A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:''

    (a)     he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or

    (b)     he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. And therefore in terms of Rule 16(3)(b) eligible for refund of ITC of goods utilised for export of goods.

Answer:  The language employed in sub-section (2) of Section 16 of IGST Act, 2017 uses the phrase notwithstanding that zero rated supply may be an exempt supply. It is to be seen here that the words exempt supply here means the exemption by virtue of export or goods which are otherwise exempted from payment of tax. There is no doubt that credit is available on inputs used in manufacturing exported goods. The doubt is whether credit can be availed on goods which are otherwise exempted from payment of tax because as per the language of Section 17(2) of CGST Act, 2017 credit on fully exempted goods is not available. Language of said Section 17(2) is reproduced below;
 "(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies."
 In other words, if a supplier is manufacturing taxable as well as exempted goods then he is required to reverse credit corresponding to the exempted goods at the time of purchase itself.. In this situation, how will he take credit at later stage when he is exporting his fully exempted goods.
Accordingly, it is understood that the words exempt supply used in Section 16(2) of the IGST Act means exemption by virtue of zero rated.
Similar provisions existed in Central Excise regime. Rule 6(6)(v)  of Cenvat Credit Rules, 2004 provided that CENVAT credit involved on goods exported under Bond was not required to be reversed, that means, credit involved on exported goods was entitled to the exporting unit but it was very much required to be reversed when goods were exempted otherwise.  
Your feedback needs deeper consideration and interpretation of law, therefore, we request you to bear with us for sometime. We would definitely revert back to you after giving some more serious thought to the issue involved. (Reply dt. 06/12/2017)