QUESTION

GST is charged on Import. The value for the purpose of calculating the IGST on imported article is the aggregate of - (1) the value of the imported article and (2) any customs duty chargeable. The importers are paying `NIL basic customs duty on the strength of safta [Notification no. 99/2011 - Cus dated 09.11.2011]. As such, IGST is paid by them only on the value of the imported article and not on the Customs duty. Whether IGST is to be charged on Customs duty as well, though it might be exempted under a separate exemption notification? What is the procedure followed in other Customs port?

ANSWER

Facts of the case:

IGST is charged on Import. The value for the purpose of calculating the IGST on imported article is the aggregate of -
(1) the value of the imported article and
(2) any customs duty chargeable
the importers are paying nil basic customs duty on the strength of safta [notification no. 99/2011-cus dated 09.11.2011]. As such, IGST is paid by them only on the value of the imported article and not on the customs duty.
Whether IGST is to be charged on customs duty as well, though it might be exempted under a separate exemption notification? What is the procedure followed in other customs port?

Law Applicable: Section 3 of Customs Tariff Act 1975
Section 3: Levy of additional duty equal to excise duty, sales tax, local taxes and other charges-
( 1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article:
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7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) or sub-section (8A), as the case may be
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Reply: The IGST is to be paid on the value of goods after charging of custom duty at effective rate. Since effective rate of duty is NIL, therefore, NIL duty of custom should be taken for calculating value to charge IGST.

Illustration: If import value is Rs.100, custom duty is Rs. 10 and effective rate of custom duty is NIL. Then IGST will be charged on Rs.100. (Reply dt. 27/07/2021)