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India ranked 48th in global aviation safety rankingMumbai Customs seizes cocaine worth Rs 18 Cr from two foreign nationals4 killed & 9 injured as car rams into truck in AgraDecode Freebies Maze to free Growth GenieST - Technicalities should not come in way in permitting the party to agitate the case on merits before the court of law: HCCentre asks all States to establish price monitoring centres in all districtsGST - The time is still available, since the new registration certificate is on 21.06.2022 and petitioner had attempted to file on 20.07.2022 and period of limitation would be over the next day only, petitioner is entitled to relief: HCISTS charges on transmission of electricity waived for 18 yearsScindia inaugurates direct international flight from Pune to SingaporeCX - As credit has been accumulated due to clearance of excisable goods during Excise Law Regime for export, bar of unjust enrichment is not attracted: CESTATCus - Duty-free imported goods found during search by DRI officers, within Public Bonded Warehouse, cannot be said to have been outside warehouse - duty demand raised thereon is not tenable: CESTATNew low cost 'Powerless Heating System' activated with water can heat food in remote areasI-T- No need to make addition u/s 68 as assessee has sufficiently discharged onus upon him to prove identity, genuineness of transaction and creditworthiness of depositors: ITATG7 caps disagreement over Russian oil price at USD 60 per barrel; Crude price dives down to US 80I-T- Employee's contribution to employee welfare funds can be allowed if deposited before due date of filing return of income u/s. 139(1) of Act: ITATIndia’s Ambassador hands over Padma Bhushan to Sundar Pichai in San FranciscoI-T- It is the duty of the assessee to lead evidence in support of it's claim: ITATFive Earthshot Prize winners declared from India, Oman, UK, Australia and KenyaOrban says Hungary still not in favour of global minimum taxUS Commerce sleuths find Chinese solar exporters dodged US tariffAmerican Judge erases indictment against Huawei CFOSoccer legend Pele down with respiratory infectionAmerica unwraps B-21 Bomber built to deter ChinaIndonesia to pass law banning adulteryAmerican employers add 2.63 lakh jobs in Nov month despite recession in tech sectorRailways' revenue earnings up by 76% in pax segmentTax Congress 2022: Time is ripe to get in bed with New Income Tax Code!CBEC vests powers in certain officers for Central Excise & Service Tax appealsGST - Paper based corrugated sheets attract tax @12%: AAR



Refund of unutilised ITC in case of exports on CIF basis- A deep dive

Formula of Refund Amount under Sub rule 4 of Rule 89

As per the recent ‘Explanation’ added to Rule 89(4), the value of goods exported out of India should be taken as FOB value, if it is lower than invoice value. Assuming that it refers to Turnover of zero-rated supply, as mentioned in NUMERATOR of the formula, as given in Rule 89(4). The Explanation is silent about the value to be adopted in DENOMINATOR of that formula i.e. Adjusted Total Turnover.

LOGICALLY, FOB Value should also be adopted in Denominator so that proper ratio of export turnover vs total turnover can be arrived. However, as per the definition of ‘Adjusted Total Turnover’, as given in the said Rule read with Section 2 (112) and Section 15, the value in Denominator would be transaction value i.e. CIF value, if contract is on CIF basis. Under this situations, the taxpayers who are exporting goods on CIF basis and having only export turnover (no domestic supply), would not be in a position to get full refund of ITC.

Suppose the ratio of FOB value and CIF value is 90% in a given tax period, such exporters would be able to get refund of only 90% of Net ITC, i.e. ITC taken on inputs and input services. The remaining 10% ITC lying unutilized plus ITC taken on capital goods would not be of any use to such class of exporters. This may not be intention of law.

Personal views.

Shvetal Parikh 11/08/2022



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