GST: CBEC's tardiness on export rules

CBEC should now clarify the pending issues and allow exports to proceed

For exporters, the Goods and Services Tax (GST) regime started on July 2 with no idea on how to remove their goods for shipment. As the days went by, many of the issues got sorted but some remain.

Last Monday, exporters found the Central Board of Excise and Customs’ (CBEC) circular no. 26/2017-Customs dated July 1 on its website. It outlined the procedure for claiming refund of tax paid on export goods and refund of unutilised Input Tax Credit (ITC) on account of exports under a bond or undertaking.  The circular also prescribed a new procedure for mandatory self-sealing of export containers with effect from September 1. New formats of bonds and undertakings were prescribed.

On July 1, the finance ministry issued notification no.15/2017-Central Tax, amending the Central GST (CGST) Rules. This notification, running into 77 pages and amending several provisions and prescribed Forms, introduced Rule 96A dealing with refund of integrated tax paid on export of goods and export of goods or services under a bond or letter of undertaking. It required an exporter to furnish, prior to export, a bond or a letter of undertaking in form GST RFD-11 to the jurisdictional commissioner and then clear the goods without Integrated GST (IGST) payment. This notification was found by most exporters on July 3 on the CBEC website.

Exporters were still unclear on how and to whom they should furnish the bond or undertaking. Most of them were located far away from the offices of a commissioner. Most commissionerates had been re-organised but the jurisdiction of divisions and range offices had not been notified. Most officers pleaded ignorance or lack of jurisdiction. Some were ready to take a letter of undertaking but others wanted a bond. Some wanted a bank guarantee. Utter confusion prevailed.

So, the CBEC issued circular 2/2/2017-GST dated July 4, clarifying that the bond or undertaking could be furnished to the jurisdictional assistant or deputy commissioner till the module for furnishing  Form RFD-11 was available on the common portal. Most exporters saw this circular on July 5. They began queueing before the jurisdictional assistant or deputy commissioner with their letters of undertaking or bonds but the confusions did not end.

Should the letters of undertaking be furnished on a letter head or on stamp paper and if so, on stamp paper of what value? What are the situations when a letter of undertaking has to be furnished and when should bonds be furnished? Must bonds necessarily be backed by a bank guarantee? Is acceptance of the bond or letter of undertaking by the jurisdictional officer required before movement of goods for export or would mere acknowledgement of the bond suffice? All these questions plagued exporters. Each officer had his own version and the export goods waited for want of clarity, as the law requires exporters to complete all formalities prior to shipment.  

All this turmoil in the first week of the GST regime could have been easily avoided if the CBEC had thought through and issued the instructions well in time. Anyway, it should now clarify the pending issues and allow exports to proceed. 

E-mail: tncrajagopalan@gmail.com