'Space availability certificate not required for filing in-bond B/E'

We are manufacturer-exporters of cotton yarn. We received an advance against exports but due to Covid-19, orders of our overseas buyer were cancelled by their buyer. He has requested us to refund the advance. We approached the RBI through our bankers to give permission to remit the advance received but RBI has not given it, despite a lapse of five months. Kindly guide us.

I believe you have approached RBI in accordance with the proviso to Para C.2 of RBI Master Direction no.16/2015-16 dated January 1, 2016 (as amended), which says that in the event of the exporter’s inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilised portion of the advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank.

If so, please follow up with the jurisdictional regional office of the RBI either by phone or in person, and pursue your request for permission. Normally, the RBI does respond to such requests in about two to three weeks.

We have obtained permission for a private bonded warehouse. To import in a private bonded warehouse, we have to obtain a space availability certificate from the jurisdictional customs authorities and produce the same at the time of filing the bill of entry for warehousing. Until recently, the jurisdictional customs authorities used to issue the space availability certificate. Now they have stopped it and are asking us the notification or circular number prescribing the issue of the certificate. Can you help us?

The requirement of producing the space availability certificate for clearance of goods to be deposited in a bonded warehouse has been done away with. Please see Para 5(g) of CBEC Circular no. 19/2018-Cus dated June 18, 2018, and Para 4.5(g) of CBIC Circular no. 10/2020-Cus dated February 7, 2020.

The government added a new clause (d) to Explanation 1 to Rule 43 of the CGST Rules, 2017, through Notification No. 14/2022-Central Tax dated July 5, 2022. The effect is that the aggregate value of exempt supplies for determination of restricted ITC will exclude the value of supply of duty credit scrips. Thus, the common ITC will not be restricted on account of exempt supplies of the duty credit scrips. Will this amendment have retrospective effect?

Notification no.14/2022-CT operates with prospective effect. However, it must be noted that Explanation 1 starts with the words, “for the purposes of rule 42 and this rule, it is hereby clarified that the aggregate value of exempt supplies shall exclude”. So, the amendment in effect is part of that clarificatory provision. 

As all clarifications have retrospective effect, I am of the opinion that the said amendment will have effect from October 13, 2017, when the duty credit scrips were exempted. So, in case you have carried out such reversal, you can claim refund/re-availment of the restricted ITC.