Circular No. 1068/1/2019-CX
F No: 116/15/2017-CX-3
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, dated 10" January, 2019
To
The Principal Chief Commissioner / Chief Commissioner of CGST & Central
Excise (Chandigarh, Meerut, Kolkata and Shillong zone) DG, GSTI.
Subject: Review of progress of implementation of Scheme of Budgetary Support to
eligible industrial units located in States of Jammu & Kashmir,
Uttarakhand, Himachal Pradesh and North East including Sikkim —
clarification reg.
Madam/Sir,
‘A meeting was convened at Central Board of Indirect Taxes and Customs
(CBIC) on 23.05.2018 to review progress of implementation of Scheme of budgetary
support. In the meeting various technical and operational issues forwarded by
Department of Industrial Policy and Promotion (DIPP), Trade associations and field
formations were also discussed and recommendations forwarded to Department of
Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry for
consideration. The issues requiring amendment of the scheme are proposed to be
addressed by DIPP by way of issuance of notification amending the scheme. The
issues which are operational and clarificatory in nature are addressed by way of
issuance of this circular.
Eligibility of units which were under threshold exemption or manufacturing
exempted goods but are required to pay GST under the GST regime: Under the
erstwhile regime, the benefit was made available to such units if excise duty was
imposed at a later date.
2 The scheme seeks to provide benefit to the eligible units for the residual
period which were availing exemption under erstwhile exemption notifications issued
under Central Excise regime. As such the benefit would not be available to such units.
Procurement of inputs for supply as a part of Kit A cosmetics manufacturer has
sought clarification as to whether its hair colour kit, would be considered as
manufacture. The kit consist of colourant tube manufactured in their own factory
at Baddi and other items manufactured by third parties situated in area based
exempt locations and are procured to be part of the kit. This finished hair colour kit
is cleared by their factory.
3. As long as, the sourced goods from third party are in the nature of inputs for
the kit in respect of which some of the goods are being manufactured by themselves,
the kit would be considered to be a product which is being supplied. The benefit for
the kit would be available so long as the sourced products are in the nature of
inputs/accessories and are supplied in form of kit in general trade parlance for such
goods.
Multiple business premises under the same GSTN and determination of amount of
refund: Trade has represented that where the entities are having multiple
operations in the state on account of there being single return for all the
transactions, the credit of one gets off-set against the other and the budgetary
support is not being allowed over and above the cash paid by them.
4, Under the scheme, a provision of certificate by the Chartered accountant has
already been provided for. In addition, an assessee also has an option to register its
operations other than eligible unit as a separate business vertical having a unique
GSTIN. The definition of business vertical is proposed to be omitted in terms of CGST
(amendment) Act, 2018 from the date to be notified in this regard. Therefore after
operationalization of the said act the eligible unit may maintain its existing GSTIN and
for other operations separate GSTIN may be obtained. Such a benefit should be
available from 1“ day of commencement of a quarter as per the scheme of budgetary
support.
Cases where the finding of sanctioning authority differs from inspection team:
There
is no provision in the scheme as to whose views will prevail in case the
sanctioning authority differs with the findings of the inspection team.
5. The mandate of the inspection team and the sanctioning authority are
different. The inspection team has to decide the eligibility of the unit whereas the
sanctioning authority verifies and quantifies the refund claim. In cases where refunds
have been sanctioned prior to inspection by DIPP team, such claims are provisional.
Where any of these units are found to be not eligible on the basis of inspection
report, the refund amount is liable to be recovered in the manner provided in the
scheme.
An issue regarding difficulty in verification of the refund claim was raised by Chief
Commissioner (Shillong). As per the procedure in place, an assessed files monthly
returns under the GST whereas the refund application is for the quarter.
6. Accordingly, it was decided that in the table annexed to the refund
application month wise details may be attached. This would enable speedier and
more accurate verification of the refund claims.
Time limit for disposal of the claims filed by the eligible units was discussed as at
present no time limit is provided in the scheme itself.
7. It was decided that the claims should be disposed off within 2 weeks since the
applicant has already incurred liability and paid the tax and in no case, it should be
later
than 30 days. Jurisdictional Chief Commissioner is to monitor the same and
ensure expeditious disposal.
Insistence on ink signed copy by PAO, of sanction order, creates delay in the
sanction of refund. It was suggested that there should not be any requirement of
ink signed copy of the sanction order to the PAO by the DC/AC especially in areas
where Commission rates are located in far flung areas.
8. It was clarified that in the manual mode there is a requirement for the same.
However, in the automated mode after roll out of the third phase of the automation,
there will not be any requirement of ink signing of the sanction order.
Provision for appeal: There is no provision for appeal for the unit in case the unit is
aggrieved with the findings of sanctioning authority / inspection team.
9. The support under the scheme is in the nature of grant and not refund of duty
under taxation law. As such there is no requirement for any appellate forum as the
decision of the sanctioning authority is final
Verification in respect of multi-location assesse: The budgetary support is to be
sanctioned to the eligible unit by DC\AC having jurisdiction over the ‘Principal Place
of Business’. In some cases location of the eligible unit and principal place of unit is
different. It needs to be clarified as to which of the two officers will verify the
claims.
4
10. The system being followed under the GST regime will be applicable mutatis
mutandis and the Central Tax officer having jurisdiction over the ‘Principal Place of
Business’ shall sanction the refund claim. Such officer is the jurisdictional officer in
respect of eligible unit located at any other place in the State as is the position as per
GST law. While conducting verification of multi locational assesse covered under the
same registration number, the jurisdictional AC/DC may take inputs from other
jurisdictions, wherever necessary.
It was pointed out that there is no access to Electronic Credit Ledger and Electronic
cash ledger for verification of the claim by the field officers. This leads to difficulty
in verifications.
11. Field officers presently have access to Electronic Credit Ledger and Electronic
cash ledger.
There is no clarity w.r.t requirement of pre-audit or post audit for the budgetary
support amount sanctioned.
12.1. As such payments will be liable to be audited by the C&AG office accordingly
there is no requirement for audit by departmental officers. It is reiterated that these
payments are not tax refunds but budgetary support.
12.2. The clarifications are expected to bring clarity and uniformity in
implementation of the scheme by the filed formations. Difficulty experienced, if any,
in implementation may be brought to the notice of the Board. Hindi version of this
a
Na Peet
oe ioe
Mazid Khan
(OSD-CX)
circular will follow.
