Indian Oil Corporation Ltd. – 2018 (17) G.S.T.L. 486 (A.A.R. – GST – West Bengal)

No Input Tax Credit would be available in case of goods transferred from export warehouse to distinct persons.

Facts-  In this case, the applicant Indian Oil Corporation Ltd exports HSD, ATF and other refined petroleum products to Nepal under the terms and conditions laid down in an Agreement dated 27-3-2017 between Indian Oil Corporation and Nepal Oil Corporation Ltd. ATF, Motor Spirit and HSD, sourced from the applicant’s manufacturing unit (refinery) at Haldia in West Bengal are transported by Rail to the Indian Oil Corporation’s warehouse at Raxaul in Bihar.

Issue: Whether or not GST paid on the railway freight for transportation of the above goods from its Haldia Refinery to the its export warehouse at Raxaul can be availed as input tax credit under the GST Act.

Held – ATF and other non-taxable supplies from the applicant’s Haldia Refinery to the export warehouse of Indian Oil Corporation Ltd. at Raxaul are not zero rated supplies. They are non-taxable supplies from the applicant to the Bihar unit of Indian Oil Corporation Ltd., who are distinct persons in terms of Section 25(4) of the GST Act. The applicant cannot claim credit of the GST paid on the railway freight for transportation of ATF and other non-taxable supplies from West Bengal to the Bihar unit.

The exporter, registered as export warehouse, can store goods that may be diverted for home consumption. As the nature of clearance, whether for home consumption or export, is finally determined only at the time of removal from the export warehouse, the Excise Authority shifts the incidence of duty to the time of clearance from the export warehouse. It is not correct that submission of endorsed copies of ARE-3 to the concerned Excise Authority at Haldia, where the applicant’s factory is located, is evidence of export. It is evidence of rewarehousing of the goods cleared duty free from the factory. Actual evidence of export is ARE-1, endorsed by the Customs Authority, submitted before the appropriate Excise Authority at the export warehouse, failing which the exporter is liable to pay the duty with interest. It amply clear that the goods re-warehoused at Raxaul Depot are not moved from Haldia under specific export order and can be either cleared for home consumption or exported. It is, therefore, far from a mere transit point, but the point of storing and final clearance.

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