Circular No. 3/1/2018-IGST
F. No. CBEC/20/16/03/2017- GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the 25th May, 2018
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/Commissioners of Central Tax (All)/
The Principal Directors General/ Directors General (All)
Subject: Applicability of Integrated Goods and Services Tax (integrated tax) on goodssupplied while being deposited in a customs bonded warehouse-reg.
Attention is invited to Circular No. 46/2017-Customs dated 24.11.2017 whereby theapplicability of integrated tax on goods transferred/sold while being deposited in a warehouse(hereinafter referred to as the “warehoused goods”) was clarified.
2. Various references had been received by the Board on the captioned issue which hasnow been re-examined by the Board.
3. It is seen that the “transfer/sale of goods while being deposited in a customs bondedwarehouse” is a common trade practice whereby the importer files an into-bond bill of entryand stores the goods in a customs bonded warehouse and thereafter, supplies such goods toanother person who then files an ex-bond bill of entry for clearing the said goods from thecustoms bonded warehouse for home consumption.
4. It may be noted that as per sub-section (2) of section 7 of the Integrated Goods andServices Tax Act, 2017 (hereinafter referred to as the “IGST Act”), the supply of goodsimported into the territory of India, till they cross the customs frontiers of India, is treated asa supply of goods in the course of inter-State trade or commerce. Further, the proviso to subsection (1) of section 5 of the IGST Act provides that the integrated tax on goods imported
into India would be levied and collected in accordance with the provisions of section 3 of theCustoms Tariff Act, 1975 (hereinafter referred to as the “CTA”). Thus, in case of supply ofthe warehoused goods, the point of levy would be the point at which the duty is collectedunder section 12 of the Customs Act, 1962 (hereinafter referred to as the “Customs Act”)which is at the time of clearance of such goods under section 68 of the Customs Act.
Circular No. 3/1/2018-IGST
5. It may also be noted that sub-section (8A) has been inserted in section 3 of the CTAvide section 102 of the Finance Act, 2018,with effect from 31st March, 2018,so as to providethat the valuation for the purpose of levy of integrated tax on warehoused imported goods atthe time of clearance for home consumption would be either the transaction value or thevalue as per sub-section (8) of section 3 of the CTA (i.e. valuation done at the time of filing
the into-bond bill of entry), whichever is higher.
6. It is therefore, clarified that integrated tax shall be levied and collected at the time offinal clearance of the warehoused goods for home consumption i.e., at the time of filing theex-bond bill of entry and the value addition accruing at each stage of supply shall form partof the value on which the integrated tax would be payable at the time of clearance of thewarehoused goods for home consumption. In other words, the supply of goods before theirclearance from the warehouse would not be subject to the levy of integrated tax and the same
would be levied and collected only when the warehoused goods are cleared for homeconsumption from the customs bonded warehouse.
7. This Circular would be applicable for supply of warehoused goods, while beingdeposited in a customs bonded warehouse, on or after the 1
stof April, 2018.
8. It is requested that suitable trade notices may be issued to publicize the contents ofthis Circular.
9. Difficulty, if any, in implementation of the above instructions may please be broughtto the notice of the Board. Hindi version would follow.