Manager - Finance & Accounts
57026 Points
Joined June 2010
Hey! Regarding your question on BCD (Basic Customs Duty) credit for an EOU (Export Oriented Unit) clearing finished goods into DTA (Domestic Tariff Area):
Can an EOU get Input Credit on Customs Duty paid while clearing finished goods in DTA?
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Generally, EOUs are exempt from customs duty on import of inputs for export production under the EOU scheme.
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When an EOU clears finished goods to the DTA, Customs duty including BCD is payable on such goods as per Customs Tariff.
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However, the EOU is NOT eligible to claim Input Tax Credit (ITC) on Basic Customs Duty (BCD).
This is because BCD is not considered a part of GST and is not available as credit under GST law.
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Input Tax Credit is available only on IGST, CGST, and SGST paid on inputs and input services.
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In case of customs clearance, Integrated GST (IGST) paid on imports is eligible for ITC, but BCD is not eligible for credit.
Conclusion:
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EOU must pay BCD while clearing goods to DTA.
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No credit of BCD is allowed.
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ITC on IGST (if applicable) can be claimed.