BCD credit on DTA sales by an EOU

Others 415 views 1 replies

Dear Sirs,

Can a EOU get Input credit on Customs duty paid while clearing their finished goods in DTA ?

 

 

Replies (1)

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?

  • Generally, EOUs are exempt from customs duty on import of inputs for export production under the EOU scheme.

  • When an EOU clears finished goods to the DTA, Customs duty including BCD is payable on such goods as per Customs Tariff.

  • 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.

  • Input Tax Credit is available only on IGST, CGST, and SGST paid on inputs and input services.

  • In case of customs clearance, Integrated GST (IGST) paid on imports is eligible for ITC, but BCD is not eligible for credit.

Conclusion:

  • EOU must pay BCD while clearing goods to DTA.

  • No credit of BCD is allowed.

  • ITC on IGST (if applicable) can be claimed.



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