Manager - Finance and Accounts
58798 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.