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Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise and Customs)
Circular No. 33 /2017-Cus
New Delhi, dated the 1st August, 2017
To
All Principal Chief Commissioners/Chief Commissioners of Customs
/Customs
(Preventive),
All Principal Chief Commissioners/Chief
Commissioners of Customs and Central Excise/
GST,
All Principal
Commissioners/Commissioners of Customs / Customs (Preventive),
All Principal
Commissioners/ Commissioners of Customs and Central Excise/GST.
Sir /Madam,
Subject: Leviability of Integrated Goods and Services Tax (IGST) on High Sea
Sales of imported goods and point of collection thereof-reg.
Reference has been received in the Board regarding clarity on Leviability of
Integrated
Goods and Services Tax (IGST) on High Sea Sales of imported goods.
2. The issue has been examined in the Board. 'High Sea Sales' is a common
trade practice whereby the original importer sells the goods to a third person
before the goods are entered for customs clearance. After the High sea sale of
the goods, the Customs declarations i.e. Bill of Entry etc is filed by the
person who buys the goods from the original importer during the said sale. In
the past, CBEC has issued various instructions regarding high sea sales
appropriating the contract price paid by the last high sea sales buyer into the
Customs valuation [Circular No. 32/2004-Cus., dated 11th May, 2004 refers].
3. As mentioned earlier, all inter-state transactions are subject to IGST.
High sea sales of imported goods are akin to inter-state transactions. Owing to
this, it was presented to the Board as to whether the high sea sales of imported
goods would be chargeable to IGST twice i.e. at the time of Customs clearance
under sub-section (7) of section 3 of Customs Tariff Act, 1975 and also
separately under Section 5 of The Integrated Goods and Services Tax Act, 2017.
4. GST council has deliberated the levy of Integrated Goods and Services Tax
on high sea sales in the case of imported goods. The council has decided that
IGST on high sea sale (s) transactions of imported goods, whether one or
multiple, shall be levied and collected only at the time of importation i.e.
when the import declarations are filed before the Customs authorities for the
customs clearance purposes for the first time. Further, value addition accruing
in each such high sea sale shall form part of the value on which IGST is
collected at the time of clearance.
5. The above decision of the GST council is already envisioned in the
provisions of subsection (12) of section 3 of Customs Tariff Act, 1975 inasmuch
as in respect of imported goods, all duties, taxes, cessess etc shall be
collected at the time of importation i.e. when the import declarations are filed
before the customs authorities for the customs clearance purposes. The importer
(last buyer in the chain) would be required to furnish the entire chain of
documents, such as original Invoice, high-seas-sales-contract, details of
service charges/commission paid etc, to establish a link between the first
contracted price of the goods and the last transaction. In case of a doubt
regarding the truth or accuracy of the declared value, the department may reject
the declared transaction value and determination the price of the imported goods
as provided in the Customs Valuation rules.
6. Field formations are requested to decide the cases of high sea sales of
imported goods accordingly. Difficulties, in the implementation of this circular
may be brought to the knowledge of the Board.
Yours faithfully
(Zubair Riaz)
Director (Customs)
[F.
No.450/131/2017-CusIV]
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