[Opinion] Caught between and/or Applicability of IGCR Rules, 2022 for Specified End Use

Shweta Jain Gupta – [2022] 142 taxmann.com 340 (Article)

The Government of India has introduced new Customs (Import of Goods at Concessional Rate of Duty or for specified end use) Rules, 2022 (hereinafter referred to as the IGCR Rules), which have superseded the 2017 rules on IGCR. These rules have come into force from 10th Sep 2022 for which the notification was released on 9th Sep. Important point to note is that it was on 1st Feb 2022 itself when major changes were brought in IGCR Rules 2017 which were made effective from 1st March 2022. So, these are very frequent changes happening and now with the new rules in place, it has completely superseded these rules as well. In Feb 2022, there were major changes introduced in the procedure which was completely made online for better tracking purposes and where the chances of misuse were tried to be minimalised.

In these new rules, the concept of online controls and filing of monthly returns has been kept intact. The major change that is sought to be brought by these rules is the ‘introduction of IGCR for specified end use’. Till now, the applicability of IGCR was restricted to the importers who intended to import the goods for use in their manufacturer or for provision of outward service where the notification required for specific compliance. But now, the government seeks to expand the scope for specified end use other than manufacture or provision of output service which is typically trading wherein as per the provisions also, the importer can import the goods, avail the benefit, comply with IGCR and sell the goods to the ‘specified end use recipient’.

As per Rule 2, IGCR rules are applicable where –

a. A notification provides for observance of these rules;
b. An importer intends to avail the benefit of any notification and such benefit is dependent upon the use of the goods imported being covered by that notification for the manufacture of any commodity or provision of output service or being put to a specified end use.

Thus, there are two situations prescribed where the new IGCR rules would be applicable. It is interesting to note that it does not specify whether both the conditions are to be simultaneously satisfied or getting covered under any one situation would suffice for the applicability of IGCR rules. Hence, the moot question is whether the above two conditions have to be read with the conjunction “or” or with “and”.

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