Unsold inventory of imported chocolates, confectionery and cosmetics, which attracted 28% Integrated Goods & Services Tax (GST) during inbound shipments but are now retailing with an 18% levy, can claim refunds on the excess tax paid.
“We have told importers that if they have imported goods at 28% and are selling them at 18%, they can claim a refund,” a senior official at the Central Board of Excise and Customs (CBEC) said. “They will, however, have to submit proof. We understand they have issues related to stickers.”
All imports face customs duty and IGST (CGST+SGST), unless specifically exempted. Last month, the GST Council had slashed tax slabs on 178 products, including chocolates, confectionery, deodorants and shampoo, from 28% to 18%. Almost all Indian firms have dropped prices in relevant categories after the cut.
“The reduction in GST rates for products imported at a higher rate may have some shortterm working capital impact on the importer. However, this can be adjusted against future sales,” said Lalit Malik, chief financial officer at Dabur, which operates retail chain NewU and sells both Indian and imported cosmetics and personal-care products. Some of the imported products retailed at Dabur chains include Beauty Formula from UK and Spice Island from Sri Lanka.
A leading importer of chocolates said: “We are continuing to sell at 28% as of now, and awaiting fresh stocks with revised MRPs. Unlike local manufacturers, our import cycles are dependent on international producers.”
While Indian vendors are in the process of manufacturing stocks with revised prices on packaging, importers say they are saddled with inventories because their import cycles extend anywhere between three and six months.
The government has allowed companies to put stickers on unsold stock, printing the new maximum retail prices (MRP) as long as the earlier MRPs are also visible. This facility, available until December 31, applies to both locally manufactured and imported products.
Many importers are putting stickers with revised MRPs. Some others, however, are facing issues with international clearances on revised stickers from the importing countries, said an official representing a large cosmetics importer.
Source: Economic Times
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