The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 37/2026-Cus, dated 27 August 2026, prescribing the modalities for payment of IGST in respect of Raw Sugar actually imported under the Advance Authorisation (AA) Scheme where the authorisation is being converted into the Tariff Rate Quota (TRQ) Scheme.
The Circular follows the changes announced by the Directorate General of Foreign Trade (DGFT) through Notification No. 31/2026-27 dated 20 August 2026, amending the import policy condition for Raw Sugar falling under Exim Code 170114 of Chapter 17 of ITC(HS), 2022 – Schedule I. DGFT’s Public Notice No. 27/2026-27 dated 20 August 2026 had also prescribed modalities for allocation of a 10 lakh metric tonne Tariff Rate Quota for Raw Sugar, along with a one-time facility for conversion from the Advance Authorisation Scheme to the TRQ Scheme.
CBIC has examined the mechanism for payment of IGST on the quantity of Raw Sugar that had already been imported under the Advance Authorisation Scheme and has now prescribed a specific procedure to be followed at the Port of Import (POI).
Importers to approach Customs assessment group for payment of IGST
For relevant imports where an Advance Authorisation holder is required to pay IGST, the importer may approach the concerned assessment group at the Port of Import with the relevant details for payment of tax. The assessment group will thereafter cancel the existing Out of Charge (OOC) and record the reason in the remarks before reassessing the Bill of Entry (BE) so as to charge the applicable tax.
The IGST is required to be paid against an electronic challan generated through the Customs EDI System. Upon completion of the payment, the Port of Import will make a notional Out of Charge for the Bill of Entry in the Customs EDI System. This will facilitate transmission to the GSTN portal of, among other particulars, the IGST amount and the relevant date of payment for determining eligibility under the GST provisions.
Interest liability on IGST payment waived
As an important facilitation measure, CBIC has clarified that interest liability, if any, arising on account of payment of such IGST shall stand waived. The prescribed procedure involving cancellation of OOC, reassessment of the Bill of Entry, payment through the Customs EDI challan and consequential notional OOC can be applied only once to a particular Bill of Entry.
Input Tax Credit to be available subject to CGST Act conditions
The Circular further provides that Input Tax Credit in respect of the reassessed Bill of Entry will be enabled, subject to fulfilment of the eligibility requirements and conditions for availing ITC under Sections 16, 17 and 18 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.
The mechanism of making a notional OOC after payment assumes significance as it facilitates the transmission of IGST payment particulars from the Customs system to GSTN, thereby enabling the importer to claim eligible credit in accordance with the GST law.
Importers advised not to use Voluntary Payment Challan
CBIC has specifically clarified that the IGST payable under this arrangement should not be deposited through the Voluntary Payment Challan module. According to the Circular, that mechanism is not adequate for convenient transmission of the relevant information between Customs and GSTN, which is necessary for enabling the importer to avail eligible Input Tax Credit.
Accordingly, importers covered by the conversion arrangement are required to follow the Customs EDI-based reassessment and payment procedure prescribed in Circular No. 37/2026-Cus, rather than making a separate voluntary GST payment.
Field formations asked to facilitate trade
CBIC has also directed Chief Commissioners to proactively guide Commissioners and field officers in resolving local-level issues that may arise while implementing the procedure. The field formations have been asked to ensure appropriate convenience to the trade, including completion of consequential actions required under the Circular. Suitable Public Notices and Standing Orders are also required to be issued for implementation of the prescribed mechanism.
The Circular thus provides a structured mechanism for discharging IGST liability on Raw Sugar already imported under the Advance Authorisation Scheme in cases covered by the one-time conversion to the Tariff Rate Quota Scheme, while simultaneously safeguarding the importer’s eligibility for legitimate Input Tax Credit through proper transmission of payment information between Customs and GSTN.
The Circular can be accessed at: https://taxinformation.cbic.gov.in/view-pdf/1003339/ENG/Circulars
