[Opinion] Risky Exporter Alert | All you need to know!

CA Sachin M Jain – [2023] 148 taxmann.com 120 (Article)

When alert of risky exporter is invoked on the Import Export Code, all the refunds of IGST, Drawback and other benefits gets stopped and all the export consignment are subject to verification. This stoppage of refunds causes huge loss to the export businesses and which in-turn will impact the Indian Economy. Here we will discuss about the alert of risky exporter and the procedure being followed to revoke the alert and regularize the refunds.

Based on GST, Income Tax and foreign trade transactions data, the Central Board of Indirect Taxes and Customs (CBIC) identified many entities as risky exporters. However, a group of micro, small and medium enterprises exporters said in a letter to CBIC chairman Vivek Johri that the mechanism used to tag exporters as risky is “neither transparent nor time-bound”.

The CBIC has released Instruction no 04/2022 dated 28-11-2022 on the new way of processing withheld IGST refund applications.

Previously, CBIC issued the SOPs dated 23rd January 2020 and 20th May 2020. These were issued to CGST & Customs formations and the Directorate General of Analytics and Risk Management to verify risky exporters and their suppliers.

Previously, process of Alert of Risky Exporter was as follows:

1. DGARM suspects risky exporters and respective suppliers based on risk parameters.
2. Then forward the list of risky exporters to the Risk Management Centre for Customs (RMCC) to create an alert in the system.
3. Then the Customs officers shall thoroughly examine risky exporters.
4. The CGST formations (including Anti-Evasion Team) verify risky exporters and their suppliers and forward the detailed verification report to DGARM.
5. On the basis of this verification report, DGARM decides whether to issue NOC.
6. Then, the DGARM will communicate these List of Exporters for which NOC has been issued to the Customs Department for the revocation of alert and release of withheld IGST refunds and Drawback. @CASachinMJain
7. Also, DGARM reviewed the possibility of removing the NOC-issued customers from the list of identified exporters.

However, the CGST Rule 96 has been amended retrospectively, w.e.f. 1st July 2017. The amendment is made to consider the exporter’s verification based on data analysis and risk parameters as a reason for withholding IGST refunds.

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