Rate of tax (goods)- In the instant case, the appellant is engaged in the manufacture of packaging material including HDPE Drums, Jerrycans and Intermediate Bulk Containers falling under HSN 3923.

The short point for determination is whether the Appellant is eligible for the benefit of concessional rate of GST at 0.1% in terms of Notification No 41/2017 IT (Rate) dated 23-10-2017, in respect of the supplies made to the merchant exporter under the bill-to ship-to model.

The lower Authority has denied the benefit of the said Notification on the grounds that the Appellant does not fulfil the condition No (vi) of the said Notification since the goods have not moved directly from the Appellant's premises to the port or to a registered warehouse for export.

The Appellant is aggrieved by this ruling and has appealed on the grounds that the commodity exported by the merchant exporter is Ethyl alcohol which is purchased from sugar factories and the same can be moved by the sugar factory only on packing in the HDPE drums supplied by them; that on the instructions of the merchant exporter, they have billed the drums to the merchant exporter and shipped the same to the premises of the sugar factory from where the Ethyl alcohol packed in HDPE drums will leave directly to the port for export. They argued that the premises of the sugar factory is to be construed as the "registered warehouse" where the goods get aggregated by the merchant exporter and hence they satisfy the condition No (vii) of the impugned Notification; that having complied with all other conditions of the Notification, they should not be denied the benefit.

The merchant exporters have the option to avail the benefit of this concessional rate and export the goods under LUT and later claim refund of the concessional rate of tax paid on their procurements. However, they can choose to export the goods on payment of IGST in which case, they will not be eligible to avail the benefit of concessional rate of tax under this Notification on their procurements. The CBIC vide Circular No 125/44/2019 GST dated 18-11-2019 has also clarified that the benefit of supplies at concessional rate if tax in terms of Notification No 40/2017 Central Tax (Rate) and Notification No 41/2017 Integrated Tax (Rate) is subject to certain conditions and the said benefit is optional. The option may or may not be availed by the supplier and/or recipient and the goods may be procured at the normal applicable rate of tax. Therefore, we agree with the ruling passed by the lower Authority that the Appellant is not eligible for the benefit of the concessional rate of tax in terms of Notification No 41/2017 IT (Rate) dated 23-10-2017 in as much as they have not complied with the conditions of the Notification.

Held that- This authority uphold the order passed by AAR and the appeal filed by the Appellant stands dismissed on all accounts.