IGST Compliance Framework for Raw Sugar Imports Converted from AA Scheme to TRQ Scheme

The Central Board of Indirect Taxes and Customs has issued Circular No. 37/2026-Custom dated 27th August 2026 to put in place a structured mechanism for payment of IGST on Raw Sugar that was initially imported under the Advance Authorisation (AA) Scheme and is subsequently covered by conversion to the Tariff Rate Quota (TRQ) Scheme.

This Circular provides a Customs EDI System-centric procedure to ensure that:

  • IGST is correctly paid on the quantity of Raw Sugar actually imported under the AA Scheme in the relevant cases, and
  • corresponding input tax credit (ITC) can be appropriately reflected and availed under the GST law, subject to the conditions of the CGST Act, 2017.

The instructions are of particular relevance to importers who have used the AA Scheme for Raw Sugar falling under Exim code 170114 of Chapter 17 of ITC(HS), 2022 – Schedule-I, and who are now opting for a one-time conversion of such AA to the TRQ Scheme in line with the revised import policy and TRQ allocation guidelines.

Regulatory Background to the Circular

DGFT Notifications on Raw Sugar Import Policy and TRQ Allocation

The Circular draws its foundation from two key instruments issued by the Directorate General of Foreign Trade (DGFT), both dated 20.08.2026:

  • Notification No. 31/2026-27
  • Public Notice No. 27/2026-27

Key aspects of these DGFT measures include:

  • Amendment of the import policy conditions for “Raw Sugar” under Exim code 170114 of Chapter 17 of ITC(HS), 2022 – Schedule-I.
  • Prescription of modalities for apportioning the 10 Lakh MT Tariff Rate Quota (TRQ) for Raw Sugar.
  • Laying down the framework for a one-time conversion from the Advance Authorisation (AA) Scheme to the Tariff Rate Quota (TRQ) Scheme.

In consequence, cases emerged where Raw Sugar had already been brought into India under AA, but owing to the revised policy, the AA was converted to TRQ. This raised a specific compliance question regarding payment of IGST on the Raw Sugar quantity already imported under the erstwhile AA benefit.

CBIC’s Examination and Need for a Specific IGST Procedure

The Board examined the issue of IGST liability and procedure for such cases of actual imports of Raw Sugar under the AA Scheme which are linked to AA-to-TRQ conversion.

The primary considerations were:

  • How to charge and collect IGST on the relevant quantity of Raw Sugar already imported.
  • How to ensure that payment of such IGST is correctly captured in the Customs EDI System.
  • How to guarantee that the data of such IGST payment is properly transmitted to the GSTN portal to allow ITC, based on statutory eligibility, to the importer.

To address these aspects, a step-wise process to be followed at the Port of Import (POI) has been prescribed.

Prescribed IGST Payment Procedure at Port of Import

The Circular mandates a specific operational procedure to be followed at the POI for payment of IGST in eligible cases. This procedure applies to the quantity of Raw Sugar actually imported under AA for which the AA holder is required to discharge IGST due to the conversion to TRQ.

Step 1: Approach to Assessment Group by AA Holder

For any relevant import where IGST becomes payable:

  • The AA holder must approach the designated assessment group at the Port of Import.
  • The assessee is required to furnish all relevant particulars, including details of the Bills of Entry (BE), the quantity concerned, and the specific linkage to AA-to-TRQ conversion.

This initiates the process of reopening and re-assessing the relevant BE for IGST levy.

Step 2: Cancellation of Existing Out of Charge (OOC) and Reassessment

Once approached:

  • The assessment group at the POI shall cancel the Out of Charge (OOC) previously given for the concerned BE.