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Indirect Tax Servicesvia ICEGATE Portal (icegate.gov.in) — IGCR Forms

IGCR Compliance — Import of Goods at Concessional Rate of Customs Duty

End-to-end compliance for IGCR rules — filing IGCR-1 (intent to import at nil/concessional rate), maintaining IGCR-2 running account of goods and consumption, filing IGCR-3 (quarterly statement), and regularising duty short-paid if conditions breached, under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.

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STARTING FROM₹19,999
TYPICAL TIMELINE14 days
DOCS REQUIRED4 documents
APPLICABLE TOCompany, LLP

Regulatory Framework

Customs Act, 1962: Section 25 — power to grant exemption from customs duty by notification; Section 28AA — interest on delayed payment of duty (15% per annum compounded); Section 111/112 — confiscation and penalty for contravention of import conditions. Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules 2017): Rule 3 — prior intimation IGCR-1; Rule 4 — running account IGCR-2; Rule 5 — quarterly statement IGCR-3; Rule 6 — re-export or duty payment on failure to use within period. Amendments: Notification No. 19/2022-Customs (N.T.) dated 30 March 2022 — online IGCR compliance framework on ICEGATE, mandatory electronic filing of IGCR-1/2/3, real-time running account. CBIC Circular No. 12/2022-Customs dated 16 August 2022 — clarifications on the revised IGCR framework.

Overview

The Import of Goods at Concessional Rate of Duty (IGCR) mechanism allows manufacturers and service providers to import goods at nil or concessional customs duty, provided the imported goods are used for a specified purpose — typically manufacturing of export goods, use in specified projects, or other end-use conditions prescribed under exemption notifications issued under Section 25 of the Customs Act, 1962.

What is IGCR?
IGCR rules govern the procedure for importers who want to avail customs duty exemptions or concessions that are conditional on end-use of the imported goods. The Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules, 2017) replaced the earlier Customs (Import of Goods at Concessional Rate of Duty) Rules, 1996 and introduced an electronic compliance framework.

IGCR Rules 2017 — Key Procedure:

Step 1 — IGCR-1: Prior Intimation (Intent to Import):
Before making the first import at concessional rate, the importer must file IGCR-1 online on the ICEGATE portal — intimating the customs authority about: the specific exemption notification and serial number; description and quantity of goods to be imported; the purpose for which goods will be used (manufacturing, processing, project, etc.); the jurisdictional customs officer. IGCR-1 is filed once per notification-benefit claim and remains valid.

Step 2 — Import at Concessional Duty:
At the time of import, the Bill of Entry must reference the IGCR intimation and the applicable customs exemption notification. The customs officer processes the consignment at the concessional rate. If the importer fails to reference IGCR intimation or uses incorrect notification, full duty becomes payable.

Step 3 — IGCR-2: Running Account Maintenance:
After each import, the importer must update IGCR-2 — a running account maintained online showing: goods received (quantity and value per Bill of Entry), goods consumed (quantity used in the specified purpose), goods in hand (closing stock). IGCR-2 must be updated within 30 days of import and within 30 days of consumption.

Step 4 — IGCR-3: Quarterly Statement:
Every importer availing IGCR benefit must file IGCR-3 — a quarterly statement — by the 10th of the month following each quarter. IGCR-3 summarises: total quantity imported in the quarter, quantity consumed, quantity pending, and cumulative position. Non-filing attracts duty demand for the entire concessional amount plus interest and penalty.

Step 5 — Utilisation and Re-export/Regularisation:
If imported goods are not used for the specified purpose within the prescribed period (typically 6 months, extendable), the importer must either: (i) re-export the unused goods with customs permission; or (ii) pay the differential duty (full duty minus concessional duty) with interest under Section 28AA of the Customs Act.

Amendments to IGCR Rules — 2022:
The IGCR Rules were significantly amended by Notification No. 19/2022-Customs (N.T.) dated 30 March 2022, introducing: (i) end-to-end online compliance via ICEGATE; (ii) IGCR-1 to IGCR-3 forms replacing manual statements; (iii) real-time running account; (iv) stricter penalty provisions for non-compliance.

How It Works

  1. 1

    Notification Mapping & IGCR-1 Filing (Prior Intimation)

    Identify the applicable customs exemption notification under which the import is to be made — e.g., Notification No. 50/2017-Customs for project imports, or sector-specific EOU/EPCG/SEZ notifications. Map the conditions attached to the notification: end-use requirement (manufacturing, specified project, etc.), validity period, and any quantity restrictions. File IGCR-1 online on the ICEGATE portal: specify the notification number and serial number, description of goods, purpose of use, and jurisdictional customs officer. IGCR-1 once filed remains valid for all subsequent imports under the same notification unless the importer amends it.

    Government2-3 days
  2. 2

    Bill of Entry Compliance — Concessional Duty Import

    At the time of import, prepare and verify the Bill of Entry: reference the IGCR intimation number filed under IGCR-1; cite the applicable customs exemption notification and serial number in the Bill of Entry; declare end-use purpose. The customs officer verifies the IGCR intimation before allowing the concessional rate. Ensure that the description of goods in the Bill of Entry exactly matches the description in the IGCR-1 intimation and the exemption notification. Mismatches or missing references lead to rejection of the concessional duty claim and demand for full basic customs duty + IGST.

    Government1-2 days per import
  3. 3

    IGCR-2 Running Account Update (Post-Import & Post-Consumption)

    Update the IGCR-2 running account on ICEGATE within 30 days of each import: record the Bill of Entry number, date, goods description, quantity imported, and value. As goods are consumed in the specified purpose (manufacturing, use in project, etc.), update the consumption entries in IGCR-2 within 30 days of consumption: record the date of consumption, quantity consumed, and purpose. The closing stock (goods in hand = imported minus consumed) must be accurately maintained. IGCR-2 is the primary audit trail — errors or delays in updating create compliance risk at the time of IGCR-3 filing.

    GovernmentOngoing — within 30 days of each event
  4. 4

    IGCR-3 Quarterly Statement Filing (by 10th of following month)

    File IGCR-3 on ICEGATE by the 10th of the month following each quarter (i.e., 10 July, 10 October, 10 January, 10 April). IGCR-3 captures: opening balance of imported goods pending use, imports during the quarter (Bill of Entry references), consumption during the quarter, re-exports if any, closing balance. The statement must reconcile with IGCR-2 running account entries. Cross-verify: if any goods remain unutilised beyond the permitted period, flag for regularisation before filing IGCR-3 to avoid a duty demand being raised by customs.

    Government2-3 days per quarter
  5. 5

    Utilisation Review, Duty Regularisation & Audit Support

    Conduct a utilisation review at the end of each quarter: identify goods imported at concessional rate that remain unconsumed and are approaching the validity period (typically 6 months from import date). For goods that cannot be used within the validity period: advise on either (i) re-export with customs permission, or (ii) payment of differential duty (full BCD + IGST minus amount already paid at concessional rate) plus interest under Section 28AA of the Customs Act (rate: 15% per annum, compounded annually). Provide audit support for customs department verification of IGCR compliance — prepare and present IGCR-1, IGCR-2, and IGCR-3 records, production/consumption records, and reconciliation with inventory.

    Government5-7 days per review

Frequently Asked Questions

What is IGCR and when does it apply?
IGCR (Import of Goods at Concessional Rate of Duty) refers to the mechanism under which manufacturers and specified project importers can import goods at nil or reduced Basic Customs Duty, provided they use the imported goods for a specific purpose prescribed in the customs exemption notification. IGCR applies when: (i) the import is covered by a conditional customs duty exemption under Section 25 of the Customs Act, 1962; (ii) the exemption notification specifies end-use conditions (e.g., use in manufacture of export goods, use in specified infrastructure projects); (iii) the importer must give prior intimation of intent to claim the benefit. IGCR rules do not apply to unconditional customs duty exemptions — only to those where the goods must be used for a specified purpose.
What happens if IGCR-3 quarterly statement is not filed by the 10th?
If the IGCR-3 quarterly statement is not filed by the 10th of the month following the quarter, the customs authority may: (i) issue a show cause notice demanding the differential duty (full duty minus concessional duty already paid) on all goods imported during the quarter for which the IGCR benefit was claimed; (ii) levy interest on the differential duty under Section 28AA of the Customs Act at 15% per annum compounded annually; (iii) impose a penalty under Section 114A of the Customs Act up to the amount of duty unpaid (or twice the duty if fraud/collusion). Even where there is no actual misuse — i.e., goods were properly used — a missed IGCR-3 filing can trigger a duty demand which the importer must then reverse by filing late returns and reconciling with customs, which is time-consuming and involves adjudication.
What is the time limit for using goods imported at concessional rate under IGCR?
Under the IGCR Rules, 2017, imported goods must be used for the specified purpose within 6 months from the date of import. This period can be extended by the jurisdictional customs officer for a further period of 6 months, i.e., up to a total of 12 months. The importer must apply for extension before the initial 6-month period expires. If goods remain unconsumed beyond the permitted period, the importer has two options: (i) re-export the goods with prior permission of the customs officer (under customs bond/LUT); or (ii) pay the differential duty (full Basic Customs Duty + IGST minus the concessional duty already paid) plus interest under Section 28AA. Failure to regularise within the permitted period exposes the importer to customs enforcement action including confiscation under Section 111 of the Customs Act.
Can an importer claim IGCR benefits for goods that are partially used and partially scrapped?
Yes — IGCR is an end-use benefit, not a specific-goods-specific benefit. If a portion of the imported goods is used for the specified purpose and a portion is scrapped (waste or rejects arising from the manufacturing process), the scrap/waste portion is generally treated as having been used in manufacturing and does not require duty payment, subject to: (i) the scrap arising from the specified manufacturing process (not from unrelated activity); (ii) the scrap being accounted for in the IGCR-2 running account; (iii) documentation (production records, scrap register) being available for customs verification. The key principle is that the importer must be able to demonstrate that the goods were used in the specified purpose — the output or scrap must be traceable to the imported input.
What is the difference between IGCR compliance and EPCG compliance?
IGCR and EPCG are both customs duty benefit schemes with end-use conditions, but they are distinct: IGCR (Import of Goods at Concessional Rate) applies to goods imported under conditional customs exemption notifications — the benefit is the concessional rate of Basic Customs Duty on the specific imported goods; the compliance obligation is IGCR-1/2/3 filings on ICEGATE. EPCG (Export Promotion Capital Goods) scheme under the Foreign Trade Policy allows import of capital goods at 0% Basic Customs Duty for use in manufacturing exports; the compliance obligation is export performance (6 times the duty saved in 6 years) tracked through the DGFT portal and redemption certificates. A company can simultaneously claim IGCR for raw material/component imports and EPCG for capital goods imports — they are independent schemes with separate compliance tracks.

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