Pet-Coke Import IGST for Cement Plant Chapter 27 Notification 9/2022 Reconciliation

An Indian cement producer running a Gujarat coastal plant in the Kutch cluster or a Tamil Nadu limestone-belt plant in Ariyalur lifts US-origin green petroleum coke as the primary kiln fuel — an illustrative annual import volume in the 700,000 to 900,000 tonne band per plant, CIF pricing typically in the USD 120 to 140 per tonne band depending on origin, sulphur specification and shipping window — and books the pet-coke against a customs duty stack that layers a Basic Customs Duty at 2.5 percent under sub-heading 2708 10 of the First Schedule to the Customs Tariff Act 1975, a Social Welfare Surcharge at 10 percent on the BCD under Section 110 of the Finance Act 2018, and an Integrated Goods and Services Tax at 5 percent under Section 3(7) of the Customs Tariff Act 1975 read with Notification 01/2017-Integrated Tax (Rate). The 5 percent IGST at import is available as input tax credit for utilisation against the 28 percent output GST on cement under Schedule IV entry to Notification 01/2017-Central Tax (Rate), and the Rule 89(5) inverted-duty refund route that would ordinarily catch any accumulated unutilised ITC on the pet-coke input was closed by Notification No. 09/2022-Central Tax (Rate) dated 18 July 2022, which amended Notification 05/2017-CT(R) to insert the entire Chapter 27 fuel basket (coal, lignite, peat, coke and petroleum coke) into the schedule of supplies where no refund of unutilised input tax credit shall be allowed under the second proviso to Section 54(3) of the Central Goods and Services Tax Act 2017. The reconciliation discipline that ties every bill of entry to the IGST-paid register, the GSTR-2B auto-populated import entry, the GSTR-3B Table 4A(1) ITC availment, the electronic credit ledger utilisation against output cement GST and the Notification 09/2022 refund-blocked flag, all threaded through the Ind AS 2 landed-cost computation for the pet-coke inventory book, is the subject of this pet-coke import IGST cement plant Chapter 27 Notification 9/2022 walkthrough.

Quick reference

The reconciliation in one paragraph

A large Indian cement producer running an integrated kiln-plus-grinding operation at a Gujarat Kutch coastal plant or a Tamil Nadu Ariyalur inland plant sources US-origin green petroleum coke as the primary thermal fuel and must capture every dated bill of entry at the customs port against the IGST-paid register, the GSTR-2B auto-populated import-of-goods entry, the GSTR-3B Table 4A(1) ITC availment and the electronic credit ledger utilisation against the 28 percent output GST on cement. The core reconciliation surface is a per-consignment pet-coke import register keyed on the bill of entry, holding the bill-of-entry number, the ICEGATE reference, the date of filing, the customs port, the assessable value in Indian rupees, the BCD amount, the SWS amount, the IGST amount and the customs exchange rate applied. The per-tax-period electronic credit ledger analysis identifies any residual unutilised ITC balance attributable to Chapter 27 fuel inputs, flags it against the Notification 09/2022 refund bar and disclosures the working-capital-carry position without triggering a refund application under Form GST RFD-01 on the Chapter 27 portion. The Ind AS 2 landed cost per tonne of pet-coke rolled forward through the inventory ledger loads CIF plus BCD plus SWS plus port-handling plus inland-freight, with the IGST treated as a subsequently-recoverable tax excluded from inventory cost where ITC utilisation is full within the normal 2 to 4 tax-period horizon. The monthly close packet for the CFO threads the bill-of-entry roll-up, the GSTR-2B-to-3B reconciliation, the electronic credit ledger movement, the refund-bar exposure summary and the Ind AS 2 landed-cost movement into a single audit-defensible packet — the same discipline that a statutory auditor reviewing Ind AS 2 inventory valuation, a tax auditor reviewing Section 16 ITC eligibility, a GST department review of the electronic credit ledger and a Chief Commissioner (Customs) post-clearance audit of the bill-of-entry-to-IGST chain will all expect.

What the scenario looks like in India — a Gujarat coastal or Tamil Nadu inland cement plant persona

The illustrative persona for this walkthrough is a large integrated Indian cement producer operating a Gujarat coastal cement plant in the Kutch cluster with dedicated port infrastructure at a nearby minor port, and a parallel Tamil Nadu inland plant at Ariyalur in the Cauvery-belt limestone deposit. The Gujarat plant runs an illustrative 3.5 million tonne per annum (MTPA) clinker capacity plus a co-located 4.5 MTPA grinding unit; the Tamil Nadu plant runs 2.5 MTPA clinker plus 3.0 MTPA grinding. Combined thermal fuel demand at typical Indian cement plant efficiency (specific thermal energy consumption around 720 to 780 kcal per kg of clinker) translates to an illustrative pet-coke-plus-coal-plus-alternative-fuel basket of about 1.4 million tonnes per year across the two plants, of which pet-coke shares roughly 55 to 65 percent (an illustrative 800,000 tonnes per year on the pet-coke line alone).

Illustrative Tier 1 and Tier 2 Indian cement producers operating at Gujarat coastal and Tamil Nadu inland locations with pet-coke import experience include UltraTech Cement (Aditya Birla Group, India’s largest cement producer with plants across Gujarat, Rajasthan, Madhya Pradesh, Karnataka, Andhra Pradesh, Chhattisgarh and Tamil Nadu), Ambuja Cements and ACC Ltd (both Adani Group, with a large Gujarat Kutch cluster anchor for Ambuja and Karnataka-Andhra-Madhya Pradesh anchor for ACC), Shree Cement (Rajasthan Beawar headquartered, plants across Rajasthan Sirohi and Chittorgarh, Madhya Pradesh, Chhattisgarh and Karnataka), Dalmia Bharat Cement (Tamil Nadu Ariyalur headquartered, plants across Tamil Nadu, Andhra Pradesh, Karnataka and eastern India), JK Cement (Rajasthan-Uttar Pradesh cluster), Ramco Cements (Tamil Nadu Salem headquartered), Birla Corporation (Madhya Pradesh Satna anchor), JK Lakshmi Cement (Rajasthan Sirohi anchor), Prism Johnson (Madhya Pradesh Satna), Nuvoco Vistas (Rajasthan-Chhattisgarh anchor with a large Gujarat presence), Star Cement (Meghalaya-Assam northeast anchor), Orient Cement (Andhra Pradesh Devapur anchor), India Cements (Tamil Nadu Sankarnagar and Andhra Pradesh Yerraguntla) and HeidelbergCement India (Madhya Pradesh Damoh anchor). Every one of these producers imports pet-coke through the west-coast port cluster (Mundra, Kandla, Pipavav, Mumbai, JNPT and Krishnapatnam on the east coast for Tamil Nadu and Andhra Pradesh) and threads the customs duty stack through the same GSTR-2B integration and electronic credit ledger utilisation mechanic. Cross-cluster relevance extends to chemical producers using pet-coke as feedstock — Terra Insight’s Chapter 27 IDS refund bar Notification 9/2022 chemicals sibling article documents the parallel situation for specialty chemicals with a different output-tax rate mix.

The regulatory overlay — Notification 09/2022, Section 54(3), Rule 89(5) and Ind AS 2

Four regulatory anchors govern pet-coke import IGST reconciliation for an Indian cement plant. The Customs Tariff Act 1975 Chapter 27 classification and the Section 3(7) IGST-at-import framework establish the duty stack on each bill of entry. Section 54(3) of the CGST Act 2017 read with Rule 89(5) of the CGST Rules 2017 established the inverted-duty refund route that was closed for Chapter 27 fuel inputs by Notification 09/2022-CT(R) dated 18 July 2022. Section 16 of the CGST Act 2017 governs the input tax credit availment on the pet-coke IGST. Ind AS 2 governs the inventory landed-cost computation and the treatment of subsequently-recoverable versus non-recoverable import taxes.

The First Schedule to the Customs Tariff Act 1975 classifies petroleum coke, petroleum bitumen and other petroleum residues under Heading 2708. Sub-heading 2708 10 covers petroleum coke, split further into 2708 10 10 (calcined pet-coke, used mainly by the aluminium anode industry) and 2708 10 90 (other pet-coke, including green pet-coke used by cement plants as kiln fuel and by chemical producers as feedstock). The Basic Customs Duty rate for pet-coke under 2708 10 is 2.5 percent ad valorem on the assessable value. The Social Welfare Surcharge under Section 110 of the Finance Act 2018 applies at 10 percent on the BCD — a net effective SWS of 0.25 percent on the CIF-equivalent base. The IGST under Section 3(7) of the Customs Tariff Act 1975 is levied at the domestic GST rate for the corresponding chapter — 5 percent for Chapter 27 pet-coke under Notification 01/2017-Integrated Tax (Rate) Schedule I entry — on the assessable value plus BCD plus SWS. The aggregate effective landed-cost duty impact for pet-coke import is approximately 10.4 percent on the CIF value.

Section 54(3) of the CGST Act 2017 permits a registered person to claim refund of unutilised input tax credit at the end of any tax period in two situations — zero-rated supplies made without payment of tax under Letter of Undertaking, and inverted-duty structure situations where the rate of tax on inputs is higher than the rate of tax on output supplies. The first proviso limits inverted-duty refund to input goods (not input services or capital goods). The second proviso empowers the Government to notify supplies where no refund of unutilised input tax credit shall be allowed. Rule 89(5) prescribes the refund formula. Notification No. 09/2022-Central Tax (Rate) dated 18 July 2022 uses the second-proviso authority to close the refund route for the Chapter 27 fuel basket — Heading 2701 (coal), 2702 (lignite), 2703 (peat), 2704 (coke) and other Chapter 27 sub-headings including petroleum coke under 2708. From 18 July 2022 onwards, any Indian cement plant, thermal power station, chemical producer or other downstream Chapter 27 fuel consumer that accumulates unutilised ITC on pet-coke, coal or coke inputs cannot claim refund of that accumulated ITC — the credit continues to be available for utilisation against output tax but the refund route is closed. For cement producers with a 28 percent output GST on cement that comfortably exceeds the 5 percent input GST on pet-coke, the refund bar rarely produces a direct out-of-pocket loss in aggregate but does close what was previously a working-capital release option for specific tax periods with lagged ITC utilisation.

Ind AS 2 paragraph 11 requires the cost of inventories to include import duties and other taxes other than those subsequently recoverable by the entity from the taxing authorities. For pet-coke import by a cement plant, the BCD-plus-SWS portion is always non-recoverable and always forms part of the landed cost. The 5 percent IGST portion is subsequently recoverable where it is fully utilised as ITC against output cement GST within a realistic horizon (typically 2 to 4 tax periods) and is excluded from Ind AS 2 landed cost; any residual carry attributable to the Chapter 27 refund bar is treated per the entity’s accounting policy on non-recoverable working-capital carry — typically retained as an electronic-credit-ledger balance with a narrative disclosure in the cost-management notes rather than loaded into inventory cost.

A worked example — an integrated cement producer’s pet-coke import for FY 2026-27

Illustrative — the following figures represent the operating pattern of a large integrated Indian cement producer sourcing US-origin green pet-coke for a Gujarat Kutch cluster or Tamil Nadu Ariyalur plant. Public disclosures by listed Indian cement majors do not reveal per-plant per-consignment pet-coke landed cost, tax-period-wise ITC utilisation or refund-bar exposure in the granularity below; cross-verify against your own bill-of-entry register, the GSTR-2B integration position and the CFO’s Ind AS 2 accounting policy before action.

The Gujarat Kutch plant imports 800,000 tonnes of US-origin green pet-coke at CIF USD 130 per tonne over FY 2026-27, spread across an illustrative 20 shipments of 40,000 tonnes each. The per-consignment duty stack computation at an illustrative customs exchange rate of Rs 83 per USD is as follows:

The annual roll-up across 20 shipments (800,000 tonnes) gives CIF Rs 863 crore, total landed-at-port Rs 940 crore, and total landed at plant Rs 980 crore. The Basic Customs Duty aggregate is Rs 21.8 crore per year, the Social Welfare Surcharge is Rs 2.2 crore, and the IGST at 5 percent aggregate is Rs 44.8 crore per year for this single plant single fuel line. (The Ambuja Cements Kutch reference tonnage of 800,000 tonnes at USD 130 per tonne CIF ties into the same rupee band — an illustrative Rs 866 crore CIF with an illustrative Rs 43.3 crore annual IGST at the customs exchange rate shown, the small difference explained by the exchange-rate assumption and the notional 1 percent landing charge in the assessable value.)

For the Ind AS 2 landed-cost inventory ledger, the CIF plus BCD plus SWS plus port-handling plus inland-freight (Rs 12,257 per tonne) is booked to the pet-coke stock. The IGST at Rs 560 per tonne is tracked separately in the electronic credit ledger as an input tax credit claim, routed through GSTR-3B Table 4A(1) Import of Goods in the tax period matching the bill-of-entry date, and utilised against output cement GST at 28 percent in the same or following tax periods. For a plant with an annual cement dispatch of 5.5 MTPA at an illustrative net realisation of Rs 8,000 per tonne (assumed for the illustration; actual net realisations vary widely by region and quarter), the output GST at 28 percent is Rs 1,232 crore per year (Rs 44 crore per month). The pet-coke IGST of Rs 44.8 crore per year (Rs 3.7 crore per month) is comfortably absorbed against the monthly output tax with no accumulated unutilised balance in normal operations.

The Notification 09/2022 refund-bar flag on the electronic credit ledger analysis produces a memo-item computation each tax period: the theoretical Rule 89(5) inverted-duty refund entitlement (which would have been the Chapter-27-attributable unutilised ITC) is reported as “not applicable — refund route closed under Notification 09/2022-CT(R)”. Any tax period with a positive theoretical entitlement (unusual for this plant but possible during a scheduled kiln shutdown that suppresses cement dispatch while pet-coke inventory build-up continues) is flagged for CFO narrative disclosure in the cost-management notes at year-end. The full-year cost-management note reads roughly: “Total pet-coke tonnage imported 800,000 tonnes; weighted-average landed cost Rs 12,257 per tonne including BCD, SWS and port-inland freight; IGST paid on import Rs 44.8 crore fully utilised as input tax credit against output cement GST at 28 percent within the tax period of accrual; no residual unutilised balance at year-end; refund route under Rule 89(5) closed for Chapter 27 fuel inputs under Notification 09/2022-Central Tax (Rate) dated 18 July 2022.”

Common reconciliation breakages

Four breakages recur across Indian cement producers running the pet-coke import IGST reconciliation mechanic, and each maps to a specific control failure that a statutory auditor reviewing Ind AS 2 inventory valuation, a tax auditor reviewing Section 16 ITC eligibility, a GST department reviewing the electronic credit ledger or a Chief Commissioner (Customs) post-clearance audit will surface.

• Bill-of-entry-to-GSTR-2B mismatch. ICEGATE integration with GSTR-2B under Notification 06/2022-Central Tax auto-populates the import-of-goods IGST entry for the tax period, but timing gaps, rate-of-exchange rounding differences, port-code data-quality issues and delayed customs assessment updates produce mismatches between the bill-of-entry register kept at the plant and the GSTR-2B available at GSTIN level. A cement plant that claims ITC in GSTR-3B Table 4A(1) on the plant-register basis without verifying the GSTR-2B match runs the risk of a Section 16(2)(aa) or GSTR-2B-based ITC restriction exposure at annual reconciliation. Reconciliation discipline: the per-consignment bill-of-entry register is reconciled to GSTR-2B on the tax-period-close date, and any mismatch is either resolved via ICEGATE re-transmission request or documented in the reconciliation exception log with a positive-or-negative adjustment carried forward to the next tax period. Terra Insight’s reconciliation failure mode analysis for India design pillar frames the invoice-to-ledger reconciliation family into which this breakage sits.

• IGST at import mis-classified as recoverable when the ITC utilisation lag is material. For most Indian cement plants the pet-coke IGST is fully utilised against output cement GST at 28 percent within the tax period of accrual and is correctly excluded from Ind AS 2 landed cost as a subsequently-recoverable tax. But specific tax periods — a scheduled kiln shutdown, an extended monsoon that suppresses cement dispatch, a large pet-coke consignment landing just before a quarter-end — can produce a temporary lag where the ITC availment exceeds the tax-period output tax. If the accounting policy treats the IGST as recoverable purely on the availment basis without checking realisation-horizon utilisation, the Ind AS 2 landed cost is understated in the specific tax period and requires a period-close adjustment. Reconciliation discipline: the electronic credit ledger movement per tax period is reviewed against a 2-to-4-tax-period realisation horizon, and any pet-coke IGST portion not utilised within the horizon is either loaded into Ind AS 2 landed cost per the entity’s accounting policy or retained in the credit ledger with an explicit disclosure. The reconciliation playbook for monthly close operations pillar sets the tax-period-close cadence for this review.

• Notification 09/2022 refund-blocked flag missing — refund application filed on Chapter 27 portion. The most consequential breakage on the tax-compliance side is filing a Form GST RFD-01 refund application for the pet-coke or other Chapter 27 fuel ITC after 18 July 2022 — the application is not maintainable under the second-proviso Notification 09/2022 bar, and the filing invites a proper-officer show-cause notice with a potential Section 74 fraudulent-refund exposure if the filing is deemed to be a mis-representation. A cement plant that files an inverted-duty refund with Chapter 27 fuel input in the aggregate ITC pool must exclude the Chapter 27 portion from the refund computation and disclose the exclusion in the refund application supporting workings. Reconciliation discipline: the refund-application workbook always segregates Chapter 27 fuel ITC as a memo item, deducts it from the numerator of the Rule 89(5) refund formula, and cross-references the Notification 09/2022 exclusion in the supporting narrative. Cross-cluster reference to the Chemicals Wave 1 sibling article on the same refund bar sits at Chapter 27 IDS refund bar Notification 9/2022 chemicals — the same discipline transfers across sectors.

• Landed-cost roll-forward inconsistent across bill-of-entry vintages. A cement plant that imports pet-coke across 20 to 30 shipments per year with varying CIF USD prices, varying customs exchange rates and varying port-handling and inland-freight costs must maintain a per-consignment landed cost that rolls forward through the inventory ledger on a weighted-average or FIFO basis per the entity’s Ind AS 2 accounting policy. Errors in the roll-forward — most commonly, applying a plant-wide average landed cost that does not reflect the specific-consignment tax stack for the current tax period, or mixing up the customs exchange rate for adjacent consignments with different bill-of-entry dates — produce a systemic landed-cost misstatement that the statutory auditor’s inventory-costing test will surface. Reconciliation discipline: the per-consignment landed cost is computed at bill-of-entry booking, the inventory ledger applies the entity’s costing method (weighted-average is prevailing for Indian cement) consistently across all pet-coke consignments, and the year-end pet-coke inventory reconciliation ties the closing tonnage at closing weighted-average cost to the general ledger inventory balance. The downloadable assets catalog trust anchor documents the human-error taxonomy that produces the inventory-costing failure mode.

How a reconciliation platform handles this

A purpose-built cement reconciliation platform ingests every bill of entry filed at the customs port against a per-consignment pet-coke import register, matches the IGST amount to the GSTR-2B auto-populated import-of-goods entry for the tax period via the ICEGATE integration, threads the ITC availment through GSTR-3B Table 4A(1) with electronic credit ledger movement tracking, and flags every tax period with a Notification 09/2022 refund-blocked marker so that no refund application is triggered on the Chapter 27 fuel portion. The landed-cost workbook loads CIF plus BCD plus SWS plus port-handling plus inland-freight into the Ind AS 2 inventory ledger per delivery with weighted-average roll-forward, tracks the IGST separately as a subsequently-recoverable tax where utilisation is full within the 2-to-4-tax-period horizon and disclosures the working-capital-carry position where any residual persists. Standing dashboard controls surface any bill-of-entry-to-GSTR-2B mismatch, any ITC availment pending realisation-horizon check, any refund application draft touching the Chapter 27 portion, and any landed-cost roll-forward inconsistency across consignment vintages. Match-rate improvement of 51 to 88 percent on the bill-of-entry-to-GSTR-2B-to-3B reconciliation chain, combined with an ISO 27001:2022 posture and DPDP Act 2023 aligned data handling for regulator-facing submissions, is what makes the platform an infrastructure investment for a large Indian cement producer running a multi-plant multi-port pet-coke sourcing programme against the Chapter 27 refund bar — rather than a spreadsheet substitute that leaves the per-consignment tax-stack computation, the electronic credit ledger utilisation tracking and the refund-blocked flag discipline as manual overheads on a hybrid plant-finance-plus-tax team. The commercial pillar for the cement sub-cluster is cement reconciliation software India; the broader authority for the platform is reconciliation software India.

Cross-cluster bridges and where to read next

The pet-coke import IGST reconciliation mechanic documented here anchors Cement Wave 1 Theme 2 on Chapter 27 fuel imports. The immediate in-wave sibling on the coal side — Coal Cess and Clean Energy Cess for a cement plant with Section 194Q TDS reconciliation — extends the Chapter 27 duty stack to domestic coal procurement under Section 194Q of the Income-tax Act 1961 on Coal India Ltd Fuel Supply Agreement lifts and third-party importer purchases above the Rs 50 lakh aggregate threshold. The cross-cluster sibling for the same refund bar in a different downstream sector sits at Chapter 27 IDS refund bar Notification 9/2022 chemicals and the parallel refinery-side view at petrochemical refinery downstream Chapter 27 reconciliation — both from Chemicals Wave 1.

The Wave 1 Theme 1 limestone-mining cornerstone at limestone royalty DMF NMET cement plant cost accounting India frames the parallel raw-material regulatory overlay under the MMDR Act 1957 and the Section 194Q on limestone purchase from mining lease holders walkthrough covers the TDS-on-purchase mechanic. The Wave 1 Theme 3 environmental-clearance cornerstone at cement plant CTE CTO MoEFCC Category A EIA cost accounting India sets the pre-operative EIA-and-CTE-CTO cost accounting framework, and cross-cluster analogue for the chemical-sector CTE-CTO cycle sits at MoEFCC CTE CTO clearance chemical plant cost accounting India — the same Ind AS 38 intangible-asset and Section 37 post-CTO revenue-expense mechanic applies. The Wave 1 Theme 6 clinker inter-unit transfer walkthrough at cement plant clinker inter-unit stock transfer GST IGST reconciliation closes the intra-entity supply-chain leg. The cement cluster hub indexes the full library.

The variance-classification and operational reconciliation methodology framework — mapping each bill-of-entry-driven pet-coke import against the GSTR-2B-to-3B chain, holding the electronic credit ledger movement as a standing control, flagging the Notification 09/2022 refund bar in the refund-application workbook and threading the Ind AS 2 landed cost through the pet-coke inventory ledger — sits in reconciliation failure mode analysis for India and reconciliation playbook for monthly close India; the seven-family human-error taxonomy and the trust posture on coverage limits sits in human errors detection envelope. Operational tools that support the reconciliation include the Section 16(4) ITC exposure calculator for the ITC-eligibility test on the pet-coke IGST availment and the cross-cluster chemical inverted duty refund Chapter 27 blockage calculator which computes the theoretical Rule 89(5) refund entitlement now closed by the Notification 09/2022 bar for any Chapter 27 fuel input scenario.

The five FAQs below address the operational questions Indian cement CFOs, plant finance controllers, indirect tax leads and statutory auditors ask most often when building the pet-coke import IGST reconciliation register and the Ind AS 2 landed-cost ledger under the four regulatory anchors — the Customs Tariff Act 1975 Chapter 27 duty stack, Section 54(3) CGST Act with Rule 89(5), Notification 09/2022-CT(R) and Ind AS 2.

Terra Insight Editorial Team Reconciliation Infrastructure

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Published 27 July 2026

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Navin Krishnan

Managing Director & Founder — Terra Insight

Ex Amazon India · Intuit QuickBooks · Tata nexarc

ISO 27001:2022 Patent Pending Incorporated 2024