Importer has to Pay CVD at Time of Import of Goods for availment of SAD Refund Under Customs Notification: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that importer must pay Countervailing Duties (CVD) at the time of import of goods for availing of Special Additional Duty (SAD) refund under customs notification

M/s.Dimension Data India Ltd, the (importer-respondent applied for a refund of 4% SAD levied under Section 3 (5) of the Customs Tariff Act, 1975 for the import of Information Technology Equipment covered under various Bills of Entries through Air Cargo Complex, Chennai. 

The refund claim was filed in terms of Notification No.102/2007 dated 14.09.2007. After due process of law, the original authority sanctioned an amount of Rs.37,98,594/- and rejected an amount of Rs.7,23,072/-. The adjudicating authority had rejected part of the refund claim as above about Bills of Entry where 4% SAD was paid by the respondent on the RSP-based assessed goods without claiming the benefit of exemption Notification No.29/2010 dated 27.02.2010.

The original authority viewed that the respondent ought to have sought for reassessment to claim the benefit of exemption Notification No.29/2010 for goods, and filed a refund claim under Section 27 of the Customs Act, 1962 instead of filing a claim under Notification 102/2007.  

The adjudicating authority had also rejected some amount about Bill of Entry No.4240557 dated 01.08.2011 on the ground that the goods imported and sold against the sale invoices were not tallying. Further, the refund claim to the Bill of Entry was denied on the ground that the goods were sold on the same date of import as per the sales invoices, while the goods were physically removed from Air Cargo Customs only on the next day. 

On appeal, the Commissioner (Appeals) held that the rejection of the refund claim of Rs.7,23,072/-  on the ground that the Bills of Entries has to be reassessed cannot sustain and ordered for sanction of refund on this issue. 

The respondent is eligible for the benefit of Customs Notification No.29/2010 dt. 27.02.2010 which gives full exemption regarding the countervailing duty (CVD).  Instead of availing the said exemption, the respondent has paid the CVD and thereafter filed a refund claim in terms of Notification No.102/2007-Cus. for a refund of 4% SAD. 

As per Notification No.102/2007, the scheme of exemption is by way of a refund.  The importer has to pay the duty (CVD) and then file a refund claim when the goods have been sold in the domestic market by paying VAT / Sales Tax.  The scheme of exemption under notification No.102/2007 being refunded after payment of duty, it cannot be insisted that reassessment is required while filing a refund.

It may be true that the respondent is eligible for the benefit of Notification No.29/2010 by which they do not have to pay the CVD at the time of import. However, the respondent has chosen not to avail of this benefit and paid the duty (CVD). 

The respondent has then filed a refund claim of the duty paid by them (CVD/SAD) in terms of notification no.102/2007. The Department cannot insist that the importer should avail the benefit of a particular notification when they are eligible for different notifications of the same duty of CVD / SAD. 

A two-member bench comprising Ms Sulekha Beevi C S,(Judicial) and Mr M  Ajit Kumar,(Technical)  observed that one of the conditions that have to be fulfilled for claiming a refund under Notification No.102/2007 is that the importer has to pay the CVD at the time of import of the goods. The assessment, therefore, is in order and does not require reassessment.  There is no excess duty paid.

The CESTAT upheld the view taken by the Commissioner (Appeals) and dismissed the appeal filed by the department. 

To Read the full text of the Order CLICK HERE

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