The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the refund of SAD is available even if the rate of VAT/Sales Tax is lower than the rate of SAD or nil.
even if rate of VAT/Sales Tax was nil, the refund under notification no.102/007-Cus, would be admissible, and allowed the appeal of the importer.
The Revenue approached the Tribunal against the order of the Commissioner (Appeals) wherein relief was granted to the appellants-Importer, Omya& Company, by holding that the refund of balance SAD, paid at the time of import of Rs.36,183/- is allowable under the fact that such goods were re-sold and on such sale, the rate of VAT/Sales Tax was nil.
The department contended that refund of SAD is available only on payment of appropriate VAT/sales tax on re-sale of the goods. The department further relied on the Supreme Court decision in the case of CCE, Vadodara Vs. Dhiren Chemical Industries, wherein it was held that the word “appropriate” in the context of the exemption notification meant the correct or a specified duty of excise, and that where anexemption is extended, subject to the condition that the “appropriate duty has been paid” on the raw material, then such an exemption shall not be available when the raw material is not liable to excise duty or such duty is nil. Thus, the same norm applies for the refund of SAD also.
Shri Anil Choudhary, Member (Judicial) found that “there is no merits in the grounds of appeal. SAD is applicable at the time of import by way of an equitable levy in lieu of sales tax, so as to protect the domestic industry. Further, the Customs Tariff Act itself provides for refund of SAD on re-sale of the goods. The mechanism of refund has been provided vide notification no.102/2007-Cus, which provides that one of the conditions for refund is that the goods must be re-sold and appropriate VAT/Sales Tax should have been paid. This Tribunal in precedent ruling of the Gazal Overseas has held that the refund of SAD is available even if the rate of VAT/Sales Tax is lower than the rate of SAD or nil.”
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