The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that trader-importers are eligible for a refund of 4% Additional Duty of Customs, even if their invoices do not contain the specific endorsement “credit of duty is not admissible”.
The case involves M/s. Acqueon Technologies Pvt. Ltd., formerly known as Servion T Global Solutions Ltd. and the applicability of the customs notification No. 102/2007-Cus.,. This notification outlined conditions under which importers could claim a refund of the Additional Duty of Customs, popularly known as Special Additional Duty (SAD). Among these conditions, para 2(b) of the notification stipulated that the importer must indicate in the invoice that no credit of the additional duty of customs would be admissible.
The appellant had filed refund claims seeking the refund of the 4% SAD in accordance with Notification 102/2007-Cus. However, the original authority rejected their claims on the grounds that the invoices lacked the specified endorsement regarding the non-admissibility of duty credit. This rejection was upheld by the Commissioner (Appeals), leading the appellant to approach CESTAT.
The appellant assessee was represented by Ms. Shrayashree T while the respondent revenue, the Commissioner of Customs, was represented byMs. Anandalakshmi Ganeshram.
The bench observed that the key issue was whether a trader-importer could be entitled to a refund even if the required endorsement was absent from their invoices. The bench referred to a prior decision of the Larger Bench of CESTAT in the case of Chowgule & Company Pvt. Ltd., which had addressed a similar issue.
The CESTAT cited Rule 9 of the Central Value Added Tax (CENVAT) Credit Rules, emphasising that for taking CENVAT credit, including a refund of the Additional Duty of Customs, specific particulars were required on the invoices. In cases where these particulars were absent, the question of taking any credit did not arise at all. Therefore, the non-declaration of the duty in the invoice itself affirmed that no credit would be available.
The bench recognised that the requirement of endorsement in the notification was procedural and technical in nature. It asserted that the purpose of this endorsement, ensuring that no credit is admissible, could be achieved when the duty element was not specified in the invoice. The bench concluded that the absence of the “credit of duty is not admissible” endorsement could not undermine the purpose of the exemption.
The bench held that a trader-importer, who had paid SAD on imported goods, discharged VAT or ST liability on subsequent sales and issued commercial invoices without specifying any details of the duty paid, would still be entitled to the benefit of the exemption under Notification 102/2007-Cus, provided other conditions of the notification were met.
The two-member bench comprising Ms. Sulekha Beevi C.S. (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member) clarified that while the endorsement about the non-admissibility of duty credit is an important procedural requirement, it should not deprive trader-importers of the refund if all other conditions are met.
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