2017 (6) TMI 360 - AT - Customs

Refund of SAD - no VAT was charged on these supplies in terms of notification dated 06.10.2010 issued by Rajasthan Government exempting the goods from payment of VAT - whether in such circumstances the appellant will be eligible for payment of refund of SAD? - Held that - an identical issue came up before the Tribunal in the case of Gazal Overseas 2015 (12) TMI 427 - CESTAT NEW DELHI in which the Tribunal allowed payment on refund of SAD - NIL rate of VAT in terms of the notification issued under Rajasthan VAT Act 2003 is to be considered as appropriate sales tax/VAT. Accordingly the condition prescribed in N/N. 102/2007 is satisfied and the appellant will be eligible for the refund of the SAD paid at the time of input - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility for refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus based on VAT exemption.
- Interpretation of conditions for refund eligibility under the Customs notification.

Analysis:
1. The appellant imported Medium Voltage Cable and Potential Transformer, paying SAD at 4% under Notification No. 19/2006-Cus. Subsequently, the goods were supplied to the Delhi Metro Rail Corporation (DMRCL) without charging VAT due to a specific exemption by the Government of Rajasthan for the Metro Rail project in Jaipur.

2. The refund claims for SAD were rejected by the original authority based on non-fulfillment of conditions 2(d) and 2e(iii) of Notification No. 102/2007-Cus, leading to the appeal against the rejection.

3. The appellant argued that the refund of SAD should be granted as the appropriate payment of VAT was made, even though VAT was not charged on the supplies to DMRCL. They relied on a Tribunal decision in a similar case (Gazal Overseas Vs. CC New Delhi 2016) to support their claim.

4. The Tribunal analyzed the issue and referred to the Gazal Overseas case where it was held that as long as appropriate VAT/Sales tax was paid, SAD refund was admissible even if the rate of VAT was lower or NIL. The Tribunal clarified that the condition was met if appropriate VAT/Sales tax was paid, regardless of the rate, including if VAT was NIL.

5. Following the precedent set by the Gazal Overseas case, the Tribunal concluded that the NIL rate of VAT in the Rajasthan notification should be considered as appropriate sales tax/VAT. Therefore, the appellant was deemed eligible for the refund of the SAD paid at the time of importation. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

6. The judgment was pronounced on 16.05.2017 by the Tribunal comprising Mr. Justice (Dr.) Satish Chandra, President, and Mr. V. Padmanabhan, Technical Member.