2022 (4) TMI 1044 - AT - Customs

Refund of balance SAD, paid at the time of import - goods were re-sold and on such sale, the rate of VAT/Sales Tax was nil - CBE C Circular No.6/2008 dated 28.04.2008 - HELD 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 M/S GAZAL OVERSEAS, M/S MAYANK ENTERPRISES, M/S ANAND ASSOCIATES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI 2015 (12) TMI 427 - CESTAT NEW DELHI 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. There is no error in the impugned order-in-appeal - Revenue dismissed.

Summary

Issues:
1. Whether the Commissioner (Appeals) rightly allowed the refund of balance SAD under the fact that the goods were re-sold and VAT/Sales Tax was nil.
2. Interpretation of the term "appropriate duty" in the context of refund eligibility.
3. Applicability of SAD and conditions for refund under notification no.102/2007-Cus.

Analysis:
1. The issue in this appeal was whether the Commissioner (Appeals) correctly permitted the refund of balance Special Additional Duty (SAD) on goods that were re-sold with nil VAT/Sales Tax. The Tribunal referred to a precedent order in the case of Gazal Overseas and a circular stating that the exemption for refund does not depend on the rate of VAT/Sales Tax being equal to or higher than the rate of additional duty of customs. The Tribunal held that even if the rate of VAT/Sales Tax was nil, the refund under the notification would be admissible, ultimately allowing the appeal of the importer.

2. The second issue revolved around the interpretation of the term "appropriate duty" in the context of refund eligibility. The Revenue argued that the term "appropriate duty" should be understood as the correct or specified duty of excise, citing a Supreme Court case. They further contended that the term "appropriate" should not include "nil" based on a decision by the Kolkata High Court. However, the Tribunal found no merit in these arguments, emphasizing that SAD is an equitable levy at the time of import and is refundable upon re-sale of goods, even if VAT/Sales Tax is lower or nil.

3. Lastly, the Tribunal analyzed the applicability of SAD and the conditions for refund under notification no.102/2007-Cus. It was noted that SAD is imposed at the time of import to protect the domestic industry, and the Customs Tariff Act allows for its refund upon re-sale of goods. The Tribunal highlighted that one of the conditions for refund is that appropriate VAT/Sales Tax must have been paid, but it clarified that the refund of SAD is available even if the rate of VAT/Sales Tax is lower than the SAD rate or nil. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the impugned order-in-appeal and disposing of the stay application.