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2022 (5) TMI 586 - AT - CustomsRefund 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 - 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. Accordingly, this appeal by Revenue is dismissed.
Issues:
- Whether the Commissioner (Appeals) rightly allowed the refund of balance SAD on re-sale of goods with nil VAT/Sales Tax rate. Analysis: The issue in this appeal revolves around the refund of balance Special Additional Duty (SAD) paid at the time of import, amounting to Rs.41,511/-, when the goods were re-sold with a nil rate of VAT/Sales Tax. The Commissioner (Appeals) based the decision on a precedent order of the Tribunal in the case of Gazal Overseas, referencing CBE&C Circular No.6/2008. The Circular clarified that the exemption for refund of CVD does not depend on the rate of VAT/Sales Tax being equal to or higher than the rate of additional duty of customs. Therefore, the Tribunal held that even with a nil rate of VAT/Sales Tax, the refund under notification no.102/2007-Cus would be admissible, ruling in favor of the importer. The Revenue's appeal argued that the refund of SAD should only be available upon payment of appropriate VAT/Sales Tax on re-sale of the goods. They cited the interpretation of the term "appropriate duty" by the Supreme Court and the Kolkata High Court, emphasizing that "appropriate" does not include "nil." However, the Tribunal found no merit in these grounds, highlighting that SAD is imposed at the time of import to safeguard domestic industries and that the Customs Tariff Act allows for the refund of SAD on re-sale of goods. The mechanism for refund, as per notification no.102/2007-Cus, mandates payment of appropriate VAT/Sales Tax on re-sale, without specifying a minimum rate. Referring to the Gazal Overseas case, the Tribunal reiterated that the refund of SAD is permissible even if the rate of VAT/Sales Tax is lower than the SAD rate or nil. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the decision of the Commissioner (Appeals) to allow the refund of balance SAD on re-sale of goods with a nil rate of VAT/Sales Tax. The Tribunal emphasized that the mechanism for refund does not restrict eligibility based on the rate of VAT/Sales Tax, as long as the goods are re-sold and appropriate taxes are paid, in accordance with notification no.102/2007-Cus.
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