2015 (12) TMI 427 - AT - Customs

Denial of refund of SAD - appellants did not pay any sales tax/ VAT on the goods - Held that - Notification No. 102/2007 dated 14.09.2007 as amended allowed refund of SAD subject to the condition that the importer shall pay appropriate sales tax or VAT, as the case may be . In the present case, the appropriate sales tax or VAT being NIL the appellants cannot be said to have violated the said conditions of the said notification inasmuch as it cannot be said that they have not paid appropriate sales tax/VAT. - It is evident from the clarification of CBEC that even if VAT / Sales tax was less than 4%, the appellant was entitled to refund of SAD which was 4% so long as VAT/sales tax was paid. In other words, so long as appropriate VAT/ Sales tax was paid, SAD refund was admissible even if the appropriate sales tax/ VAT was less than SAD; if the sales tax / VAT was NIL, so be it. In other words what is required in terms of the said notification is payment of appropriate sales tax/ VAT regardless of the rate thereof. It logically follows that if the appropriate rate of sales tax/ VAT was NIL then the appropriate sales tax/ VAT paid will also be NIL - impugned order is not sustainable - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues: Refund of additional duty of customs (SAD) denied due to non-payment of sales tax/VAT on imported goods.

In this case, the appellants imported footwear and sought a refund of 4% of additional duty of customs (SAD) which was denied because they did not pay any sales tax/VAT on the goods. The appellants argued that they paid sales tax/VAT at the appropriate rate, which was Nil for the goods, entitling them to the refund of SAD. Despite the absence of representation from the appellants, the tribunal proceeded to decide the appeals on merit. The Departmental Representative (DR) contended that since no sales tax/VAT was paid on the goods, the refund was not justified.

The tribunal examined the refund papers along with Notification No. 102/2007, which allowed refund of SAD on the condition that the importer pays appropriate sales tax or VAT. The tribunal noted that the appropriate sales tax/VAT being Nil for the goods imported by the appellants did not violate the conditions of the notification. Referring to Circular No. 06/2008 issued by CBEC, the tribunal clarified that the exemption for SAD refund did not depend on the rate of sales tax/VAT being equal to or higher than the SAD rate. The circular emphasized that as long as appropriate sales tax/VAT was paid, even if lower than 4%, the full 4% SAD refund was admissible. Therefore, if the sales tax/VAT rate was Nil, the appropriate tax paid would also be Nil.

Based on the clarification provided by CBEC and the interpretation of the notification, the tribunal concluded that the impugned order denying the refund was unsustainable. Consequently, the tribunal set aside the order and allowed the appeals, granting consequential relief as necessary.