Case Law Details
Principal Commissioner of Customs (Import) Vs M/s. Omya & Company (CESTAT Delhi)
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 Gazal Overseas (supra) 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.
FULL TEXT OF THE CESTAT DELHI ORDER
The issue in this appeal by Revenue is whether the Commissioner (Appeals) has rightly allowed the refund of balance SAD, paid at the time of import of Rs.36,183/- under the fact that such goods were re-sold and on such sale, the rate of VAT/Sales Tax was nil.
2. The Commissioner (Appeals) has relied upon the precedent order of this Tribunal in the case of Gazal Overseas – 2016 (332) ELT 767 (Tribunal-Delhi). This Tribunal in the said decision referred to para 5.3 of CBE&C Circular No.6/2008 dated 28.04.2008, which reads as below:-
“5.3 The exemption contained in the said notification envisages that the importer shall file a refund claim for 4% CVD (“said additional duty of Customs”) paid on imported goods and shall pay on sale of the said goods “appropriate Sales Tax or VAT as the case may be”. Hence, it is clear that there is no stipulation in the notification that the exemption is available only if the rate of ST/VAT is equal to or higher than the rate of ST/VAT is equal to or higher than the rate of additional duty of customs; nor is there a condition that if the rate of ST/VAT happen to be lower than 4%, the refund would be restricted to the lower amount. As such , it is clarified that it will not be appropriate to reduce the refund amount in such a situation and the entire 4% CVD, if otherwise found eligible, shall be refunded.”
3. Accordingly, this Tribunal had held that even if rate of VAT/Sales Tax was nil, the refund under notification no.102/007-Cus, would be admissible, and allowed the appeal of the importer.
4. The respondent /importer is absent in spite of service of notice both by speed post and email and both the reports are on record. Accordingly, the appeal is taken up for hearing and disposal with the assistance of ld. Departmental Representative.
5. The ground taken in Revenue’s appeal is that refund of SAD is available only on payment of appropriate VAT/sales tax on re-sale of the goods. It is further urged that the expression “appropriate duty” was considered by the Hon’ble Supreme Court in the case of CCE, Vadodara Vs. Dhiren Chemical Industries – 2002 (139) ELT 3 (SC), wherein it was held that the word “appropriate” in the context of the exemption notification meant the correct or a specified duty of excise, and that where an exemption is extended, subject to the condition that the “appropriate duty has been paid” on the raw material, then such an exemption shall not be available when the raw material is not liable to excise duty or such duty is nil. Thus, the same norm applies for the refund of SAD also. It is further urged that in Nikhil Kumar Vs. Commissioner of Customs – 2005 (187) ELT 6 (Kol.), the Hon’ble Kolkata High Court has held term ‘appropriate’ does not include ‘nil’.
6. I find 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 Gazal Overseas (supra) 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.
7. Accordingly, in view of my observations, I find that there is no error in the impugned order-in-appeal. Accordingly, this appeal by Revenue is dismissed. The stay application also stands disposed of.
[order dictated & pronounced in open court]
