CA K. Jitendra Babu
1. Customs Notification 102/97 Dt.14.09.2007 permitted importers to claim refund of Special Additional Customs Duty (SACD) paid on the imported goods, provided such imported goods are sold in the domestic market on payment of VAT/Sales Tax.
2. In case of some of the imported materials, rate of VAT applicable on sale in domestic market as per VAT Act of the concerned
State is lower than the SACD rate. Further, in some of the cases, the rate of VAT applicable on some of the imported material is Nil.
3. Customs department has been rejecting the refund claims of the importers in case the rate of VAT is either Nil or less than SACD rate on the ground that refund is admissible only in case the rate of VAT is equal to or more than SACD rate of 4%.
4. SACD was imposed with an intention to create level playing field between imported goods and indigenous goods by levying duty on imported goods equivalent to Sales Tax/VAT. SACD is refundable to the importer in case the goods re-sold in the domestic market. The objective of refunding the SACD is avoidance of double taxation, since the importer is incurring VAT/CST again on sale of imported goods in domestic market. If the VAT/CST is not leviable or leviable at a rate lower than the SACD rate, then also importer is eligible for refund of SACD paid on import of goods, since the objective of levy of SACD is to create level playing field between imported and indigenous goods. Since indigenous goods are not liable for VAT/CST or liable for VAT/CST at a rate lesser than SACD, the objective of level playing field gets satisfied only on refunding SACD to the importer, since indigenous seller is also not remitting VAT/CST or remitting VAT/CST at a lower rate on sale of goods in domestic market.
