09 April 2010
My group company has imported some spare parts at nil value from its parent company after paying only custom duty & freight. Now that company converted the parts into a machine after incurring labour cost. Now it is ready to sell the same machine to my company at subsized rates (i.e. Custom duty+freight+labour charges+taxes). My question is on which amount I have to pay excise duty in the situation if I am having ready buyer or in the situation I want to take the same in my stock and later on sold. thanks in advance.
21 July 2024
Yes, you can claim the credit of CVD (Countervailing Duty) and Additional Duty of Customs (commonly known as Special Additional Duty or SAD) paid at the time of import of goods. Here’s how it works:
1. **CVD (Countervailing Duty):** - CVD is levied on imported goods in lieu of excise duty on similar goods produced within India. It is payable under the Customs Act, 1962, and is considered a duty of excise for the purpose of the Cenvat Credit Rules. - As per the Cenvat Credit Rules, 2004 (now integrated into GST laws), CVD paid on imported goods can be availed as Cenvat credit. This credit can be utilized for payment of excise duty or service tax (now GST) on goods manufactured or services provided.
2. **Additional Duty of Customs (SAD):** - SAD is an additional duty levied under Section 3(5) of the Customs Tariff Act, 1975, on imported goods. It is not eligible for Cenvat credit under the Cenvat Credit Rules. - However, under the current GST regime, SAD paid on import of goods is eligible for Input Tax Credit (ITC) under GST. This credit can be used to set off GST liabilities on outward supplies or can be claimed as a refund if it remains unutilized.
3. **Procedure to Claim CVD and SAD:** - To claim Cenvat credit or Input Tax Credit for CVD and SAD: - Ensure that the duty has been paid to the customs authorities at the time of import. - The invoice or bill of entry should clearly indicate the amount of CVD and SAD paid. - These duties should be reflected in your import documents and customs clearance documents. - You can then utilize this credit while discharging your excise duty liabilities (if applicable) or GST liabilities (under the current GST regime).
4. **Documentary Requirements:** - Maintain proper records of invoices, bill of entry, and other relevant documents related to import clearance showing the payment of CVD and SAD. - These documents may be required for audit purposes or if you decide to claim a refund of accumulated credits.
In conclusion, while CVD can be claimed as Cenvat credit for excise duty purposes (before GST), and SAD can be claimed as Input Tax Credit under GST. It’s essential to comply with all procedural requirements and maintain accurate documentation to avail and utilize these credits effectively.
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