A special additional duty (SAD) of Customs of 4% has been levied on all imports by the Budget 2006-2007. As no central sales tax or VAT is levied on imports, the levy of SAD is intended to create a level playing field for domestic goods vis--vis imports. However, this fairly innocuous-intentioned move has a number of anomalies and contradictions.
A manufacturer of excisable goods is permitted to utilise the SAD paid on imported goods as a credit against its excise duty liability. Therefore, SAD is not a cost for a manufacturer and as such does not operate as a countervailing tax.
However, such credit is not available to a service provider or any person engaged in other activities that do not attract excise duty such as mining, power generation and construction. An importer-trader, who imports and sells goods in India upon payment of CST/VAT, had to first pay SAD, and then CST/VAT on sale of the imported goods.
In a nutshell, until recently, the tax was countervailing for a service provider and someone engaged in mining, construction, etc, but not for a manufacturer. For a trader, rather than being countervailing, levy of SAD results in double taxation.
29 December 2011
Sir Actually we have imported the material then now we are saling the material on DTA after paying aplicable Excise duty. but some case we are also purchase the material from India that case we are doing adjustment.can we apply for SAD 4% return plesae advice.
CAclubindia
