4% sad refund

          Special Additional Duty on Import

While importing goods in India, the importer is required to pay Special Additional Duty (SAD). The rationale behind levying this import duty is to counterbalance VAT (i.e. tax revenues of government) and boost the domestic suppliers (which would have been purchased from domestic market otherwise). The SAD is levied as per Section 3(5) of Customs Tariff Act and also known as Special Counter Value Duty (CVD).

• In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty).
• The exemption contained in this notification shall be given effect if the following conditions are fulfilled:

1. The importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods;

1. The importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible;
2. The importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer;

1. The importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be;

1. The importer shall, inter alia, provide copies of the following documents along with the refund claim:

(i)      document evidencing payment of the said additional duty;

(ii)    invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed;

(iii)   Documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods.

• The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled.

Procedure to claim:

•  Time-limit for filing of refund claim:  Up to a period of 1 year from the date of payment of 4% SAD. Unsold stocks would not be eligible for refunds.

• Processing Time of Refund: The refund claims should be processed within the prescribed period of 3 months time.

• Documents required for refund claim:
  • Document evidencing payment of the Special Additional Duty (SAD).
  • Invoices of sale of the imported goods in respect of which refund of the said SAD is claimed.
  • Documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods.
  • Certificate from a statutory auditor / CA who certifies the final accounts in respect of correlation of VAT payment, payment of 4% SAD amount and unjust enrichment as prescribed in Board’s circular No.6/2008-Customs dated 28.4.2008 and 16/2008-Customs dated 13.10.2008.
  • Copy of the Consignment Sale Agreement. (in case of sale through consignment agents / stockists).
  • Self-declaration / Affidavit (for e.g. in case of submission of invoice in soft form in lieu of paper documents, in case of fulfillment of the doctrine of unjust enrichment to the effect that the applicant has not passed on the incidence of 4% SAD to any other person).
  • Any other document considered necessary in support of the claim.
  • Evidence to show that the duty incidence has not been passed on to the buyers.

Computation of Duty Payable:

Conditions to be satisfied to claim refund:

1. The importer should have paid all duties including 4% SAD at the time of importation.
2. The importer should have sold these goods through invoices clearly indicating that no credit of this duty will be admissible under Cenvat Credit Scheme.
3. Appropriate sales tax / VAT has been paid on these goods. (Both intra- sale or inter-state sale is considered as subsequent sale).

In case of manufacturing:

A manufacturer of excisable goods is permitted to utilize 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.