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Cenvat credit of cvd 3(5)

18 July 2016

respected CCI members, My client is a trader of imported coal and he pays CVD 3(5)at a rate of 2percent.. now it raises bill showing VAT at a rate of 5 %. so my question is whether it is possible to take the credit of CVD 3 (5) against the vat payable. the sales tax department officials rare denying such credit

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3 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 18 July 2016

Hope you are referring to special CVD. If yes, traders can claim refund of it from Customs (not from CTD). You need to pay VAT but claim refund from Customs.

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CA Hitesh Sachdev (Associate Consultant) (305 Points)
Replied 19 July 2016

Ajay,

As the manufacturer was allowed credit of Spedial additional duty 3 (5) traders were left behind adding to the cost of goods sold. So by vitue of notification 102/2007 dated 14th September 2007, the SAD was exempt (exemption granted via refund route) on fulfilment of following conditions-

1. The dealer should have paid all the duties of custom due on Import

2. Dealer shall mention on Sale Invoice that no credit of such additional duty was claimed

3. Dealer shall file a claim of refund for the SAD

4. The dealer shall have paid Sales tax/VAT on sale of the said goods as applicable

5. The claim is accompanied by the following documents

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.

Moreover a certificate by a CA is also required.

If there is still any ambiguity please feel free to ask

CA Saurabh Singh (Practising Chartered ) (974 Points)
Replied 20 July 2016

Yes, the two laws are different so both should not be mingled up.

If you paid CVD you would get CENVAT credit and further CVD payable to centre government can be adjusted by the same.

However in case of VAT or the output VAT liability the shall be paid either in cash/bank or utilitisation of VAT credit paid on purchase of goods called input VAT credit, the same shall be paid to State Government.