Keerthi (Article assisstant) (24 Points)
10 March 2011Can SAD Refund be claimed on the following case?
Goods imported and SAD is paid on it accordingly. The goods have undergone some process which changed the form or structure or matter of the goods. And these processed goods have been sold within one year by charging VAT or CST.
The question is can SAD refund be claimed in this case? Or is it that refund can be claimed only on such goods where the goods have not undergone any process.?
If so which circular or notification specifies it.
RAMESH KUMAR VERMA
( CS PURSUING )
(43853 Points)
Replied 11 March 2011
PLEASE NOTED THAT:-
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.
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