2022 (5) TMI 258 - AT - Customs

Tribunal allows refund of Special Additional Duty (SAD) on re-sold goods with nil VAT/Sales Tax rate

The Tribunal upheld the Commissioner (Appeals) decision allowing the refund of Special Additional Duty (SAD) on goods re-sold with a nil rate of VAT/Sales ... Refund of balance SAD, paid at the time of import - such goods were re-sold and on such sale, the rate of VAT/Sales Tax was nil - HELD THAT:- There is no merits in the grounds of appeal. SAD is applicable at the time of import by way of an equitable levy in lieu of sales tax, so as to protect the domestic industry. Further, the Customs Tariff Act itself provides for refund of SAD on re-sale of the goods. The mechanism of refund has been provided vide notification no.102/2007-Cus, which provides that one of the conditions for refund is that the goods must be re-sold and appropriate VAT/Sales Tax should have been paid. This Tribunal in precedent ruling of the M/S GAZAL OVERSEAS, M/S MAYANK ENTERPRISES, M/S ANAND ASSOCIATES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2015 (12) TMI 427 - CESTAT NEW DELHI] has held that the refund of SAD is available even if the rate of VAT/Sales Tax is lower than the rate of SAD or nil. Appeal dismissed - decided against Revenue. Issues:1. Whether the Commissioner (Appeals) rightly allowed the refund of balance SAD on goods re-sold with nil VAT/Sales Tax rate.2. Interpretation of the term 'appropriate duty' in the context of refund eligibility.3. Applicability of SAD on imports and conditions for refund under notification no.102/2007-Cus.Analysis:1. The primary issue in this appeal was whether the Commissioner (Appeals) correctly permitted the refund of the balance Special Additional Duty (SAD) on goods that were re-sold with a nil rate of VAT/Sales Tax. The Tribunal referred to a precedent order involving Gazal Overseas, where it was established that the refund under notification no.102/2007-Cus would be admissible even if the rate of VAT/Sales Tax was nil. The Tribunal upheld the decision and allowed the appeal of the importer based on this interpretation.2. The second issue revolved around the interpretation of the term 'appropriate duty' concerning the eligibility for a refund. The Revenue argued that the word 'appropriate' should be understood as the correct or specified duty of excise, citing a Supreme Court case and a Kolkata High Court case. However, the Tribunal found no merit in this argument and emphasized that SAD is levied at the time of import to safeguard the domestic industry, and the Customs Tariff Act allows for the refund of SAD on re-sale of goods, irrespective of the VAT/Sales Tax rate.3. Lastly, the Tribunal addressed the broader issue of the applicability of SAD on imports and the conditions for refund under notification no.102/2007-Cus. It clarified that the mechanism for refund is outlined in the notification, requiring the goods to be re-sold with the payment of appropriate VAT/Sales Tax. The Tribunal reiterated that the refund of SAD is available even if the rate of VAT/Sales Tax is lower than the SAD rate or nil, as established in the Gazal Overseas case. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the correctness of the order-in-appeal and disposing of the stay application.In conclusion, the judgment reaffirmed the principles governing the refund of SAD on re-sold goods, emphasizing the eligibility criteria outlined in the relevant notification and the precedent set by previous Tribunal rulings.