Cenvat credit of SAD - Reg

[vinay wakde]

We are purchasing imported Capital goods from various dealers. The Notification No. 102/2007 –Customs, dated 14.09.2007 has granted the exemption by way of refund of SAD to the dealers of imported goods.  However, the dealers were passing the credit of SAD to the buyer instead of claiming refund with the Department. We have taken CENVAT credit of SAD on the strength of valid duty paying documents, which is now objected by the Excise Auditors.  As per the Department, the dealer has to claim refund of SAD from the Department as per Notification No. 102/2007 –Customs, dated 14.09.2007.   Kindly clarify whether the objection taken by the Excise Auditor is correct and we have to reverse the credit?  

Regards,

VINAY

 

[PAWAN KUMAR]

As per my view, the objection raised by the audit is incorrect. In circular No. 06/2008-Customs, it has clearly provided that the importer declared that he has not passed the incidence of duty to his customer. It means importer has the option whether to pass or not. If importer passed the duty to his customer, benefit of cenvat will definitely allow.

[GANTI SARMA]

What Mr. Pawan telling is correct. Whether SAD pass to customer or claim with department is depends on dealer's interest, but not mandatory to claim with department.

 

The objection of the Audit party is ridiculous, there is no such restriction in the Act or Rules. Whether to claim refund or to pass on SAD is entirely on the Dealer and the understanding and the objection is unsustainable.   

[RAMNIRANJAN KANDOI]

Dear,

Actually Excise Auditors do not hv proper knowledge and because of this, they  take wrong points. My simple advise is to ask them to show the Rules & provisions..

R M Kandoi

AI Summary

Cenvat credit of SAD permitted when importer passes duty to buyer; claiming refund remains an alternative option.
Dispute concerns whether Cenvat credit of SAD is permissible where importers/dealers either claim SAD refund under Notification No. 102/2007 or pass the incidence to buyers. Forum replies assert no statutory prohibition on passing SAD to customers; Circular No. 06/2008-Customs indicates the importer's declaration about passing incidence is optional. Therefore a buyer taking Cenvat credit on valid duty-paying documents is consistent with accepted practice and the audit objection is unsupportable without a specific rule prohibiting it.