4% SAD REFUND

[Samir Banerjee]

One importer/trader while selling goods within state paying applicable VAT amount by setting off VAT Input credit available with importer/trader. The importer will submit alongwith application record of VAT Input Credit Account wherein the debit entries of VAT appearing against sale of Imported Goods. All sales are made within state. My query is will the VAT payment made from VAT Input Credit account be acceptable by Customs Department and allow the refund the 4% SAD

[Rajagopalan Ranganathan]

Sir,

It is clarified in Circular No.16/2008-Customs dated 13.10.2008 that discharge of ST/VAT liability by the importer, through cash or other authorised form of payment to the concerned ST/VAT authority or input tax credit adjustment, could be accepted by Customs field formations for the purpose of fulfillment of the condition in para 2 (d) of Notification No. 102/2007-Customs dated 14.09.2007 considering sanction of refund of 4% CVD

[Mahir S]

Sir,

Please find following extract from the PUBLIC NOTICE NO. 01/2009 dated 19.02.2009 issued by the Commissioner of Customs (Import), Mumbai regarding Procedure for refund of 4% Additional Duty of Customs in pursuance of Notification No. 102/2007- Customs dated 14-09-2007 :-

3. Payment of ST/VAT by utilizing the input tax credit :- In terms of the requirement under Para 2(d) of the said notification, appropriate ST/VAT is to be paid by the importer on sale of goods. It is noticed that most of the ST/VAT legislations provide for payment of ST/VAT by utilizing the input tax credit. If the Sales Tax Authorities accept payment of ST/VAT through cash or adjustment of input tax credit, the same shall be treated as effective discharge of ST/VAT payment on imported goods.

Further, it was provided in Board’s Circular No.16/2008 –Cus dated 13-10-2008 that a certificate from Statutory Auditor/Chartered Accountant correlating the payment of ST/VAT on the imported goods with the invoices of sale, along with supporting documents of proof of payment of appropriate ST/VAT is acceptable for the purpose of 4% SAD refund.

AI Summary

VAT Payments via Input Credit Accepted for 4% SAD Refund on Imports; Requires Auditor Certification and Sales Tax Approval. An importer inquired about the acceptability of VAT payments made through VAT Input Credit for a 4% Special Additional Duty (SAD) refund on imported goods sold within the state. Two responses referenced relevant customs notifications and public notices. Both responses clarified that VAT payments, whether made in cash or through input tax credit adjustments, are acceptable for fulfilling the conditions required for a 4% SAD refund. This is contingent upon the acceptance of such payments by Sales Tax Authorities and the provision of a certificate from a Statutory Auditor or Chartered Accountant correlating the VAT payments with sales invoices.