manufacturer imported raw material sales as such basis can charge 4% sad in invioce

[nandankumar roy]

Dear sir,

please clear regarding manufacturer of formulation drugs imported raw material(bulk drugs) and then sales as such basis this product to third party can charge 4% sad in invioce ?

Nandan Roy

[Suryanarayana Sathineni]

Dear Mr. Roy,

I am of the view that you are going to sell the inputs to other party initially imported by you for your production purpose. In this context, Pl. note the following:

• such transactions come under the purviews of "inputs cleared as such" and you require to pay the duty amount equal to the Cenvazt credit taken at the time receipt of such inputs in your factory ( CVD + SAD + others , if any ) in terms of Rule 3(5).
• Since it is a sale, you may have to also charge applicable VAT/ CST .
• As the above transaction, covers under trading ( which is an exempted service ), you may have follow the Procedure prescribed under Rule 6 of CCR,2004 ( like reversal of Input service Credit or not to avail the credit etc) which is a cumbersome procedure in fact.

Regards

Suryanaryana

[Rajagopalan Ranganathan]

Sir,

If you sell the imported goods as a trader, you can charge vat on such sales and can claim the refund of SAD already paid from the Department.

Normally imported goods are not leviable with vat. Therefore to provide level playing field to manufacturers in India who are manufacturing similar goods like the imported goods. However you can take the advice of Vat practitioner whether vat is not payable if SAD is paid at the time of import. You have to refer to provisions of Vat law of your State in this regard.

[CSSANJAY MALHOTRA]

Am in agreement with the procedure shared by Mr. Roy as in case of Inputs cleared as such Rule 3(5) comes into and CENVAT Reversal equivalent to Duty credit availed has to be paid off.

Further procedure shared by Mr Rajagopalan hold good for trading supplies.

[YAGAY andSUN]

You have two options, viz:

1. Either to make SAD as part of Cost/include it in the price of goods and Charge VAT. In this option you will not get refund from the Customs Department under Notification No. 102/2007- Customs as amended from time to time.
2. If you charge only VAT/CST while selling of the goods as such then under Notification No. 102/2007-Customs you can avail the refund of SAD after following the prescribed procedure from the Customs Department.

[KASTURI SETHI]

Thanks a lot to all experts, namely, M/s.YAGAY AND SUN, SH.CS SANJAY MALHOTRA, Rajagopalan Ranganathan,

Surya Narayana, Sirs for throwing light on this issue. All the views have enriched my knowledge.

AI Summary

Special Additional Duty treatment for resold imported inputs requires Cenvat reversal or duty refund alongside VAT/CST liability. Transfers of imported raw materials sold 'as such' are treated as inputs cleared as such, requiring reversal of Cenvat credit equal to the duty originally availed (including CVD and Special Additional Duty); the sale may attract VAT/CST depending on state law. Suppliers may either include Special Additional Duty in the price and charge VAT (forgoing Customs refund) or charge VAT/CST and claim a refund of the Special Additional Duty from Customs by following the prescribed procedure.