Refund of 4% SAD – when in invoice SAD shown as Nil but no endorsement made that incidence of duty not passed on

PJ/Case Laws/2011-12/1457

Refund of 4% SAD – when in invoice SAD shown as Nil but no endorsement made that incidence of duty not passed on – refund allowable.

Case: RUCHI ACRONI INDUSTRIES LTD. Versus COMMR. OF CUS. (IMPORT), MUMBAI

Citation: 2011 (272) E.L.T. 287 (Tri. - Mumbai)

Issue:- Refund of 4% SAD – when in invoice SAD shown as Nil but no endorsement made that incidence of duty not passed on – refund allowable.

Brief Facts:- Appellants had initially paid 4% SAD at the time of import. Thereafter, they cleared the goods on payment of VAT and filed a refund claim in terms of Notification No. 102/07-Cus of 4% SAD paid by them. The refund claim was rejected on the ground that the appellants have not made endorsement on the invoices as per condition 2(b) of the said Notification by the lower authorities.

Aggrieved by the said order, appellant is in appeal before the Tribunal.

Reasoning of Judgment:- The Tribunal found that while issuing the invoice the appellants have clearly shown in the invoice the SAD as zero which clearly shows that the incidence of SAD has not been passed on the buyer as the buyer can take the credit of the duty shown in the invoice. In this case when SAD has shown zero no credit can be taken by the buyer. It is true that appellants have not made the endorsement on the invoice but it is clear from the face of the invoice that there is no SAD shown. The Tribunal relied on the decision of the Apex Court in the case of Malwa Industries [2009 (235) E.L.T. 214 (S.C.)] wherein it was held that exemption Notification should be read liberally. Particularly, in this case showing SAD was shown nil in the invoice, the appellants have complied the condition of 2(b) of the Notification.

Further reliance was placed on judgment in the case of Equinox Solution Ltd. v. CCE wherein this Tribunal vide Order No. A/649-651/SMB/CIV/10 dated 8-12-10 on similar facts, this Tribunal has already held the purpose of the said Notification is that importer should not suffer SAD on the goods imported by them which have been imported for the purpose of resale and the proper ST/CST/VAT has been paid of the goods imported. It was noted that SAD is to be paid by the importers as precaution measure to ascertain whether ST/CST/VAT has been discharged by the assessee or not. In this case, it has been clarified whether ST/CST/VAT has been paid by the appellants which enables the appellants to take refund of SAD paid by them. There is also a condition in the Notification that the incidence of SAD should not be passed on the buyer and endorsement should be made to the effect on the invoice.

It was held that it is clear that no SAD is shown in the invoice which amounts that the endorsement as per condition 2(b) of the Notification has been made by the appellants and as held in the case of Equinox Solution, the appellants are entitled for refund claim.

Decision:- Appeal allowed with consequential relief.

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PJ/Case Laws/2011-12/1457

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