By TIOL News Service

MUMBAI, MAY 31, 2014: THE appellants are traders and have imported certain goods on payment of SAD. They sold the goods in the open market after charging VAT with an endorsement that CENVAT credit of SAD is not available to the buyers of the goods.

As the goods were imported in terms of notification no. 102/07-Cus they filed a claim for refund of SAD paid by them at the time of importation of the goods.

The refund claim was denied by the adjudicating authority on the ground that the appellants have failed to prove the nexus between the goods sold and the bills of entry.

The Commissioner (Appeals) observed that the notification did not require any nexus to be established of importation and sale of the goods; that the only condition is that the applicant is required to sell the goods on payment of VAT/CST and there should be endorsement on the sales invoices that credit of the SAD is not admissible to the buyer.

Having said so, he examined the ledger account of the appellant and said that as the amount of SAD is shown as recoverable only after the sale takes place, the importer is not entitled for the refund claim.

The importer is, therefore, before the CESTAT.

The Bench observed -

"4. Considering the fact that the learned Commissioner (Appeals) has gone beyond the issue one step further of the issue before me. In fact, the learned Commissioner (Appeals) held that the appellants have shown the amount recoverable on account of SAD after sale has been effected, is not correct. In fact, without effecting the sale, the amount of refund of SAD available to the applicant was not known. Therefore, the observations of the learned Commissioner (Appeals) are totally irrelevant and incorrect. As the appellant has fulfilled the condition of notification 102/07-Cus and also have been able to prove that the amount of SAD has not passed on the buyer by way of a certificate issued by the Chartered Accountant and an undertaking given by them. In these circumstances, I hold that the appellants are entitled for refund of claim of SAD…"

The appeals were allowed and the adjudicating authority was directed to implement the order within a month.

(See 2014-TIOL-908-CESTAT-MUM)