By TIOL News Service

NEW DELHI, JUNE 13, 2017: NOTIFICATION No. 102/2007-Cus dated 14/09/2007 grants exemption to SAD subject to fulfillment of certain conditions itemised therein. One of the requisite conditions for claiming refund of SAD is that "the importer shall pay on sale of the said goods, appropriate sales tax or value added tax , as the case may be.

The refund claim filed by the appellant in respect of 4% of additional duty of customs (SAD) under Notification No. 102/2007 -Cus was denied on the ground that the imported goods were sold at Nil rate of VAT / ST.

The appellant has filed an appeal before the CESTAT.

None appeared for the appellant, despite notice.

After hearing the AR, the Bench observed -

"4. Sale of footwear attracts payment of Value Added Tax. However, the said goods are exempted from payment of VAT on its sale, by virtue of the Notification issued by the State Government. Since, the goods imported by the appellant attract "Nil" rate of VAT and the appellant did not pay VAT in view of the exemption Notification, it cannot be said that the appellant had violated the conditions mentioned in the Notification dated 14/09/2007 (as amended) inasmuch as, "Nil" rate is also a rate of tax, which is payable on sale of subject goods, but for the exemption. Thus, "Nil" rate should not dis-qualify the phrase "appropriate sales tax or VAT" as contained in the Notification dated 14.09.2007…"

Noting that the issue involved in this case is no more res integra in view of the decision of the Tribunal in the case of Gazal Overseas vs. CC, New Delhi = 2015-TIOL-2454-CESTAT-DEL, the CESTAT concluded that there is no merit in the impugned order for denying the refund benefit of the SAD amount to the appellant.

The appeal was allowed.

(See 2017-TIOL-1976-CESTAT-DEL)