Govt out with new clarifications on 4% CVD refund

EXIM MATTERS

Any excise or customs or service tax assessee trying to get refund from the government will readily agree that it is no easy task. Firstly, unless there is an order for refund, refund claim cannot be maintained. Secondly, the concept of ‘unjust enrichment’ effectively denies refund in most cases.

So, when the government came out with a notification allowing refund of 4 per cent additional duty of Customs last September, the trade was rather cynical. Subsequently, the fact that hardly any refund has been granted has only vindicated the skeptics. However, the trade has been persistent and the government has come out with clarifications on various issues relating of grant of refund.

The notification for refund (no. 102-2007-cus. dated 14.09.2008) is basically an exemption notification. It only operates by way of refund. Even so, the government has thought fit to make the concept of ‘unjust refund’ applicable in such matters.

The procedures (put out through CBEC Circular no. 6/2008-Cus. dated 28.04.2008), said that a certificate from statutory auditor/Chartered Accountant (CA) who certifies the annual financial accounts under the Companies Act or any statute, explaining how the burden of 4 per cent CVD has not been passed on by the importer should suffice.

The CBEC now (through Circular no. 16/2008-Cus. dated 13th October 2008) says that certificate from any independent CA will not be acceptable. It has to be from a CA who certifies the importer’s financial records under the Companies Act, 1956, or any Sales Tax (ST)/Value Tax Act (VAT) of the state government or the Income Tax Act, 1961.

The refund is subject to the condition that the importer resells the imported goods on payment of VAT or central sales tx (CST). The evidence of payment of VAT/CST has been a subject matter of contention. Now the CBEC has said that payment of VAT through Input Tax Credit is quite OK. Moreover, instead of original copy of VAT/CST challans, copies of challans or documents of other forms of payments along with CA certificate regarding CST/VAT payment would be acceptable.

Another condition for refund is that the re-sale invoice must show that no cenvat credit is admissible of the 4 per cent additional duty. Cenvat credit can not be taken against invoices issued by dealers who are not registered with central excise. The CBEC is of the view that even unregistered dealers must show on their invoices no credit of 4 per cent duty can be taken. Importers, whether registered as dealers or not, may submit the soft copy of the invoices along with refund claim, says CBEC.

Importers, who sell through consignment agents/stockists, can also claim refund on the basis of agreements with the consignment agents/stockists and CA certificate regarding CST/VAT payment on behalf of the principals.

The refund claim must be filed within a period of one year from the date of duty payment. Monthly claims must be filed but filing of refund claim for part quantity covered in a bill of entry shall not be allowed except when this is necessary at the end of the one year period prescribed or where certain quantity of goods were lost or short-landed or damaged resulting in sale of part quantity.

The CBEC has asked the field formations to sanction the refunds quickly, to deface the bills of entry and to place details of refunds sanctioned on the websites.

tncr@sify.com