'Unregistered dealers permitted to claim refund of Special Additional Duty'

We are traders, not registered with Central Excise. We imported certain items on payment of four per cent Special Additional Duty (SAD) and re-sold the same on payment of VAT. However, we did not show the SAD separately in our invoice or make a declaration in the invoice that credit of SAD will not be available. Will our claim for refund of SAD be sustainable?

In the case of Equinox Solutions Ltd. [2011 (272) ELT 0310 (Tri. Bang)], on identical facts, it was held that a refund is admissible, on the grounds that the appellant was not a registered dealer and therefore based on the invoice issued by him no Cenvat credit could have been taken. Further, the absence of disclosure of quantum of SAD therein also did not facilitate any availment of Cenvat credit by the purchaser. That judgment was followed in the cases of Ruchi Acroni Industries Ltd. [2011 (272) ELT 287 (Tri. Mumbai)], Nova Nordisk India Pvt. Ltd. [2013 (292) ELT 252 (Tri. Mumbai)] and Maruti Suzuki India Ltd. [ 2013 (296) ELT 100 (Tri. Mumbai)]. In the case of Fossil India Ltd. [2014 (301) ELT 268 (Tri. Bang)] also, the same view was taken by the Tribunal and a refund was allowed.

We are a 100 per cent Export Oriented Unit (EOU). We bought some capital goods locally on excise duty payment and took Cenvat Credit of the same. Now, we want to sell these goods. Do we need to take any permission or pay any duty?

The removal of such goods will be governed by sub-rules (5) and (5A) of Rule 3 of the Cenvat Credit Rules, 2004. You do not need any permission for that.

We were unable to re-sell within one year the goods imported paying four per cent SAD. Later, when we re-sold the goods on payment of VAT, complying with all the conditions of notification 102/2007-Cus dated September 14, 2007 and filed our refund claim, it was rejected on the ground that the time limit of one year from the date of duty payment has expired. This is a recurring problem for us. Can you give us a solution?

You may appeal based on the case of Sony India Ltd. [2014 (304) ELT 660 (Del)], wherein the Delhi High Court held that since SAD is refundable only on subsequent sale (i.e., point at which Sales Tax/VAT liability arises), no limitation period can be imposed for advancing the refund claim. The right to claim refunds only accrues to the importer once the sale, entirely a market-driven event, is complete. Given the vagaries of the market, the importer has limited control over when the sale is complete. To uphold limitation period starting from date of payment of duty would amount to allowing commencement of limitation period for refund claims before right of refund has even accrued. So, the high court ordered grant of refund in that case.

Can we get a temporary Importer-Exporter Code (IEC) for a one-off import?

There is no such provision. You can obtain an IEC in the usual way and then surrender it after your import is over.

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