Sad refund rule

This query is : Resolved 

Querist : Anonymous (Querist) 05 August 2011

Dear Sir,

We are just going to start the import of some scrap material.

Is it true that SAD acts as VAT when the entire excise bill is passed on to the manufacturer.

I mean, do I have to pass on the SAD also to the manufacturer and I don't have to apply the VAT.

Or I have to apply the VAT to the manufacturer and also pass on the 4% SAD to the manufacturer.

Also I got to know the broken information that 4% SAD is refundable to the traders quarterly or anually.

Please explain, its urgent.

Thank you very much in advance.


U S Sharma (Expert)
05 August 2011


Notification No. 102/2007-Customs
New Delhi, the 14
September, 2007

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of
1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts
the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for
subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3
of the said Customs Tariff Act (hereinafter referred to as the said additional duty).

2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled:
(a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon,
as applicable, at the time of importation of the goods;

(b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in
respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of
section 3 of the Customs Tariff Act, 1975 shall be admissible;
(c) the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with
the jurisdictional customs officer;

(d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be;

(e) the importer shall, inter alia, provide copies of the following documents alongwith the refund claim:

(i) document evidencing payment of the said additional duty;
(ii) invoices of sale of the imported goods in respect of which refund of the said additional duty
is claimed;
(iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may
be, by the importer, on sale of such imported goods.

3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to
in para 2 above, are fulfilled.

F.No. 354/129/2007-TRU
Under Secretary to the Government of India

Querist : Anonymous (Querist) 05 August 2011

Dear Mr. Sharma,

Thank you for the information.

Basically I am not aware of so much technical knowledge, therefore can you plz be so kind to solve my apprehension.

If I am pass on the excise bill to the manufacturer then should I raise the commercial invoice (i.e. the VAT/CST) bill and I can cover the 4% SAD from the manufacturer.

Or 4% SAD is something different from Sales Tax Department and has to be claimed by the manufacturer and not by me. I am only suppose to get the 4% VAT/CST which I will have to fully pay to the Sales Tax Department.

Sorry to bother again. But answer in simple language will be highly appreciated. If can explain with example will be a better solution.

Thank you again.


U S Sharma (Expert)
06 August 2011

There is no such word as "pass on" in taxation, without appropriate rules and registration.

if you want to pass the CVD to manufacturer, you have to get dealer registration in excise and issue dealers invoice to manufacturer on the strength of import bills, he will get credit of CVD

if you want the SAD refund, then you have to charge VAT on your such sales and claim refund of SAD paid at the time of import from customs,

Manufacturers are not charged with SAD, but once charged it can not be available as "credit" to manufacturer even.

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
06 August 2011

Agree with the expert

CA. C V SURYAM (Expert)
31 December 2011

I too have similar apprehensions. Kindly clarify whether a manufacturer of imported raw materials on which SAD (U/s.3(5) of customs act) pad can claim refund of same from customs since the manufacturer will use these raw materials and make finished goods on which VAT/sales tax will be paid.

Or, will the expression i.e., "said goods" in the notification be strictly applied to traders only since the same goods will be resold by them in the same condition.

If a manufacturer is also eligible, what happens when the sale invoice does not contain the declartion ie., Not eligible for Cenvat".

Also what happens when the manufacturer avails sales tax deferment?

I hope there are experts who will pay attention on above and throw some clarity. May be mailed to CVSURYAM@REDIFFMAIL.COM also, if possible.

Thanks and Wish You All Happy New Year, 2012.

02 November 2012


C.A. HIREN (Expert)
23 July 2013

Dear Mr. Ramesh Sir,
I want to know the refund of SAD duty paid by the importer. As he is trader. So he can sell the product with VAT/CST. Now, can he get the refund of SAD duty paid by him?

23 July 2013

sir ,the company who is not registered in vat department does not admissible for SAD REFUND.

SAD refund can be claimed by importers who imports in India and sold imported goods as it is i.e. goods didn’t lose their identity. In nutshell, importer trader is allowed to claim SAD Refund after sale of imported goods and payment of VAT amount.

Imports into India are charged with a Special counter veiling duty known as Additional Custom Duty (or Special Additional Duty – popularly known as SAD ) at the rate of 4% and is leviable under sub-section (5) of Section 3 of the Customs Tariff Act, 1975. This is charged on the total value of imports including CIF + Basic Customs duty + CVD. This duty is to countervail sales tax leviable on the sale of goods in India to give level playing field to domestic industry.

4% SAD is refundable to the import traders i.e. who sold their goods in India without changing identity of goods in pursuance of Notification No. 102/07-Custom Dt. 14.09.2007 subject to fulfillment of various conditions and procedure as laid down by government in various subsequent circulars, instructions and public notices. This refund is known as SAD Refund in commercial parlance.
Documents required for SAD refund

a) TR6 challan for evidencing payment of special additional duty.

b) Original BOE on which SAD paid & corresponding purchase invoices, purchase order and packing list.

c) Sale invoice of imported goods in respect of which refund is claimed.

d) VAT Payment challans for evidencing payment of appropriate VAT on imported goods.

e) Signed working sheet for the refund amount claimed.

f) Certificate from CA who must be statutory auditor or VAT auditor of applicant.

g) In case of sale through consignment agents/stockists, copy of consignment sale agreement required.

h) Self declaration/Affidavit to ensure fulfillment of doctrine of unjust enrichment.

i) Any other document considered necessary for the claim.

SAD refund can be claimed by importers who imports in India and sold imported goods as it is i.e. goods didn’t lose their identity. In nutshell, importer trader is allowed to claim SAD Refund after sale of imported goods and payment of VAT amount.

Government of India has issued Notifications No’s 102/2007 dt. 14.9.2007 & 93/2008 dt. 01.08.2008 mandating various conditions to be fulfilled by the claimants to be eligible for the refund of said 4% AD. Further, the Central Board of Excise and Customs (CBEC) has issued many circulars (No’s 6/2008 dt. 28-4-2008, 16/2008 dt. 13-10-2008, 6/2009 dt. 9-2-2009, 15/2010 dt. 29-6-2010, 18/2010 dt. 8-7-2010, 23/2010 dt. 29-7-2010 & 27/2010 dt. 13-8-2010) on the subject and has since clarified various doubts raised by the field formations. The circulars also elaborated on the mandatory procedural requirements to be complied with by the claimants before the sanction of refund of 4% additional duty of customs.

C.A. HIREN (Expert)
23 July 2013

Thank you very much SIr.
And if i not want to claim refund but i want to sale it to manufacturer. Now, my question is that what should i have to do so that i can claim BCD, CVD etc.

23 July 2013


in our india exporter and importer are Struggling every exporter wanted to avail INCENTIVE .

if any importer does not avail the SAD REFUND THEIR duty will stand with 1 year of TR-6 payment as above said.


CA Sanjeev Kr Jain (Expert)
12 April 2014

SAD is 4 %, whether refund would be granted if goods are sold at 4% VAT or against C form after charging 2% CST,

please guide whether VAT/CST needs to be greater than SAD

whether SAD refund is granted on sales made against form H

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