Refund of cvd and sad
This query is : Resolved
26 December 2014
hi...
i want to import HDPE from china and then sell it off here in local market.
My Query is whether i can get refund of both CVD and SAD or just 4% SAD.
Also can i set it off against my VAt Output.
Furthur please tell me the difference in tax regime of selling it to a manufacturer and trader
C.A Kirti Jalan
i want to import HDPE from china and then sell it off here in local market.
My Query is whether i can get refund of both CVD and SAD or just 4% SAD.
Also can i set it off against my VAt Output.
Furthur please tell me the difference in tax regime of selling it to a manufacturer and trader
C.A Kirti Jalan
20 July 2025
Hi Kirti,
Sorry for the delay! Let me clarify your query regarding refund of CVD and SAD on imported HDPE and related points:
1. Refund of CVD and SAD on import of HDPE
When you import goods like HDPE, you pay Customs Duty, which includes:
Basic Customs Duty (BCD)
Countervailing Duty (CVD) (which is essentially excise duty levied to match the excise on similar domestic goods)
Special Additional Duty (SAD) (usually 4%, to compensate local VAT on imports)
Refund Eligibility:
If you sell the goods to a manufacturer who is eligible for CENVAT credit, then you cannot claim refund of CVD, because CVD paid can be taken as credit by the buyer.
If you sell goods in the local market to a trader or end consumer, you cannot claim refund of CVD because you are not paying excise or you are not the manufacturer.
However, you can claim refund of SAD (4%) paid on import, provided you pay VAT on the same goods in your state.
2. Set-off of SAD against VAT Output
SAD is not creditable against VAT output directly.
The refund of SAD is given if VAT is paid on the imported goods locally.
So, you pay VAT on sale, and then claim refund of SAD from the Customs department by filing a refund claim.
SAD is not adjusted in VAT returns.
3. Difference in tax regime when selling to manufacturer vs trader
Aspect Selling to Manufacturer Selling to Trader/End Customer
CVD Credit Manufacturer can take CENVAT credit on CVD No CENVAT credit if trader/end user
Refund of CVD Not applicable No refund of CVD to importer
Refund of SAD Generally not applicable (manufacturer usually claims CENVAT) Refund of SAD is possible if VAT paid on sales
VAT Payment Manufacturer usually claims input VAT credit Trader/end user pays VAT without input credit
Summary:
You cannot claim refund of CVD if you sell to a manufacturer because they will claim CENVAT credit.
You can claim refund of SAD if you sell locally and pay VAT on HDPE.
SAD refund is separate from VAT set-off; SAD refund comes from Customs, VAT credit is claimed in VAT returns.
Sorry for the delay! Let me clarify your query regarding refund of CVD and SAD on imported HDPE and related points:
1. Refund of CVD and SAD on import of HDPE
When you import goods like HDPE, you pay Customs Duty, which includes:
Basic Customs Duty (BCD)
Countervailing Duty (CVD) (which is essentially excise duty levied to match the excise on similar domestic goods)
Special Additional Duty (SAD) (usually 4%, to compensate local VAT on imports)
Refund Eligibility:
If you sell the goods to a manufacturer who is eligible for CENVAT credit, then you cannot claim refund of CVD, because CVD paid can be taken as credit by the buyer.
If you sell goods in the local market to a trader or end consumer, you cannot claim refund of CVD because you are not paying excise or you are not the manufacturer.
However, you can claim refund of SAD (4%) paid on import, provided you pay VAT on the same goods in your state.
2. Set-off of SAD against VAT Output
SAD is not creditable against VAT output directly.
The refund of SAD is given if VAT is paid on the imported goods locally.
So, you pay VAT on sale, and then claim refund of SAD from the Customs department by filing a refund claim.
SAD is not adjusted in VAT returns.
3. Difference in tax regime when selling to manufacturer vs trader
Aspect Selling to Manufacturer Selling to Trader/End Customer
CVD Credit Manufacturer can take CENVAT credit on CVD No CENVAT credit if trader/end user
Refund of CVD Not applicable No refund of CVD to importer
Refund of SAD Generally not applicable (manufacturer usually claims CENVAT) Refund of SAD is possible if VAT paid on sales
VAT Payment Manufacturer usually claims input VAT credit Trader/end user pays VAT without input credit
Summary:
You cannot claim refund of CVD if you sell to a manufacturer because they will claim CENVAT credit.
You can claim refund of SAD if you sell locally and pay VAT on HDPE.
SAD refund is separate from VAT set-off; SAD refund comes from Customs, VAT credit is claimed in VAT returns.
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