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.
This 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 fulfilment 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.
- • SVB order.
- • Acceptance Letter from review department regarding SVB Order.
- • Finalized Bill Of Entries.
- • EDD challan.
- • Purchase Invoice & Packing List.
- • Working sheet/calculation sheet.
- • Any other documents considered necessary for SVB Refund.
- • IEC Certificate.
- • PAN Card.
- • Brief about relationship between buyer and seller.
- • Articles of Memorandum.
- • GATT declaration.
- • SVB Bond (in case of other Custom House, copy of the same.
- • Copies of the B/E, Invoice.
- • Any other documents.
Simply it can be claimed by importer, on which EDD duty was imposed at the time of clearing of goods.
It is not right to say that EDD is a custom duty. Even it is not levied due to Customs (Provisional Duty Assessment) Regulation, 1963. We may call it a security deposit charged as per Para 9 of the Board`s Circular No. 11/2001-Cus., dated 23-2-2001. Currently it is charged at 1% on assessable value. But if the importer does not furnish complete reply to the questionnaire within 30 days, of receipt of the ‘Questionnaire’ by the importer, the extra duty deposit will be increased to 5% till the date of receipt of reply by the Department.
It is levied mainly if custom department thinks that assessable value shown by importer is not right and there may be some revenue loss to government. It is not imposed on every importer. For e.g. in case where subsidiary company imports from its Holding Company, custom may think that assessable value shown by subsidiary is less than actual value, they may levied EDD on import by subsidiary. It is refunded if importer prove assessable value is genuine. He has to take SVB order and claim refund from customs.
SAD Refund must be claimed within one year from payment of SAD i.e. date of TR6 challan of corresponding BOE.
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. Refund is not available to manufacturers who consume these goods in manufacturing process or end consumers of goods.
- • TR6 challan for evidencing payment of special additional duty.
- • Original BOE on which SAD paid & corresponding purchase invoices, purchase order and packing list.
- • Sale invoice of imported goods in respect of which refund is claimed.
- • VAT Payment challans for evidencing payment of appropriate VAT on imported goods.
- • Signed working sheet for the refund amount claimed.
- • Certificate from CA who must be statutory auditor or VAT auditor of applicant.
- • In case of sale through consignment agents/stockists, copy of consignment sale agreement required.
- • Self declaration/Affidavit to ensure fulfillment of doctrine of unjust enrichment.
- • Any other document considered necessary for the claim.
IEC is compulsory for all those who wish to carry on Import Export business in India. If a company wants to apply for IEC then the applicant should apply from his head office to the nearest office of Regional Authority of Directorate General Foreign Trade.
In India we cannot operate an Import Export business without having an IEC number. . There are some categories of companies which are exempted from the compulsion of getting IEC for Import and Export in India. Companies which fall in to these categories do not need an IEC for carrying out import export in India. Departments of state and central governments, people transferring or getting goods from outside for personal use etc. are exempted from the compulsion of getting an IEC for foreign trade.
Import Export Code or IEC refers to a code of ten digits which is issued by Director General of Foreign Trade to different Indian companies/business units. One individual can only have a single IEC issued against a PAN number. No proprietor can hold more than one IEC.
- • Bank certificate.
- • PAN card copy.
- • Date of birth certificate.