Conditions & Provisions:

• All duties of customs, including additional duty, has been paid on the imports;
• Sale invoice(s) issued by the importer for the said goods bear the text: in respect of the goods covered by the invoice, no credit of additional duty of customs u/s 3(5) of the Customs Tariff Act, 1975 shall be admissible; and
• Appropriate sales/value added tax has been paid by the importer on the said goods.

Filing of Refund Application:

Claim for refund of duty should be filed by the importer with the jurisdictional customs officer. The refund claim should be accompanied with the following documents:

1. Document evidencing payment of Additional Duty (i.e., TR-6 Challan);
2. Invoice of sale of the imported goods in respect of which refund of Additional Duty is claimed (i.e., Tax Invoice / Bill of Sale or by whatever name called). The said Invoice should specify separately, the sales tax / value added tax charged;
3. Documents evidencing the payment of appropriate sales /value added tax, by the importer, on sale of such imported goods (i.e., tax paid challan)

Upon complying with these conditions to the satisfaction of the jurisdictional customs officer, a refund will be granted. In the context of this notification, an attempt has been made to address a few ubiquitous questions:

1. What does this notification seek to achieve?
As stated earlier, almost all imports are subject to an additional duty to counteract sales/value added tax levied on similar indigenously manufactured goods. However, in the case of resellers, this levy results in a double impact as the resellers not only pay additional duty when importing, but also pay sales/value added tax on the sale of such goods. This notification intends to remove the burden of this double effect.

2. What is the due date for filing refund application?
The refund claim shall be filed within 1 year from the date of payment. The CBEC vide circular No 6/2008-Cus dated 28-04-2008 has clarified this point.

3. Will the refund of the said Additional Duty be subject to the bar of unjust enrichment?
Yes. Refund of Additional Duty will be subject to the bar of unjust enrichment. Consequently, the importer will have to prove to the satisfaction of the customs authorities or any other statutory / judicial authority that the incidence of the Additional Duty has not been passed on to any other person / buyer by the importer. Further CBEC vide Circular No 6/2008-Cus dated 28-04-2008 has clarified that a certificate from statutory auditor would be accepted towards unjust enrichment. The certificate should explain how the burden of 4% additional duty has not been passed on by the importer and it should also fulfill the requirement of unjust enrichment.

4. Can a Single refund claim for a month can be filed when there is more than one bill of entry processed in a month?
CBEC vide Circular No 6/2008-Cus dated 28-04-2008 has clarified that a single refund claim covering all the bill of entries assessed in a month shall be filed.

5. What can be done if goods have remained unsold for one year?
CBEC vide Circular No 6/2008-Cus dated 28-04-2008 has clarified that in situation where goods have remained unsold for one year, a part claim of quantity sold can be filed at the end of one year. However, such claim cannot be filed prior to one year if part of goods imported have remained unsold.

6. What is not eligible for this Refund?
Imports for which payments were made prior to 14-09-2007 would not be eligible for this refund.

Some Other Clarifications are:

• Certificate from statutory auditor would be accepted correlating the payment of sales tax / VAT on the imported goods with the invoice of sale
• A stamp on invoice (to state that no CENVAT Credit is admissible) should suffice conditional requirement provide in the notification.
• Amount of 4% paid through DEPB shall not be refunded in cash; the said amount shall be re-credited in DEPB scrip

While the notification does represent a benefit to importer-resellers, there are more questions that need to be answered, namely:

1. Will the refund be granted in case the sale of imported goods are exempt from payment of sales /value added tax, either generally or specifically?
2. Will the refund be granted in case of sale to SEZ or SEZ units?
3. Will the refund be granted in case of inter-State sale to EOUs, wherein EOUs will further claim reimbursement of the central sales tax charged?
4. Will refund be granted if the sale of imported goods takes place after 6 months from the date of payment of duty?
5. In case of sales returns/unfructified sales, should the Additional Duty that was claimed as refund be returned/refunded back to the Government?
6. Should the importer be a registered dealer under the sales tax law / value added tax law at the time of import or is it sufficient that the importer is registered at the time of resale?
7. Will this refund be available to manufacturers and / or persons undertaking resale through AMCs / Maintenance Contracts?