The Hindu Business Line : No refund of 4% addl customs duty on unsold stocks: CBEC

The Finance Ministry has specified a maximum time limit of one year for making refund claims on the four per cent additional duty of customs (CVD) paid on goods imported by traders and subsequently sold within the country.

This would imply that importers would have to file their refund claim within one year from the date of payment of CVD. The Finance Ministry has also now said that unsold stocks would not be eligible for refunds.

Importers would be entitled to refund of duties only in respect of quantities for which the prescribed documents are made available and the claims submitted within the maximum prescribed time of one year, the Central Board of Excise and Customs (CBEC) has said in a circular.

Hitherto, no specific time limit was prescribed for filing a refund application. In the absence of specific time limit, there were doubts as to whether the six months time limitation (as provided in the customs law) would apply for the refund claim.

In September 2007, the Government had, as a goodwill measure, announced a scheme that enabled traders to claim refund of CVD on goods imported by them and subsequently sold in India after paying applicable sales tax/VAT rates.

For obtaining refund of CVD levied in lieu of sales tax, traders had to meet certain conditions, including providing evidence on sale of imported consignment and payment of value-added tax (VAT) on the sale within the country. Moreover, the first and second stage dealer has to indicate on the invoice that no credit of CVD would be admissible.

Under the four per cent CVD exemption, which is operated through a refund mechanism, an importer would have to first pay the for per cent CVD at the time of importation and, thereafter, claim refund on production of documents that appropriate ST/VAT has been paid.

The purpose of the exemption is to ensure that an importer pays either four per cent CVD or the appropriate ST/VAT and not both. The Finance Ministry has now said that the “doctrine of unjust enrichment” would be applicable for the four CVD refund scheme.

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