Special Additional Duty (SAD) is a central levy mandatory upon import regardless of state-level VAT exemptions, and a provisional assessment regarding one duty (CVD) does not prevent a demand for SAD under Section 28 of the Customs Act.

Per: Shri P. Dinesha

This Appeal is filed against Order in Appeal No. 546/2015 dated 29.05.2015 passed by Commissioner of Customs (Appeals II), Chennai and the short issue in this Appeal is the demand of 4% Special Additional Duty of Customs (SAD) on the Silk fabrics imported by the Appellant.

2. Heard Shri S. Murugappan, ld. Advocate for the Appellant and Shri Vineet Goyal, ld. Departmental Representative for the Respondent; perused the documents placed on record including the orders of lower authorities carefully and we have also gone through the decisions relied upon during the course of arguments.

3. A perusal of the Order in Original No.36231/2015 dated 27.03.2015 reveals that the Appellant filed a Bill of Entry on 21.01.2012 upon import of Silk fabrics, which was assessed to duty by classifying the goods under CTH 5007 and the Appellant also claimed the benefit of SAD vide Sl.No.50 of Customs Notification No.20/2006 Cus. A Show Cause Notice dated 09.11.2012 came to be issued proposing to recover the non payment of SAD since, according to the Revenue, as per Finance Act, 2011 effective from 08.04.2011 all goods specified in the First Schedule to the Additional Duty of Excise (Goods of Special Importance) Act, 1957 stood deleted and hence, the Bill of Entry which was filed on 21.01.2012 which was after the enactment of Finance Act, 2011, the benefit of exemption of SAD was stood withdrawn. The Appellant appears to have filed its explanation justifying its claim of exemption which was considered in adjudication and the Adjudicating Authority vide Order in Original dated 27.03.2015 confirmed the proposal made in the SCN. Aggrieved by the above, the Appellant appears to have filed an Appeal before the First Appellate Authority and the First Appellate Authority also having dismissed their Appeal vide impugned Order in Appeal No.546/2015 dated 29.05.2015, the present Appeal has been filed before this forum.

3.1 Under the Customs Act, 1962, Additional Customs Duty i.e. CVD is imposed to counteract the impact of subsidies awarded by exporting countries of their products and the same is levied on the assessed value of imported goods, the intention is to ensure a level playing field for domestic producers.

3.2 Special Additional Duty i.e. SAD is applicable to imported goods under the Central Excise Act, is applied at a specific percentage of value of the imported goods including BCD & CVD. SAD is imposed and collected in lieu of VAT/Sales tax. The goal therefore is to provide protection to domestic industries from the impact of cheaper imports.

4. The contention of the Ld. Advocate as could be seen from the Grounds of Appeal as well as the submission / synopsis filed during the course of arguments by the Appellant, is that primarily there was an exemption for payment of VAT under U.P. VAT Act and, therefore, SAD would not be leviable. Moreover, the assessment was only provisional on account of the dispute relating to levy of countervailing duty and, therefore, the demand raised, confirmed and upheld in the Order in Appeal under Section 28 ibid cannot sustain. It is the further case of the Appellant that when assessment is provisional, it remains provisional for all purposes and hence, no demand under Section 28 could be made. Reliance in this regard has been placed on the following judgements / orders :

(i) International Computers Indian Manufacturers Ltd. Vs Union of India [1981 (8) ELT 632 (Del.)]

(ii) Commissioner of Customs Vs Aanchal Cements Ltd. [2020 (2) TMI 612]

(iii