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Levy of Special Additional Duty (SAD) on Goods Chargeable to Duty under
Additional Duties of Excise (Goods of Special Importance) Act, 1957
Customs
Circular No. 35 dated 27th June 2002
I
am directed to refer to the subject mentioned above and say that doubt has been
raised as to whether the goods which are subjected to �nil� rate of duty
under the Additional Duties of Excise (Goods of Special Importance) Act, 1957
would be leviable to SAD or otherwise.
2.
Sub-section (1) of Section 3A of the Customs Tariff Act, 1975 (51 of
1975) states that any articles imported into India shall be leviable to SAD at a
rate to be specified by the Central Government. Sub-section (5) of this Section
states that nothing contained in the section shall apply to any article, which
is chargeable to additional duties levied under sub-section (1) of section 3 of
the Additional Duties of Excise (Goods of special Importance) Act, 1957 (58 of
1957). In a representation received in Board�s office, it has been pointed out
that the goods, namely, Narrow Woven Fabrics are not liable to SAD as they are
chargeable to duty under the Additional Duties of Excise (Goods of Special
Importance) Act, 1957, though the duty payable is �Nil�.
3.
The matter has been examined. In the constitution bench judgement of the
Supreme Court in the Case of Collector of Central Excise, Vadodara Vs. Dhiren
Chemical Industries [2002 (139) ELT 3 (SC)] the issue under consideration was
whether exemption to specified iron or steel products made from fresh unused re-rollable
scrap (raw material) on which the appropriate amount of duty of excise has
already been paid, would be available if the said raw material attracts
�Nil� duty. It was held by the Supreme Court that
�For
the purposes of getting the benefits of the exemption under the notification,
the goods must be made from raw material on which excise duty has, as a matter
of fact, been paid, and has been paid at the appropriate or correct rate. Unless
the manufacturer has paid the correct amount of excise duty, he is not entitled
to the benefit of the exemption notification. Where the raw material is not
liable to excise duty or such duty is Nil, no excise duty is, as a matter of
fact, paid upon it. To goods made out of such material the notification will not
apply. The notification is intended to give relief against the cascading of
excise duty on the raw material and again on the goods made therefrom. There is
no cascading effect when no excise duty is payable upon the raw material and the
hardship that the notification seeks to alleviate does not arise�
4.
The ratio of the above judgement of the constitution bench of the Supreme
Court is squarely applicable in the present case. As in the instant case, the
subject goods have not suffered any Additional Excise Duty leviable under the
Additional Excise Duty (Goods of Special Importance) Act, 1957; they would be
leviable to SAD.
5.
The Customs Houses may kindly take note of the above clarification while
levying SAD on goods which have not suffered any Additional Excise Duty under
Additional Excise duty (Goods of Special Importance) Act, 1957.
6.
Difficulties, if any faced in the implementation of above instructions
may be brought to the notice of the Board.
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