Exemption from Additional Customs Duty for goods imported for subsequent sale.
The government has exempted goods imported for subsequent sale in India, the whole of Additional Customs Duty under section 3(5) of the Customs Tariff Act, to counter balance the sales tax, VAT etc., The exemption works in a roundabout way of first paying the duty and then claiming refund. And the refund is subject to conditions like the Additional Duty is not claimed as a credit and the importer paying the appropriate sales tax/VAT when the goods are sold.
The CENVAT Credit Rules have been amended to provide for that no credit would be available in such cases.
The Central Excise Rules are also amended to provide for the first stage dealer and second stage dealer to indicate in their invoices that no credit of the Additional Duty shall be admissible.
Notification No. dated September 14, 2007, Notification No. 35 & 36/2007 CE (NT) dated September 14, 2007