Special Additional Duty is a Indian customs levy to support VAT and domestic trade. Domestic trade is covered by VAT and CST but importers pay VAT only when they sell the imported goods with in the Indian territory.
As there is no VAT during the import stage, SAD or Special Additional Duty acts as a substitute to VAT and CST. When the importer resells the imported goods in its original shape under VAT/CST billing, he becomes eligible for a SAD refund as this tax is linked to the domestic sales tax system.
But the refund is said to be not as easy as the VAT input credit. Although SAD is said to be a substitute for VAT, it is also a different tax. Two departments also different. So refund procedure is difficult and needs extra documentation.
There are two types of export oriented cashew industries in India –
1) Some industries import more but export less.
2) Some industries import less but export more.
This second type of industrial units are genuine exporters. They should get all the export oriented incentives, benefits and also easy refund of SAD paid on raw cashew. ( please read next article)