CESTAT Bangalore Allows SAD Refunds Despite Absence of Invoice Endorsements

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 27.06.2026

CESTAT Bangalore Allows SAD Refunds Despite Absence of Invoice Endorsements

A recent decision by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, has clarified the eligibility criteria for VAT (Special Additional Duty, or SAD) refund claims on imported goods. The case involved M/s. Vestal Impex, a trader importing PVC profile frames through Cochin Port, and addresses key procedural issues that impact importers across India.

Background of the Case

M/s. Vestal Impex imported PVC profile frames and paid Special Additional Duty (SAD) totaling Rs. 84,106 and Rs. 1,62,141 on two separate occasions in May 2013. The company subsequently filed refund claims for these amounts under Notification No. 102/2007-Cus. dated 14.9.2007.

However, the refund claims were rejected by the lower authorities on two grounds:

1. Lack of Chartered Accountant Certificates: The authorities claimed that the required certificates were not submitted.
2. Missing Endorsements on Sales Invoices: The sales invoices did not contain endorsements indicating that CENVAT credit was not availed on the imported goods sold.

Key Arguments and Evidence

• Appellant’s Position:
  • The advocate for Vestal Impex argued that the issue of endorsements on sales invoices had already been settled in previous tribunal decisions (notably, R.K.G. International Pvt. Ltd. and House Full International Ltd.).
  • Chartered Accountant certificates were, in fact, submitted with the refund claims but were overlooked by the authorities.
  • Endorsements regarding non-availability of CENVAT credit were made on the original invoice copies given to customers, though not on the retained copies.
  • Documentary evidence supporting these claims was provided in the appeal paper-books.
• Revenue’s Position:
  • The Revenue reiterated the findings of the Commissioner (Appeals), maintaining that the absence of endorsements and certificates justified the rejection.

Tribunal’s Findings

The Tribunal examined the evidence and found:

1. Compliance with Requirements: Vestal Impex had submitted the necessary Chartered Accountant certificates and provided sample invoices with the required endorsements.
2. Legal Precedent: It is now settled law that the absence of an endorsement on the sales invoice regarding non-availability of CENVAT credit cannot be used as a ground to deny SAD refunds.

Final Order

The Tribunal set aside the orders of the lower authorities and allowed the appeals, granting Vestal Impex the refund claims with consequential relief.

Implications for Importers

This ruling provides important clarity for importers seeking SAD refunds:

• Endorsement Requirement: The absence of a specific endorsement on all copies of sales invoices does not automatically disqualify a refund claim, provided other evidence is available.
• Documentary Evidence: Importers should ensure that Chartered Accountant certificates and at least one copy of the sales invoice with the required endorsement are submitted with refund claims.
• Legal Certainty: The decision reinforces the principle that procedural lapses, such as missing endorsements on retained invoice copies, should not override substantive compliance and entitlement to refunds.

Conclusion

The CESTAT Bangalore’s decision in favor of Vestal Impex sets a significant precedent for the processing of SAD refund claims. Importers should take note of the clarified requirements and ensure proper documentation to avoid unnecessary rejections of legitimate refund claims.

Connected Matter

CESTAT Chennai Allows SAD Refund: Departmental Lapses and Procedural Compliance Clarified

Source: CESTAT Bangalore

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