SAD refund eligibility where nil sales tax or VAT still satisfies the notification's payment condition.

Refund of special additional duty under the exemption notification is available where the importer satisfies the condition of payment of the appropriate sales tax or VAT on resale. The explanatory circular states that refund is not limited merely because the local tax rate is lower than the 4% SAD, and the full SAD remains refundable if other eligibility conditions are met. Where the applicable sales tax or VAT rate is nil, payment of nil tax is treated as compliance with the notification condition, so refund cannot be denied on that ground.

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Issues: Whether refund of special additional duty (SAD) under the exemption notification was admissible where the importer paid no sales tax or VAT because the applicable rate was nil.

Analysis: The notification required payment of the appropriate sales tax or VAT on sale of the imported goods. The explanatory circular clarified that the refund was not to be restricted merely because the sales tax or VAT rate was lower than the 4% additional duty, and that the entire SAD would be refundable if otherwise eligible. On that reasoning, where the applicable rate of sales tax or VAT was nil, the condition of paying the appropriate tax stood satisfied by payment of nil tax, and the refund could not be denied on that ground.

Conclusion: The refund was admissible and the denial of SAD refund was unsustainable.

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