Special additional duty exemption applies where basic customs duty and countervailing duty are exempt, even through conditional scrip debit.

Imported goods under the Served from India Scheme were treated as eligible for exemption from special additional duty under Notification No. 20/2006-Cus. because the operative conditions were exemption from basic customs duty and countervailing duty. The fact that basic customs duty exemption was availed through conditional debit under Notification No. 92/2004-Customs did not take the goods outside the SAD exemption. As countervailing duty was also exempt under Notification No. 6/2006-CE, the exemption conditions were satisfied and the demand could not be sustained.

---

---

Issues: Whether goods imported under the Served from India Scheme were entitled to exemption from special additional duty under Notification No. 20/2006-Cus. when basic customs duty was exempted by debit under Notification No. 92/2004-Customs and countervailing duty stood exempted under Notification No. 6/2006-CE.

Analysis: The exemption from special additional duty under Notification No. 20/2006-Cus. was held to depend on the goods being exempt from basic customs duty and countervailing duty. The fact that the basic customs duty exemption under Notification No. 92/2004-Customs operated subject to conditions and through debit in the scrip did not take the goods outside the scope of the SAD exemption. Since the goods were also exempt from countervailing duty under Notification No. 6/2006-CE, the conditions for the SAD exemption stood satisfied.

Conclusion: The imported goods were eligible for exemption from special additional duty under Notification No. 20/2006-Cus., and the demand could not be sustained.

Final Conclusion: The appeals were allowed and the impugned orders were set aside, with consequential relief.

Ratio Decidendi: Where imported goods are exempt from basic customs duty and countervailing duty, the benefit of exemption from special additional duty cannot be denied merely because the basic customs duty exemption is availed through conditional debit under a scheme notification.

---