Refund of Special Additional Duty remains available where resale attracts nil VAT, if notification conditions are otherwise met

Refund of Special Additional Duty under Notification No. 102/2007-Cus was examined against the condition that appropriate VAT or sales tax be paid on resale of the imported goods. The Tribunal noted that, following its earlier view in Gazal Overseas and a binding CBEC circular, refund is not denied merely because the applicable VAT rate is nil, so long as the notification's other conditions are satisfied. Revenue's contrary authorities were treated as factually or contextually different and not determinative of this issue.

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Issues: Whether refund of Special Additional Duty of Customs under Notification No. 102/2007-Cus dated 14.09.2007 is admissible when the imported goods are sold on payment of nil VAT because the applicable VAT rate is nil.

Analysis: The entitlement to refund under the notification was examined in the light of the condition requiring payment of appropriate VAT or sales tax on resale of the imported goods. The Tribunal noted that, on the identical question, its earlier decision in Gazal Overseas had held that refund is available even where the applicable VAT rate is nil, placing reliance on CBEC Circular No. 06/2008 dated 28.04.2008, which is binding on departmental officers. The contrary authorities relied upon by the Revenue were found to deal with different contexts and were not considered determinative of the specific issue involved.

Conclusion: Refund of Special Additional Duty was held to be available even when the applicable VAT rate is nil, and the assessee's claim was upheld.

Ratio Decidendi: Where the conditions of Notification No. 102/2007-Cus are otherwise satisfied, refund of Special Additional Duty cannot be denied merely because the resale of the imported goods attracted nil VAT, particularly when a binding departmental circular supports that view.

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