SAD refund condition satisfied by Nil VAT under local law; refund cannot be denied for mismatch in tax rate.

Refund of Special Additional Duty was held admissible where imported goods were subsequently sold locally and Nil sales tax or VAT was paid under the applicable notification. The Tribunal applied the refund notification requiring payment of appropriate sales tax or VAT on the subsequent sale, and treated Nil VAT under the local levy as satisfaction of that condition. It also noted that reliance on the earlier 1998 notification was misplaced because it had been rescinded and did not govern the imports in question. On that basis, the refund condition was found met and SAD refund could not be denied merely because VAT or sales tax was not levied at the SAD rate.

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Issues: Whether refund of Special Additional Duty was admissible when the imported goods were sold locally and Nil sales tax or VAT was paid under the applicable notification.

Analysis: The refund claim was governed by the notification granting refund of SAD subject to payment of appropriate sales tax or VAT on the subsequent sale. The Tribunal noted that the issue had already been settled in the appellant's own case and by other decisions. It also held that reliance on the earlier notification of 1998 was misplaced because that notification had been rescinded and was not applicable to the imports in question. Following the earlier ruling and the CBEC clarification, Nil VAT under the applicable State levy was treated as satisfaction of the condition of payment of appropriate sales tax or VAT.

Conclusion: The condition in the refund notification was satisfied and the appellant was entitled to refund of SAD.

Ratio Decidendi: Where the refund notification requires payment of appropriate sales tax or VAT, Nil tax under the applicable local law can satisfy that condition, and refund of SAD cannot be denied on the ground that the rate of VAT or sales tax was not equal to the SAD rate.

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