SAD refund under import notification remains available when the subsequent sale attracts nil VAT rate.

Refund of Special Additional Duty under Notification No. 102/2007-Cus is available where imported goods are sold on a tax invoice and the applicable VAT rate on the subsequent sale is nil. The notification requires payment of the appropriate sales tax or VAT, but it does not set a minimum rate; accordingly, compliance is satisfied even when the applicable rate is nil. The excise-based principle that nil duty is not payment of duty was held inapplicable because the condition here concerns VAT, not excise duty. Prior decisions were followed, and the refund claim was treated as maintainable with consequential relief.

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Issues: Whether refund of Special Additional Duty of customs under Notification No. 102/2007-Cus is admissible when imported goods are sold on a tax invoice but the applicable VAT rate is nil.

Analysis: The refund scheme under the notification is intended to neutralise the incidence of SAD and maintain parity between imported goods and domestically manufactured goods that suffer VAT. The notification requires payment of the appropriate sales tax or VAT on the subsequent sale, but it does not prescribe any minimum rate of VAT. The condition is satisfied even where the applicable VAT rate is nil, because payment of the appropriate tax at a nil rate still answers the statutory requirement. The central excise-based principle that nil duty is not payment of duty was held inapplicable, as the present issue concerns VAT and not excise duty. The Tribunal also noted that the issue had already been answered in prior decisions and followed consistently.

Conclusion: Refund of SAD is admissible even where the appropriate VAT rate on the subsequent sale is nil.

Final Conclusion: The appeals succeeded and the refund claim was held maintainable, with consequential relief following from the allowance of the appeals.

Ratio Decidendi: Where a refund notification requires payment of the appropriate sales tax or VAT without prescribing a minimum rate, the condition is satisfied even by payment at a nil rate if that is the applicable rate on the sale.

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