Refund of SAD allowed where nil VAT or sales tax on pre-GST resale still satisfied Notification No. 102/2007-Cus conditions.

Refund of Special Additional Duty under Notification No. 102/2007-Cus was available where imported goods were subsequently sold in the pre-GST period, even if no sales tax or VAT was actually collected and the applicable rate was nil. The authorities had wrongly relied on rescinded Notification No. 34/1998-Cus instead of the governing notification. The earlier tribunal view, supported by Circular No. 6/2008, confirmed that the condition of payment of appropriate sales tax or VAT is not defeated merely because the tax rate is nil. The appellant therefore satisfied the notification conditions and was entitled to SAD refund.

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Issues: Whether the appellant was entitled to refund of Special Additional Duty under Notification No. 102/2007-Cus dated 14/09/2007 when the goods were sold during the pre-GST period and no sales tax or VAT was payable or collected on such sales.

Analysis: The claim for refund had to be examined only under Notification No. 102/2007-Cus dated 14/09/2007, which allows refund of SAD on payment of appropriate sales tax or VAT on subsequent sale of the imported goods. The authorities below had relied upon Notification No. 34/1998-Cus, which had already been rescinded by Notification No. 58/1998-Cus. The Tribunal held that the issue was already settled in favour of the appellant in earlier proceedings, and that nil rate of VAT or sales tax could still satisfy the condition of payment of appropriate sales tax or VAT. The earlier tribunal view, supported by Circular No. 6/2008, clarified that the refund cannot be denied merely because the rate of VAT or sales tax is nil.

Conclusion: The appellant satisfied the condition in Notification No. 102/2007-Cus and was entitled to refund of SAD.

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