SAD refund under exemption notification cannot be denied solely because duty was paid through duty credit scrips.

Refund of special additional duty cannot be denied merely because the duty was paid through duty credit scrips where the imported goods were subsequently sold in the domestic market on payment of VAT or sales tax and the notification conditions were otherwise satisfied. A CBEC circular cannot add a restriction or amend an exemption notification issued under section 25(1) of the Customs Act, 1962. Circulars inconsistent with the notification cannot override the refund entitlement, and a rejection based solely on that ground is unsustainable.

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Issues: Whether refund of special additional duty could be denied merely because the duty was discharged through duty credit scrips, and whether the CBEC circulars could impose such a restriction when the notification did not.

Analysis: The imported goods were sold in the domestic market on payment of VAT or sales tax, and the conditions of the exemption notification stood satisfied. The notification, as amended, did not expressly exclude refund where SAD had been paid through duty credit scrips. An administrative circular cannot introduce a new restriction or amend a notification issued under section 25(1) of the Customs Act, 1962. The circulars relied on by the Revenue were therefore inconsistent with the notification and could not defeat the refund claim.

Conclusion: Refund could not be denied on the ground that SAD was paid through duty credit scrips, and the circular-based rejection was unsustainable. The appeal was allowed in favour of the assessee.

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