SAD refund on resale allowed even where VAT or sales tax on the resale was nil under the refund scheme.

Refund of Special Additional Duty under Notification No. 102/2007-Cus is available where imported goods are resold, and the refund scheme does not require the resale tax to be at a positive rate. The Tribunal held that the condition of payment of appropriate VAT or sales tax is satisfied even when the resale attracts nil VAT or sales tax, because SAD is collected at import in lieu of sales tax and the notification does not make refund contingent on a taxable resale rate. Refund was therefore admissible notwithstanding nil VAT or sales tax on resale.

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Issues: Whether refund of Special Additional Duty was admissible when the imported goods were resold and the rate of VAT or sales tax on such resale was nil.

Analysis: The refund mechanism under Notification No. 102/2007-Cus permits refund of SAD where the imported goods are resold and appropriate VAT or sales tax is paid. The Tribunal followed its earlier view that the condition of payment of appropriate tax on resale does not require that such tax must be at a positive rate or equal to the SAD rate. It held that SAD is an equitable levy collected at import in lieu of sales tax and that the refund scheme does not deny refund merely because the resale attracts nil VAT or sales tax.

Conclusion: Refund of SAD was admissible even though the resale of the goods attracted nil VAT or sales tax, and the Revenue's appeal was dismissed.

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