SAD refund on resale remains available even where VAT or sales tax on the resale is nil.

Refund of special additional duty under Notification No. 102/2007-Cus. is available where imported goods are resold and the resale attracts VAT or sales tax, and the refund scheme is intended to neutralise the countervailing burden of SAD. The Tribunal accepted that the condition of payment of appropriate tax does not require the resale tax rate to match or exceed the SAD rate. Refund was therefore not denied merely because VAT or sales tax on the resale was nil, and the Revenue's challenge failed.

---

---

Issues: Whether refund of special additional duty paid on imported goods is admissible when the imported goods are resold and the applicable VAT or sales tax on such resale is nil.

Analysis: The refund mechanism under Notification No. 102/2007-Cus. permits refund of SAD where the goods are resold and appropriate VAT or sales tax is paid. The Tribunal relied on its earlier view that the condition of payment of appropriate tax does not require the tax rate to be equal to or higher than the SAD rate, and that the refund cannot be restricted merely because the resale tax rate is nil. The levy of SAD is intended to operate as a countervailing duty in lieu of sales tax, and the refund scheme is meant to neutralise that burden on fulfilment of the resale condition.

Conclusion: Refund of SAD remained admissible even though VAT or sales tax on resale was nil, and the Revenue's challenge failed.

---