SAD refund under Notification No. 102/2007-Cus may still be available where subsequent sale attracts NIL sales tax/VAT.

The refund scheme for special additional duty under Notification No. 102/2007-Cus requires payment of customs duty at import, subsequent sale of the goods, and prescribed documentary proof of appropriate sales tax or VAT on that sale. The note states that the condition is not defeated merely because the applicable sales tax or VAT rate is NIL, where the sale is otherwise outside the levy and the importer satisfies the scheme's substantive requirements. On that basis, the refund conditions are treated as complied with.

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Issues: Whether refund of special additional duty was admissible when the imported goods were subsequently sold without payment of sales tax or value added tax, and whether the conditions of Notification No. 102/2007-Cus dated 14.09.2007 stood satisfied.

Analysis: The refund claim was governed by the refund scheme under Notification No. 102/2007-Cus, which requires payment of customs duty at import and payment on sale of the imported goods of appropriate sales tax or value added tax, along with the prescribed documentary proof. The dispute turned on whether NIL sales tax or VAT could be treated as compliance with the notification condition where the sale was said to be outside the levy under section 5(2) of the Central Sales Tax Act, 1956 read with Article 286 of the Constitution of India. Following the Tribunal's earlier view in an identical factual setting, the condition of payment of appropriate sales tax or VAT was treated as satisfied even where the applicable tax rate was NIL, so long as the transaction was not burdened with such levy and the importer otherwise met the scheme's requirements.

Conclusion: The refund conditions under the notification were held to be satisfied and the denial of refund was set aside.

Final Conclusion: The appeal succeeded and the appellant was held entitled to refund of SAD with consequential relief as per law.

Ratio Decidendi: Under Notification No. 102/2007-Cus, refund of SAD cannot be denied merely because the appropriate sales tax or VAT payable on the subsequent sale is NIL, provided the importer otherwise complies with the refund scheme's substantive conditions.

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