Cenvat credit of sad u/s 3(5) by a manufacturer cum trader

Please help me on the following issue :)

M/s X P. Ltd., a manufacturer registered with the Excise Authorities having registered premises in Bangalore has imported certain goods and paid customs duties including SAD u/s 3(5). Their customers are located across the country. The entire goods imported are sold without any further conversion / manufacturing process.  A part of imported goods is sold within Karnataka and the balance is dispatched to a retailer in Karnataka. They have paid state VAT on the sales made within the state and paid CST on inter-state sales. On reviewing the invoices, the director raised objection on levying VAT and CST as the imported goods are already chargeable to SAD u/s 3(5), which is levied to counter balance sales tax and other local taxes Can M/s X Pvt Ltd get credit of SAD paid? Can the SAD so paid be utilised to knock off excise liability?