These two schemes are covered under different legislations and are mutually exclusive. You are right SAD refund / CENVAT credit of SAD is to counter balance the VAT / Sales Tax.
For SAD refund (in case of trading) or CENVAT credit on SAD (if the imported goods are put into further process of manufacture), you have to satisfy the conditions laid down under Customs Notification No.102/2007 followed by many circulars.
On the other hand, the Input Tax Credit is the subject of a State VAT. Broadly, if an input is used in the course of manufacture / traded as such, the VAT suffered at the input stage is transferred as set off while discharging the output VAT. There are certain Input Tax Credit restrictions in every State.
Conclusion - If you are satisfying relevant provisions of Customs / local VAT, the credit of SAD & ITC can be utilised.
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