this is a GW8 instalation on NOWS SBE 2.5

I am sending emails via web(https://localhost/gw/webacc)

in To: feild if I type UserID@mydomain.local, then I got following error

The user "manas@mydomain.local" could not be found. Select a user from the address book
but if I just type UserID (without/minus @mydomain.local), message sent successfully

from GW8 I can resolve the mydomain.local
host -t mx mydomain.local
mydomain.local mail is handled by 10 gw8mail.mydomain.local
http://gw8mail.mydomain.local:9850/settings > Configuration

Foreign ID: mydomain.local

ConsoleOne > gwdom > right click 'gwia' then properties > then Groupwise Identification TAB
Foreign ID: mydomain.local

please help whats wrong