Refund of unutilised AED credit allowed where export-related credit could not be used against domestic clearances.

Refund of unutilised AED credit was held admissible under Rule 57F(13) read with Rule 57A and Notification No. 85/87-C.E. where the credit could not be absorbed against domestic clearances. The governing notification was construed to permit refund for exported goods when utilisation was not possible for any reason, and the benefit was not denied merely because the finished product itself did not attract AED in domestic clearances. Board circulars supported this broader construction, and the refund claim was allowed with consequential relief.

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Issues: Whether refund of AED was admissible when the credit could not be utilised against domestic clearances and the finished product itself did not attract AED.

Analysis: The claim was examined in the light of Rule 57F(13) of the erstwhile Central Excise Rules, 1944, Rule 57A, and Notification No. 85/87-C.E. dated 01.03.1987. The operative notification permitted refund where the manufacturer was unable to utilise the credit allowed under Rule 57A against goods exported during the relevant quarter. The Board's circulars clarified that refund of AED was to be allowed notwithstanding the ineligibility of the duty on the finished product. The restrictive reading placed on the expression "any reason" so as to deny refund merely because AED was not utilised for domestic clearances was not accepted.

Conclusion: Refund of AED was held admissible and the assessee succeeded on the refund claim.

Final Conclusion: The refund order in favour of the assessee was restored and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the governing notification permits refund of unutilised credit for exported goods, the benefit cannot be denied by a narrow construction of the clause on inability to utilise credit merely because the finished product is not liable to the same duty in domestic clearances.

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