Refund claim on generators fails where duty was consciously paid and later exempt use of the goods does not create a refund right.

Refund of duty paid on generators was held not maintainable where the manufacturer had consciously discharged duty on the final product while availing Modvat credit on inputs. The buyer could not seek refund merely because the generators were later used as part of wind mills covered by an exemption notification, as the duty payment was not shown to be erroneous. The Tribunal therefore rejected the claim, holding that subsequent exempt use did not create a refund right in favour of the buyer.

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Issues: Whether the buyer of generators was entitled to refund of duty paid by the manufacturer on the ground that the generators were used as parts of wind mills exempted under the exemption notification.

Analysis: The claim was based on the premise that the duty paid on generators was erroneous because parts of wind mills were exempt from duty under the relevant notification. The Tribunal noted that the refund was sought by the buyer of excisable goods on which duty had already been paid by the manufacturer. It further found that the manufacturer had consciously paid duty on the final product while availing Modvat credit on inputs, and the contention that such duty was wrongly paid was not sustainable. On that basis, the buyer could not claim refund merely because the goods were subsequently used in an exempted application.

Conclusion: The refund claim was not maintainable and was rejected against the assessee.

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