Refund of duty paid in cash upheld where credit was restricted by departmental direction and later adjusted without double benefit.

Duty paid in cash after departmental directions prevented utilisation of eligible credit remained refundable where the same credit was later adjusted in a subsequent period, because no double benefit arose. The assessee, operating under Notification No. 32/99-C.E., had discharged part of its April 2003 duty liability in cash when credit use was restricted by departmental officers. As that amount was accounted for in the next month and the corresponding refund position was adjusted accordingly, the refund claim was sustainable. The adverse remark against the adjudicating authority was also held unwarranted and was expunged.

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Issues: Whether the assessee was entitled to refund of the amount of duty paid in cash for April 2003 after being directed by departmental officers to transfer part of the credit, and whether the adverse remark made by the lower appellate authority required interference.

Analysis: The assessee was operating under Notification No. 32/99-C.E. and the duty liability could be discharged from available credit and, where necessary, by cash payment. Due to the departmental direction, part of the credit was not allowed to be utilised as originally intended, which led to a cash payment of Rs. 95,664/-. That amount was subsequently used in the succeeding month, resulting in a correspondingly lower cash outflow and lower refund for that later month. Since the amount paid in cash for April 2003 represented duty actually discharged and the credit adjustment had already been accounted for in the subsequent period, the refund claim was found sustainable. The remark criticizing the adjudicating authority was found unwarranted.

Conclusion: The refund of Rs. 95,664/- was upheld in favour of the assessee, and the adverse remark was expunged.

Final Conclusion: The Department's appeal failed, while the assessee retained the refund relief granted by the lower appellate authority.

Ratio Decidendi: Where duty is paid in cash because departmental directions prevent utilisation of eligible credit, and the credit is later adjusted in a subsequent period, the cash-paid duty remains refundable if the adjustment does not create a double benefit.

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