Compounded levy scheme and export rebate operate in separate fields; refund cannot be denied on that basis.

Under a compounded levy scheme, duty is fixed by annual capacity and not by actual production or clearances, so export incentives cannot be tied to the actual duty paid. Where the prescribed formula under Notification No. 31/98(NT) governed the incentive, a rebate availed on exported goods did not alter the duty payable under the compounded levy scheme. The refund claim and export incentive operated in different fields, and no material showed that a change in duty liability would affect the incentive rate or basis. The article concludes that denial of refund on that ground was unsustainable and the assessee's claim was correctly allowed.

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Issues: Whether refund could be denied on the ground that the amount sought had been obtained as rebate in respect of exported goods, when the assessee was operating under a compounded levy scheme and export incentives were governed by the prescribed formula.

Analysis: Under a compounded levy scheme, duty is fixed on the basis of annual capacity and is not correlated to actual production or clearances. In that regime, export incentives cannot be linked to the actual duty paid, and the authorities had prescribed a formula for payment of such incentives under Notification No. 31/98(NT) dated 24-8-1998. No material was shown to establish that any change in the duty payable under the compounded levy scheme would alter the rate or basis of the export incentive. The refund claim and the export incentive operated on different fields, and the rebate availed in relation to exports did not affect the duty payable under the compounded levy scheme.

Conclusion: The denial of refund on the stated ground was unsustainable and the assessee's claim was rightly allowed.

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