Refund for double duty payment on same goods allowed only when second levy is proved; no substitute for Modvat credit otherwise.

Refund under Section 11B of the Central Excise Act was treated as admissible where the same goods had suffered duty twice, because the second duty payment created a valid basis for relief and the unit's status as a 100% Export Oriented Unit did not exclude the claim. By contrast, refund was denied where no second duty payment on the same goods was established, since Modvat credit was unavailable to such units during the relevant period and no legal provision permitted refund as a substitute for that credit. The operative distinction was double payment of duty: refund followed only when that factual basis was proved.

---

---

Issues: (i) Whether refund of duty was admissible where the same goods had suffered duty twice and the claim was made under Section 11B of the Central Excise Act. (ii) Whether refund could be granted when the goods were not shown to have suffered a second duty payment and no provision permitted refund in lieu of Modvat credit to a 100% Export Oriented Unit.

Issue (i): Whether refund of duty was admissible where the same goods had suffered duty twice and the claim was made under Section 11B of the Central Excise Act.

Analysis: The claim was based on the fact that the same goods had been cleared on payment of duty, returned by the buyer after reversal of credit, and cleared again on payment of duty. As Modvat credit was not available to a 100% Export Oriented Unit during the relevant period, refund of one of the duty payments was the only available relief. Section 11B applied to the claim and did not exclude such units. The refund was thus justified on the ground of double payment of duty.

Conclusion: The refund was admissible and the Revenue's challenge failed on this issue.

Issue (ii): Whether refund could be granted when the goods were not shown to have suffered a second duty payment and no provision permitted refund in lieu of Modvat credit to a 100% Export Oriented Unit.

Analysis: On the second set of facts, there was no evidence that duty had been paid a second time on the same goods. The goods had been cleared on payment of duty and returned by the buyer after reversal of credit. Since Modvat credit was not available to 100% Export Oriented Units at that time, and there was no legal provision allowing refund in substitution of such credit, the basis for refund was absent.

Conclusion: Refund was not admissible and the Revenue's challenge succeeded on this issue.

Final Conclusion: The decision sustained refund only where the same goods had borne duty twice, but denied refund where no second duty payment was established.

Ratio Decidendi: Where duty has been paid twice on the same goods and Section 11B applies, refund is permissible notwithstanding the unit's status as a 100% Export Oriented Unit; absent a second duty payment, refund cannot be granted in lieu of unavailable Modvat credit without a supporting legal provision.

---