Refund on Nepal exports upheld where duty was paid upfront and export proceeds were received in freely convertible foreign currency.

Refund of central excise duty on exports to Nepal was held maintainable where duty had already been paid on clearance and export proceeds were received in freely convertible foreign currency. The bond requirement in the export notification was treated as a safeguard for duty-free exports, so its non-execution did not defeat refund once duty had in fact been paid and the payment condition was satisfied. The later reliance on the refund benefit was also accepted, and the notifications for the relevant period were treated as pari materia. The rejection of the refund claim was therefore unsustainable, and refund relief was allowed.

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Issues: Whether refund of central excise duty paid on export to Nepal was allowable where the goods were exported after payment of duty, payment was later received in freely convertible foreign currency, and no bond had been executed under the export notifications.

Analysis: The export notifications governing supplies to Nepal permitted clearance either without payment of duty on execution of bond or, where duty had been paid, refund of the duty subject to fulfilment of the conditions relating to receipt of payment in convertible currency. The bond condition was meant to safeguard revenue in cases of duty-free export. Since the goods in the present case had in fact been exported on payment of duty, insisting on execution of bond would serve no practical purpose. The payment condition stood satisfied because consideration was received in freely convertible currency. The later invocation of the relevant notification was not barred merely because the assessee had not initially claimed that benefit, and the notifications relied upon were treated as pari materia for the relevant period.

Conclusion: The refund claim was maintainable and the assessee was entitled to refund despite non-execution of bond.

Final Conclusion: The appellate order rejecting the refund was unsustainable, and the assessee succeeded in obtaining the refund relief.

Ratio Decidendi: Where export duty has already been paid and the export proceeds are received in freely convertible currency, the bond condition in a duty-free export notification, being intended to secure revenue in unpaid-duty exports, cannot by itself defeat a refund claim.

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