Pass book debit under an exemption scheme is not duty payment; refund fails when no actual duty was paid.

A debit in a duty entitlement pass book under an exemption scheme is not payment of duty in cash or its equivalent. Where the assessment is later set aside, no refund lies for an amount that was never actually paid as duty; the proper consequence is only possible restoration of credit in the pass book. As the scheme had already ceased to operate, even that restoration would confer no present benefit. The refund claim was therefore not maintainable and was correctly rejected.

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Issues: Whether an amount debited in a duty entitlement pass book under an exemption scheme could be treated as payment of duty so as to sustain a claim for refund after the assessment was set aside.

Analysis: The claimed excess duty was not paid in cash but was adjusted by debit in the pass book under the duty entitlement pass book scheme operated through Notification No. 104/95 dated 05.09.1997. Such a debit, made only for the operational working of the exemption scheme, does not constitute payment of duty. Once the assessment was set aside, the appellant could not claim a refund of duty that had never been actually paid. At most, the appellant could seek restoration of credit in the pass book, but that would not give any present benefit as the scheme was no longer in operation.

Conclusion: The refund claim was not maintainable and was rightly rejected.

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