Exemption under Notification No. 56/02-CE cannot be denied solely because terminal excise duty refund was also claimed.

An assessee located in a specified area remained eligible for exemption under Notification No. 56/02-CE because the goods supplied were otherwise covered by the notification, and the exemption text did not make denial contingent on a separate terminal excise duty refund claim made to the DGFT. The assessee's refund request concerned a different authority and, even if it raised a possible double-benefit issue, it did not by itself invalidate the central excise exemption or justify demand, interest, or penalty. The relevant ingredients for the notification benefit were satisfied, so the exemption could not be denied on that ground.

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Issues: Whether the assessee was entitled to exemption under Notification No. 56/02-CE despite having claimed terminal excise duty refund from the Directorate General of Foreign Trade in respect of the same supplies, and whether such refund claim justified denial of the exemption and recovery with penalty.

Analysis: The unit was located in the specified area and the goods supplied were otherwise covered by the exemption notification. The dispute arose because the assessee also sought terminal excise duty refund treating the supplies as deemed exports. The relevant refund issue lay between the assessee and the Directorate General of Foreign Trade. The notification itself did not impose a condition that the exemption would stand denied merely because the supplier had claimed such refund. The assessee's refund claim may have attracted action by the Directorate General of Foreign Trade, but that did not, by itself, invalidate the exemption otherwise available under the central excise notification. The ingredients for the exemption were satisfied, and the alleged double benefit did not furnish a ground to deny the notification benefit or sustain demand, interest, or penalty.

Conclusion: The exemption under Notification No. 56/02-CE could not be denied on the ground of the assessee's claim for terminal excise duty refund from the Directorate General of Foreign Trade, and the Revenue's appeals failed.

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