Refund of compounded levy duty allowed where entire production was exported and later export restriction could not apply retrospectively.

Duty paid in advance under the compounded levy scheme remained refundable where the entire manufactured output was exported under bond, because the duty had already been discharged and the existence of a separate rebate route did not justify denial of refund. The later insertion of Rule 14A, effective from 05.03.2009, could not be applied to exports made earlier between 12.08.2008 and 30.09.2008, so the amendment did not bar relief for the disputed period. Refund was therefore upheld with consequential relief.

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Issues: (i) Whether duty paid in advance under the compounded levy scheme was refundable when the entire production was exported under bond; (ii) Whether the later insertion of Rule 14A, which restricted export without payment of duty, affected exports made before its commencement.

Issue (i): Whether duty paid in advance under the compounded levy scheme was refundable when the entire production was exported under bond.

Analysis: The goods manufactured during the relevant period were admittedly exported in entirety. Duty under the compounded levy scheme is paid in advance on the basis of the number of machines, and the export of the goods does not alter the fact that excise duty stood paid on the manufactured goods. Rule 19 permits export under bond without payment of duty, and the existence of a separate rebate procedure cannot justify denial of refund where the duty has already been discharged and the entire output has been exported.

Conclusion: Refund of the duty paid under the compounded levy scheme was allowable.

Issue (ii): Whether the later insertion of Rule 14A, which restricted export without payment of duty, affected exports made before its commencement.

Analysis: Rule 14A was inserted only by the amendment effective from 05.03.2009. The dispute related to exports made between 12.08.2008 and 30.09.2008. A subsequent restriction on export cannot be applied to a prior period, and the amended requirement could not be used to deny relief for exports completed before the amendment took effect.

Conclusion: The amendment introduced by Rule 14A had no application to the disputed period.

Final Conclusion: The order denying refund was set aside and the assessee was granted refund with consequential relief.

Ratio Decidendi: Duty paid under a compounded levy scheme remains refundable where the entire production is exported during a period when no retrospective restriction on such export existed, and a later amendment cannot defeat the refund claim for the earlier period.

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