CENVAT credit and refund remain available after actual duty payment, even where exemption conditions were not met

CENVAT credit and consequential refund were treated as available where excise duty had in fact been paid on goods received from a sister unit, and the Revenue did not dispute that payment. The text states that credit or refund could not be denied merely on the premise that duty ought not to have been payable, especially when no undue enrichment by the supplier was shown. It also notes that the exemption regime for transfers between export-oriented units was conditional, requiring prior intimation and prescribed procedure, and those conditions were not demonstrated to have been satisfied. On that basis, the assessee was said to be entitled to the benefit claimed.

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Issues: Whether the respondent-assessee was entitled to CENVAT credit and consequential refund where duty had been paid on goods procured from a sister unit, and whether the conditions for exemption applicable to transfers between export-oriented units were satisfied.

Analysis: The duty amount was admittedly paid by the respondent-assessee, and the Revenue did not dispute that payment. Once duty had been paid, there was no illegality in the assessee availing credit or refund of the amount paid. The Court also noted that the exemption framework under Section 5A(1) and the Foreign Trade Policy provisions was not absolute and operated subject to conditions, including prior intimation and prescribed procedure for inbound movement of goods. Those conditions were not shown to have been satisfied. The Revenue's reliance on an alleged bar to duty payment did not displace the fact that duty had in fact been paid, and no case of undue enrichment by the supplier was pleaded or established.

Conclusion: The respondent-assessee was entitled to the benefit claimed, and the appeal was liable to be rejected.

Ratio Decidendi: Where excise duty has in fact been paid and the Revenue does not challenge that payment, the assessee cannot be denied credit or refund merely on the premise that duty ought not to have been payable, especially when the relevant exemption is conditional rather than absolute.

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