Refund under area-based exemption must follow the amendment in force during the relevant period, not later retrospective restrictions.

Refund under the North East area-based exemption notification had to be computed for January to March 2003 under the amendment then in force, namely Notification No. 61/2002-CE, which limited refund by reference to duty paid after Cenvat credit on inputs used for the cleared goods. The later restrictions introduced by Notification No. 65/2003-CE on 06.08.2003 did not apply retrospectively to that period, and the department's monthly credit adjustment approach was not justified. Contemporaneous circulars and departmental instructions supported the same construction, so the refund as allowed by the appellate authority remained correct.

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Issues: Whether refund under the North East area-based exemption notification for the period January to March 2003 was to be restricted by applying the later amendment introduced in Notification No. 65/2003-CE dated 06.08.2003, or only by the amendment then in force under Notification No. 61/2002-CE dated 23.12.2002.

Analysis: The refund for the relevant period had to be computed under Notification No. 32/99-CE as amended by Notification No. 61/2002-CE, which limited the refund by reference to duty paid less Cenvat credit availed on inputs used in relation to the goods cleared under the notification. The later amendment of 06.08.2003 imposed additional restrictions, but it did not govern the refunds relating to January to March 2003. The monthly credit adjustment adopted by the department was therefore not justified. The contemporaneous circular and departmental instructions supported the same construction.

Conclusion: The restriction made by Revenue was unsustainable and the refund as allowed by the appellate authority was correct. The appeal was decided against Revenue and in favour of the assessee.

Ratio Decidendi: A refund claim under an exemption notification must be determined by the amendment in force during the relevant period, and a subsequent amendment cannot be applied retrospectively to curtail the refund unless the notification so provides.

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