Refund on export duty paid cannot be denied by applying a notification meant for exports without payment of duty.

Where duty had been paid on exports to Bhutan, the refund claim was treated as one falling under Section 11B of the Central Excise Act, and rebate on exported goods was held to be covered by that provision. Notification No. 45/2001-C.E. (N.T.) was held to govern export without payment of duty under Rule 19 of the Central Excise (No. 2) Rules, 2001, and could not be mechanically applied to deny refund where duty had already been paid. As the other refund conditions were not in dispute, rejection of the claim was found unsustainable and refund was directed, consistent with the principle that tax cannot be retained without authority of law.

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Issues: Whether the rejection of the refund claim arising from duty paid on exports to Bhutan was sustainable in view of Rule 18 of the Central Excise Rules, 2002, Section 11B of the Central Excise Act, 1944, and Notification No. 45/2001-C.E. (N.T.) dated 26.06.2001.

Analysis: The duty payment on export was not disputed. The claim was treated as one for refund/rebate under Section 11B, and rebate on exported goods is covered by that provision. Notification No. 45/2001-C.E. (N.T.) was held to regulate export without payment of duty under Rule 19 of the Central Excise (No. 2) Rules, 2001, and therefore could not be mechanically applied to a case where duty had already been paid and refund was sought. The remaining conditions for refund under Section 11B were not found to be in dispute. Denial of the refund was also found inconsistent with the principle that tax cannot be retained without authority of law.

Conclusion: The rejection of the refund claim was unsustainable and the assessee was entitled to the refund.

Final Conclusion: The impugned order was set aside and the refund claim was directed to be granted with consequential reliefs according to law.

Ratio Decidendi: Where duty has been paid on export and the statutory conditions for refund are otherwise satisfied, a notification governing export without payment of duty cannot be invoked to deny refund or rebate under Section 11B.

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