Exemption relates back to the application date, and refund remains available where duty incidence was not passed on.

Once eligibility for exemption is established, the benefit should relate back to the date of application rather than a later date fixed after departmental verification. Procedural delay in issuing the certificate cannot postpone substantive exemption where the applicant had complied and the required formalities were completed. The refund claim is also maintainable where the duty burden was reimbursed under the purchase arrangement and was reflected as loans and advances, rather than being passed on to third parties. On that basis, procedural lapses and unjust enrichment did not defeat the refund claim, and the rejection of refund was unsustainable.

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Issues: (i) whether the eligibility certificate and exemption under the notification applied from the date of application or only from the later date accepted by the department; and (ii) whether refund of duty was barred on the ground of procedural delay or passing on of incidence.

Issue (i): whether the eligibility certificate and exemption under the notification applied from the date of application or only from the later date accepted by the department.

Analysis: The exemption was not in dispute on merits, and the only controversy was the effective date from which the benefit could be given. The application for exemption had been made promptly, the department had sought clarifications on the validity of the electricity certificate, and the later issuance of the certificate followed completion of the required formalities. Once eligibility stood established, the benefit could not be postponed merely because the departmental verification took time. The certificate was therefore treated as relating back to the date of application.

Conclusion: The exemption was held to operate from the date of application, not from the later date insisted upon by the revenue.

Issue (ii): whether refund of duty was barred on the ground of procedural delay or passing on of incidence.

Analysis: The record showed that the duty burden had been reimbursed by the appellant under the power purchase arrangement and was accounted for as loans and advances, not as an expenditure passed on to third parties. The Tribunal also applied the principle that substantive entitlement to exemption and refund cannot be defeated by procedural lapses when eligibility is otherwise established.

Conclusion: The refund was held to be admissible and the plea of unjust enrichment failed.

Final Conclusion: The rejection of refund was unsustainable, and the appellant was entitled to relief on both the effective date of exemption and the refund claim.

Ratio Decidendi: Once eligibility to an exemption notification is established, the benefit cannot be denied by a merely procedural delay in departmental processing, and refund is maintainable where the incidence of duty has not been passed on.

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