Refund of excise duty on exempt goods upheld where duty was paid despite full exemption eligibility.

Excise duty paid on goods undisputedly covered by an exemption notification remained refundable, because no duty was payable at the time of clearance. Payment of duty on exempt goods did not bar refund, and there was no legal basis to deny relief on the ground that the goods should originally have been cleared under exemption. The exemption benefit could be claimed even after clearance, so the earlier duty payment was held refundable and the assessee was entitled to the refund.

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Issues: Whether excise duty paid on goods that were admittedly exempt under Notification No. 12/2012-CE could be refunded to the assessee when the goods were cleared on payment of duty.

Analysis: The goods cleared by the assessee were undisputedly covered by the exemption notification, so no excise duty was payable at the time of clearance. Payment of duty on exempt goods did not create a bar to refund. The view that the assessee ought to have cleared the goods under exemption and therefore could not seek refund was held to have no legal basis. The benefit of exemption could also be claimed after clearance, and the earlier payment of duty remained refundable in light of the settled authorities relied upon.

Conclusion: The refund of excise duty paid on exempt goods was admissible, and the assessee was entitled to the refund.

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