Proforma credit refund entitlement includes actual repayment, with compensatory interest payable until payment is made.

Where proforma credit under Rule 56A was admissible for countervailing duty paid on raw material used in fertiliser manufacture, the Court held that the assessee was entitled to refund of the amount claimed and not merely to a book adjustment. It accepted that the relevant clause did not bar refund where the benefit was otherwise due. The Court further held that delay in payment justified compensatory interest on the refundable sum, and directed interest at 8% per annum until payment.

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Issues: (i) Whether the petitioner was entitled to refund of the amount claimed, instead of mere credit in the prescribed account; (ii) Whether the petitioner was entitled to interest on the refundable amount.

Issue (i): Whether the petitioner was entitled to refund of the amount claimed, instead of mere credit in the prescribed account.

Analysis: The claim arose from the grant of proforma credit under Rule 56A in respect of countervailing duty paid on raw material used in the manufacture of fertilisers. The Tribunal had already held that the petitioner satisfied the conditions for the benefit and that the relevant clause did not prohibit refund where no net surplus advantage in cash was being conferred. The Court accepted that the amount was refundable and rejected the contention that the matter could still be confined to adjustment in the account.

Conclusion: The petitioner was entitled to refund of the amount claimed, and not merely to a book adjustment.

Issue (ii): Whether the petitioner was entitled to interest on the refundable amount.

Analysis: Once the amount was held to be refundable, the Court treated the delay in payment as justifying compensatory interest. The pendency of controversy before the departmental authorities and the Tribunal did not displace the obligation to make timely payment of the refundable sum.

Conclusion: The petitioner was entitled to interest at 8% per annum on the refundable amount until payment.

Final Conclusion: The writ petition succeeded, and the respondents were directed to refund the amount claimed and pay interest thereon.

Ratio Decidendi: Where proforma credit is duly admissible and the Tribunal has held the amount refundable, the revenue cannot confine the assessee to book adjustment alone, and interest may be awarded on the refundable sum until actual payment.

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