Budgetary support eligibility under GST transition Scheme upheld for a unit found entitled to area-based excise exemption on merits.

A unit found entitled on merits to area-based excise exemption under Notification No. 50/2003-CE qualified as an "eligible unit" for budgetary support under the GST transition Scheme. The Court read the Scheme to require prior eligibility under the specified exemption and availing of that exemption immediately before 01.07.2017, but held that a unit could not be denied support merely because the Revenue had disputed the exemption and duty had been paid under protest. Since the exemption claim had been upheld by appellate orders and refund had been sanctioned, the unit satisfied the Scheme conditions and was entitled to budgetary support and online registration for claims.

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Issues: Whether the petitioner satisfied the conditions of an "eligible unit" under the Scheme of Budgetary Support in respect of a unit which had been held entitled to area-based excise exemption under Notification No. 50/2003-CE dated 10.06.2003, so as to qualify for budgetary support after the GST regime commenced.

Analysis: The Scheme extended budgetary support only to units which were eligible under the specified erstwhile exemption notifications and were availing the exemption immediately before 01.07.2017. The petitioner's entitlement to the area-based exemption stood concluded in its favour by the appellate order of the Commissioner (Appeals) and the subsequent order of the CESTAT. That finding established that the petitioner was eligible for the exemption ab initio under the notification listed in the Scheme. The fact that the Revenue had disputed the exemption and the petitioner had paid central excise duty under protest did not mean that the petitioner was not availing the exemption for the purposes of the Scheme. The petitioner had consistently asserted the exemption claim from commencement of production, had succeeded on merits, and had also secured refund sanction of the duty paid under protest. On that basis, the second condition in the Scheme could not be read so narrowly as to exclude a unit whose exemption was being contested by the Revenue but was ultimately upheld.

Conclusion: The petitioner was an eligible unit under the Scheme and was entitled to budgetary support; the objection that it was not availing the exemption immediately before 01.07.2017 was rejected.

Final Conclusion: The respondents were required to release the budgetary support and grant the registration necessary for filing claims online, and the appeal succeeded.

Ratio Decidendi: For determining eligibility under the Scheme, a unit that has been found entitled to the specified exemption on merits cannot be denied budgetary support merely because the Revenue contested the exemption and duty was paid under protest before the GST transition.

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