Refund of terminal excise duty allowed where deemed-export supplies were exempt but duty had already been paid.

Refund of terminal excise duty was held maintainable for supplies treated as deemed exports under the Foreign Trade Policy and made against international competitive bidding in connection with petroleum operations. The court accepted that the supplies qualified for exemption, and since the duty had actually been paid, the assessee could elect to seek refund rather than be confined to the exemption route. Refusal of refund was therefore not sustained, as it would leave the duty collected without justification. The appeal was dismissed and the refund order was upheld.

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Issues: Whether refund of terminal excise duty was admissible when the supplies were made against international competitive bidding and the assessee was entitled to exemption under the Foreign Trade Policy.

Analysis: The supplies were certified as having been made in connection with petroleum operations under petroleum exploration licences or mining leases and against international competitive bidding. The Foreign Trade Policy treated such supplies as deemed exports and extended benefits, including exemption from terminal excise duty. Since the duty had in fact been paid, the question was whether the assessee could seek refund instead of being confined to the exemption route. The Court held that where exemption was otherwise available and duty had been paid, the assessee could claim refund, and refusal of such refund would only result in unjust enrichment by the Government.

Conclusion: The refund claim was maintainable and the challenge to its rejection failed.

Final Conclusion: The appeal was dismissed and the order allowing refund was sustained.

Ratio Decidendi: Where an assessee is entitled to exemption from duty on deemed-export supplies and has actually paid the duty, the assessee may elect to claim refund of the duty paid.

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