Cash refund for deemed export clearances upheld where duty was paid and Board circular supported refund in money.

Clearances for World Bank aided projects were treated as deemed exports, so no excise duty was otherwise payable. Where duty had been paid at clearance and refund was later claimed, the Board's Circular No. 220/54/96-CX dated 04.06.1996 supported cash refund even when unutilised Modvat credit was involved. On that basis, the view that refund had to be granted only by credit to the Cenvat/Modvat account was rejected, and cash refund was upheld as the correct mode of relief.

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Issues: Whether refund of duty paid on clearances made for World Bank aided projects was correctly allowed in cash instead of being credited to the Cenvat/Modvat account.

Analysis: The supplies were treated as deemed exports, for which no excise duty was otherwise payable. The respondent had paid duty at the time of clearance and sought refund. The Board's Circular No. 220/54/96-CX dated 04.06.1996 specifically advised cash refund even in cases involving unutilized Modvat credit relating to exports, and gave reasons for that course. In the face of that circular, the Revenue's objection that the refund ought to have been granted only in credit was not accepted.

Conclusion: The refund was correctly granted in cash and the Revenue's appeals failed.

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