Deemed credit notification must reduce duty payable, making excess duty refundable when limitation and unjust enrichment do not bar relief.

Notification No. 54/2001-C.E. (N.T.) was construed as a beneficial deemed-credit scheme for readymade garments under Chapter 62, requiring duty on finished goods to be computed after giving effect to the 20% deemed credit. Payment of duty at the full rate without availing that benefit was treated as excess duty payment, and the refund claim was maintainable because the excess was not recovered from buyers and no bar of limitation or unjust enrichment was applied. The consequence was refund of the excess duty paid and consequential relief.

---

---

Issues: Whether the assessee was entitled to refund of duty paid in excess after claiming the benefit of deemed credit under Notification No. 54/2001-C.E. (N.T.) for readymade garments falling under Chapter 62.

Analysis: Notification No. 54/2001-C.E. (N.T.), issued under Rule 11 of the Cenvat Credit Rules, 2001, grants deemed credit at 20% of the duty payable on the final products and permits clearance of readymade garments without production of duty-paying documents. The notification has to be read as allowing the manufacturer to compute the duty payable on the finished goods after giving effect to the deemed credit, so that the effective burden is reduced accordingly. On that construction, payment of duty at the full rate without availing the deemed credit results in excess duty payment. The record also showed that the excess amount had not been recovered from buyers and the authorities had not rejected the claim on limitation or unjust enrichment.

Conclusion: The refund claim was maintainable and the assessee was entitled to the benefit of deemed credit under the notification, with consequent refund of the excess duty paid.

Final Conclusion: The impugned appellate order was unsustainable and the appeal succeeded with consequential relief.

Ratio Decidendi: A beneficial deemed-credit notification for specified final products must be applied so as to reduce the duty actually payable at clearance, and duty paid without availing such benefit constitutes excess duty refundable when statutory bars are absent.

---