Deemed credit and export-linked refund claims must be assessed on their merits before applying limitation bars.

Deemed credit under the exemption-based credit scheme is treated on par with actual credit for taking, utilising and refunding credit, so a refund arising after utilisation may attract the prescribed limitation period. However, credit accumulated from exports stands on a different footing, and a refund claim under the governing notification cannot be rejected mechanically as time-barred without examining it on merits. The time-bar finding was set aside and the matter was remanded for fresh consideration by the original authority.

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Issues: Whether the refund claims arising from deemed credit under the exemption notification were barred by limitation under the refund time limit.

Analysis: The credit scheme treats deemed credit on the same footing as actual credit for purposes of taking, utilising, and refunding credit. Once credit is available for utilisation and is then used, any refund arising therefrom may attract the prescribed refund limitation. However, credit accumulated because of exports stands on a different footing, and the refund claim under the relevant notification was not to be rejected merely as time barred without proper reconsideration of the claim on merits.

Conclusion: The finding that the refund claims were time barred was set aside, and the claims were directed to be reconsidered afresh by the original authority.

Ratio Decidendi: Deemed credit under the credit scheme is to be treated as credit for purposes of utilisation and refund, but export-accumulated credit cannot be mechanically rejected as time barred without examining the claim under the governing notification.

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