Excise refund on exempt clearances must include duty recovered from customers when computing the refundable amount.

Refund of excise duty on exempt clearances under Notification No. 71/78-C.E. had to be computed on the assessable value as inclusive of duty recovered from customers. Because the assessee had collected the duty element from buyers, that recovered amount was taken into account even though duty was not otherwise payable on the exempt clearances. The refund was therefore confined to the amount correctly worked out on that assessable value, and the partial rejection of the refund claim was upheld against the assessee.

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Issues: Whether, while granting refund of excise duty on clearances covered by Notification No. 71/78-C.E., the duty amount recovered from customers had to be included in the assessable value and taken into account while computing the refundable amount.

Analysis: The exemption in respect of the initial clearances had already been accepted, and refund was claimed on that basis. It was undisputed that the assessee had recovered the duty element from customers. The fact that the duty was not payable on the exempt clearances did not prevent the assessable value from being treated as inclusive of the duty recovered from buyers, and the refundable duty had therefore to be computed on that assessable value alone.

Conclusion: The partial rejection of the refund claim was and the issue was decided against the assessee.

Final Conclusion: Refund was confined to the amount correctly worked out on the assessable value, with the customer-recovered duty element taken into account.

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