Cash refund of input duty barred where the assessee did not pay the duty and the credit scheme prohibited cash repayment.

Cash refund of input duty under the credit scheme was not admissible where the assessee had not itself paid the duty and the burden had been borne by another manufacturer. The governing Rule 56A also barred refund of credit in cash or by cheque, so non-compliance was not a mere procedural defect but a substantive prohibition. The order allowing refund was therefore set aside, while the question of proforma credit was remitted for fresh consideration by the Assistant Collector.

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Issues: Whether refund of duty paid on inputs could be granted to the assessee when the duty had not been paid by it, and whether non-compliance with the procedure under Rule 56A could justify cash refund.

Analysis: The claim was for refund of duty paid on inputs used in the manufacture of the final product. The duty on those inputs had been borne by another manufacturer, not by the assessee. The governing rule also contained a specific prohibition against refund of credit in cash or by cheque. In these circumstances, the claim for cash refund could not be sustained as a mere procedural irregularity, since the bar was substantive.

Conclusion: Refund of the duty amount was not admissible to the assessee and the order directing such refund was set aside. The question of proforma credit was left for fresh consideration by the Assistant Collector.

Ratio Decidendi: A person who has not paid the duty on the inputs cannot claim cash refund of that duty, especially where the governing credit scheme itself prohibits refund of the credit in cash or by cheque.

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