Accrued credit under an exemption notification survives rescission where departmental action blocked timely availment, and refund remains allowable.

Entitlement to credit under Notification No. 201/79 was treated as having accrued while the notification remained in force, and later rescission did not defeat that accrued right where departmental action had prevented timely utilisation. The prohibition in paragraph 9(b) was read as applying to normal cases of validly availed credit, not to cases where the Department itself frustrated availment. Refund was therefore allowed under the proviso to Section 11B(2), and the unjust enrichment objection was held inapplicable on a harmonious reading of the notification and the statute.

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Issues: (i) Whether the assessee retained the right to the benefit of Notification No. 201/79 notwithstanding its rescission when departmental action had prevented timely availment of the credit. (ii) Whether refund was barred by the notification and by the doctrine of unjust enrichment, or was allowable under the proviso to Section 11B(2) of the Central Excises and Salt Act, 1944.

Issue (i): Whether the assessee retained the right to the benefit of Notification No. 201/79 notwithstanding its rescission when departmental action had prevented timely availment of the credit.

Analysis: The right to the credit accrued while the notification remained in force. The assessee had sought permission and had also pursued statutory remedies, but the departmental authorities prevented availment of the credit in the relevant account. The subsequent rescission of the notification could not defeat a benefit already accrued, especially where the delay and denial were attributable to the Department. The notification was therefore to be applied to the period when the benefit was admissible.

Conclusion: The assessee's entitlement to the notification benefit survived the rescission, and the issue is decided in favour of the assessee.

Issue (ii): Whether refund was barred by the notification and by the doctrine of unjust enrichment, or was allowable under the proviso to Section 11B(2) of the Central Excises and Salt Act, 1944.

Analysis: The prohibition in Para 9(b) of the Appendix to the notification was held to govern normal cases where credit could be validly availed and utilised. It did not control a situation where departmental refusal had frustrated availment of the credit. The proviso to Section 11B(2) carved out an exception for refund of credit of duty paid on inputs in accordance with rules or notifications. On a harmonious reading, the refund bar had to yield in such cases, and the unjust enrichment objection did not apply.

Conclusion: Refund was not barred, and the issue is decided in favour of the assessee.

Final Conclusion: The appeals failed, and the order granting relief to the assessee was upheld because the accrued credit benefit could not be defeated by later rescission and the statutory refund exception applied.

Ratio Decidendi: Where entitlement to credit under a notification accrues while the notification is in force but departmental action prevents its timely utilisation, the subsequent rescission does not extinguish the accrued right, and the refund bar under the notification must be read harmoniously with the statutory exception permitting refund of duty credit.

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