Duty-linked incentive credit includes duty paid through approved input credit, not only PLA payments, unless expressly excluded.

For computing duty-linked incentive credit under the exemption notification, duty paid through an approved credit mechanism could not be excluded merely because it was not paid through PLA. The notification required reference to the effective rate of duty leviable, and its exclusion clause applied only to notifications granting credit or reduction in duty on raw materials or components. Duty debited in the RG 23 register under the relevant input exemption scheme therefore counted as duty paid for incentive credit purposes. The departmental view limiting credit to PLA payments was rejected, and the assessee was entitled to the claimed relief.

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Issues: Whether, for computing incentive credit under the exemption notification, only duty paid through PLA could be counted, or whether duty paid by debit in the RG 23 register on inputs covered by another notification also formed part of the effective duty paid.

Analysis: The notification governing incentive credit required computation with reference to the effective rate of duty leviable, and its explanatory provision excluded only notifications granting credit or reduction in duty on raw materials or components. The input duty paid by debit in the RG 23 register under the relevant input exemption scheme could not be ignored merely because it was not paid through PLA. The departmental objection was also inconsistent with the Board's circular clarifying the same position.

Conclusion: The restriction of credit to duty paid through PLA was unsustainable, and the assessee was entitled to the incentive credit claimed.

Final Conclusion: The appeal succeeded and the assessee obtained the claimed relief in accordance with law.

Ratio Decidendi: For computing duty-linked incentive credit, duty paid through an approved credit mechanism is as much duty paid as duty paid through PLA, unless the governing notification expressly excludes it.

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