Duty credit refund under RG 23 must be restored as credit, not paid out in cash or by cheque.

Notification No. 201/79 was construed as a credit scheme for duty already paid on inputs, allowing the credit to be used against duty on finished products. Because the Appendix required RG 23 maintenance and paragraph 9(b) expressly barred refund of any part of the credit in cash or by cheque, any refund had to restore the RG 23 position only. Authorities distinguishing cases where credit had been denied and duty paid entirely in cash were not applicable here. The text therefore states that the amount attributable to RG 23 credit could not be paid out in cash or cheque and had to be reinstated as credit.

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Issues: Whether, under Notification No. 201/79, the amount of duty paid through RG 23 credit could be refunded in cash or by cheque, or whether the refund had to be restored only as credit in the RG 23 account.

Analysis: The notification was read as a scheme granting credit of duty already paid on inputs and permitting its utilisation for payment of duty on the finished products. The Appendix required maintenance of RG 23 accounts and paragraph 9(b) expressly provided that no part of the credit could be refunded in cash or by cheque. The cases relied on by the assessee were distinguished because they concerned situations where credit was initially denied and the duty had been paid entirely in cash. Here, the credit had in fact been utilised for payment of duty on the final product, so any refund could only restore the credit position and could not be paid out in cash or cheque.

Conclusion: The refund attributable to duty paid through RG 23 credit was not payable in cash or by cheque and was correctly directed to be restored only as credit. The assessee's contention was rejected.

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