Modvat refund and DEEC exports: policy anti-double-benefit clause could not by itself defeat refund under excise law.

Refund of accumulated Modvat credit under Rule 57F could not be denied merely because the goods were exported under the DEEC Scheme. Paragraph 250(2) of the Import Export Policy 1990-93 was treated as a safeguard against dual benefit, namely duty-free replenishment imports and Modvat credit on the same inputs, but it did not create an in-built prohibition in the excise refund provision itself. The Central Excise authorities could not refuse refund on that basis alone; the denial was held unsustainable and the refund claim was required to be reconsidered on merits after hearing the assessee.

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Issues: Whether refund of accumulated Modvat credit under Rule 57F could be denied on the ground that the goods were exported under the DEEC Scheme and paragraph 250(2) of the Import Export Policy 1990-93 barred double benefit.

Analysis: Paragraph 250(2) was held to operate as a safeguard against availing both duty-free replenishment imports and Modvat credit on the same inputs. The obligation to verify that credit had not been availed and utilised was placed on the import trade control mechanism, and the excise rule itself did not contain an in-built prohibition enabling the Central Excise authorities to deny refund merely on that basis. The earlier orders proceeded on the assumption that the policy prohibition could be read into the excise refund provision, which was not accepted.

Conclusion: The denial of refund was unsustainable. The orders of the lower authorities were set aside and the refund claim was directed to be reconsidered on merits after hearing the assessee.

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