Net ITC treatment protects zero-rated supply refunds from unrelated earlier-period compensation cess reversals under the statutory formula.

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....Net ITC for refunds of unutilised compensation cess on zero-rated supplies comprises credit actually availed and attributable to the relevant refund period. A reversal recorded in that period reduces Net ITC only where the reversed credit was availed during the same period. Residual credit from earlier periods, not included in the claimed Net ITC for the refund period, cannot reduce the eligible refund. Departmental clarification must operate consistently with the statutory refund formula and cannot require deduction of every reversal irrespective of when the underlying credit arose. The refund sanction was therefore upheld and the Revenue challenge rejected.....