Refund of unutilised AED Cenvat credit upheld where adjustment was not possible under the amended rules.

Unutilised AED Cenvat credit was held refundable under Rule 5 of the Cenvat Credit Rules, 2002 where the credit could not be adjusted against duty liability. The analysis relied on Board circulars and the subsequent amendment to the Cenvat Credit Rules, which permitted utilisation of credit of additional duty of excise towards payment of excise duty on final products. That amended framework, together with the explanatory provision, supported the view that such credit could first be adjusted and, if adjustment was not possible, refunded. The assessee was therefore entitled to refund and the Revenue's challenge failed.

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Issues: Whether the assessee was entitled to refund of unutilised AED Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002.

Analysis: The refund claim concerned unutilised Cenvat credit in the AED account. The Commissioner (Appeals) had allowed the claim relying on the Board's circulars, and the relevant Cenvat Credit Rules were subsequently amended to permit utilisation of credit of additional duty of excise towards payment of excise duty on final products. The amended rule and the explanatory provision supporting utilisation of such credit reinforced the view that the credit could be adjusted and, where adjustment was not possible, refunded.

Conclusion: The assessee was entitled to refund of the unutilised AED credit, and the Revenue's challenge failed.

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