Refund of unutilised Cenvat credit for AED (T & TA) on export upheld under Rule 5

Unutilised Cenvat credit of AED (T & TA) on inputs used in exported goods was considered refundable under Rule 5 of the Cenvat Credit Rules where the credit could not be adjusted against domestic clearances. The text treats export under bond, together with the absence of drawback or rebate on the consignments, as satisfying the refund framework. It also notes that Board clarification supported admissibility of such credit and refund, subject to the prescribed conditions and limitations. The stated position is that accumulated AED (T & TA) credit is refundable on export when utilisation is restricted, and the denial of refund was set aside.

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Issues: Whether accumulated Cenvat credit of AED (T & TA) paid on inputs used in exported goods could be refunded under Rule 5 of the Cenvat Credit Rules, and whether such refund was confined only to exports made under bond.

Analysis: The refund claim was examined in the context of exports under bond and the absence of drawback or rebate on the relevant consignments. Rule 5 permits refund where the credit cannot be utilised for any reason, and the phrase was construed literally to cover situations where the credit of AED (T & TA) could not be adjusted against domestic clearances because its utilisation was restricted. The clarification issued by the Board also supported the view that Cenvat credit of AED (T & TA) is admissible and that the accumulated unutilised credit can be refunded on export, subject to the prescribed conditions and limitations.

Conclusion: The refund of accumulated AED (T & TA) credit under Rule 5 was held admissible, and the appeals succeeded.

Final Conclusion: The exporters were entitled to refund of the unutilised credit arising from AED (T & TA) paid on inputs, and the denial of refund was set aside.

Ratio Decidendi: Unutilised Cenvat credit that cannot be adjusted for any reason, including restricted utilisation of AED (T & TA) credit, is refundable under Rule 5 when the goods are exported under bond.

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