Cash refund of unutilized Cenvat credit is permissible after factory closure when no express bar exists.

Cash refund of unutilized Cenvat credit was treated as admissible where the assessee had closed its factory and surrendered its excise licence. The Tribunal noted that the relevant notification contemplated one-time deemed credit subject to filing requirements, but the dispute concerned the form of relief after cessation of manufacture. It applied Rule 5 of the Cenvat Credit Rules, 2002 and held that, once the factory had closed and the assessee had gone out of the credit scheme, the rules did not expressly bar refund in cash. The restriction limiting relief to credit-form adjustment was therefore unsustainable.

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Issues: Whether cash refund of unutilized credit was admissible when the assessee had closed its factory and surrendered its excise licence, instead of granting the amount only as Cenvat credit.

Analysis: The relevant notification granted one-time deemed credit subject to the filing requirement, and the dispute centered on the form of relief after closure of the factory. Rule 5 of the Cenvat Credit Rules, 2002 was relied upon to hold that, where manufacture had ceased and the factory had been closed, the rules did not expressly prohibit refund of unutilized credit in cash. The Tribunal applied the ratio that cash refund is permissible when the assessee goes out of the credit scheme or the factory is closed.

Conclusion: Cash refund was admissible. The restriction applied to the credit-form refund was unsustainable, and the assessee succeeded.

Ratio Decidendi: Where unutilized credit remains after closure of the factory and the rules do not expressly bar such relief, cash refund of the credit is admissible.

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