Refund of unutilised Cenvat credit allowed where rebate covered only basic excise duty on exported goods.

Refund of unutilised Cenvat credit on additional duties of excise paid on inputs was held admissible under Rule 5 because the rebate claimed under Rule 18 covered only the basic excise duty on the exported final products. The exports were made on payment of duty, so Rule 19 did not apply, and the proviso to Rule 5 did not bar refund where no rebate had been sought for the input duty component. The settled principle applied was that Rule 5 operates to permit refund where accumulated credit cannot be adjusted against duty payable on exports. The Revenue's challenge therefore failed.

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Issues: Whether refund of Cenvat credit relating to additional duties of excise paid on inputs was admissible under Rule 5 of the Cenvat Credit Rules, 2002 when the final products were exported on payment of duty and rebate of the basic excise duty had been claimed under Rule 18 of the Central Excise Rules, 2002.

Analysis: The refund claim was held to be maintainable because the rebate under Rule 18 was confined to the duty paid on the exported final products and did not cover the additional duties of excise paid on the inputs. The exports were not under bond or without payment of duty so Rule 19 had no application. Since no rebate had been claimed in respect of the additional duty on inputs, the proviso to Rule 5 did not bar refund of the corresponding Cenvat credit. The Tribunal followed the settled view that Rule 5 is intended to permit refund where credit cannot be adjusted against duty payable on exports.

Conclusion: The refund of Cenvat credit was admissible and the Revenue's challenge failed.

Ratio Decidendi: Where rebate under Rule 18 is restricted to basic excise duty on exported goods, refund under Rule 5 cannot be denied for unutilised Cenvat credit relating to additional duty paid on inputs merely because the goods were exported on payment of duty and no rebate was claimed for that additional duty.

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