Cenvat refund mode depends on credit utilisation; authorities must verify records before choosing cash or restoration.

Refund of amounts deposited under Section 35F may be granted either in cash or by restoration of Cenvat credit, but the correct mode depends on whether the revived credit could be effectively utilised. The authority must examine the relevant credit records, including RG 23A Part II entries, and the surrounding statutory context before deciding the refund mechanism. Consideration of the nature of the product and the effect of Note 6 in Chapter 25 was necessary to determine practical utilisation of credit. A fresh factual inquiry was required, and the impugned order could not stand.

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Issues: Whether the refund of the amount deposited and debited from the credit account under Section 35F should be granted in cash or by restoring credit in the Cenvat account, and whether the appellate authority was required to examine the assessee's ability to utilise the credit.

Analysis: The entitlement to refund was not in dispute, but the manner of refund depended on whether the assessee could in fact utilise the revived credit during the relevant period. The appellate authority proceeded on the general proposition that cash refund of credit is permissible only in specified circumstances, but did not examine the relevant Cenvat records, the RG 23A Part II entries, or the factual position as to utilisation of credit. The record also showed that the nature of the appellant's product and the effect of the insertion of Note 6 in Chapter 25 of the Central Excise Tariff Act required consideration before deciding whether credit could be practically utilised.

Conclusion: The matter required fresh examination on the factual issue of utilisaion of credit, and the impugned order could not stand.

Ratio Decidendi: Where the refund claim turns on whether revived credit could be effectively utilised, the authority must examine the relevant credit records and surrounding statutory context before deciding whether refund should be made in cash or by credit restoration.

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