Refund of unutilised Cenvat credit allowed for exports when textile levy credit could not be used against non-liable finished goods.

Refund of unutilised Cenvat credit under Rule 5 was held admissible where final products were exported on payment of basic excise duty, and the input credit arose from additional excise duty under the textile levy that could not be utilised against the exported goods because that duty was not leviable on them. The earlier decision accepted by the lower appellate authority, and subsequently affirmed in later Tribunal and High Court proceedings, was treated as governing the issue. The contrary Departmental precedent was distinguished because it concerned a different factual situation involving simultaneous rebate claims. The refund claim was therefore allowed.

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Issues: Whether refund of unutilised Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2002 was admissible when the final products were exported on payment of basic excise duty and no additional excise duty was payable on the exported goods.

Analysis: The export of the final products was on payment of basic excise duty, while the input credit related to additional excise duty under the textile levy could not be utilised against the finished goods because such duty was not leviable on them. The earlier decision relied upon by the lower appellate authority, as affirmed in subsequent Tribunal and High Court proceedings, was treated as governing the controversy. The contrary decision cited by the Department was distinguished as arising in a different factual setting involving simultaneous rebate claims.

Conclusion: The refund claim under Rule 5 was admissible and the Department's challenge failed.

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