Unutilised Cenvat credit refund allowed where exempted goods prevented utilisation, applying Section 11B cash refund principle.

Refund of unutilized Cenvat credit was admissible where the credit could not be utilised because the goods were exempted from additional duty of excise. The applicable principle was that cash refund is permissible under clause (c) of the proviso to Section 11B(2) of the Central Excise Act, 1944 when input credit remains unutilised. Applying the settled position and the earlier Tribunal and Karnataka High Court view referred to in the order, the Commissioner (Appeals) order allowing refund was found correct in law. The Revenue's challenge therefore failed and the refund was upheld.

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Issues: Whether refund of unutilized Cenvat credit was admissible when the credit could not be utilised because the goods had been exempted from payment of additional duty of excise.

Analysis: The claim was held to be governed by the settled legal position that, where input credit cannot be utilised, cash refund is permissible in terms of clause (c) of the proviso to Section 11B(2) of the Central Excise Act, 1944. Following the earlier Tribunal view and the Karnataka High Court decision referred to in the order, the Commissioner (Appeals) order allowing refund was found to be correct in law.

Conclusion: Refund of the unutilized Cenvat credit was admissible, and the Revenue's challenge failed.

Final Conclusion: The order allowing refund was upheld and the Revenue appeal was rejected.

Ratio Decidendi: Where credit cannot be utilised, cash refund is permissible under clause (c) of the proviso to Section 11B(2) of the Central Excise Act, 1944.

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