CENVAT credit refund under Rule 5 requires proof that credit could not be utilised; refund was rejected.

Refund of CENVAT credit under Rule 5 is available only where credit taken on inputs used in exported goods cannot be adjusted against duty on clearances. The assessee was also making domestic clearances and was using credit, with duty being paid from the PLA during the relevant period. As no finding was recorded that the accumulated credit could not be utilised, the refund claim was unsustainable. The appellate order granting refund was set aside and the refund was held inadmissible.

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Issues: Whether refund of CENVAT credit under Rule 5 was admissible when the assessee was exporting goods but there was no finding that the credit could not be utilized.

Analysis: Refund under Rule 5 is available only when the credit taken on inputs used in exported goods cannot be adjusted against duty on clearances. The assessee was also clearing goods in the market and, during the relevant period, was paying substantial duty from the PLA after utilizing credit. The appellate order did not record any finding that the assessee was unable to utilize the credit claimed as refund. In the absence of such a finding, and in view of the material showing continued utilization of credit, the refund claim could not be sustained.

Conclusion: The refund was not admissible and the appellate order granting refund was set aside.

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