Refund of unutilised Cenvat credit for export goods allowed where credit could not be absorbed against duty liability.

Rule 5 of the Cenvat Credit Rules, 2002 permits refund of accumulated and unutilised credit where inputs are used in manufacturing exported goods and the credit cannot be absorbed against duty on final products. The Tribunal applied the connected notification framework and followed its earlier view on the same issue, holding that the possibility of future domestic clearances does not defeat the statutory entitlement to refund of credit that remained unutilised for export-related production. The rejection of the refund claim was therefore unsustainable.

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Issues: Whether refund of accumulated and unutilized Cenvat credit was admissible under Rule 5 of the Cenvat Credit Rules, 2002 for goods exported by the assessee.

Analysis: The refund claim arose from credit accumulated on inputs used in the manufacture of exported goods and not absorbed against duty liability on clearances. The controlling principle applied was that Rule 5, read with the connected notification framework, permits refund where the credit cannot be utilised for payment of duty on final products. The Tribunal followed the earlier decision on the same point and held that the fact that the assessee might have future domestic clearances did not defeat the statutory right to refund of credit that remained unutilised for export-related purposes.

Conclusion: Refund of the unutilized Cenvat credit was admissible, and the rejection of the claim was unsustainable.

Final Conclusion: The assessee succeeded in establishing entitlement to refund of the accumulated credit, and the impugned rejection order was set aside.

Ratio Decidendi: Where Cenvat credit accumulated on inputs used for exported goods remains unutilised, Rule 5 permits refund of such credit in the absence of utilisation against duty on final products.

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